Here’s another way to address the teacher shortage: don’t let them retire until they turn 67!
Bob Mercer reports that the South Dakota Retirement System is considering raising the retirement age to 67 for most public employees and 57 for public safety workers. Any change would have to go through the Legislature.
The reason for the change is simple: we’re living longer. More years of retirement cost more money. If we want SDRS to cover our groceries and RV gas, we need to work longer. Additionally, while SDRS assets grew last year to $10.8 billion, the return was only 4.5%. State investment chief Matt Clark says the “good times have run out of gas,” so we’re going to have less revenue for more retirees.
But perhaps before requiring South Dakota’s public servants to work past age 65, our state pension system should consider the wisdom of letting people retire at 55. Early retirement is an enticing perk, but those early takers get lower monthly benefits, but over time, they draw more than members who retire at the traditional age. Early retirement also introduces uncertainty into the system’s planning: one can’t be sure how many members will take early retirement each year. If SDRS set 65 as the age for everyone to get benefits, it would have a much more predictable draw-down rate.
One way or the other, SDRS needs to throttle payments to sustain its pot of gold. Which cut is better: requiring some folks to work past 67, or requiring everyone to work to 65?