To receive any type of retirement benefit, you must work at least three years in Minnesota public schools. This is called the “vesting” period.  Full retirement benefits are available at the “normal retirement age,” which is 66 by law. You can retire as early as age 55, but you would incur severe early retirement penalties for every year of early retirement before the normal retirement age. 

The Rule of 90 - early retirement at full benefits

Under the Rule of 90, instead of waiting until the age of 66, some educators may retire with full benefits if their age and years of service add up to 90. This allows a person to retire at age 58 with 32 years of service, for example.

But this benefit is only available to those hired on or before June 30, 1989. Those hired after that date do not qualify for the Rule of 90 under state law.

Pension formula

The formula for determining your annual pension is simple:  Years of Service x Multiplier x High-5 Average Annual Salary.

Actually, it’s not as simple as plugging in the numbers above, but it is almost that simple.  Teachers hired after June 30, 1989, have following multipliers set in law:

• 1.7 percent for every year of service (in Minnesota) before July 1, 2006.
• 1.9 percent for every year of service (in Minnesota) on or after July 1, 2006.

So, for example, an educator who worked 18.5 years before July 2006 and 14 years afterwards, and who earned an average of $50,000 in the highest five years of service, would calculate his or her annual retirement benefit as follows:

18.5 years x 1.7% = 31.45%
14 years x 1.9% = 26.60%
58.05% (or 0.5805) x $50,000 = $29,025

If you want to calculate your monthly benefit, simply divide the number by 12. In the example above, the monthly figure is $2,418. 

But don’t count your money yet. Because the educator in this example was hired after June 30, 1989, she does not qualify for the Rule of 90 and cannot collect her full retirement benefits. Instead, unlike her peers hired earlier, she incurs early retirement penalties for each year under her “normal retirement age,” which is 66. The penalties average 4.9 percent per year under age 66. Assuming this person retired at age 57½, the penalties add up to $902 per month, which reduces her monthly benefit from $2,418 to $1,516.

Under the same circumstances, a person who does have the Rule of 90 would receive $2,127 per month. That’s a disparity of $611! That’s why we need your help in the Rule of 90 campaign.

The information above is derived from calculations provided by the Teachers Retirement Association, which can be found at www.tra.state.mn.us.  It is meant to give you an approximation of your pension benefit. To obtain an official and exact calculation of your individual retirement benefit, you must contact a TRA retirement specialist at 800-657-3669 or 651-296-2409.