Dear Mr. Berko: Please don’t use my initials or city, because my comments might encourage the local school board to fire me. A dear aunt passed away last March, leaving me two pieces of property, which I sold for $620,000. I am in my 40s and finally have the means to quit my stinking teaching job, which I’ll do in June. I and most other teachers feel betrayed by our union, our state Legislature, our school board and especially our students’ parents. I am a darn good teacher and will be moving to another state, where I’ll enjoy teaching at my choice of several private schools.
I need this $620,000 to produce about $2,000 in income a month. I have little knowledge about investing, though I have $23,000 in three Fidelity funds you recommended in 2014. Please tell me which stocks and mutual funds I should own. Or should I go with my brother-in-law, who is a broker with a big firm in another city and is pushing us to be his client? Finally, do you think my teacher’s pension will be available when I’m 65?
— XX, Illinois
Dear XX: At the end of fiscal 2017, your state’s Teachers’ Retirement System had an unfunded liability of $73 billion. That’s equal to the gross domestic product of Cuba — enough cash to build six fully equipped nuclear-powered aircraft carriers. But yes, Illinois will have some of the pension plan money for you when you reach that magic age.
The wonderful politicians in the state Legislature (whose pensions are assured) and union officials (whose pensions will get preference) are working to help teachers retain 40 to 60 percent of their promised pension at 65. However, this will require higher state taxes. Illinois’ individual state income tax was recently raised from 3.75 percent to 4.95 percent, a thumping 30 percent increase. And that amount may double in the coming decade. The sales taxes on merchandise and services range from 6.25 percent to 11 percent and may have to grow by 40 or 50 percent.
