Personal Spending and Classroom Supplies Horace Mann Educator Advisory Panel April 2008

Transcription

1 Personal Spending and Classroom Supplies Horace Mann Educator Advisory Panel April 2008

2 Personal Spending and Classroom Supplies: Summary In March 2008, 941 educators responded to the latest Educator Advisory Panel survey covering personal spending and classroom supplies. This survey had three sections: personal spending for classroom items, educational expenses, and savings and retirement. Panel members were asked how much of their own money will be used to purchase classroom items this school year and what items they typically purchase. The second section of the survey asked if educators have student loans related to their college degree and the outstanding amounts of those loans. They were also asked about reimbursement programs at their schools for educational expenses. Lastly, the survey asked panel members to estimate their income needs during retirement. They were then asked about their sources of retirement income and whether their retirement needs will be met with those sources. 2

3 Personal Spending and Classroom Supplies: Key Findings Personal Spending and Classroom Supplies Overall, more teachers believe school funding, in terms of supporting teachers classroom needs, is adequate,, versus those who don t, 2. When looking at grade levels, however, more elementary teachers consider school funding inadequate, 27%, compared to those who consider it adequate, 2. 2 of educators will spend over $500 this school year on classroom items with 28% of elementary teachers spending over $ of teachers have seen at least modest or dramatic increases in personal spending over the past three years. Student rewards are the most common school item teachers spend their money on. Rewards cited in teachers comments include snacks, candy, movie rentals, gift certificates to restaurants, CD players and portable radios. Student rewards are items that schools don t always include in their budget. Although student rewards are a common spending item for teachers, school supplies, computer/technology updates, and books are items teachers believe are most needed if local businesses are willing to help with funding shortfalls. Educational Expenses 27% of educators on the panel report that they currently have an outstanding student loan and 31% of those educators owe more than $20,000 on their loan. Over half of these educational loans were used for masters degrees. According to our panel members, 58% of their schools wouldn t cover any of the tuition and fees for a masters degree and only 1 would cover over half of tuition and fees. Savings and Retirement Assuming that they reach retirement age with $100,000 in savings and investments, 47% of educators would choose to convert the savings into an annuity with a lifetime monthly payment at retirement, while would keep their savings in the same accounts after retirement, and would use their savings to pay down debt when they retire. One third of educators don t know how much of their pre-retirement income they can expect from their teacher s pension. Of those who do know: 7 expect to have at least 25 years of service when they retire. On average, they expect to receive about 6 of their preretirement pay as pension income. Other, non-pension, retirement vehicles, like 403B savings, are expected to add another 1 of preretirement pay to educators post retirement income. 58% report that they will need at least 8 of preretirement income when they retire.

4 Pre-K, K College/Univer Not classrm tchr Personal Spending and Classroom Supplies What grade(s) do you teach? Elementary School Grades 17% 14% 16% 18% 16% 16% 1 Multiple responses allowed Middle School Grades High School Grades Grade Taught N=933 Other In all grade level groups except elementary, more teachers believe school funding is adequate versus those who don t. Elementary school teachers, however, report spending more of their personal funds on school related items than teachers at other grade levels. How adequate is funding at your school in terms of supporting your classroom needs? Elementary 2 27% 2 How adequate is funding at your school? Middle School High School 17% 21% 27% 2 Adequate 52% Other 21% 1 Neither adequate nor inadequate Inadequate N=938 3 Adequate Funding Inadequate Funding N=930 4

5 Personal Spending and Classroom Supplies How much do you anticipate you will spend out of your own personal funds on classroom supplies this school year? % 28% 34% 8% Personal Spending by Grade Taught 3 18% Elementary Middle 12% % School High 17% % School Personal Spending N=938 Other NA/None $1-$100 $101-$250 $251-$500 $501-$1,000 >$1,000 N=930 5

6 Personal Spending and Classroom Supplies How has your personal spending for your classroom changed in the past three years? Increased Dramatically 36% Modest Increase 3 Stayed the Same Modest Decrease Changes to Personal Spending 4% Decreased Dramatically N=936 N/A No Personal Spending Elementary Middle School High School Other Changes to Personal Spending by Grade Taught 12% 8% 6% 31% 32% 36% 46% 3 34% 3 32% 7% 7% 14% 4% 4% 8% 2% Increased Dramatically Modest Increase Stayed the Same Modest Decrease Decreased Dramatically N/A No Personal Spending N=928 6

7 Personal Spending and Classroom Supplies Have you purchased any of the items listed below during this school year with your own funds? Student rewards Classroom supplies (pens/pencils/notebooks) 81% 77% Student rewards and classroom supplies are the items purchased most often by teachers. Materials for lessons 74% Classroom decorations Books for classroom library Professional supplies 58% 7 66% Items purchased with personal funds by grade taught Item Purchased Elementary Middle School High School Art supplies 57% Student rewards 8 84% 66% Recreational equipment/games 32% Books for classroom library 81% 6 44% Computer software Classroom magazines Calculators for students 18% 18% 8% Other items purchased by educators include: Computer N=941 equipment 2% Personal care items 2% Classroom decorations 81% 6 56% Materials for lessons 8 77% 7 Classroom supplies (pens/pencils/notebooks) 78% 8 78% Art supplies % Multiple responses allowed Food items 1% Audio/visual equipment 1% Furniture 1% Professional supplies 62% 5 5 Recreational equipment/games 42% 27% 18% Clothes 1% N=902 N=910 7

8 Personal Spending and Classroom Supplies If a local business wanted to help with funding shortfalls, what types of items would be most helpful and needed for your classroom or your school? 820 Educators responded with 1,537 comments HELP WITH FUNDING SHORTFALLS % of Comments % of Respondents Classroom supplies-pencils, markers, organizers 2 4 Computer equipment/technology updates 16% 31% Books 2 Art & craft supplies/music supplies & instruments 8% 14% Student rewards 7% 14% Math and science materials 6% 11% Office supplies Money/gift cards to educational stores 4% 7% Recreational equipment-games, P.E. equipment 4% 7% Audio/visual equipment Teaching materials/curriculum support 2% 4% Field Trips/guest speakers 2% Personal care items-hand sanitizer, facial tissues 2% Furniture/building maintenance 1% 2% Food and snacks 1% 2% Misc. 1% Classroom Supplies Student supplies like pens, pencils, paper, notebooks, colored pencils Basic supplies, like crayons, notebooks, pencils, books for classroom libraries, and chart paper Computer Equipment and Technology Technology items such as student laptops and calculators. I'd really love a projector to connect with my computer. Money for technology. Upgrades to software. Cleaning supplies Clothing

9 Educational Expenses Do you currently have any outstanding debt due to your own education, (i.e. student loans)? Degree loan was used for Yes % 4 No 7 27% 4 3 4% 1% N=924 Doctorate Masters Bachelors Associates N=256 22% 17% 16% Amount owed on loan 12% 14% 17% Year of loan 4 28% 2% < $1,000 $1-$5 $6-$10 $11-$15, $16-$20 $21-$30 Over $30 N=257 (000) N=258 9

10 Educational Expenses 8 of respondents with student loans didn t participate in a loan forgiveness program. Of those who did, what percent of the loan was forgiven? % 1 12% 3 If you decided to pursue a master s degree today, which of the following statements would be the most accurate description of the financial support you would receive from your school or district? School would cover all tuition and fees N=119-6%- 11%- 21%-5 Greater than 5 School would cover more than half of tuition and fees 8% School would cover some of tuition and fees School would not cover any of tuition of fees 58% Don't know/not sure N=916 10

11 Savings and Retirement If you had a personal windfall of $5,000 today, on which one of the following would you be most likely to use that extra money? Apply towards home/mortgage loans, pay off home debt 26% Save for retirement 18% Save for children's education / or pay off children's education debt Pay off car loan or put towards a new car 12% None of the above Pay off own school debt 8% Use to finance additional education for yourself 7% Use to pay for vacation 3 N=931 11

12 Savings and Retirement Assuming that you were able to invest and save $100,000 for retirement, which of the following do you think you would be more likely to do with those savings when it comes time for you to retire? Convert the money into an annuity that will give you a monthly income for life 47% Keep the money in the same investment accounts until it was needed Don't know / Not sure 1 Use the money to pay off debts at retirement N=923 12

13 165 comments from 163 respondents Convert the money into an annuity that will give you a monthly income for life Why do you feel that way? % of comments Will supplement monthly benefits-pension and social security 3 Security 22% A constant income 1 Would be the most beneficial Continue to earn money on investment Am already doing this Need to have money budgeted monthly 2% Want some money for kids 2% Tax implications 2% Avoid part-time job in retirement 1% Don't want to be a burden on my children 1% Like the guarantee of an annuity 1% Will need to supplement my spouse's retirement 1% Best way to save for retirement-don't have to worry about money 1% Have other investments, not an annuity 1% Not able to save now 1% I would need to supplement my retirement income. Because I do not feel in today's economy that my retirement benefits will support me comfortably in the future. Therefore I will most likely need additional monthly income to meet my personal needs. Want to have security. I know I will need monthly income. Savings and Retirement 88 comments from 85 respondents Keep the money in the same investment accounts until it was necessary % of comments I want to continue to make money off of investment 32% Won t need for the money immediately upon retiring. I feel secure knowing the money is there 1 Makes sense to keep it where it is 8% Will need the return on investment to keep up with inflation 8% Would only use for "extra" things like travel, vacation 6% To avoid paying the tax on tax deferred investment Will not need it to pay off debts Will need the money for my children 2% It's important that my money continue to grow while I'm taking some money out of the account during retirement. If I don't need it yet, I don t need it yet. I'll probably waste it if I have it. I don't spend much money. It would make me feel better knowing I had money I could use if I really needed it. I will not retire until I am able to live off of social security and my state retirement funds. Would be nice to have a "rainy day" fund. 13

14 33 comments from 33 respondents Use the money to pay off debt at retirement Why do you feel that way? % of comments With limited income, want less debt 4 Goal is to be debt free at retirement 18% More secure with less debt 12% Interest on debt is more than interest on investment 12% Will still have debt at retirement 6% Don t want to burden my estate with debt 6% Savings and Retirement 67 comments from 67 respondents Don t know/not sure % of comments Not familiar with retirement options 37% Haven't planned that far yet 18% Need to get advice from someone else 16% Unsure about the future Changing needs - will have to evaluate at that time Would spend money rather than invest it Would only spend the income from the investment 1% Too late to start thinking about retirement 1% Health issues - health care costs 1% Am debt free - not much need for annuity 1% I think most retirees have such a problem with debt that they can't enjoy their retirement. Many of the retired teachers have second jobs or struggle. Less debt more money in the long run. One cannot carry debt going into retirement. Debt reduction is the number one goal for most retired educators. Interest on debts would most likely be higher than interest earned on investment. I don't know enough about investment accounts and annuities at this point to make an educated choice. I have not studied the benefits of each option so I don't know which way I would use the money. Although I will retire in less than 10 years, probably seven, I have not thought about it. I would have to talk to a professional about what the best plan would be. The economic scene is changing so drastically right now. I'm no longer confident in the management skills of those in the financial field. 14

15 Savings and Retirement When you retire from the field of education, how many years of service do you anticipate you ll have credit for in your state teachers retirement system pension? N=929 2% less than 10 years years 6% years years N=910 22% years 17% 5 30 or more years 1% 2% Not sure / don't know % Don't Know Approximately how much of your pre-retirement income do you expect to receive in your retirement pension checks after you retire? N=921 34% Don't Know 2% 4% 6% 1 16% 12% Approximately how much of your pre-retirement income do you think your household will need postretirement to maintain the lifestyle you would like to maintain during retirement? 4% 15

16 Savings and Retirement Besides your education system pension program, do you currently have other pension, savings or investments set aside for your retirement? 2% If yes, approximately how much of your preretirement income do you think these other savings, investments, or pensions will contribute to your retirement income? Yes No Don't Know 3 22% 26% N=927 12% 2% 2% Don't Know N=

17 Savings and Retirement How much income will you need in retirement? 4 3 How much income do you expect from your pension? % 6% 18% 1 6% How much income will your other investments contribute? 1 58% 12% 28% 3 2 N=759 N=609 2% 1% 2% Amount of Retirement Income Needed (stated as a Percent of Pre-retirement Income) Amount Needed Avg. Income Expected from Pension Avg. Income Expected from Other Investments Avg. Total Income Expected % 84% % % 1 77% -5 57% 24% 81% Total 61% 1 8 Note: Excludes Spouse s Income What educator panel members expect from their pension varies by age. 3 of year olds expect over 8 of their preretirement income to be matched by their pension. Only 14% of year olds expect that much. N= The - range includes respondents who answered no to having other investments. 17

18 Savings and Retirement Does your school or district offer retirement savings programs that allow employees to save through payroll deduction (such as 403B program)? 16% 14% 71% Yes No Don't Know If yes, How are the retirement savings programs offered by your school or district communicated or promoted to employees? N=924 Annual benefits enrollment period communications Individual meetings/sales calls from representatives 48% 51% Seminars put on by representatives of the companies 3 Other ways of promoting retirement programs: Talking to teacher/talking to financial advisor 1% On my own 1% Rep. visits school.4% No communication or poor communication.4% Annual meeting during benefit sign-up.4% State teachers retirement. Periodic communications from district through Benefits information kit for new hires 24% Benefits communications from local teachers' union 22% Seminars/instructional programs put on by district District benefits web-site Web-site of savings program provider companies Multiple responses allowed N=638 18