I have read some posts regarding academic salaries such as In which countries are academic salaries published? but none about retirement pension plans.

What is a typical retirement pension plan for professors in the United States?

I assume there might be some significant differences between public and private universities. Research/study/survey that tried to quantify it on a larger sample is welcome.

  • 1
    I've never heard of an actual academic pension plan in the US. A private retirement investment savings account (401K or similar) seems to be the status quo.
    – David
    Commented Mar 30, 2017 at 18:19
  • Background info on 401(k) and similar retirement plans: en.wikipedia.org/wiki/…
    – David
    Commented Mar 30, 2017 at 18:21
  • 1
    @David Really? They are standard around where I am, generally all the state universities are in the same program (and often with other state workers). Commented Mar 30, 2017 at 18:22
  • 3
    @guifa Ah, OK. I do know of some pension plans when professors at public universities are incorporated into a larger public employee pension plan, such as State of Illinois and State of California.
    – David
    Commented Mar 30, 2017 at 18:25
  • 2
    This varies widely from state to state, and dependent on many other factors. Certainly there is no uniform national structure, standard, etc. As in some comments/answers, in some cases pensions are state-controlled, and thus can be bait-and-switch operated and modified after-the-fact. In some cases, which may seem better or worse depending on the political climate, pensions are essentially equivalent to private pensions, with varying contributions from "the employer"... but/and the state cannot so easily manipulate that money. Commented Mar 30, 2017 at 19:22

4 Answers 4


AFAIK, all pensions are calculated basically the same, and I'll use Alabama, Tennessee, and Georgia as examples since I'm familiar with them. In the public system, these are often pooled between all universities and colleges and often with the K-12 system or all public employees.

You have three variables: the eligible salary, the number of years worked, and the multiplier.

The eligible salary is calculated through a variety of methods, but tends to be the average of the highest X years of work over the last Y years. For example, in Alabama, it's the average of the highest 3 years of the last 10 years. In Tennessee, it's the average of the highest consecutive 5 years. In Georgia, it's the average of the two highest consecutive years.

The multiplier is probably the single most important variable, though. My father, for instance, worked in Alabama, with a 2.0125 multiple. Let's say for instance his eligible salary was 100k to make the math easy. If he retired with 10 years of service, he would receive ~20k per year. With 20 years of service, ~40k, etc. For me in Tennessee, my multiplier is only 1.5. If when I retire I have an eligible salary of 100k, with 10 years of service, I'll only make 15k. With 40 years, I'll make 50k. (Yeah, my dad got a much better deal, and that's before we talk about the DROP program). Georgia, for reference, has a 2.0 multiplier.

A minor difference thing to consider are time to vesting (Tennessee is only 5, but Alabama and Georgia are 10), but over an entire career, those don't make much of a difference for overall payout.

Because the ways to calculate the eligible salaries (highest two years really helps folks in departments with rotating chairs), I'm not sure how well one can generalize about the pensions. One thing for sure is that they tend to be quite decent since you also collect social security benefits. Anecdotally, for instance, between his pension with 30 years worked, social security and differing retirement tax rules, my dad takes home more now than when he worked. Plus in academia we tend to be able to work well into old age which really boosts our pension income.

Based on what I've read, private pension funds work the same way, just with ever so slightly different variables.


In some states, there are public retirement/pension plans that the university will contribute to on your behalf as a state employee, but there are differences across states. For instance, I used to work at a university in FL and selecting the teacher's retirement fund in Florida was optional. In Alabama, where I am now, it is mandatory.

If a university is a non-profit, they will often offer a 403b or 457b plan, but contributions from the university vary. These work similar to a 401k plan at corporations.

Just remember that state governments control a lot of the retirement plan options in many states and can change after you take a job. When I took my job in FL, the university contributed 13% of my salary to my 403b without a match requirement. The state government changed a year after I started the job and reduced the employer contribution AND required a mandatory match (talk about bait and switch!). I'm in Alabama now and participate in the mandatory state retirement plan (which I must contribute to), but also take the option of an additional 403b. So, it's all different, but you often have multiple options at a single university.


As mentioned in some of the other answers, this depends on the state you're in. In Texas, when I started as a postdoc in 2002, I had the once-in-a-lifetime option of either going with the state Teacher's Retirement System, which is defined benefit plan similar to the ones discussed by @guifa in one of the other answers; or going with a 401(k) into which I would pay 6.75% of my salary and the state matches that with 6.5% (now 6.65%). Given that the terms of the state-run system are subject to what the state legislature feel like doing, I went with the latter. It also has the great advantage that you do not lose your benefits if you later switch to a university in a different state.

Colorado has a similar system, except that that there was no choice for university professors to join a state-run system -- only the 401(k). In Colorado, you contribute 8% and the state 11%, which sounds more generous than TX, but the situation is in fact more complicated because, for difficult historical reasons, Colorado does not participate in the Social Security System for its state employees, and so I will not get Social Security benefits for my time here.

In both cases, my universities offered the option of contributing to a 403(b) in addition to the 401(k), but the university did not match anything there.

  • My public university in Colorado actually offers the obscure 401(a) instead of 401(k), not sure if yours is the same. The main difference is that a 401(a) is mandatory - you don't get to choose how much to contribute. Commented Mar 31, 2017 at 19:27
  • Interesting. I have to say that I didn't look too carefully -- everyone who doesn't max out the match is not paying attention, so the question of how much to contribute has only a single, useful answer. (Also, hi neighbor!) Commented Mar 31, 2017 at 22:11

In the U.S., preparing for retirement is often quite different now from how it was 30 or more years ago.

Now, many workplaces, including a lot of universities, have pushed the responsibility to the employee.

I will describe my spouse's plan, in a large university, where my spouse started working in 2000.

The university contributes 10% of my spouse's salary to a retirement investment. A nonprofit financial service called TIAA (Teachers Insurance and Annuity Association) receives the funds every pay period and invests the money. But it is up to the employee to instruct TIAA how to invest it. TIAA has a bunch of different options to choose from, which are kind of like mutual funds -- different mixes of types of investments. The basic ingredients are stocks, bonds and real estate funds.

My spouse can put additional money into the retirement investment if desired. Up to 10% of the annual salary can be invested per year, as pre-tax dollars (i.e. not subject to income tax). That's the thing called "501 K."

If you want to learn more about how it works, you can look at the TIAA website, and you can also call them up.

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