STRS Ohio and Your Retirement: What Ohio Teachers Need to Know
If you've spent your career in an Ohio classroom, school building, or university, you've likely been contributing to the State Teachers Retirement System of Ohio, known as STRS Ohio. It is one of the largest public pension funds in the United States, and for most Ohio educators, it forms the foundation of their retirement plan.
But STRS Ohio has been through a turbulent few years. Cost-of-living adjustments were suspended, health care benefits came under pressure, trustee elections made headlines, and the rules around retirement eligibility have been changing on a rolling basis. At the same time, a landmark federal law passed in 2025 restored Social Security benefits to millions of public employees who had been penalized for decades.
If you are an STRS Ohio member or retiree, there has never been a more important time to take a careful look at where you stand.
At Ville Wealth Management, we work with Ohio educators and have developed a deep understanding of how STRS Ohio fits into a comprehensive retirement plan. Here is what we think every STRS Ohio member should be thinking about.
Your Retirement Benefit: The Formula and the Decisions Around It
Generally the STRS Ohio Defined Benefit pension is calculated using a straightforward formula: 2.2% multiplied by your total years of service credit, multiplied by your Final Average Salary, which is the average of your five highest earning years in Ohio public employment. A teacher with 30 years of service and a Final Average Salary of $80,000 would receive $52,800 per year before any survivor election or adjustments.
That formula is clear. The decisions surrounding it are not.
Know which plan you are in. STRS Ohio offers three options: the Defined Benefit Plan, the Defined Contribution Plan, and the Combined Plan. New members have 180 days from their first day of paid service to choose. If STRS Ohio does not receive a selection within that window, the member is automatically placed in the Defined Benefit Plan. For many career educators, the Defined Benefit Plan can provide valuable lifetime income, but the appropriate choice depends on the member’s circumstances, retirement horizon, risk tolerance and other resources.
Retirement eligibility thresholds are changing. From June 1st 2025 through May 1st 2030, unreduced benefits are available at any age with 32 years of service, or at age 65 with 5 years. Reduced benefits are available at any age with 27 years of service. These thresholds increase after 2030 and again after 2032. If you are approaching any of these milestones, a precise timeline analysis matters more than a general estimate.
The survivor benefit election is largely irreversible. Choosing how your pension continues after your death is one of the most consequential decisions an STRS Ohio retiree makes. It cannot be changed once retirement begins. Every scenario should be stress-tested before you commit.
The formula reaches a cap. Because the formula is 2.2% for each year of service, each additional year increases the formula by another 2.2% of FAS. The formula reaches a ceiling at approximately 45 years of service. Additional years of service beyond that point do not increase the monthly pension. Long-tenured educators near the cap should understand that continued employment has diminishing returns from a pension standpoint alone.
Final Average Salary timing is a planning lever. Because FAS is based on the five highest years of Ohio public earnings, educators approaching retirement should understand which forms of compensation are included in their FAS calculation and how the timing of eligible compensation could affect their benefit. This is one of the highest-value planning moves available to educators approaching retirement.
Social Security: A Major Change That Affects Ohio Teachers
For decades, many Ohio teachers who also had Social Security-covered employment saw their benefits significantly reduced, or eliminated entirely, because of two federal provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These rules reduced or eliminated certain Social Security benefits from public employees for receiving both a pension and Social Security benefits.
That changed in January 2025.
The Social Security Fairness Act was signed into law on January 5, 2025, permanently repealing both the WEP and the GPO. Ohio teachers who had prior careers in business, healthcare, or other private sector fields and paid into Social Security now receive the full benefit of those contributions. Retroactive payments covering benefits back to January 2024 were distributed by July 2025.
However, the repeal doe not increase Social Security benefits for every Ohio educator. It primarily affects individuals whose pension is based on employment that was not covered by Social Security and who would previously have been affected by WEP or GPO.
This is one of the most significant retirement income developments in decades for Ohio educators. Here is what to focus on:
Re-run your Social Security projections. Any analysis done before 2025 is outdated. The income floor for many STRS retirees is now meaningfully higher.
Spousal and survivor benefits may now apply. GPO previously reduced or eliminated Social Security spousal and survivor benefits by two-thirds of the STRS pension amount. That offset is gone. If you or your spouse avoided filing for Social Security because of GPO, that barrier no longer exists.
The retroactive lump-sum payment has tax implications. The retroactive SS payment received in 2025 is taxable Social Security income for that year. The IRS allows an election to allocate prior-year payments back to the years they would have been received, which can reduce the tax impact. Coordinate this with your tax advisor.
Claiming strategy now matters more than ever. With Social Security now a real income source for many STRS members who previously ignored it, when you claim and how it interacts with your pension and other income needs careful modeling.
Health Care: Know What You Have and What You Don't
STRS Ohio offers a retiree health care program, but there is something every STRS member needs to understand clearly: health care coverage is not guaranteed by law. The STRS Ohio board retains the right to change or discontinue coverage at any time, for any class of eligible recipients. This is categorically different from the pension benefit, and it means health care should be treated as a variable in your retirement plan, not a certainty.
Structural changes to the STRS Ohio health care program could happen in 2027. The specifics are still being finalized, but advisors and members should be actively monitoring developments rather than assuming current coverage levels will persist.
A few other health care planning points:
Medicare enrollment is mandatory at 65. For STRS retirees who are eligible for Medicare, enrolling in Medicare Part B at the appropriate time is critical to maintaining STRS health care coverage. Declining Medicare Part B means losing STRS Ohio medical coverage. Poor timing around enrollment can result in permanent premium penalties. This transition needs to be planned for well in advance.
Pre-65 coverage requires a bridge plan. For educators retiring before Medicare eligibility, the gap needs to be explicitly addressed. ACA marketplace options, COBRA, and a spouse's employer coverage should all be evaluated and budgeted.
Long-term care is not covered. STRS Ohio health benefits do not cover long-term care services. This is the most significant and most commonly overlooked gap in an Ohio educator's retirement plan. It must be addressed separately.
Your Investment Portfolio: Think Differently
When a client has a STRS Ohio Defined Benefit pension, we approach their investment portfolio differently than we would for someone without a guaranteed income source.
The pension provides a lifetime income stream that can serve a role similar to the fixed-income portion of a traditional portfolio. It pays a predictable, guaranteed stream of income for life, which is exactly what most bonds in a traditional portfolio are designed to do. For many STRS retirees, this creates a logical case for holding a higher equity allocation in their personal investment accounts than they might otherwise feel comfortable with.
The portfolio's job is not to replicate the pension's income. It is to provide growth, flexibility, and legacy capital. That is a different mandate, and it drives a different allocation.
Many Ohio teachers also have access to supplemental 403(b) and 457(b) plans through their school districts. These plans deserve a careful review of contribution levels, investment options, and fee structures, alongside the STRS benefit and any other personal savings.
Tax Planning: More Complexity Than Most Clients Expect
STRS Ohio pension income is fully taxable at both the federal and Ohio state level, unless the member made contributions that were previously taxed. Setting withholding correctly from the first payment matters, and many new retirees underestimate the combined tax on pension, Social Security, and other income.
Ohio provides a favorable tax treatment for certain retirement income, but the applicable deductions and credits depend on the taxpayer’s circumstances.
Beyond the basics:
The Roth conversion window. The early retirement years, before Social Security and required minimum distributions add to your taxable income, can be an ideal time to convert 403(b) or traditional IRA assets to Roth. With Social Security now higher for many STRS members, this window may be shorter than expected. Starting early matters.
IRMAA thresholds require proactive management. Pension income combined with restored Social Security and eventual RMDs can push modified adjusted gross income above Medicare IRMAA thresholds, adding surcharges to Part B and Part D premiums. Because IRMAA uses a two-year lookback, this must be planned for well before Medicare enrollment begins.
The PLOP carries a tax event. If a client elects the Partial Lump Sum Option Payment, that amount is fully taxable (unless previously taxed) in the year received unless rolled directly to an IRA. The retirement year tax picture needs to be modeled before the election is made.
Cash Flow: The Floor, the Gap, and the Plan
Our approach to cash flow planning for STRS Ohio clients starts with mapping the pension and any restored Social Security income against essential spending needs. The gap between that income floor and total desired spending tells us exactly how much work the investment portfolio needs to do.
A few STRS-specific items worth noting:
COLAs are not guaranteed and do not compound. STRS Ohio COLAs are approved annually by the board and are not guaranteed year to year. Each COLA is also calculated on the original base benefit, not the previously adjusted amount. Long-term cash flow models should not assume automatic or compounding COLA increases.
Sick leave and vacation payouts deserve attention. Many school districts pay out accumulated sick and vacation time at retirement. This one-time cash flow event needs tax planning and should be factored into the overall retirement-year income picture.
Part-time income after retirement is common. Many educators continue tutoring, consulting, adjunct teaching, or coaching after retirement. These income streams interact with Social Security claiming strategy and taxable income and should be modeled explicitly.
Risk Management: Know What You Have and What You Don't
STRS Ohio provides disability benefits to active members and survivor benefits to eligible family members. These should be reviewed carefully alongside any employer-provided coverage before retirement, to identify gaps and avoid paying for unnecessary duplication.
The primary risk gap for most STRS Ohio retirees is the same as for most Ohio public employees: long-term care. STRS health benefits do not cover long-term care services. This needs to be addressed through insurance, a hybrid policy, or a dedicated self-insured reserve. It is not optional planning.
The second risk worth naming explicitly is reliance on a single institutional benefit. The recent history of COLA suspensions and evolving health care benefits illustrates that STRS Ohio benefits are subject to board decisions and legislative changes. Personal savings diversification is not just a nice-to-have for STRS members. It is a meaningful backstop against future benefit variability.
Estate Planning: The Pension Ends When You Do
Beyond the elected survivor benefit, STRS Ohio pension income ends at the retiree's death. It does not pass to children or to the estate.
This surprises nearly every client. Educators who feel financially comfortable because of a strong pension often significantly underestimate how much investable wealth they need to accumulate for legacy purposes. We encourage shifting the estate planning focus toward personal IRAs, investment accounts, and life insurance as the true estate-building tools.
A few additional estate planning points specific to STRS Ohio:
Beneficiary designations are separate from your estate documents. Your STRS Ohio beneficiary designation is not governed by your will or your trust. It must be reviewed and updated independently.
Trusts generally cannot be named as a survivor annuitant. This creates coordination challenges between STRS survivor elections and trust-based estate plans. Work through this carefully with an estate planning attorney.
PLOP proceeds need an immediate plan. If a client takes the lump sum, those dollars need a beneficiary designation and investment strategy from day one.
A Few Things Most People Don't Know
After working with STRS Ohio clients, a few lesser-known facts tend to be genuinely surprising:
The 180-day plan selection window is a one-time event. New STRS Ohio members have exactly 180 days to choose their retirement plan. This is not a decision that can be revisited. Advisors working with newly hired educators should address it immediately.
COLAs are calculated on the original base benefit. Unlike Social Security, STRS Ohio COLAs are not compounding. Each annual increase is calculated on the original retirement benefit amount, not the previously adjusted amount. The long-term purchasing power impact is more limited than most retirees assume.
STRS Ohio had a 10-year annualized return of 9.44% through December 31, 2025, ranking in the top decile of peer plans. Strong investment performance is a key driver of the benefit restoration currently underway. This is a meaningful data point for clients who have concerns about system stability.
The Sustainable Benefit Plan governs all future benefit decisions. STRS Ohio uses an annual process that allows the board to incrementally improve benefits only when the actuary confirms no material impairment to the fund. Understanding this framework helps set realistic expectations about future COLA improvements and benefit changes.
Reciprocity exists across Ohio retirement systems. STRS Ohio has reciprocal agreements with OPERS, SERS, OP&F, HPRS, and the Cincinnati Retirement System. Educators who also worked in other Ohio public roles may be able to combine service credit across systems for eligibility purposes.
Key Differences Between OPERS and STRS
If you've worked in multiple Ohio public sector roles, or if you're simply trying to understand which system applies to you, here's how OPERS and the State Teachers Retirement System of Ohio (STRS) compare.
Who They Cover OPERS covers the broadest group of public employees: county, municipal, and state workers, library employees, park district staff, and most other local government positions. STRS covers teachers and licensed educators in Ohio public schools, community schools, and universities.
Benefit Formula Both are defined benefit systems, but the formulas differ. STRS has historically used a 2.2% multiplier per year of service applied to the member's final average salary. OPERS formulas vary by membership group (A, B, or C) based on hire date.
Social Security Neither OPERS nor STRS members pay into Social Security through their public employment. This is precisely why the 2025 repeal of the WEP and GPO was significant for members of both systems.
Health Care Both systems offer retiree health care, but the structure and funding differ meaningfully. STRS has faced significant controversy in recent years over benefit cuts to health care coverage and cost-of-living adjustments, leading to trustee elections and ongoing reform efforts. OPERS has generally been more stable on this front.
Cost-of-Living Adjustments STRS suspended its COLA entirely for a period and has been working to restore it amid sustained member pressure. OPERS has maintained its COLA structure, providing either a flat 3% or a CPI-W based adjustment depending on when the member retired.
Investment Options Most career STRS members are in the Defined Benefit Plan, which has no member-directed investment option. However, STRS does offer a Defined Contribution Plan and Combined Plan that include investment choice for members who selected them early in their careers.
Retirement Eligibility Age and service requirements differ between the two systems and are further broken down by membership tier within each. If you have worked in both a teaching role and another public sector position, the reciprocity agreements between OPERS and STRS may allow you to combine service credit across systems for eligibility and benefit purposes.
Reach out to us to schedule a conversation
At Ville Wealth Management, we believe Ohio educators deserve the same quality of comprehensive financial planning as anyone else, and that planning well for an STRS Ohio retirement requires specific, current knowledge, not just general financial advice.
If you are an STRS Ohio member, a retiree, or someone approaching retirement from a career in education, we'd welcome the opportunity to walk through where you stand and what decisions are in front of you.
This article is provided by Ville Wealth Management for informational purposes only and does not constitute legal, tax, or investment advice. STRS Ohio benefit provisions, COLA decisions, and health care coverage are subject to change. Social Security information reflects provisions as of the publication date. Please consult a qualified financial, tax, or legal professional before acting on any information contained in this article.
Ville Wealth Management is a Registered Investment Adviser in the state of Ohio. Advisory services are only offered to clients or prospective clients where Ville Wealth Management and its representatives are properly registered or exempt from registration. “Likes” should not be considered a positive reflection of the investment advisory services offered by Ville Wealth Management. Brian Jaros is an investment adviser representative of Ville Wealth Management. The firm is a registered investment adviser and only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The information presented on this post is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Comments should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell the investments mentioned. A professional adviser should be consulted before implementing any of the strategies discussed. Investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. All investment strategies can result in profit or loss.
