5 Things Teachers Need to Consider When Planning for Retirement

As an educator, you have a unique selection of potential income sources to take advantage of when it comes time to retire. From defined-benefit pension plans to defined-contribution retirement plans, you can create a personalized retirement strategy system that prioritizes your goals. By proactively preparing for your future, you can ensure that your finances are secure and you’re able to enjoy a comfortable, dignified lifestyle.

1. Seek Expert Assistance for Efficient Planning: The financial landscape can be complex and challenging to navigate, particularly when considering all the unique conditions applicable to educators. Consulting with an experienced benefits or retirement counselor familiar with your state’s programs allows you to maximize your savings and implement a strategy that suits your needs.

A financial advisor can provide critical insights into your current financial status and provide you with the support you need to reach your long-term objectives. It’s essential to begin thinking about your retirement early so that you’re not scrambling to shift investments and open new accounts. By speaking to a retirement counselor many years before exiting the workforce, you give yourself time to make the moves necessary to ensure a stress-free retirement.

2. Supplement Your Pension: Many educators in the United States have defined-benefit pensions, where both the employer and teacher make contributions. In return, the state guarantees a payout for life upon the teacher’s retirement. Your payout varies depending upon your earnings history, length of service, and other specifics of your plan.

Many educators find that their pension, by itself, is unfortunately insufficient to maintain a comfortable standard of living in retirement. As early as possible in your teaching career, it’s crucial to begin setting aside money to supplement your anticipated pension. By adding additional investments to your retirement portfolio and contributing to options such as defined contribution plans, you can substantially enhance your savings.

3. Contribute to Defined Contribution Plans: If you work full-time for a tax-exempt private school or a public school, you’re likely eligible to participate in at least one employer-sponsored contribution plan. The most common option for teachers is the 403(b) plan. A 403(b) is similar to a 401(k) plan in that you can have money deducted from your paychecks and siphoned into investments that you select. Contributions are generally tax-deductible, though you may have the option to open a Roth 403(b) through your employer if you’d prefer to pay taxes upfront.

Another option you may be eligible for is the 457(b) plan. To qualify for this selection, you must be working for a public school district. Similar to a 403(b) plan, contributions are withdrawn from your salary and your money grows tax-deferred until you remove it. A significant benefit of the 457(b) is that you may begin taking distributions without penalty as soon as you leave your job.

4. Explore Your Social Security Options: Unlike many Americans, your position may exclude you from claiming Social Security retirement benefits. Simply checking your payroll deductions will reveal whether or not you’re paying into Social Security. You may qualify for these retirement benefits if you’ve previously worked in the private sector, but it generally takes at least ten years of work to be eligible for benefits. Depending on your state’s regulations and the program you participate in, you may be able to add Social Security to your bucket of retirement strategies.

5. Consider the Benefits of Working Beyond Retirement: If you’re passionate about your career, you may find it financially and personally rewarding to stay in the workforce after your retirement. Many educators continue to accrue wealth through part-time teaching, work in other professions, or by maintaining their full-time position. It’s safest not to base your financial plan on the assumption that you’ll continue to earn income after retirement. Still, the option to continue working is constantly available for those that wish to pursue it.

Planning for a Comfortable Retirement & Secure Financial Future

When you’re just starting your first full-time role as a teacher, retirement may appear to be far off on the horizon. However, if you begin planning early alongside an experienced retirement professional, you’ll find yourself prepared to exit the workforce with minimal stress when the day comes. Our experts at GLP Financial Group are prepared to walk with you through every step of your financial journey, so get in touch with us today to schedule your free initial consultation!