Do I need to contribute to my 403(b) if I have a pension?
This is an excellent question. Because you have a 403(b) and a pension I’ll assume you’re either an educator or another government worker. Either way the answer is the same.
YES, you should contribute to your 403(b)! You’re one of the fortunate people still offered a pension through their employer, but you should still utilize the benefits provided by your 403(b). Here are a few reasons why;
You need to put in the time - Your pension will provide you a nice monthly income in retirement, but only if you continue to work in your occupation long enough to qualify. Things happen, people change, so you never know.
Pensions are a promise from the government but a promise isn’t a guarantee. It’s hard to trust politicians and many people have seen pension benefits cut.
It’s not always a lot - Your pension benefit is likely based on years of service and average salary. If you’re unable to work as long as you want, you’ll have a lower benefit.
Social Security is also a promise - Will the government need to cut your benefits someday? Maybe.
403(b) provides tax deferred growth - When you put money in a 403(b) it grows tax-free until retirement, so it’s a good place to watch your money grow without the government getting in the way.
You own it - A 403(b) is not a promise from the government or anyone else. Whatever you put into it is yours and the benefits can’t be cut by anyone. As with any investment, market fluctuations can change your account balance, but whatever is in there belongs to you.
As I’ve written about before, the key for an educator to afford retirement is to use more than a pension. There are other options such as IRAs, but 403(b)s are an excellent choice. If your employer offers them, start contributing and you’ll be happy you did when retirement comes.
