They key to affording retirement for educators
Why It’s So Hard for Educators to Retire
Having worked with educators on their retirement planning, I’ve noticed some consistencies in their desire and preparedness for retirement. Most educators reach a point where they’re ready to retire. While there may be some that want to work forever, it’s a career with a lot of stress and many want to call it quits prior to their 65th birthday. Educators are also notoriously underpaid, meaning they have less income to use for retirement preparation. When they want to finally retire, it’s almost always a close call to whether they’ll be able to do it.
Good News Bad News
The good news is that teaching is one of the few professions with a pension benefit. And in many instances, that pension will begin payouts to someone before 65 and even before 60, assuming the person qualifies in terms of years of service. Review your plan closely as retiring early can reduce benefit payouts. Contact your Teacher Retirement System for plan details. Despite having a solid pension benefit available, it’s become clear that pensions alone are not enough. The educators I’ve helped prepare for retirement, and especially early retirement, usually need more than their pension and social security to make it work. The key for an educator to afford retirement at a reasonable age is to understand they need more than a pension and prepare accordingly.
5 Steps to Successfully Prepare for Retirement
When preparing for retirement, the first step is to ensure you’re getting as much out of your pension as possible. Research how many years of service you need, your average salary, and what your benefits would be if you retired at 55, 60, 65, etc…
The next step is to do the same for social security. You may not be eligible as soon as you retire depending on how old you are, but you need to have a good estimate of what your benefit will be when the time comes, and at what age you plan to take benefits.
This is an important one. Find a way to take advantage of other retirement plan options. Many educators have access to a 403(b) plan or something similar that provides a tax-advantaged way to save for retirement. If not, you can open a Roth or Traditional IRA with a reputable financial firm. You can also do both!
Know that a little goes a long way. You will likely have a pension and social security to handle most expenses, so don’t be overwhelmed with the thought of needing to put aside more. You don’t need a million dollars. You need some additional funds you can tap in retirement for a few hundred dollars extra per month or for a major one time expense like a house repair. If you have nothing saved and are near retirement, that’s ok. Start now and you’ll be happy you did.
Don’t forget about medical benefits! Many educators have access to medical benefits when they retire. Be sure you know that you will have those benefits before retiring. Your Teacher Retirement System should have this information available for your review.
Developing a retirement savings strategy outside of your pension will be a decision you won’t regret. Read more about building multiple sources of retirement income and take action. Lastly, I’m confident that in a one hour coaching session, we can make a great retirement plan that you’ll feel good about. To work with me, book an appointment.
