- 1 best retirement plans for teachers
- 1.1 Retirement Wishes For Teachers
- 1.2 The Best Teacher Retirement Plan
- 1.3 Best retirement plans for teachers
- 1.4 Welcome to Teachers Benefits and Insurance Services!
- 1.5 The Top Retirement Strategies For Teachers
- 1.6 Don’t Fully Rely on Your Pension
- 1.7 Save and Invest through Tax-Advantaged Retirement Accounts
- 1.8 Will You Work After You Retire from Teaching?
best retirement plans for teachers
Retirement Wishes For Teachers
For many years you’ve devoted yourself to educating children
Now you can look back with pride at all you’ve accomplished
As the time now comes for reminiscing and relaxing
May you look to the future with joy and satisfaction
Congratulations on your upcoming retirement
It’s time to put away the books and clean out the desk
Now you can sleep in late and take time just for yourself
After many years of hard work and dedication to others
You can relax and enjoy the simple things life has to offer
Wishing you a happy and fulfilling retirement
It’s time to say goodbye to students and colleagues
You’ll soon be enjoying life at a quieter and slower pace
There will be more time to spend with family and friends
And so to a fantastic teacher, I wish you only the best
Congratulations on your retirement and many years of service
It’s a time to look back on all the years in the classroom
It’s also a time to look forward and plan for the future
As a successful and rewarding career is now winding down
I offer congratulations and best wishes on your retirement
You’ll forever remain in the hearts of the children you’ve touched
You’ve given of your time and talents in so many different ways
May you relish the many memories you’ve created over the years
While enjoying each moment in your life and the many days to come
I’m wishing you every happiness in your much deserved retirement
You’ve worked hard helping children for so many years
You’ve earned the admiration and respect of your colleagues
It’s time to look back with satisfaction and pride
Wherever you may go and whatever you may decide to do
I’m wishing you a wonderful and relaxing retirement
Your dedication to improving young lives has been inspiring
You will always be remembered as a caring and energetic teacher
As you plan for the future and move on to many new experiences
I’m hoping you have a long and prosperous retirement
It’s so amazing how fast all these years have come and gone
The impact you have had on many young lives is immeasurable
And now, as you step into a new and exciting phase of your life
May the memories of your years in the classroom always go with you
May they remind you of students and colleagues you hold dear
It is now time to enter into the next stage of your life
Here’s wishing you a happy retirement and many wonderful years
No more lesson plans to make or late nights grading papers
No more parent-teacher conferences or long staff meetings
The best part of teaching is touching the hearts of students
And that will remain with you for the rest of your life
Happy retirement and congratulations on a successful career
Your retirement is a celebration not just for all the years put in the classroom
But for every child you helped along the way and the knowledge that was imparted
It’s for the patience and dedication that made a difference in the lives of others
Congratulations to someone who has had such a positive impact on so many children
As you step into the future and look back over the past
All the lives you’ve touched, all the children you’ve changed
They will remain a part of you for the rest of your life
So congratulations on a great career and a life well spent
Wishing you much happiness and relaxation in your retirement
The Best Teacher Retirement Plan
As a teacher, planning for retirement can be complicated, especially if you have many options to choose from. Depending on the state in which you live, you may be eligible to contribute to state pension plans and other retirement plans including 403b and 401k. When investing, consider these options carefully and take into consideration your lifestyle and future plans.
A 403b retirement plan allows teachers to contribute to a retirement account without having to pay taxes on monies deposited. This is known as a tax-deferred retirement plan. Teachers will only pay taxes when taking money out of the account, usually after they retire.
Within this retirement plan, employers provide teachers with investment options that include mutual funds and annuities (variable, fixed, or equity indexed).
Mutual funds are groups of small investors that gather their money together and invest it in a variety of ways. Some mutual funds buy certain types of stock, while others invest in specific industries or businesses. You may be able to choose from a list of mutual fund stock options.
Annuities are purchased through insurance companies. Depending on your contract with an insurance company, you agree to invest a certain amount of money and receive that money plus interest in monthly payments upon your retirement (similar to a savings account).
Research your investment options before signing up for a 403b retirement plan. Consult a financial adviser to learn more about the types of mutual funds and annuities available.
As with any type of financial investment, consider the risks.
A 401k is a defined contribution plan, which means that you determine the percentage of your salary to contribute each pay period. Under this plan, the money you invest may not be what you end up with depending on the risk level of your investments.
Most 401k plans allow you to invest in mutual funds, money market accounts, stock, and other investments. Creating a diverse investment portfolio is expected when investing in a 401k plan.
Teachers may be offered a 401k plan instead of a the 403b retirement plan or they may be offered both so they have more options.
Under the 401k plan, your employer may match your contribution to increase your overall investment. Taxes are deferred until you start taking money out of your account.
Many states also offer pension plans to teachers. Under these plans, a certain amount of money will be witheld from your paycheck and kept in an account. Over time, this money will accrue interest.
When you retire, you will begin receiving monthly pension checks from the account.
State pension plans vary in benefits from state to state. Most teachers have the option to participate in state pension plans and in other retirement plans.
Contact the human resources department in your school district to learn more about state pension plans.
Best retirement plans for teachers
Teachers normally become absorbed into educational systems and have long and prosperous careers in the classroom. Yet, like everyone else, teachers do have to plan for retirement. This takes thought as well as advice from financial professionals and prior planning. The following article addresses the subject of successful planning for teacher retirement.
Rule Number One: Know Your Life Expectancy
It is not a subject that most people care to think about, but mortality is a fact and for purposes of retirement planning, it is an important one. There are life expectancy tables available online, so learn the average life expectancy and begin to think about how much money you will need for retirement based upon those numbers conservatively.
Rule Number Two: Research Your State's Retirement Website
Each individual state is different, and as such, you will need to fully acquaint yourself with the rules and resources that you are entitled to access. Do not listen to those from another state system. Do the research for yourself about what is available to you from your state's retirement system website. There is no substitute for the time that you put in there, learning and absorbing the information that is put there for your benefit.
Rule Number Three: Consider Lifestyle
It is important to remember that not all people have the same lifestyle. In other words, some people like to live with more of what could be considered luxuries, and others prefer a quieter, more basic lifestyle. Therefore, during retirement planning, lifestyle must be taken into account. What kind of lifestyle do you want to have after retirement? Will there be traveling involved, or will it be more of a closer to home type of retirement? These are the types of questions that must be considered and planned for, not left to hoping, wishing and chance. A solid plan that is made in conjunction with a professional is what is necessary.
Rule Number Four:
Take Advantage of Automatic Deductions Many teachers have become wealthy over the courses of their career by merely taking advantage of the teacher option to have automatic deductions into the retirement account. It is better if everything is set up as an automatic deduction, because then it will be sure to happen and not be reliant upon the writing of a check. If teachers never see the money, then they will never be tempted to spend it instead of putting it into the retirement account. Automatic deductions are the wisest way to go for setting up retirement accounts for teachers.
Some Possibilities for Retirement Plans:
Social Security eligibility
When it comes to retirement, there are many factors that go into a good retirement plan. Naturally, it is important to know such basic information as life expectancy, your state's retirement website and some possibilities for retirement plans. Retirement planning requires careful consideration and consultations with a trained advisor, in order to produce a workable plan. Fortunately, a teacher's career is plenty of time to produce enough income to provide a good retirement income. All it takes to have a good retirement is dedication, research, and persistence toward a diligent plan.
Welcome to Teachers Benefits and Insurance Services!
We have practical experience in retirement planning and investments. Before talking about particular investment program for your retirement program, it is essential that some sort of arrangement be made first. This doesn’t need to be a long, mind boggling and costly process; truth be told, we give free consultation. All things considered, certain inquiries should be replied, such as:
- When is it time to retire
- How much are you financially
- Solving “How Much” Shortfalls: Last minute strategies to boost retirement income ready to retire
- Bonus pre-retirement ideas to consider
- How aggressive should you be with your investment/savings?
Initial planning is needed to answer these questions; otherwise, proper decisions cannot be made regarding your savings and investment plans.
We work with almost all types of retirement and investment plans:
- 403(b), 457, Roth 403(b), Roth IRA etc.
- Student loan forgiveness (No charge)
- Life insurance bids from 100 different companies.
- STRS projections.
- How to save for college
- Disability insurance half price of Colonial, NTA, AFLAC for healthy individuals.
A 403(b) plan is a U.S. tax-advantaged retirement savings plan available for public education organizations, some non-profit employers (only Internal Revenue Code 501(c)(3) organizations), cooperative hospital service organizations, and self-employed ministers in the United States. It has tax treatment similar to a 401(k) plan, especially after
the Economic Growth and Tax Relief Reconciliation Act of 2001.
Employee salary deferrals into a 403(b) plan are made before income tax is paid and allowed to grow tax-deferred until the money is taxed as income when withdrawn from the plan.
403(b) plans are also referred to as a tax-sheltered annuity although since 1974 they no longer are restricted to an annuity form and participants can also invest in mutual funds.
A Roth IRA (Individual Retirement Arrangement) is a retirement plan under US law that is generally not taxed, provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. The Roth IRA’s principal difference from most other tax advantaged retirement plans is that, rather than granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement.
A Roth IRA can be an individual retirement account containing investments in securities, usually common stocks and bonds, often through mutual funds (although other investments, including derivatives, notes, certificates of deposit, and real estate are possible). A Roth IRA can also be an individual retirement annuity, which is an annuity contract or an endowment contract purchased from a life insurance company. As with all IRAs, the Internal Revenue Service mandates specific eligibility and filing status requirements. A Roth IRA’s main advantages are its tax structure and the additional flexibility that this tax structure provides. Also, there are fewer restrictions on the investments that can be made in the plan than many other tax advantaged plans, and this adds somewhat to the popularity, though the investment options available depend on the trustee (or the place where the plan is established).
Differences from a traditional IRA
In contrast to a traditional IRA, contributions to a Roth IRA are not tax-deductible. Withdrawals are tax-free under certain conditions (for example, if the withdrawal is only on the principal portion of the account, or if the owner is at least 59½ years old). A Roth IRA has fewer withdrawal restrictions than traditional IRAs. Transactions inside a Roth IRA (including capital gains, dividends, and interest) do not incur a current tax liability.
Life insurance (or life assurance, especially in the Commonwealth), is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses (such as funeral expenses) can also be included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Life-based contracts tend to fall into two major categories:
- Protection policies – designed to provide a benefit, typically a lump sum payment, in the event of specified event. A common form of a protection policy design is term insurance.
- Investment policies – where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the U.S.) are whole life, universal life, and variable lifepolicies.
The person responsible for making payments for a policy is the policy owner, while the insured is the person whose death will trigger payment of the death benefit. The owner and insured may or may not be the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe’s life, she is the owner and he is the insured. The policy owner is the guarantor and he will be the person to pay for the policy. The insured is a participant in the contract, but not necessarily a party to it.
The beneficiary receives policy proceeds upon the insured person’s death. The owner designates the beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation. If a policy has an irrevocable beneficiary, any beneficiary changes, policy assignments, or cash value borrowing would require the agreement of the original beneficiary.
In cases where the policy owner is not the insured (also referred to as the celui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an insurable interest in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The insurable interest requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).
The Top Retirement Strategies For Teachers
As a teacher, you are in a unique situation when it comes to retirement planning. You may be eligible for a pension plan, and how much that pension will be worth depends on your years of service, ending salary and a percentage established by your employer. Depending on whether you teach for a public school or nonprofit private school, you’ll also typically have access to defined contribution plans like 403(b) and 457(b) plans. In addition, some teachers pay into the Social Security system and will be eligible for Social Security benefits when they retire, while others don’t participate. Because of all these variables, each teacher’s situation is different, but here are some general strategies teachers should consider when planning for retirement. (For more, see Retirement Planning Basics.)
You might be an expert in chemistry, history or teaching kids how to read, but you might not know a lot about retirement planning. Consulting an expert can get you up to speed. There are financial planning firms that specialize in helping teachers plan for retirement. There are also plenty of competent, fee-only financial advisors who don’t specialize in teachers’ retirement but who are still familiar enough with their situations to provide valuable advice. (For more, see Fee-Only Financial Advisors: What You Need to Know.) Make sure to choose an adviser who is a fiduciary, meaning that they’re required to act in your best interests. (For related reading, see What you Need to Know about the Fiduciary Standard.)
Also take advantage of any free help that might be available to you, such as state retirement counselors or state benefits counselors, your state teachers association website and your state teachers retirement system website. “I would counsel teachers to start speaking to a retirement counselor from the state five years before your retirement date,” says Jeaninne Escallier Kato, a retired California public school teacher. She paid into the California State Teachers Retirement System (CalSTRS) for 36 years and now collects 85% of her former pay, an extra $400 per month for three years’ worth of unused sick leave, and an extra stipend called “longevity pay.” She says talking to a retirement counselor helped her plan the formula that would work best for her. “Many teachers wait until the last months of their tenure, then find out they didn't work to the best of their pay options.” It’s important to learn how your state teachers retirement system works and how to maximize your pension and other retirement benefits.
Don’t Fully Rely on Your Pension
Even if you are eligible for a pension and work to maximize it, your pension may not be enough for you to maintain the standard of living you’re used to. As early in your career as possible, start balancing out your expected pension with defined contribution plans and insurance. You’ll want to use many of the same tools and strategies that a private sector employee would, such as opening a Roth IRA or traditional IRA for tax-advantaged retirement savings, buying term life insurance to protect anyone who relies on your income and securing long-term disability income insurance to protect your income and your ability to save for retirement. If you receive life or disability insurance as an employment benefit, make sure you have enough coverage, and if not, supplement it with a private policy.
Save and Invest through Tax-Advantaged Retirement Accounts
If you work full-time for a public school or a tax-exempt private school, you should be eligible to contribute to a 403(b) plan. A regular 403(b) lets you contribute pretax dollars from your salary and lets you put that money into investments you choose among the options offered by the plan. Contributions grow tax-deferred, and you pay tax on plan withdrawals in retirement. If you’d prefer to pay taxes on the money now instead of when you retire, and if your employer offers the option, you can contribute to a Roth 403(b) instead. Your employer can also make matching contributions to your plan.
“These 403(b) accounts are crucial to the process for a lot of teachers because many districts do not pay into Social Security anymore,” says Wyatt Moerdyk, managing member, Evidence Advisors Investment Management in Boerne, Texas. “Teachers forget to add the 403(b) savings that will supplement their teacher pension.”
If you work for a public school district, you may be able to save pretax dollars for retirement using a 457(b) plan. If you work for a private school that is classified as a tax-exempt organization, you may not have access to a 457(b) unless you are a highly compensated employee; those are the federal government’s rules. Your 457(b) contributions come directly out of your salary and your investments grow tax deferred.
The maximum you can contribute to each of these plans for 2016 is $18,000, plus a catch-up contribution of up to $6,000 if you’re 50 or older. And with a 457(b), when you’re three years away from the plan’s stated retirement age, instead of catch-up contributions, you can opt to start saving the lesser of either twice the annual limit or the sum of the current year’s limit and any unused portions of previous years’ contribution limits.
A downside of 457(b) plans is that employers usually don’t provide matching contributions – your employer is already providing a pension, after all. But there’s an upside: when you leave your job, you can start taking distributions from your 457(b) without penalty, even if you haven’t reached retirement age. If you’re considering early retirement, or early partial retirement, a 457(b) can help you fund that goal.
Here’s another perk: Participating in a 457(b) plan doesn’t exclude you from contributing up to the maximum to a 403(b). If you maxed out your contributions to both a 457(b) and a 403(b) in 2016, you’d be putting away a whopping $36,000. If you’re older, you can save even more. Whether you participate in a 403(b), 457(b) or both, make sure you understand the fees associated with both the plan itself and the investments offered within the plan before you contribute.
Setting aside whether Social Security will still be solvent when you retire (see Social Security Depletion: Is the Fear Justified?), many teachers are simply not eligible for Social Security benefits because, as noted above, they don’t pay Social Security taxes. It’s important to understand whether the retirement program you participate in makes you eligible or not and to be aware that asking your coworker for retirement advice might mean getting information that applies to his or her situation but not to yours.
In California, for example, teachers who participate in CalSTRS do not pay into Social Security; they pay into the CalSTRS fund instead. But teachers who participate in the California Public Employees Retirement System (CALPERS) do pay into Social Security.
If your spouse pays Social Security taxes, you might be eligible for spousal Social Security benefits, but these benefits might be reduced because of your pension under government pension offset rules. “Many teachers rely on spousal Social Security benefits, only to find out later that they are dramatically reduced by the GPO rules,” says Moerdyk. You can also qualify if you’ve worked in the private sector, but it typically takes at least 10 years of private-sector work to earn enough credits to qualify for Social Security.
Will You Work After You Retire from Teaching?
Not everyone wants to or can afford to quit working after retiring from a full-time career in teaching. If you expect to teach part time, work in another profession part time or start an encore career, think about how that income might influence how much you need to save and how much investment risk you need to take today.
That being said, we aren’t always able to work when we’re older; we might have to take care of our aging parents, or we might find that our own health is less than stellar. To be conservative, your financial plan should not rest on the assumption that you’ll continue to earn income from work after you retire from teaching full time. If you do want to work, make sure you understand how continuing to work will affect your retirement benefits. Certain job choices will reduce your benefits, depending on your retirement plan’s rules.
Planning for retirement when you’re a teacher isn’t easy, especially if you work for a public school. You face considerations that private-sector employees don’t, such as when to retire to maximize your benefits and how to select part-time or post-retirement work that doesn’t reduce your retirement benefits from teaching. On top of that, it probably seems like there’s less advice out there for you – retirement articles and books are usually geared toward private-sector employees, not public school or nonprofit private school teachers. Your retirement is just as important as anyone else’s, but your unique circumstances mean you’ll need to do extra work to make sure your retirement is secure.