Teachers are among the most valuable members of society, yet the average educator makes around twenty percent less than other professionals with the same education and experience. This makes it even more important for individuals in this field to pursue other investment opportunities to help secure their retirement funds.
A lot of teachers are actually switching careers to have higher wages, but this makes them ineligible for their pension. So, whether you are a young teacher looking to secure your financial future or planning to dial back on your academic career for other financial opportunities, it may be wise to start figuring out your investment plan.
Reach Out to Your Benefits Administrator
The first thing you should do is talk to your benefits administrator to check for certain retirement options that are uniquely available to your field. They can sort out whether you are eligible or not. This includes your 403b, which is a tax-deferred retirement savings account, and your 457b, which is a similar account but offered to state employees.
For either the 403b or 457b, you can get annuities or mutual funds. Your administrator can help you to figure out which plans work best for you.
Check If You Belong to a State Teacher Retirement System State
Certain states don’t provide their teachers with social security. This means teachers don’t pay those taxes, but they also don’t receive any of the benefits. Instead, they have state pension plans under STRS. This system is only really beneficial if you plan to teach for the remainder of your career (upwards of two decades). This should give you a good idea of where you are in terms of financial security.
Review Your Pension Fund Formula
If you’ve already been working for a few years, it’s a good idea to see how your pension plan is being managed. Younger teachers often get the most issues because of mismanagement, so you’ll want to make sure you review everything and check what tier you fall under. This will provide you with a sense of how much you can expect out of your pension.
Start Your Savings Fund Now
This is especially important if you’re not sure whether you might continue teaching. As important as it is to look into active investments, you also want a secure fund to store your finances. You should always have a pool you can rely on.
There are numerous high-yield savings accounts available that can give you up to twenty times more than the national average interest rate.
Lower Your Debt Burden
Debt relief for teachers may seem like an overwhelming challenge, but it’s best to start working on major debts now so they don’t trim down your savings later on. It can also give you more room to look into riskier investments if you aren’t overloaded with other payables. There are numerous programs available to educators, like the Public Service Loan Forgiveness Program and the Teacher Loan Forgiveness Program.
The best way to save for retirement is by being smart with your financial plan and not relying solely on your pension. These tips are a great starting point for a young teacher looking to save money, but there are more steps that can be taken.
If you want to consider higher-yield investments, it’s generally a good idea to consider the risk first and go for these while you’re young. Even if your retirement is a long time from now, you should be creating a beneficial system that can help your financial independence.
My State Pension is dedicated to helping today’s valuable workers maximize their benefits and retire with peace of mind. We specialize in retirement planning for educators and government employees. Reach out to us for a free retirement planning session.