A Teacher’s Guide to Retiring [3 Common Mistakes to Avoid]

As an educator in the United States, you’re eligible for an unusual mix of potential income sources in retirement. You’re eligible for a benefit-defined pension plan. On top of that, you are also eligible for a defined contribution retirement plan, regardless if you teach in a public school or non-profit private school.

However, it’s easy to miscalculate planning for your retirement without knowing the common mistakes to avoid. Although challenging, here are common mistakes to avoid while planning for retirement.

Failure to Save Beyond the Pension

The majority of teachers in the United States have defined-benefit pensions, to which both the employee and their employer make contributions monthly. It provides a secure, guaranteed payout for life upon retirement. Although most retirees entirely depend on their pension to survive after retiring, it’s a different story for teachers and educators.

Pension plan payouts for teachers depend on the teacher’s length of service, earnings history, and other plan specifics. Although it sounds promising, pension coverage is generally far short for most teachers to sustain their needs after retirement

In 2016, the average annual pension for newly-retired teachers was only around $20,000 in most states. Annuities are only beneficial for teachers who spent their whole lives teaching compared to short-change and medium-term teachers. 

It’s not good for the retirement plans for teachers starting late in life. However, teachers can save up beyond their pension contributions by investing in other saving plans. They can apply for an Individual Retirement Account (IRA) or a 403(b) Plan.

Underestimating the 403(b) Plan

Besides the defined benefit pensions for teachers, they are also eligible to sign up for a defined contribution plan which aims to supplement their pension payouts during retirement. The 403(b) plan is a retirement benefit program that deducts a certain amount of money from monthly paychecks to put into investments chosen by the applicant.

The monthly contributions are tax-deductible, and the investments are tax-deferred. The tax is only applicable during withdrawal or by the time the applicant retires. However, if you prefer to pay taxes now instead of when you retire, you can also contribute to a Roth 403(b) Plan. Remember that the 403(b) Plan is an excellent option for teachers, but the investment choices can be limited or expensive.

Not Knowing Social Security Options

Surprisingly, 40 percent of public school teachers aren’t covered by Social Security. In 15 states, some educators do not participate in Social Security. In effect, most employees fail to get any of the linked benefits. Texas leads the states with the lowest Social Security participation rate, where 96 percent of the districts do not pay into Social Security.

Non-participation in Social Security contributions can be a significant issue for employees to fund their retirement. It’s essential to check your monthly paycheck to ensure that you contribute to it regularly. The best deal is to contribute at least 10 percent of your salary to the contributions as it will also supplement your pension for a more comfortable retirement.


Retiring from the workforce should be a time to relax and enjoy life to the fullest. Knowing your rights and options to secure a stable retirement is a must to ensure that everything goes according to plan.

Retirement planning for teachers can be confusing. But My State Pension is here to help. Get a free retirement planning session with the country’s experts in state employee and educator retirement planning. Schedule your free session right now on our website.

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If you are a K-12 educator or staff, collegiate educator or staff, municipal or state employee we can connect you with a licensed financial professional with the experience needed to help you understand your pension benefits and overall retirement plan.