Your Investments
Working Together
What else can you do to take control of your retirement picture?
Knowing what your income stream will be during retirement can ease some uncertainty.
I help educators and district employees, such as yourself, find the answers to the question that they have about their financial future and help navigate their path toward retirement.
Lets Quickly Dive In..
We know you have a state pension and can calculate your approximate amount that you would get for that depending on which option you choose. Remember there is no cost of living adjustment. What you get today is what you will get 20 years from now. Review the Pension Insights page.
Secondly, you have Social Security and we can find out approximately what full retirement age (FRA) amount is by visiting the social security website (ssa.gov) and looking up your estimated benefit amount. There will be some choices as to when to take your social security between the ages of 62 and 70. Taking it earlier will result in reduction. Taking it later would give you an increased amount.
Social Security does have a cost of living adjustment (COLA), but it really is to keep up with inflation. Simply, if you get $1000 today you will have the same $1000 of buying power every year. Even if your social security gets a COLA increase and its up to $1100, that means it takes $1100 to buy now what $1000 bought when you started getting Social Security. It tries to keep up with the cost of goods. I hope that makes sense.
The two income sources above are ones that you can not really control except to work longer and make more money for the calculations.
The Third type of investment, your personal savings/investments, is the one that you have control over. It could be 403b, 401k, 457, Roth, CDs', IRA etc. There are different personal investment options, and all of them can help you take control of your retirement and allow you to plan your future and retire on your terms.
The goal is to make sure that you are able to fill any income gap that may happen during your retirement. Utilizing, with what I sometimes call, the "Three legs of your retirement stool", Pension, Social Security, and Personal Investment, for achieving a fruitful retirement.
Lets talk a little about the 403b personal investment option. Why? Because, as a school district employee, you have the option of a 403(b) account (some districts may have other options). This investment vehicle allows you to save more for retirement.
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It is pre-tax.
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It has a $20,500 contribution limit per year.
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Over 50 years old, it allows an additional $6,500 contribution per year.
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In some school districts, if you have 15 or more years of service you can add an additional $3000 per year for 5 years.
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Payroll Deducted.
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Allows you to save a lot per year.
Check out 403b Basics for more in depth information.
If you already contribute to a 403b account:
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Great, because you started and can not get that time back
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Review your investment annually, make sure it is working for you and invested the way you want
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Fees - do an analysis to see what you are paying (not sure where to start, contact me)
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Make changes if needed.
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Are you contributing enough to reach the level of financial dream you want.
If you do not have a 403b established:
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Start now - it is never to late or to early to start
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Put your retirement savings first
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Almost everything else can be financed, a car, home, college but retirement can not.
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Discipline through payroll deductions - trouble saving on your own, payroll makes your contributions automatically, easy.
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Tax Deferred (pretax)
CLICK HERE to schedule a discussion about the 403b with me and get your questions answered.
So how do they work together?
Your pension and social security you know you will have an amount that is in all fairness, permanent. No increases.
When you retire you will have a budget to cover your needs and wants. The income from your pension and social security may or may not cover all of your financial obligations.
If those two income streams cover
your expenses when you first retire,
they may not in the future due to no
real cost of living adjustments,
inflation, cost of goods and services
increasing over the years. Basically
your on a fixed income and
expenses are gradually increasing
over the years.
If those two income stream do not
cover your expenses when you retire then you may have to make adjustments that you may or may not be comfortable with. And, of course, over time expenses will increase.
Your third income stream, personal investment, is the one that helps fill in that income to expense gap. It becomes versatile, depending on your situation. Whether you need it immediately when you retire or will need it gradually over time to keep up with rising costs. Maybe you retire before you can collect Social Security. Another option with your personal investments (403b) is that you use it in combination with the Pension and provide time to maximize other sources of income.
All three of these income streams, your pension, your social security and your personal investments (403b, IRA, etc), play an important role in your retirement goals. Knowing how they work in your retirement goal may be another question.
So now, you may be asking yourself, "Am I using all the tools available in an effective way to help me be prepared for retirement?"
That question is best answered after a meeting, discussing your personal situation and creating a financial picture so you see where you are today and understand the path of where you want to go.
Schedule your Appointment.
Get the clarity about retirement
that you deserve.