Do you have enough saved to retire? While it can definitely be hard to project 25 or 30 years in advance, that’s exactly what teachers who plan to retire should do. When should you start saving? The sooner you start, the faster your money will grow so try to start as soon as possible.
How much you should save depends on several factors, such as your projected retirement lifestyle, cost of living in your area, and the number of family members you’ll be supporting. Still, 10%-15% is a good rule of thumb or at least a starting point. Here are a few more tips for teachers who wish to start saving money for retirement:
Determine How Much You’ll Need
To determine how much you’ll need in your retirement years, you’ll first have to stop and envision the lifestyle you’ll lead. Will your cars, mortgage, all loans – including student loans – and outstanding debts be paid off by then? If so, you’ll likely be able to live on less money than you’re living on as a teacher. If, however, you plan to travel extensively in your leisure time or have no plans to downsize the home that you may still be paying on, you could actually need more than you need now.
Factor in Your Pension
Thankfully, you won’t have to supply all of your retirement funds on your own. Check with Human Resources or your Office of Public Instruction if you need a better idea of how much your pension will pay out. You’ll be able to deduct that amount from how much you’ll need to put forth yourself. This will help you get an idea of how you should be saving money for retirement, in other areas.
Saving the money is only step one. Step two is determining where you’ll put that money. If your school district offers a 403(b) investment plan, consider using it. You can save over $18,000 on an annual basis using a 403(b) investment account.
Another option is an IRA, though you are capped at saving only $5,500/year. Like the 403(b), you will be penalized if you deduct from an IRA too soon. Finally, look into your school district’s 401(k) option as it may be the most financially wise investment for your situation.
Teachers saving for retirement have many things to take into consideration. As it is, we don’t make much money so squirreling away anything takes a huge effort.
Remember, your own age and the age at which you plan to retire factor in here, too. A teacher in her 20s or 30s doesn’t need to save as much as a teacher in her 40s or 50s who may not have been saving for her whole career.
Or Maybe you were a stay-at-home mom at some point and weren’t able to save as much as you would have liked. Implementing those same frugal habits from being a one income family can help you to meet your retirement goal as well.