Back to School or Not, It’s Always a Cool Time to Consider How to Save for Retirement

September 6, 2022

By Guest Author Kelsey Kerr – Poet, former adjunct professor, and a second year student at the George Washington University Law School

Back to school is underway, and students and teachers are lining up their pencils and straightening their rulers—gearing up for the year ahead. Particularly at this time of year, teachers are drafting their lesson plans, constructing syllabi, and reading new texts. But those aren’t the only things to be thinking about this time of year, especially for teachers considering new jobs: It’s important to be considering retirement, too.

Being a part-time or full-time professor, also known as an adjunct or contract professor, taught me how difficult it can be to save for retirement as a teacher with few benefits. Some schools offer benefits such as a retirement plan with matching rates, even though the rates often are low. And low salaries can make it difficult to even find the money to meet the matching rate.

At the adjunct level, specifically, some schools may be able to offer health benefits, while others may not. But this isn’t only indicative of issues with teaching and retirement for secondary education; rather, it is common throughout the profession. This is why in all professions, but particularly in fields like teaching, it is vital to look into retirement and healthcare benefits prior to accepting a position.

When it comes to retirement benefits, most states make traditional defined benefit pension plans the default option for teachers. These plans are generally tailored towards teachers who plan to  remain in the same job for their entire career, and make it extremely hard for teachers to move state to state, particularly as these plans often require teachers to stay in the “same profession and work in the same state for the seven or 10 years” for them to vest (in short, meaning to become eligible for benefits).

While pension plans are the most common form of retirement benefits, they can be problematic because young teachers entering the field may see lower pension contribution rates. Second most common among retirement plans for teachers are plans like 401(k)s, 403(b)s, or 457(b)s, which enable teachers to directly save a portion of their salary, tax-exempt, for retirement, and sometimes offer the matching opportunities mentioned above. These plans allow for more flexibility and mobility, as the vesting periods are typically shorter. Least common are hybrid plans, which “incorporate features from both” of these types of plans.

Additionally, while the majority of states allow for contributions to Social Security benefits for teachers, 13 states opt out, and 5 have mixed policies where school districts can choose to opt in or out. This means that teachers may not be able to rely on adequate Social Security as they retire—in fact, 40% won’t—but even if they are, it is important to have retirement plans to supplement Social Security. In general, it’s best to utilize a three-pronged approach, often referred to as the “three-legged stool,” to retirement: personal savings, employer-sponsored plans, and Social Security. Where this is difficult, however, there may be other avenues.

Research shows that the best approach, overall, to retirement for teachers includes the following. If possible, seek a retirement counselor in your state, often provided free of charge by the state Teachers’ Retirement System. It is extremely important for teachers to save on their own, as well. To emphasize this point, the median benefit for teacher retirees in 2019 was $16,404, and as low as $11,400 in Kansas, though it was $53,172 in D.C.

To save on their own, teachers can consider defined contribution plans—savings account plans which may be available through their school. The limits for contributions to these plans can be very high; for example, for 401(k)s, 403(b)s, and 457(b)s, the yearly limit has now increased to $20,500. It is also important to maximize your matching potential, which can easily increase your retirement. For example, if you earn $50,000 a year, and you contribute 6% of your salary to your retirement, where your employer matches up to 3%, you can save a total of $4,500 a year—which quickly adds up. Teachers must also ensure that they are aware of their Social Security options, as mentioned above, because some states/districts opt out of participation.

There are a number of resources for teachers regarding retirement. A great place to start is the National Resource Center on Women and Retirement which has tools and information to help women of all ages, professions, and income levels understand the basics of planning for a financially secure future. In planning for a financially secure future, of utmost importance is awareness through these resources: Teachers need to be aware of all routes that can be taken in preparation for retirement, and must accept a position with eyes open to what benefits are available.

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