Specializing in Teachers Retirement

Traditionally, educators are taught to use a 403(b) as a tax-advantaged retirement savings plan. Is this still the best option in the 20th century? Some advantages and disadvantages of using a 403(b) plan are:

Advantages:

1. Tax benefits: Contributions made to a 403(b) TSA plan are tax-deferred, meaning they reduce the employee's taxable income in the year they are made. Additionally, the earnings on the contributions grow tax-free until withdrawal, and taxes are only paid when withdrawals are made in retirement.
2. Investment options: 403(b) TSA plans typically offer a range of investment options, including mutual funds, annuities, and other investment vehicles, providing flexibility to employees to choose investments that align with their risk tolerance and financial goals. 

Disadvantages:

1. Limited access to funds: Unlike other retirement accounts 403(b) TSA plans may have restrictions on when employees can withdraw funds, limiting access to the money invested.
2. Potentially High fees: Market investment 403(b) TSA plans charge high fees, which can eat into the returns of the investment over time. It is important for employees to review the plan's fees and investment options before contributing.
3. TSA is tax -deferred, however, tax trends have historically increased and this trend is more true today than ever. Paying taxes today will actually save you money rather than waiting till the year you retire.  
4.  Yes, you can lose any amount of money if entered in market, but with an annuities you are protected (zero floor limit). Your investments can fluctuate with the rise and fall of the stock market. You may want to consider your risk tolerance between market and annuities before you invest and adjust your investment accordingly. 

Overall, a TSA plan can be a valuable tool for retirement savings, but employees should carefully review the plan's investment options, fees, and restrictions before contributing. 

Speak to one of our Licensed Advisors to better understand your situation.

A whopping 52% of teachers say their pension and 403(b), 457(b) TSA may not be enough to comfortably survive retirement. Every educator’s situation is different, which is why speaking with a licensed advisor can help you understand your options, protect your income, and build a stronger retirement plan.

• Your pension is a strong foundation, but it may not cover everything 
• TSA plans alone may not provide enough retirement income 
• Unexpected family care costs can impact retirement savings 
• Debt such as credit cards or student loans can create financial pressure 
• Poor investment returns or bad timing can hurt retirement plans 
• Inflation can reduce your buying power over time 
• Understanding your CalSTRS benefits is important for long-term planning 
• A licensed advisor can help review your pension, TSA, and additional income options 
• Plan today so you can retire with more confidence, security, and peace of mind

Federal pensions can provide a strong retirement foundation, but for many retirees, they may not be enough on their own. Whether you are under CSRS, FERS, Social Security, or TSP, speaking with a licensed advisor can help you review your income, understand your options, and build a stronger retirement strategy.

• FERS includes a basic pension, Social Security, and TSP 
• CSRS provides a traditional defined pension benefit 
• Pension income is often based on years of service and salary history 
• TSP and other savings may be needed to fill retirement income gaps 
• Cost-of-living increases may help, but inflation can still reduce buying power 
• Pensions can provide lifetime income, but may not cover every expense 
• A licensed advisor can help review your pension, TSP, and additional income options 
• Ask our specialists about strategies to create more retirement security and peace of mind