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:
Disadvantages:
Overall, a 403(b) 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 whooping 68% of teachers say their pensions and 403(b) TSA just isn't enough to survive retirement. So, what can I do? Speak with one of our Licensed Advisors. Each of our lives differ from one another so understanding yours is crucial.
Here are the top four reasons in order:
Your state recognizes the importance of planning for a successful retirement and is dedicated to providing the highest quality service necessary to assist members in achieving their goals. Your state pension benefits, when combined with other income, are designed to provide you with the basis for financial security during your retirement years.
Let’s take a closer look at the eligibility requirements, options and benefits of your state pension plan.
Retirement Plan First and foremost, the retirement foundation for district employees is their state retirement system. The California State Teachers Retirement System’s (CalSTRS) primary responsibility is to provide retirement benefits and services to teachers in public schools and community colleges. Having a good understanding of how your state pension works and the benefits it can provide is essential to your retirement well being. The unfunded liability and budget shortfalls in state retirement plans are forcing states to take a hard look at the benefits being offered to plan participants. Be sure to monitor your CalSTRS benefits for any changes. This overview is designed to explain the Retirement System as it applies to most participants.
Go to the CalSTRS website at www.CalSTRS.com for more information.
How the Plan Works CalSTRS benefits are based on your age and years of service under CalSTRS. Eligibility for a full lifetime retirement benefit is based on when you joined CALSTRS:
Your monthly CalSTRS benefit is calculated by:
1. Determining the Age Factor
2. Multiply by total service credit
3. Multiply by Final Average Compensation
4. Divide annual payment by 12 to get monthly payment
The average monthly annuity among civilian federal employees who retired under Civil Service Retirement System (CSRS) in 2018 was $4,973, whereas new Federal Employee Retirement System (FERS) annuitants received an average annuity of $1,834. In short, pensions are a stretch to survive and need another source of income. So, what can I do? Speak with one of our Licensed Advisors so we may better understand your situation.
The FERS is a three-tiered plan made up of: a basic annuity, Social Security, and a tax-deferred retirement savings and investment plan called the Thrift Savings Plan (TSP). The CSRS is a defined benefit, contributory retirement system.
Is government pensions better than a 401K? Though there are pros and cons to both plans, pensions are generally considered better than 401Ks because all the investment and management risk is on your employer, while you are guaranteed a set income for life.
What is a pension from the government? These public pension plans typically provide pensions based on members' years of service and average salary over a specified number of years of employment. Many members also receive cost-of-living adjustments that help maintain the purchasing power of their benefits in retirement.
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