FBS Podcast Ep5: Retirement Education for Educators

Retirement may seem far away or even unattainable, but the reality is that it’s important to start saving now to live comfortably once the time comes. Without a retirement plan, you run the risk of running out of money.

Erik NeVille, CEO of Teacher’s Pension, discusses the importance of retirement plans for educators. He created the company because his father, an educator, didn’t know his school district offered retirement plans due to a lack of financial education in his father’s district. Teacher’s Pension offers an educational approach to providing information about financial wellness such as debt management, risk tolerance, Social Security, and much more.

Here are some valuable highlights from the podcast:

What is important about retirement education? (1:45) “It’s important for employees to understand their retirement income gap. What is their gap and what would it take for them to bridge the gap to 90 or 100% of their salary instead of 50-60%? That way they have enough money to carry them through retirement and it covers inflation. Employees don’t have to work until they’re 90, but it starts with education. It’s very important for employees to understand how social security, pension, and beneficiary options work.”

What tools can a person use to measure how they are performing in regard to their retirement savings? (3:37) “Depending on the investment provider you have; they should have educational resources. We have online calculators and assessments, and employers have access to many valuable resources. To see if you’re on track, it’s important to bring your statement to a fiduciary, a financial advisor, that is unbiased and neutral to see if your portfolio matches your risk tolerance. They’ll see if based on historical averages, the portfolio looks like it will bridge that TRS income gap. The fiduciary can help you make some edits and tweaks to your plan.”

How does social security factor into the retirement equation? (5:27) “There’s many states that opt out of Social Security, instead they opt for the TRS system (not together with Social Security). Because the employees don’t contribute to Social Security, that factors in. They assume they have both the TRS pension and Social Security when in reality, they might not get Social Security or might not get enough. This is exactly why employees need to know that they need to supplement with retirement.”

What is the difference between 457(b) and 403(b) plans? (9:30) “403b was designed for nonprofits, churches, and schools. The 457(b) was designed for governmental such as police officers and firefighters. The school district is the only profession that can have both. They work very similarly, but the main difference is with a 457(b) there is no penalty from the IRS for withdrawing your funds before you’re 59.5 years old. You can be 23 years old with a million dollars in there and cash it out without the 10% cash penalty.

What if I’m close to retiring and haven’t saved anything in a retirement plan, is it still worth it? (12:55) “That is one of my favorite questions. It always, always, always makes sense to save whether you have 2 years or 30 years left.”

Check out the podcast for more information on how Teacher’s Pension and FBS can help educate your employees on retirement savings. Check out all our podcasts in one convenient playlist here!

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