403b retirement for teachers. Fixed return or stocks, bonds??help (spouse, federal)
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I would suggest checking with a no-load mutual fund company such as T Rowe Price or Vanguard for an IRA. And invest for the long haul, don't worry about short term fluctuations. Reballance semi-annualy.
I have both fidelity and an ira with vanguard. Vanguard has great funds.
i like windsor 1 and 2 also wellington, and the growth index fund. i picked magellan with fidelity which i think is now closed. however they do have alot of other funds.
at 30 i would go with growth for the long term, rather than fixed. even with an ira you can invest in stocks which pay dividends as verizon and AT&T.
I contribute to a 403b, we do not have a 401k. This contribution earns a guaranteed fixed rate of 3.5% and quarterly an extra 2%. I was told by the woman that handles my account that I should stay in this because retirement is important and teachers tend to not have a lot of assets. I am in my mid 30's. I contacted a free financial planner through my work and they suggest considering my age to invest this money in a variable account. They asked me a series of risk-tolerance questions. I came out to be considered moderately risk. They suggested 50% bonds fixed, 25% large cap, 6% small cap, 19%International stocks, 7% something else which I am not sure.
So now I am not sure what to do? I do not have a lot of money and I work very hard to put this money into the 403B. I am not even sure if I changed it to a variable, if I should be moderately risk. I answer the questions but was not even sure if I answered the questions right.
please help.
I can also switch my defined pension benefit plan from a fixed amount when I retire or I can switch to their investment plan.
Teachers are the victims of collusion between unions and insurance companies. There are a number of articles and law suits related to. Please use the attached link as a great educational tool for teachers.
This contribution earns a guaranteed fixed rate of 3.5% and quarterly an extra 2%. I was told by the woman that handles my account that I should stay in this because retirement is important
Look at how food prices have gone up from the start of the year. There has been at least 10% inflation since then. I've seen reports of some foods going up 25% in price since the start of the year. A 3.5% rate is absolutely nothing, and TPTB will want you to pay taxes on that, even though you are losing value on your investments with time.
Prices going up means the dollar is declining in value. The dollar will continue to decline until it's worth nothing. The monetary policies of this country are making this path inevitable. The secondary mortgage market has failed. The stock market has several times been in danger of crashing over the last several months. A major online bank failed just a few days ago. There have been runs on banks such as Countrywide and Washington Mutual. A major bank failed in Germany. The issue is not only in the U.S., but worldwide, because of the policies of the World Banking system, the IMF, the IRS and the Fed.
Just so you know what is happening.
The best thing you can do is to become knowledgeable about your investments. As the dollar declines, causing inflation because it takes more dollars to purchase the same value of items, this strangely could result in a depression. This is because there would be more money available, but people would not have it in possession. Everything would cost more to purchase, but people would not have the funds. If and when the dollar fails, this means banks would close and would fail. Insured up to $100,000? Have valuables in safe deposit boxes? Good luck. Not only this but most people's investments are just numbers on a page, certainly not represented by gold in a vault. And nowadays it's likely those numbers are not even represented by paper money that was printed by the Fed and thus such numbers could be wiped out in an instant.
If this happens, and it's likely, what will you do then?
The key is being prepared. Have some assets that are available to you, regardless the actions of TPTB. If you have land in the country, a well, grow some food, and have some cash or coins for trade and barter then you are ahead of the game. But be careful about cash on hand, because TPTB and police are confiscating cash from people both in their homes and in cars. So it is best to keep only so much in one place.
As to funds, I have been doing this a long time and feel 100% that it's better to take control of your assets. I had some in a mutual fund that I transferred to a self directed IRA and it took the mutual fund a MONTH to complete the transfer. Previously I transferred funds from a 403B and it took them TWO MONTHS to transfer MY funds. And institutions are getting very tight about money. It's better to do this now than WTSHTF. If and when everything closes down then transfers could become impossible. At such a time I'd rather have such things under as much of my control as possible, if they don't just disappear, and making your own preparations where you live, just in case.
Summing this up in regards to investments, this is why I have chosen a self directed IRA, and chose to not leave any funds at all in any kind of mutual fund or other account where the control would be up to someone else and not me. The great thing is you have many MORE choices when you have control of your funds. You can still invest in mutual funds, stocks, and many other things without having to go through a one to two month ordeal plus begging for someone else's PERMISSION to use and transfer your own funds.
My husband & I both taught ; we live in a state where we had to pay into FICA, our district paid into our pension and we could give a certain % to our 403(b)s and also into Roth IRAs. our state does NOT deduct from our pension or from Soc. Sec. based on the other; lots of states do w/public pensions.(Find out!)
Both of us put as much as we could into mutual fund 403(b)s as soon as our kids were old enough that we quit saving every penny for college -- it went to all different funds -- spread out mostly conservative to moderate risk. We have a few which were high risk. [We change with the market.] We did NOT do a guaranteed % like you indicated ( here that is only w/purchase of an annuity or whole life insurance). We kept our traditional pension (defined benefit); personally, I think the other is too chancy. I wanted to keep my money separate from my pension. We also have Roth IRAs ( you are probably eligible to get one).
My advice? Ask questions. if the return isn't what you want, change the representative/company. Invest as much as you can; if you have direct deduction, use it. You won't be tempted to spend it elsewhere. You can always get into a Money Fund and it is basically fairly stable, so are long term bonds. If you are in your 30s, you have a way to go to build your 403(b)s.
[We had 2 kids; we didn't have big salaries, we really got involeved w/the saving in our late 30s.... we retired in our 50s, when the pension kicked in. We are living on one and have yet to touch a penny of the retirement money. It's all in your budgeting.]
Last edited by BuffaloTransplant; 10-09-2007 at 09:52 PM..
Reason: add
I spent a great deal of time talking with a financial advisor when choosing between a 401k or a 403b. I don't understand why anyone would choose a 403b unless their spouse was putting huge amounts into a 401k. Since a teacher's pension is not taxable, then it make a lot more sense to have that money taxed when you withdraw it (and have 0 taxable income), then to pay the taxes now when you are more than likely not in that lowest tax bracket. The only reason I could see to have a 403b would be if you expect to have a higher taxable income in retirement that you do now - very rare, correct?
I spent a great deal of time talking with a financial advisor when choosing between a 401k or a 403b. I don't understand why anyone would choose a 403b unless their spouse was putting huge amounts into a 401k. Since a teacher's pension is not taxable, then it make a lot more sense to have that money taxed when you withdraw it (and have 0 taxable income), then to pay the taxes now when you are more than likely not in that lowest tax bracket. The only reason I could see to have a 403b would be if you expect to have a higher taxable income in retirement that you do now - very rare, correct?
403B is the Non Profit entity Version of a 401K. Teachers would have a 403B as long as other government workers.
I contribute to a 403b, we do not have a 401k. This contribution earns a guaranteed fixed rate of 3.5% and quarterly an extra 2%. I was told by the woman that handles my account that I should stay in this because retirement is important and teachers tend to not have a lot of assets. I am in my mid 30's. I contacted a free financial planner through my work and they suggest considering my age to invest this money in a variable account. They asked me a series of risk-tolerance questions. I came out to be considered moderately risk. They suggested 50% bonds fixed, 25% large cap, 6% small cap, 19%International stocks, 7% something else which I am not sure.
So now I am not sure what to do? I do not have a lot of money and I work very hard to put this money into the 403B. I am not even sure if I changed it to a variable, if I should be moderately risk. I answer the questions but was not even sure if I answered the questions right.
please help.
I can also switch my defined pension benefit plan from a fixed amount when I retire or I can switch to their investment plan.
I work for a firm called keystone state capital that offers a fixed 10% annually. The firms located in philadelphia and has been open 14 quarters. If your not sure about going with stocks, bonds, mutual funds, etc or something fixed and safe this is a fantastic solution. You wont make 200% in a quarter like you may with a stock but you wont lose your shirt the next quarter either. You can email me at ashaffer@keystonestatecapital.com if you have any questions or want more information on the fund.
When it comes to retirement i would go with something fixed and safe even if it's with a different firm. Some hedge funds are returning huge rates of return up to 170% annually but i question the future performance of these funds.
let me tell you about my two buddies joe and steve... both were teachers and recently retired .. joe decided to let things ride in the equities choice... steve on the other hand had no interest in really investing. he chose fixed income and always figured what the heck we all earn about he same thing when we work we will all retire about the same too.
well 30 years later joe retired with 1.2 million and steve had 196,000
needless to say joe is very happy retired and steve has a part time job now
I work for a firm called keystone state capital that offers a fixed 10% annually. The firms located in philadelphia and has been open 14 quarters. If your not sure about going with stocks, bonds, mutual funds, etc or something fixed and safe this is a fantastic solution. You wont make 200% in a quarter like you may with a stock but you wont lose your shirt the next quarter either. You can email me at ashaffer@keystonestatecapital.com if you have any questions or want more information on the fund.
When it comes to retirement i would go with something fixed and safe even if it's with a different firm. Some hedge funds are returning huge rates of return up to 170% annually but i question the future performance of these funds.
that 10% is a withdrawl rate including your principal, its not 10% interest, dont get confused here folks..also becareful the industry rate depending on age which is important is about 6-7% so any claim of 10% withdrawl with no age question needs careful scrutiny of every detail.... i have not checked out the details of this company so i cant comment on this plan.....
it usually works where you give them a lump sum of money and for the next 10 years or so depending on the withdrawl rate they basically give you back your own money with no interest... if you die they keep it all... at 7% after you exhaust getting back your own money after 10 years or so your getting your first real return on their dime and effectivly are running on their money.... 100,000 lump sum in this case gives you about 7,000.00 a year .. after 10 years you get your first 7,0000 on their dime , which by the way is the interest they earned on your own money as they slowly gave it back to you the last 10- years....thats an interest rate of about .007% a year so far.. when you die say good bye to all you paid in. you can buy options not to forfeit it all when you die but your payment is reduced defeating the extra withdrawl rate the annuity gives you.
immeadiate annuties are not a bad thing overall ,just dont be mis-led as to what the 10% claim means. the immeadiate annuity is the opposite of life insurance, its living insurance.... life insurance the company bets you will live, annuties they bet you will die. but if you live you dont have to worry about out living your money if you live to long.
typically a retiree can pull about 4% a year withdrawl rate from their own investments assuming a 7% average return on a 50/50 mix and 3% inflation and have a 95% chance of not running out of money...
an annuity gives you more than 4% allowing you more money a month to live on with out fear of running out of money if you live long enough.... you cant achieve that withdrawl rate on your own because the insurance company has something you dont. they have a big pile of dead people who forfeited their money and so some goes in the payment pool and some go to the insurance company as profit.
again im not saying immeadiate annuities are bad, they have their place in my opinion for no more than 25% of your assets for those that dont care about leaving anything to heirs and want more money each month to live on.
just fully understand the claims and wording used...
by the way my hats off to the fellow from keystone.... notice how he did say 10% and left it at that,... he didnt say 10% interest or annual return but a better way would be to have said 10% withdrawl rate...i bet a lot of people took it to mean 10% interest un-knowingly
ps please dont tell my mom im an annuties salesman, she thinks im a piano player in a brothel... ha ha ha
Last edited by mathjak107; 03-17-2009 at 03:29 AM..
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It is your 403 B wise and don't trust your union
Cheers.
