Think Your Retirement Plan Is Bad? Talk to a Teacher (pensions, financial advisor)
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While the pensions offered public employees are a big plus and give them a leg up over other workers their workplace investment plans 403B often don't. It has often been written about and is getting better but the problem is still significant.
Most Americans who save for retirement at work have 401(k) plans, which are generally offered by companies and must by law provide a mix of prudent investment options. But millions of Americans — public school teachers, clergy members, employees of religious institutions or nonprofits, and some charities — are not offered 401(k)’s. Instead they typically must rely on what are known as 403(b) plans, many of which are more lightly regulated.
Quote:
Named for a section of the tax code, many 403(b) accounts are riddled with complicated, expensive investment products that can cost their owners tens of thousands of dollars, if not more, over their careers. The 403(b) accounts that many workers contribute to are not subject to the more stringent federal rules and consumer protections that apply to 401(k) plans. In fact, of the $879 billion in total 403(b) assets, more than half is not subject to federal retirement plan rules, according to Cerulli Associates, a research firm.
Those assets also escaped tighter protections issued in April by the Obama administration, which will require brokers to put the interests of their customers first when handling retirement dollars.
It is worth remembering that the PBS special on workplace savings plans that was a hot topic here. Pretty much focused on the plans of public employees.
Probably not a good idea for a person with a pension and SS to put their savings into annuities and leave themselves limited retirement liquidity and to do so by paying high fees to insurance companies.
I intentionally mentioned in the opening that public employees with pensions have a leg up so no need for anyone to get panties in a bunch about public pensions. The issue for many is saving a retirement nest egg to provide liquidity in retirement.
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Or local news did a 'Retired Teachers' 5 day report. Most of the interviews were overseas, (Tahiti, Belize, Riviera, Italy, France...) where double income, retiree couple (ex USA teachers) were having to 'get-by' on $120k to $200k pensions and they had full medical.
Or local news did a 'Retired Teachers' 5 day report. Most of the interviews were overseas, (Tahiti, Belize, Riviera, Italy, France...) where double income, retiree couple (ex USA teachers) were having to 'get-by' on $120k to $200k pensions and they had full medical.
I'm sure things are changing!
Again this isn't about their pensions but about their investment portfolios's. 150K income with no savings/liquidity is no panacea.
Teachers have a significant 'step-up' on the 'average USA 401k' owner / manager.
I expect they will not suffer. (Suffered enough during career)
Did you read the article about money lost to fees and limited options? The article is about the quality of programs notvwho had the best retirement. It is about who is making the money off of their contributions and the bang for their dollars contributed
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Yup.... price of admission for a $100k + pension. With that, who needs additional 403 'retirement plan'?
Get out at 20 yrs with your pension, (pre age 50) and roll your little tiny 403 (b) to an IRA and get on with life.
The 401k and 403(b) Ate results of your favorite politicians and their favorite finacial lobbyists. Boondoggle for both. No mention of "Is this good or FAIR to American worker?" As it was intended...
Just.... "will this improve the wealth and life of legislators and fund managers?" If YES, sign here!
Who thought the entire US workforce were excellent "retirement plan managers"
It was a way for GOV and money managers to benefit from inept financial managers who were a product of a failed public edu system. Sounds like a perpetual feedsteam for the beneficiaries And is working out REAL well for THEM.
Initially 401 / 403 / 457 had good intentions (1978). Then the rules started getting tweaked.
Everyone should be prudent, some 401 folks get hammered too.
Again this isn't about their pensions but about their investment portfolios's. 150K income with no savings/liquidity is no panacea.
$150,000 income per year in retirement is no panacea?? How do you figure that? That would be way more than any retiree needs and would be an ultra luxurious very abundant life for most any retiree. Many retirees (if not most) live on a tiny or small fraction of that.
Or local news did a 'Retired Teachers' 5 day report. Most of the interviews were overseas, (Tahiti, Belize, Riviera, Italy, France...) where double income, retiree couple (ex USA teachers) were having to 'get-by' on $120k to $200k pensions and they had full medical.
I'm sure things are changing!
Don't make me get on my high horse again about teachers pensions!! One of the best jobs in the world !!
This article was posted on Bogleheads and is being praised for unveiling this issue as well as garnering much sympathy for the teachers. I would assume that these 403b plans also apply to other state workers who are getting a similar bad deal. I did not care for the way the article focused on single mothers and pictures of handicapped persons - it was not relevant to the article but I suppose that might be the style of the NYT. However three of my relatives are schoolteachers with two being single mothers and one the main breadwinner for a family of five - and none have any interest in or knowledge of investing so they could be easily manipulated by 403b financial advisors. I suppose I'm lucky with my simple, boring TSP - five index funds with very low expense ratios. Nothing to get you rich quick but a good way to just plod along toward retirement.
Note: My niece now makes $46K after ten years of teaching in Texas public schools. Does not pay into social security. It is going to take a heck of a multiplier to get her pension up to $75K.
Or local news did a 'Retired Teachers' 5 day report. Most of the interviews were overseas, (Tahiti, Belize, Riviera, Italy, France...) where double income, retiree couple (ex USA teachers) were having to 'get-by' on $120k to $200k pensions and they had full medical.
I'm sure things are changing!
Really? Who is getting $200K pensions with full medical? Got a cite? Would love to read that.
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