How to Supplement Your Pension with a 403b Plan

How to Supplement Your Pension with a 403b Plan

Educators are given many advantages when it comes to preparing for retirement. 

As a teacher, you will have a pension plan set up that will provide you with income payments for the rest of your life. Although these pension plans are great, they may be only a starting point for many, as they may not cover all your expenses. 

To ensure that you are financially prepared for retirement, and not “keeping all of your retirement eggs in one basket,” you may consider investing in a 403(b)-retirement plan with National Educational Services.

The 403(b) Plan

As you probably know by now, there are many options when it comes to selecting a retirement investment plan. One of these specific options available for educators is the 403(b) plan.

The 403(b) plan for educators provides tax-deferred savings, which can be compared to the 401(k) plan that is offered to those who work in the private sector. 

The 403(b) plan for teachers is an optional plan that is offered by many school districts across the country, and it provides supplemental income to your pension, which allows you to better prepare for your retirement. Although your pension plan provided to you as an educator is great, it, unfortunately, may not cover all of your expenses in your life of retirement.

Understanding the 403(b) Plan

In a similar fashion to the 401(k)-retirement plan, the 403(b) allows you to invest money that is pretax through payroll deductions. You are then offered a variety of investment opportunities and your money will be given the opportunity to grow throughout the course of your career, tax-deferred until retirement. 

Additionally, your contributions to your 403(b) plan can allow your federal income taxes withheld on each paycheck to reduce as well as your annual taxable income. 

For the year 2021, you are able to contribute a maximum amount of $19,500 of your salary. If you are over the age of 50, you are able to contribute an additional $6,500. Finally, if you have been employed at your school district for over 15 years, you may also be eligible for additional contributions.

With the 403(b) plan, you are able to start small when it comes to your individual contributions. You are able to increase your contributions over time, so if you do not have $19,500 to contribute your first year, that is okay. 

With a 403(b) plan, you are given the option to diversify your investments, which is essential to address the impacts of the market changes. Not all investments react the same to different market conditions, so diversifying your investments will allow you to create a unique financial plan. 

The Annuity Option

Depending on your specific 403(b) plan, you may also have the option to have an annuity, which can provide you with additional benefits. If your specific plan has the annuity option, you will have a guaranteed amount of income for the rest of your life or for a specific period of time.

Additionally, you will be provided with family protection through a death benefit. Finally, you will be given additional options for professional investment management. 

Preparing For Your Future with Help from National Educational Services

The first step to investing in a 403(b) is to determine if your specific district offers the option to invest in the plan. 

Contact an advisor at National Educational Services today to get the process started. Fill out the form below, and we will be in touch with you soon.

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