Regardless of where you are at currently in your teaching career, you have most likely thought about your retirement at one point or another.
As an educator, you understand that you will have a teacher pension plan, but what exactly does this mean? Additionally, will this plan provide enough income to live life in retirement the way you want?
Pensions can be very confusing, especially for educators. Although pensions may be confusing, you should not be discouraged from wanting to understand how your pension plan will work and impact your future finances throughout retirement.
Experts at National Educational Services are here to help make sure you understand this difficult path of pensions.
The ABCs of a Pension
Starting with the basics, a pension, sometimes referred to as a defined benefit plan, is a specific type of retirement fund account where your money is saved over time and when you reach retirement, the funds will become available as monthly payments that you will receive for the rest of your life during retirement.
In order to fund this pension plan, a portion of your income is placed in the pension plan in addition to funds coming from your school district. Pension plans tend to be a major source of retirement income for public educators.
How Do You Enroll in a Pension Fund?
The majority of the time, public employees, such as teachers, are automatically enrolled in their school district’s pension fund. Although, pension plans differ all over the country and the specific plan you are enrolled in is going to be specific to your state.
Will My Pension Plan Provide Enough Income for Retirement?
In terms of teacher pensions, there is a lot of information that can be found online, some of which conflicts with other pieces. Additionally, pensions have become a very hot topic in terms of political issues. Due to the current nature of pension plans, there is no true answer to this question, as many facts will impact your teacher pension, such as:
Duration of Teaching Career
The longer you are an educator, the more you will receive from your pension. Additionally, pension plans typically consider your highest salary over a three-to-five-year period. Essentially, if you begin your career as an educator straight out of college, you will typically have a higher pension plan than someone who begins teaching at 30 years old.
State in Which You Teach
Pension plan payments are typically based upon three main factors: the number of years you have been teaching, your ending salary, and your state’s pension multiplier. Because of this, the state that you live and teach in plays a major role in your pension payments.
Savings and Other Investment Options
Whether or not you have other savings and investments set up factors into your specific retirement goals and whether or not your pension will provide you with a stable retirement or not.
Goals for Retirement
Retirement looks different for every individual. Some people are satisfied with having extra time on their hands while others want to travel the world during retirement. These different goals and desires factor into understanding whether or not your pension will be suitable during retirement.
Schedule a Pension Planning Session
Retirement and pension plans are very individualized topics and general advice will not work for many. Contact an insurance agent today at National Educational Services for more personalized information about your pension and retirement as a whole, as it can be a very difficult and confusing topic.