There is no set dollar amount that will set you up for a comfortable retirement, but some believe $1 million may be the perfect amount. Is this goal possible for teachers and is it necessary to save this much?
We here at National Educational Services want to make sure you have a comfortable retirement and understand how much you should save for retirement as a teacher.
Determine a Set Amount to Save Each Month for Your Retirement
This is a simple rule that everyone should follow in terms of saving for retirement.
Determining a goal that is reasonable for you based on your monthly income is the perfect way to start. Additionally, looking into various ways that you will be able to grow your money savings is also ideal.
Examine the Idea of Opening a Traditional Individual Retirement Account (IRA) or Roth IRA as an Investment Vehicle
Individual Retirement Accounts, or IRAs, and the Roth IRA are very similar yet the difference between the two lies in how taxes are paid.
With a Roth IRA plan, your withdraws are not taxed in retirement and you are not taxed on the growth of your Roth IRA either. You make contributions from the money that has already been taxed through income taxes so there are no additional taxes. In order to withdraw from this account, it needs to have been open for at least five years and you must meet the age requirement of 59 ½ years.
A traditional IRA is different, as your contributions are tax-deductible. This means you will pay income tax when it comes time for you to withdraw the money from your account.
Know the Details of the 403(B) Before Deciding Whether or Not it is The Best Option for Your Retirement
403(B) retirement plans are great options for teachers who are looking to have supplemental income for their retirement. The 403(B) is a tax-sheltered annuity plan where both the teacher and their employer are able to contribute funds to the account. Understanding the advantages and disadvantages of these plans is essential.
So, How Much Money Do I Need as a Teacher for Retirement?
The answer to this question is very different for everyone. First and foremost, the state in which you live plays a major role in your retirement finances. Your health can also play a big factor in these savings. These factors and more should all be taken into account when deciding how much to save for retirement.
As a Teacher, Do I Really Need to Save That Much?
It really depends on your individual situation. If you qualify for one, your individual pension will most likely provide you with a sufficient amount of income for your retirement. It will be most helpful to determine the average pension amount for teachers in your state as well as the percentage of those who qualify. Any gaps in income could also be covered through social security as well as personal savings and investments.
Reach Out to a Financial Expert for Help
Planning for retirement is not an easy task, but with the help from a financial expert at National Educational Services, this process can be smooth sailing.
Let us help you feel secure in your retirement planning process and contact our office today to get in touch with an advisor that is right for you.