5 Ways Public School Teachers Can Boost Their Retirement Savings

5 Ways Public School Teachers Can Boost Their Retirement Savings

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From utilizing 403(b) plans to saving from summer jobs, you can accelerate your retirement savings.

Whether you’re just beginning your teaching career or looking for ways to supplement your pension as you near retirement, finding ways to boost your savings is smart. An added cushion of retirement savings can help cover unexpected expenses, offer you the opportunity to retire early or simply give you the resources to do what you want in this next phase of life, from traveling to spending time with your family. Here are five ways that teachers can boost their retirement savings.

1. Take advantage of 403(b) savings plans

Most teachers have access to 403(b) retirement savings plans, which are similar to 401(k)s offered by the private sector. The plans allow you to save pre-tax dollars, which then grow tax-deferred until you draw on them in retirement. The benefits are myriad – you’ll lessen your taxable income in the present, pay fewer taxes on your distributions in retirement as you’ll most likely be in a lower tax bracket and your employer may even offer a savings match. However, before you sign up make sure you understand any fees associated with your plan and investigate whether you can access lower-cost plans or plans with different investment options.

2. Do double savings duty with a 457(b) plan

If you work in a public school district, explore whether you also have access to a 457(b) plan, another retirement saving plan made available to government employees. These plans offer similar benefits to 403(b) plans, saving you pre-tax dollars and tax deferred growth. However, they come with an additional perk – you can make penalty-free withdrawals as soon as you leave your job, regardless of whether you’ve reached official retirement age. If you’re aiming to retire early, saving with a 457(b) can help you fill the gap until you reach 59 1/2, the age at which you can pull money from your 403(b) penalty free.

3. Maximize your pension benefits

If you are eligible for a pension, consider creative ways to make the most it as you near retirement. Teacher retirement systems vary by state, but if your pension is determined by your average salary in your highest earning years, consider boosting your income at the end of your career by working overtime or taking on extra duties, such as coaching. In some states, especially where teachers are in demand, you may be able to retire, draw on your pension and then come back to work full-time or part-time. Doing so can also provide you with added funds to save for use later in your retirement years.

4. Boost savings with a summer job

You work hard all year, and there’s no doubt that you look forward to relaxing during those precious summer months. But saving money you earn through temporary, freelance or even task-based work such as driving for Uber can help accelerate your retirement savings. If you’re older than 50, you can use the additional income to help fund your daily living, and then make additional catch-up, pre-tax contributions to your 403(b) – up to $6,000 annually – from your paycheck during the school year.

5. Consider an encore career for extra income

According to a recent Gallup poll, 40% of 65-year-olds are still working full-time or part-time in some capacity, whether it’s for financial purposes or simply because they want to stay engaged. For teachers, there are a wealth of earnings options that still provide a flexible retirement lifestyle. For instance, you could tutor students in the afternoons, offer lessons in your area of expertise such as music or art, or work at a camp during school breaks. The added income can reduce what you need to draw from your retirement savings in the present and help ensure your nest egg lasts longer.

Your retirement may be decades away or just around the corner. Reach your short and long-term retirement goals by maximizing the savings tools available to you as a teacher and finding creative ways to save even more now.


For more information on tax exempt retirement plans, visit irs.gov