Whether you’re a teacher in your 20s or 60s, you’ve certainly thought about what will happen after you retire. Do you have aspirations of relocating somewhere warm, reading by the beach, or seeing the world? Do you intend to spend your days’ crafts, gardening, or visiting with loved ones? Though it’s enjoyable to daydream about retiring, we must plan if we are to make it a reality. We developed this age-by-age retirement planning checklist for teachers since it’s never too early or late to start.

Teacher retirement planning checklist by age

Public educator often relies mainly on a pension to cover their retirement. However, our pensions typically don’t match our present salaries. Typically, we need to add money to pensions to position ourselves for the optimum quality of life following retirement. An excellent place to start is by using our age-by-age retirement planning checklist for teachers. The next step is working with a qualified financial representative who can assist in developing a unique strategy to close the gap between pension benefits and current pay.

“Just picking a random dollar amount to save each month is not enough,” claims Alex Kocoves, CEO of GLP Financial Group and a specialist who has spent the last 35 years assisting educators in achieving their retirement objectives. Yes, saving more is great, but what matters most is if the amount you save will enable you to achieve your objectives.

Those of you in your 20s…

Life passes so quickly, particularly if you’re a busy teacher. When you’re fresh out of college and enjoying the glory of your first classroom, we know it’s difficult to believe. In actuality, though, the earlier you begin retirement planning, the better. The strength of compounding returns, which means that your money grows quicker and you may not need to put aside as much to attain your objectives, makes your 20s an ideal time to start following this retirement planning checklist.

1. Recognize your district’s retirement advantages 

According to Kocoves, “all retirement systems are unique, and districts frequently don’t give enough information to teach employees about their pension schemes.”

A defined benefit plan or a defined contribution plan are the options provided in some states. A defined contribution plan gives you a lump sum to spend as you see fit after your employment. You receive smaller, recurring payments for the remainder of your life under a defined benefit plan. It’s critical to comprehend the alternatives and deadlines since some districts only offer new instructors 45 days to choose the plan they’ll be required to adhere to during their careers.

2. Understand the distinctions between a 403(b) and 457(b), then decide which is best for you. 

Because you want to control your financial destiny, Kocoves thinks it’s crucial to save on your own. “The more defenses you have in place, the better.”

To achieve your objectives, you must choose the best solution. The 403(b) and 457(b) are two different forms of retirement funds for public educators. Despite their differences, these deferred compensation programs for nonprofits may offer tax benefits since they reduce your taxable income by the number of contributions—the possible tax savings increases in direct proportion to your contribution.

3. Establish your spending and saving goals.

Kocoves suggests that people in their 20s start developing the habit of investing right away and collaborate closely with their financial advisors. According to Kocoves, “I don’t want my customers to merely choose a dollar amount to defer into an account every paycheck.” They must completely comprehend what they are doing and why they are doing it to be informed participants and get their entitlements under the available programs.

Those of you in your 30s…

You’re settling into your teaching job in your 30s. Your classroom probably functions flawlessly. You can be married, have children, or wish to purchase a house. Your debt load may be beginning to increase. It’s simple to feel tempted to stop investing or saving money and spend it on other things. It’s crucial not to give up on your long-term ambitions, though.

1. Continue to grow your nest egg

Maintain your dedication to saving money for retirement. Meet with your financial representative frequently to review your assets and ensure they are on course. Increase your contributions by using your yearly wage rises. Roll over any retirement funds accumulated from prior employment if you are in your 30s and new to teaching.

2. Pay off any high-interest debts, such as college loans.

Don’t let your ability to provide for the future be hindered by student loans. As soon as you can, pay them off. To reduce the deficit, you can think about using presents from family members or tax refunds. Try your hardest to prevent credit card debt, even though it’s more complicated than it seems.

3. Create an unforeseen event plan

You’ve put a lot of effort into planning your investments for the future. It is now necessary to defend them. Consult your financial advisor for information on a Living Benefits plan. These plans include life, disability, and options to aid in helping pay costs like an assisted living or nursing care facility. “Your assets might be gone just like that if you don’t have the insurance against unanticipated circumstances,” warns Kocoves.

Those of you in your 40s…

You’re probably in it for the long haul if you’re in your 40s. You’re certainly a well-respected mentor at your school, and you could have earned additional qualifications or assumed leadership responsibilities, which could result in a pay raise. However, you also save for college while your children develop. You may own a home that requires upkeep. You have a hefty financial load, particularly if you have a family.

1. Continue on route

For your long-term future, resist the urge to transfer funds from your retirement account to pay for other costs. Maintain frequent meetings with your financial adviser, make the planned contributions, and carry out your plan as intended.

2. Take into account the financial hazards you’re prepared to accept.

Things happen, and as you move closer to retirement, plans might occasionally alter, according to Kocoves. But a well-managed strategy has the flexibility to change course. In your 20s, you could have been enthused about the newest investment, but today you might prefer something less spectacular. Your asset allocation should be adjusted to reflect your risk tolerance.

3. If you haven’t already, start saving now—not it’s too late.

Even if you might wish you had begun sooner, you won’t be able to afford to retire until you’ve amassed your nest fund. Therefore, you’ll feel better the sooner you implement a strategy.

If you are above 50,

You already know retirement is attainable if you’ve been utilizing this retirement planning checklist. As a teacher, you’ve put in your time, and you’re beginning to look forward to the home stretch. Your financial obligations are starting to diminish even if your children are now attending college and you still intend to work for a few more years to continue saving for retirement.

1. Begin calculating the numbers.

Schedule frequent meetings with your financial representative to modify your asset allocation and ensure you are on the right road. To align your portfolio with the risks you’re ready to face, switch to more conservative investments. A more cautious approach can be just what you need to provide you with the money you need to last for the long run.

2. Manage your money

Suppose you can pay off any outstanding debt, including loans, credit card balances, and mortgages. Even though you might be tempted to buy a second house or go on that epic journey, ensure your current financial condition can support your aspirations.

3. Use catch-up contributions to your advantage.

After turning 50, several investment programs let you raise your contributions. Once you are three years out from retirement, some companies enable you to work hard. Find out what is feasible by speaking with your financial representative.

A note on retiring early:

The strains of COVID teaching have probably contributed to the considerable increase in instructors considering early retirement this year. Retirement requires preparation and notification of the district.

Kocoves adds, “The first thing you should respond to is, are you eligible?”

The majority of districts employ a scoring system that combines experience and age. Any money accumulated may be kept on hold if you are not eligible until you reach a specific age, such as 60 in Michigan or 62.5 in other states. The majority of districts provide a range of retirement payment alternatives. Teachers often need to decide six months before they officially retire. Additionally, once you’ve made your decision, nothing can change.

If you’re over 60…

That’s it! This retirement celebration will soon be here. Moving from building and safeguarding your money to distributing and conserving it is the game’s name right now.

1. Execute the last numbers.

Check the final distribution figures with your financial representative before you commit. Make the necessary changes or adjustments to ensure that your decisions will give you enough money to last the remainder of your life.

2. Keep an eye on how to save money.

You put a lot of effort into creating your nest egg. The moment has come to safeguard it against being drained by taxes, disabilities, or long-term care expenses.

3. Commence estate planning.

Additionally, now is the time to consider creating trust, a will, and medical directives. This safeguards your assets for the foreseeable future and saves your family the time, money, and hassle of handling your affairs while you are away.

Are you prepared to begin retirement planning?

Reading this financial planning checklist for teachers will help you turn your ideal retirement into reality regardless of your age or stage of your work. You never know what life will throw at you. The following stage is collaborating with a financial representative to develop a unique strategy.

Kocoves claims that everything will be OK if the proper steps are taken with the appropriate parties.

GLP Financial Group information

For over 50 years, the GLP Family of Companies has assisted public school employees and non-profit professionals with their retirement needs. GLP, a complete financial services company made up of six independent businesses, offers customers the professional assistance and all-inclusive solutions they require to prepare for a secure financial future and a comfortable retirement. GLP has offices in Texas and California in addition to its Farmington, Michigan headquarters.