10 Sep 9 Common Retirement Planning Mistakes Teachers Make
Avoid These Mistakes When Planning Your Teaching Retirement
Because most teachers are offered a pension at the time of retirement, too many people in the profession make the mistake of believing that pension annuities alone will provide enough cash flow for them to retire the way they want.
In this article, our retirement experts at Appreciation Financial detail several mistakes that teachers often make when planning their retirement. We also review strategies to avoid them, along with suggestions to help you reach your retirement goals.
If you are in the teaching profession, call our office today to discuss your retirement investment options or reach out to our team online. There is no obligation, and our pension reviews for teachers are free of charge.
9 Common Mistakes Teachers Make When Planning Retirement
The following are some common mistakes people in the teaching profession make regarding their retirement strategies.
1. Ignoring a Budget
Here is a hard truth: most people end up needing more money during retirement than they originally accounted for.
And to compound the issue, too many teachers are outspending their financial means while they are still working. Credit cards, personal loans, and other debts quickly handcuff your retirement strategies.
And less money in your retirement funds means that you might have to give up some of your retirement dreams.
To help set yourself up for financial success in your retirement years, it is never too late to structure a budget. For help creating a retirement budget, reach out to our experts at Appreciation Financial.
2. Not Understanding Social Security Benefits
A mistake we see teachers make time and again is that they factor social security into their retirement even though they work in a state where they do not pay into the social security system. And when retirement finally arrives, they are shocked to learn that they will not be receiving a social security check each month.
It is imperative to find out if you have been paying into social security. And even if you do qualify for benefits, knowing when to begin accepting them is a big decision. The difference in waiting a few years to begin collecting social security can significantly impact your retirement.
To help, Appreciation Financial offers retirement planning for teachers to review which income streams are available to you at your retirement.
3. Not Creating a Retirement Plan
Everyone eventually will retire. So, creating a retirement plan seems like a given. Unfortunately, far too often, teachers neglect to map a plan for their retirement.
Early in your career, such as in your 20’s and 30’s, is the time to begin planning. But even if you are mid-career, it is never too early to begin thinking about your retirement goals.
4. Not Factoring in Cost-of-Living Adjustments
Many teachers plan on retiring to other cities and states. But what many people fail to do is calculate the cost of living differences at their new location. That is especially true if you are retiring from a small town to a city or a resort location. Expect to pay more for housing, services, and food in these locales.
5. Ignoring Inflation
When you retire, your pension annuity payments will stay the same for the rest of your life. That is why it is essential that you factor inflation into your retirement plans. For example, if inflation spikes after you retire, the money in your retirement funds is worth less and holds less buying power.
6. Not Understanding Your Pension Options
Does your state and school district offer traditional pensions or hybrid options? It is important to understand the available plans so you can choose the best option for you. To understand your options, make sure to schedule a free pension review with Appreciation Financial.
7. Forgetting to Factor Medical Expenses
When you retire, you probably will not have the same medical coverage you did when you were working in the classroom. And because many teachers retire before being eligible for Medicare, that leaves many in a tough spot of having underfunded health insurance.
Make sure to set enough money aside to pay for private insurance until you qualify for Medicare. And consider that you might need to purchase supplemental insurance on top of what Medicare offers.
8. Not Exploring Additional Investment Options
Too many educators believe their pension will provide everything they need for their retirement without exploring additional investment options.
Consider a 403(B) plan. These tax-sheltered annuities are similar to 401(k) plans. With a 403(B), your funds are not taxed until withdrawals are made, and often, your employer will offer an investment match. The plans are easy to manage; you can even have money deducted directly from your paycheck and placed into the account.
9. Trying to Make Complicated Investment Decisions On Your Own
Making investment decisions on your own is risky. Volatility and when to buy, sell, and trade can be confusing, even for people with a deep knowledge of the financial markets. Before blindly making impactful financial decisions, consult with our team at Appreciation Financial. We offer retirement planning for teachers to put you on solid financial footing.
Even if You Have Made Mistakes, It Is not too Late to Right the Financial Ship
It is easy to make financial mistakes. And the truth is, nobody is perfect when it comes to retirement planning. If you have made some of the mistakes we detailed above, do not feel alone.
At Appreciation Financial, we are here to turn mistakes into solutions that will get your retirement plans back on track. Call our office today or reach out online.