As you begin your work, retirement may not seem to be a pressing problem. However, the majority of professional educators will never own a larger financial asset than their retirement payout. Thankfully, most educators recruited now are protected by pensions, which, once you retire, give you a small lifetime income. Pensions can guarantee your spouse a lifetime of income.
- Pensions offer great security for retirement. Contrary to 401k plans, which give no guaranteed benefits and are leaving too many Americans facing a retirement crisis, traditional pension plans offer retired workers a consistent income stream that is guaranteed for life.
- Pensions are beneficial for both schools and children. Maintaining seasoned teachers in the classroom enhances education and provides youngsters with secure settings. Pensions make perfect sense for public education since they aid in employee retention. For example, a study of California’s public schools revealed that “A large majority of teachers who survive the first few years of teaching, stay until at least early retirement age.”
- Teachers favour pensions! Some states give teachers the option of choosing between pensions and 401k-style plans. After reading the fine print, educators decide on pensions!
- Employees have no control over how their pension is invested, as a result may be at risk. In addition pensions only cover roughly 40%-50% of their full-time income.
Pensions are a terrific asset because they increase interest in teaching careers and help keep excellent instructors in the classroom. With so many states currently experiencing a teacher shortage, this is particularly crucial today.
However, even though the prospect of a pension income does tend to give retirees a sense of security as they approach retirement, there are some disadvantages in that pensions aren’t meant to cover a full-time salary after retirement. This leaves educators unaware of the options available to them.
Here is a prime example of how your pension can be out of your control: California Retirement System affected by Russia & Ukraine conflict.
Please get in touch with us if you need assistance weighing the benefits and drawbacks for your particular situation.
