More teachers getting access to better retirement plans

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We talk a good game about how we value our teachers and what they do for our children. But then we as a nation turn around and dis them by giving them some of the worst retirement plans of anybody out there.

In its infinite wisdom, Congress set up inferior retirement plans for teachers called 403(b) plans way back in the 1950s. 403(b) plans come loaded with massive commissions and huge ongoing fees from the insurance companies that push them. Unions and even school districts can be complicit in this colossal rip-off of our country’s teachers via crummy 403(b) plans in some cases.

Now The Wall Street Journal  reports that there’s a big push in some school systems to give teachers access to the kind of good retirement plans like a 401(k) that many people have.

There are couple things I want you to know:

  • If you get new plan info on your 403(b), find out what’s in it. Don’t be intimidated or confused by the verbiage.
  • If you are offered a 403(b) with TIAA-CREF, go with them. They will charge you as little as one-twentieth in junk fees what you pay to a typical insurance company offering a rotten 403(b) plan.
  • For any teacher saving for retirement, their first step should be to do a Roth IRA on their own. You can contribute up to $5,000 annually ($6,000 for those 50 or older). A Roth is a vastly superior thing to crummy 403(b) plans.


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