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After decades of serving others, teachers deserve clarity about their retirement planning options, which often differ from those available to private-sector employees. But many teachers still struggle to understand their retirement plan type, contribution levels, or eligibility age.

In this episode of Money Wisdom, Nicholas J. Colantuono, CFP® and Eric Hogarth, CFP® discuss how teachers can build more flexibility around their retirement income.

Understanding Teacher Pension Benefits

In Connecticut, teachers typically participate in the Connecticut Teachers’ Retirement Board. In Massachusetts, teachers work through the Massachusetts Teachers’ Retirement System. These pension systems provide lifetime retirement income, generally based on years of service and salary history.

Because pension rules can vary and decisions can have lifelong consequences, teachers should review their options carefully. Key considerations include vacation payouts, benefit timing, and whether a single-life or survivor benefit makes sense.

Are you wondering if you’re ready to retire? Get your free Are You Ready to Retire? Starter Kit by texting “KIT” to 800-757-0436.

Using 403(b), 457, IRA, and Roth IRA Accounts

While a pension can create a strong income foundation, it may not provide enough flexibility on its own. Many teachers also have access to 403(b) plans or 457 plans. These plans work similarly to 401(k)s where you make contributions through payroll deductions.

Teachers with earned income may also be able to contribute to a traditional IRA or Roth IRA. Traditional IRA contributions typically offer a tax deduction and tax-deferred growth, while Roth IRA contributions generally offer tax-free growth and withdrawals.

Exploring Social Security Options

In Connecticut and Massachusetts, you do not earn Social Security credits while teaching. However, you may qualify for benefits if you previously held jobs that paid into Social Security. You may also be able to claim benefits based on a spouse’s work record.

Additionally, under the Social Security Fairness Act, certain public employees are now eligible for higher Social Security benefits than previously expected.

Getting Professional Guidance

If you’re like many teachers who have several moving pieces to coordinate, you should not make these decisions alone. A financial professional can help you review your options within the context of your full financial picture and long-term retirement goals.