All over the country public school teachers and many others in public service work will have less money for retirement than others because the retirement plans they are offered are more costly than a 401(k).
Americans who receive a 401(k) through their employers are normally given a few different investment options from which to choose. Those options are normally low cost and relatively easy to understand.
However, many public school teachers are not given a 401(k) investment account. Instead, they are offered lightly regulated 403(b) accounts.
These accounts require teachers to sort through a large amount of investment options that can be very costly and difficult to understand. Many are steered into variable annuities that have high annual fees and harsh penalties from withdrawing from the plan.
This was the subject of a New York Times article titled "Think Your Retirement Plan Is Bad? Talk to a Teacher."
While most public school teachers also have pension plans, those plans are not always as good as the general public assumes. Teachers often do not work long enough in the field to receive full benefits and in many states they are not eligible for Social Security benefits. That means they must rely on their individual retirement accounts.
Teachers and others with 403(b) plans should seek the advice of financial planners for help in understanding their rights and how they can use their retirement accounts to their best advantage.
Reference: New York Times (Oct. 21, 2016) "Think Your Retirement Plan Is Bad? Talk to a Teacher."
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