403b Account?

Discussion in 'General Education' started by YoungTeacherGuy, Jan 4, 2018.

  1. YoungTeacherGuy

    YoungTeacherGuy Phenom

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    So...I turn 36 next month and will be wrapping up year #12 (yikes!) in my district. Whew. Time has flown by so incredibly fast.

    Anyway, I finally decided to open up a 403(b) account! My CalSTRS (California State Teachers' Retirement System) account may or may not be enough to live on once I'm ready to throw in the towel, so I figured I'll need a supplemental pot of $ to dip into.

    Has anyone else opened up an account such as an IRA or 403b? Just curious.
     
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  3. miss-m

    miss-m Devotee

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    Yup! I opened one last year when our building financial advisor person came to visit. I was able to contribute quite a bit per month, too, since my monthly expenses were fairly low. I’m not so lucky this year because I’m in a different position (making less for now) and my rent is higher, but it should pick back up next year when I transition back into a salaried position.

    Our state has a retirement system as well, but I doubt the 6% contribution is enough to hold me over when I retire, even though that’s still a long way off (almost 40 more years).
     
  4. gr3teacher

    gr3teacher Phenom

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    I'm going to open it up when I move into administration (hopefully 2-3 years).
     
  5. teacherintexas

    teacherintexas Maven

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    I have a 403b. It’s pretty painless savings.

    I did hear of something better than 403b that I want to start next year but I can’t remember the number/letter combination at this minute. It’s in paperwork at school.
     
  6. readingrules12

    readingrules12 Aficionado

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    A Roth IRA is better as all the $$ is tax free. 403b is good, but $$$ is tax deferred--good but not as good. Unless you get a match on the 403b (then the free $$$ makes it worth it), I'd go with the ROTH.
     
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  7. futuremathsprof

    futuremathsprof Phenom

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    I opened up a Roth IRA when I turned 24. It currently has $10,000 in it and will have over $1,000,000 once I reach retirement age. If I withdraw the recommended 4% each year I will never touch the principal and have $40,000/year in income along with my other investments.
     
  8. jadorelafrance

    jadorelafrance Cohort

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    How much do you contribute per paycheck?

    I want to open one in the next couple of years. I currently am contributing to a 403b but want to have a tax-free withdrawal option.
     
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  9. TeacherNY

    TeacherNY Phenom

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    I work in a private school so we have a 403b which my employer contributes to. I also put $$ per paycheck. Right now I put in only 3% of my paycheck I think but eventually I will increase it. There's a really helpful guy who comes to our school a few times a year to help us if we want information or to change something with our account.
     
  10. Zelda~*

    Zelda~* Devotee

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    Love my 403b. Money is taken out of my pay before taxes. My employer does not contribute, I had no idea that was even a thing, lol.
     
  11. MsMar

    MsMar Fanatic

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    I have a 403b and have been contributing for a while. Hubby has a 401k with a small employer added contribution.
     
  12. NewTeacher2016

    NewTeacher2016 Companion

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    .
     
    Last edited: Jun 27, 2018
  13. nklauste

    nklauste Comrade

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    I have a 403b and have since my first year teaching. I always contribute what my employer will match. My first year was about $25/month, second year (different school) was $80/month, years 3-5 no match (so I didn't contribute), and now last year and this year have had matches of $900-$950/year. I figure at least I'll have a bit more than the TRA that Minnesota has for teachers currently.
     
  14. TrademarkTer

    TrademarkTer Groupie

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    I contribute 600 per month. Unfortunately no match here : (. I am up to around 34-35,000 and growing, which is a nice little extra stash. I might lower my contribution soon though, and switch some into a Roth starting next year.
     
  15. NewTeacher2016

    NewTeacher2016 Companion

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    .
     
    Last edited: Jun 27, 2018
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  16. Tyler B.

    Tyler B. Groupie

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    Fund your Roth to the max first. When you pull money out of the Roth at retirement, it comes out tax free, so when you withdraw a dollar, you pay no taxes on that dollar. Put your Roth into Index Funds or ETFs to get the lowest fees. I use Vanguard Funds.

    Fund your 403b to the max after you make sure your Roth is funded, but when you pull a dollar out, you'll pay 40 cents in taxes (in my state), but it's still a screaming deal.

    To find a good 403b plan, look at expenses. Some come loaded with fees to contribute, fees to manage, and even fees to withdraw. These fees can cause you a huge loss. My current 403b contributions go to a Custodial 403b and into a super low fee Index 500 fund.

    This is a topic all teachers should study, especially if your state has a shaky or non-existent pension fund.
     
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  17. futuremathsprof

    futuremathsprof Phenom

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    I recommend you contribute $5,500/12 or $458.33/month if you have a 12-month contract or $5,500/10 or $550/month if you are paid on a 10-month contract.
     
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  18. allaphoristic

    allaphoristic Companion

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    I've had a Roth IRA since I graduated college. I contribute 10% of my income in addition to my CalSTRS.
     
  19. YoungTeacherGuy

    YoungTeacherGuy Phenom

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    I knew this thread would stir up great conversation! Y’all are among the smartest people I know (yet interestingly enough, I’ve never met a single one of you)! ;)
     
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  20. Rockguykev

    Rockguykev Connoisseur

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    My 403b has the worst returns of any investment I've ever made. I made more in a market index fund in a year than I've made in any of the 10 in my 403b.
     
  21. futuremathsprof

    futuremathsprof Phenom

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    Yeah, don’t go with Valic and other investment firms with high fees. You’ve lost quite a bit in retirement over those 10 years...
     
  22. readingrules12

    readingrules12 Aficionado

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    This is why it is so important to get some professional help with these funds. Most schools or districts usually have someone who can help with this.Now most 403bs have a lot of options which wasn't the case many years ago. In my 403b, I have had have index funds that perform as well or better than the market.

    Good point on the subject of fees by another poster. Fees can be quite high, but not always.
     
  23. Tyler B.

    Tyler B. Groupie

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    In my experience, "professional help" has meant a high pressure salesperson trying to get me to buy high fee financial instruments. The best financial help would come from a fee only financial advisor where you pay for the advice.

    The union had an inexpereinced advisor who urged me to put my money into insurance company annuities - probably the hightest fee "investment" of all. Plus, an annuity is a tax shelter, but in a 403b, which is already a tax shelter, it makes no sense. Avoid annunities.

    An index fund could never beat the market since it is the market.
     
  24. whizkid

    whizkid Devotee

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    Yea, but it's beating a bank or fixed income return. Lol
     
  25. whizkid

    whizkid Devotee

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    I opened a Roth with Vanguard my first year of teaching and plan on contributing much more than I've done in past years. I plan on drawing at least three checks in retirement: pension, Roth and SS. I also plan on saving more this year. I'm thinking about selling the shares in my brokerage account and dumping the proceeds into my Roth since I don't study individual companies anymore.
     
  26. whizkid

    whizkid Devotee

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    In the age of the Internet and lightning fast information, there's no need.
     
  27. Janedo5513

    Janedo5513 Rookie

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    I started a 403b at an young age and wasn't getting a great return. Ironically, it was my employer who matched any funds that the employee puts in up to a certain figure (401k). I was with them for five years and was able to roll it over into a Roth. I am still contributing to that Roth to this day. Great return and the company has great customer service.
     
  28. jadorelafrance

    jadorelafrance Cohort

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    What company?
     
  29. Janedo5513

    Janedo5513 Rookie

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    403b was TIAA CREF and now I am with Fidelity
     
  30. readingrules12

    readingrules12 Aficionado

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    Fidelity is good. Vanguard is also good.
     
  31. FourSquare

    FourSquare Fanatic

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    I opened a Roth IRA on Wealthfront, maxed out the risk level, and just let the robo-advisor do its thing. I've only put $4200 into it, but it's currently sitting at $5407. Not bad for not having to actually do anything. Much better return than letting that money sit in the bank. I've done anything from $30 payments to $300 payments. I'm looking to deposit more regularly this year. I won't get anything from Social Security, so I'll need something if the pension system implodes. :eek:
     
  32. Tyler B.

    Tyler B. Groupie

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    I would agree with this. Teachers should view managing their finances as a part-time job for which they are very well compensated. Many teachers view financial management as an onerous chore that should be avoided.

    We need to study up on our choices and the benefits and disadvantages of each choice and make a plan. This is literally worth a million dollars.
     
  33. cupcakequeen

    cupcakequeen Comrade

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    Just curious, for those of you who do have some type of pension plan, what's it like? Here in NC we don't have the best pay, but we have a surprisingly decent and pretty well funded (over 90% I believe) pension plan. I've heard horror stories about pensions in other states, though.
     
  34. John Lee

    John Lee Groupie

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    The question is: what to do after you've studied? I'm with an insurance company (not an investment company, apparently a no-no), and I've learned that there are fees that need to be fleshed out. When I go to my company and ask those questions, assuming the answers aren't positive for me, what is the alternative? Can I move my contributions to another company?

    I've read that, to make a 403b work, you need district matching. Otherwise, there are better options out there.
     
  35. Tyler B.

    Tyler B. Groupie

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    Being with an insurance company is not a no-no. You are off and running. Many of your colleagues haven't even started the race yet, so you should feel good about what you are doing.

    The 403b is a wonderful investment device. When you put $100 dollars into one, it reduces your taxable income, so the IRS views you as having made less money, so you save some money on taxes. That $100 might save you $40 on taxes, so you are really making a lot on your contributions.

    If you are not happy with what the insurance company offers you, you can check with the district office to see what alternatives they offer. If one of them is to go with a low cost company like Vanguard, then switch your contributions over there.

    Another alternative is to roll your 403b account to an IRA in some place like Vanguard. You need to check and see if your current account has "surrender fees" and act so you avoid those. Also, you need to contact Vanguard (or whatever new company you decide to go with) and get instructions about how to roll the account over to an IRA. Whatever you do, don't have your current company send you a check. This would trigger a taxable event.
     
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  36. John Lee

    John Lee Groupie

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    Is this a situation where consulting a financial advisor would be worthwhile? I'm considering one anyway, but I'm confused about how to put my "knowledge" into action. I only know not to go with an insurance company after the fact, but currently still contribute via them. I've only recently become more knowledgeable, but how to apply it? Is still unknown to me. So I do have the idea of consulting an advisor, to help me set myself up to start. I'm reluctant with that too though, because it isn't like I have a ton of money in any case.
     
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  37. Tyler B.

    Tyler B. Groupie

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    It will be a ton of money when you retire. One place to look for a fee-only financial advisor is this company. They will probably charge you by the hour. It's painful to pay for advice, but the "free" advice that salespeople give you is unreliable. If your advisor is offering to sell you something, get a second opinion.
     

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