life stage: Late Career

 

Planning for your retirement can be challenging.

How can compound interest work in your favor? What role do time and principal play in your savings? What investment vehicle and strategy is right for you?

You’d advise any student struggling with a complex subject to engage a tutor, so why not take your OWN advice?! Getting the help of an experienced financial advisor can be vital to reaching your retirement goals. The following are just a few of the ways an experienced professional can help.

 

1. Guidance on how to begin

It can be confusing to know how to take the first step when it comes to retirement planning. Do you know what types of programs, investments, and strategies might help you reach your goals? If not, don’t worry, an advisor can get you started with the basics and guide you through the process.

2. Constructing a plan that’s right for you

Just as every student you teach is unique, your needs for retirement planning are as well. Preparing for retirement is best approached by articulating your specific goals and a plan to achieve them with the help of a knowledgeable advisor. They can help you choose the right investments to meet your objectives. The investment programs available to teachers are unique and differ from most other employees, so guidance from a financial professional experienced in working with educators can be vital.

3. Helping you avoid costly mistakes

When going it alone, the potential for making mistakes is significant and could be expensive. An experienced financial professional can help you avoid these pitfalls, and help ensure you’re making choices that are right for you, and will get you on track toward your retirement goals.

4. Saving you money

It’s simple. Financial professionals have more experience and less emotion when it comes to making tough financial decisions. A study by the financial research firm Financial Engines, showed that those who worked with a financial professional when planning for their retirement had a better experience and felt less stress than those who didn’t.

¹ Source: Financial Engines & Aon Hewitt Find 401(k) Participants Who Use Professional Help Are Better Off Than Those Who Do Not

5. Saving you time

Taking the do-it-yourself approach often involves things like monitoring investments and making adjustments in response to market conditions. This requires time and expertise few people have.
An experienced financial professional can answer questions and help you navigate unexpected life changes, provide steady guidance in a volatile market and make adjustments as your goals and circumstances change.

Yours is a noble profession benefitting the future of our society. It can also be sacrificial and thankless. We get it. It reminds us of a teacher’s story:

A police car with flashing lights pulled me over near the high school where I teach. As the officer asked for my license and registration, my students began to drive past. Some honked their horns, others hooted, and still others stopped to admonish me for speeding.

Finally the officer asked me if I was a teacher at the school, and I told him I was.

I think you’ve paid your debt to society, he concluded with a smile, and left without giving me a ticket.
You’re working hard to improve the future of the next generation, so let an experienced financial professional help you improve yours.

One of the most basic principles of successful long-term investing is to invest as much as you can as soon as you can. For 2020, many of the annual retirement plan contribution limits have increased from their 2019 levels. Limits for 2020 include:

• For individuals under age 50, the maximum contribution to 401(k), 403(b) and 457(b) plans increased to $19,500. For individuals age 50 and older, catch-up contribution to 401(k), 403(b) and governmental 457(b) plans has increased to $6,500.
• The maximum combined employee and employer contribution to 401(k) and 403(b) plans increased to $57,000.
• For individuals under age 50, the maximum contribution to Traditional and Roth IRAs remains at $6,000. For individuals age 50 and older, the additional catch-up to Traditional and Roth IRAs remains at $1,000.
• The 403(b) plan service-based catch-up contributions, available to 403(b) account holders with at least 15 years of service with their current employer, remains at $3,000.¹
• If your employer offers both a 403(b) and a governmental 457(b) plan, then you can contribute up to the combined maximum annual contributions to each plan. This means if you are under age 50, you can contribute up to $19,500 to each plan for a total maximum 2020 contribution of $39,000. If you’re age 50 or older, you can contribute up to $26,000 to both the 403(b) plan and a governmental 457(b) plan for a maximum 2020 contribution of $52,000.

2020 Retirement Plan Contribution Limits
Plan	2020 Limit
401(k), 403(b), 457(b) and SAR-SEP Plans	$19,500
Age 50 & Over Catch-Up for 401(k), 403(b) and Governmental 457(b) Plans 403(b) Service-Based Catch-Up for 15+ years with Employer1	$6,500 $3,000
Roth/Traditional IRA Age 50 & Over Catch-Up	$6,000 $1,000
SIMPLE Plan Elective Deferral Limit Age 50 & Over Catch-Up	$13,500 $3,000
Defined Contribution Maximum Combined Employer and Employee Contribution	$57,000

 

Contribute as Much as You Can, as Soon as You Can

By investing as much as you can as soon as you can, you can take advantage of the power of long-term compound growth. The hypothetical table below illustrates how by contributing just $1,000 more per year you can increase the size of your nest egg over the long term.²

	After 10 Yrs	After 20 Yrs	After 30 Yrs
$10,000 per Year	$139,716	$389,927	$838,017
$11,000 per Year	$153,688	$428,920	$921,818
Savings Increase	$13,972	$38,993	$83,802

 

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1. Up to a $ 15,000-lifetime limit. Other conditions apply.
2. Assumes a 6% average annual growth rate and a single lump sum contribution at the beginning of each year. Actual returns may be higher or lower. Table is for illustration purposes only and is not intended to indicate the past or future performance of any investment options available through the PlanMember Program. This hypothetical illustration does not include sales charges or other expenses.

This communication is not intended to be tax, legal or accounting advice. Issues could exist that can affect the tax treatment of a transaction. Therefore, taxpayers should seek advice from an independent tax, legal or accounting advisor before acting on any information presented. This information cannot be used to avoid tax penalties.