Teachers are on the front lines of our children’s futures, so it’s unsettling to see evidence that their own future is increasingly at risk.
In a frightening 2014 Urban Institute study–The State of Retirement–the think tank issued unflattering report cards across the far majority of America’s state teacher pension plans. In a separate recent survey by National Life Group, some 70% of educators said their state retirement plan would be their primary income source down the road. This makes the results of the Urban Institute study even more important, revealing that many teachers may not realize the shortfall they will have if their teacher’s pension is their only source of retirement income.
Making the Grade: Not
With precision, Urban Institute rated plans based on the the percent of final salary it would replace, how well they reward younger and older workers and how well funded the plans were. All told, not a single state earned an overall A grade from the study, while most states hovered among the mediocre ranks of C-grade territory. Five states plus the District of Columbia received F grades.
In this environment, you can’t blame educators for putting personal finances at the root of their physical and emotional stresses. It even outranked time management challenges and the daily demands of their career, according to National Life’s survey. Newer teachers in particular–most of them Millennials–are especially frazzled. Some 60% revealing that personal finances are their sharpest stress point.
Open the Books. Close the Gaps.
If their future pension income is showing to be subpar, teachers should widen their options. It’s not easy to know, however, where to start and it can be intimidating. On the other hand, influential teachers– the real life changers in our society–typically imbue in their students that you can’t become confident at something without at least attempting it. This is true whether it’s sports, social situations, academia and especially retirement planning. Years of data herald the immutable, positive correlation between cracking open books on the topic and making confident financial decisions toward certain income goals.
That said, with some careful study and well-intended direction, educators can take big strides to make up the shortfall in their pension income. Many already are. In contrast to another honorable profession’s adage “doctors make the worst patients,” educators are incredibly willing to be students themselves in their quest for retirement planning knowledge. In fact, teachers are more likely (31%) to seek the expertise of a financial professional, as opposed to a trusted relative or even the home-grown resources in their own school districts, according to National Life’s survey.
Financial Education Is Fuel for Your Future
When it comes to saving for retirement, the most important things are to start as soon as possible and don’t panic if you haven’t. Because, confidence comes after at least attempting it. The more time you have to save now vs. later, the more confident you’ll be in building a comfortable retirement. If education is power, financial education is fuel for your future.