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  • Writer's pictureLeyder "Aiden" Murillo, MBA

Teachers' Retirement Planning: The Importance of Starting Early

Updated: Sep 13, 2023

As an educator it is important to start early and often a pension is not enough. Learn more with Wolfpack Wealth Management

As a wealth management advisor (also known as a financial advisor) at Wolfpack Wealth Management, I know that retirement planning is a top priority for many teachers, especially those in California and Colorado.

While many teachers have pensions, it is essential to note that just having this pension may not fully support their retirement goals. Starting early and creating a comprehensive retirement plan is crucial for teachers to ensure a comfortable and secure future.

You may think, "I have a pension plan through my employer, so I don't need to worry about retirement planning." Unfortunately, while a pension plan can be valuable, you may need more to cover all your retirement expenses. A 2019 study found a small group of long-serving veteran teachers with adequate retirement benefits. As a result, many teachers must supplement their pensions with other retirement savings plans. For example, pensions in California, California State Teachers' Retirement System (CalSTRS), & Colorado, Public Employees' Retirement Association (PERA), are defined benefit plans. Defined benefits plans are determined by a formula based on a member's years of service and salary rather than the amount of money contributed to the plan.

The "secret sauce" to retirement is starting early with your retirement planning. The importance of starting early cannot be overstated. The power of financial compounding can significantly affect the money you'll have available during retirement. One of the key benefits of starting early with retirement planning is the power of financial compounding. Financial compounding is the process of earning interest on interest over time. The earlier you start saving and investing, the more time your money has to compound and grow.

For example, if a 25-year-old teacher starts saving around $385 per month into a retirement account with a 7% annual return, by the time they reach 65, they will have accumulated about $1 million. However, if that same teacher waits until 45 to start saving, they would only have earned around $200,000 by the time they reach 65. As you can see, starting early can make a significant difference in the money you will have available for retirement.

Another advantage of starting early with retirement planning is that it allows teachers to take advantage of employer-sponsored retirement plans such as 403(b) or 457 plans. These plans often have employer-matching contributions, which can significantly increase the money you have saved for retirement. Starting early also allows teachers to take advantage of tax savings options, such as traditional IRAs and Roth IRAs, which can help them save more money for retirement.

For another example, look at these two charts showing how using a 403(b) while starting early, plus the power of financial compounding can help you reach your retirement goals much quicker.

You can download the PDF by clicking on either image to view these charts in greater detail.

Despite the benefits of starting early, many teachers may need help knowing where to begin with their retirement planning. That is where Wolfpack Wealth Management comes in. We provide accessible wealth management services to teachers and educators like you, helping you create a thorough retirement plan that meets your unique needs and goals. We deeply understand teachers' financial challenges and are committed to helping you achieve your educator retirement goals. We always tell our teacher and educator clients that having more options is better than having no options. This also includes your retirement bucket.

In conclusion, early retirement planning is crucial for teachers to ensure a comfortable and secure future. The power of financial compounding and employer-sponsored retirement plans can significantly increase the money you have saved for retirement. Contact Wolfpack Wealth Management today if you are a teacher in California or Colorado and want to create a thorough retirement plan. We will work with you to create a plan that meets your unique needs and goals. Take control of your retirement today!

P.S.: We serve teachers in Los Angeles, California & Denver, Colorado, surrounding areas, and nationwide too, so if you're a teacher in these areas and looking for retirement planning guidance, we're here to help!


Ready to take control of your financial future? Schedule your free financial assessment and discover how working with a wealth management advisor is accessible and helpful in reaching your financial goals. Start building the future and wealth you deserve.

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