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Dan's Blog

K-12 Benefits Officials Fail This Test 😩

May 5, 2020

Too many K-12 benefits officials get this question wrong.

In retirement which of the following 403(b) balances is optimal?

a) $185,391
b) $241,537
c) $343,474

The overwhelming majority of benefits officials choose letter "a" over the correct answer "c." It's so weird. It's so puzzling. Benefits officials have demanding jobs. Managing healthcare costs alone must be daunting. But why don't they want a bigger 403(b) balance at retirement? Most educators are in the fortunate position of having a pension. But even the best defined benefit plan can't ensure a healthy retirement. The ovewhelming majority of educators are going to need to supplement their pension plan with a 403(b). Unfortunately, the ovewhelming majority of educators only have access to expensive 403(b) plans. 

Typical Vendor List

The typical K-12 vendor list is some combination of expensive agent-sold annuity products (often includes one with the implicit endorsement of a national union), and high-cost mutual fund companies. The products sold in these plans often contain expensive surrender charges lasting years. The worst of which apply a new penalty time period with each monthly contibution.  

Vendor list recently posted on the 403bwise.org Facebook Group

The Math Behind This Question

The math couldn't be simpler. Costs matter. A lot. Benefits officials surely know this. Why don't they add at least one-low cost choice? If not for for themselves, why not for teachers and bus drivers? 

Event: Get Wise to Adding Better 403(b) Vendors

On Wednesday, May 13th at 1pm Pacific 403bwise.org will be hosting a video conference called "Get Wise to Adding Better 403(b) Vendors." The interactive panel will features teacher advocates and vendors Aspire and Vanguard. I hope you and many benefits officials can join us.  


Stay well. 

Related Podcast:

Fight for Better 403(b) Super Advocate teacher Chris Nye educates colleagues and has helped get T. Rowe Price and Vanguard on vendor list. Listen Now »

Related Podcast:

Furloughs and layoffs are coming - At a minimum school districts must add one low-cost vendor now to help ease some financial pain. Listen Now »