403bwise is a 501(c)(3) nonprofit organization.

The K-12 403(b) is broken.
Together we can fix it.
Dan's Blog

All the Small Things 🐜

January 26, 2021

One of my favorite songs is Blink-182's All the Small Things. It's applicable in so many situations, but particularly when it comes to finances. Small, positive steps and happenstances can make a huge impact. Consider...

Paying 1% More in Fees

Under the following assumptions paying 1% more in fees costs $105,572*.

  • $416 a month (annual total contribution of $5,000)
  • Contribute for 35 years between the ages of 25 and 60
  • Annual return of 7%

Paying 2% More in Fees

Under the following assumptions paying 2% more in fees costs $188,912*.

  • $416 a month (annual total contribution of $5,000)
  • Contribute for 35 years between the ages of 25 and 60
  • Annual return of 7%

Paying 3% More in Fees

Under the following assumptions paying 3% more in fees costs $254,863*.

  • $416 a month (annual total contribution of $5,000)
  • Contribute for 35 years between the ages of 25 and 60
  • Annual return of 7%

Paying more than 3% in fees may seem unlikely. In the K-12 403(b) world it is not. 

*according to 401kfee.com 

Innacurate 403(b) Paycheck Designation

The overwhelming majority of K-12 403(b) paychecks designate a 403(b) contribution as a TSA (Tax Sheltered Annuity) or SRA (Supplemental Retirement Annuity) contribution. This gives the false impression that 403(b) money must be contributed to annuity products. Even my 403(b) contribution at a university was designated as an SRA. 

High School Class on Personal Finance

Prior to the launch of Sputnik 1, it was not uncommon for American high school students to get some personal finance instruction through home economics courses. The perceived security threat of this launch led the nation to rapidly adopt a curriculum focused on math and science, often at the expense of so-called “Life Skills” courses like home economics. Next Gen Personal Finance is working hard to make personal finance instruction common again. Think of the financial difference it can make to have taken a personal finance class in high school. 

403(b) Education at the Pre-Service Teaching Level

Almost zero Colleges of Education provide basic instruction on teacher retirement plans. Consequently, teachers are chum to the 403(b) sales shark waiting in lunch rooms and blasting misleading emails to inboxes. On Wedensday, January 27, 403bwise will host an event on this very topic: Shark Repellent: Panel discussion about how to educate pre-service teachers about saving for retirement before the 403(b) sales sharks get to them. We hope you can join us. If not, we will make this available as a podcast. 

Wise new teachers who have received instruction in teacher retirement plans in general, and the 403(b) specifically, will be singing the following tune when invited to a misleading sales seminar. 

Say it ain't so
I will not go
Turn the lies off
Go the hell home

Na-na, na-na, na-na, na-na, na-na
Na-na, na-na, na-na, na-na, na-na
Na-na, na-na, na-na, na-na, na-na
Na-na, na-na, na-na, na-na, na-na

 

Stay wise and well.