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The K-12 403(b) is broken.
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Teacher Stories

Ben, age 46

Photo of Ben, age 46

As a media specialist, Ben, age 46 helps teachers and students integrate technology into the curriculum. He loves collaborating with teachers and students, and being around amazing people. His biggest challenge is staying on top of the latest technology tools and websites available for teaching and learning.

We asked Ben, age 46 some questions about what he knows or wants to know about the 403(b) and saving for retirement, and this is what he said.

On a scale of 1 to 10, with 10 being total understanding, how well do you understand saving for retirement? Why did you pick this number?

I picked 8 because I spend a lot of my free time reading about investing and saving for retirement. However, I feel like I still have a lot to learn about maximizing tax benefits and withdrawing from investments during retirement.

What is your biggest money worry?

There is a lot of poverty in my school. I worry that students, especially low income students, will not achieve the financial literacy necessary to thrive as adults.

Do you have a 403(b)? If yes, are you satisfied with your investment? If you do not have a 403(b), why not?

I have a 403(b) with Oppenheimer. I should say "had" because in Colorado we can contribute to a 401(k) so I switched to that. There are much better investment choices available. On a scale of 1 to 10, my satisfaction with my 403(b) plan is 1. If I could change anything about my plan, I would like to eliminate it as teachers in my district have access to an excellent, low-fee 401(k) that is managed by our state's pension. However, the 403(b) is still available in our district and it is the one that most of our teachers get funneled into because the insurance salesmen weasel their way into our staff lounges and our teacher's union has a relationship with one of the 403(b) vendors because they have agreed to buy our new teachers lunch during the union's welcome meeting. I am currently working with our benefits department to have better options added to our 403(b).

What prompted you to start a 403(b)?

In 2000 I took an instructional support position with an extended contract. My boss suggested investing the extra income, instead of spending it. It was probably the best advice I ever got.

Did you ever hear about the 403(b) in your teacher preparation program?

No. I received no financial literacy instruction in high school or college. I basically knew nothing about investing until I heard an interview with John Bogle. The story was about how people were getting fleeced in their retirement plans.

Do you know what a fiduciary financial advisor is? If yes, how would you describe a fiduciary to a colleague?

Yes. I would say a fiduciary financial advisor is supposed to have their client's best interest in mind. However, the two fiduciary financial advisors I have met, and that work with our district, do not appear to have our teachers' best interest in mind. I'd warn colleagues to be leery of them. I'd recommend working with hourly CFP®s that have signed a fiduciary pledge. Paying a 1-2% AUM (assets under management) fee is giving up too much of your future retirement. [Note: 403bwise information on working with a financial advisor]

If you could ask a financial advisor one question what would it be?

I'm not 100% certain if my wife and I will be in a lower or higher tax bracket during retirement. I'd love to sit down with an hourly CFP® and try to determine exactly which tax bracket we will fall into and then get some guidance on how much money we should be putting into a traditional vs Roth 457.

Anything else you would like to share with us?

For the past few years, I have been working with my HR department to improve offerings in our 403(b) and 457 plans. I recently received word that low-fee Vanguard options will be added to our 457 plan. I'm continuing to work on improving our 403(b) options. If you are a teacher fighting for better choices I would say not to give up on the fight. As Dan Otter says, our "403(b)s are broken and together we can fix them!"

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