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Michael, age 33

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As an Elementary Music Teacher, Michael teaches music to four, five, and six year-olds. He loves that young children are so impressionable and excitable and that it is easy to get them enthused about learning. His biggest challenge is behavior. For many of his students, this is their first time in school so they are still learning how to deal with the high expectations put on students today. Additionally, many of his students have much larger problems in their home life which makes it difficult for them to succeed under the pressures of the school setting.

We asked Michael 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 10 because I have learned A LOT through many sources, including 403(b)wise, Bogleheads, various investment books, etc. In my work and personal circle, I am a person people go to when they need financial questions answered. I have been advocating within my own district to improve our 403(b) choices and to educate district employees on retirement finance.

What is your biggest money worry?

Losing my pension, or getting laid off due to being a music teacher, especially during the economic aftermath of Covid-19.

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 MEA Financial/Paradigm Equities. On a scale of 1 to 10, my satisfaction with my 403(b) plan is 7. If I could change anything about my plan, I would change the fact that there is exactly one tolerable investment option among the abundance of mutual funds offered to me. It is a S&P 500 index fund with an expense ratio of 0.25. That is a pitiful expense ratio compared to what I could get for a S&P index elsewhere, but it is decent enough for me to allocate a portion of my portfolio to (I have better investments through an IRA, 457, HSA). I wish they would have more low-cost index funds available in my 403(b), and ideally cut out most of the crappy choices so people who don't know better can't accidentally pick managed mutual funds with expense ratios near 1.5%.

What prompted you to start a 403(b)?

I started my 403(b) because someone came to one of my new teacher meetings, and saving for the future seemed like a good idea.

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

No.

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

Yes. A fiduciary financial advisor is an advisor who is obligated to act on your best interests, NOT on whatever investment choices will benefit them the most. Typically, non-fiduciary "advisors" are merely salespeople trying to sell you products from the company that they work for or worst, whatever will benefit them the most. Fiduciary salespeople usually are paid through consulting fees or based on a percentage of assets under management.

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

How do you get paid/make money off of me?

Anything else you would like to share with us?

If you don't have good 403(b) options, look into other investment options that may be available to you, including IRAs and 457s.

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