403b plans
Hi Terry!
I am a second year public school teacher in Illinois and I have (unfortunately) put off saving for retirement. I’m saving in general but I need to have an account for just my retirement (in addition to my pension). I have the option of a 403b plan, but I have to find the company to open it through. From my understanding, these plans/accounts are for public workers. Is this true? Do you recommend saving for retirement through a 403b or through a different method? Thanks!
Terry Says
EMPLOYERS offer a 403(b) plan — it’s not something you can just seek out! So your first step is to ask if your school district offers such a plan. That’s the best and easiest way to start, since they will take an automatic deduction from your paycheck. So it will come out before taxes. And, it will be painless! But you get to make the decision about which funds inside the plan you choose to invest in. Almost every school district has such a plan.
If they don’t, you can start saving in an Individual Retirement Account. Contact Fidelity (1-800-FIDELITY) and say you want to open a Roth IRA. You won’t get a deduction for a contribution to a Roth — but when you retire (if the govt keeps its promise) all the money will come out tax free — even the growth over the years. They will help you choose a mutual fund to invest your IRA –probably an Equity/Income fund would be best over the long run.
