[USER]

Two educators retiring in two years. Both pensions will be about 10,000 monthly.

Minimal to no social security due to WEP. More than cover monthly expenses. Kids graduated from college, no loans.

403b will be over 1,000,000

HSA 50,000

Brokerage 200,000

Savings 8,000 in hysa

Minimal left on mortgage at 3%, no car loans/debt
Question- currently maxing out 403b to help w tax burden.

We will be taxed heavily when we pull from it.

Would it be better to lessen the contribution these final two years and just fund the savings?

Will be 55 and 58 at retirement.

Each get 1/2 of each other’s pension upon death.

Thank you

[Mark]

they are in great shape for two people 20k is more than enough for the rest of their days.

At age 65 or 70 they will both be getting Social Security so another 6-7k per month …

the 1.3 million will double in 7-10 years …

looks to be in great financial shape in my view.

[Zhanna]

I don’t think you need to worry with pension of $10K. Enjoy your well deserved retirement

[Mickael]

Just curious, if taxes are your concern, wouldn’t be possible to convert a portion for the 403(b) to a Roth?

And putting more money into the HYSA assuming it is your emergency fund?

[Mark]

10k each is 20k total per month? 20k is more than enough per month..

[Colleen]

Your situation is almost identical to ours. You need to consider a couple of things. #1) Does your state of residence when you retire tax retirement income?

If no, keep saving in the tax deferred account. #2) Estimate your effective tax rate now, compared to what it will be when you’re making less.

Which one would you rather pay tax at?

If you have enough from your pensions to cover your living expenses, then your risk tolerance is higher.

You may not need the tax deferred account much and still have lots of time to grow it before RMDs start.

In the meantime, you could convert it a little at a time to a ROTH, using the tax brackets wisely.

[Jeff]

Dave Ramsey’s top five list of millionaires are teachers. Number 3 to be exact.

Only problem is both husband and wife both need to be in the system and ideally at similar age.

Are those 403b accounts earning a fixed 7% like NYC teachers?

Roth conversions might be the answer.

Left untouched for 20 years, that could possibly quadruple when RMDs roll around.

[Lora]

I retired at 53 with a pension what are you doing for medical factor that in to your plan.

You look great on paper I’d be enjoying retirement.

Love mine I travel non stop!

[Joe]

Sounds like you did very well. Stop funding pre tax savings!

[Jeffrey]

Unless the 403b is Roth, you are simply deferring the tax burden instead of paying it now.

I would definitely begin increasing the HYSA instead because you are presumably in a position to enjoy life still.

Tomorrow you might not be.

[Vanessa]

I’ve seen a lot of posts recently from teachers with crazy high pensions.

Conversely, I see a lot of posts on other pages from teachers whining about their pay.

Interesting.

[David]

Its always (well 98% of the time) better to pay your taxes later than sooner.

Because of the time value of money, anything that lets you defer taxes generally is a net benefit.

If you are deferring taxes from 25 y/o and not paying them until you withdraw at 59.5 y/o thats a huge benefit.

If you are deferring taxes from 55 y/o and not paying until you withdraw 4.5 years later the benefit is still there but much less pronounced.

But then again you might not touch the 403B money until you are 75 for example, so greater benefit from the tax deferral.

I would want 6 months expenses in savings and I suspect you are short of that.

But you do have the brokerage you can pull from with no penalty (taxes of course would apply to gains).

It really depends on your goals and next steps.

But all else being equal there is a benefit (due to the time value of money) to continuing to utilize the 403B.

But if you need to shift those funds in a different direction for the next few years, you are still in great shape either way.

[Lee]

I would increase HYSA within the next 2 years to at least 50K. If pension for 2 would cover monthly expense comfortably then delay withdrawing 403b at least at the age of 60 or older.

Your numbers are fabulous so enjoy your retirement.

[Kathryn]

Educator here. I consciously tried to minimize saving addt’l tax deferred vehicles and filled other buckets (Roth and Brokerage).

Also, Can you move your 403b out after retirement?

Some allow this, some don’t.

Makes a difference w fee structure

[Charlene]

What roles did you have in education and in what state? Asking as a fellow educator who is planning for retirement.

[Fru]

I’m
grateful for my municipal pension. I retired at 55 and have been living my best life ever since.

I don’t want for anything and live very comfortably. Good Luck.

(FYI their is legislation pending to try and repeal and/or change WEP)

[Bonnie]

In the book Diary of an Early Retiree: How You Can Do It Step by Step, it suggests that you will need cash outside of your retirement accounts to fill the gap years until you are 59 1/2 and can withdraw without penalty.

You can get the book free if you subscribe to Kindle or Audible

[Author]

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