NEA Retirement Program
Late Career
Be ready for retirement – You’re within 10 years of retirement.
As you get five to 10 years within retirement, you need to start answering questions that will affect the rest of your life.
First, how long do you plan to be retired? It’s a simple question, but one not many people will think through. “For the rest of my life!” is the usual answer. But you need to really think about a number. At that age, you may have more retirement ahead of you than you realize. For an average couple who retires at age 65, they can expect at least one of them to live to age 95. That’s 30 years of retirement.
Are you planning for that much retirement? Remember, these are averages. Your retirement could be shorter, or it could be even longer than 30 years. A lot can happen in 30 years.
How will you deal with inflation? Costs during retirement can change quickly and inflation could out-pace your retirement income. If inflation maintains historical levels, it could rise three percent per year – that’s 243 percent over 30 years.
Lifestages
What's Your Lifestage?
Beginning Career - You’ve been working 15 years or less.
Mid-Career - You’ve been working 15 – 28 years.
Late Career - You’re within 10 years of retirement.
In Retirement - Congratulations! You’ve earned some time to relax.
Beginning Career
Getting Started – You’ve been working 15 years or less.
The last thing you’re probably thinking about right now is your retirement. But if you are just beginning your career, or perhaps just started working in your job within the past few years, you still own the greatest asset and advantage – time.
You may qualify for a state pension and/or Social Security benefit. But these program benefits may change or become frozen, and you may not have enough income to meet your needs in retirement. That’s why your school district offers a 403(b) or 457 retirement plan to provide you the opportunity to save more and complete your retirement picture. Your district’s 403(b) or 457 plan is your opportunity to make contributions on a pre-tax basis to your own retirement account.
Starting to save – even small amounts – now can make a huge difference when you retire. Your contributions to your 403(b) or 457 accounts are tax-deferred which allows your investments to grow tax-free until you make withdrawals.
Compound Growth
Returns or interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compounding grows at a faster rate than simple interest, which is interest calculated only on the principal amount. The rate at which compound interest accrues depends on the frequency of compounding; the higher the number of compounding periods, the greater the compound interest.
This hypothetical illustration assumes an 8% annual effective rate of return with ongoing contributions and 26 pay periods per year. The above illustration does not take into account the effect of any state or federal taxes. The performance of the investment is hypothetical and in no way relates to the actual or expected performance of any investment. The results of an investment may differ substantially. Investing involves risk and there is no guarantee of investment results.
What Should You Do Now?
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Find out your potential retirement benefit(s). As an educator in your state do you qualify for a state pension, Social Security, or both? This will vary by state.
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If you qualify for a state pension, investigate the plan and what you need to do to enroll for the pension. Do not assume you’re automatically enrolled or that your benefit will be the same as your older peers.
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Determine the best way for you to save for today and for retirement. What you do over time to ensure you reach your retirement goals should evolve as your career grows and your time until retirement gradually shortens.
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Start small; start today! Take advantage of time.
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Review your retirement plans annually.
Achieving Your Goals
During your first 15 years or so of your career, you should be focused on accumulating assets.
We know it can be confusing to understand how much you should be saving, what’s the right investment, and how to get started. Our Retirement Plans section offers you some basic information about saving, as well as investment options available under the NEA Retirement Program. Security Benefit recommends you work with your local NEA Retirement Specialist to ensure you completely understand the best choices for you.
Mid-Career
Keep Moving Forward – You’ve been working 15 – 28 years.
Even though you’ve been working for a while, like your younger peers, time is a great asset, however you need to use it wisely and make a plan now for how long you want to work – instead of how many more years you have to work. A good retirement plan allows you to have more options and choices at retirement – instead of forcing you into decisions that can limit your overall income.
The first few years in retirement are critical to helping you have a long and successful retirement. There are a lot of decisions and issues you need to understand now.
Social Security, Medicare, and state pensions are probably the three major parts of your retirement plan. The news has been full of stories of how these benefits are straining federal and state budgets. We just don’t know what may happen in the future – all we know for sure is if the budget crunches continue, it will mean increasing pressure on state services, including retirement programs.
To give you more flexibility, options and choices during your first few years of retirement, you need to save and save as much as you can.
What should you do now?
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If you qualify for a state pension, keep a pulse on the plan. Has anything changed that affects your benefits during retirement? If something has changed, you may need to adjust your retirement plan.
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Do a quick analysis of the income you might need in retirement – we call this a Gap Analysis. It’s a basic review of the income you may receive from your pension, social security and other investment sources.
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Adjust your savings for the potential income you may need in retirement.
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Balance your risk within your entire retirement and investment portfolio.
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Review your retirement plans annually.
Achieving Your Goals
During this phase of your career, you should be focused on continuing to accumulate assets as well as starting to analyze when and how you’ll start transitioning to protect those assets.
We know it can be confusing understanding what you should be saving, how you should be saving it, and if additional investments would be advantageous to achieving your retirement goals. Our Retirement Plans section offers you some basic information about saving, as well as investment options available under the NEA Retirement Program. Security Benefit recommends you works with a local, certified NEA Retirement Specialist to ensure you completely understand the best choices for you.
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You can help prepare for inflation by creating a versatile retirement portfolio. An important part of that portfolio is an investment vehicle that can help you earn more than inflation.
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When will you begin taking benefits, will you need to supplement those benefits? The first few years in retirement are critical to helping you have a long and successful retirement. There are a lot of decisions and issues you need to understand now.
In Retirement
Congratulations! You’ve earned some time to relax.
You’ve worked hard to achieve retirement; you want to ensure it’s what you want. Take some time now to think about how long you plan to be retired. It’s a simple question, but one not many people will think through. “For the rest of my life!” is the usual answer. But you need to really think about a number.
The average worker retires at age 61. Educators retire even earlier; their average retirement age is 58. At that age, you may have more retirement ahead of you than you realize. For an average couple who retires at age 65,
they can expect at least one of them to live to age 95. That’s 30 years of retirement.
If you retire at age 60 – the only income you may actually receive is just a state pension because you won’t be eligible for Social Security. Is that enough?
If you wait until age 62 not only will your pension benefit likely be higher – but it’s likely the first year you may be eligible for a reduced Social Security benefit, as much as 35% less than your full benefit.
Waiting until age 67 or 70 to begin retirement – may not be an option – but if you wait to take your Social Security Benefit until age 67 you’ll get your full benefit and if you wait until age 70 your benefit will likely be 33% more.
Visit www.ssa.gov to learn more about Social Security benefits.
What should you do now?
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Plan for a long and successful retirement and save for those unforeseen expenses.
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Understand your personal retirement path and the financial decisions you’ll need to make now.
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Review your retirement income picture to find out if you may have potential income gaps.
Achieving Your Goals
During this phase of your career, you should be focused on transitioning to protect those assets.
We know it can be confusing understanding what you should be saving, how you should be saving it, and if additional investments would be advantageous to achieving your retirement goals. Our Retirement Plans section offers you some basic information about saving, as well as investment options available under the NEA Retirement Program. Security Benefit recommends you works with a local, certified NEA Retirement Specialist to ensure you completely understand the best choices for you.
Are you planning for that much retirement? Remember, these are averages. Your retirement could be shorter, or it could be even longer than 30 years. A lot can happen in 30 years.
You need to ensure you don’t outlive your money. Now is the time to secure your retirement income plan. You should have two main parts to your income – guaranteed and flexible income.
Guaranteed Income
Guaranteed income is regular and dependable during your entire retirement. Things such as Social Security, a pension, or regular payouts from an investment can be counted as guaranteed income. Does your guaranteed income cover your monthly basic expenses?
Flexible Income
Flexible income continues to grow for emergencies and inflation. Costs during retirement can change quickly and inflation could out-pace your retirement income. If inflation maintains historical levels, it could rise three percent per year – that’s 243 percent over 30 years.
You can help prepare for inflation by creating a versatile retirement portfolio. An important part of that portfolio is an investment vehicle that can help you earn more than inflation.
Achieving Your Goals
In retirement, you need to be focused on turning your savings and investment into income.
We know it can be confusing understanding how to optimally secure guaranteed and flexible income, and if additional investments would be advantageous to achieving your retirement goals. Our Retirement Plans section offers you some basic information about saving, as well as investment options available under the NEA Retirement Program. Security Benefit recommends you works with a local, certified NEA Retirement Specialist to ensure you completely understand the best choices for you.
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1 Annuity 2012 mortality table published by the Society of Actuaries, Base Year 2015
3 USDA Food Plans: An inflation rate of 1.9% was used to calculate future grocery costs, and is derived using the latest Consumer Price Index. August 2017
4 Kelly Blue Book: An inflation rate of 1.9% was used to calculate future new car costs, and is derived using the latest Consumer Price Index. August 2017
5 HealthView Services’ 2017 Retirement Health Care Costs Data Report
6 Gallop Poll – Social Series: Economy and Personal Finance, April 5-9, 2017
7 Timing is Everything: Your Essential Pre-retirement Checklist: October 2017
This information is provided by Security Distributors, in connection with the NEA Retirement Program for retirement plans sponsored by school districts and other employers of NEA members and individual retirement accounts established by NEA members. Security Distributors and certain of its affiliates (collectively, “Security Benefit”) make products available under the NEA Retirement Program, directly or through authorized broker/dealers, pursuant to an agreement with NEA’s wholly owned subsidiary, NEA Member Benefits (“MB”). NEA and MB are not affiliated with Security Benefit. Neither NEA nor MB is a registered broker/dealer. All securities brokerage services are performed exclusively by your sales representative’s broker/dealer and not by NEA or MB.
NEA, NEA Member Benefits and the NEA Member Benefits logo are registered service marks of NEA Member Benefits.
NEA Retirement Specialists, when making recommendations to an NEA member, offer only Security Benefit products.
