Posted by
Waski_the_Squirrel on Saturday, November 08, 2008 6:09:26 PM
One of the realities of teaching that is often overlooked is that it doesn't pay well. If you made it through that sentence without giggling, you're ready to hear what I mean. Of course it doesn't pay well, and anyone who doesn't kow that has been ignoring the media and the steady drumbeat from the unions. What new teachers often don't know is what that means and what to do about it.
I have some inkling of what it means. I live in the second worst paying state. I want to give some financial advice for teachers. The concepts will apply to anyone else, but the specifics may differ slightly. I want to conclude with a warning that should frighten anyone.
How to Retire with Money
Start right away. Sacrifice now and you'll be a winner in the end. Avoid debt. It will eat you alive.
The specifics are: invest as much as you reasonably can in a 403b and a Roth IRA. Your state may have some kind of a retirement plan and it's probably mandatory, but don't count on it for your retirement. Several states are already facing the possibility of bankruptcy in their retirement systems. The promises were easy to make when the states when the states forced people into the retirement plans. The reality was that the expenses outran (or will outrun) the profits.
While we're on the topic, don't trust Social Security either. Trouble is coming there too.
Don't invest your money in a savings account in the bank. That's not an investment. That's a place to store money so you can access it. Savings bonds are the same way, just a bit longer term. Store money in it to cover your bills and any emergencies.
When the money is there, try to invest in other areas too. Try investing in mutual funds. You could try investing in stocks, but that requires some kind of specific knowledge that you probably don't have. Mutual funds spread out the risk and they are usually run by a company that understands stocks.
In the end, do not panic. Right now, a lot of people are panicking over the stock market. My retirement has lost money. There are people withdrawing from their retirement plans because they believe the hype. There is no 10 year period (including the Great Depression) in which the stock market lost money. There are only two 5-year periods. Play your retirement long-term and you will be a winner.
About the Panic
The panic segways nicely into my warning. Government is a pig. It wants to stick its snout into your retirement and gobble it down. Right now, people are vulnerable to this because they're panicked. The government, particularly under a democrat congress and president, will take advantage of this to steal your retirement. The plans are in the works.
Of the articles I read, the most thorough one was from the
Carolina Journal. There are plenty more out there. It's not just a myth or fear-mongering. The only ray of hope I see is that enough members of congress will realize that retirement plans don't just belong to the wealthy.
The proposal is to entirely eliminate all 401k and IRA retirement plans. While bad enough, I could tolerate this. I could just invest my money in mutual funds without all the tax benefits. What is more scary is that the proposal includes a mandatory 5% contribution to a government-run retirement system. As much a failure as Social Security has been, that makes me angry. They want to steal my money and take it out of my control with a vague promise that they'll take care of me. Worse, the possibility has been tossed around of confiscating all 401k and IRA money.
Now, I haven't read anything about the 403b plan, but it is the same as the 401k plan, so I suspect that it could suffer the same fate.
This is a blatant attempt by an element of our government to steal yet more of our income and take away yet more of our independence. It must be fought.