June 13, 2008

Plan Your Retirement

Everyone eventually begins to look forward to that day that they can say, “I am retired!” While all of us have different views of what we will do in retirement, each of us have basic needs that must be met.

First, as educators in the State of Georgia, there is the Teachers Retirement System of Georgia pension. This is the foundation on which your retirement income will be based. I will discuss it in greater detail later in a future blog, but for now, just know it is of great importance.

OK, so you now have a foundation on which to live the rest of your life with a guaranteed income, but what about all the “extra” things you want to do? Travel, clubs, golf, tennis, arts, events, etc. All of these will take money, and is your pension big enough to cover the basics and your wants? For most, the answer will be no. There is a solution though…


Essentially, there are three things that must be done to get you on your way:

  1. Live within your means and control debt. Sounds simple, but it is hard for so many.
  2. Start investing now with a 403(b). New to education or a few years from retiring, the main thing is to start.
  3. Make goals. See how long it takes you to get to $10,000, $50,000, etc.

I know some of you are thinking that you cannot afford it now, but you will later… when will that be?

Let me give you a couple of examples that illustrate waiting:

  • A new teacher, Sally, starts investing $100 per month for 30 years with a 9% annual return. At 30 years, Sally has $184,447. Total investment - $36,000.
  • Another new teacher, Jane, decides that she has more important things to do, and she waits 10 years. Jane from year 11-30 contributes $200 per month with a 9% annual return. At Sally’s retirement, she has $134,579. Total investment - $48,000.

Funny huh? $50,000 more simply by starting earlier, and Sally contributed less. It is simply the power of compound interest. The longer it is invested, the more it has a chance to grow and grow.

Are you ready to start?

1 comment:

Anonymous said...

Thanks. Simple, straight forward, easy. I wish I had started earlier.