Frequently Asked Questions
Here are some frequently asked questions about long-term savings options and 403(b) plans available for Florida’s public school employees.
Specific questions about your personal financial planning and individual 403(b) plan provisions should be addressed to your local school district’s benefits manager or a financial advisor. Contact your local school district’s human resources and employee benefits department for more detailed information to help you get set for life after school.
A: By becoming a School Employee Saver! Everyone is different. But in today’s economy — where Florida Retirement System and Social Security benefits are uncertain — Florida’s public school employees can’t afford not to take control of their own financial future. Fortunately, your local school district offers supplementary retirement savings options, including the 403(b), which is specifically designed for public school employees. It’s never too late — or early — to save. The best time to start is now!
Q: If you can’t set aside 3%-5% of your salary as savings now, how can you expect to live off of 70%-80% of your salary in retirement?
A: OK, so we recognize this is a rhetorical question. But it’s important to consider when making decisions about how to save for your life after school. Current options — like the Florida Retirement System and Social Security — will only account for a portion of your expenses in retirement. The 403(b) is a way to take your savings into your own hands. A little bit now will go a long way later.
A: Your retirement savings needs depend on a number of factors, including your expected age at retirement, your current income and your expected cost of living. Based on economic trends, changes to benefits programs like the Florida Retirement System and Social Security, and rising life expectancies, employees need to save more now than they ever have in the past. The 403(b) plan can help.
Consult your local school district’s benefits manager and/or your financial advisor about setting your retirement goals and determining the amount you need to save for life after school.
As a Florida public school employee, you are automatically eligible for a retirement package through the Florida Retirement System based on your years of service and income level, in addition to the benefits you’re entitled to through Social Security.
But with changes to these programs and ongoing economic trends, you may only be able to depend on the Florida Retirement System and Social Security to cover a portion of your expenses in retirement. (You can estimate your benefits from the Florida Retirement System and Social Security.) A supplementary savings plan like the 403(b) helps you own your financial future and achieve a comfortable life after school.
Try the AM I ON THE RIGHT TRACK? tool to the right to figure out if you’re going in the right direction based on where you are in your career.
A: A 403(b) is a long-term savings plan for public school employees. It allows you to contribute a portion of your salary to an employer-sponsored plan that can supplement the benefits you are entitled to through the Florida Retirement System and Social Security. It’s a long-term savings plan that works as hard as you do.
A 403(b) plan is similar to a 401(k) plan. You can contribute up to $17,500 (or 100% of your compensation, if less). If you are at least age 50, you can contribute an extra $5,500. You may be able to contribute more using another special catch-up option.
A: There are three basic reasons to contribute to a 403(b) plan:
Tax Deferral — A 403(b) plan offers several tax advantages:
- Deferred federal taxes on pre-tax contributions and any earnings until the money is withdrawn or distributed, and
- Tax-deferred growth potential.
Automatic Savings — A 403(b) plan is an easy way to save because of convenient, automatic payroll deductions.
Supplement Your Retirement Income — Because people are living longer in retirement, you should consider supplementing your Florida Retirement System pension and Social Security benefits.
A: All current public school employees in the state of Florida are fortunate to have the opportunity to shore up their financial future with a 403(b) plan. According to partnerships established by your school district with financial institutions, you can choose the institution, advisor and plan that’s best for you and your plans for life after school.
A: The amount you can accrue with a 403(b) depends on various assumptions, including your current age, the age you plan to retire and the size of your regular savings contribution. Thanks to the benefits of time, compounding interest, and tax-free contributions and earnings, the 403(b) stands to save you more than other forms of supplementary savings.
To calculate the exact amount you could save with a 403(b), consult your financial advisor. For an estimate of how much a 403(b) plan can pay out in retirement benefits compared to a piggy bank or basic savings account, use WHAT’S THE BEST WAY TO SAVE? tool to the right.
A: Your local school district can tell you which financial institutions offering 403(b) savings accounts are available to you. Contact your human resources and employee benefits department for a list of investment companies that are approved from a regulatory standpoint (this is often known as a vendor list). You can only invest with a company approved by your local school district.
To choose a financial institution and potentially a financial advisor, use the Planning Toolkit for tips on how to make the decision that’s best for you and your future.
A: Not necessarily. You have the option of investing on your own. A financial advisor is not required to start saving with a 403(b) plan. But compared to those who go it alone, School Employee Savers who consult a financial professional are more likely to:
- Put a plan in place with defined retirement goals
- Know how much they will need for the life after school they imagine
- Estimate when they can afford to retire
- Save more for retirement
- Protect their retirement savings with a more diversified portfolio positioned for both up and down markets
- Stick to their plan during market upheavals
- Feel more confident about meeting their goals
Whether you’re at the beginning of your career, thinking about life after school or already in retirement, research has shown that working with a financial professional may better help you reach your retirement goals.
For the younger School Employee Saver — A financial professional can help by showing you how you can meet your everyday obligations, save for future expenses and still maximize the amount you set aside for retirement.
For School Employee Savers of all ages — A financial professional can help you navigate an investment course during difficult economic times. Your financial advisor can help you understand the investment options offered by your retirement plan and the types of investments that may be appropriate for your goals, risk tolerance and time frame.
For School Employee Savers nearing or in retirement — A financial professional can help you determine how to turn your retirement savings into retirement income. And for everyone, having a financial professional gives you someone knowledgeable to call with questions, concerns or changes in your situation.
Instead of an advisor provided by your financial institution, you may seek the services of a vendor representative or independent financial advisor who can help with retirement planning and other financial needs. Retirement savings products like 403(b) plans often are sold by vendor representatives, also known as agents. All financial advisors charge a fee for their services, so you need to know exactly what services are being provided and what fees are being charged.
A: The best 403(b) plan and investments for you depend on your plans for life after school and how much you can set aside now to get there. The optimal plan will be one that best meets your timeline (the number of years until you retire or until you need to access the funds), goals (the kind of after-school lifestyle you desire and how much you need to save to achieve it) and risk tolerance (how much investment volatility — or changes in value — you can manage).
To help you determine how to choose a 403(b), use the Planning Toolkit for tips on how to make the decision that’s best for you and your future. You can also contact your local school district’s human resources and employee benefits department for a list of available investment companies and the 403(b) plans they offer.
A: To get started, get in touch with your local school district’s human resources and employee benefits department. A benefits manager can you put you on the right path to saving with a 403(b) and making sure you’re ready for life after school!
What's the best
way to save?
See which savings option gives you
the biggest payoff.
After 15 years,
you will have saved...
under the Mattress
in a Savings Account*
in a 403(b) Retirement Account**
*After taxes, assuming the interest is taxed at 25% and an annual savings account interest rate of 1%. **Assuming an average annual return of 3%.
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Florida School Employer Saver offers retirement education and does not provide investment, legal or tax advice. Participants are encouraged to consult their own advisors.
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