What Profession Has The Worst Retirement Planning?

[yakers]

As A group, I nominate teachers, its remarkable that most don't plan, don't use their crappy 403b choices and don't negotiate for something better.
But I have heard a lot of other interesting stories about groups that are well educated, have plans available and maybe even good cash flow and still don't do retirement planning. Certainly the military are all about plannning and training (like firemen) but a lot don't seem to save. My brother used to work on pipeline projects where tradespeople were very well paid and they would be broke shortly after each project.

 

[farmerEd]

I am gonna vote doctors...I know a lot of them, they probably all on average made more than me over their careers, and most are still working and unhappy...I've talked to several that are 10+ years older than me and asked them why they don't just retire if they hate it so much...the answer, "can't afford too"...the doctors I know anyway, all made good money, and live the lifestyle they were certain they deserved to have after having sacrificed so much, so early on (i.e. med school etc)...not to mention the student loan bills which probably put them a few hundred grand in the hole before they even start working...

 

[Cut-Throat]

As A group, I nominate teachers, its remarkable that most don't plan, don't use their crappy 403b choices and don't negotiate for something better.
But I have heard a lot of other interesting stories about groups that are well educated, have plans available and maybe even good cash flow and still don't do retirement planning. Certainly the military are all about plannning and training (like firemen) but a lot don't seem to save. My brother used to work on pipeline projects where tradespeople were very well paid and they would be broke shortly after each project.

Actually, I have heard that teachers are some of the best prepared retirees. They have summers off, so they are used to plenty of down time, getting part time jobs etc. etc.

With pensions and health care they are even better prepared. Some of my best friends are teachers and they don't have a clue what SWR means.

 

[Mountain_Mike]

I don't think teachers have the WORST retirement benefits, put if they relied on their own private savings, they'd be in trouble. ....DW is a teacher, and I can tell you that getting her to increase her 403(b) is like pulling teeth.  Each year when she gets a larger contract, I've encouraged putting all (or even some) of the increase toward retirement.  It is a hard sell.

A while back, one of her statements came, and there was over $50,000 in it.  I pointed this out to encourage how much she'd saved (painlessly), and her reaction was "big deal...I couldn't even live a year on that."

Oh well...so I just double my savings


As for pensions, they're pretty good IF you have 32 years in the system and retire after age 60!  STRS has $200, $300, and $400 per month bonuses for 30, 31, and 32 years.  Things like health benefits vary by district.  I think most teachers don't get any paid health insurance in retirement, but some do.

 

[WanderALot]

As A group, I nominate teachers, its remarkable that most don't plan, don't use their crappy 403b choices and don't negotiate for something better.

You hit the nail on the head. None of my teacher friends, including the ones I met before my teacher wife, contribute anything significant to their 403(b) plans. Additionally, they didn't see any problem with the horrible choices that their district forces on them.

Up until 2 years ago, the only plans that my wife's district had documentation on were annuity based.
After harassing their benefits team repeatedly, they vounteered the name of a single individual contracted with the district. This guy had a bunch of underperforming, high fee mutual funds. He insisted that I was the only person to ask him why his S&P 500 Index fund was charging upwards of 0.75 in expenses. When my wife relayed my complaints to her co-workers, none of them saw any of this as a problem. One of her coworkers told me: "We don't have to worry about retirement, everything's taken care of with CalSTRS".

I'm convinced that the only reason the district changed their whole 403(b) program was because their retarded benefits people couldn't be bothered administering the program (and not because teachers complained). They've now contracted with an outside firm that handles all the 403(b)/457 stuff and they are for the most part pretty decent.

 

[retire@40]

A lot of doctors are self-employed, so that may foul up your poll. Doctors save a lot for retirement as do self-employed people. Tradesmen follow, and teachers are the worst of the bunch in your pool of options.

 

[haha]

Things like health benefits vary by district.  I think most teachers don't get any paid health insurance in retirement, but some do.

My mother was a teacher, and a brother and sister are teachers. It is a very cushy retirement, and they don't work in NYC. At 30 years- at which time my brother is all of 52 years old- he gets 85% of his highest 3 years, plus fully paid health insurance. The retirement salary alone is close to $65,000.

My brother in particular has spent every dime he ever made, but he nevertheless has home in town and a small horse operation downstate.

This is very hard to beat in the private sector unless you have unusual success. All you have to do to get this as a teacher is to avoid sleeping with your students, never say anything non-PC, and show up most of the time.

The reason teachers don't plan for retirement is that in larger cities anyway, they really don't have to.

Ha

 

[LOL!]

I've known a number of accountants that were lousy with their own money. I'd have to say accountants are the worst with retirement planning.

 

[JohnP]

It isn't close - Teachers have the worst Retirement Planning and, to make matters even worse, the entire 403b system is set up to take advantage of their dedication to education and aversion to anything financial.  The local districts are responsible for their 403b accounts but are typically not funded by taxpayers to provide appropriate advise and education to the teachers on Retirement Planning; therefore administering the accounts is turned over to the 403b providers themselves - in turn, the 403b providers make sure there is adequate compensation for this administration.

DW is a teacher who had a 403b approved by her district and was making regular deposits when we started dating.  The choices are all insurance company annuities-based and have high fees.  The District has no interest in providing information, so the salesmen are made welcome to roam the halls at any time to dispense profit-making (for them) advice to the teachers.  

JohnP

 

[Mr._johngalt]

I've known a number of accountants that were lousy with their own money.  I'd have to say accountants are the worst with retirement planning.

That's a pretty broad unsupportable statement.  I started out as an accountant and I was lousy with ER planning.  The financial orientation
has paid off since however.

JG

 

[Mr._johngalt]

This is very hard to beat in the private sector unless you have unusual success. All you have to do to get this as a teacher is to avoid sleeping with your students, never say anything non-PC, and show up most of the time.

The reason teachers don't plan for retirement is that in larger cities anyway, they really don't have to.

Ha

That's the way I see it.

JG

 

[maddythebeagle]

I've known a number of accountants that were lousy with their own money. I'd have to say accountants are the worst with retirement planning.

Maybe lump everyone with a finance degree in there. I dont know why it is maybe it is the reason why active mutual funds underperform (the more details you learn, the more you think you can outsmart the markets?). I think it is better to know just a little and not read so many books.

 

[Sheryl]

Well, I guess he's an exception to the typical teacher, but my next door neighbor is/was a teacher and he RE'ed three years ago at 52.  He subs now and then for pocket cash.  His wife works at the hospital gift shop.

They have been role models for me - they LBYM very happily, simple affordable house that is paid off, they always seem to have time to garden and be involved in community activities, travel on "bumped" tickets more often than not...  Not into the conspicuous consumption trap.

 

[Ed_The_Gypsy]

From personal observation, I vote for the doctors. They are very smart well-educated and often make a ton of money, but it looks to me that they do not know how to handle it, to generalize. Maybe it is mean of me, but people who are a lot smarter than me or with big incomes who wind up without a bean don't get much sympathy from me.

I have a number of teachers in the family and they seem to have got by just fine, in spite of arithmetic and other handicaps. They also are very good at LBYM.

Then there is me. Old Dutch saying:"We grow too soon old and too late smart."

Ed The Grouch

 

[Michael]

Most of the tradesmen I knew depended upon employer or union based defined benefit pensions, which are on their way out. There were a number who saved quite a bit, and invested wisely. I spent hours talking to them, and they taught me quite a bit. The variations between people are amazing.

 

[punk]

I've posted only a couple of times before, but love reading this board. Great info, and first class interactions. Teacher retirement planning varies from state to state. While many teachers, like many others, do not prepare well on their own, the state mandatory plan often more than makes up for it. In Texas teachers contribute roughly 6.5 % of the their yearly income (mandatory) from the first month they teach to a state DBP, and the state matches that contribution. So, in one sense, teachers have planned from day one, and are well ahead. With a "best three year average" and a 2.3% per year mulitplier, retirement after 30 years can be rather positive, and usually occurs in the mid to early 50's. In addition, my local district matches teacher contributions, up to 7% of salary, or 10 thousand per year, based on attendance and vests its teachers after 5 years. Teachers may select any provider/vendor they desire for the their investment selection. My wife and I are both educators (she in the classroom and me in upper management), we will retire next year at 55 with a six figure retirement. Other investments and planning (agree that not all have done this) will add a significant additional amount to that with a SWR of 4%, if desired, or needed (but really plan to hold that for the grandchildren). Everyone is different, and working 30 - 35 years to make this happen hasn't always been fun, but it sure looks good from here...

 

[retire@40]

Teacher retirement planning varies from state to state.  While many teachers, like many others, do not prepare well on their own, the state mandatory plan often more than makes up for it.  In Texas teachers contribute roughly 6.5 % of the their yearly income (mandatory) from the first month they teach to a state DBP, and the state matches that contribution.  So, in one sense, teachers have planned from day one, and are well ahead. 

Mandatory plans contribute to your retirement, but it doesn't mean you are planning for retirement. Besides, isn't this mandatory DBP a substitute for social security? If so, it's no different from what every employee in the US does.

From what I've seen, most teachers do nothing to plan for retirement on their own, and you confirmed that from what you said.