The Advisor - September 2011


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What CTA Is Doing to Help You with Your 403(b) or 457 Plan

Why You Need to Supplement Your Pension

The average CalSTRS benefit to new retirees is estimated to replace 63% of income* – and CalSTRS members are not eligible for Social Security benefits based on their earnings as educators. The average CalPERS member is estimated to receive 50% or less of preretirement pay in retirement** although most CalPERS members are covered by Social Security.

Given you may need 90% to 100% of preretirement income, particularly with ever-increasing health care costs and the likelihood of future inflation, your ability to maintain your standard of living is at risk unless you are saving for retirement.

One of the best ways educators can save for retirement is through a 403(b) or 457 plan. These are tax-advantaged savings plans offered via payroll deduction through your school employer (similar to a 401(k) plan in the private sector). Yet only 30% to 40% of educators are saving through these vehicles! Not only that, nearly half (46%) of 403(b) assets are held in fixed annuities, which may not earn enough over time to outpace inflation (see chart). ***

In many cases, it is simply a lack of information (or time to digest the information) that’s keeping educators from taking advantage of this valuable opportunity to supplement their retirement savings.

* Source: CalSTRS, “Promises Made, Promises Kept,

** Source: CalPERS, “Facts at a Glance,”

*** Source: Spectrum Group, as reported at


*** Source: Spectrum Group, as reported at