Are you currently contributing to a 403(b) or 457 plan? The 2010 IRS annual contribution limit for elective deferrals to these plans has remained unchanged from the 2009 limit of $16,500. The catch-up contribution amount ($5,500) for participants age 50 and older is also unchanged.
If you are not contributing to a 403(b) or 457 plan, think again! As a career educator, you can expect to receive approximately 63% of your pre-retirement income through your CalSTRS defined benefit pension.* If you are a CalPERS member, the average monthly service retirement for school miscellaneous members is $1,134.**
Neither benefit is likely to support your lifestyle or cover retiree medical expenses. In fact, many financial advisors suggest that you'll need 100% of your pre-retirement income in order to maintain your standard of living and cover health care costs in retirement. You can work toward that goal by participating in a 403(b) or 457 plan, which allows you to save for retirement with pre-tax dollars.
You can learn more about saving for retirement by visiting ctainvest.org, CTA's new investment education Web site. It includes calculators and tips that can help you decide what type of 403(b) or 457 investment is right for you and how to evaluate your current investment. Additionally, CTA has a consumer guide on 403(b) and 457 Plans, which you can access online at ctainvest.org. You may also email or call 650-552-5200 to request a free copy.
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