An Educators Unfortunate Advantage

Sean Murphy |

Your pension is spoiling you.

All you must do is just show up for work. Nice, right? You’re automatically enrolled in the plan, though in some instances you may need to be on the job for a year before you are officially enrolled.

As for the investment decisions: You have none. Your employer hires a firm to invest the pension plan’s assets. There is absolutely no work required (or allowed) on your part to manage the pension money. Your pension grows year after year, all out of your view. Deferred compensation that rewards the loyalty of the career employee.

What could be better?

What could be better is the assurance your pension will be enough to finance all your retirement dreams. There are variables to these calculations we can never know with complete certainty, such as what your final salary will be, how many years you will put on the job, and most importantly, the amount you will need to live out your fullest retirement.

It seems like the only times we hear about pension systems are when city and state budgets struggle to make ends meet. We are starting to see changes in the pension systems in many states. Some changes we see are requiring current employees to shell out more to cover the rising pension deficit.

I’m not here to go all doom and gloom on the pension systems. They are protected by law and a vital investment savings instrument for our public workforce.

What concerns me is that I have seen many current employees estimating their pensions and mentally planning on retiring on that amount and then...well, whatever extra may magically come their way. It’s like this pension, which is tantalizingly close to being enough to live off, is taking your eye off the ball.

Your pension is giving your retirement a great head start! And many are not taking advantage and saving just a little bit extra each month to ensure they retire with their needs covered and then some.