Retiring as an Educator: A Professor’s Tips for Supplementing Savings

The State of Retirement for Teachers

Part of the issue teachers face when saving for retirement is that, in addition to already low salaries, they are grappling with an economic state that is worsening.

“I think it’s in a bad state,” Dennis Shirshikov, an economics professor at CUNY Queens College, told Annuity.org. “The cost of living has gone up and there’s no end in sight. People are retiring later while living longer. Teachers have much more demand on their job.”

The cost of retirement is also becoming increasingly significant. A recent Fidelity study found that the average couple retiring in 2023 would need $315,000 saved just for health care costs.

Inflation has also been rampant in recent years, further diluting the power of teachers’ salaries. According to the National Council on Teacher Quality, part of the issue is that, unlike other industries, teacher salaries are a result of things like collective bargaining instead of supply and demand.

This makes their salaries slow to respond to changing economic conditions.

Solutions To Help

There are still plenty of avenues available for teachers to save for retirement. 

There are, of course, the typical retirement plans. Teachers can consider opening up a traditional IRA or Roth IRA to build up their retirement savings. They may also have access to a 403(b) or 457(b) plan.

But just saving in a standard retirement account may not be enough. Shirshikov offered several more innovative solutions for teachers to consider.

One is taking advantage of off time. Teachers work very hard, but they also have the benefit of school being out for several consecutive months. Those stretches can be, and often are, used to create additional income.

“Teaching also leaves you with the opportunity to develop something on the side,” Shirshikov said. “Even moving into small-time real estate investing can be a really powerful option for a lot of teachers because it opens up the door for portfolio growth beyond what you’d expect.”

Peer support is another way teachers may be able to generate additional income. Talking about finances with people outside of your immediate family isn’t always easy, but teachers can work together in a few different ways.

Shirshikov said, for example, a group of teachers could purchase a property together and rent it out.

“Or, you might go ask for advice on a form, or decide a place where you guys can all meet once a week and discuss what everyone is doing,” he said. “That ability to collaborate is going to create a lot more opportunities than sitting at home and stressing out.”

It may involve some creativity, but there are a number of ways teachers can generate additional income to make up the gap they face when saving for retirement.