Everyone knows that teachers are one of the keys to our future, but is anyone looking out for their future? Teaching can be a rewarding occupation that affords many exciting opportunities, but (as with any prospective career) you should be aware of the financial opportunities and implications before pursuing the career path. These changes will affect multiple aspects of your life, including educational expenses, retirement planning, and work-life balance. To help you understand the overall cost of becoming a teacher, HighPoint Advisors, LLC discusses new developments in the profession and their financial impact.
NYSTRS Pension Tiers Require More Saving of New Teachers
New York State Teachers’ Retirement System (NYSTRS) is one of the largest public pension funds in the nation that provides retirement, disability, and benefits to qualifying public school teachers and administrators throughout the state, except in New York City. The organization uses six tiers to determine what retirement benefits members are eligible to receive. These tiers inform the type of benefits educators obtain.
Younger and/or newer teachers typically fall into the less generous tiers, meaning they must work longer to reach the minimum age. For instance, Tier 6 members must wait until 63 to retire, or they will experience a reduction in benefits. Those with over 20 years of service will earn a pension of 35% of their final average salary plus 2% for every additional year. This amount is significantly less than Tier 4 and 5, where the pension for 30 years of service is 60% of the final average salary.
The less generous terms of lower-tier benefits mean younger educators must make lifetime contributions to the pensions. With pension cuts on the rise, these teachers attain lower payouts than those in higher tiers, even if they worked for the same time. This dilemma requires them to save more and make wiser investment choices.
Increasing Teaching Duties Impact Work-Life Balance
Many teachers are retiring early or seeking alternative career paths, but fewer teachers are entering the workforce to replace them. According to Education Week, the number of people participating in teacher-education programs dropped nearly one-third between the 2008-2009 and 2018-2019 school years. This combination has led to a substantial teaching shortage and forced many existing educators to take on more responsibilities in leadership roles.
Administrator positions can be more financially rewarding but sometimes interfere with a work-life balance. Teachers with families may have fewer opportunities to be involved in their children’s lives. Some school districts are using monetary incentives to persuade teachers to accept a job offer, but educators should evaluate if the financial rewards of added responsibilities are worth making the sacrifice.
Rising Childcare Costs Make Staying at Home Practical
Childcare is one of the many services experiencing soaring prices. Younger teachers with children not old enough to attend school must invest in daycare. Competition at childcare centers has increased in the past few years, restricting classroom sizes and charging higher enrollment costs. As a result, many teachers with kids realize it is more affordable to stay at home with their little ones than pursue a career and pay for daycare.
Budget Cuts Placing Personal Financial Burden on Teachers
With more school districts facing budget cuts, many teachers have to tap into their bank accounts to purchase essential classroom supplies. Some organizations, such as the public charity Donors Choose, work to mitigate this issue by providing basic materials to schools primarily serving low-income students. As helpful as the charities are, many new teachers are discouraged about this added financial burden, especially considering their salaries are fixed despite mounting inflation. There are many other public & private resources available to teachers to help obtain supplies they need and get funding to cover the otherwise out of pocket costs. Contact your advisor to get more info.
Educational Requirements Put Further Financial Pressure on Teachers
Prospective teachers may have considerable debt before they even begin their professional careers. Today, most teaching positions require applicants to have a master’s degree. Depending on the school and specific program, this additional credential can cost between $30,000 and $120,000. Entering the workforce with such large debt makes sufficient saving for retirement that much harder for educators.
Navigate the Financial Side of Teaching with HighPoint Advisors, LLC
The current situation has left many teachers feeling alone, with no one willing to listen to their concerns. If you are uncertain about your finances as a teacher and need guidance, reach out to HighPoint Advisors, LLC for holistic financial planning. Our advisors have extensive experience with teachers, as well as the NY State Teacher’s Retirement system. As a matter of fact, our advisors are the designated representatives for the National Educational Association (NEA) approved 403(b) vendor in many of the school districts that we serve. We serve a large number of districts throughout NY State, including but certainly not limited to Syracuse City Schools, Liverpool, Cicero North Syracuse, Fayetteville Manlius, Onondaga, Badwinsville, and OCM BOCES, to name a few.
Located in East Syracuse, New York, we deliver the personalized service of boutique firms coupled with opportunities available at larger firms. Our experienced advisors frequently collaborate to help clients achieve their unique wealth management goals.
At HighPoint Advisors, LLC, teachers will find a financial advisor committed to forming a lasting relationship and staying by their side through various challenges. Contact us today to learn more about how we serve teachers throughout Central NY and the surrounding areas.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.