Teachers are natural planners. Preparing lessons and creating engaging classroom activities are an integral part of the job. But when it comes to planning for retirement, many teachers have some prep work to do. It’s understandable. If you’re a new or even not-so-new teacher, thinking about retirement is probably pretty far down on your list of priorities. But financial preparation today can help ensure that when you finally bid farewell to the classroom, you’re in the best possible financial shape. Think of it as taking care of your future self, who many years from now will thank you.

Pensions and Social Security

Although most teachers pay into a pension fund from day one, teachers are not guaranteed a comfortable retirement. The pension system is complicated. In all but a few states, public school teachers contribute to the fund by paying in a small percentage of their salary each year. The state also makes a contribution. Then, when teachers retire, those who qualify receive a predetermined amount, a figure calculated by a complex formula that varies from state to state. This formula isn’t subject to the whims of the stock market, so the payout is fixed. That’s the good news.

But teacher pensions are far from golden parachutes. In most states, you have to teach a minimum of 10 years to receive any payout at all. And other factors can jeopardize the pension of even veteran teachers, such as a move across state or, in some cases, district lines. It’s crucial to know what the rules are in your district and how they apply to you.

What about Social Security benefits? According to Teacherpension.org, more than one million K–12 teachers (about 40 percent) are not covered under Social Security. Coverage varies within states and sometimes even within districts. If you’re unsure whether or not you’re covered, be sure to find out as soon as possible.

Investing   

If you can’t count on a pension or Social Security benefits to help ensure you have a well-padded retirement, what can you do? Invest in your retirement yourself.

Unlike private sector employees, teachers aren’t allowed to invest in 401(k)s. What’s available instead are plans known as 403(b) retirement plans. These are tax-deferred plans similar but not identical to 401(k)s. Investing in a 403(b) plan benefits you in two ways: It allows you to invest pretax dollars for your retirement and, in so doing, it lowers your taxable income each year.

A 403(b) plan lets you determine how much to contribute each year, up to a maximum, and it gives you some say in how the money is invested. A number of insurance and financial services companies are usually available to manage 403(b)s, so be sure to shop around!

Create a Budget

But how do you save for retirement if you are just barely making ends meet? Finding extra money each month can be difficult, but the strategy of budgeting can help you determine a realistic amount to set aside each month, and it can give you the discipline to follow through to meet your goals. 

The first step is to calculate your monthly expenses, making sure to include personal, household, and classroom expenditures. A number of free apps are available to help you do this; Dollarbird, Mint, and Mvelopes are just three of the many good options out there. If you prefer to work with a spreadsheet, Mint also offers a variety of free downloadable templates that you can use with any spreadsheet software that supports .xls files. And if you’d like to keep things nice and low tech, you can create a budget with nothing more than a pen and paper. The important thing is to find a method that works for you, and then use it.

Budgeting will help you track your monthly expenses so you know exactly where your hard-earned dollars are going each month. If you’re like most teachers, you likely spend hundreds of dollars of your own money on classroom supplies every year. Kindergarten teacher Allie Magnuson advises making an online wish list for parents who want to contribute, and suggests you remind them to check the list on a regular basis. “If you create your wish list on Amazon, you can add a product from any website — not just Amazon — so all your requested items are compiled on a single list,” she says. “For big-ticket items, consider Donors Choose, which allows you to take advantage of the generosity of strangers through crowdfunding.”

No matter how much money you’re able to come up with each month, remember: Even small contributions to your retirement fund, if made consistently, do add up. So start saving now. Your future self will be grateful you did.