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Educate the Educators About Retirement, Researchers Say

There is work to do regarding increasing teachers’ knowledge and understanding of retirement benefits and plans, according to a recent study. It’s time to educate the educators, they suggest.
In  “Teachers’ Knowledge and Preparedness for Retirement: Results from a Nationally Representative Teacher Survey,” Dillon Fuchsman of Saint Louis University’s Sinquefield Center for Applied Economic Research, Josh McGee of the University of Arkansas Office for Education Policy and Gema Zamorro of the University of Arkansas Department of Education Reform and Center for Economic and Social Research note that while teachers participate in a variety of retirement plans, little is known about their grasp of retirement, nor how they prepare for it. The researchers argue that it is vital to understand how much teachers know about their employer-sponsored retirement plans and how financially literate they are in order to ensure that they are able to make sound decisions about retirement. 

To find out more, they surveyed a “nationally representative” sample of educators  through RAND’s American Teacher Panel concerning retirement planning and employer-sponsored retirement plans. 

Segment-Specific Factors

Fuchsman, McGee and Zamorro write that there are aspects of retirement systems that serve teachers that simplify retirement planning; for instance, teachers generally are automatically enrolled in a plan that a state or school district sponsors. That means, they say that they will receive lifetime benefits and that the plan or its sponsor make most decisions concerning the plan, contributions and investments. 

At the same time, they say, there are aspects of the plans that serve teachers that make planning for retirement harder. For example, they argue, teachers’ pensions often are “backloaded”—benefits are lower early in their careers and higher later in their careers. And this can have a significant impact, Fuchsman, McGee and Zamorro suggest: they cite research that found that less than half—45%—of educators will work long enough to qualify for retirement benefits, and a strong majority—80%—will fail to qualify for full benefits. They add that the fact that some teachers lack supplemental sources of retirement income, and the fact that 40% of teachers do not participate in Social Security, signify the importance of employer-provided plans for teachers. 


Fuchsman, McGee and Zamorro report that there is good news and bad news. In general, they say, most teachers are doing something to prepare for their retirements. More specifically: 

  • More than half have tried to develop a plan for retirement;
  • 70 percent are saving independent of their employer-sponsored plan; and 
  • of those that are married or have been, 70% say their spouse participates in an employer-provided plan.

At the same time, however, they found that teachers do not have the sufficient basic knowledge for them to plan for retirement effectively. More specifically:

  • Around 45% could not identify what kind of plan they were participating in;
  • 30% don’t know how long their benefits will last; and 
  • respondents struggled to say:
    • how much they contribute to their retirement plans;
    • when they will be able to retire; and 
    • who contributes to Social Security. 

Fuchsman, McGee and Zamorro also note that the lack of knowledge is most acute among younger teachers. 

The Bottom Line 

Fuchsman, McGee and Zamorro warn that the lack of knowledge about retirement benefits and the value makes it hard to plan for retirement and could result in teachers being financially insecure in retirement. Teachers are “not fully equipped” to make choices about their retirement, they say—which, they say, could lead to poor decisions and planning. 

The silver lining to relative lack of knowledge and comprehension, the researchers suggest, is that reforming retirement for teachers may not be disruptive and states may be able to make changes with “minimal pushback.” 

Fuchsman, McGee and Zamorro also look to better educating the educators. They suggest that it would be helpful to provide them with better information that is simpler and more clear. Policymakers should craft “information interventions,” they argue, that will better enable teachers to prepare for a secure retirement.

All comments
Edward Dressel
4 months 12 hours ago

It seems highly unlikely that many of the 50 states will implement "information interventions" (what is that) for teachers, but this doesn't mean all is lost. Actually, this provides a significant opportunity for advisors working in the 403(b) world. Bringing teachers an effective retirement education solution that engages them can help an advisor stand out! The teacher will appreciate the education, and an advisor can grow their business and distinguish themselves from others.

The best way I know how to do this is to provide an integrated benefit analysis for the teacher (a typical retirement years income chart) that shows the pension, other savings, and if they have it, Social Security. If there is a shortfall in the chart, ask the teacher how they want to solve the shortfall--this last part is key. It integrates the teacher in their own retirement planning in a meaningful way, effectively putting them in the driver seat (often for the first time). The teacher will often typically become engaged and start to understand retirement for the first time.

If others have methods that have worked for them, I would enjoy reading your responses.