Saving for Your Retirement

As a public school employee, you dedicate your career to the future of Florida’s students. You deserve a secure and comfortable future of your own.

To help plan for retirement, one of the employee benefits it pays to take advantage of is your 403(b) supplemental retirement plan. This valuable tool — designed for employees of the public school system — can help you meet your retirement goals. Here’s how:

It's tax-deferred:

You pay no current income tax on the money you contribute or on your investment.

It's portable:

If you change jobs, your savings go with you.

It can help close the gap:

You pay no current income tax on the money you contribute or on your investment.

Save More with Less Effort

Since income taxes are calculated after your 403(b) contribution, the amount that goes into your savings account is typically higher than the reduction in your take-home pay.

In the simple example below, a monthly contribution of $300 costs just $225 in take-home pay — because income taxes are lower. At $200 per month, take-home pay in this example goes down by just $150. Over a long career, those pre-tax savings can add up to substantial retirement income.

Tax-deferred savings can lead to higher retirement income

With $300 pre-tax contribution

With $200 pre-tax contribution

Total monthly pay $3000 $3000
Income tax paid $675 $700
Contribution to a 403(b) plan $300 $200
Take-home pay $2,025 $2,100
Reduction in take-home
pay from 403(b) contribution

$225

$150
Increase in saving over
25 years with a 3% return

$133,950

$89,300

Assumes 25% federal income and payroll taxes, annual compounded investment return of 3%, and month-end contributions. For illustration only.

Knowing How Much Is Enough

You will probably need about 70% to 90% of your pre-retirement income to maintain your standard of living when you stop working.

How much will you need to save in order to supplement Social Security and the Florida Retirement System?

A “gap analysis” calculates the amount you’ll need to save on a monthly basis to fill the gap between your retirement income and expenses. You can calculate your own gap analysis, or you can work with a financial advisor or investment plan provider who can calculate it for you.

Learn more about the investment plan providers in your district who can help you determine the amount you should be saving.

Investing for Your Retirement

The most important step in retirement planning is making sure you’re saving enough. The next step is finding the right investment — to put your savings to work for you.

How to Choose an Investment Option

The Model Plan makes it easier for you to choose high-quality and low-cost investment products. These products received a seal of approval for inclusion in the Model Plan from Florida’s leading education organizations working in your best interest.

Florida’s school employees can invest their 403(b) savings in annuities and mutual funds. Within the Model Plan, American Century Investments, PlanMember Services and Security Benefit offer mutual funds. AXA-Equitable, PlanMember Services, Security Benefit and VALIC offer annuities.

Learn more about what annuities and mutual funds are and how they work.

To help decide which type of investment is right for you, ask yourself:

1. How much time are you willing to spend on your investments?

2. Are you interested in investing?

3. How much experience do you have with investing?

4. When do you plan to retire?

Making the Best Choice for You

Many factors will impact your choice of investment options, including how much risk you’re comfortable taking. Be careful to compare how investment options differ in terms of the rate of return you should expect and any fees or charges.

Remember: All Model Plan investment products and the provider companies are monitored for quality and value by an independent investment consultant. These products received a seal of approval for inclusion in the Model Plan from Florida’s leading education organizations working in your best interest.

When you choose a plan, you can work with one of the company’s representatives to decide the best options for investing your 403(b) savings.

Members of the Florida Retirement System can also get retirement advice from an Ernst & Young financial advisor — at no charge. These financial experts come highly rated from other FRS members who have used this service.

Saving and investing for your retirement in a 403(b) plan can help you get closer to securing the financial future you deserve. The Model Plan was created to offer you quality investment options so that you can feel confident in your investment decision.

Quick Facts

Also called a tax-deferred account, a 403(b) plan is a type of retirement savings plan for employees of tax-exempt organizations, including public schools. Similar to a 401(k) plan, the 403(b) allows you to contribute a portion of your salary to an employer-sponsored plan on a pre-tax basis. That means contributions are made before income tax is calculated, which lowers income taxes paid. The investment gains from these contributions also grow on a tax-deferred basis, so no income taxes are paid until the money is withdrawn as income from the plan.

There are many reasons to participate in a 403(b) plan, including significant tax advantages:

  • It is tax-deferred, which means you pay no current income tax on the money you contribute or on your investment earnings.
  • Since taxes aren’t taken out of contributions to your 403(b), the amount that goes into your savings account is typically higher than the reduction in your take-home pay.
  • Your 403(b) is portable: If you change jobs, your savings go with you.
  • Your supplemental retirement savings will help secure your financial future by filling in the gap between the income you can except to receive from the Florida Retirement System and Social Security and your actual retirement needs.

The Independent Benefits Council (IBC) is a not-for-profit organization formed in 2007 by four of Florida’s leading education groups — the Florida Education Association, the Florida Association of School Administrators, the Florida School Boards Association and the Florida Association of District School Superintendents. The IBC works on employee benefits issues for which a statewide approach would likely benefit public school employees and employers, compared with district-by-district action.

Established by the IBC, the Model Plan brings together a set of preferred products for Florida’s school employees’ supplemental retirement savings within 403(b) plans. Investment products and the companies that provide them have been thoroughly vetted to ensure fairness and transparency in fees and costs, as well as high-quality performance and services. They are continually monitored to maintain these high standards and values.

Within the Model Plan, employees can invest in annuities, mutual funds, or a combination of both through multi-product accounts that combine these registered products. You can choose the product type that best meets your individual circumstances and your investment preferences.

Learn more about annuities and mutual funds.

Five investment companies comprise the Model Plan selected by the IBC to provide supplementary retirement products in the following categories:

Annuities

AXA

PlanMember Services

Security Benefit

VALIC

Mutual Funds

American Century Investments

PlanMember Services

Security Benefit

Multi-Product Accounts

PlanMember Services

Security Benefit

To start saving for your retirement, learn more about the options available in the FOR EMPLOYEES section.

From there, you can find a plan in your district. You can also work with one of the company’s representatives to decide the best options for investing your 403(b) savings.

Yes. The Model Plan was designed to meet the supplementary retirement investment needs of all school employees. Because of the diversity of products available from Model Plan companies, participants will find options that meet their individual circumstances.

The Model Plan makes the investment decision less overwhelming and more manageable while maximizing the value to you.

When the Model Plan was established, all companies then offering 403(b) products in Florida’s school districts were invited to participate in the selection process. Some companies chose not to participate because they didn’t want to offer programs statewide, which is required by the Model Plan. Others felt their prices wouldn’t be competitive.

Ultimately, five companies earned the IBC’s seal of approval for inclusion in the Model Plan. These companies offer high-quality products and services at fair prices to 403(b) participants in Florida.

Yes. Several of the companies included in the Model Plan offer trained financial representatives to meet personally with you by phone or in person.

The amount of additional retirement savings depends on many factors, including the difference in investment returns and fees and how long you’re invested.

By selecting a Model Plan option, you can rest assured that the investment company and the investment product have been thoroughly vetted to ensure high quality at a fair price.

Yes. You choose the level of service you need from an investment plan provider. Total costs vary for specific products and services, but all investment options were vetted to ensure fairness and transparency in fees and costs, as well as high-quality performance and services.

Potentially. This is an important feature of the multi-product custodial account. PlanMember Services and Security Benefit offer hundreds of different mutual fund companies through their investment portfolios. Yours most likely is among them.

FIND A PLAN FOR YOUR DISTRICT

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