What is a 403b? - YouTube

Hey teachers! I want to talk to you about  saving for retirement, but before I do  

I want to first thank you for what you do.  I personally know how difficult teaching can  

be. The kids are great, but the work can  be exhausting. There's morning bus duty,  

15-minute lunches, and large class sizes. But  there are perks, and I'm not just talking about  

July and August. One of those perks is that  you have access to something called a 403(b).  

What's that? It's a retirement plan available  to teachers and other school employees. It's  

similar to the 401k and it can be a game changer  in terms of how much you save for retirement.  

Let me explain. Most teachers have a pension, but  will that be enough for a comfortable retirement?  

Here's why it might not be. Few pensions  pay out 100% of your last year's salary.  

Many teachers are career switchers and haven't had  time to build up sufficient pension credit, plus  

medical costs and retirement can be significant.  That's where the 403(b) comes in. Here are a few  

key points you need to know. You can contribute up  to $19,500 a year. If you are age fifty or older,  

you can contribute an additional $6,500 a  year and you can contribute on a pre-tax or  

after-tax basis. Sounds great, right? The problem  is that most 403(b) plans stink. What do I mean?  

Costs. Most 403(b) investments cost too much.  This is because most of the investment choices  

are through insurance companies who use  high-commissioned sales people to sell  

high-cost products. Ever walk into your staff  lounge to find a "financial professional"  

has provided sandwiches or pizza for lunch? How  nice, right? You probably feel obligated to buy  

his or her 403(b) product. Don't do it. That will  be the most expensive lunch you ever buy. Signing  

up with the wrong provider could cost you hundreds  of thousands of dollars. Look what happens to  

three teachers who invest the same amount over the  same period of time and receive the same annual  

return. Teacher 1's 403(b) is now worth $185,391  dollars. Teacher 2's 403(b) is now worth $241,537.  

Teacher 3's 403(b) is now worth $343,474. Why  such a difference? Costs. Teacher 1 committed  

to a plan that charges 3% in fees. Teacher 2 pays  1.74% in fees and teacher 3 pays 0.07% in fees.  

Doesn't take a math teacher to realize that it  is much better to pay 0.07% in fees. In fact,  

it's more than $158,000 better and that'll buy  a lot of sandwiches. Get wise to the 403(b) at  

403bwise.org. Learn how to get better lower cost  investment choices and while you're at it, join an  

active community of classroom teachers fighting to  improve the K-12 403(b). My name is Dan Otter and  

I'm a former elementary and middle school teacher.  I started 403bwise because I was tired of seeing  

my colleagues getting ripped off by sales agents.  The K-12 403(b) is broken. Together we can fix it.