Good for you for thinking ahead! I suggest going for both a TSA (401) and a
Roth IRA. TSA's are before taxes and I can't remember if the Roth IRA is.
The limits for both of these accounts has been raised lately. Starting
young and having direct deposit on these will make it painless. It's
amazing how fast these will develop into valuable assets.
Before tax programs are great, especially if you don't own a house or have
any deductions. This will significantly reduce your tax burden. I think I
was told that for every dollar you put in a TSA, 1/3 of it would have been
Also consider getting disability insurance, especially if you are single.
It's really hard for teachers to get workers' compensation. Look for a
disability program that pays at least 60% of your salary and goes to age 65.
The cost is cheap at your age. The price goes up slightly every five years
that you have the policy. Your teacher's union probably has one of these to
suggest. Also, if your union has a catastrophic illness fund, contribute
the required number of sick days to it.
Besides setting up a secure retirement, these accounts can be helpful in
other ways. I have been getting a house refinance and they counted my TSA
and Roth IRA as part of my liquid assets for the loan.
-Alix E. Peshette
Emerson Junior High School
From: Krista Ranly [mailto:firstname.lastname@example.org]
Sent: Thursday, March 27, 2003 2:21 PM
To: ArtsEdNet Talk
Subject: Need advice on retirement plan
As a new teacher, I am hoping that someone out there has advice on starting
a retirement account. I'm debating between various types of IRAs, a direct
compensation program, etc. Also, I'm trying to figure out if I'm better off
doing a plan that invests before-tax or after-tax income. I'd greatly
appreciate any knowledgeable insight :)...