The Three-Legged Stool of Retirement: Why Teachers Need to Build Their Own Leg

It is the start of the school year, which means a typical conversation I have with teacher friends involves the phrase,

“I can retire in X years.”

For many, it’s even a countdown:

“Only nine years left until I can retire!”

It always bothers me that my friends are allowing the arbitrary formulas adopted by state pension systems to control their lives. Putting aside for a minute the limitations of most teacher pensions, what really gets me is the quiet surrender of personal autonomy.  Katie and I believe that retirement should be about your goals, your timeline, and your freedom and not about waiting for a bureaucratic clock to hit zero. This is especially true as state legislatures increasingly work against the interests of public school teachers.

Katie and I left our W-2 jobs before the state said that we “could” retire.  Sure, it slowed down the date before we hit the “rule of 80” and start drawing a pension, but these years are too valuable to us to be trapped by the bronze handcuffs of our retirement system (because let’s be real, a teacher pension isn’t good enough to even be called golden handcuffs 🙂   

The Three-Legged Stool — and Why Yours Might Be Wobbly

You’ve probably seen the “three-legged stool” model of retirement: Pension, Social Security, and Private Savings. For many teachers, that stool is already missing a leg or two.

• Social Security?
  In many states, teachers won’t qualify at all unless they’ve worked 40 quarters outside the school district. Even if they do, their benefit is often low because only their non-school earnings are counted.
  
• Pension?
  Teacher pensions can be valuable, but they often replace far less of your working income than expected. Without regular cost-of-living adjustments (COLAs), purchasing power declines every year.

That leaves the third leg — Private Savings — as the one you have full control over. Building it strong is essential if you want choices and flexibility in your life.

Where to Start

1. Roth IRA – Make this your first priority. Contributions are made with after-tax dollars, and withdrawals in retirement are tax-free. For teachers, whose salaries will be relatively modest to start with, the up-front tax deduction of a 403(b) or 457 is often less valuable than the long-term benefit of tax-free income.

2. After-Tax Brokerage Account – No tax break now, but maximum flexibility later. Perfect for early retirement or bridging the gap before pensions or Social Security begin.

3. 457 or 403(b) – After maxing your Roth, look at your district’s tax-advantaged plans. Be cautious: many 403(b) options are laden with high fees and sold by aggressive insurance reps. A 457 plan is often a better choice because it allows penalty-free withdrawals if you leave your job before 59½.

Personally, Katie and I invested in a mix of all three account types. This gives us flexibility in early retirement and allows us to control our taxable income year-by-year, optimizing for taxes, health care subsidies, and college financial aid opportunities.For teachers, retirement security means taking ownership of that third leg of the stool. The earlier you start, and the more intentional you are, the steadier your retirement seat will be — and the more it will be your decision when to step away from the classroom and reclaim your freedom.