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A Short Review of “Teach and Retire Rich” by Dan Otter
By JLP | April 6, 2009
Just because you are a teacher, doesn’t mean you have to settle for a cash-strapped retirement. There are plans available to teachers that if used properly, can help teachers have a comfortable retirement.
If you are a teacher and you don’t understand your retirement planning options, you NEED to read Teach and Retire Rich* by Dan Otter. It’s an excellent primer on retirement planning for teachers. It’s not going to give you all the answers because the 403(b) and 457(b) markets are so fragmented but I like the fact that the book gives readers questions to ask their administrators as well as steps to take in getting started in their school’s plan.
One thing is for certain after reading this book: If your school district doesn’t offer a low-cost 403(b) option, ASK FOR ONE! Don’t accept no for an answer. Some of the lower-cost 403(b) providers are Vanguard, TIAA-CREF, T. Rowe Price, and USAA.
The reason 403(b) plans are so expensive is that there is no incentive for brokers to offer cheaper alternatives since they typically don’t get paid to promote such products. They typically make commissions on insurance-type products or load mutual fund products. Also, you can’t rely on the school administration to be proactive in offering low-fee products. So, proactive teachers must request these plans.
How important is it have a low-fee 403(b) option? Very! Since most 403(b) plans are insurance products, the fees on some of the products can be 2 percent or more. Contrast that with index funds offered through Vanguard that run .2 percent. Yes, those extra fees go to pay for insurance and some guarantees, but some of those “benefits” are of quesitonable value.
You can find out more by checking out Dan Otter’s websites: 403bwise.com and 457bwise.com.
*NOT an Affiliate Link
Topics: Books | 3 Comments »
April 7th, 2009 at 8:46 pm
Great post! Brokers are trying to make a living, the school administrators are just lazy.
April 8th, 2009 at 7:39 am
The new 403b laws make it impossible to follow this advice. Schools don’t want to pay money to have a low fee provider come in when they can have a high fee provider do it for free. Before Jan 1st you could purchase your investments from whoever you wanted, now you can only purchase from who the school partners with.
April 8th, 2009 at 8:02 am
I think you should remove that 457 link. That doesn’t look like a legitimate web site. It looks like a “link farm”.