Teacher Retirement Planning: Why You Don’t Need a Huge Portfolio
- David Gourley
- Jan 15
- 4 min read
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Many teachers worry they are “behind” on retirement because their investment accounts don’t look as large as those of friends or family in the private sector.
But retirement planning for teachers is fundamentally different.
Thanks to pensions, educators can live a rich, secure retirement without building a massive investment portfolio. Understanding how your pension fits into your overall retirement plan can completely change how you view your financial progress.
Retirement Planning for Teachers Is Different
Most retirement advice assumes you must create 100% of your retirement income from investments like 401(k)s and IRAs.
That assumption does not apply to most teachers.
Why Traditional Retirement Advice Falls Short for Educators
Teachers typically have:
Lower salaries than comparable private-sector professionals
Access to defined benefit pension plans
Less reliance on market-based retirement income
Comparing a teacher’s retirement accounts to a corporate employee’s 401(k) balance is misleading. Teachers are building wealth in a different form. One that provides guaranteed income for life.
The True Value of a Teacher Pension
A teacher pension provides something investments alone cannot guarantee: stable, lifetime income.
How Teacher Pensions Create Retirement Security
Monthly income for life
Survivor benefit options for spouses
Protection from market downturns
Cost-of-living adjustments (COLAs) in many states
Instead of asking, “How big is my portfolio?” teachers should ask:
“How much income will my pension provide in retirement?”
That income is the foundation of a strong retirement plan.
Teacher Pension vs Investment Portfolio: A Fair Comparison
To understand the value of a pension, it helps to translate pension income into investment terms.
Using the 4% Rule to Understand Pension Value
The 4% rule is a commonly used retirement guideline that suggests retirees can withdraw about 4% of a diversified investment portfolio each year, adjusted for inflation. It's not a hard and fast rule, but something we can use to have a conversation.
Using this framework:
$40,000 per year of pension income ≈ $1,000,000 portfolio
$80,000 per year of pension income ≈ $2,000,000 portfolio
$120,000 per year of pension income ≈ $3,000,000 portfolio
Many two-teacher households will generate six-figure pension income, placing them in an excellent retirement position, even if their investment accounts appear modest.
Why Teachers Often Feel Behind for Retirement
Despite strong retirement benefits, many educators still feel behind.
Common Reasons Teachers Underestimate Their Retirement Readiness
Teachers often:
See smaller investment balances on statements
Compare themselves to high-earning professionals
Ignore the lifetime value of their pension
Focus on net worth instead of income
Social media and online comparisons rarely account for pensions, making teachers feel like they are falling short, even when they are not.
A Rich Retirement Looks Different for Teachers
A successful retirement is not defined by a seven-figure portfolio alone.
What a “Rich Life” in Retirement Really Means
For many teachers, a rich retirement includes:
Guaranteed income covering essential expenses
Freedom from worrying about market volatility
Flexibility to travel and enjoy hobbies
Confidence that money will last
Retiring from education in their 50s!
When a pension covers day-to-day expenses, investment accounts become a supporting tool, not the primary source of income.
How Investments Fit Into a Teacher Retirement Plan
Having a pension does not mean investments are unimportant. It means they serve a different role.
Investment Planning for Teachers With Pensions
Teacher investment accounts can be used to:
Bridge the gap before Social Security starts
Cover large one-time expenses
Provide inflation protection (especially in states that don't have COLAs)
Add lifestyle flexibility
Serve as legacy assets
Why Financial Planning for Teachers Should Be Different
Many financial planning firms require large investment minimums, which can unintentionally exclude educators.
Teachers Should Not Be Penalized for Having a Pension
A pension is a valuable asset, even if it does not show up on an investment statement.
Teachers deserve a Financial Planner who:
Understands pension systems
Integrates pensions with their investments
Focuses on income, not just account size
Aligns planning fees with educator realities
A pension-centric approach leads to better decisions and greater peace of mind.
Final Thoughts on Retirement for Teachers
If you are an educator who feels behind on retirement, take a step back.
If your pension will provide:
$40,000 or more per year of lifetime income
Potential inflation adjustments
And you have additional savings in a 403(b), Roth IRA, or brokerage account
You may already be closer to a rich, secure retirement than you realize.
Your wealth just looks different, and that difference is a strength.
If you are an educator who wants to work with a Financial Planner that understands your needs, fill out the Financial Planning Application to get started today!
David Gourley is the Founder and lead Financial Planner at K-12 Planning, an independent financial planning firm specializing in finance for teachers. He served for eight years as a high school mathematics teacher before transitioning into the financial services industry. He started K-12 Planning in 2024, and his passion for serving as a fiduciary for teachers and a student loan planning expert runs deep, as his wife and several other family members have served as educators for years.
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