We’ve seen it all as teachers, haven’t we? New curriculums, shifting policies, and, of course, political changes that sometimes leave us scratching our heads. Well, buckle up, because with the recent election of Trump, it’s time to start thinking about how the next few years could impact your retirement plans as a NYS educator.

Let’s get real about what could happen and why it matters right now:

1️⃣ Potential Cuts in Education Funding 💸

Under Trump’s leadership, we might see a shift in federal priorities that could lead to cuts in funding for public education. Less funding often translates to larger class sizes, fewer resources, and increased stress in the classroom. While you might be a pro at adapting to change, these conditions can have a significant impact on your career longevity, health, and, importantly, your final average salary (which is crucial for calculating your pension!).

2️⃣ Will Your Final Average Salary Take a Hit? 📉

Your NYSTRS pension is based on your final average salary, which is usually calculated using your highest-earning years. If we start seeing budget cuts, wage freezes, or restrictions on contract negotiations, your potential earnings in those critical final years could be impacted. This would mean a lower pension than you may be anticipating. It’s time to ask yourself: Is my retirement plan prepared for this possibility?

3️⃣ What About Investment Returns? 📈💲

With Trump’s election, there are bound to be changes in economic policy, tax structures, and regulations that could affect market performance. While markets can be unpredictable, political shifts like this often lead to volatility. And if you’re counting on your 403(b), Roth 403(b), or other investment accounts to supplement your pension, we need to consider how these fluctuations might impact your portfolio.

The truth is, as educators, we’re used to rolling with the punches and adapting on the fly. But when it comes to your retirement, you can’t afford to take a “wait and see” approach. A strong financial plan is proactive, not reactive.

Let’s Make Sure Your Plan is Election-Proof! 🛡️

I’ve been a teacher for 30+ years, as well as a financial advisor so I know the unique challenges we face in the education sector. I’ve also navigated countless political and economic shifts, helping teachers like you secure the retirement they deserve.

Now is the time to take a hard look at your retirement strategy and make sure it’s built to withstand whatever changes may come. If you have questions or just want a second opinion, I’m here to help.

As you may know, the New York State United Teachers (NYSUT) has been busy lobbying the politicians in Albany to make some tweaks to the tier 6 pension.🐝💼
Those efforts have been bearing some fruit as of late.
First up on the chopping block: the vesting period. In 2022, Kathy Hochul and the Legislature waved their magic wands and poof! Reduced the time it takes to vest in the pension from 10 years to 5. Just like that, Tier 6 is feeling a little more like Tier 4. Of course, this was done with the lobbying efforts of NYSUT🎩🐇
But wait, there’s more! During the current legislative session, the NYSUT Leader Bulletin that I received dropped a bombshell: a major improvement to the final average salary calculation for tier 6 members. No more averaging the best 5 consecutive years; now, it’s the best 3 consecutive years. Talk about moving in the right direction! 🚀💰
The Road to Tier 4 Status:
While these changes are certainly cause for celebration, we’re not even close to Tier 4 status yet. The major issue is getting the age at which one can collect a full pension down from 63 to 55. With each step forward, we’re getting closer to a retirement plan that rivals Tier 4. 🏰💼
Stay Informed, Stay Empowered:
So, what’s the moral of this pension tale? Members need to keep the pressure on the pols. After all, knowledge is power, and a well-informed educator is a force to be reckoned with! 💪📚
Of course, you should not be relying on your pension alone to bail you out. You should be contributing 10% of your salary to your district’s 403b plan and make sure it’s not in an annuity which is high in fees and commissions.
1) Automate your savings and investing. Make the money come out of your paycheck or checking account automatically, that way you can’t spend it. This is called paying yourself first.
2) Invest Wisely: Explore investment opportunities aligned with your risk tolerance. Smart investment decisions can make your money work as hard as you do. For me personally, I’m in stocks all the time because I’ve lived through a lot of market ups and downs over the last 30+ years. However, this may not be suitable for you. It depends on your personality.
3) Debt Management: Make 2024 the year to tackle debts strategically. Whether it’s student loans or credit card balances, a proactive approach can pave the way to financial freedom.
Always, always, always pay off your credit card balance at the end of the month. Many credit cards charge interest that is 30% per year. I’ve seen way too many people have their finances destroyed by this.
4) Contribution Maximization: Maximize your contributions to retirement accounts. In 2024, you can contribute up to $23,000 to your 403(b),457 and 401K plans and up to $6,000 to your IRA. For those 50 and over, catch-up contributions are your secret financial weapon. You can add an additional $7,500 for a total of $30,500. For an IRA it’s an extra $1,000.
If you want to turbocharge your investing you can have a 403b and a 457 and contribute the max to both.
5) Open a Roth 403b or 401K if your school or employer allows. The money will grow tax-free for life. Probably the best investment choice out there.
If you need any guidance or have questions about your financial journey, I’m here to help!
Here’s to a prosperous and joy-filled 2024!

Energy Efficient Home Improvements Credit:

$1,200 credit for energy-efficient home improvements! It used to be only $500 and good for only 1 year. The new credit is good year after year as long as you make the improvements of course.
If you installed qualifying exterior windows/doors, skylights, insulation materials, and more, or purchased a new furnace, hot water heater, or central air conditioner you may be eligible for this tax break. The credit limit is up to $1,200 per taxpayer per year with a $600 per item cap on most types of property.
And, there’s a higher credit limit of up to $2,000 for a separate category of heat pumps, heat pump water heaters, and biomass fuel stoves.

Residential Clean Energy (RCE) Credit:

Shine bright with a 30% credit for installing solar panels or solar water heaters. New York State is also throwing in an additional $5k for your eco-friendly efforts. Green energy is not just good for the planet; it’s fantastic for your wallet too!

Electric Vehicle Credit:
Navigate tax savings lanes with electric vehicles! Whether you choose a new or used model, credits are zooming up to $7,500 for new vehicles and $4k for used. Buckle up, and let your tax journey be as smooth as an electric ride.
You could claim the tax breaks if you purchased qualified vehicles and your modified adjusted gross income does not exceed $300K if married filing jointly, $225K if head of household or $150k if single. Car price can’t exceed $55k and SUV can’t exceed $80K.

Standard Deduction Increases:
$13,850 for singles
$20,800 for heads of households
$27,700 for those married filing jointly.

If you’re over 65 you can add $1500 to the standard deduction or $3K if both spouses are over 65.

The SALT deduction is still capped at $10K but as of this email, it is being debated in Congress, so fingers crossed for positive changes.

Tax filing begins as early as Jan. 23 for this season if you have received all your paperwork.

As the holiday season sparkles its way in, let’s dive into the whimsical world of presents that every educator secretly dreams of! Because, let’s be real, a well-behaved class is priceless, but a little extra sparkle doesn’t hurt! 🎄✨

  1. Coffee, Coffee, and More Coffee ☕☕☕
    • A never-ending flow of caffeine to keep us energized through lively classroom moments and financial planning marathons. Teaching: one of the highest-ranking professions in coffee consumption, right behind cops.
  2. A Magic Wand for Classroom Cleanup 🪄✨
    • Abracadabra! Poof! Imagine effortlessly tidying up the chaos at the end of the day with a wave of our magical wand.
  3. Noise-Canceling Headphones 🎧🔇
    • A sanctuary of serenity amidst the symphony of school bells and the bustling market of financial news—perfect for staying focused. (Elementary PE teachers can definitely use them! 🤣)
  4. Spa Vouchers for Pampering 🧖‍♀️🌺
    • Because self-care is non-negotiable, and a rejuvenated teacher is a powerhouse in the classroom and the financial realm. (My wife loves these!)
  5. Gift Cards Galore 🎁💳
    • From office supplies to that little guilty pleasure, a variety of gift cards ensures every teacher gets just what they need.
  6. The “Extra Day Off” Coupon 📅🎫
    • A golden ticket to seize a moment of zen, whether it’s for lesson planning, catching up on the latest financial trends, or even Christmas shopping.
  7. A Portable Charger for Classroom Gadgets 🔋📱
    • Keeping both our teaching and financial planning devices juiced up and ready for action.
  8. Inspirational Wall Art for the Classroom 🎨📚
    • A touch of motivation and aesthetic flair to keep both students and teachers inspired.
  9. Comfortable Classroom Seating Options 🪑🛋️
    • A cozy teacher throne or a cushioned oasis for those moments of respite between lessons and market analyses.
  10. A Time-Turner from Harry Potter ⌛🧙‍♀️
    • For those days when there’s just not enough time to teach, plan, and indulge in a bit of self-care.
  11. Less PD (Professional Development) Time 🚫📚
    • Because, let’s be honest, who wouldn’t appreciate a little less time in meetings and more time doing what we love?

🌟✨ What’s on your holiday wishlist, educators?

As you approach the golden gates of retirement, it’s time to unlock the secrets of your pension formula. The following 3 variables are the key to your financial pot of gold. 🌈🎉
1) Pension Factor ✅
This is the magic number based on your years of dedicated service in the retirement system. For our cherished Tier IV members, the goal is clear: you want to clock in at least 20 years of service to reach that coveted 40% pension factor. (That’s 20 years multiplied by 2% per year of service!) However, beware the pension factor pitfall! If you have less than 20 years, it falls to a less exciting 1.67% per year. Ouch! 🕰️
2) Age Factor 🎂
Think of this as the birthday candle that should always be burning brightly. Ideally, you want it to equal 1, which means no age-related penalties. The sweet spot here is 30 years of service and at least age 55. If you’re Tier IV and your service years are below 30, brace yourself for a fraction in the age factor, and a significant reduction in your pension payout. But don’t worry; there are strategies to overcome this challenge! 🕯️
3) F.A.S. (Final Average Salary) 📈
This is where your financial prowess truly shines. Your F.A.S. is calculated from your three best consecutive years. These years can include home teaching, class coverages, coaching, and other teacher or administrative duties. But here’s the kicker: it can’t include certain extras like health insurance buybacks, employer contributions to your 403b, or payouts for unused sick days. Furthermore, your F.A.S. calculation is capped at 10% of the average of your two previous years. In simpler terms, if you’re expecting a significant income increase, aim to secure it during your last five years to avoid that pesky 10% cap. 💡💼
Now, here’s your chance to take action:
As you near the final stretch of your teaching journey and the prospect of a relaxing retirement, make sure to schedule a personalized consultation with me. Together, we’ll craft a strategy that optimizes these factors to maximize your retirement income. In order for me to do this you will need to be a client of mine. In order to do that I will have to manage your 403b. Transferring that over to me to manage is easy because I do all the work – I do it all the time. I will probably even save you $$ on fees and commissions.
Don’t wait until the last minute! The sooner we start planning, the brighter your financial future will shine. 🌟🚀

6 steps to your estate plan

Help protect your family’s financial future

Estate planning is the process of designating who will receive your assets after you pass, documenting your health care directives and identifying who will care for your minor children. A Trust, Power of Attorney, and Advance Healthcare Directive are some of the most common documents all designed to document your wishes and give your heirs access to your assets. Your estate plan is a fluid process that should be updated as your personal and financial situations change. To help get your estate plan going, here are 6 steps to consider:

1. Make a list of your possessions

You may think you don’t have enough to justify an estate plan. But once you think about it, you might be surprised by all the tangible and intangible assets you have.

Your tangible assets may include:

  • Homes, land, or other real estate
  • Cars, motorcycles, boats, or other
  • Vehicles
  • Collectibles such as coins, art, antiques, or trading cards

Your intangible assets may include:

  • Checking and savings accounts and Certificates of deposit
  • Life insurance policies
  • Retirement plans such as 401(k)/403(b)/457(b) plans and IRAs
  • Stocks, bonds, and mutual funds

2. Review your beneficiaries

Retirement plans and insurance products usually have beneficiary designations that you need to keep track of and update as needed. Those beneficiary designations can outweigh what’s in a will. Keeping your beneficiaries up-to date will help ensure the right people get what you intend after you pass. People often forget the beneficiaries they named on policies or accounts established many years ago. For example, if your ex-spouse is still a beneficiary on your life insurance policy, your current spouse will not get the policy’s payout after you’re gone.

When naming your beneficiaries, you’ll want to designate the percentage of your account assets each beneficiary will receive. Also, make sure to name contingent beneficiaries. These secondary beneficiaries are next in line if your primary beneficiary dies before you do and you forgot to update your primary beneficiary designation(s). If you leave anything blank, an account may go through the probate process and be distributed based on the state’s rules. It’s a wise idea to maintain a list of all of your named beneficiaries along with the account and/or policy providers’ names and account numbers. Establishing and updating such a list is an important component of an estate plan list and makes it easy for your heirs to locate your assets after you pass on. Check out my Beneficiary Planning System designed to help make documenting and tracking of this important information easy.

3. Protect what you have

Once you have determined what’s in your estate, think about ways to protect your family and assets after you’re gone. A suitable amount of life insurance may be important if you’re married and your current lifestyle and/or monthly mortgage payment require dual incomes. Life insurance may also be important if you have college tuition bills or a child with special needs. You may want to document your wishes for your minor children’s care. Don’t assume that certain family members will share your child-raising ideas and goals. Additionally, don’t assume a judge will abide by your wishes if have not documented them and the issue goes to court.

4. Establish your directives

A complete estate plan includes important legal directives. This includes a trust/and or will, Power of Attorney (POA) and Advance Healthcare Directive (AHCD). A will is a written document that becomes effective only after your death and expresses your wishes which may include naming guardians of minor children and bequeathing objects and cash assets to relatives, friends, or charities. A trust is active the day it is validly executed, and a grantor can list the distribution of assets before his or her death. All wills must go through a legal process called probate. This process can be long and potentially contentious if family members contest the will. Trusts are not required to go through probate when the grantor dies, and they cannot be contested. With a living trust, you can designate portions of your estate to go toward certain things while you’re alive. If you become ill or incapacitated, your selected trustee can take over. Upon your death, the trust assets are transferred to your designated beneficiaries.

You may also want to consider a power of attorney (POA) which is a legal document that gives someone the power to handle your financial affairs or gives legal rights so they can handle any of your non-heath or non-medical affairs if you become incapacitated. An advance healthcare directive (AHCD) states what medical actions should be taken if you become unable to make your own decisions.

5. Enlist the help of a professional

If your estate is small and your wishes are simple, an online or packaged will-writing program may be sufficient for your needs. If your estate is more complicated or you have any doubts about the process, consult an estate attorney and possibly a tax advisor. Don’t worry. more than 99% of estates don’t pay taxes!!

6. Plan on adjustments

Revisit your estate plan every 3-5 years or when your personal and financial circumstances change. This may include marriage, divorce, birth of a child, loss of a loved one, a new job, or being terminated. Even if your circumstances don’t change, you should periodically revisit your estate plan as laws may change.

I only work with K-12 public school educators on Long Island. Why, you may ask? These are the people that I know best because I was a public school educator here for 32 years. I grew up in Patchogue and eventually moved to Blue Point in 1993. My kids attend Bayport-Blue Point Schools. Bayport-Blue Point is a small community but it definitely “punches” above it’s weight class – as evidenced by many of it’s sports teams. We are nestled between Sayville and Patchogue on the west and east. Just to our north is Holbrook, Holtsville, Farmingville and Medford. Many of my educator clients come from these surrounding areas.

🗳️ What’s the most important election when it comes to your finances as a public educator? It’s definitely not the presidential election. 🙅‍♀️ Believe it or not, economic data from the last 100+ years shows that it doesn’t matter if a Republican or Democrat is in the White House. 🤷‍♂️
The elections that matter the most to your work life are your local school board elections. 🏫 The school board members you elect set the policies that shape your profession and the terms and conditions of your contract. 💼
As someone who knows first-hand how hard it is to balance teaching and being a parent, with a wife who is a 2nd-grade teacher, I can tell you that it’s important to get out and vote, even if you don’t work in the district where you live. 💪 Salary, benefits, and working conditions are not created in a vacuum. Other districts always look at what neighboring districts are doing with regard to pay scales, benefits, and class sizes.
This year, your school board elections are tomorrow, May 16th. If your school budget fails and/or anti-teacher school board members get control of your school board, this can wreak havoc on your finances and your classrooms. Those rows and columns that you look at in the back of your teacher’s contract can change, and it’s not always for the better. 📉 So please, get out and vote! Your profession depends on it. 🙌
As a financial advisor, I often think about the similarities to my previous profession as a teacher. Both require a dedication to helping others, a desire to make a difference, and a commitment to lifelong learning.
But one of the most striking similarities is the importance of planning. In teaching, we plan lessons, activities, and assessments to ensure that our students are learning and reaching their full potential.
If I walked into a classroom without a plan there would be chaos with little learning.
In financial planning, I help my clients plan for the future, set financial goals, and make smart financial decisions. Without having a plan you will end up with a less secure future. You can’t rely on your pension alone.
Just like a good teacher, a good financial advisor takes the time to understand their client’s unique needs and goals and develops a personalized plan to help them achieve success. And just like a good teacher, a good financial advisor is there to provide ongoing support/extra help and guidance as their clients navigate the ups and downs of life.
If you’re a teacher looking for someone to help plan your financial future, I’d love to work with you to create a plan that will help you achieve your goals and protect your financial security.
Just like you need a lesson plan for your class, you need a financial plan for your future. Do you want to treat your life like that “teacher” without a lesson plan?

Basically, the number of qualified teachers is declining for the whole country and the vast majority of states for reasons that most teachers already know:
1) Inadequate funding
2) Stagnant compensation
3) Heavier workloads
4) Declining prestige
5) Constant meddling from far-away bureaucrats – this was my addition
6) Polarized political climate of our country

 

Here is an article from the NY Times that has research to back up the tons of anecdotal evidence from the people that actually do stuff – the teachers!

This might sound a little strange coming from a Financial Advisor but if there is one financial mistake that I made while I was a school teacher, that would be not starting a Roth IRA.

I do have a partial excuse and that’s due to my income being a little too high from all the extra jobs that I did back in 1997 when the Roth IRA was first introduced.

In 2010 they came out with the Back-Door Roth IRA which does not have income limits. I don’t have an excuse for that, however. I did make up for it somewhat by starting them for my kids.

The moral of the story is that inertia, or basically staying still and doing nothing, can be a powerful force to overcome – even for this Teacher/Financial Advisor. What’s even better now if you’re an educator is that many schools offer a Roth 403b. Don’t be like me and let inertia get the best of you. Don’t hesitate, motivate.