Nothing Beats an Early Start

By Jim DiUlio
Retirement Consultant
WEA Tax Sheltered Annuity Trust

October 1999

Saving now may be the key to an early retirement

If there’s one piece of advice about retirement planning that veteran school employees would like to pass on to their younger colleagues, it’s this: Start planning and saving for retirement early. This message is often expressed by those whose plans for an early retirement have been delayed because they started saving too late.

Of course, it’s easy to understand why individuals put off retirement planning. Starting a new job can be a busy and stressful time in your life. There may be countless rules, procedures, and routines to learn. Plus, you never seem to have any extra income to put away for retirement.

Wisconsin’s Retirement System

If you’re just starting in the profession, planning for retirement may not be a high priority. But there’s good news – a retirement fund has been established for you. For each year of service, most school employees receive credit in the WRS pension program. The program was initially set up so employers could contribute a percentage of wages, and employees could match that contribution. But these days, as a result of collective bargaining, most schools make the full contribution on your behalf.

The amount you will receive from WRS at retirement depends on how many years of service you have. The earliest you can qualify for a pension benefit is at age 55. So, someone with 33 years of service could receive a pension equal to about half the average of their three highest years of salary.

However, most people who retire after 33 years in the teaching profession are in their fifties. This means Social Security benefits won’t be available to them for some time. The WRS’s benefits will not to be enough for you to truly enjoy your retirement. Financial experts say that you should save enough money to replace about 80% to 100% of your pre-retirement income.

Veteran school employees who have been able to retire early share one thing in common – they started saving money for retirement at an early age, using a tax-efficient plan such as a tax-sheltered annuity (TSA).

The advantage of a TSA

The TSA program was created by Congress as a way to supplement school pensions. You can have a portion of your salary set aside on a pretax basis in a trust account until retirement. The concept is simple: Income taxes are deferred until the money is withdrawn, but you are able to invest the entire deducted amounts, including the ‘tax money,’ until you retire.

In addition, if you start this process early, the compounding of investment returns over the years can be dramatic, whether in fixed interest accounts or mutual funds. A habit of saving regularly can mean the difference between retiring early or having to work for another five or 10 years.

Your ‘Trust’

While there are countless companies that offer TSAs, there’s only one program created specifically for Wisconsin public school employees – the WEA TSA Trust. The TSA Trust offers a selection of notable mutual funds, a guaranteed interest rate account that has traditionally offered the best rate in the state, and low operating expenses. The Trust is a not-for-profit group and is overseen by an elected board of WEAC members.

Starting an account with the Trust is easy. You can start with as little as $200 a year, or about $10 a paycheck. For more information on TSAs, call the WEA TSA Trust at 1-800-279-4030 or visit our Web site at www.weatsa.com.

Popular WEAC IRA offers a good yield at a low risk

By David Mabie, ChFC, CFP
WEAC Member Benefit Trust

Ever since we introduced the WEAC IRA, we have been looking at ways to better serve members. One way we’re doing this is by allowing spouses, parents, and parents-in-law of WEAC members to participate in the WEAC IRA program.

Safety and high yield

Many people keep a portion of their retirement savings in conservative investments like certificates of deposit (CD). The WEAC IRA yield of 7% rivals the earnings of many mutual funds, but without the fees associated with mutual funds and the risks associated with investing in the stock market. The WEAC IRA provides the protection of guaranteed principal and interest, and its yield exceeds the top CD rates in the nation.

Created for you

The WEAC IRA was created by WEAC to provide members and their families with the best IRA value. We firmly believe that lower expenses enhance returns for our participants over time. So, we work hard to hold down costs. There are no sales fees for opening an account, no fees for withdrawing funds, and no transaction fees. Our low annual administrative expense puts more of your money where it should be – helping you and your family build a secure financial future.

Easy to start and keep

When it comes to rolling over a large sum of retirement money, a second opinion can give you considerable peace of mind. A WEAC IRA Retirement Specialist will work with you throughout the process to answer your questions, coordinate the transfer of your funds, and make sure the rollover takes place smoothly.

To learn more about the WEAC IRA, call David Mabie, toll free, at 1-877-WMBT-IRA (1-877-962-8472).

Posted September 30, 1999