Kayla is a kindergarten teacher and she has access to some of the best benefits to assist in becoming financially independent.
I define Financial Independence (FI) as having enough income from assets to no longer depend on a W-2 income.
Teaching is a great career choice if you’re interested in financial independence and possibly early retirement. The benefits Kayla has access to as a teacher are PERFECT for the FIRE movement.
457(b) Retirement Plan
Access to a 457(b) plan is so valuable. This retirement plan is similar to a 401(k), but has some distinct differences:
The 457b retirement plan is similar to a 401k, IRA or a 403b plan, but has some strong advantages.
Pre-tax allocations lower your taxable income
Interest and earnings aren’t taxed until funds are withdrawn
No early withdraw fee (typically 10%)
Ability to contribute the max ($19k to BOTH 457b and 403b or 401k if available)
You read that right, NO EARLY WITHDRAW FEE. Read my full article on the 457(b) plan.
Other Retirement Accounts
Kayla has the ability to contribute the max contributions to her 457(b) retirement plan AND max contributions to a 401(k). That’s $19,000 x2.
She could potentially save $38,000 per year in tax-advantaged savings accounts. We can also open up a Roth IRA for an additional $6,000 in contributions if needed.
At this point, the only benefit my 401(k) offers is an employee match. I make sure to get that each month and anything additional is going into our other accounts.
Teachers Salary Isn’t Terrible
First-year teachers in our school district earn $54,000 per year. They can give themselves a pay bump in several ways:
Time in service
Completing training hours
When I got my MBA, nothing happened. If I wanted to pay raise or promotion I would need to fight for it or find a new company to work for. When Kayla completes her Masters, she’ll have an instant pay bump.
Teachers’ salary is public record, many of the teachers in her school are making well into the $70,000 salary range or higher.
Work-Life Balance of a Teacher
Kayla gets 12 sick days, 3 personal days, winter break, spring break, summer break (2 months), no nights, weekends or holidays.
If you add up all this time off, it’s staggering.
She does have to bring work home with her from time to time, and or do some work on Sunday nights, but it’s been minimal. Nowhere near the amount of work I do outside of my primary job.
She will have the majority of June and all of July off of work. No work, no meetings, no training, no conferences. She will start to have some of those in August, but the class doesn’t begin until the end of the month.
She has a lot of time off and it’s a great benefit for our family.
Our oldest is in 1st grade this year and Kayla is able to take him with her. This provides her with some extra one-on-one time during their 15-minute commute. That’s an extra 30 minutes per day!
She usually leaves the house at about 7:30 am and is home by 5:00 pm. She stays late to get a lot of her work done to not have to bring it home with her. Our oldest plays in her room, reads or builds with legos.
Unlike me, Kayla doesn’t have to worry if her job will be there tomorrow or 5 years from now. I work in the Software as a Service (SaaS) industry and we’ve gone through mergers & acquisitions (M&A) twice in the last two years.
When a company is in an M&A cycle like we are, it’s tough to know how long until we’re absorbed into another company that doesn’t need OUR workforce.
People joke that it takes an act of congress to get a teacher fired. The teachers union offers several protections and benefits to the teachers.
Teaching Alone Wouldn’t Be Enough
We wouldn’t be able to reach financial independence on just her salary alone. It’s a perfect compliment to my job and income. I’m able to generate more money but have less advantageous places to invest that money.
We will be increasing her contributions heavily, so on paper, it won’t seem like she’s bringing in much money. The reality is, it’s all of our money, she just so happens to be putting more of her money into her 457(b) plan and I’m putting more money into our checking account.
Teaching Into and Past Retirement
When I was in school, I remember a lot of substitute teachers I had. Many of them had been or considered themselves retired.
You see, people get tired of not working, of not having a social outlet, of not contributing and staying busy. Many retirees go back into the workforce as teachers.
According to the National Center for Education Information, “About 20% of the 35,000 people who use alternative teacher certification are age 50 and older.”
Teaching is a Noble Career Choice
Teachers are selfless. I don’t care if they’re the most selfish teacher in the school, they are selfless compared to most of us.
Teachers are largely responsible for the upbringing of our children. They spend far more time with them and they often provide more structure and opportunities for learning.
Giving your time and freedom to teach and nurture other people’s kids is a selfless gesture and should be more highly respected in my opinion.
Kayla being a teacher is a perfect compliment to my job. It’s more secure and dependable. If I ever find myself out of work, I know that we can live off her income until I find something else.
Teachers have access to some great financial independence benefits like the 457(b) retirement plan. Being able to contribute so much into tax-advantaged accounts is seriously amazing. Now we just have to execute on that.
Teaching was a great career choice for her. It gives her everything she’s looking for in a job and she can keep doing it as long as she wants to. It fits her perfectly. Her happiness is key.
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