National Retirement Security Month: Ensuring a Bright Future for Public Employees in Texas
The Federal Reserve Report on Economic Well-Being of U.S. Households in 2022 indicates Americans' progress toward retirement savings goals declined. October is National Retirement Security Month, which encourages individuals to consider their retirement goals and take action to secure them. A Texas public employee pension system is ideal for guiding its annuitants through the process.
National Retirement Security Month is a nationwide effort to raise awareness about the need for retirement planning, financial literacy, and saving for one's golden years. For public employees, especially those with defined benefit pension plans, it's a time to reflect on their retirement security and learn more about their benefits.
A defined benefit pension is a retirement plan in which an employer commits to providing employees with a specific, predetermined income during retirement, usually based on a formula that considers factors like years of service and salary. Employers are responsible for funding the plan and managing its investments, and employees contribute a portion of their pay. Upon retirement, employees receive regular payments, a lump sum, or other payout options, with the exact amount guaranteed by the plan, offering financial security and stability in retirement.
Only some Americans have the security of a defined-benefit plan, and even those with them often need additional savings to take them through retirement.
Here's what else the Federal Reserve's report found:
- Thirty-one percent of non-retirees thought their retirement savings plan was on track, down from 40% in 2021.
- Building retirement savings can have implications for financial well-being later in life.
- Seventy-nine percent of retirees said they were doing at least okay financially. However, retirees who received income from wages, pensions, or investments were much likelier to be doing at least okay financially than those with no private income.
Download the full report here.
How Public Pension Systems and Employers Can Benefit
Here are some key reasons why National Retirement Security Month is vital for public employees in Texas and how public pension systems can get involved:
- Highlighting Defined Benefit Plans: Texas is known for its commitment to providing public employees with retirement security. Many public sector employees at the state and local government levels are part of defined-benefit pension plans. National Retirement Security Month offers an opportunity to educate employees about the inner workings of their plans and the financial security they can provide.
- Encouraging Saving and Supplemental Retirement Accounts: While defined benefit plans are a significant part of retirement security for public employees, it's essential to understand that they may not cover all retirement expenses. The observance encourages public employees to consider additional retirement savings options, such as 457(b) and 403(b) accounts, which can complement their pension benefits. Why are multiple streams of savings important? Consider this: According to the National Institute on Retirement Security, the average Generation X household has only $40,000 in retirement savings, with significant differences among races, income levels, and genders.
- Promoting Financial Literacy: Financial literacy is a crucial aspect of retirement planning. The observance is a good time for pension funds and/or their employee sponsors to provide public workers with resources and educational materials to help them make informed decisions about their financial future. It equips them with the knowledge they need to manage their money effectively and maximize their retirement benefits.
- Discussing Healthcare Costs: Retirees often face substantial healthcare costs, and this is especially important for those in the public sector who may have access to healthcare benefits during retirement. This observance serves as a reminder to plan for healthcare expenses and understand how these benefits will work in retirement.
How Public Employees Can Benefit
As a public employee in Texas, there are several ways to make the most of National Retirement Security Month:
- Review Your Defined Benefit Plan: Take the time to understand the details of your pension plan, including eligibility requirements, vesting periods, and benefit calculations.
- Assess Your Current Retirement Savings: Evaluate any additional retirement savings, such as your 457(b) or 403(b) accounts. Are you contributing enough to meet your retirement goals?
- Engage in Financial Education: Participate in workshops, webinars, or seminars offered during the month to enhance your financial literacy and retirement planning knowledge.
- Seek Advice: Consider consulting a financial advisor or retirement specialist who can help you create a comprehensive retirement plan tailored to your needs.
- Plan for Healthcare: Understand your post-retirement healthcare benefits and how they align with your financial plan.
- Set Goals: Establish clear retirement goals for when you want to retire and what you want your retirement lifestyle to look like.
- Regularly Review Your Plan: Continuously assess and adjust your retirement plan as your circumstances change.
The Future of Retirement Security
National Retirement Security Month is not just a one-time event but a reminder of the ongoing commitment required to secure one's financial future. For public employees in Texas, it's an opportunity to appreciate the defined benefit plans that provide stability and explore supplemental savings options that can enhance their retirement security.
By taking proactive steps to understand their retirement benefits, save wisely, and invest in their financial education, public employees in Texas can look forward to a retirement that offers peace of mind and financial security. As we celebrate National Retirement Security Month, let's embrace the opportunity to ensure a brighter and more secure future for those who have dedicated their careers to public service.
About the Author: Allen Jones is the Director of Communications and Event Marketing at TEXPERS. He joined TEXPERS in January 2017. He can be reached at [email protected].