I could not possibly be more excited to share an article with you today, from two RWM employees who are making a genuine difference in people’s lives: Tony and Dina Isola.
In this weekend’s Barrons, they discuss what Teachers should know about 403(b)s and the pitfalls they should avoid:
“Tony Isola was the kind of guy other teachers liked to approach for help with their retirement plans. Which investments should they be in? They felt Tony would know, because he used to be a currency trader, and because his wife, Dina Isola, worked on Wall Street. Plus, a guy who could teach social studies to hormone-addled middle schoolers was good at making simple financial concepts intelligible.
“Ask me a question, and I’ll give you the answer,” he’d say. “Usually, it’s ‘I don’t know.’ ” But his colleagues didn’t even know where to start. So, save regularly, he told them. Stay in the market through thick and thin—it will reward you. “Focus on things you have control over: Your costs. Your behavior.” They asked Tony to look at their statements.
He couldn’t believe what he saw. Many of his fellow teachers were in high-cost annuities, lured by tax-deferred growth and a lifetime stream of income. It made no sense—savers don’t need income; they need growth. And they don’t need tax-deferred products, since their retirement plans were already tax shelters. For these unnecessary “features,” the annuities imposed high sales charges on every paycheck withdrawal. And a 2% annual management fee. And large surrender fees of, say, 7%.”
Teachers need to learn what to avoid so as to make sure they are not taken advantage of by a dysfunctional system filled with regulatory gaps and a corrupt, and hyper-aggressive insurance sales culture…
TBT In the 1950’s the majority of K-12 teacher 403(b) assets languished in overpriced and inappropriate annuity products. Guess what? Nothings changed…….yet. pic.twitter.com/cJMNQ3nYff
— Anthony Isola (@ATeachMoment) May 9, 2019
The Annuity Trap That Teachers Need to Avoid
By Leslie P. Norton
Barron’s May 25, 2019
Teachers Are Getting Schooled When It Comes to 403(b) (Plans May 2, 2019)
Dina Isola: Standing Up For Investors (April 25, 2019)
401(k)s versus 403(b)s (March 20, 2019)
Isola: Congress’s Blitzkrieg on our Retirement Savings (September 11, 2017)