Most teachers can remember their first year of teaching. And if you have never been a teacher, let me tell you; that first year is a doozy! Like most fresh, young teachers, I walked into my classroom thinking I was going to change the world of academics with my new found knowledge of current trends and techniques of teaching. Let me tell you; I was riding high on the wave of the paradigm shift of teaching and learning! I was so incredibly frustrated with the “older” teachers who were not as excited as I was about the amazing potential of the new ways of teaching. And I have to tell you, over the years, I was able to convince a few of the stone-agers that some of my techniques actually work, and they are still using them today. However, what is even more important, is that I learned those much wiser teachers knew the tried and true methods are just that, tried and true. They get the job done and done well. Those methods are the methods for which grown children with children of their own look back at and thank their much admired teachers.
I’m not a dummy. This was a life lesson for me. Trust the “ancients.” They do know a thing or two, and they are worth emulating. It is this very lesson for which I write this blog today.
Back in the days when Franklin D. Roosevelt ushered in the institution of Social Security, a mindset was instilled in most American workers. That mindset was that of the three-legged stool of retirement planning and saving. The metaphor of the three-legged stool exemplified what it takes to build a strong retirement plan, a plan with three legs. Without one of the legs of the stool, the plan would not be as strong. The legs represented Social Security benefit, your pension benefit, and your personal savings. This tried and true method worked for many and continues to work today.
Now, whether it was due to fresh, young teachers, or some very clever entrepreneurs, the pension leg of the stool was weakened when more employers started learning about the paradigm shift of defined contribution plans like the 401(k). In fact, according to a recent article in the balance1, “Only 16% of Fortune 500 companies offered any type of defined benefit pension plan to new employees in 2017, down from 59% in 1998.” For many, this has made the goal of the strength of the three legged stool obsolete, leaving many American workers working in a situation where they feel they don’t have the financial strength to retire. Their stool is not strong enough to support the full weight of their retirement.
Please don’t get me wrong. Just like the older teachers who have incorporated some of the newer teaching techniques into their curriculum, there is absolutely a place for defined contribution plans, right in the personal savings leg of the three-legged stool. In fact, those workers fortunate enough to have a pension should not overlook the value of defined contribution plans, more now than ever, they can lean on their three legged stool without fear of falling. Yet, many times employers see an either/or choice when it comes to retirement plans for their employees. EITHER they will have a defined benefit plan OR a defined contribution plan. But in this wisened teacher’s opinion, there is no replacing the tried and true three legged stool; therefore, the either/or approach is not likely to yield optimal results.
As a LAGERS member, you can depend on the strength of your pension leg. However, it is up to you to make sure your personal savings is as strong. If your employer does not offer a defined contribution plan in place, you may want to think about how you can strengthen your personal savings leg on your own.
There is a reason you have a favorite teacher, and more than likely that teacher had some life lessons you took with you without even knowing it! Just look at the three legged stool!