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April7th

Aspire...spreading The Word

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Hi everyone! A huge thanks to all who have helped me learn more about the trials and tribulations of 403(b) investing. I have managed to get Aspire added to our district's offerings. Working on TIAA Cref. (The superintendent is "thinking about it." Huh???)

 

Anyway, I wanted to spread the word about our generally lousy options. I met with a group of 30 people from the teachers' union reps and presented some basic information. Details about fees, advisors, options, etc. (I used part of the John Oliver, Retirement video. Very funny and quite apropos!) it went over very well...but I did get a lot of questions about annuities. Such as, how to extricate themselves from an annuity!

 

I know very little about annuities, never having been roped into them, but I know they are pricey, hard to exit, and a killer, often, for one's investments. Do you have any particular website I could recommend? I am not becoming a financial adviser, just trying to steer people. I have mentioned this website and the Teach and Retire Rich book. Other suggestions?

 

(By the way, I found the interview with Mark Luckenbill about Aspire very, very helpful. Thanks!!!!!)

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For the facts about annuities that I agree, and I think most would agree, who frequent this website, with Stan the Annuity Man: http://www.stantheannuityman.com/

 

Investments: No forum is better, insightful, downright nice and freely giving of their time and expertise by very smart people than the Bogleheads: https://www.bogleheads.org/ is THE forum for the Do It Yourselfer (DIY).

 

Below are additional teachers and pros who are 100% anti-annuity and 100% pro-growth genuine investments with low-cost investment strategies and their blogs and websites:

 

#1 – Right here on 403bwise.com: Dan Otter is a teacher and LONG time crusader for better 403(b) plans and increased education among teachers about 403(b)’s. Dan has either been through or heard it all when it comes to 403(b) issues. As is the case with most teachers Dan was approached in his classroom early in his career by an insurance salesman pitching an expensive and inappropriate annuity-based retirement plan. Dan has a book and podcast on the topic of 403(b) and manages the forums at his website 403bWise.com where teachers share and discuss their experiences with 403(b) retirement plans. The media frequently cites him for his experience and knowledge about teacher retirements.

#2 – Andrew Hallam writes at AndrewHallam.com and is a former teacher and long-time student of investing. Andrew amassed over $1 million before the age of 40 and wrote a book about it. He continues to write about investing and retirement at his website.

#3 – Steve Schullo is the author of two books and a retired Los Angeles Unified School District teacher who writes at his blog, LateBloomerWealth.com. Steve is frequently cited by media outlets for his experience and wisdom about the 403(b) situation facing teachers (high fees, low returns) and continues to be a staunch supporter of a better system for teacher retirement systems. Books: Late Bloomer Millionaire and Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (free pdf download from Steve’s blog).

#4 – Ed Mills is known as the “Millionaire Educator” and writes at writes at MillionaireEducator.com. Ed and his wife have amassed nearly $1 million at the time of this post…on a teacher’s salary. Ed and his wife have used an amazing technique for saving and investing as well as taught overseas for a few years to amass enough money that they could put a huge portion of their salaries directly into their retirement accounts. They now regularly transfer school districts to roll their 403(b)’s into IRA’s with Vanguard (who I heartily endorse).

#5 – Tony Isola is a former teacher and Certified Financial Planner (CFP) who writes at TonyIsola.com. Tony is a fired up advocate for teachers who is heated about the 403(b) options provided to most teachers. Tony knows both teaching and investing and provides a unique voice from someone working tirelessly on your behalf.

#6 – Dave Grant is also a Certified Financial Planner (CFP) who writes at FinanceforTeachers.com Dave is married to a teacher and shares a similar story about the 403(b) market available to teachers. Dave is a speaker and author as well as a trustworthy teacher advocate. Dave is experienced in dealing with a broad range of financial options for teachers and is available to come speak at schools in the Chicagoland area.

#7 – Scott Dauenhauer is another Certified Financial Planner (CFP) who writes his blog Teachers Advocate: http://teachersadvocate.blogspot.com/He is one of the brains that created the best 403(b) in California under the guidance of the state’s teacher pension system: Pension2. He just released his 2nd book for financial advisors who want to work with k-12 public school teachers: Wild West: Providing Fiduciary Advice to Public School Employees

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April17th, congratulations on getting Aspire added to your district's list of providers! And it's great that you are trying to spread the word about investing in a 403b to your colleagues! I don't know much about about annuities, but I found these articles very informative. Mel Lindauer, one of the founders of the Boglehead website, wrote the series of easy to read articles on annuities for Forbes magazine.

This first article is a great introduction to the expense of annuities.
"As the chart shows, the vast majority (81%) of variable annuity sub-accounts have total annual expenses that run between 2% and 3% of assets a year. Nine percent have expenses that exceed 3%and 289 sub-accounts charge more than 5%. Most variable annuities also charge an annual contract fee in addition to these sub-account expenses.

 

The 2nd article discussed how to cut the cost of a variable index annuity. I think this pertains to annuities in a taxable account, not a retirement account like a 403b.
The 3rd article discusses variable annuities in retirement plans such as a 403b so this one should be read by every teacher before they sign up for a 403b!
The 4th article discusses fixed deferred annuities:
The 5th article discusses SPIA’s: single premium immediate annuities, which have there uses and are sometimes recommended by Bogleheads:

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You asked for information, here is a list of published print media articles about the deplorable 403b plans with public school districts:

 

403(b) Newspaper and Online Reports (1994-2012)

1. Where to invest a 403(b): almost anywhere by Melynda Dovel Wilcox, Kiplinger’s Personal Finance, Feb. 1, 1994. (Note: This article discussed only transferring from an annuity or high fee vendor into a low-cost mutual fund).

2. Fighting for 403(b) funds: With Annuities, you’re stuck with extra fees by Kevin McCormally, Kiplinger’s September1997

3. Protect Yourself from American’s Flawed Pension Plans. By Andrea Rock, December 1, 1997, MONEY Magazine.

4. The Fourth R: It’s Retirement, and for many teachers the arithmetic is narrow investment choices is unsatisfactory. If you are persistent you may be able to get your employer to broaden your choices. Kathy Kristof, Los Angeles Times, January 18, 1998.

5. For Teachers, Object Lessons From the 401(k) by Richard A. Oppel Jr. New York Times, June 13, 1999.

6. Public sector retirement savings plans often are accompanied by hefty fees that reduce returns. Just Ask Pinellas County Sheriff's Deputy Adrian Nenu by Helen Huntley. St. Petersburg Times Online Business, September 26, 1999. Adrian has been an awesome force trying to reform all retirement plans. He is a prolific poster on several investment forums.

7. 1st Step in Teacher’s Lesson Plan: Crash Course in Investing by Suzy Hagstrom. Los Angeles Times Makeover special, December 21st, 1999.

8. The Fleecing of 403(b) participants by CBSMarketWatch.com May 30, 2000.

9. Feds issue annuity warning by Marcy Gordon, Associated Press, published in the Daily News, June 6, 2000.

10. Special Report: Shark Attack! Investors in 403(b) plans, beware: You are especially vulnerable to predators by Don Kuehn, American Teacher. American Federation of Teachers (AFT) trade magazine, June 2000.

11. Insurance Agents Weigh in on Column Taking Industry’s Bad Apples to Task by Liz Pulliam Weston, Sunday, June 18, 2000 Los Angeles Times. Ms. Weston’s response to a complaining insurance agent was brilliant.

12. Retirement plans come in various flavors—403(b)s can leave a bad taste by Paul J. Lim. US News and World Report (July 10, 2000).

13. Retirement Savings Plan Costs Teachers, Lawsuit say by Mary Doclar and Mike Lee. Fort Worth Star-Telegram, Sunday, September 17, 2000.

14. Savings Shock by Michele M. Capots. Education Week, Vol. 12, Issue 7, Page 9, April 2001.

15. Changes to 403(b) plans help teachers save by Sandra Block. Your Money, January, 2002 USA Today.
16. Cops and Teachers Getting Soaked by Robert Barker. USA Today MONEY, July 19, 2002.
Friend and Sheriff Adrian Nenu is featured once more. He is a fighter!
17. Teachers' 403(b) plan
non virtues 'extolled', San Diego Union, 2004 by Lynn O'Shaughnessy.

18. Costly Lesson: Some of the biggest names in insurance peddle lousy retirement plans with high fees and low returns. One and a half million teachers blithely signed up for these dogs--often with their unions' blessing. Forbes Magazine by Neil Weinberg, 2005.

19. Teachers get
harsh lesson on investing, Saving for retirement harder with 403(b) law, San Diego Union, by David Washburn (2005).

20. As Teachers Sock Money Into 403(b)s, Few Defenses Exist, The WSJ, Aug. 25, 2005, by Tom Lauricella.

21. Teachers investment plans flunk, 403(b) plans could hardly be worse: fees are outrageous, there’s no match and there’s no oversight, MSN Money, 2005, by Timothy Middleton.

22. Unions' Advice Is Failing Teachers. Labor groups have joined forces with investment firms to steer members into savings plans that often have high expenses and poor returns, by Kathy M. Kristof. Los Angeles Times, April 25, 2006. Crystal Mendez's story is featured on the Front Page.
23. Firm to disclose savings plan fees. AIG agrees to detail charges that it will levy in a new L.A. teacher retirement program. Los Angeles Times by Kathy Kristof, October 23, 2006.

24. Fleecing 403(b) plan participants, W. Scott Simon. This is an excellent eight part series of articles tearing the 403(b) system apart, from total lack of fiduciary responsibility, high costs and the insanity of nobody in the educational establishment looking after the teachers' best interest. Mr. Simon is a Morningstar Advisor contributor.
Fleecing 403(b) Plan Participants April 5, 2007
Fleecing 403(b) Plan Participants (Part 2) May 3, 2007
Fleecing 403(b) Plan Participants (Part 3) June 7, 2007
Fleecing 403(b) Plan Participants (Part 4) July 5, 2007
Fleecing 403(b) Plan Participants (Part 5) August2, 2007
Fleecing 403(b) Plan Participants (Part 6) October 4, 2007
Fleecing 403(b) Plan Participants (Part 7) November 11, 2007
Fleecing 403(b) Plan Participants (Part 8) June 5, 2008

25. Prepare for Changes in 403(b) Plans, Wall Street Journal, MarketWatch.com, 2007

26. Fees take huge toll on 403(b) plans, Bankrate.com, by Leslie Haggin Geary, 2007

27. How to avoid 403(b) pitfalls, Bankrate.com, by Leslie Haggin Geary, 2007
28. Annuities: Good, Bad Or Ugly, Forbes.com. By Mel
Laudauer, 2010. A six-part series.
29. California teachers' supplemental pension plan is flawed, study finds. Los Angeles Times, by Walter Hamilton, March 2, 2011.

30. Teachers' 403(b) Plans See Big Changes, Wall Street Journal, January 4, 2012 Leslie Scism.
31.
Law limits L.A. school district's efforts to simplify 403(b) plan, Pensions and Investments. By Robert Steyer, July 9, 2012
32. http://www.kiplinger.com/article/retirement/T047-C000-S002-make-the-most-of-a-403-b-retirement-plan.htmlby Kimberly Lankford, July 2012.

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