Invest above the Requirement

Dear Dave, I'm a teacher, and the school system I work for puts 13.5 percent of my pay into a public teacher retirement fund. They also match this amount. I've read about your rule of investing 15 percent of your income toward retirement, so should I invest 1.5 percent into another retirement fund in order to max out my savings at 15 percent of my income? What do you think about the idea of opening another retirement account at a full 15 percent of what I make?


Dear Patrick,

It sounds like you've got a pretty good pension plan through your school system. I can't help but wonder, though, what would happen to the money if the system were to take a big financial hit. I'm not predicting bad things, but the truth is that you just never know what might happen. In other words, there's no way I'd lean on this fund as my one and only source of retirement income. Never put all of your financial eggs in one basket!

I wouldn't go as far as to pour an additional 15 percent into a different retirement plan, but I'd definitely look at putting seven to 10 percent into a Roth IRA. I want you to have some money that's separate from the school system account just in case things go south with their retirement fund. If you're married, and your wife works and generates income, she needs to be putting 15 percent into a plan, also. You can never have too much money during retirement!

- Dave

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