THE BARATELLI INSTITUTE · Mentoring at Scale
FOR CAREER TEACHERS · MID-CAREER TEACHERS · TEACHERS THINKING ABOUT LEAVING · AND THE SPOUSES WHO HELP DECIDE

The pension promises a number at 30 years. Your 403(b) gives you control. Most teachers should have both.

The state pension is a defined-benefit promise: final-average-salary × years × multiplier. Powerful if you stay. Mostly useless if you leave before vesting. The 403(b) is your portable, controllable, vendor-vulnerable layer on top — where the silent killer is a 2% annual fee on an annuity product the district let a salesperson set up in the teacher’s lounge twenty years ago. Run both side-by-side here.

Pension
Defined benefit
403(b)
Defined contribution
Combined
Real retirement income
Fee waterfall
2% vs 0.05%
YOUR RETIREMENT
1
Pension situation
2
Pension portability
3
403(b) layer
4
Decision frame
5
Results & decision
STAGE 1 OF 5

Your pension situation

The basic facts about your defined-benefit promise. Most states publish the formula publicly — the multiplier and the final-average-salary calculation are the two numbers that matter.

Each state’s formula differs; some have multiple tiers based on hire date. Pick the closest match and verify your tier on your annual member statement.
Years you’ve already taught in a pension-covered position in this state. Round to nearest half year.
Best-honest forecast. Career teachers reach 30-35. Vested-then-leave might be 5-12. Be specific — this drives everything.
Your current annual gross. The FAS is built up over your final years, so this grows.
$
Step + lane changes + COLAs. Mid-career teacher salaries grow 2-4% nominal in most districts. 3% is a reasonable default.
%
The % per year of service applied to FAS. CA CalSTRS: 2.0% (pre-2002) to 2.4% (age 63+). TX TRS: 2.3%. IL TRS: 2.2%. NY: 1.67-2.0%. NC: 1.82%. Check your state’s member handbook.
%
Most systems average the highest 3 or 5 consecutive years. CA: highest 12 months (for some tiers) or 36. TX: highest 5. IL: highest 4.
The pension formula in plain English. Annual pension = (highest-FAS-years average) × (years of service) × (multiplier). For a CA teacher retiring at 60 with 30 years, FAS ~ $95k, multiplier 2.0%: pension = $95,000 × 30 × 0.02 = $57,000/yr for life. That’s real — but only if you make it to 30 years in that system. Leave at year 6 and the same formula gives you ~$11,400/yr deferred to age 62-65 (or a refund of your contributions). The two paths produce radically different math.
STAGE 2 OF 5

Pension portability

If you might leave teaching before retirement, this is the most important page. Vested means the system can’t take your future pension away. Not vested means the only thing you can recover is the cash you put in (sometimes with low statutory interest, often without your employer’s match).

Vesting periods: CA 5 yrs, TX 5 yrs, IL 10 yrs, OH 5 yrs, NY 10 yrs, MA 10 yrs. Check your annual statement.
Years of service needed for a non-refundable claim on a future pension. Default 5; some states 10.
The cumulative dollars you’ve paid into the pension. On your annual member statement. Typical 8-10 years at 8-10% of salary = ~$50-80k.
$
If you leave and take a refund, most states pay 2-4% per year on contributions only (no employer match, no investment gains). Check your member handbook.
%
If vested, you can defer the pension to retirement age and collect (small) annuity. If not vested, refund is your only option.
When you plan to start drawing the pension. Earliest 55-60 in most systems; some have penalties before "normal retirement" age 60-65.
The leave-early decision is asymmetric. If you leave at year 4 (before 5-year vesting), you can only refund your contributions — typically getting back $30-50k that you could roll to an IRA. The employer’s ~15-25% contribution match is gone. If you leave at year 6 (just past vesting), you can either refund (similar to above) OR defer a small pension to age 62 (typically $4-8k/yr for life starting age 62). For most leavers, the refund-and-roll-to-IRA route is mathematically better unless you’re close to retirement age already.
STAGE 3 OF 5

403(b) layer · the part you actually control

The pension is largely fixed by state law. The 403(b) is where you have agency — and where the choice between a 0.05% Vanguard index fund and a 2.2% variable-annuity product, made in week 1 of your first job, will quietly determine $150-400k of your retirement.

All vendors combined. Many teachers have multiple accounts from different vendors over the years.
$
Your share. 2025 IRS limit: $23,500/yr (under 50) ÷ 12 = $1,958/mo max. 50+: $31,000/yr ÷ 12 = $2,583/mo.
$
Roughly 30% of US districts match some portion of 403(b). Typical: 1-5% of salary, dollar-for-dollar up to a cap. Most districts that match cap at 3%. Zero is the default.
%
Long-run real return for 60/40 portfolio: 4-5%. 80/20: 5-6%. Index funds in a 403(b): you keep all of it. Annuity products: subtract the fee from this number.
%
Sum of mortality & expense charge + sub-account fee + administrative wrap. Variable annuities: 1.5-2.5%. Mutual fund 403(b): 0.5-1.2%. Low-cost index 403(b) (Vanguard, Fidelity, Aspire): 0.05-0.15%. Check your statement’s "expense ratio" or call vendor.
%
What you’d pay in a Vanguard or Fidelity index fund 403(b) if your district offers one. Most districts offer multiple vendors. Aspire and PlanMember have low-cost lineups. See 403bWise.org or 403bCompare.com.
%
The 403(b) vendor-fee trap is the single biggest preventable wealth-destroyer in teaching. Unlike a private-sector 401(k) which is governed by ERISA fiduciary rules, the typical 403(b) lets the district approve any vendor that meets a low bar. A salesperson visits the teacher’s lounge in week 1, gets the new teacher to sign up for a "tax-sheltered annuity," and that 2.2% fee runs for 30 years. The math: $350/month for 30 years at 5% real return nets ~$292k with 0.1% fees vs ~$211k with 1.5% fees. The vendor difference is $81k — bigger than most teachers’ annual salary.
STAGE 4 OF 5

Decision frame · which path are you on?

The math changes dramatically depending on whether you’re a career teacher (30+ years), a vested-then-leave teacher (~10 years then private sector), or an early-career exiter (under vesting). Pick the path you think is most likely. Then we’ll model all three so you can see the cost of each choice.

Be honest. You can always revisit. The math just needs your best forecast today.
For comparison only — if you leave you may save more in a 401(k) at higher salary. Use today’s dollars.
$
For context — household retirement math depends on this. Spouse’s pension, 401(k) draw, SS. Today’s dollars at age 65.
$
What you want your household to live on at 65. Conventional planning: 70-85% of pre-retirement household income.
$
Three paths, three different answers. A career teacher with 30 years and decent salary growth gets a pension that replaces 50-70% of FAS — and the 403(b) is gravy. A vest-then-leave teacher gets a tiny deferred pension and a 403(b) that’s the main event. An early exiter gets a contribution refund and starts over in a 401(k). The "right" 403(b) contribution amount and vendor choice depends on which path you’re on. This tool models all three.
STAGE 5 OF 5

Combined retirement income & decision

Pension annuity at retirement + 403(b) at 4% safe-withdrawal-rate + spouse income. The combined number is what you actually live on. The vendor-fee waterfall shows what those quiet 2% fees actually cost.

HERE, TRY THESE. THEY MAY HELP.

Three honest resources. No form. No newsletter trap.

The pension-vs-403(b) decision is the longest-running financial choice most teachers make — and the one most quietly mis-set in year one. The guides and the rest of the toolkit are free. Use what’s useful, ignore what isn’t.

Read the Money Reality First Job Edition Read the Family Office Guide All free tools
This is not tax, legal, or financial advice. Pension rules vary by state and by hire-date tier within a state. SS rules changed in 2024 with WEP/GPO repeal. 403(b) vendor lists and fee structures change — verify current options with your district benefits office. Investment return assumptions are nominal long-run averages and not guaranteed. Cross-check with your state retirement system’s benefit estimator and a qualified fee-only advisor before relying on any number.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator pairs with Money Reality · First Job & Career Edition and the Family Office Guide.
The tool gives you the pension formula + 403(b) projection + vendor-fee waterfall. The guides give you the surrounding decision frame — the Roth-vs-traditional question, the asset allocation puzzle for someone with a pension that acts like a giant bond, the survivor-benefit irreversible choice at retirement, and the household-coordination math with a spouse’s 401(k).
Methodology references: Money Reality Ch 7 (Employer retirement plans) & Ch 9 (Vendor-fee due diligence) and FO Guide Ch 11 (Public-sector pension coordination) & Ch 14 (Retirement-income sequencing).
Read Money Reality → Browse all guides
PROFESSIONAL DISCLAIMER · PLEASE READ

Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute investment, tax, legal, accounting, or any other professional advice, and they do not create a fiduciary, attorney-client, accountant-client, or advisor-client relationship of any kind.

Estimates based on your inputs. All results are estimates derived from the assumptions you provide. Pension formulas vary by state and by hire-date tier. 403(b) vendor lists and fee structures change. Investment returns are not guaranteed and the 4% safe-withdrawal-rate rule is a planning convention, not a promise. The Baratelli Institute, its affiliates, and any co-branding professional make no warranty of accuracy and disclaim all liability for decisions made in reliance on the output.

Consult your own qualified professionals. Before acting on anything calculated here, run your state retirement system’s official benefit estimator, consult your district benefits office on 403(b) vendor options, and engage a fee-only fiduciary advisor for personalized planning. The Baratelli Institute is a publisher of practitioner reference material. It is not a registered investment adviser, broker-dealer, law firm, or accounting firm.

Co-branded versions: If a professional advisor’s name and contact information appear on this tool, that advisor has elected to make the tool available to clients as a courtesy. Inclusion of an advisor’s name does not constitute the advisor’s endorsement of any specific result, nor does it transfer professional responsibility for the underlying methodology to that advisor.