Financial Planning

Financial Planning

Participating in a retirement savings/investment plan, offers an employee the opportunity to establish another retirement fund in which he or she can draw from at the time of retirement. The contributions made to this retirement savings plan are employee funded and are available through payroll reduction.

The School Board of Broward County is a qualified tax-exempt organization covered under the Internal Revenue Code allowing you to accumulate money for your retirement in a special tax-sheltered plan, a Tax Sheltered Annuity.

This plan is in addition to your pension benefits under the Florida Retirement System. Social Security credits are not affected because they are determined by your gross earnings prior to your Tax Sheltered Annuity contributions.

Contributions are excluded from your current taxable income and the interest earned or gained is credited to your account and is tax deferred until you begin to receive distributions from your Tax Sheltered Annuity. The IRS has created formulas known as Maximum Annual Contribution which governs the maximum contribution that you may make to a Tax Sheltered Annuity in a given tax year. These limits are based on several factors including: your salary, years of service, prior contributions to a Tax Sheltered Annuity and/or other qualified plans.

Listed on the attached are two (2) examples, which illustrate the value in an account every five years, and assume the following:

  • The employee begins investing at age 30
  • Pay increases by 3% per year
  • The employee saves 3% of pay (chart 1) or 7% of pay (chart 2)
  • The employee works 35 years
  • A rate of average return of either 10% or 12%
Chart #1 - Save 3% of Pay Each Year

Your Age

Your Pay
(increased by
3% each year)

Amount
Saved Per
Year/Check??

Your balance,
If you earn
10% annually?

Your balance,
If you earn
12% annually

30

$25,000

$750/$32

$787

$795

35

$28,982

$869/$37

$6,496

$6,887

40

$33,598

$1,008/$42

$16,524

$18,499

45

$38,949

$1,168/$49

$33,640

$39,976

50

$45,153

$1,355/$57

$62,324

$79,001

55

$52,344

$1,570/$66

$109,817

$149,137

60

$60,682

$1,820/$76

$187,810

$274,319

65

$70,347

$2,110/$88

$315,162

$496,763

 

Chart #1 - Save 5% of Pay Each Year

Your Age

Your Pay
(increased by
3% each year)

Amount
Saved Per
Year/Check??

Your balance,
If you earn
10% annually?

Your balance,
If you earn
12% annually

30

$25,000

$1,750/$73

$1,837

$1,855

35

$28,982

$2,029/$85

$15,159

$16,071

40

$33,598

$2,352/$98

$38,558

$43,166

45

$38,949

$2,726/$114

$78,494

$93,279

50

$45,153

$3,161/$132

$145,423

$184,336

55

$52,344

$3,664/$153

$256,241

$347,987

60

$60,682

$4,248/$177

$438,224

$640,078

65

$70,347

$4,924/$206

$735,378

$1,159,113

 

Note: This example is for illustration only. Other factors could change the value of the account. This chart is for general information and education purposes only. The information provided should not be construed as legal or tax advice. Please consult with your legal or financial advisor to determine the appropriateness of this article for your particular circumstances. The SBBC assumes no responsibility or liability for the accuracy of the information provided.

It is never too late to start saving/investing for your future. Agents are available to meet with you at your convenience. They can provide you with free personal consultation and discuss your retirement goals. To obtain more information or a listing of participating vendors, contact us!