How to Save for Retirement with a 403(b) Plan: A Guide for Teachers and Nonprofit Workers

A 403(b) plan may be available to you if you work for a public school, a nonprofit, or a specific religious institution and want to save for retirement. This kind of account enables you to set money aside from your paycheck for future investments.

You can choose to save money before or after taxes. If you save before taxes, you pay less tax now but more later. If you save after taxes, you pay more now but not later. Your situation and goals will determine which option is best.

A 403(b) plan has some benefits, such as:

You can save more money than with other accounts, such as IRAs.
You can get free money from your employer if they match your contributions.
You can save extra money if you are older or have worked for a long time with the same employer.
You can access your money faster if you leave your job or retire.

A 403(b) plan also has some drawbacks, such as:

You may have fewer and more expensive investment options than other accounts, such as 401(k)s.
You may pay a penalty if you take money out before age 59 1/2 unless you have a good reason.
You may lose some of your money to creditors if you get sued or go bankrupt.

A 403(b) plan can be an excellent way to save for retirement, but it is not the only way. You should compare different accounts and pick the one that works best for you.

If you need help deciding, you can talk to a financial planner or advisor who can give you personalized advice.