Ways to help achieve a tax-advantaged retirement 

Once a staple of retirement, pensions are rare for the vast majority of employees working today. Education is among the very few professions that still provides a pension to its staff.

Pension eligibility and the amount depends on years of service, location, pension type and when individuals start taking their pension. Given that the average age for teacher retirement is between 55 and 65 years old, it’s common that many educators pursue other careers after leaving the field – many of which can earn them significantly higher salaries.

While there can be a comfort knowing that many states contribute funds for retirement, those contributions to a pension are done so on a pre-tax basis. Couple that with a potentially higher second career income, retirement can come with an unanticipated expense – a higher tax bill.

The good news is that there are ways to help address future tax burdens by saving in financial strategies such as:

  • Roth IRA: This is an individual retirement account where you contribute after-tax dollars to the plan so that any and all future withdrawals are tax-free and will limit your taxable income in retirement years. Contribution limits for 2021 are $6,000 for anyone younger than 50 and $7,000 if you’re 50 or older.


Note: There is an income limit which excludes high earners from enrolling. For tax year 2021, you must make less than $140,000 to contribute to a Roth IRA. If you are married and filing jointly, your modified adjusted gross income must be less than $208,000 to participate. 

  • Roth IRA conversion: If suitable and appropriate for the investor, this retirement strategy enables the transfer of funds from an old IRA or 401(k) into a Roth IRA. There isn’t a limit on the amount of the transfer, nor a penalty from the IRS. However, taxes will need to be paid in the following year that the conversation is made. 

  • Cash-value life insurance provides a tax-free death benefit for the policy holder’s beneficiaries, as well as potentially tax advantaged cash value accumulation. While there are similarities between a Roth IRA and cash value life insurance, there are also differences. A Roth IRA is an IRS plan designed to facilitate retirement savings. Cash value life insurance is a contract that builds value and provides a death benefit backed by the claims-paying abilities of the issuing life insurance company. You should carefully review all the features, benefits and costs of a cash value life insurance policy before making a purchase.


Retirement savers are given the choice of paying taxes upfront or later on during retirement, so it’s important to try and gauge when tax rates may be at the highest levels and develop strategies to retain more income when it’s most needed. 

Many people tend to command their biggest salary in their 50s. And, it’s during peak career earnings that people should consider flipping the tax burden on themselves. For instance, if you don’t already contribute to a tax-deferred savings plan, you might want to consider enrolling in a 403(b) or a 401(k), depending on your situation. 

Also, if you have non-retirement assets, keep in mind that capital gains rates increase as your income increases. You can potentially decrease your capital gains rate by deferring income into a pre-tax retirement plan.

If you want guidance on creating plan tailored to your situation, you might want to consider working with a financial professional and a tax professional. They are deeply invested in getting to know you and what’s important to you. By understanding those things first, they can then help you design a plan tailored to meet your specific needs, help you achieve long-term goals and your overall well-being. 

Jared headshot
Jared M. Gaddis
Senior Vice President | Financial Consultant

8000 IH 10 West, Suite 750
San Antonio, Texas 78230
Phone (210) 348-1385

This article was written by an outside source and is provided for general information only. No part of this article should be considered or relied upon as financial, investment, legal or tax advice. Equitable Advisors and its associates and affiliates do not provide legal, tax or accounting advice or services. 

For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm’s Relationship Summary For Retail Investors and General Conflicts of Interest Disclosure. 

Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company with main administrative headquarters in Jersey City, NJ, and Equitable Distributors, LLC. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI & TN).

GE- 3762349 (09/2021) (Exp. 09/2023)