The Teaching Lifestyle and Roth IRA: A Perfect Pair

Why I think a Roth IRA Is Often the Best Retirement Account for Teachers

Happy New Year! This post is part of the Path Series, where I try to help early- and mid-career educators chart a path toward financial stability and freedom. 

I think there are many paths to financial stability and freedom for educators. As I've brainstormed the paths I want to highlight with this project, I’ve tried to keep in mind a few guiding goals: paths that are accessible to most educators in Wisconsin, avoid complicated financial structures or behaviors, and allow flexibility as life circumstances change.

With these goals in mind, I think there are three financial tools that will suffice for most folks: a pension, the Roth IRA, and the 457(b) supplemental retirement. Although there are certainly other financial tools one might pick, I think understanding how these three tools work together can put many teachers in a position to retire at 55—or potentially even earlier.

I have already discussed pensions a bit in The Pension Path and Pension at 55: A Starting Point. My goal with these discussions has been to provide a general overview of how a pension works. This post will aim to provide a high-level overview of what I view as the next most-valuable tool: the Roth IRA. 

What is a Roth IRA?

A Roth IRA is a retirement account that allows you to save money. It was created by the Taxpayer Relief Act of 1997, which was introduced by Senator William Roth (hence the name). You contribute to a Roth IRA using after-tax dollars. A key benefit of a Roth IRA is that qualified withdrawals, which includes investment gains, are tax-free in retirement. A Roth can take many forms, but it is easy to open and control the account yourself through a discount brokerage (e.g., Schwab, Fidelity, Vanguard).

Benefits of a Roth IRA

Why is a Roth IRA a good fit for teachers?

Although personal finance is always context-dependent, I believe the Roth IRA is (in most cases) the best long-term savings vehicle for educators. The reasons have to do with the context of the teaching lifestyle (income level, career structure, tax brackets, etc) as well as the flexibility of the tool itself. In the rest of this post, I'm going outline major reasons why I think the Roth IRA pairs so well with the realities of a teaching career.

1. A Typical Teacher Salary Makes Roth Contributions Efficient

The value of Roth contributions depends on your marginal tax bracket and most teachers in the U.S. fall into the 12% or 22% federal tax bracket during their working years. For example, in 2025 a new teacher making $45K and a mid-career teacher making $62K typically fall into the 12% bracket after deductions. When a pension kicks in at age 55+ many teachers will also retire into a similar bracket. This is particularly true for folks who teach into their 60s and retire with a full pension. They are likely still in the bracket they were prior to the pension. While state taxes matter too, the federal picture drives most of this decision.

Even in cases where someone may land in a different tax bracket in retirement, I’d argue that the value of this “tax arbitrage” (tax deduction now, taxed later) is not going to be significant when compared against the other benefits of the Roth that I describe below.

2. You Control the Roth Completely

Unlike your pension or district-sponsored supplemental retirement plans, you have full control over your Roth IRA. This means that you can choose any major discount brokerage (e.g., Vanguard, Fidelity, Schwab), invest in low-cost index funds, avoid variable annuities and high-fee products, and avoid being tied to whatever vendor the district has contracted with. That control is powerful especially for teachers who may have limited options otherwise.

3.  Your Roth Travels With You Throughout Your Career

It is a reality that teachers change districts. Sometimes they change states. If you are going to teach for 20-30 years, you will likely have different opportunities (or challenges) present themselves that make moving districts or positions the best option. A Roth IRA never resets. It never needs to be “rolled over” into a new plan. No matter what you do professionally, you can keep contributing to your Roth and it can remain invested and growing. This is true even if you decide to take a break from teaching for a few years or even leave entirely. 

4. A Roth Offers Flexibility in Several Ways 

There are several features of a Roth IRA that make it more flexible than other savings tools. 

1. Access to Contributions: You can withdraw your contributions (not earnings) anytime, penalty-free and tax-free. This makes a Roth IRA an emergency buffer, a bridge to early retirement, and a safety valve if life takes a turn. While you shouldn’t rely on it as an emergency fund, knowing you can access contributions gives you options.
2. Spousal Contributions: If you’re married and file jointly, you can contribute to your spouse's Roth IRA. This is especially useful for partners who stay home with young children, partners who work part time, and partners transitioning careers.
3. Contribution Timing: You can make contributions for the previous year up until you file your taxes. This gives you much greater flexibility than pretax structures where you elect to have a certain amount deducted from your paycheck within the calendar year. 

5. There Are No Required Minimum Distributions

Pre-tax retirement accounts (e.g., 403(b)s and 457(b)s) require you to begin withdrawals at the required minimum distribution (RMD) age, currently 73. Roth IRAs don’t have this requirement. You can let the money grow untouched for future medical expenses, late-life care, gifts, legacy planning, or simply because you don’t need it yet. You aren’t forced to take withdrawals that could increase your tax bracket, which gives you far more control over your financial timeline.

6. Roth IRAs Are Excellent for Inheritance

If leaving a legacy matters to you, a Roth IRA is one of the most tax-efficient ways to do it. There are no taxes for your beneficiaries on withdrawals. The 10-year withdrawal rule still applies, but tax-free growth continues during that period. For teachers who want to build generational wealth, a Roth is a powerful vehicle.

7. Roths Are Easy for Family Members to Support

If a family member wants to help you build financial stability, gifting you money to offset contributions to your Roth IRA is one of the best ways they can help. Along these same lines, the recent SECURE 2.0 act opened a pathway for individuals to roll surplus Edvest 529 funds into a Roth IRA. This means that contributions to a child's 529 college savings account could also help them in preparing for retirement. This isn’t automatic and has limits, but it opens up another long-term planning option for families.

8. Roth IRAs Pair Beautifully With a Pension

This point should not be overlooked. Teachers already have a financial tool, the pension, that will provide stable income, predictable benefits, and a structural baseline for retirement spending. Adding a Roth IRA provides flexible, tax-free supplemental income that will not affect bracket thresholds or other benefits. In this scenario, the Roth can serve as a hedge against pension reductions or COLA changes,  provide liquidity in early retirement, and offer greater control over the timing of withdrawals. 

Final Thoughts

The purpose of this post has been to provide a general overview of a Roth IRA and highlight the reasons I think they are a great financial tool for most teachers. A Roth IRA offers simplicity, flexibility, control, mobility, and tax-free growth—and aligns well with the financial realities of a teaching career. It is a tool that can work well with a pension to provide financial stability and freedom. For most educators, the path to long-term financial security is built one year, one contribution, one small step at a time. A Roth IRA is one of the best tools to make those steps count. For teachers who are balancing demanding careers and long-term uncertainty, having simplicity and flexibility matter—and the Roth IRA delivers both.

Originally posted Jan 10, 2026.