Maximizing Your Future: The Benefits of Voluntary Retirement Savings Accounts

By Luke Lara, FA Ombudsperson

Disclaimer: Parts of this article were written with the help of AI. This article is intended as informational only and is not intended to replace the sound guidance and counsel of tax, legal, financial, or CalSTRS advisors. Consult your own tax, legal, financial, and/or CalSTRS advisor before making any decisions regarding retirement or investments.

As faculty members at MiraCosta College, we are dedicated to shaping the minds of future generations. However, it’s equally important to shape our own futures by ensuring financial security in retirement. The California State Teachers’ Retirement System (CalSTRS) advises that the Defined Benefit Pension does not fully replace your current income, so you may want to consider additional income sources to cover your retirement needs. Whether you’re just starting your career or have been with us for many years, setting aside additional money in a voluntary retirement savings account, such as a 403(b), 457, and/or Roth 403(b), can offer significant benefits for your future needs.

Why Consider a Voluntary Retirement Savings Account?

Tax Advantages: Pre-tax contributions for 403(b) and 457 plans may reduce your taxable income for the year. After-tax contributions for Roth 403(b) result in tax-free withdrawals in retirement.
Compounding Growth: The earlier you start saving, the more time your money has to grow. Thanks to the power of compounding interest, even small contributions can grow significantly over time. This is especially beneficial for younger faculty members, but it’s never too late to start.
Flexibility and Control: These accounts offer a range of investment options, allowing you to tailor your portfolio to match your risk tolerance and retirement goals. You have the flexibility to adjust your contributions and investment choices as your financial situation and goals evolve.
Supplementing Pension Plans: While CalSTRS provides a solid foundation, it may not be enough to maintain your current lifestyle in retirement. Voluntary retirement savings accounts can bridge the gap, ensuring you have sufficient funds to enjoy a comfortable retirement.
Catchup Contributions: For those who are 50 or older, catch-up contributions allow you to contribute more than the standard limit. This is a great opportunity for faculty members who may have started saving later in their careers to boost their retirement savings.

Interested? Here is Information About MiraCosta’s Options

SchoolsFirst is the third party administrator that is responsible for receiving employee pre-tax contributions and transferring the funds to the various investment companies based on employee elections. More information about SchoolsFirst can be found on the Human Resources website.

The following are the steps you would take to open or modify a voluntary retirement savings account:

Select an investment company from the approved list of investment companies.
Contact the investment company of your choice to set-up an account (or work with a financial advisor to do so).
Log-in to your Workday homepage to enroll AFTER your account has been established.
Select the “My Benefits” icon from your Workday homepage to enroll, change, and/or cancel enrollment in a retirement savings plan (see the Retirement Savings job aid).

Lastly, keep in mind that if you do establish a retirement savings account, MiraCosta’s Human Resources Office advises:

Please be aware that your retirement savings contributions will be deducted from ALL earnings. If you would like to stop your retirement savings deductions during the summer months, you must submit two benefit events in Workday - one event to stop the deduction over the summer months and one event to resume your deduction during your regular work period.

Feel free to reach out to Eva Brown or Karen Radzinski in the Human Resources department for more information on opening a voluntary retirement savings account.