How NYSTRS Pensions & 403(b)s Work Together for Teachers in Westchester County

The New York State Teachers’ Retirement System (NYSTRS) provides a defined‑benefit pension that replaces a portion of a public school employee’s income in retirement. But for most teachers in Westchester County, the pension alone won’t fully cover future expenses. That’s where a 403(b) plan comes in—allowing you to save additional, tax‑advantaged money to supplement your NYSTRS income. Together, these two benefits can create a more complete and reliable retirement strategy.

How NYSTRS Pensions Are Calculated

NYSTRS is a traditional pension—meaning the retirement income you’ll receive is based on a formula, not on market performance. Your benefit is typically calculated using:

• Years of service credit
• Final Average Salary (FAS) —usually your highest three or five consecutive years of earnings, depending on your tier
• Your tier and age at retirement

In simple terms, the more years you work and the higher your salary in your final years of employment, the larger your monthly pension benefit.

What Percentage of Income NYSTRS Typically Replaces

Many teachers in Westchester County are surprised to learn that NYSTRS benefits often replace only 40–60% of pre‑retirement income —and that percentage varies by tier and years of service. While this is a solid foundation, it usually leaves a gap when compared to your actual retirement spending needs, especially in higher‑cost areas such as Westchester County, Rye, and surrounding communities.

Why Most Teachers Still Need a 403(b)

Because NYSTRS replaces only part of your income, almost all public school employees benefit from saving in a 403(b) plan. A 403(b) functions similarly to a 401(k) but is designed for educators and nonprofit employees. It allows you to build long‑term retirement savings that grow tax‑deferred.

Most teachers use a 403(b) to:

• Add a second income stream in retirement
• Cover healthcare costs, travel, and lifestyle expenses not fully supported by NYSTRS
• Save more aggressively during higher‑earning years

How 403(b) Contributions Reduce Taxable Income

When you contribute to a traditional 403(b), your taxable income decreases for the year you make the contribution. For example, if you earn $90,000 and contribute $5,000 to your 403(b), you’re only taxed on $85,000 of income. That can reduce your tax bill today while helping you build retirement savings for the future.

Roth 403(b) contributions work differently—you pay taxes now, but withdrawals in retirement can be tax‑free. Many teachers use a combination of both.

Rollover Options at Retirement

When you eventually retire from a Westchester County or nearby Connecticut district, you’ll typically have the option to:

• Leave the funds in your existing 403(b)
• Roll the balance into an IRA for more investment flexibility
• Consolidate multiple retirement plans from past districts or jobs

Rolling over your 403(b) can help simplify your financial life and give you more control over investment choices and withdrawal strategy.

Common Mistakes Teachers Make

• Waiting too long to start saving —your pension alone may not be enough.
• Not coordinating NYSTRS and 403(b) benefits as part of a comprehensive financial plan.
• Investing too conservatively or too aggressively inside their 403(b).
• Not reviewing fees or comparing vendor options.
• Missing opportunities to increase contributions during higher‑income years.

How Focus Financial Group Helps Public School Employees

At Focus Financial Group in Rye, NY, we specialize in helping public school employees understand how their NYSTRS pension, 403(b), and other benefits work together. Our team provides personalized guidance on savings strategies, tax considerations, investment selection, and rollover decisions.

We also offer comprehensive financial planning and investment management designed specifically for educators in Westchester County and surrounding regions.

Ready to Build a Confident Retirement Plan?

If you’re an educator in Westchester County, Dutchess County, or a nearby Connecticut school district, we’d be happy to help you understand how your NYSTRS pension and 403(b) plan fit together. Our team at Focus Financial Group is here to guide you every step of the way.

Schedule a consultation today to get started.