When we discuss retirement with professors, I typically find that faculty fall into two groups. The first group is deeply passionate about their research and mentoring graduate students. They have dedicated so many years to their university that they can’t imagine retiring. As they transition to emeritus status, they may continue working well into their late 70s or 80s.

The second group also enjoys their work but actively seeks opportunities to accelerate their path to retirement. They may have common goals, such as relocating to a more desirable area, moving closer to family, pursuing long-delayed personal interests, or stepping away from administrative duties to focus on consulting, either full-time or part-time. Sometimes, factors beyond their control, such as health issues or reductions in research funding, hasten their retirement timeline. The most common question among this group is, “How can I retire sooner?”

The first question I usually ask is, “How much are you currently saving in your university retirement plan?”

Most universities have transitioned away from defined benefit programs. In most cases, a portion of your salary is contributed to the plan, and your university provides a matching contribution. However, if this is the extent of your retirement savings, you may miss significant opportunities to accelerate your retirement timeline or grow your nest egg more quickly.

To maximize your savings rate and improve your chances of achieving your desired retirement, consider these five key questions. With 2025 just underway, now is the perfect time to review your pay stub and consult your benefits department to ensure you take full advantage of the available options. Start by answering the questions below.

1 – Are you contributing the maximum amount allowed within your 403(b) plan?

Typically, a portion of your salary is required to go toward retirement savings. While contributions to these plans, when allocated appropriately over a 25-year time horizon, can provide a solid foundation for your nest egg, they are often insufficient to meet your desired income needs in retirement. The good news is that most universities offer a voluntary 403(b) savings plan to help bridge this gap. Contribution limits for these programs continue to increase, and in 2025, you can contribute up to $23,500 on a tax-advantaged basis. Taking advantage of this option is one of the simplest ways to enhance your retirement savings.

2 – Are you over the age of 50? You can start contributing more, potentially a lot more.

If you’ve been delaying your retirement savings or are already contributing the maximum allowed amount of $23,500, it’s a good idea to review your contributions. You may be able to increase them through an Age 50 Catch-up contribution, which allows you to add an additional $7,500 to your 403(b) plan. Additionally, recent changes under the SECURE Act 2.0 permit even higher contributions—up to $11,250—for those aged 60 through 63. This means you could potentially increase your contributions by nearly 50%! In some cases, certain university plans may even accelerate their own contributions once you reach a specific age. Therefore, it’s important to stay informed about these opportunities as you approach retirement.

3 – Do you work for a public university? If so, your university likely offers a 457(b) plan you can contribute to!

457(b) plans are generally available to employees of state and local government entities, including many public universities. However, they are typically not offered at private universities, as they are government-sponsored retirement plans. Most state-funded universities provide a 457(b) plan, though certain eligibility provisions may apply. If you qualify, these plans offer a tax-advantaged savings option with a contribution limit of $23,500. When combined with another eligible plan, the total contribution limit can reach $47,000, providing a significant opportunity for tax-advantaged savings each year.

4 – Does your university offer a Roth option within your 403(b) or 457(b) plan? You can contribute. No, really! You can.

“Is your savings plan structured in a tax-optimized way?” We continuously address this question in our ongoing planning relationships. Understanding all available tax-advantaged savings options is a key factor in effectively answering this question.

One savings option tends to cause confusion—especially among senior faculty with significant income. Roth IRAs have income limitations ($150,000 for single filers and $236,000 for married filing jointly), and a common misconception is that these limitations apply to contributions made within university-sponsored retirement plans. They do not. I repeat—they do not apply to university plans, as these income limitations for Roth contributions do not apply for employer-sponsored plans. Ultimately, the decision to have Roth options available within a university retirement plan is made at the plan level.

Deciding whether to make contributions on a pre-tax basis and pay income taxes later depends on several factors, such as your anticipated spending needs in retirement. However, we often find that most faculty members face substantial income tax burdens on their retirement savings. Because of this, having some tax-free money set aside for retirement income distribution and estate planning can be highly beneficial.

If your university allows Roth contributions, consider directing a portion of your 403(b) or 457(b) contributions to a Roth account. This approach enables your investments to grow tax-free, and strategically deciding which assets to place in Roth versus pre-tax accounts can have a significant long-term impact.

5 – If you are already maximizing all your current plans, what other options exist?

If you have extra cash to invest, opening a low-cost brokerage account can be a smart choice for long-term investments, especially if a Roth option is unavailable within your university plan. While this account won’t grow tax-free like a Roth, it offers greater flexibility for accessing funds and can still be managed in a tax-efficient way to minimize taxes. Additionally, many faculty members earn consulting income, making contributions to a SEP IRA another valuable tax-advantaged savings option to consider.

The bottom line is that incorporating these savings habits into your retirement plan can have a significant impact over a 12- to 15-year horizon. This could potentially accelerate your retirement timeline by several years, or more. Working with a financial advisor specializing in university retirement plans can help you run scenario analyses and provide conservative estimates on how these strategies can positively impact your financial future.

This is intended for informational purposes only and should not be construed as personalized financial advice. Please consult your financial professional regarding your unique situation.