Hello! I am looking for advice about helping my wife choose a retirement plan. She just got a new job in a Charter School in Philadelphia. She had previously been in a different Charter School in Philadelphia for the last four years. And she had been contributing 7.5% a year to the state PSERS retirement program. She is a class T-D member of PSERS (if you know what that means).
The new Charter School offers her an option. Either keep the same PSERS or take a 403(b) at Vanguard. The Charter School contributes 5% for her to Vanguard that is fully vested after 2 years, 50% vested after 1 year. She can contribute up to the max into a Vanguard 403(b). The Vanguard fund choices are good, and livable, but not stellar. Or she would pay 7.5% into PSERS every year, and her school pays whatever they pay into PSERS.
At the time of a normal retirement the Vanguard 403(b) would be a normal 403(b). For a normal PSERS retirement, she would get a yearly payment of (2.5%) X (average of her three highest years salaries ) X (years of service). The Vanguard option has market risk. And the PSERS has the risk that goes with underfunded pension plans etc.
Another point to make is that I currently contribute as much as possible into my Vanguard 403(b) plan (my contributions are maxed out). We also have been doing full backdoor Roth contributions for the last few years. So there would be some diversification with the PSERS option in that regard.
Anyone have any insight about which is a better choice? Apparently this is a one time choice that she can never change while she works at this school. Thanks!