Business Innovators Radio - Interview with Danny Favreau with One Less Worry, Discussing Pension Tension for Teachers

Episode Date: March 19, 2025

Danny Favreau is a knowledgeable, detail-oriented leader with nearly 17 years of experience in the dynamic financial industry. As the owner of One Less Worry, Danny has become a trusted authority in pension and retirement planning, providing Federal and State employees with tailored guidance to achieve “Retirement by Design.” His success stems from his strategic approach to business development, his dedication to building strong client relationships, and his clear, practical communication style.Danny’s career spans a range of challenging roles, from field underwriter to account executive, financial advisor, and now business owner. Each position has refined his financial expertise and deepened his industry insights. With a National Social Security Advisor certification, Danny is equipped to address Social Security-related needs, including optimization strategies to maximize benefits.Throughout his career, Danny has demonstrated a commitment to professional growth, expanding his financial acumen through continuous education and leadership roles within top-tier organizations. His clients and colleagues alike value his integrity, his attention to detail, and his ability to consistently deliver exceptional results.Learn More: https://www.onelessworry.co/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-danny-favreau-with-one-less-worry-discussing-pension-tension-for-teachers

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with this Danny Fabro with one less worry and we'll be discussing pension tension for teachers. Danny, welcome to the program. Hey, thank you for having me. Hey, so I love that pension tension.

That kind of gives me the connotation that maybe there's some unknown aspects of a pension that teachers do not really know about. So they assume that their pension will take care of them in retirement. Why should teachers get a pension review? Well, it's pretty easy. I mean, and that's a great question. The biggest misconcept out there is teachers think that they got a pension that's going to last and going to be good for them. They think that the school is doing the right thing for them. And it may or may not be that case, but they really need to understand what the true retirement income is going to be, okay, because there's going to be a pension gap, okay?

So that pension gap is what they're currently making today, and what's it going to be making when their pension gets done. There's going to be that gap in between. So that they need to know. And to maximize their benefits, their payouts could be different, especially if they choose to have their spouse to receive part of their, pension if they pass away first. But, you know, and then you got the taxes, you know, they got to pay taxes under pension. A lot of teachers have no clue about that at all. They actually look, you know, when you tell them they got paid taxes on it, they look like they're lost in space. And, you know, the 403Bs, they have to pay taxes when you start pulling that money out, too.

So they really need to know what their numbers are so they can make sure that they're putting enough away to make sure that they have a good retirement. It kind of makes me think about people that have a 401k. They just fill out a bunch of paperwork when they start working at a company and they have no clue what they did, what they signed, what it does. Same with this pension with teachers. They probably just have in the back of their mind, oh, I have a pension, but they don't even know details. But to your point, a couple of those things you brought up that you can assess and bring to light in a review might even be time sensitive to where you might want to know about that. Definitely.

Because people just don't realize. And every school, every state is different. Okay. So you have to be careful of that. And if they have different states, if they worked in different states, you know, the pensions could be different. They can merge some over. You can carry some hours over.

But it's important to make sure to know exactly what you got. And we can forecast that. We could let them know what it's going to be when they retire. Yeah. So what are some of the biggest financial mistakes that you find that? that teachers make when it comes to retirement? Great question. There's three of them that really popped in my mind.

Not saving enough beyond their pension, okay? They actually don't save anything, don't put anything away, they don't have a 403B, anything of that nature. They just assume the pension is going to be the same amount when they retire. And that's not the case. You know, choosing the wrong pension payout, okay? That's very important. And if they want their spouse to get some money, you know, that's important.

You know, if they pass, they want to make sure that that's done properly. A lot of times they take the hire of them of the pension amounts and not realizing if they die tomorrow, then there's nothing left for the rest of the family. So they got taken all that consideration and understanding the inflation and taxes and the market. Look at the market. What that's done is decreased, you know, another drop. So it takes away of their 403B money. So they're not putting it into a safe spot, and that's a problem with it, you know. And then, like I said, the taxes, they got to pay taxes on everything.

And, you know, they'll pull out money of 403B pay taxes. Your pension, you pay taxes. Sometimes you pay state and federal tax. So you have to be aware of that. It kind of brings up the point that you need to know exactly how much you're going to need in retirement so that then you then can assess how much you'll have in your pension, then how much you'll have in other areas, right? So how do you help your clients realize how much that they're going to need on a monthly basis during retirement?

Well, we take that into it, we put it into a formula with their current pay, and we basically were going to figure out exactly what they're going to need based upon their current pay. If they're living fine with their current pay, and then that's going to be our goal, is that's what we want to achieve when you retire. Because remember, the first phase of retirement, you're going to spend more than what you're actually been making. You've got traveling, you've got grandkids, you know. You've got a lot of things to take into consideration, and people spend more during that first phase of life of retirement. You know, the second phase is a slowdown phase where you're at home more.

You're going to be not spending as much. But then that third phase is your final phase, and that's expensive. You know, that's health care costs that come into play. So it's very important to, you know, make sure you know what you're doing. And we ask teachers, you know, to do it yearly review. The best thing to do is do it every year because things change. And when things change, you need to be on top of it.

Yeah. You know, I don't know much about the educational field and pensions like what you are an expert in. But when a teacher retires and they're going to work with this pension like you're going to help them understand and review, do they also get Social Security? Some do. Some don't. Okay. 15 states that they don't pay into Social Security. okay so you can't collect from it you know right unless it's a spouse related or something like that

okay you know so that that that is a factor and you know you get sometimes you get people that worked in one state that didn't pay into it and then they work into another state and they don't have enough hours or credits you know to be collecting yourself they need to know that too so therefore they may have to work an extra year or something of that nature yeah and that kind of gets down to knowing what's ahead of you having that review. What do you find that are some signs that a teacher might not be financially ready for retirement? Well, that's pretty easy. You know, they need to ask themselves some questions, you know, do I know exactly what my pension is after taxes? Okay. So if they don't know that, they need a pension review. They need to calculate their

monthly expenses in retirement. Okay. So I tell them to write down everything for a couple months. every expense that you have, and that will give you a good guideline of where you are now, okay, because most people don't know how much they spend a month period, okay? And do you have other savings or other investments? And where is that? Is it in a safe spot or is it tied to the market? Because that's important, you know, to make sure that that is working well for them. And basically, do I have to work after I retire?

You know, that's another thing that we're going to address with them, and we're going to go through it. And we're going to figure out, and we pull out a report, it shows them exactly what they're going to needs are, and it's shown them what the pension amount is. And then what the gap is if there's a gap. And a lot of times there's a gap. So that needs to be figured out. So we've got to make sure that's get covered or else you've got to go find a part-time job, you know? And that's not fun. Nobody wants to do that.

Well, if you have that part-time job, you wanted to be only because you want to be there, not because you're forced to. That is so correct. Yeah. Yeah. So what are you finding are some of the maybe when you said track your expenses for two months? I would venture to say that there are some people that get into retirement and discover that now they have all this extra time, that they're spending even more than what they were while they were teaching because they've got extra time. Or maybe they're traveling more like you were saying. What are some of those things that are typically hotspots where they're spending more? Oh, definitely traveling.

Grandkids. Grandkids are a big, big spending pocket for grandparents. And in a good way. In a good way. But it's, you know, the tend of gifts that they get are a lot more and higher price. And so that's one of them. And they travel to go see their grandkids. Or else they may just take them by a Winnebago or another camp or something like that.

So they can go camping. You know, they travel. They're on the go, especially if both of them are retiring at the same time. You know, they want to get, they want to do things. So that's one thing. Or they want to become a business owner and start doing something that they really wanted to do. And you see a lot of people invest into that. The other big thing is people get sick and they don't realize it.

Some people are forced to retire early. Okay. That's a problem because if you're not prepared ahead of time for it, you're not going to have the finances for it. And when you get sick, it's costing you, more money for health care and you've got to travel back and forth to the hospital or doctors. So therefore, there's more expenses and it makes it hard, you know. So and then repairs on houses. That's a big thing that people don't ever consider that they may have to repair the house or buy a furnace,

put a new roof on, a new car, you know, something like that when they retire. You know, because retirement nowadays, people are living 30 years into it, 35 years into it. So you have to have the funds to do that. You have to be set up properly in order to do that. I mean, if it's on a downway market and you're pulling money, have your 403B, that's going to hurt you. You know, the sequence of return there is going to kill you, and you're not going to have any money come retirement.

You know, that's a really good point you bring up, because I feel like we are all as Americans taking better care of herself. We've got better, you know, nutrition habits, medicines, health care, we're exercising more so. Maybe we're living a little bit longer. in retirement than it was decades ago. So at whatever age, someone decides to retire, you might need your money to last longer than what you might have put down on paper.

So with that thought in mind, it makes me think about this. The best time to get a pension review might not be, you know, one year before you plan to retire. So how far ahead of retirement should you be getting a pension review? And I know a lot of teachers are just running a mile a minute and they feel like that. like they don't have the time. How easy is it to get a pension review? Well, both good questions.

Now, let's take the one to start doing pension reviews. You start immediately. I mean, you can start the day that you start teaching, you know, you start then, and that'll give you a clue of what you've got to put away besides your pension. Okay, the sooner you start saving for that, the better off you're going to be, hands down. Especially if you something happens soon, you get sick and you got to retire early, you'll be covered. You know, so as soon as you start, the better off you are. Now, if it's 10-year window before 10 years, I would make it mandatory, basically,

that you should see at least somebody to talk about your pension every year, because things are going to change. And it's important that you know the changes. You don't want to wait for the last minute to do it. I've had so many teachers last year, actually, they come to retire and ask them what they have for money set aside and they have nothing. And they can't retire. or they already retired, turned in all the paperwork, and like, what do I do now if I'm running out of money? So that's why they got to find a part-time job. So, and the second part of the question is, basically, it only takes about 20 or 30 minutes of your time.

I know teachers are busy. I know they're on the go, but it only takes 20, 30 minutes at a time. And I would suggest always to do the pension review outside of school so that way your spouse could be on the call. That's important because you guys make decisions together. You know, one just does it retire without telling the other one. And it comes to finances. It's important that both of them are together. So you talk about that.

The thing that I noticed, you know, some teachers don't want, they want to do it during school hours. Well, the problem is they're not getting full attention to it. They're not pulling up the records that they need to. You know, we want to know, basically, you know, copy of your pay stub so we can see what you're making. So therefore, we can make sure of that. And if you've got 403B money being taken out, We want to be able to see that so we can pull them reports. But to have the time just to dedicate to yourself after school is great.

Even during the summer months are great when you're out of school. I know you don't want to think about it at that point. But I do have a lot of teachers that do want to do it then and we do it for them. But if you get on a regular base once a year of doing this, it's very easy. And if you get to do it with the same person over and over again, they're going to have your file. And it'll be so much easier. it only be a five-minute phone call the second time around. You know what I'm saying?

Yeah, 30 minutes or less the first time and five minutes thereafter, that's not bad at all. And that was one of the questions going on in my mind when you were explaining that, which is how often, you know, so the earlier, the better, yes. But then you feel like annually would be a good time frame to recheck the pension just to see if there's been any changes? Yeah, spend five minutes with me. And that way we just make sure that there's not really a change. You know, your income could change a little bit.

We'll figure that up if you know, and you may want to save more if you're getting paid raise. But more changes would be if the pension rules change or if the government changed or taxes changed, then are little things that add up to be a lot. And you want to be ahead of that versus behind. Yes. So, Danny, wrapping up,

what's one piece of advice that you would give a teacher about their pension? Well, don't assume nothing. clarify exactly what it is. Make sure you know what your income is going to be. And that's the key right there. And don't assume that all your hours are been posted to your job. Make sure that your early statement is correct because sometimes they're not.

And we see that occasionally. But more importantly, just don't assume nothing. Get clarification. Get it done. Spend 20, 30 minutes with me. And you'll be all set. and then five minutes every year and boom, we're done. And then you know that you're on the road to retirement.

Excellent. Well, if someone is interested in taking a few minutes to check out their pension, what should teachers do to reach out and connect with you? That's very easy. Pensiontension.com. Just go right there. You'll see a lot of information about retirement, along with you can sign up for a good appointment with me.

But it's pensiontension.com. Very easy. and get the tension. Yes, thank you so much. I love that name, and thank you for your timely advice. I appreciate you coming on. Thank you. Appreciate it.

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