Public Employee Risk Tolerance: Aligning Your 403(b) & 457 with Your Pension Floor
Get to Know Free CallIs Your 403(b) or 457 Positioned Too Conservatively?
For Massachusetts public employees, evaluating risk tolerance is fundamentally different than it is for corporate workers. Most online risk questionnaires treat you as if your portfolio is your only lifeline. But if you have an MTRS or MSERS pension, you already hold a massive guaranteed income stream that covers your basic cost of living.
Your true risk tolerance isn’t just an emotional score. It is about balancing that guaranteed pension floor and restored Social Security against the growth needed in your supplemental accounts to protect your purchasing power over a 25- to 30-year retirement.
The Public Employee Advantage: Your Pension Is Your Bond Floor
A $60,000 annual state pension functions as the mathematical equivalent of holding $1.2 million to $1.5 million in high-grade fixed income. Because that baseline covers day-to-day essentials, a market pullback does not force you to liquidate stocks at a loss to pay your mortgage or grocery bills.
With the repeal of WEP and GPO under the Social Security Fairness Act restoring earned benefits, public employees now have a dual layer of guaranteed income. Understanding this stability allows you to evaluate whether your voluntary accounts are carrying the right amount of growth, especially when planning for a reasonable rate of return during retirement.
The Psychology of Investing: Understanding Loss Aversion
While the mathematical math may show you can afford equity risk, psychological comfort remains absolute. Nobel Laureate Daniel Kahneman demonstrated that the pain of a financial loss is felt twice as intensely as the pleasure of an equivalent gain.
When investors hold portfolios that do not align with their temperament, they are prone to panicking and selling at cycle troughs. The goal is to align your supplemental portfolio so it earns what you need without causing you to abandon your plan when market volatility strikes.
My Process: A Clear, Objective Framework for Alignment
We replace generic guesswork with an unbundled, 5-step evaluation:
1. Web-Based Risk Assessment
An 8-question evaluation that captures your true emotional comfort zone and produces a clear baseline risk score.
2. Pension Floor Valuation
We calculate the present value of your MTRS/MSERS pension and restored Social Security to determine your actual capacity for risk.
3. Side-by-Side In-Plan Audit
Using the fi360 Fiduciary Score™, we conduct an independent 403(b) and SMART Plan fee and performance audit to compare your current investments against an optimized, lower-cost model.
4. Tailored Allocation Roadmap
You receive written recommendations on whether to adjust risk, rebalance asset styles, or lower costs within your existing employer plan.
5. Ongoing Reviews
Annual check-ins ensure your plan stays aligned as market cycles turn and your career timeline advances.
Book a 20-Minute Intro Call
Let's look at your pension estimate, your workplace plan statements, and determine if your assets are properly aligned. No sales pitch, no obligation.
Get to Know Free Call“Tim has served as my financial advisor for many years. He is experienced, knowledgeable, competent, flexible and proactive. Tim sends to me, via email and on a regular basis, secure and thoroughly organized client reports of my combined account portfolio. If I have trouble understanding any part of my portfolio or have questions, he is always available to explain. Tim is forthcoming advising me on any changes to my holdings that could be more beneficial given the state of the market. Over the many years of working in my career, setting up savings funds for the future and retiring, Tim has always been there to advise and help.”
Pat Barbour
Client
Testimonial Disclosure: Testimonials are based on individual client experiences and may not represent the experiences of all clients. They are not a guarantee of future performance. Each client’s situation is unique. No compensation has been provided for these testimonials.