Making the Most of Your Retirement Benefit: Workplace savings plans are a great way to help you save for retirement. We're going to look at what to look for understanding plan features or plan highlights.

We'll talk about some benefits of participating in your workplace savings plan, and we'll talk about two different investment strategies, as far as investing your money in your workplace savings plan. I'll provide a couple of valuable tips along the way, and then we'll have a short recap or an overview to summarize today's presentation. If you go back to 1950, when somebody retired, they spent about 14 years in retirement.

But if you fast forward, 72 years later, to 2022 when somebody retired, they're spending almost double the amount of time, almost 24 years in retirement.

So, people are living a lot longer and if you're living a lot longer than it probably means you're going to need a lot more money to live a comfortable retirement, and workplace savings plans provide you one of the best ways to help you achieve your goals at retirement. So, check with your HR Department and see if your plan has any specific eligibility or entry date requirements to participate.

Check to see if they permit you to rollover a prior employer's workplace savings plan into your current one and check to see if the plan has a vesting schedule attached to it. And if you don't know what vesting means, it means ownership of company money.

So, if you're working and saving in a workplace savings plan, where your company helps you save for retirement, vesting applies to company money only.

In 2023, the IRS is allowing all of us to contribute pre-tax, or if the plan allows Roth contributions, up to $22,500 - either, or a combination of both. And if you turn age 50 or are age 50 or older in 2023, you're permitted to make an additional contribution provided you put the full $22,500 in of an additional $7,500

in 2023, and we call this a catch up contribution. Workplace savings plans also have beneficiaries attached to them. By law,

if you have a spouse, your spouse is automatically your primary beneficiary. If you're unmarried, you can make anybody your primary beneficiary. And then plan also allows for secondary beneficiaries.

Whether it be children, other family members, friends, choose your beneficiaries carefully and make sure you check and update these on a yearly basis because of major life events happening: a birth, a death, marriage, or a divorce.

All right, let's move on and talk about some of the benefits of participating in your workplace savings plan. Your amount you save every pay period I like to make it a bill or it's an expense. So if you treat it that way throughout your saving years, there's a lot of great benefits that you can receive. Number one is a tax benefit. If you're saving traditional pre-tax dollars, you could be reducing your taxable income and you're saving your money and investing your money and hopefully over time you make interest in earnings.

And when you withdraw that pre-tax contribution at retirement, that's when you pay the taxes on that money.

Now, if your plan allows after tax, Roth, contributions, you're doing the same thing. You're saving for your retirement, but you're saving with after tax dollars.

So, you're also investing the money, just like pre-tax dollars. So, the after tax dollars throughout the savings years, make interest earnings. The difference with a Roth contribution, when you go to withdraw it, provided the withdrawal is a qualified withdrawal or distribution, meaning the account's been open five years and you're over 59 and a 1/2, all the interest and earnings, plus that Roth contribution are tax free.

Now, if you can't make up your mind, which way benefits you the most, you have the ability to contribute both pre-tax and after tax, Roth, contributions should your plan allow Roth contributions. Another benefit of workplace savings plans are, if something would happen with your employment, they're portable.

You can leave the money and your former employers' plan, if they permit it. You always have the ability to roll funds into a new employer's plan, if permitted. You have the ability to roll the money into an individual retirement account and that keeps all the money tax deferred.

Now, if you do take a cash distribution from a workplace savings plan, it will be subject to taxes, and if you're not 59 and a 1/2 years old, you may pay an extra penalty tax. Other benefits of a workplace savings plan is how to invest your money. Most for most workplace savings plans, have a hands-on approach or a hands-off approach.

So, with a hands-on approach, consider a couple different things, if you say are 30 or 40 years away from retirement, you may want to take a little more risk to potentially have higher returns over that 30 or 40 year period. Conversely, if you're nearing retirement, getting ready to retire or already in retirement, you may want to take a more conservative approach to investing with a more balanced portfolio or a preservation of capital portfolio.

Please be aware of inflation. Inflation can affect the value of your workplace savings plan throughout the years. So, with hands-on investing, the first thing, probably, everyone would need to do is determine how much money to have in the three basic asset classes. And those are stocks, bonds, and cash. So, typically, if you're investing in stocks and stock mutual funds, that's where you take on the most risk.

But over time, you're hoping for a higher return. Now, if you're investing in more conservative, fixed income, or bond funds, you're reducing your risk considerably versus investing in stocks, but bonds are certainly not guaranteed. And then the safest approach to investing in your workplace savings plan is utilizing a cash type investment.

An example would be a money market or a stable value fund. So, once you determine how much money to have in stocks, bonds, and short term investments, you kind of put together a portfolio where you're picking and choosing the funds on your own to satisfy whatever percentage of stocks you may want to be invested in.

So, someone, if we go back to say that 25 year old or 30 year old, they may want to take an aggressive or a growth approach because they're so far away from retirement. nThey want to take more risk, hoping for a higher return.

Now, if you go to that investor, who's going to retire next year, or within the next three to five years, they may take an approach of more conservative or preservation of capital investment where you can see, only 15% to 35% is invested in higher risk stocks.

So, if your hands-on investing, it's important to set up a portfolio to satisfy whatever risk level you want to take, and then you have to monitor it throughout your working years and decide when to change your approach from aggressive to more balanced or moderate.

Now, if you don't want to do hands-on approaching, hands-off approaching is the easiest way. It requires the least amount of time and is utilizing one of the age based target date funds.

And these are the mutual funds with numbers attached to them, typically 2010 - 2065. And the target date fund, what they will do is they use a generic retirement age of 65.

So, if you want to figure out which target date fund is right for you in your workplace savings plan, determine when you're going to turn age 65 and whatever year closely matches that year is the proper age based target date fund for you.

Target date funds diversify you into multiple different mutual funds, and the great thing about target date funds is the risk level of the target date fund changes over time. So, if we look at this chart, zero represents age 65, and that's where the dotted line is in the middle of the slide.

Now, if you go back 40 years, that's telling me somebody is 25 years old. You can see dark blue. High-risk, high-return potential. Ninety percent of your money is going to be invested in stocks. And unlike hands-on investing, hands-off investing, that target date fund throughout your working years, as you approach that dotted line, which is age 65, reduces your risk level in stocks and will add more conservative bonds and eventually add the most conservative minvestment, which is cash.

So, a target date fund is a mutual fund made up of a whole bunch of different mutual funds, fully diversified that manages the risk automatically for you. So, when it comes to target date funds, ask yourself three questions:

Do you have a desire to select your own mix of individual funds? Are you comfortable deciding how much to invest in each fund in your own mix?

And do you have the time to monitor the investments and make changes as you approach retirement?

So, if you answer "no" to any of these questions, a target date fund strategy may be right for you. Generally, some tips along the way, ideally, you want to try and save at least double digit percentage in your workplace savings plan. In a perfect world, if you're 25,

I would love to see you save 15%. So, I think saving 15% or double digits, at any age, whether it be 25, 35, 45, 55 is a great thing. The best waym to help you achieve those double digit percentages, as far as savings, is take advantage of that 1% rule. And that's just simply increasing how much you contribute to your workplace savings plan by 1% every single year that you're saving for retirement. Another great thing about workplace savings plan is you have a steady contribution, every pay period.

Take advantage of dollar cost averaging. It's a great thing. And this is where you're buying mutual fund shares at different prices throughout the year.

So, with this particular example, you're saving $100 every month, but you're buying shares of mutual fund at different prices. If you look at May through September, well, that $100 is buying more shares that tells me that the mutual fund shares have dropped, so the purchasing power of your $100 is more than it was say, in the beginning or the end of the year.

So, that $1,200 investment, at the end of the year, if you average all that out, you purchased almost 62 shares at an average share price of $19.38. That is dollar cost averaging. That is a great thing within workplace savings plans. So, determine when you want to retire; that's the most important thing. Have a starting point to work with. Be as specific as you can. If you want to have goals written down or even pictures of that beach house, or sailboat, or any type of goals you have in retirement. Have them in front of you.

And your retirement plan should be evaluated regularly. It's okay to make adjustments as needed. Typically, most people will evaluate their retirement plan at least once a year.

And maybe as you approach and get closer to retirement more than once a year. So, to summarize, let's just give a quick recap here. All right. Learn how your plan works.

So, again, check with your HR department regarding if you're eligible and if there's any entry dates. If the plan has any company money with vesting attached to it and get started as soon as possible. The earlier you start, the better off you'll be at retirement.

Take advantage of the 1% rule. The 1% method of increasing contributions review your investment strategy and stay on course and monitor your progress.

Thank you for joining this presentation.