In This Issue. Plan Guidance for You. Hop Off the Emotional Roller Coaster A cool head and a calm approach will serve you well in the long run

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1 RetireOnTarget Newsletter, Spring 2013 In This Issue Hop Off the Emotional Roller Coaster Delaying Social Security Could Be Your Best Investment What to Do with Your Old 401(k) Pay It Forward Plan Guidance for You For questions or personalized guidance on your retirement plan, contact the Retirement & Investment Solutions Center at , option 3 or psu@cunamutual.com. Hop Off the Emotional Roller Coaster A cool head and a calm approach will serve you well in the long run Warren Buffet, one of the world s richest and most successful investors ever was once asked why so few have been able to replicate his investing success. His reply was simple, The reason gets down to temperament. To cultivate a good temperament one that focuses on the long term, not the short term, and ignores the crowd in favor of a well-thought-out strategy involves the ability to control your natural emotions. You need to build your own resistance to emotional triggers that can lead to bad investment decisions. Here are a few techniques to do regularly to keep your cool: 1. Think Long Term Investing success is not measured in minutes, months or even a year or two. Choose investments for their long-term potential. Resist the urge to act all the time. Sometimes the best action to take is no action at all. 2. Think Asset Allocation It s not about whether you pick the best stock or bond funds for your plan. No one can do that over time. It s out of your control. But you can control what percentage of your investments go into stocks, bonds and guaranteed accounts. How you allocate will serve you best over time. A great way to do this is through target date retirement funds. You ll sleep better at night. 3. Be an Investor Not a Speculator As an investor, you: Don t time the market. Don t try to move in and out of the market. For most, this is a fool s game. Buy for the long term. Invest with a purpose. For example, investing for your retirement is all about replacing your paycheck someday. It s not about achieving breath-taking returns that you can talk about to your friends. Be careful not to do something foolish with your money. Invest appropriately. This is all about how much time you have to invest. If you ve got 20 to 30 years to retirement, you should be mostly in stocks. If you re at the doorstep of

2 retirement, you should have a much higher amount of bonds and guaranteed dollars. 4. Block Out the Noise Put down the newspaper. Don t listen to the investment gurus with today s hot stock, and stop clicking on those sites. Fixating on the market s minute-to-minute news is not the answer. In fact, by the time you hear the news, the market has already reacted to it. 5. Dollar Cost Average By regularly and consistently purchasing an investment over time, you remove some risk. You wind up buying some shares at higher prices and some shares at lower prices. It, kind of, averages out. That s the beauty of investing regularly into your 401(k) plan you re already dollar cost averaging and you may not even know it. Following these steps won t help you achieve the wealth of Warren Buffet, but it will help you invest like him. Not too bad of an example to follow! Delaying Social Security Could Be Your Best Investment A few years can mean a lot for your retirement income When you delay claiming Social Security benefits until an older age, you ll receive a larger, inflation-adjusted monthly check for the rest of your life! A 2012 study by Steve Sass from the Center for Retirement Research at Boston College explains why delaying benefits offers the best deal in town for retirees in today's low-interest rate environment. His working paper is called Should You Buy an Annuity from Social Security? You can claim Social Security benefits at any age between 62 and 70.The difference between claiming as early as possible, at age 62, and waiting until age 70 to claim the maximum amount, results in a benefit that is 76% larger. But to score higher benefits, many retirees must rely on their other savings to fund their lifestyle in the interim. The Price of Waiting Author Steven Sass calculates the price of waiting in terms of buying additional monthly income through an annuity. Think of the savings used during the period before collecting Social Security benefits as the price and the increase in benefits as the annuity that a retiree can buy from Social Security. For example, consider a retiree who could claim $12,000 a year at age 65 and $12,860 at age 66 (or $860 more.) If he delays claiming benefits for that one year and uses $12,860 from his savings to pay the bills for that 12 months, $12,860 is the price for the extra $860 in Social Security income. The annuity rate the additional annuity income as a percent of the purchase price would be 6.7% ($860/$12,860). Cost Comparison The author, then, compared the cost of waiting for a year to the cost of buying a commercial annuity that would pay the additional income per year. Sass found buying an annuity from Social Security is

3 generally more attractive than buying a commercial annuity. Waiting on claiming Social Security becomes even more valuable for married couples because you can lock in the largest possible survivor benefit for the remaining spouse. Buying an annuity from Social Security (i.e. delaying Social Security) is particularly attractive in today's low-interest environment when you consider traditional alternatives for providing retirement income. Living off the interest from savings is tough today as interest rates on safe investments are currently less than inflation. It was certainly easier when Certificates of Deposit were yielding 5% or more. Drawing income from a portfolio of stocks and bonds is also less attractive given the volatility of the stock markets and the low-interest rates on bonds. Bridge the Early Years For many Americans, the best use of your retirement savings may be to use them as a bridge to fund the early years of retirement, allowing you to delay collecting Social Security benefits for as long as possible. Steve Goss, chief actuary of the Social Security Administration, extolled the value of delaying benefits until age 70 when they are worth a third more than at the normal retirement age of 66 as a remarkable deal that is not well understood. What to Do with Your Old 401(k) Avoid the one biggest mistake! The average person holds 11 jobs from the age of 18 to 44, according to the Bureau of Labor Statistics. For many of you, it means you have multiple workplace retirement accounts. Because not all employer plans require you to leave the plan when you leave the company, you could end up with several, disparate retirement accounts. This often leads to neglect, extra fees or lost accounts all of which hurt your retirement savings progress. Consolidating old workplace accounts to an IRA or your current employer plan may give you a clearer picture. But the decision of whether or not to roll over your 401(k) or other workplace retirement account is an important one, as these accounts may make up the bulk of your savings. Know Your Options When you leave a job, you typically have four options: leave the money in your old employer s plan, roll it into your new employer s plan, put it into an IRA, or withdraw the balance. 1. When to stay put: If your former plan has great investment options at low prices, you won t be charged fees to stay in the plan (be sure to check on this), and you don t mind managing multiple accounts, it s OK to leave it where it is. Otherwise, move it to your new plan or an IRA. 2. When to roll in to your current plan: If you have access to your new retirement plan right away, and the options are good and the costs are as low as or lower than your former plan, it s a great idea to roll your old balance into your current plan. That way you ll have one less statement to deal with and you ll probably do a better job of managing a

4 consolidated account. 3. When to rollover: A third option is to move your funds into a rollover IRA. Consider this when you have an account like this already in place or you re not thrilled with the options of your former or current plan. 4. Don t cash out: Unless you absolutely need the money, don t withdraw it. This is one of the biggest mistakes workers make! You ll pay income tax on the money, plus a 10% penalty for early withdrawal if you re under age 59-1/2. For Roth 401(k)s, only the earnings (non-contribution portion) are subject to the penalty and income tax, though in some cases qualified early withdrawals are not subject to the penalty. Even though you may be tempted to simply take the cash, try to remember that these funds are for your retirement. Don t use them for anything else. Moving the funds If you decide to move your old 401(k), you ll just need to make a few phone calls to get started. Call the Retirement and Investment Solution Center at They ll guide you through everything you ll need to do to transfer the funds to your current 401(k) plan or set up a rollover IRA. Contact your old plan. Ask your former plan administrator for a list of all the information they require. Do Yourself a Favor Paying attention to your former retirement accounts will benefit you in the long run. Consolidating them has several advantages. Whatever decisions you make, avoid the option of cashing out. If you really need the money and you have nowhere else to turn, you may have the option of taking out a plan loan and repaying over time. This will keep these funds working towards their original intent funding your retirement. Pay It Forward Help Your Co-workers Avoid a Retirement Crisis You might think it s impossible to avoid a retirement crisis in this country, especially in the wake of recent reports that Americans are not very confident about their prospects for having a comfortable retirement. But Matt Greenwald the president of Matthew Greenwald & Associates, the firm which conducted the research for the 23rd annual Retirement Confidence Survey for the Employee Benefit Research Institute thinks otherwise. In an interview, Greenwald outlined what it will take for the U.S. to avert a retirement crisis. Calculate how much you need If you want to avert a personal or national retirement crisis, there s one sure-fire way to do that: Calculate how much you need to save for retirement, and get others to do the very same. According to Greenwald, this task can help you (and others) go a long way toward making sure that you have the financial resources required for a comfortable retirement. Doing a retirement plan helps, said Greenwald. People make more accurate assessments of what they need. Most people don t do any retirement planning and that s something that s

5 very important. The people less prepared (for retirement) are the people who do less retirement planning. Talk to Your Co-workers Ask your co-workers if they ve ever made a retirement savings plan. Specifically, ask them if they know how much they ll need in retirement and if they ve calculated how much they need to be saving today. Let them know that they can log on to and this information is waiting for them on RetireOnTarget. Help spread the word and encourage your co-workers to take control of their retirement. Oh, and pat yourself on the back. If you would prefer to receive news and techniques to help you reach your retirement goals at a different address, log into and click on View/Change My Preferences on the I Want To page. Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value, and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. Retirement & Investment Solutions Center team members offer retirement education and do not provide investment, legal or tax advice. Participants are encouraged to consult their own advisors. RPS E