TAKE CHARGE OF YOUR FUTURE

Transcription

1 TAKE CHARGE OF YOUR FUTURE LOYOLA HIGH SCHOOL OF LOS ANGELES 403(b) PLAN ENROLLMENT OVERVIEW

2 4Steps to retirement preparation Reaching your retirement goals can take a lot of preparation. As a general rule, some financial professionals suggest that you ll need at least 75 to 80 percent of your final working salary to maintain your lifestyle during retirement. The Loyola High School of Los Angeles 403(b) Plan is a way to start preparing for your retirement. Your plan offers you tools, education and investment options that can help you focus on your future. 1Estimate 2 3 Contribute Choose 4 Start

3 ENROLLMENT OVERVIEW 1. Estimate your need With the average life expectancy increasing, uncertainty around Social Security, rising healthcare costs and inflation continuing to erode the purchasing power of your money, participating in your retirement plan is more important than ever. The amount you need in retirement income could play a significant role in reaching your future financial goals. It is important to take the time to look at your specific situation and retirement income needs before determining how much to contribute to your retirement account. Only 48 percent of workers report that they and/or their spouses have taken the time to complete a retirement needs calculation, according to the 2016 Retirement Confidence Survey from Employee Benefit Research Institute and Mathew Greenwald & Associates. Note: Employee Benefit Research Institute and Mathew Greenwald and Associates are not affiliates of AUL and are not OneAmerica companies Use the Retirement Income Strategy tool at com/retirementstrategy to determine a suitable amount for your situation. Note: Any individuals used in scenarios are fictitious and all numeric examples are hypothetical and were used for explanatory purposes only. Hypothetical returns assume reinvestment of earnings. Actual returns or principal value will vary. Balances shown are before reduction for taxes. It is important that you start preparing to reach your retirement income goals early, because waiting even one year can make a big difference. David Age 25 $1,500 Annual contribution Assumptions: Earns $30,000/year Plans to retire at age 65 Contributions assume a constant rate of return of 6 percent Total at age 65 if contributions begin at: Age 25 $246,072 COST OF WAITING (ONE YEAR) = $0 Age 26 $230,643 = $15,429 Lisa Age 40 $3,000 Annual contribution Assumptions: Earns $50,000/year Plans to retire at age 65 Contributions assume a constant rate of return of 6 percent Total at age 65 if contributions begin at: Age 40 $174,469 COST OF WAITING (ONE YEAR) = $0 Age 41 $161,594 = $12,875 3

4 2. Contribute to your retirement plan Though starting early is important, participants who are or will turn 50 years of age during the calendar year are eligible to make catch-up contributions. Check with your plan administrator to learn how catch up contributions can assist with your preparation. For many people it is a good idea to participate in your retirement plan as soon as possible. If you start contributing right away, your account may have more time to grow or weather ups and downs in the stock market. Your retirement plan contributions The money you contribute to your retirement account is automatically deducted from your paycheck before taxes are taken out. It goes directly into your retirement account. This means you are paying less in current income taxes for the year. This can help reduce the impact of contributing to your retirement plan on your take-home pay. Any investment involves risk and there is no assurance that the investment objective of any investment option will be achieved. Before investing, understand that variable annuities are subject to market risk, including possible loss of principal. Put tax deferral to work for you Tax deferral simply means the contributions to your retirement plan are not currently taxed. You are putting off paying taxes on that money until you withdraw it from your retirement account. The benefits of compounding Compounding occurs when your principal investment generates a gain that is reinvested and experiences an additional earning. When the new balance (the original investment plus the gain) generates further earnings, the initial gain increases the total return of your initial principal. When the following gains are reinvested, future positive earnings are further compounded. Compounding example Michael Age 25 $100 Monthly contribution over 40 years Total contribution $48k = $199,149 at retirement Note: This hypothetical investment return with a fictitious name is designed to demonstrate the impact of compounding returns and is not indicative of any particular investment or performance. Hypothetical returns assume reinvestment of earnings and a 6 percent average return on investment. Actual returns or principal value will vary. Balance shown is before reduction for taxes. 4

5 ENROLLMENT OVERVIEW Your plan highlights Eligibility requirements employee contributions All non-excluded employees are eligible to participate in the plan immediately. Eligibility requirements employer matching contributions Participation in the plan is open to non-excluded employees who meet the following requirement(s): Completion of 1 year of service Completion of 1,000 hours of service Plan entry dates employee contributions Participants may participate in the plan effective immediately upon date of hire. Plan entry dates employer contributions Participants may participate in the plan after completion of eligibility requirements Excluded employees employee contributions The plan does not allow for participation by employees who are working less than 20 hours per week. Employee contributions Through payroll deduction, you can make pre-tax contributions of up to the Internal Revenue Service (IRS) dollar limit cap. Visit for information on the IRS limits for the current calendar year. You can designate your contribution as a pre-tax deferral, a Roth deferral or a combination of both. Roth deferrals are after-tax contributions, but earnings on Roth contributions accumulate tax-free in your account and withdrawals at retirement may be exempt from federal income tax. Automatic enrollment To help you contribute toward retirement, your plan has automatic enrollment and escalation features Automatic enrollment allows you to take no action in regard to participating in the 403(b) plan once you meet eligibility requirements. If you are a newly eligible employee and have completed one year of service (with 1,000 hours), 1 percent of your compensation will be deducted from your paycheck pre-tax and invested in the the plans Qualified Default Investment Alternative or QDIA option. You may change your contribution and investment elections or elect not to participate by going to or by calling Employer matching contribution Your employer may make discretionary matching contributions to your account. All non-excluded employees are eligible to participate in the plan immediately. 5

6 Vesting employee contributions You are always 100 percent vested in your deferral contributions to the plan, plus any earnings they generate. You may change your contribution and investment elections or elect not to participate by going to or by calling Vesting employer matching contributions Contributions made to the plan on your behalf, plus any earnings they generate, are fully and immediately vested. Rollovers and transfers Your plan allows for the rollover or transfer of an existing qualified retirement plan account from a prior employer. You are always 100 percent vested in any rollovers or transfers to the plan, plus any earnings they generate. Withdrawals/distributions Generally, money may be withdrawn from your account for: Death Disability Plan does not allow for hardship withdrawals In-service withdrawals at age 59½ Loans Retirement at the plan s normal retirement age of 65 Termination of employment 6

7 ENROLLMENT OVERVIEW 3. Choose your investments An important, and sometimes confusing, step in retirement preparation is choosing which options to invest in. Because each investor has different goals and different circumstances, there is no set strategy that works for everyone. Asset classes There are different types of investments, known as asset classes, in which you may choose to invest your retirement plan contributions. The three main asset classes are: Stocks Stocks have historically had the greatest risk and highest returns among the three major asset categories. Bonds Bonds are generally less volatile than stocks but offer more modest returns. Cash equivalents Cash equivalents such as certificates of deposit, treasury bills and money market funds are generally the most conservative investments, but offer the lowest return of the three major asset categories. Another type of investment, called an Asset Allocation fund, provides investors with a portfolio of a fixed or variable mix of the three main asset classes. These funds are a good option for investors that would prefer not to worry about making adjustments to their portfolio as the market fluctuates. Understanding risk and return Risk is the potential for an investment to lose value. Return is the change in value on an investment. Understanding the relationship between risk and return is very important as you develop your investment strategy. The amount of investment risk you are willing to take, also known as your risk tolerance, is a personal decision, which can be shaped by the amount of time you have until retirement, or your time horizon. Risk tolerance Some people are comfortable taking on the risk of frequent ups and downs of the market in return for potentially greater longterm returns. Others prefer the slow, steady return of lower risk investments. Understanding your personal attitude toward risk will help you find the right mix of investments for your portfolio. Time horizon The longer you have until retirement, the more risk you can potentially afford to take. Mixing it up with diversification Because different asset classes have varying levels of risk and return, it is important to make sure you have a good mix of investments in your portfolio. This strategy, called diversification, aims to balance risk and reward by allocating assets according to your goals, risk tolerance and investment horizon. The mix of investments that is appropriate for you depends on your retirement goals, your risk tolerance and how long you have until retirement. Note: Each group of investments carry their own unique risks. Before investing, please read each fund prospectus for a detailed explanation of the risks, fees, and costs associated with each underlying investment option. Although you might reduce volatility and risk with diversification, you can t eliminate investment risk all together. Diversification and asset allocation do not ensure a profit or protect against loss. Bond funds have the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the fund. Money Market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other federal government agency. Although they seek to preserve the value of your investment at $1.00 per share, it s possible to lose money by investing in money market funds. 7

8 Select the investor profile that fits you best by completing this questionnaire. What type of investor are you? This questionnaire will help you select an investor profile, based on your personal situation and comfort level with investing. The total score recommends which of the five risk profiles may be appropriate for you. Answer these questions and total your score at the bottom. I expect to begin withdrawing money from my retirement account in: 1 year 2 4 years 5 7 years 8 10 years 11+ years Score Once I begin withdrawing money from my retirement account, I expect the withdrawals to last: I want a lump sum distribution 2 4 years 5 7 years 8 10 years 11+ years Score I would take money out of my retirement account to pay for a large, unexpected expense. To meet my financial goals, my investments must grow at a high rate of return. I prefer investments that are a low risk, even if the returns are lower than the rate of inflation (the rise in prices over time). I prefer an investment strategy designed to grow steadily and avoid sharp ups and downs. When it comes to investing, protecting the money I have is my highest priority. I am unwilling to wait several years to recover from losses I could incur in an extended down market. I always choose investments with the highest possible return, even if the investments may frequently experience large declines in value because of higher risk. If I had $1,000 invested in an account, and its value dropped to $850 after six months, I would move all my money to a more conservative account. Strongly agree Agree Neutral Disagree Strongly disagree Score TOTAL 8

9 ENROLLMENT OVERVIEW Selecting an investor model to suit your style Conservative strategy Score The conservative investment strategy seeks to provide high current income and low longterm capital appreciation. 20% Stocks 80% Bonds Investment Percentage n Large-cap stocks 11% n Mid-cap stocks 3% n Foreign stocks 3% n World stocks 3% n High yield bonds 5% n Intermediate-term bonds 13% n Short-term bonds 34% Moderate strategy n Fixed interest/stable value/cash 28% Score The moderate strategy seeks to provide high current income and moderate long-term capital appreciation. 40% Stocks 60% Bonds Balanced strategy Score The balanced strategy seeks to provide above average capital appreciation and a moderate level of current income. 60% Stocks 40% Bonds Investment Percentage n Large-cap stocks 19% n Mid-cap stocks 5% n Small-cap stocks 3% n Foreign stocks 8% n World stocks 5% n High yield bonds 5% n Intermediate-term bonds 13% n Short-term bonds 23% n Fixed interest/stable value/cash 19% Investment Percentage n Large-cap stocks 28% n Mid-cap stocks 6% n Small-cap stocks 5% n Foreign stocks 13% n World stocks 8% n High yield bonds 4% n Intermediate-term bonds 10% n Short-term bonds 15% n Fixed interest/stable value/cash 11% 9

10 Selecting an investor model to suit your style (continued) Growth strategy Score The growth investment strategy seeks to provide high long-term capital appreciation with low current income. 80% Stocks 20% Bonds Investment Percentage n Large-cap stocks 33% n Mid-cap stocks 9% n Small-cap stocks 8% n Foreign stocks 16% n World stocks 14% n Intermediate-term bonds 9% n Short-term bonds 11% Equity growth strategy Score An equity growth strategy seeks to provide high long-term capital appreciation. 100% Stocks 0% Bonds Investment Percentage n Large-cap stocks 39% n Mid-cap stocks 12% n Small-cap stocks 11% n Foreign stocks 21% n World stocks 17% Note: While diversification through an asset allocation strategy is a useful technique that can help to manage overall portfolio risk and volatility, there is no certainty or assurance that a diversified portfolio will enhance overall return or outperform one that is not diversified. An investment made according to asset allocation models neither guarantees a profit nor eliminates the possibility of loss. Bond funds have the same interest rate, inflation, and credit risks that are associated with the underlying bonds owned by the fund. Investing in international markets involves risks not associated with investing solely in the U.S., such as currency fluctuation, potential political and diplomatic instability, liquidity risks, and differences in accounting, taxes, and regulations. Funds that focus on real estate investing are sensitive to economic and business cycles, changing demographic patterns, and government actions. Funds investing in stocks of small, mid-sized, and emerging companies may have less liquidity than those investing in larger, established companies and may be subject to greater price volatility and risk than the overall stock market. 10

11 ENROLLMENT OVERVIEW 4. Get started! eenrollment 1. Go to 2. Click on Enroll or View Account 3. Enter log in information. 4. If you are a first time user, enter your full Social Security Number (SSN) as your user name 5. The last four digits of your SSN are your initial PIN 6. Check the box if you have other retirement accounts you would like to rollover (if applicable) 7. Enter your personal information 8. Decide how much you want to contribute and choose your investment options 9. Add beneficiary information 10. Review your entries and click Enroll Me Enroll today at or by calling Enrollment assistance over the phone English and Spanish speaking representatives are available Monday through Friday between 8 a.m. and 8 p.m. Eastern Time to help you complete your enrollment. 11

12 Note: McCready and Keene provides administrative and recordkeeping services and is not a broker/dealer or an investment advisor. Neither McCready and Keene nor its employees provide tax, legal, fiduciary, or investment advice. Mutual funds are sold by prospectus. To obtain a copy of the prospectus, the participant should contact the plan s investment advisor or the mutual fund company directly. Before investing, carefully consider the fund s investment objectives, risks, charges, and expenses. The underlying fund prospectuses contain this and other important information. Read the prospectuses carefully before investing. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. About OneAmerica A national leader in the insurance and financial services marketplace for 140 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources that are committed to providing value to our customers. To learn more about our products, services and the companies of OneAmerica, visit OneAmerica.com/companies. McCready and Keene, Inc. a OneAmerica company P.O. Box Indianapolis, IN OneAmerica Financial Partners, Inc. All rights reserved. OneAmerica and the OneAmerica banner are all registered trademarks of OneAmerica Financial Partners, Inc. R /24/17