Driver s. 1st Gear: Determine your asset allocation strategy.

Size: px

Start display at page:

Download "Driver s. 1st Gear: Determine your asset allocation strategy."

Cory Blake
5 years ago
Views:

Delaware North 401(k) PLAN The Driver s Guide The fial step o your road to erollig i the Delaware North 401(k) Pla. At this poit, you re ready to take the wheel ad set your 401(k) i motio.

We call it the Driver s Guide, because it empowers you with iformatio ad helps you make choices based o your specific eeds.

1 Delaware North 401(k) PLAN The Driver s Guide The fial step o your road to erollig i the Delaware North 401(k) Pla. At this poit, you re ready to take the wheel ad set your 401(k) i motio. Now all that s left to do is to follow the three steps outlied i this easy-to-use ivestmet plaig ad erollmet tool. We call it the Driver s Guide, because it empowers you with iformatio ad helps you make choices based o your specific eeds. Here s a overview of how the Driver s Guide will guide you to your ultimate destiatio: 401(k) erollmet. 1st Gear: Determie your asset allocatio strategy. This sectio icludes a retiremet profile that will help you defie what kid of ivestor you are. Usig your score from this profile, you ca determie your asset allocatio strategy (i other words, how to ivest your retiremet accout). 2d Gear: Choose your ivestmets. Now that you ve defied your retiremet profile, it s easier to decide how your moey will be ivested. Your 401(k) pla allows you to choose your ow ivestmets or choose a model asset allocatio strategy. For ivestmet guidace, cotact the Pla s fiacial advisors at The MHC Group at Graystoe Cosultig. (Graystoe Cosultig is a busiess of Morga Staley Smith Barey, LLC). You ca reach oe of the advisors at , ext rd Gear: Eroll i the Pla. With your completed Driver s Guide i had, move full speed ahead ad eroll. You ca do it over the telephoe or right o the Iteret. Either way, it s fast ad easy. 1

2 1st Gear: Determie your asset allocatio strategy. Asset allocatio is oe of the most powerful retiremet plaig tools you ca use. Thik of it as a valuable road map for your fiacial future. What is a asset allocatio strategy? It s the process of dividig your moey amog a variety of asset classes such as stocks, bods, ad stable value ivestmets each of which has differet risk ad retur characteristics. (See page 4 i the Road Guide for a descriptio of each asset class ad the associated risk.) To determie which asset classes may be right for you, you ll eed to take ito cosideratio your goals, time horizo, ad tolerace for risk. How does asset allocatio work? Asset allocatio works o the priciple that your ivestmets i various asset classes will very likely react to chagig market treds with differet growth rates ad levels of volatility. For example, while oe ivestmet may decrease i value due to chages i the market, at the same time aother ivestmet may icrease i value ad offset the declie. Keep i mid that asset allocatio is essetially a log-term strategy. It is t about short-term ivestmet returs or outperformig the stock market for the momet. You start with a objective ad stick with it through stock market ups ad dows over the years to hopefully come out ahead i the ed. Remember, though, asset allocatio does t esure a profit or protect agaist a loss. Performace of asset allocatio fuds depeds o the uderlyig mutual fuds i which they ivest. These fuds are subject to the volatility of the fiacial markets i the U.S. ad abroad ad may be subject to the additioal risks associated with ivestig i high yield, small cap, ad foreig securities. Factors to cosider. Your asset allocatio strategy will also help you sharpe your focus o your retiremet goals dow the road. To build your strategy, you will have to cosider the followig: What is your time horizo? (Whe will you eed the moey?) How do you feel about risk? (Ca you withstad volatile market coditios for a exteded period of time?) What are your retiremet goals? (How much moey will you ultimately eed?) Keep i mid that your compay pla represets oly oe aspect of your overall retiremet plaig strategy. You should also take ito accout other sources of reveue, icludig Idividual Retiremet Accouts (IRAs), persoal savigs, Social Security, ad earigs from future employmet i determiig your total retiremet icome. Keep a eye o the road. As with ay log-term pla, it s importat to thik about ad re-evaluate your goals, objectives, ad overall strategy o a regular basis. Make sure ay chages i your life situatio are reflected i your ivestmet choices. Retiremet plaig today meas makig decisios that will shape your fiacial future. 2

3 Ivestor profile. What kid of ivestor are you? To fid out, simply complete the followig questios. The, add up the umbers i the paretheses ( ) ext to your selected aswers to compute your overall score. 1. W hat percetage of your total retiremet savigs (combied balaces i Idividual Retiremet Accouts, bak savigs, CDs, mutual fuds, etc.) does this retiremet savigs accout represet? A. More tha 75% C. 25% to 50% B. 51% to 75% (4) D. Less tha 25% 2. H ow do you feel about this statemet? I believe that if I cotiue to save for retiremet at my curret rate, my retiremet savigs will be sufficiet to support my retiremet. (16) (4) (20) 3. O ver the ext 10 years, how will the amout of your aual cotributios to this retiremet pla most likely chage? A. Decrease from curret level C. Icrease slightly B. Remai about the same D. Icrease substatially Kowig your appetite for risk is importat. The followig questios will help you gai a uderstadig of your risk tolerace. 4. How do you feel about this statemet? I order to make moey, I am willig to take some risk. 5. H ow do you feel about this statemet? If my ivestmets declied i value 10% or more, I would move my assets to a ivestmet i which I would ot expect to lose ay moey. 3

4 Risk measuremet (cotiued) 6. H ow do you feel about this statemet? I am willig to accept gais ad losses o my ivestmets for potetially higher returs over the log term. 7. A ivestmet that you expected to have a high retur over time has declied i value. At which poit would you move your moey to a differet ivestmet? A. Whe the ivestmet s value declies by 5% B. Whe the ivestmet s value declies by 10% C. Whe the ivestmet s value declies by 15% D. Whe the ivestmet s value declies by 20% E. I am ulikely to chage ivestmets 8. H ow do you feel about this statemet? I prefer that my accout grow with the highest possible returs, eve though a differet choice may grow more cosistetly but at a lower rate. Cosider whe you eed your moey. 9. How soo do you pla to withdraw a substatial portio of your accout balace? A. I less tha 5 years C years (20) B years D. More tha 20 years (30) Overall score Note: Refer back to this score whe examiig the Model Asset Allocatio Strategies show o the ext page. 4

5 Next step: Determie your strategy. Now that you ve completed the Ivestor Profile, fid the model asset allocatio strategy o the chart below that matches your overall score ad decide if it s appropriate for you. As you ll see, your score will correspod to oe of six model asset allocatio strategies desiged to help you work toward your specific goals. Each model asset allocatio strategy represets a bled of differet asset classes that are available uder the ivestmet optios offered by your pla. The models rage from a ivestmet mix that provides the least potetial for appreciatio with the least amout of risk to oe that offers the greatest potetial for appreciatio with the greatest amout of risk. Model Asset Allocatio Strategies Coservative 2 42 Moderately Coservative % 2% 7% 18% 15% 10% 24% 60% Chart Key: Moderate 8% Moderately Aggressive % % 12% 11% Very Aggressive 86+ 6% 10% 50% Aggressive 10% 50% 26% 40% 32% 10% 15% 25% 20% 14% 38% 54% 16% Stable value Stocks ad bods (balaced) Emergig market stocks Bods Large compay stocks Small/medium compay stocks Iteratioal stocks Take a pit stop make sure your accout is keepig pace. It s importat to re-evaluate your curret ad future goals, as well as your asset allocatio strategy, every so ofte. Because the performace of the various asset classes will vary, over time your asset allocatio percetages will become out of balace from your origial strategy or model. Rebalacig your accout simply meas reallocatig your ivestmets back to your iitial asset allocatio strategy. This ivolves sellig ivestmets i asset classes that are overrepreseted ad ivestig the proceeds i a uderrepreseted class. Usig your retiremet accout statemet, you ca compare your curret asset allocatio with your origial asset allocatio strategy ad determie whe it s time to rebalace. Stay up to speed with the risks ad rewards. Each asset class ad each ivestmet optio has differet risks ad objectives, ad teds to perform differetly durig various market cycles. S tocks historically have show greater growth potetial tha other types of securities ad have experieced the most volatility risk. B ods historically have show less volatility risk tha stocks but are subject to credit risk. Credit risk is the risk that the compay issuig a bod may be uable to pay iterest or repay pricipal. Historically, bods, whe compared to stocks, have offered less growth potetial. Stable value ivestmets have the least volatility risk, but offer the least potetial for appreciatio i value. Stable value ivestmets are also subject to credit risk. Ivestmet retur ad pricipal value will fluctuate so that shares, whe redeemed, may be worth more or less tha their origial cost. Overall, whe choosig your ivestmet strategy, you should keep i mid the risk ad potetial rewards associated with each asset class. 5

6 2d Gear: Choose your ivestmets. The Delaware North 401(k) Pla offers you a choice whe it comes to ivestig your moey. You ca select your ow ivestmets (go to Optio I). Or, you could select a model portfolio strategy (go to Optio II). OPTION I: SELECT-YOUR-OWN INVESTMENT OPTION CHOICES. The Pla s 15 fuds are grouped below by asset class. Use the followig chart to record your percetage allocatios, usig whole umbers oly. Make sure your percetages total 100%. Asset Class Ivestmet Electio Allocatio % Emergig markets stocks fud Ivesco Developig Markets Fud Iteratioal stock fuds America Fuds New Perspective Fud MFS Iteratioal New Discovery Fud MFS Iteratioal Value Fud Small/medium compay Vaguard Small Cap Idex Sigal Fud stock fuds JPMorga Mid Cap Value Fud America Fuds AMCAP Fud Legg Maso Clear Bridge Appreciatio Fud Dreyfus Basic S&P 500 Stock Idex Fud MFS Value Fud Stock ad bod (balaced) fud BlackRock Global Allocatio Fud Bod fuds MFS Govermet Securities Fud MFS Research Bod Fud Templeto Global Bod Fud Ivesco Stable Value Fud Large compay stock fuds Stable value fud 100% OPTION II: SELECT A MODEL PORTFOLIO STRATEGY. If you prefer, you may choose to ivest 100% of your 401(k) moey sources ito ONE of the asset allocatio strategy models (listed o the previous page). As you may recall, your choices rage from coservative to very aggressive. If you decide to take this route, be sure to use your score from the Ivestor Profile to determie which model is right for you. By choosig a asset allocatio strategy model, your cotributios will be ivested i the fuds that correspod to the applicable asset classes. If there is more tha oe fud i a asset class, your cotributios will be evely split amog those fuds. For asset classes with odd percetage allocatios (for example, 7% or 27%), the greater percetage will go to the first fud listed i each asset class. I additio, if ay of the uderlyig fuds i a strategy model deviates from its targeted asset allocatio amout by more tha 1%, your accout will be rebalaced automatically. Rebalacig occurs withi 10 busiess days of each caledar quarter ed. If you elect a asset allocatio strategy model ad later make a chage to your accout (for example, a chage to ivestmet electios or a exchage of balaces), the quarterly rebalacig feature will be cacelled. 6

7 Cotributio limits for ivestors aged 50 ad older. You may be eligible to make a additioal 401(k) cotributio of up to $5,500 durig a particular pla year if you meet the followig coditios: You are a pla participat who is at least 50 years old by the ed of 2013, ad Y ou are curretly cotributig the maximum eligible cotributio amout to your 401(k) accout OR you have reached the 2013 IRS maximum cotributio limit of $17,500. If you are iterested i makig this additioal Catch-Up Cotributio, please call the Participat Iformatio Ceter at for more iformatio. 3rd Gear: Eroll i the Pla. Now that you ve read through ad completed the Driver s Guide, there s just oe last step ahead of you: Erollmet. You ca either eroll by phoe or via the Iteret. No matter which route you choose, kow that your advisor is ready to help if you have ay questios alog the way. Optio I: Eroll by Iteret. 1. Log i to dc401k.com ad click o Access my accout to reach the log-i page of Retiremet Access. 2. Follow the olie istructios. Eter your ie-digit Social Security umber as your iitial User Name. E ter the moth ad day of your birthday i a eight-digit format (MM/DD/YYYY) as your iitial password. C hoose a ew password. Your ew password must be betwee 8 ad 12 characters ad cotai at least two umbers ad two letters. C hoose a ew User Name. Your ew User Name must be 8 to 25 characters log with o alpha umeric requiremets. 3. S elect the percetage of your pay that you would like to cotribute to the Pla. 4. C hoose your ivestmets. You may choose EITHER a asset allocatio strategy model OR your ow idividual ivestmet selectios. (If you choose to select your ow ivestmets, you will otice that the BlackRock Global Allocatio Fud has bee desigated to receive 100% of your cotributios. You ca easily chage this allocatio to 0% or to your desired percetage.) Note: As you scroll through the erollmet screes, you ll be able to elect erollmet, eter your cotributio deferral percetage, ad select your ivestmets. Just follow the prompts. Be sure to complete the erollmet process ad record your referece umber. Optio II: Eroll by phoe Simply call the Participat Iformatio Ceter at The Participat Iformatio Ceter is a speech recogitio system. If you eed assistace while usig the speech recogitio system, just say Represetative at ay time after you ve etered your Social Security umber. If you d prefer to use the Touchtoe Respose System, press ** aytime after you hear the welcome greetig. To reach a Service Represetative, just press 0 after you ve etered both your SSN ad PIN. Thigs to kow before you call: Please read through these procedures completely before you call so that you re prepared to follow the prompts. The system s erollmet process is listed o the followig page. 7

8 Laguage selectio You ca choose to hear the voice prompts i either ENGLISH or SPANISH. Autheticatio For security purposes, you ll be asked to provide your SOCIAL SECURITY NUMBER ad PERSONAL IDENTIFICATION NUMBER (PIN), ad/or olie password. Tip: Whe you call for the first time, your iitial PIN will be your ie-digit Social Security Number. Eter the moth ad day of your birthday i a eight-digit format (MM/DD/YYYY) as your iitial PIN. You the will be prompted to chage your PIN to a ew PIN that is betwee four ad eight umbers log. Elect to participate This is where you will actively elect to participate i the pla. Deferral percetage You must eter your SALARY DEFERRAL PERCENTAGE usig whole umbers oly. Tip: If you are usig the Touchtoe System, you will eed to eter two zeros after your percetage allocatio, followed by the poud sig. For example, to elect a 6% deferral amout, you must eter #. Ivestmet electios You may choose a model asset allocatio strategy OR select your ow ivestmets. SELECTING A STRATEGY: You will hear the ames of the strategies ad the will be istructed to select oe of the models for 100% of your allocatio. Follow the prompts to cofirm your selectio. CHOOSING YOUR OWN INVESTMENTS: The BlackRock Global Allocatio will receive 100% of your cotributios i the evet that you choose ot to make your ow selectios. You will hear the ame of this fud first, idicatig a 100% allocatio. If you do ot wat to allocate ay amout to the BlackRock Global Allocatio, you will be able to modify or cacel this allocatio by followig the prompts. The ames of all remaiig fuds will be voiced. After you hear oe of your choices, eter your desired percetage as istructed. The system will keep a ruig total as it progresses through the pla s ivestmet optios. Your total allocatios must equal 100%. Erollmet cofirmatio. IMPORTANT: You must complete the etire erollmet process ad receive a cofirmatio umber for your erollmet to become effective. Cofirmatio umber* Need help? Just call. Customer Service Represetatives are available durig regular busiess hours (Easter time) every busiess day. For assistace or for aswers to your questios, simply: 1. Call the Participat Iformatio Ceter: Say Represetative at ay time after you have etered your Social Security umber. Oe last but importat step: Do t forget to retur your Beeficiary Form i the eclosed prepaid evelope! RS DNC-DRIVER-BRO 8

living well in retirement Adjusting Your Annuity Income Your Payment Flexibilities

living well in retirement Adjusting Your Annuity Income Your Payment Flexibilities livig well i retiremet Adjustig Your Auity Icome Your Paymet Flexibilities what s iside 2 TIAA Traditioal auity Icome 4 TIAA ad CREF Variable Auity Icome 7 Choices for Adjustig Your Auity Icome 7 Auity