Tag: savings plan

Don’t Wait to Create a Retirement Savings Plan

Published on by Megan MacGregorLeave a comment

We are committed to helping our employees prepare for a successful retirement by offering several retirement savings plan options, along with tools and resources to help you reach your goals.

Most benefit-eligible employees2 are enrolled in the 403(b) Base Retirement Program, which consists of a 5% employee contribution of your eligible compensation and a generous university matching contribution of 10%. That’s an immediate two-for-one match of your investment for a total contribution of 15%. While this provides a great foundation, you may want to consider additional savings options. MSU also offers two additional savings accounts: the 403(b) Supplemental Retirement Program and the 457(b) Deferred Compensation Plan. For more information about these two accounts, read Your Top Questions about MSU’s Optional Retirement Plan Options.

How to Make a Retirement Savings Plan

It’s normal to have many questions when you start to plan for your retirement:

  • How early should I start planning?
  • How much do I need to save to retire comfortably?
  • Which plan(s) should I contribute to?
  • What can I do to maximize my savings?
  • Are my retirement goals attainable?

The answers will depend on your financial situation and retirement goals. We strongly encourage all MSU employees to make an appointment with their retirement vendor – Fidelity or TIAA – to discuss their options and develop a personalized savings plan. Fidelity and TIAA are financial professionals who can provide helpful strategies, tips, and actionable steps that can help you take charge of your finances.

Additionally, both Fidelity and TIAA have numerous resources – including articles, webinars, interactive tools, and more – to help you learn about saving for retirement and other financial goals.

Don’t Wait to Save: The Power of Compounding Interest

For younger MSU employees, creating a comprehensive retirement savings plan may not be a top priority. Between student loans, rent, childcare, and more, it can be difficult to set aside money for a day 30 to 40 years in the future. But the young have a huge advantage when it comes to saving money for retirement: more time. This additional time allows them to potentially benefit the most from compounding interest, which may lead to greater savings down the road.

Compounding interest basically means allowing an investment to earn money while continually reinvesting those earnings over time. The more time you have, the smaller your original investment may need to be. In the hypothetical example below, a 25-year-old starts saving $5,000 annually ($416 per month), and a 40-year-old starts saving twice as much but waits until age 40 ($833 per month). 

Compounding Interest Graph

The 25-year-old ends up contributing less money over time – $200,000 versus $250,000 – but ends up with a higher balance: $798,735 versus $566,317. In other words, the 25-year-old contributes $50,000 less but ends up with $232,000 more than the 40-year-old who waited to save. As this example shows, younger investors may benefit from saving as much as possible as soon as possible.

If your retirement date is a bit closer, you can still take advantage of compounding interest. However, you may need to increase your monthly contributions to meet your retirement savings goals. Luckily, the IRS allows people who are aged 50 years or older to contribute an additional “catch-up” amount to their retirement plans each year.

As you determine your contribution amount, please note the IRS places limits on how much employees can contribute to a retirement plan each year. To contribute a certain amount, such as $100 per paycheck, you can use the calculating tool for converting a dollar amount to a percentage.

Of course, remember that investment returns are not guaranteed and will fluctuate — in some years you may have gains, and in other years you may have losses. But over time, any investment that has a net gain will have benefited from compounding.

How to Change Your Contribution

While your contribution to the 403(b) Base account is fixed based on your income, you can adjust your contributions to the 403(b) Supplemental Retirement Program and/or the 457(b) Deferred Compensation Plan at any time. To do this, login to the EBS Portal with your NetID and password. Select My Benefits from the top navigation, then click on the Benefit/Retirement Enrollment and Changes tile. Select Enroll/Change my Retirement/Health Savings Account Options from the dropdown menu and click Next. On the Savings Plan screen, you’ll be able to edit your contributions to the 403(b) Supplemental and/or 457(b) Deferred Compensation accounts. Make sure you click through all the screens and hit Save to finalize the change to your contributions.

Questions? We encourage you to reach out to Fidelity (800-642-7131) or TIAA (800-732-8353) for your retirement planning questions. Visit the HR website for additional information on the retirement plans offered by MSU.

1 Please note, that the example above is a hypothetical illustration only and is not intended to represent the past or future performance of any investment. The example assumes contributions are made monthly at a 6% annual effective rate, compounded monthly, and no withdrawals. Actual performance will vary with market conditions. Investing involves risk. There is no assurance that the goals will be met or that the solution or strategy will be successful. This example was developed in partnership with TIAA.

2 Certain types of employees are excluded to participate in the 403(b) Retirement Plan. Please see the 403(b) Base Retirement Program Eligibility Chart for more detail. 

graphic of person using calculator and looking at papers on desk.

Make a Plan During America Saves Week

Published on by MSU Human ResourcesLeave a comment

America Saves Week (Feb. 22-26, 2021) is an annual event that encourages you to make a plan to increase your savings and improve your financial situation by utilizing your workplace retirement plan and the tools and resources they provide. Both of MSU’s retirement vendors, Fidelity and TIAA, have resources and tips on saving money, getting out of debt, and planning for retirement with live webinars, courses for financial literacy, and other tools. Be sure to review their resources on preparing for financial emergencies or managing unexpected expenses, which you may find especially useful during this difficult and uncertain time. 

Fidelity Resources

Fidelity is offering online workshops on a variety of topics including creating a budget, paying off debts, managing unexpected events and expenses, taking the first step to investing, preparing for retirement, and more. Fidelity members should consider registering for sessions (see link for details) that may be useful to your family’s current financial needs. If you can’t make the online workshops, check out this on-demand workshop called Taking Control: 3 Ways to Start Feeling Good About Your Finances. Other tools and calculators provided by Fidelity to their members can be found here.

Additionally, find resources on health and financial emergencies, building your financial “immune system” and emergency savings that are available for everyone.

TIAA Resources

TIAA’s Goal Planner webpage offers calculators and resources on how to save for things outside of your retirement plans, such as emergency funds, vacations, a home, and more. Additionally, TIAA has a financial goal planning PDF that allows you to track your money in detail. Use these tools to map your income and expenses, write down your goals, and match them to a time frame to complete them. 

If you’re struggling with debt, TIAA’s debt calculator tool will help you evaluate your current situation and then offer resources and tips to help. Additionally, their Retirement Checkup tool allows you to create a projection of how much income is needed in retirement.

Schedule a Virtual Consultation with Fidelity or TIAA

Both Fidelity and TIAA offer virtual appointments with financial consultants and encourage you to set up an appointment with them to ask any questions you have at no additional cost as part of your MSU retirement plan. Set up an appointment with your  TIAA consultant here or set up an appointment with your Fidelity consultant here. 

For general questions about retirement, visit the HR website or contact the HR Solutions Center at SolutionsCenter@hr.msu.edu or 517-353-4434. For questions about your specific retirement plans, please contact your retirement vendor directly.

Tips to Enhance Savings During America Saves Week!

Published on by MSU Human ResourcesLeave a comment

Today marks the start of America Saves Week, taking place February 24-29, 2020. America Saves Week is a nationally recognized time to encourage individuals and families “to save money, reduce debt, and build wealth” (America Saves, 2018). Saving money is much easier said than done, so MSU’s retirement vendors TIAA and Fidelity have provided tips and tools to make saving for retirement and (life in general) a bit easier.

  • Save just 1% more. If you’re already saving, that’s great! But, did you know that increasing your 401(k) savings by just 1% can cause your savings to grow exponentially? Try the Power of Small Amounts tool by Fidelity to see how a small increase can have big effects on your savings.
  • Utilize a financial goal planner. Reveal your personal financial path in just three steps:

1. Map your income and expenses.

2. Write down each of your goals.

3. Match each goal to a time frame.       

4. Find an in-depth financial goal planner from TIAA here.

  • Try an online webinar. Both Fidelity and TIAA offer a variety of online resources. Fidelity hosts webinars on everything from managing life to saving and investment, to preparing for retirement. Fidelity is offering live webinars for Fidelity members during America Saves Week; if you’re not a member, you can find previous webcasts available any time on the Fidelity website. TIAA offers educational articles on saving, tools for goal setting, a retirement calculator, and free live webinars. You don’t need to be a TIAA member to participate in the live webinars, simply select the “Guest Login” option on their website when signing up for a webinar. You can also give them a call at 800-842-2252.
  • Try to follow the 50/30/20 rule. Allow 50% of your income to go towards necessities, 30% towards discretionary items, and 20% towards savings. Click here to learn more about monthly savings plans and the 50/30/20 rule from TIAA.

Whether you’re looking to save for retirement now or start planning for your future, Fidelity and TIAA can help you plan with webinars, online professional help and financial planners.

For general questions about retirement, contact MSU HR at SolutionsCenter@hr.msu.edu or 517-353-4434. For questions about your specific retirement plans, please contact your retirement vendor directly.