July 2013 DC Update
Adding It Up: Staying on Track for Retirement
One of the most common questions we hear from participants is “Am I saving enough for retirement?” To answer this question, it’s important to consider what sources can provide income in retirement, including a pension, social security, deferred compensation plan savings, and any other outside savings. Once you identify where the money will come from, the tricky part becomes calculating how much you can expect to receive from each, and steps you can take to improve your outlook. In this month’s Adding It Up, we’ll explore a custom calculator that’s designed to help state of Missouri employees do just that.
RetiremenTrack, which is available publicly at www.modeferredcomp.org and securely within Account Access, is a handy online tool that builds a personalized retirement forecast using your expected pension and social security benefits, deferred compensation plan savings, and other savings sources. It takes minutes to complete and offers a wealth of retirement savings insight.
For example, let’s assume you’re a 35 year old employee and plan to work until you’re 56. Additionally, let’s set a life expectancy of 90 years and an annual salary of $35,000 on a semimonthly pay frequency. For this example, let’s also assume a 2% annual salary increase, a 3% rate of inflation, and status of single. Next, let’s enter a deferred compensation plan balance of $5,000, an 85% retirement income replacement ratio (financial experts recommend 80% or higher) and expected annual rates of return on your assets of 6% prior to retirement and 4% during. Following this, we’ll enter a semimonthly pre-tax contribution to the deferred compensation plan of $75. On the Social Security and Pension Benefits screen, we’ll assume you will begin receiving social security at 65 (you can begin receiving social security as early as age 62) and are a part of the MOSERS MSEP 2000 or MPERS Year 2000 retirement plan with 5 years of service under your belt. Finally, let’s assume you have no other retirement accounts or other sources of planned retirement income. What you’ll see on the results page is a year-by-year retirement forecast that not only shows where your money will come from, but how much you can expect from each source, including any necessary deferred compensation plan withdrawals or retirement savings gaps that might occur. You’ll also notice that you can adjust your retirement age, income replacement goal and pre-tax contribution amount to quickly see how those factors will impact your forecast.
While this calculator is for illustrative purposes only, it provides a personalized retirement income snapshot that will help you make informed career and savings decisions in the future. We encourage you to revisit this tool on an annual basis to ensure you stay on track.
ICMA-RC Memorial Scholarship Fund
On Wednesday, July 31, two Missouri students will receive a scholarship from our record keeper, ICMA-RC, via their Vantagepoint Public Employee Memorial Scholarship Fund. This unique program awards scholarships to the children or spouses of fallen public service employees. Since its inception, the ICMA-RC Memorial Scholarship Fund has awarded more than $860,000 in scholarships nationally to hundreds of recipients. This year’s Missouri ceremony will be held at the Missouri State Capitol Building on the 1st floor rotunda from noon to 2 p.m. For more information on this special honor, including a listing of past winners and application instructions for next year's scholarship, visit the Vantagepoint Public Employee Memorial Scholarship Fund page on ICMA-RC’s website.
Second Quarter Statements, Newsletter Now Available
Second quarter statements, for the period ending June 30, 2013, are now available online within Account Access under the Statements and Confirms tab. You can access your account quickly and easily using the state’s Employee Self-Service portal (https://ess.mo.gov/) or by logging on at www.modeferredcomp.org.
The second quarter edition of our newsletter, Simply Put, is also available online under the Publications tab. This quarter’s issue highlights the importance of financial planning and the unique financial planning services available to you as a participant in the deferred compensation plan.
Stay Connected
You can find the State of Missouri Deferred Compensation Plan on Facebook, Twitter and YouTube. Whichever you prefer, staying connected with the Plan is a great way to receive timely plan news, valuable savings tips and more.