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This guide was created as a quick reference for you to learn about your retirement, and understand your retirement savings options through your employer’s tax advantaged retirement plan. Get started by watching our video and review the Understand Your Retirement tab to get a quick overview of your retirement picture. Next, click the Investment Options tab to access useful information on choosing an investment that fits your needs. The final step is the Enrollment tab where you will find specifics on your employer’s plan including the plan design and available vendors. Our goal is to make enrolling both easy and convenient.
This guide was created as a quick reference for you to learn about your retirement, and understand your retirement savings options through your employer’s tax advantaged retirement plan. Get started by watching our video and review the Understand Your Retirement tab to get a quick overview of your retirement picture. Next, click the Investment Options tab to access useful information on choosing an investment that fits your needs. The final step is the Enrollment tab where you will find specifics on your employer’s plan including the plan design and available vendors. Our goal is to make enrolling both easy and convenient.
Even though you may have Oklahoma Teacher’s Retirement System and/or Social Security, those are fixed incomes and often not enough to support retirees and the risk of inflation during retirement. A tax advantage retirement plan through your employer could make up the difference.
The earlier you take control of your future and start saving for retirement, the better.
For most K-12, Career Tech or College Employees their retirement income comes from three sources: Oklahoma Teacher’s Retirement, Social Security, and Retirement Accounts. Teacher’s Retirement is a defined benefit plan based on your years of service and your final average salary (2% x (service years) x (final average salary) ÷ 12 = Monthly Benefit). Social Security is based on your average wages over 35 years and provides income for life. Both of these have the same thing in common, they are fixed incomes. Unless there are cost of living adjustments, these incomes lose purchasing power with the effects of inflation (ex. Healthcare). Although you may start retirement with 80-100% of your current take home, you have to ask yourself if that’s enough.
Retirement accounts are designed to accumulate assets over time using the simple concept of “pay yourself first.” By making a regular monthly investment through convenient payroll deduction, you have the ability to create a nest egg that could make a huge difference in your retirement income. Even a small contribution can make a big difference over time, and create the discipline to capitalize on your savings goals. Contributions are tax deductible, which reduces your income for tax purposes, resulting in more money to accumulate and grow in your account for the future. Taxes remain deferred until you decide to take distributions, but that can be delayed until 70.5 years of age if you choose.
https://www.ok.gov/TRS/documents/Client_Handbook_V10_2017-FY19.pdf
This hypothetical is intended to show how compounding and persistency can impact retirement savings. Assumes an 8% rate of return, 26 pay periods a year and continued contributions until retirement at age 65. The performance shown below is not indicative of any particular investment. Investments are subject to market risk and may lose value. The examples in this article are hypothetical and for illustrative purposes only. They assume a steady 8% annual rate of return, which does not represent the return on any actual investment and cannot be guaranteed. Moreover, the examples do not take into account fees and taxes, which would have lowered the final results. Diversification does not guarantee against loss
Every employer who offers 403(b), 457(b) or 401(a) plans will have approved vendors who offer specific types of investments. Although many employers can have similar vendors and investments types, each plan should be considered unique in their options. You can find more information on your plan’s approved vendors on the Quick Enroll tab. The following general descriptions will help you understand the types of investments your plan might offer, and provide a starting point on how to build your portfolio’s allocation.
This broad category of investments includes mutual funds, and exchange traded funds, and pools money from many investors and invests it according to the fund’s investment strategy. Funds can offer diversification and can be actively or passively managed, and can invest in a wide assortment of stocks, bonds, and money market instruments. The prospectus should always be read before investing and will give you details on the fund’s strategy, fees and expenses. When it comes to choosing the right funds you first have to understand some of the basic categories of funds:
Domestic Stock Funds invest in stock issued by U.S. Companies, and are typically defined by the size of the company they invest in such as Large Cap, Mid Cap or Small Cap.
International Stock Funds invest in stock issued by foreign companies, and can also be defined by the size or region of exposure.
Bond Funds invest in bonds issued by the U.S. Government, Agencies, Municipalities, or Corporations, and can be categorized by the credit rating or length of maturity of the the underlying bonds.
Target Date Funds fall into a special category know as lifecycle funds or age based funds, and are described as a fund of funds. Target Date funds are designed specifically for retirement investing. Start by choosing a fund based on your estimated future retirement date. Your money will automatically invest in a mix suitable for your age and adjust as you near your target retirement date.
Annuities are a contract between you and the insurance company where the company agrees to make payments to you based on the amount you have accumulated in your investment. Annuity products can vary greatly from company to company, but they all have the similar trait of providing a stream of income at retirement. The prospectus should always be read before investing and will give you details on the contract including surrender charges, mortality and expense charges and administrative fees. There are three basic categories of annuities:
-Fixed Annuities are classified as insurance products and offer you a guaranteed rate of return and payout based on current or future interest rates, and typically provide a minimum guaranteed return on your investment.
-Variable Annuities are investment products that allow you to select from a list of investment options such as mutual funds. The value of your investment is based on these choices, and there are a variety of insurance features available depending on the contract you choose.
-Indexed Annuities are classified as insurance products and offer you a hybrid version of both fixed and variable annuities. They can provide a minimum guaranteed interest rate coupled with more complex crediting strategies tied to market indexes.
Securities and Advisory services offered through GWN Securities, Inc., Member FINRA/SIPC, a Registered Investment Advisor. 11440 N. Jog Road, Palm Beach Gardens, FL 33418. (561) 472-2700. Horizon Financial Services, Inc. and GWN Securities, Inc. are separate companies. Horizon Financial Services, Inc. is not an employee of the Oklahoma Teacher’s Retirement System.