“DREAM” Big During National Retirement Security Week

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“DREAM” Big During National Retirement Security Week October 2016

Take time to focus on your retirement future October 16-22, 2016 According to the 2016 Employee Benefit Research Institute’s (EBRI) Retirement Confidence Survey, only 63% of workers reported that they or their spouse are currently saving for retirement and 54% reported that their savings, excluding the value of their primary residence and defined benefit plan, is less than $25,000. This year’s National Retirement Security Week (October 16-22) represents a great opportunity for investors to refocus their attention on their retirement future and make additional savings a top financial priority. To help get started, we have identified five strategies based on age groupings. Once you find your age’s strategy, use this year’s National Retirement Security Week as an opportunity to get started. Remember that it is never too late, or too early, to add to your retirement savings.

Twenties – Dig Deep. The biggest advantage for investors in their twenties is the power of compounding growth over time. For example, suppose a 20-year-old is able to save $1,000 a year over the course of 10 years. Assuming a 7% annual return and no additional contributions, the initial $10,000 investment will grow to $105,174 at age 60. Conversely, a 30-year-old who begins saving $1,000 a year for thirty consecutive years will accumulate $94,460. Despite making three times the initial investment, the late-starter will have about $10,000 less than the early-starter at age 60. Continued on next page The hypothethical examples are for illustration purposes only and do not represent the returns of any particular investment. Return figures exclude fees and taxes.

Matt Sommer, CFP®, CFA® Vice President and Director, Retirement Strategy Group Janus Capital Group

“DREAM” Big During National Retirement Security Week

Thirties – Roth Accounts. For investors in their 30s, consider setting a goal of retiring a millionaire. Consistent savings, good investments and a Roth 401(k) or 403(b) can make this goal attainable. Unlike traditional retirement accounts, Roth distributions are income tax-free after age 59½. While you may sacrifice the upfront income tax deduction, the power of two, three or even more decades of tax-free growth can more than offset this potential disadvantage. If you have a 401(k) or 403(b) at work, annual employee and employer matching contributions of about $10,500 will grow to approximately $1,000,000 over 30 years, assuming a 7% growth rate.

Forties – Exit Former Employer Plans. According to the Bureau of Labor Statistics, the average tenure of American workers is approximately 4.4 years. Investors in their 40s may have changed jobs at least a few times by this point in their careers, but left their retirement balances in their former employer plans. While there is no requirement that terminated employees must transfer their money out of the plan (as long as the balance is greater than $5,000), many investors may find it easier to consolidate these “orphaned” accounts into one IRA or even your current employer’s retirement plan (assuming rollover contributions are allowed). Having one retirement account will make it easier to implement a sound investment strategy and monitor progress toward your goals.

Fifties – Accelerate Contributions. For many investors, their 50s represent peak earning years allowing maximum contributions to various retirement accounts. In 2015, catch-up contributions of $1,000 and $6,000 are allowed to IRAs and 401(k)s respectively for individuals age 50 and older. If you wish to contribute even more than these accounts permit, additional amounts can be invested in an annuity. There are penalties for distributions made prior to age 59½, but the earnings grow tax-deferred and can supplement IRA and qualified retirement plan savings.

Sixties – Maximize Social Security. Most investors do not consider Social Security a retirement savings account because it provides a stream of monthly income rather than a balance that is readily accessible. Nonetheless, Social Security retirement benefits are based on the amount of your wages that were subject to Federal Insurance Contributions Act (FICA) taxes paid over the course of your career. These benefits can play a major role in supplementing your savings to provide the retirement lifestyle you envision. If you turn 62 this year, it may be tempting to begin taking Social Security immediately. You should remember, though, that benefits received at age 62 will be subject to a 25% permanent reduction. At age 66 (Full Retirement Age – FRA), you can collect full benefits. If you wait, however, your benefit can increase 8% annually up to age 70. The decision to delay Social Security retirement benefits can also maximize your spouse’s survivor benefit. No investment strategy can ensure a profit or eliminate the risk of loss. A retirement account should be considered a long-term investment. Retirement accounts generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. For more detailed information about taxes, consult a tax attorney or accountant for advice. The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a professional advisor. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus does not have information related to and does not review or verify particular financial or tax situations. Janus is not liable for use of, or any position taken in reliance on, such information. Janus is a registered trademark of Janus International Holding LLC. © Janus International Holding LLC. Janus Distributors LLC C-0916-4849 12-30-17

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