Monthly Archives: February 2016

It’s Time to Review Your Savings Goals

America Saves WeekIt’s America Saves Week! This week is dedicated to instilling us with good savings principles. Last year, we showed you what some of our current savings goals were. Now that a year has passed, I thought it would be a good idea to review a few of our savings goals and discuss how we are doing to meet our goals.

 

Dana America SavesI had the opportunity to speak with LAGERS Benefit Specialist, Dana Eichholz about her goal of saving for a new house and what she is doing to meet her goal. She told me, “We are trying to make extra principal payments on our current house each year to get it paid off quicker. We set a goal to have it paid off within the next couple of years. In the short term, we decided to forego some of our favorite hobbies. I have decided to pass on a few vacations (which is a bummer L) for the next few years and my husband has had to give up rebuilding tractors. Also, I have set up the use of automatic savings through our cafeteria plan that allow us to save some money on our daycare expenses.”

 

Dennise America Saves WeekAlso, I spoke with Dennise Schaben about her goal of saving for her husband’s retirement since he does not have a pension. She was delighted to say, “Saving for my husband’s retirement has been right on track. We have an IRA set-up for him and are having the monthly amount automatically withdrawn from our checking account. That way we don’t miss it or spend it on something else. We have a long way to go to meet our goal but we are confident we will achieve it.”

 

JP America SavesFinally, I thought I would do some reflection of my savings goal. At the time, I was saving for a new car because my wife and I were expecting our second child and I had a two door vehicle that would not be a very good fit with two kids. So, we decided that we were going to save for a new(er), bigger car. We started by setting up an automatic deposit into our savings account and I put my car up for sale. With the automatic savings and sale (instead of trade) of my old car, we were able to pay for 75% of a used minivan in cash.

Since I pulled the trigger on my previous goal, I now have a new, more medium term goal. My wife and I are looking to upgrade to a newer, larger home. As you may know, the more people (kids) you have, the more space you need! So, to do this, we have set up another automatic savings deposit and we are making more principal payments towards our current house (just like Dana J)

Savings goals can be difficult and you may have to give up some of the things you love to do to achieve your goals. However, the tools necessary to start saving are easy to access and not too difficult to implement. First set your goal, then come up with a plan for that goal, review the savings plan regularly, and make it easier on yourself by setting up automatic savings deposits.

JP headshot

Jeff Pabst, CRC Communication Specialist

Tagged ,

The Most Effective Way for an Employer to Make a Benefit Upgrade

photo-1447752875215-b2761acb3c5d

As many LAGERS employers continue to see their rates decline in 2016, some have begun the process of looking into making enhancements to their LAGERS benefit package.  Changing benefits certainly does represent a new, and sometimes significant financial investment for an employer and as such, there is often plenty of questions and discussion surrounding the decision, both from internal staff and the public.  Having a game plan in place before you begin the process can help ensure that everyone walks away feeling satisfied with the final decision.  Here are three simple steps to make changing benefits a smooth process.

Set Your Goals Before You Begin

As an employer who is publicly discussing making a change to their benefit plan, it is firstly important to be clear on the reason why you are considering a benefit change.  Every employer’s reason for changing benefits is a little different, but having a clear goal will make it easier to communicate both with staff and the public. For example, a common reason would be, as rates go down, enhancements can provide additional compensation for employees often for the same or close to the same cost as before.  Employers can leverage these lowers rates to offer better compensation packages without ever having to increase their payroll, which is a win-win for everyone.  Another reason an employer may consider a change is to try and make their benefit package more competitive with surrounding employers.  Often, decreasing rates make a benefit change in this circumstance much more realistic, and can help provide an employer with even more tools to attract and retain the highest quality employees into their communities.  Another reason could simply be that the employees have come to the employer expressing a desire for better retirement benefits.  I’ve worked with countless employers who recognize the value and dedication that their public servants bring to their communities and when these employees voice concern over the financial security of their future, employers often seek solutions and compromise to address these concerns.  Again, as simple as it may sound, being clear on your goals upfront with help create the best environment for a productive conversation down the road.

Facilitate a Conversation, Even if it’s Tough

One of the best philosophies we subscribe to as LAGERS staff is to always have a conversation, even if it’s a tough one.  I am a personal believer in the adage that a tough conversation is better than no conversation at all, and sometimes addressing concerns openly and honestly can help resolve many issues that could otherwise turn unsavory.  When an employer has decided to proceed with looking into an enhancement, the first step is to request an actuarial cost study. Once an employer has received their study, it must by law be made public information for 45 calendar days before a board can take any action.

This public information period is important because it allows an opportunity for anyone from the public to comment or raise questions about the proposed change.  And as an employer, this public period is a chance to address these questions or concerns that may arise.  Having your goals clearly set beforehand will help make these conversations more clear and straightforward. If there is concern from the public, facilitating an open dialogue is extremely important before your board makes a decision.  And as always, if you feel like any questions or concerns would be better addressed by LAGERS staff, we are always more than happy to attend a board or council meeting to assist with explaining the benefits and answering questions.

And don’t forget, these changes are for your staff, so communicating with them throughout this process is always important:  for example, are they willing to contribute for higher benefits?  Or maybe willing to give up future pay raises for a benefit increase?  I have never met an employee who didn’t appreciate having their opinion heard when it comes to what is important to them in their benefits package.

Follow Through and Communicate Your Decision

Once you have made a final decision and whether that decision is to move forward with an upgrade or not, it’s important to continue to communicate with all parties that weighed into the decision.  If the decision is to pass, take time to explain to employees who were involved in the conversation the effort that went into the process and the reasons, however unpopular, that the board ultimately decided against change.  If the decision is to move forward and there was public dissent, using the goals that you set forth at the beginning of the process will make great talking points when fielding questions after the fact.  For example saying “we were looking for the most cost-neutral way to create a benefit package that the city can use to attract and retain the highest quality workers into our communities” is probably going to be better received than “our employees wanted higher benefits.”  And if you do decide to change your LAGERS benefits, make sure you take the time to explain the impact to your employees.  Helping them to understand the value of the upgrade will help each employer maximize this investment in their workforce.

Upgrading benefits can feel like a daunting task, but taking the time to follow these three easy pointers can help ensure that the best decision for your employees, employer, and community can be reached.  And as always, LAGERS staff is available to answer any questions throughout the process, so never hesitate to call our office or request a visit.

Elizabeth Althoff Communications Specialist

Elizabeth Althoff
Communications Specialist

Tagged ,

Don’t Forget the Flowers!

meaning-of-valentines-flowers

It’s Valentines week! This may be the reminder that you need to go and get flowers or chocolate for that special someone. However, with all of the love in the air this week, I thought it would be a good time to talk about the LAGERS benefits that are available to the ones you love.

LAGERS has benefits that your loved ones may be eligible for if you pass away while you are still working. If you are vested and were married for at least two years prior to the death, your spouse will be able to receive a monthly lifetime benefit from LAGERS. The two year marriage requirement is waived if your death is caused by an accident or is work-related.  Your spouse will receive the Option A amount which is the highest monthly benefit a beneficiary can receive from LAGERS, equivalent to approximately 60-64% of your benefit. When the death is work-related, you don’t need to be vested and LAGERS will extend additional service credit to your benefit as if you worked until age 60. Read more about Disability & Survivor Benefits – Click Here.

Don’t have a spouse? There is a scenario where a beneficiary may still receive a payment from LAGERS. If you contributed to the LAGERS system during your career and did not receive a refund of those contributions at any time, upon your death, the beneficiary listed with LAGERS will receive your employee contribution balance plus the interest earned in a lump sum payment. If you don’t have a living beneficiary listed, LAGERS will pay your employee contributions to the your estate. So, having an up-to date beneficiary is incredibly important. You can update your beneficiaries and much more from the myLAGERS portal – Click Here.

Once you retire, it is entirely up to you whether or not your spouse or loved ones will receive a monthly benefit. You will have the freedom to choose one of the options explained below upon your retirement.  Keep in mind that this is not a one-size-fits-all decision.(Read blog here).

Life Option: This option is pretty straightforward. It is the option that pays the highest monthly benefit to you. Upon your death, however, there is no monthly benefit payable. The only thing that could be payable is your remaining employee contribution balance (if any).

Option A & B: These options are better known as ‘joint-survivor’ options. With both of these options, you can choose to have your monthly benefit reduced in exchange for providing  a beneficiary with a lifetime benefit after you pass away. The difference between the two options is the amount the spouse and member receive; Option A pays the spouse more than Option B.

For both of the options, the beneficiary must be a spouse of at least two years or a person age 40 or older who is more than half supported by you for two or more years. Also, once you begin your monthly benefit under these options, the spouse designation cannot ever be changed in the future. Also, if both you and your spouse pass away and there are still employee contributions in the system, they will be paid to your beneficiary of record or estate.

Option C: The common name given to this benefit is Life (10 Year Certain) Plan. This is misleading because you will receive a reduced monthly benefit for the rest of your life under Option C not for just 10 years. Option C pays a beneficiary a monthly benefit if you pass away before a total of 120 payments are paid. The beneficiary will receive the remaining monthly payments until a total of 120 payments have been made to you and the beneficiary. Also, Option C allows someone other than a spouse to be listed as your beneficiary and your beneficiary(s) can be changed throughout retirement.

Partial Lump Sum (PLUS): The Partial Lump Sum can be added to any of the above payment options and will pay you a lump sum equivalent to 24 Life Option payments. This will reduce your monthly benefit, but will allow you to use this lump sum upfront. For more information about whether the PLUS if right for you – Check out this blog.

So, you could tell your spouse that you have these benefits available for her and that’s why you didn’t get her anything for Valentine’s Day, but I don’t think that will go well :). Instead, you have the peace of mind knowing that if something were to happen to you now or after you retire, your LAGERS benefit will be there. As for this week, you may just want to bite the bullet and buy some chocolate.

 

JP headshot

Jeff Pabst, CRC Communication Specialist

A story of pensions, golf……..& life

I rarely take vacations and when I do, I like to completely unplug, escape and get back to the quiet of the country.  With my regular work being about retirement issues, employer contribution rates or budgets seemingly all day long, when I get away I want to just enjoy the quiet calm of ‘non-work’.

Well a couple of years ago I took a few days and escaped to Florida.  One day I took a ‘me’ day to go play golf.  By myself.  I love the quiet solitude of golfing alone.  As luck would have it I was able to get a cart by myself, with only two other guys playing in front of me.  I found out that were college roommates who became lifelong buddies.  It was great because I was in my own little world and as we played, I enjoyed my quiet time and listened to the distant exchange of their various life events.  One of the guys had retired several years ago, bought a vacation home and had done those retirement activities that we all hope we can do someday.  The other had experienced a more modest path and had been building his nest egg, working toward the same goals of retiring in comfort and security but had not yet retired.

As I listened, their stories had an all-too-familiar theme……..their plans hit a wall.  Both had private 401(k)-type investment accounts which had climbed over the years as the stock market had grown.  On paper each had accumulated a tidy little nest egg for a secure future, or so they thought.   Then the 2008-2009 market crash came home to roost.  Both of them suffered severe financial loss and were sent scrambling.  Luckily, one of the men had not yet officially retired and managed to retain his job.  He was scared, frustrated and had no idea when he’d ever be able to retire now.  The other man who had retired was in much more despair.  He sold his vacation home, downsized his existing house and had to rejoin the work world.  He too was scared, depressed and said he’d “probably have to work until he died.”  It was so sad to hear, though it’s something that’s all too common.  So I listened to their stories of dreams lost, discouraged and delayed. They shared their frustration to have worked all their lives to end up in this spot.  Then I about fell out of my golf cart with what I heard next, just a few minutes later.

“Hey, did you read about all that city pension stuff in the paper?” one of them said.   “Yes I did.  The new city council wants to do away with employee pensions and the employees are mad,” the other piped up.  “Well that’s baloney.  Pensions are ridiculous – they should have what we have.

Seriously! That’s what they said!  After they both had lamented about how their 401(k)s had completely failed them, they thought everyone should be in the same boat.  A race to the bottom.  It was at that point that I could keep silent no more.

“They should have what you have?” I asked.  “Really?  How’s that working for ya?”

Dead silence.  They looked at each other then looked at me like I’d just hit them with a brick.  Like many who so easily cast stones, they were so caught up in their negativity and despair they didn’t really understand what they were saying – until I made them stop and think.  What would we be as a society if we all had lost everything and had no retirement security?  Shouldn’t we all be working together to discover ways to allow ALL who work hard to be able to retire with the dignity and peace of mind of modest financial security?

We spent the next hour talking about productive, practical solutions to providing financial security to those who earn it.  I’m proud to say that LAGERS is one such solution, which should be modeled for all workers. It was as if I had suddenly invented fire!  They finally understood that it wasn’t us vs. them – that we are all in this together.    Looking back, it was one of the most enjoyable rounds of golf I’ve ever played.

Robert Wilson, Asst. Executive Secretary

Robert Wilson, Asst. Executive Secretary

Tagged ,
%d bloggers like this: