Tag Archives: Savings

June Article Roundup

What To Do When You Haven’t Saved Enough For Retirement

The good news is that a portion of your retirement income will be covered by protected, monthly, lifetime payments you earned from your LAGERS service. The bad news is that your LAGERS benefit likely won’t be enough to produce the lifestyle you want in retirement. This article gives some helpful tips on catching up on retirement savings.

Read the article here.


Here’s how thieves use your data after a breach

Hearing LAGERS IT guy talk about all of the cyber security threats we face today is enough to make you never want to use the internet again. This article breaks down how cyber criminals use your information if they are able to hack into an online database and how to protect yourself against these threats.

Read the article here.


How to Spot the Lies Financial Advisors Tell

I am a huge proponent of seeking financial advice to help you navigate retirement savings and other investments. However, I am just as passionate about warning people to be very careful on who they choose as their financial advisor. This article will give you some ammo for selecting and advisor or to identify when you’re current advisor is not working in your best interest.

Read the article here.


Jeff Kempker
Asst. Director, Member Services

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Use These 5 Simple Hacks to Ease Financial Stress


April is Stress Awareness Month and we all know that finances are the root of much of the stress we face. If you haven’t ever lost a little sleep worrying about a money-related issue, I would question whether or not you had a pulse. It’s almost inevitable that, at some point, we all will have a financial difficulty that wears on our mind, and ultimately, maybe even our body.

Financial Finesse is a financial wellness firm that offers coaching to over 2.4 million people in the U.S. In the firm’s 2016 Financial Stress Research, they reported that 1 out of every 4 people say that they suffer from high or overwhelming financial stress and 6 out of 10 people reported losing sleep over at least one financial problem. The good news is that there are some fairly simple steps we can take to ease financial stress. Here are some that have worked for me.

Resist the consumerist culture we live in.

My wife and I just recently realized we had too much stuff. Not only did we have too much, we wanted even more. The culture we live in is constantly in our face about purchasing items that are supposed make us happy; new clothes, beauty products, cars, toys for your kids, electronics, apps for your phone. The never-ending assault on our desire for more is relentless. Our home was bursting at the studs with things we didn’t need and all of that stuff was causing stress. So we decided to get rid of it. Anything in our home that is not useful or doesn’t bring us joy is sold, thrown away or donated. And, we have begun to use the same criteria for our purchases. We are spending less money on things that have no lasting value and using those resources to focus on experiences and priorities that truly make us happier. We are still in the beginning stages of this journey, but it’s amazing how much less stress we have.

Create an emergency fund.

According to a recent survey by Bankrate, 57% of Americans don’t have enough cash on hand to cover an unexpected $500 expense. Now that is stressful! Sticking money into an account and resisting the urge to touch it can be tough, but here is a quick hack I have used for years to help with this. Create automatic transfers from your checking account into a savings account. Most of us now have our paychecks directly deposited into our checking accounts and most banks allow you to set up automatic recurring transfers. So, set up money to transfer every payday to a savings account and you will likely not even notice it’s gone. It doesn’t have to be a large amount; it will feel great just to get started!

Make a plan.

Simply having a plan in place to manage your finances can be a huge weight off of your shoulders. Knowing your monthly income and essential expenses is the first step in figuring out a budget and sticking with it. When my wife and I decided she would leave her career and stay home with our girls a couple of years ago, we both lost sleep over the financial impact this would have on our family. So, we sat down together and calculated our monthly income and bills. From there we identified some expenses we could easily reduce (like our satellite bill) and figured out how much we would have left for discretionary expenses (it wasn’t much). Having this plan in place made us both feel better and gave us some peace of mind knowing we could make this work as long as we stuck to the plan.

Talk about money.

Perhaps the most important thing you can do to ease financial stress is to talk to your spouse or significant other about money. These are not always easy or fun conversations and they may even end with one person being upset. But don’t give up. It is vitally important for you and the person you are sharing your life with to be on the same page about finances. A seemingly simple rule my wife and I have always used is that we will ask the other person before we make a purchase that is over a certain threshold. When we were first married and had very little in the way of financial resources, the limit was $50. For example, if I wanted to buy new decoys for turkey hunting and they were going to be more than $50, I had to run it by my wife first. While our threshold has grown since we were newlyweds 12 years ago, we still have this rule in place. It may seem silly, but it is a subtle way to ensure we are both on the same page about how the family’s money should be spent.

Visualize your future.

Your future self wants to be financially independent. Taking steps now toward that end will ease stress today and have a lasting impact later in life. What does your future look like? What do you want do? What will you be doing when you are 65, 75, 85? A great first step in planning for your financial future is to visualize the life you desire. This will help you to know if you are on track today to achieve the life you are picturing. My wife and I frequently talk about our dreams for our life after work and what we want to do. Sometimes these conversations are just two people dreaming together and sometimes there is a little more planning involved, but either way, it is helpful. Be kind to your future self, take action today to reduce stress now in order to avoid tension in the future. Read my blog about this here.


Stress can kill. And financial problems are one of the leading causes of anxiety. There are many money problems that may be fixed using simple hacks like the ones above, but for serious issues, you may need to talk to a professional to get help. The key is to take control of your money and allow yourself some better nights of sleep!


Jeff Kempker
Manager of Member Services

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Response to Forbes Opinion: 401(k)s Are Not the Solution

the word "reform" in lead letters written. symbolic photo for quick correspondence


The May 2, 2016 article on Forbes.com, A Solution To Our Public Pension Problem, left me scratching my head.  The overall theme of the article is, that because ALL public pensions are doing poorly, we should completely abandon pensions so all Americans are covered under 401(k)-type plans.  I will admit that some public pensions have great challenges and may be in need of reform, but these are the minority and many plans across the nation have already made adjustments so they are more sustainable. I will also fully admit that I am not an economist, and would never claim to be.  I’m just a guy that believes retirement security is for everyone and it can be achieved without an all-or-none solution.  With that being said, let’s discuss the article’s main points.

There is a public pension crisis.

The authors of this article talk about a public pension crisis in America and make the reader believe that there is a wide-spread problem.  This is not true.  The truth is there is a retirement crisis in America, not a public pension crisis. In fact, most public pension plans in the U.S. are working well to promote retirement security while at the same time, many Americans do not have enough money saved to support themselves during retirement. If public pension plans are abolished in favor of defined contribution accounts, e.g. 401(k)s, this will only hurt retirement security and further exasperate the retirement savings crisis.

The authors of the Forbes article talk in length about the unfunded liabilities of public pensions but fail to mention the underfunding of individual retirement savings accounts.  Bottom line, people with only a 401(k) are not saving enough.  According to a report by Monique Morrissey of the Economic Policy Institute, the average retirement savings for working age Americans is $95,776 and for those on the cusp of retirement, ages 56-61, the average account balance is $163,577.  These amounts are hardly enough for someone to sustain an adequate standard of living during retirement.  And, these amounts only include workers that have retirement savings, which is only around 50% of the workforce, the other half has nothing.  So, if you include ALL families, the average retirement savings for Americans age 56-61 is $17,000.

Unfunded Liabilities

The authors mention the unfunded liabilities of public pensions as an enormous problem. The truth is that most states and localities are doing a good job in funding their pensions for sustainability.  For example, Missouri LAGERS has 682 participating employers who diligently make their required contributions each and every month and move toward being fully funded over decades of time.  While each LAGERS employer has their own funded level, LAGERS as a whole is 94% funded (80% is considered good).

Think about the purchase of a home.  The belief is that buying a home is a long-term investment.  No one would say that taking out a 30-year mortgage is irresponsible so long as you diligently make your required monthly payment and you are living within your means.  That is how we should view public pensions, as a long-term investment in our communities to attract and retain the best public servants possible.  Then, after those workers have helped make their communities better over a career, pensions provide a dignified means for exit from the workforce at an appropriate age.  Often when we look at unfunded liabilities all we can see is the dollars.  But those dollars represent time worked protecting, maintaining, and building strong communities.

A Fundamentally Flawed System

The authors of the Forbes article say that defined benefit plans are a flawed system pointing to “generational accounting and excessive expected rates of return.”  First, the authors describe a pay-as-you-go pension funding model, like Social Security.  This is a model where the people who are working now are paying for the benefits being paid now.  So, over time, costs have to increase because there are more retirees.

What the authors fail to mention is that most public pensions don’t use a pay-as-you-go funding model.  Pensions, including LAGERS, typically use a pre-funding method of payment so benefits are funded before an individual retires.  This method requires a higher contribution in the beginning so that the funds can be invested and contributions don’t need to increase as the retiree pool grows.  Contribution rates are designed to remain level over decades of time.

Expected Rates of Return

This is referring to the return that pension plans assume they will make on their investments. The Forbes article authors infer that all public pensions use unrealistic investment projections to calculate their liabilities.  This, again, is not true.

Investment income matters, as investment earnings account for a majority of pension funding. A shortfall in long-term expected investment earnings must be made up by higher contributions or reduced benefits.

Funding a pension benefit requires the use of projections, known as actuarial assumptions, about future events. One actuarial assumption is the investment experience. This must be a realistic figure to ensure that members and taxpayers (the other sources of funding) are not being undercharged or overcharged. If the assumption is too low, member and employer contributions must increase, if the assumption is too high, shortfalls in the investment performance would have to be made up by higher contributions or reduced benefits.

LAGERS investment return assumption is 7.25% and the average investment return assumption for public pensions is 7.85%. LAGERS’ assumption is based on historical returns as well as a recent asset liability study projecting returns 20 years into the future. LAGERS’ 20-year return is 8.70% and its return since inception is 8.92%.  We believe our assumption is realistic, prudent and sustainable.  We are in this for the long haul.

Take a cue from the private sector.

I could write a series of responses on the flaws of this section of the Forbes article.  Here the authors contend that all people, public and private, should be placed into 401(k) type plans.  They say that this puts “the power of an individual’s future in their own hands instead of depending on the good fortune of government-directed DB-style plans” and “retirees will finally have the opportunity to determine how much risk they are willing to take.”  While these are great soundbites, here are the facts.

The retirement system in the private sector is in shambles and the 401(k) experiment has failed.  People are not saving enough, don’t understand the investment landscape, are being forced to work longer, and have no security because their nest eggs are subject to the whims of volatile markets.  While the 401(k) may be a great vehicle for higher paid workers to generate wealth, it has not been a sufficient vehicle for all workers to generate secure, dependable retirement income, especially those with lower or more modest wages.

The authors also say that private sector employers moved to the 401(k) system because of the plan’s “efficiency, simplicity and fully funded nature.”  This is also not true.  Private sector employers moved to 401(k) plans for two reasons, to reduce costs, and therefore, reduce retirement benefits and because of the over-regulation of private pension plans.  You see, the 401(k) was intended to be a supplement to pensions for those who could afford to save more and as a way for companies to pad executive compensation.  They were never intended to be THE retirement plan.  However, over the years, companies realized they could save money by reducing retirement security and doing away with pensions.  Further, the Federal government, in an effort to save pensions, actually has done more harm by enacting complex and expensive regulations that have forced private sector employers away from defined benefit plans.

Investing money is complicated.  Knowing how much to save, which products to purchase, when to re-allocate, and how to draw out an account so you don’t run out of money during retirement can be completely overwhelming.  The 401(k) system requires the individual to navigate the murky waters of the investment seas completely on their own. Sure, there are financial advisors willing to help (for a fee), but many people are hesitant to trust the advice of a stranger and don’t know how to find a qualified advisor.  For these reasons, the move to 401(k)s has further widened the gap between the haves and have-nots.  Those with higher incomes can afford to save more, have more access to financial help, and have increased capacity to make investment decisions.  For the rest of us, good luck.

Retirement security should be for all Americans who work hard and play by rules.  Defined benefit pension plans are worth fighting for because they are the most efficient way to promote retirement security, provide a dignified exit from the workforce and help middle-class workers transition into being middle-class retirees.


Jeff Kempker Manager of Member Services

Jeff Kempker
Manager of Member Services

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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

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Should Employers Provide Financial Education for Employees?

Student Overwhelmed Asking For Help


Financial stress is an issue that touches all age groups and income levels.  Student loan debt, retirement, health care, credit cards, and mortgages are all common concerns for American workers.  A recent survey conducted by State Street Global Advisors found:

  • 60% of respondents said they are stressed and distracted by their financial situations.
  • Half live paycheck-to-paycheck.
  • Almost one-in-four say their productivity has suffered because of financial issues.
  • One quarter said they have missed work because of money-related stressors.

These results don’t seem particularly remarkable.  I mean, we all have issues, right?  Some would say that the employee needs to put all that aside while at work and keep productivity high no matter what.  But let’s face it, this problem isn’t going to fix itself.  The need for financial education is at an all-time high as financial literacy is low among Americans.

So who should provide this education?  More experts are recommending that employers provide financial instruction for their employees.  Why?  Because the benefits are great not only for the workers, but for the employers as well.

Think about it, employers are losing thousands of dollars each year due to low productivity. Some of these losses are due to the financial stress of their workers.   Missed working days, limited focus, and employees retiring on the job are all issues that can cost employers money.     So it now becomes much more than an individual problem, it is an organizational problem.  This is prompting more employers to consider financial wellness education for their employees.

Employers have provided employee benefits education since the first American pension plan was established by American Express Railroad in 1875.  This normally consists of describing the enrollment process, options, and required forms.  However, many think it is time for a more complete approach that includes basic money management skills, budgeting, and investment advice for employees at all stages of their careers.  In an article by Jill Cornfield featured on PLANSPONSOR.com, Fredrik Axsater, of State Street, said “A more holistic approach is needed, providing tools and opportunities for employees to reduce stress and improve their financial well-being.”  Employers are taking notice.   In fact, the Society for Human Resource Management (SHRM) reports that 57% of organizations are now making financial education available for their workers.

The University of Minnesota advocates “Workplace Comprehensive Financial Education” and says that the benefits to employers for offering financial education include:

  • Improved productivity – Enables employees to focus on their jobs rather than financial issues
  • Reduced employee stress – Leads to healthier, happier employees
  • Improved workforce planning – When employees can retire when they are supposed to, employers can better plan for future workforce movement.
  • Attract quality workers and then keep them – Employees generally view their employers as trustworthy sources of information. Providing these services for employees can be a very attractive benefit.

So what do you think?  Does an employer have any responsibility whatsoever to ensure its employees are fiscally fit?  Or is this the responsibility of the individual?


Jeff Kempker, RPA, CRC

Jeff Kempker
Manager of Member Services

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Millennials are Super Savers? You Must be Joking.



I often wonder if I would care as much about my retirement if I didn’t work for a pension plan.  Probably not.

We millennials, those of us born between 1979-1996, seem to be focused on starting careers, buying homes, SUVs, and paying off student loan debt.  Not to mention saving for our own kids’ college.  Many of us also are entering the workforce during challenging economic times which have made it difficult to find work.  With all of these financial distractions it would be easy to assume that the Millennials are a generation whose retirement dreams are on shaky ground.  I cerainly have made this assumption based on my obversations.  But maybe I was wrong.

Recent research suggests there is hope for me and my peers.  A report by the Transamerica Center for Retirement Studies calls Millennials ‘super savers’ for their focus on stashing money away for retirement.

Super savers?  Us?  No Way!

Yep, it’s true according to Transamerica.  The study reports that 75% of working Millennials are saving for retirement and that many started saving around 22 years of age – very young compared to other generations.  Transamerica also found that the median contribution rate is 10% of pay for this group!

Wow, I had no idea we were doing so well.

Or are we?  The Transamerica report focused on a single aspect, the number of millennials saving for retirement.  But what about other aspects of financial health?  I decided to do a little more digging to see if it’s too early for us Millennials to pat ourselves on the back.

Millennials are more likely to cash out retirement savings when they switch jobs.  According to Fidelity Investements, 35% of workers cash out their retirement savings when switching jobs.  Of those workers in the 20-39 age group, the percentage is 40%.  Millennials are also chronic job hoppers and leave thousands of employer paid retirement dollars on the table each year because they change jobs before they are vested.

Millennials carry the lowest credit card balances.  Experian’s 2013 State of Credit study found that the average credit card balance for Millennials is $2,682, the lowest of any generation included in the study.  Baby Boomers carry the highest average balance at $5,347 and Generation X is right behind them at $5,343.  Experian also reports that Millennials are below the national average in total debt and hold the lowest number of bankcards compared to other generations.  However, we do have trouble paying bills on time and have the lowest credit scores of any other age group.

Paying off student loan debt accounts for 12% of of monthly pay.  A recent study conducted by Wells Fargo found that Millennials are spending a significant portion (12%) of their monthly income paying down student loan debt and 40% of survey respondents said they felt “overwhelmed” by debt.  However, the average student loan balance for a 2012 graduate is around $29,600 so this burden does seem managable.

In scrolling through articles about millennials and finances I found a recurring message that young people in America are a generation of savers.  We apparently learned our lesson as witnesses to the Great Recession and are taking steps toward securing our financial future and stashing funds away.  Now if we could just learn about retirement plan rollovers and how to pay our bills in a timely fashion.


Do you agree that Millennials are super savers?


Jeff Kempker, RPA, CRC

Jeff Kempker
Manager of Member Services

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