How Much Can You Save in 2018?

At UC, we’re in the business of building a better tomorrow. That means our eyes are focused on the future, and how people want to live, learn, work, and play.

So it should come as no surprise that we’re focused on your future as well. Through our primary (required) and voluntary retirement benefits, we help you build financial security for retirement.

Start 2018 off right by making sure your retirement savings are on track for your goals.

HOW MUCH DO YOU NEED TO SAVE?

The amount you need to save each year depends on the level of income you think you’ll need when you retire and when you start saving. But here’s one simple rule of thumb: Many financial experts suggest contributing at least 15% of your pay to your workplace retirement plan.

Does 15% sound impossible to save? There’s good news: UC’s primary retirement benefits can help make that a reality. Most Career employees contribute 7–9% of pay toward these retirement benefits.

Of course, to make the most of your primary retirement benefits, you’ll need to work for UC for the long term. But if you’re like many people, you’ll work for several employers during your career—and you may not be at UC long enough to build your retirement benefits to a level that meets your retirement income needs.

That’s where the UC voluntary 403(b) and 457(b) Plans come in. Saving in one—or both—of these tax-advantaged plans can help give you the best chance for a more financially secure future. Want guidance on how much you might consider saving for retirement based on your personal circumstances? Talk one-on-one with a UC Retirement Planner at 1-800-558-9182.

Remember, the UC Plans accept rollovers of eligible retirement funds from a previous employer plan or IRA. Consolidating retirement accounts into your UC plan lets you manage your retirement savings in one place and take advantage of the lower-cost funds offered on the UC investment menu.

HOW MUCH WILL THE IRS LET YOU CONTRIBUTE TO UC’S 403(B) AND 457(B) PLANS?

You might be surprised by how much the IRS will let you contribute to these plans.

  • In 2018, you can contribute up to $18,500 pretax to the 403(b) Plan, plus another $18,500 pretax to the 457(b) Plan for a total of $37,000.
  • And if you are age 50 or older, you can contribute an additional $6,000, which means you can contribute a total of $24,500 pretax to each plan for a total of $49,000. In addition, you may be eligible for special and lifetime catch-up provisions to increase your limits. Contact Fidelity to see if you are eligible.

That’s a lot of money you can shelter from current income tax and put working toward your future. Not everyone can get there overnight, however. That’s okay, because even a small change today can have a big impact over time.

START SMALL AND WORK UP OVER TIME

Saving a small amount may mean more money to spend in retirement, especially when you start early and increase your savings as you are able.

Consider this example. Rob, Ella, and Lou all contribute just 1% more of their pay to the UC 403(b) or 457(b) Plans. Even though 25-year-old Rob contributes less, he can end up with more retirement income than Lou.

But it’s never too late. If 45-year-old Lou contributes an additional 1%—$83 more a month—he could have $2,050 more per year in retirement. Imagine what could happen if he increased his contributions by 1% more each year?

CAN YOU SAVE 1% MORE IN 2018?

Can you save a little more? Increasing your contributions by just 1% could mean bigger payoffs in retirement. So maybe the question really is: Can you afford not to?

This information is intended to be educational and is not tailored to the investment needs of any specific investor

Employee and UC contributions to the primary retirement benefit are subject to collective bargaining for represented employees. Please refer to the appropriate collective bargaining agreement, as benefits and other provisions may vary.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

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