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3 ingredients to help you reach long-term success: Budget, boost savings and be prepared

Edition 11: September 2019

Ramp up your savings: Now's the time!

With the lazy days of summer behind us, many of us are working toward a renewed sense of purpose. With a few short months to go before we say farewell to 2019, this is a perfect time to revisit the goals you set at the beginning of the year and figure out what adjustments you may need to make to achieve them.

This includes your workplace savings goals. Are you on track to meet your objectives? If you're falling short, don't worry: There's no better time than now to boost your contribution rate to your retirement account. Even a small increase can make a big difference over the long term, bringing you closer to your goals.

Here's another great reason to ramp up your savings: If you're not maxing out your contributions, you're missing out on the full employer match from LG Health. For every $1 you contribute to the Plan, LG Health will contribute a $0.50 employer match, up to 6% of your eligible pay. Although LG Health deposits a basic employer contribution (equal to 2% of your pay) whether you contribute to the Plan or not, why leave money on the table? It's like "free" money! If you're not contributing at least 6% you're missing out, and these extra dollars can really add up over the long term.

Whether retirement is nearly in sight for you or is decades away, every change you make today will have an impact on your tomorrow.


The 50/20/30 rule of budgeting

How can you make sure you're saving enough to meet your financial goals? The first step is developing a budget to ensure you always have money for savings. This may seem daunting—especially if you have several competing priorities—but a simple rule can help you stay on track. It's called the 50/20/30 rule and here's how it works:

  • 50%: Essential expenses
    No more than 50% of your take-home pay should go toward essential life expenses, including housing, transportation, utilities, and groceries.
  • 20%: Financial priorities
    At least 20% of your pay should go toward retirement contributions, any debt payments, and other savings. These contributions and payments should be made after paying essential expenses and before any other spending.

    Debt payments include student loans. For guidance on paying off this debt, check out the Student Loan Assistance Program. This feature in your online retirement account allows you to compare multiple loan repayment scenarios.
  • 30%: Lifestyle choices
    No more than 30% of your pay should go toward discretionary spending, which includes shopping, hobbies, entertainment, restaurants and charitable giving.

Keep in mind that these numbers are guidelines. If you want to increase your savings to 25% of your take-home pay, you can make spending adjustments so that less of your pay goes toward lifestyle expenses.

Need more help with budgeting? Try our budgeting tool, which helps you track your expenses. After logging in to your account, you can access this tool in the My Financial Life section.


An important decision: naming your beneficiary

You're maxing out your retirement contributions, enjoying the full company match, and are on track to meet your goals. Before you kick back while watching your savings accumulate, have you decided who will get the money in your retirement account when you pass away?

If you haven't yet named a beneficiary, don't put off this very important decision. There's no guarantee your retirement account funds will be distributed according to your wishes if you haven't named a beneficiary. Don't let others make this decision when you're no longer able to. Designate your beneficiary (or beneficiaries) today!

A few important points to keep in mind:

  • Be sure to review/update your beneficiary information periodically, especially after a major life event such as marriage or divorce.
  • If you are married and choose someone other than your spouse as your beneficiary, your spouse must consent by signing a beneficiary designation form.
  • Wills do not cover company-sponsored retirement plans.

Expect the unexpected: Lou and Mary's story

When it comes to planning for the future, many of us are optimists. In a lot of ways this is a good thing, but it's also important to factor in the unexpected. Sometimes life throws us a curveball, a situation Mary, 54, and husband Lou, 58, are all too familiar with following Lou's recent cancer scare. After being told the cancer will likely return in the future, Lou and Mary had to revisit their plans.

"We are now considering early retirement for Lou once he's 62," said Mary.

Given the adjustments they might need to make, the couple decided to sit down with retirement counselor Mike Phyillaier to see if they could make it all work.

"Lou and Mary's situation really highlights the importance of preparing for the unexpected," said Mike. "You may not have control over the future, but you can control how much you save and when you start saving. The earlier and longer you save for retirement, the better prepared you'll be, no matter what challenges life throws your way."

Mike reviewed the couple's savings and retirement plans. Mary, who plans to continue working even if Lou retires at age 62, has a good pension and has been diligently saving 15% (with a 5% company match) into the Lancaster General Health Plans. Although Lou has no pension, he's been saving a similar amount. The couple has accumulated a comfortable nest egg over the years.

"We were stressed that we wouldn't have enough for retirement, especially if Lou's cancer returns and he needs to retire early," said Mary.

Mike looked at the couple's holistic financial situation, taking into account their life insurance and other assets. Using the Financial Wellness Life Insurance Calculator, Mike showed Mary and Lou the need to keep their coverage.

Mike also walked them through a few different scenarios.

"After several different calculations about potential retirement income and savings, it does indeed look like Lou could retire in four years, at age 62," said Mike.

Going through this exercise with Mike gave Lou and Mary peace of mind. No matter what happens, they know the long-term savings plan they set in motion years ago will pay off.

"I told Mike ‘you can't imagine the relief I feel'," said Lou. "He made everything easy to understand and gave us hope."

Are you using the new financial wellness tools?

If you haven't been taking advantage of our new financial wellness tools, check them out! You'll learn how to manage your finances, save for your future and protect against financial risk. You'll also receive information customized to your needs, after you complete the Financial Wellness Assessment. If you have not yet registered your account, access your account and follow the instructions.

Registering your account online will give you access to My Financial Life, your online portal to a host of financial wellness resources.

Log in to your account

Get help with budgeting, long-term planning, and more!

Mike Phyillaier is a full-time retirement counselor dedicated to helping LG Health employees take the steps they need to achieve financial wellness. Whether you have questions about improving your financial wellness or creating a budget using the budget management tool, Mike is here to help. Make an appointment with Mike today!

Office: 844-LGH-RET1 (844-544-7381) (Press "2")

michael.phyillaier@prudential.com
Schedule an appointment

Previous Editions

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Edition 7: September 2018accordion tab open

Get ready to improve your Financial Wellness!

We're pleased to announce that, coming in October, as an LG Health Retirement Plan participant you'll have access to new Financial Wellness tools, giving you:

  • A personal financial assessment tool to help you understand where you may need to make a change in your finances
  • New budgeting tools to help you track your expenses
  • The ability to view all of your personal accounts in one place
  • A personalized newsletter you'll receive on a regular basis

Prudential's tools will, in the future, provide to you the ability to add all of your financial accounts, including prior 401(k) plans, IRAs, etc.

You'll be notified when these tools are coming

At least one week before the Financial Wellness tools become available, you will receive an email that the upgrade is coming—but only if you've registered your LG Health Retirement Plan account. Once the Financial Wellness tools have been launched, you'll be invited to upgrade to the tools when you log in to your account.


What one word can help you take control of your finances? Budget!

Do you ever wonder where your money goes each month? You're not alone. Many people have trouble managing their finances. But budgeting your money doesn't require unreasonable sacrifices. It calls for mindful spending and sensible habits.

Step 1: What are your financial goals?
Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., your child's college education, retirement). This will help you set priorities. With a clear picture of your prioritized goals, you can establish a budget that can help you reach them.

Step 2: What are you spending your money on now?
Before you can create a smart budget, you need to know how you're spending your money today. You can get some of this information from your checkbook, credit card statements, and other receipts. You should also keep track of your cash expenditures for a few weeks—the $3 latte, the $4 magazine, the $6 fast-food lunch. These small cash outlays, over the course of a year, can add up to hundreds of dollars. Once you have that information, divide your spending into two categories: fixed expenses—such as housing, transportation, food and clothing—and discretionary expenses like entertainment, hobbies, and vacations. Don't forget to include out-of-the-norm expenses like holiday gifts, car maintenance and home repairs.

Step 3: Where can you cut costs?
Identify categories where your expenses are high and think about ways you can cut back. Maybe you could bring lunch to work a few days a week instead of going out. Instead of dinner and a movie, stay in and rent a video—or watch a movie on the cable TV that you're already paying for. Small changes can mean big savings, and could free up some money for one or more of your financial goals.

Step 4: What habits can you change?
For example, can you avoid impulse purchases by waiting a week or even a month before buying an item that's not a necessity? Paying off your credit card balance in full every month can free you from interest charges. Making modest adjustments in your day-to-day spending habits can help you find more cash to put toward your financial goals.

Step 5: Remember your goals.
When you're creating your budget, don't forget to include a category for the financial goals you identified in Step 1. You can use some of the freed-up money you identified in Steps 2-4 to start or add to a college savings plan, contribute more to your LG Health Retirement Plan account, or use toward any other financial goal you wish. The right budget can help you plan today for tomorrow.


How a budget put one couple on the road to Financial Wellness

Retirement counselor Mike Phyillaier understands what a difference a budget can make to anyone—of any age.

Mike explains: "Recently, I met with an employee in her 20s who wanted to get a handle on her finances. The problem? She and her fiancé didn't know where to begin. While she explained to me that they both felt totally out of control when it came to money, I explained to her that with some planning and budgeting, she and her fiancé could start taking charge of their financial future.

"So, I sat down with them and held a budgeting and planning session. Together, they decided that she would start by contributing 4% to her LG Health Retirement Plan account (she hadn't been contributing at all). But she didn't stop there, because she also turned on the Contribution Accelerator feature to put regular increases in her contribution rate on auto-pilot. Together, they are now saving approximately $300 per month and will start paying down debt at the rate of $300 per month once her student loan forgiveness payments begin next month. They are also saving for a home and their wedding, which is two years away.

"Budgeting is all about taking control of your finances, and this couple is well on their way to greater financial wellness."