How Smart Is SMarT?
The Program’s new SMarT Plan is a painless way to save
more. By enrolling in the SMarT Plan, your pre-tax payroll deferral
amount will automatically increase each year by the amount you specify (but will
not exceed the annual limit allowed by law). But, just how smart is SMarT?
Let’s take a look at the following example and find out.
Joe is a new employee just starting on his public service career. Realizing the
importance of saving for his retirement, Joe signs up to defer $20 each biweekly
pay period (26 pay periods per year) into Ohio Deferred Compensation. He then
makes no changes to his account for the remaining 30 years of his career.
Assuming that he invests in a well-diversified portfolio that earns a 7% annual
return over those 30 years, Joe’s account would grow to over $50,800.
Not a bad sum, but hardly enough to live off for a potential long retirement
period.
Now let’s look at another new employee named Jane, who is also just starting her
career. Jane also decides to start saving for retirement by signing up for the
exact same deferral amount of $20 each bi-weekly pay period into Ohio Deferred
Compensation, in the exact same funds, with the exact same 7% return. However,
she does one thing different. Jane realizes that she is
probably going to get a raise each year, so she also signs up for a $20
automatic deferral increase each year under the SMarT Plan. Because she
elects to have the increase effective around the time of her anticipated raise,
she never even misses the extra $20. So, instead of saving $50,800, Jane’s
account could grow to over $546,900!
That sounds pretty smart! If you would like to start saving the SMarT
way, visit our web site at www.ohio457.org
or call the Program’s Service Center
at 1-877-644-6457. Tell them Jane sent you.
Investing involves market risks, including possible loss of principal. The
examples in this newsletter are hypothetical. They do not represent actual
performance of any investment or deferred compensation program and, therefore,
do not reflect any applicable fees or taxes, which would reduce the results
shown. Investment return is not guaranteed and will vary depending
upon your investments and market experience. Fund prospectuses can be obtained
by calling 1-877-644-6457 or visiting
www.ohio457.org. Before investing, carefully consider the
fund’s investment objectives, risk, charges, and expenses. The fund
prospectus contains this and other important information. Read the
prospectus carefully before investing.