Pledge 1% More
2019 National Retirement Security Week
This National Retirement Security Week (October 20-26, 2019), the MO Deferred Comp Plan challenges you, and all state of Missouri employees, to Pledge 1% More each year to your retirement saving account. The Pledge 1% More initiative encourages state employees to enroll in the plan, contribute a percent of pay to your retirement savings account, and lastly pledge to save 1% more each year of your career using deferred comp’s automatic increase feature. While 1% more doesn’t sound like a game-changing amount, it can have a significant impact on your end retirement savings balance and retirement lifestyle.
For example, let’s say you’ve been saving 1% for the last 7 years and have an account balance of roughly $3,000. If you worked for the state for another 20 years and added 1% to your contribution rate per year, your balance at retirement would be roughly $133,430!* That balance would replace an estimated 15%* of your salary in retirement. By not increasing by 1% each year, your balance at retirement would only be roughly $23,260* and replace approximately 3%* of your salary in retirement.
Automate Your Savings
To help ensure you stay on track to Pledge 1% More, the deferred comp plan offers the auto-increase tool, which is a feature that automatically increases your retirement savings contribution annually on the month you choose and by a percentage amount that you specify.
You’re probably wondering how a 1% increase would affect your per paycheck contributions each year? The chart below calculates your annual contributions per pay period. In this example, your contributions would only increase by an average of $16*per paycheck each year, but would have a major impact on your end balance at retirement.
|Year||Annual Contribution Rate||Semimonthly Contribution in Dollars||Retirement Plan Balance - Monthly Compound|
*Assumes a starting salary of $33,000, a 1.5% annual salary increase, a 6% rate of return while employed, 25 years in retirement, 2% inflation, and a 4% rate of return throughout retirement. Numbers calculated using the Grow Your Retirement Savings calculator.
If you’d like to see how the auto-increase tool could affect your personal retirement savings balance, we encourage you to use the Grow Your Retirement Savings calculator. This tool illustrates how making regular contributions over a long period of time can have a big impact on your total retirement savings. If you need help on using the tool, be sure to watch the Grow Your Retirement Savings Calculator Website Walk-Thru tutorial or reach out to your local education specialist to help guide you through the process.
What's 1%? 1% might be equivalent to giving up:
- 2 or 3 lunches a month
- A sweater at an online or local boutique
- A manicure or pedicure
- 5 -6 large fancy latte drinks
- A holiday decoration from your favorite décor or craft store
- A trip to the movies with popcorn and drink
Take the 1% More Pledge
In the grand scheme of things, a 1% annual increase is a manageable amount for state employees to commit to their retirement savings. If you can’t Pledge 1% More, pledge 0.5% or whatever you can do. Every penny you put into your retirement savings account will help put you in a better financial situation for the future. Don’t wait to start saving. Don’t wait to start increasing your contribution amounts. To begin using with the auto-increase tool, simply:
- Log in to Account Access via www.modeferredcomp.org or through the ESS portal
- Hover over the Access My Accounts menu tab and click the My 457 Account.
- If a dropdown appears under My 457 Account , you can select Contributions within the menu or click Contributions from the sub-menu (just under the main menu) on the My 457 Account page.
- Click the blue, Change Contributions button.
- Select the Percent radio button and choose a percentage amonut from the dropdown or enter in a specific amount you'd like. NOTE: You must save with a percent contribution to use the auto-increase tool.
- Once complete, scroll down a bit further on the page and enter in 1% in the auto-increase field or an amount of your choice, as well as the month for the increase to occur.
- When you're finished, click the Next button and follow the prompts to confirm the change.
- You're done! NICE WORK!