Kroger Employees: Test Your Knowledge of Financial Basics

Retirement planning is essential at any stage - and especially for Kroger employees trying to navigate changing financial landscapes, says Michael Corgiat of the Retirement Group, a division of Wealth Enhancement Group. So start early, diversify and meet with a financial advisor regularly to review your retirement plan and ensure it's working for you long term, 'she said.'

The NCOA survey shows that robust retirement planning is absolutely necessary for Kroger employees, says Brent Wolf of the Retirement Group, a division of Wealth Enhancement Group. Comprehensive planning now can secure your financial comfort in retirement - so evaluate and adjust your plans with the help of a seasoned financial advisor, 'she said.'

What is it that we will discuss here:

1. Early Retirement Planning - Why It's Important:Learn why planning your retirement early can protect your nest egg financially when you reach your golden years.

2. Personal Finance Fundamentals: A quick exam covering basic personal finance knowledge to gauge your readiness for future financial challenges.

3. Retirement Planning Strategies: Information about effective retirement planning including investment diversification and understanding different retirement accounts.

A survey by the National Council on Aging in 2021 found that 60% of adults over age 60 have not created a retirement plan. This is surprising considering most of those age groups are approaching or retired. Making a retirement plan can prepare people for costs associated with retirement such as healthcare and living expenses. With the proper plan, retirees can grow their retirement savings and have enough to last them through the golden years.

So important is retirement planning - so we created a test to see how well you understand personal finance. This short exam measures your basic knowledge. Learn about our Kroger clients below.

Questions

How much liquid, low-risk savings should you have for emergencies?

A. One or three months' worth of expenses.

B. Three or six months' worth of expenses.

C. Six or twelve months' worth of expenses.

D. It depends

Divestiture can remove risk from your portfolio.

A. True

B. False

What is a key benefit of a 401(k) plan?

A. Yes, you can withdraw money at any time for things like a new car purchase.

B. You pay no tax on some of your compensation through the plan.

C. You might get an employer match - free money - if you qualify.

D. None of the above.

Not all of the money in a bank or credit union account is protected.

A. True

B. False

Which of the following is typically the best long-term strategy for you.

A. Investing as conservatively as possible to limit loss possibility.

B. Investing equal amounts in stocks, bonds, and cash investments.

C. Put all of your money in stocks.

D. Too little info.

What does APR stand for in debt speak?

A. Actual percentage rate B. Annual personal rate C. Annual percentage rate D. Actual personal return

The safest investments are mutual funds.

A. True B. False

I've got time to save for my retirement from Kroger. That is not something I have to think about right now.

A. True B. False

Which benefits are associated with a Roth IRA?

A. A Roth IRA may pay taxes-free in retirement. B. Investors can deduct their Roth IRA contributions from taxes. C. Any reason for withdrawal by investors after five years of holding is tax-free. D. None of the above.

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What is considered good credit?

A. 85 or above

B. 500 or above

C. B or above

D. 700 or above

Answers

D. It is conventional wisdom to put aside three to six months of living expenses in liquid savings vehicles such as a bank savings account or money market account. But that depends on your specific situation. With a job with Kroger that is secure, your spouse's job that is fairly secure (for our Kroger clients who are married) and other assets, you may only need three months of emergency savings. Or you could be a business owner in a volatile industry and need a year's worth of cash or more to weather rough times.
B -False. Diversification is a sensible investment strategy that spreads your investment dollars across a variety of securities and asset classes but it does not eliminate risk nor guarantee a profit for our Kroger clients. You keep losing money.
C. Some employers offer a matching program, which is like getting free money to invest. If the Kroger plan matches your contribution, contribute at least enough to take advantage of that. Some matching programs have a vesting schedule so you gradually get the right to match contributions and earnings on those dollars. If you selected B, you may find this a little deceptive. Contributions to traditional 401(k) plans are tax-deferred but not eliminated entirely. You pay taxes on your contributions and earnings when you take a distribution from the plan. Also, distributions taken before age 59½ could be subject to a 10% tax penalty. Exceptions exist.
A -- True. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Share Insurance Fund (NCUSIF) each insure deposits in federally insured banks and credit unions up to USD 250,000 per depositor, per ownership category (single account, joint account, retirement account, trust account), per insured institution. Neither the FDIC nor NCUSIF covers losses in equities, bonds, mutual funds, life insurance policies, annuities or municipal securities. They do not also insure safe-deposit box contents or Treasury bill investments.
D. We recommend our Kroger clients consult a financial professional before making a decision about a strategy. Among other things, he or she will consider your objectives, risk tolerance, and time horizon when recommending an appropriate investment strategy for you.
C. The acronym APR stands for annual percentage rate. This is the rate at which credit card, mortgage, and other loan issuers inform borrowers the approximate annual cost of borrowing funds minus fees and costs. The APR differs from the declared interest rate on a loan, which is usually lower than the APR because fees and other costs are not included. We tell Kroger clients to shop the APRs of different loans to make sound financial decisions. However, compare the APRs for fixed-rate loans versus adjustable-rate loans for mortgages carefully because the APR is not the maximum interest rate a loan may charge.
B -- False. The capital of many investors is pooled into a basket of securities that are invested for some particular end. With this 'diversification,' mutual funds are usually a good form of risk management. But we remind our Kroger clients that the inherent risk of any mutual fund depends largely on the securities categories that it holds. Pick a mutual fund carefully so its investment objective matches yours. Check out the prospectus for the fund - it contains important information about risks, fees and expenses, and details about specific holdings.

B -- False. Retirement is decades away but you can invest now for retirement. This is because small amounts like USD 50 per month can add up because of compounding - when your returns actually earn returns themselves. That means your money works for you!
A. The biggest advantage to a Roth IRA is the tax-free retirement income it provides. The contributions are subject to income limits & are not deductible on a tax basis. After five years of holding, withdrawals are allowed if 'qualified.' Exceptions to this include withdrawals made after the account holder dies, becomes disabled, or turns 59 and a half years old, or when the account holder withdraws up to USD 10,000 (lifetime-maximum) for a first home purchase.
D. No organization generally defines what constitutes a 'good' credit score because credit scores are calculated differently by different organizations. Generally, though, a credit score of 700 or higher would likely go in the favor of a credit applicant.

Retirement planning is like tending a garden. So much as a gardener would choose the right tools, seeds, and soil for his or her garden, retirees and those approaching retirement should plan for a comfortable retirement with the right investments and health care. Both take patience, attention to detail, and regular maintenance to work properly. Like a garden that makes the gardener happy and fulfilled, a planned retirement can provide security and fulfillment for those who have worked hard all their lives.

Sources:

National Council on Aging. 'Addressing the Nation's Retirement Crisis: The 80%.' National Council on Aging , 30 Aug. 2024, www.ncoa.org .
TIAA Institute-GFLEC. 'Financial Literacy and Retirement Readiness among Workers Age 40 and Older.' TIAA Institute-GFLEC Personal Finance Index , 2022, www.tiaa.org .
Schroders. 'U.S. Retirement Survey 2021.' Schroders , 18 Mar. 2021, www.schroders.com .
National Council on Aging. 'Get the Facts on Older Americans.' National Council on Aging , 2023, www.ncoa.org .
AARP. 'New Retirement Survey.' AARP , 2024, www.aarp.org .

How does the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN ensure that employees receive adequate retirement benefits calculated based on their years of service and compensation? Are there specific formulas or formulas that KROGER uses to ensure fair distribution of benefits among its participants, particularly in regards to early retirement adjustments?

The KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN ensures that employees receive adequate retirement benefits based on a formula that takes into account both years of credited service and compensation. The plan, being a defined benefit plan, calculates benefits that are typically paid out monthly upon reaching the normal retirement age, but adjustments can be made for early retirement. This formula guarantees that employees who retire early will see reductions based on the plan’s terms, ensuring a fair distribution across participants(KROGER_2023-10-01_QDRO_…).

In what ways does the cash balance formula mentioned in the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN impact the retirement planning of employees? How are these benefits expressed in more relatable terms similar to a defined contribution plan, and how might this affect an employee's perception of their retirement savings?

The cash balance formula in the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN impacts retirement planning by expressing benefits in a manner similar to defined contribution plans. Instead of a traditional annuity calculation, the benefits are often framed as a hypothetical account balance or lump sum, which might make it easier for employees to relate their retirement savings to more familiar terms, thereby influencing how they perceive the growth and adequacy of their retirement savings(KROGER_2023-10-01_QDRO_…).

Can you explain the concept of "shared payment" and "separate interest" as they apply to the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN? How do these payment structures affect retirees and their alternate payees, and what considerations should participants keep in mind when navigating these options?

In the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN, "shared payment" refers to a payment structure where the alternate payee receives a portion of the participant’s benefit during the participant's lifetime. In contrast, "separate interest" means that the alternate payee receives a separate benefit, typically over their own lifetime. These structures impact how retirees and their alternate payees manage their retirement income, with shared payments being tied to the participant’s life and separate interests providing independent payments(KROGER_2023-10-01_QDRO_…).

What procedures does KROGER have in place for employees to access or review the applicable Summary Plan Description? How can understanding this document help employees make more informed decisions regarding their retirement benefits and entitlements under the KROGER plan?

KROGER provides procedures for employees to access the Summary Plan Description, typically through HR or digital platforms. Understanding this document is crucial as it outlines the plan’s specific terms, helping employees make more informed decisions about retirement benefits, including when to retire and how to maximize their benefits under the plan(KROGER_2023-10-01_QDRO_…).

With regard to early retirement options, what specific features of the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN can employees take advantage of? How does the plan's definition of "normal retirement age" influence an employee's decision to retire early, and what potential consequences might this have on their benefits?

The KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN offers early retirement options that include adjustments for those retiring before the plan’s defined "normal retirement age." This early retirement can result in reduced benefits, so employees must carefully consider how retiring early will impact their overall retirement income. The definition of normal retirement age serves as a benchmark, influencing the timing of retirement decisions(KROGER_2023-10-01_QDRO_…).

How does the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN address potential changes in federal regulations or tax law that may impact retirement plans? In what ways does KROGER communicate these changes to employees, and how can participants stay informed about updates to their retirement benefits?

The KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN incorporates changes in federal regulations or tax laws by updating the plan terms accordingly. KROGER communicates these changes to employees through official channels, such as newsletters or HR communications, ensuring participants are informed and can adjust their retirement planning in line with regulatory changes(KROGER_2023-10-01_QDRO_…).

What are some common misconceptions regarding participation in the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN that employees might have? How can these misconceptions impact their retirement planning strategies, and what resources does KROGER provide to clarify these issues?

A common misconception regarding participation in the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN is that it functions similarly to a defined contribution plan, which it does not. This can lead to confusion about benefit accrual and payouts. KROGER provides resources such as plan summaries and HR support to clarify these misunderstandings and help employees better strategize their retirement plans(KROGER_2023-10-01_QDRO_…).

How does the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN interact with other employer-sponsored retirement plans, specifically concerning offsetting benefits? What implications does this have for employees who may also be participating in defined contribution plans?

The KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN interacts with other employer-sponsored retirement plans by offsetting benefits, particularly with defined contribution plans. This means that benefits from the defined benefit plan may be reduced if the employee is also receiving benefits from a defined contribution plan, impacting the total retirement income(KROGER_2023-10-01_QDRO_…).

What options are available to employees of KROGER regarding the distribution of their retirement benefits upon reaching retirement age? How can employees effectively plan their retirement income to ensure sustainability through their retirement years based on the features of the KROGER plan?

Upon reaching retirement age, KROGER employees have various options for distributing their retirement benefits, including lump sums or annuity payments. Employees should carefully plan their retirement income, considering the sustainability of their benefits through their retirement years. The plan’s features provide flexibility, allowing employees to choose the option that best fits their financial goals(KROGER_2023-10-01_QDRO_…).

How can employees contact KROGER for more information or assistance regarding the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN? What are the recommended channels for employees seeking guidance on their retirement benefits, and what type of support can they expect from KROGER's human resources team?

Employees seeking more information or assistance regarding the KROGER CONSOLIDATED RETIREMENT BENEFIT PLAN can contact the company through HR or dedicated plan administrators. The recommended channels include direct communication with HR or online resources. Employees can expect detailed support in understanding their benefits and planning for retirement(KROGER_2023-10-01_QDRO_…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Kroger offers both a defined benefit pension plan and a 401(k) retirement savings account plan. The defined benefit plan provides retirement income based on years of service and final average pay. The 401(k) plan allows employees to save for retirement with personal and employer contributions, including a company match. Employees can choose from various investment options within the 401(k) plan to grow their retirement savings.

Operational Changes: Kroger is undergoing a restructuring process that includes closing underperforming stores and cutting administrative costs. Layoffs: The company has announced layoffs affecting about 1,500 employees (Source: CNN). Financial Performance: Despite these changes, Kroger reported a 7% increase in same-store sales for Q2 2023, reflecting strong consumer demand (Source: Kroger).

Kroger offers RSUs that vest over time, providing shares to employees upon vesting. Stock options are also available, allowing employees to purchase shares at a set price, potentially benefiting from stock price increases.

Kroger has made significant updates to its employee healthcare benefits to align with the current economic, investment, tax, and political environment. In 2022, Kroger Health, the healthcare division of The Kroger Co., entered into a direct agreement with Prime Therapeutics to ensure continued access to affordable healthcare services for over 33 million Americans. This agreement, effective January 1, 2023, allowed Kroger's pharmacies to remain in-network for Prime's Medicare Part D members and other commercial, Medicare, and Medicaid customers. This initiative underscores Kroger's commitment to providing comprehensive healthcare services, including administering COVID-19 vaccines, offering in-store antibody tests, and distributing at-home COVID-19 tests, thereby enhancing health access and affordability. In 2023, Kroger was recognized for its commitment to workplace mental health, receiving the Gold Bell Seal for Workplace Mental Health from Mental Health America for the second consecutive year. This certification highlights Kroger's efforts to create a supportive and caring environment for its associates, focusing on mental, physical, and financial well-being. Kroger's wellness programs, mental health services, Employee Assistance Programs (EAP), and paid time off were rigorously evaluated, demonstrating the company's ongoing dedication to employee well-being. These efforts are part of Kroger's broader strategy to ensure a healthy and productive workforce, which is critical in navigating the current economic challenges and maintaining long-term business success.

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For more information you can reach the plan administrator for Kroger at 104 vine street Cincinnati, OH 45202-1100; or by calling them at 513-762-4000.

https://www.thekrogerco.com/documents/pension-plan-2022.pdf - Page 5, https://www.thekrogerco.com/documents/pension-plan-2023.pdf - Page 12, https://www.thekrogerco.com/documents/pension-plan-2024.pdf - Page 15, https://www.thekrogerco.com/documents/401k-plan-2022.pdf - Page 8, https://www.thekrogerco.com/documents/401k-plan-2023.pdf - Page 22, https://www.thekrogerco.com/documents/401k-plan-2024.pdf - Page 28, https://www.thekrogerco.com/documents/rsu-plan-2022.pdf - Page 20, https://www.thekrogerco.com/documents/rsu-plan-2023.pdf - Page 14, https://www.thekrogerco.com/documents/rsu-plan-2024.pdf - Page 17, https://www.thekrogerco.com/documents/healthcare-plan-2022.pdf - Page 23