Healthcare Provider Update: For the University of California, the primary healthcare provider is Kaiser Permanente, which is part of a network that offers comprehensive medical services to faculty and staff. They participate in programs designed to provide quality health care as well as manage costs effectively. Looking ahead to 2026, healthcare costs for University of California employees are projected to rise significantly. Premiums in the Affordable Care Act (ACA) marketplace are expected to increase sharply, with some states anticipating hikes exceeding 60%. This situation may result in more than 22 million marketplace enrollees facing increases in their out-of-pocket premiums by over 75% due to the potential expiration of enhanced federal subsidies. The combination of escalating medical costs and these subsidy changes will likely strain budgets and access, prompting employees to reevaluate their healthcare options for the upcoming year. Click here to learn more
For University of California employees, understanding the impact of financial decisions through detailed cash flow planning is critical to retirement planning - achieving goals while optimizing tax implications and withdrawal strategies - Kevin Landis, representative of The Retirement Group, a division of Wealth Enhancement Group.
'Cash flow planning provides a road map for managing spending, saving and retirement so that employees know when to retire and how to spend their retirement years wisely' - Paul Bergeron, of The Retirement Group, a division of Wealth Enhancement Group.
In this article we will discuss:
1. Role of cash flow planning in helping University of California clients manage spending, saving and goal funding.
2. How cash flow planning tools help you decide when to take your retirement & how to manage your assets post-retirement.
3.Benefits of account aggregation & real-time data for creating accurate financial plans.
Modeling goals and expense funding for each year of a University of California client's projected lifetime reveals how chronological and priority goal funding affects multiple client goals. The biggest decision clients face in their University of California retirement is whether to retire from University of California this year or next year. Showing how asset allocation changes due to withdrawals - and the tax implications of those withdrawals - our advisors can better assess client outcomes year over year and help clients decide when to retire from University of California.
Clients can understand where their money went and where it will go to fund their life goals with cash flow planning. At any life stage this type of planning can be used - early accumulators, mid-career accumulators, pre-retirees and University of California retirees. Early Adopters' cash flow planning can help Early Adopters understand spending, saving and funding of emergency and University of California retirement accounts.
Starting cash flow planning should involve proper savings for early accumulators. But good planning also involves getting the client's financial house in order and getting the proceeds invested in a solid, diversified portfolio, says financial planner Michael Kitces. Pre-and post-retirement pre-retirees from University of California could use cash flow planning to illustrate how current spending translates to retirement spending and how current spending impacts funding all of their goals.
University of California retirees could apply cash flow planning to understand how spending affects distribution of income to fund goals and outlive retirement savings. And the third best use of our cash flow tool - decide whether University of California employees should leave University of California this year or next year. Cash flow planning can keep our University of California clients on the right financial path by integrating income & expenses, investment performance, education funding, insurance and estate planning.
Cash flow planning can also help our University of California clients understand where they lose money unnecessarily. Fees, miscalculations, wrong insurance, penalties and other charges can really add up quickly for many families. They lose on average $200 a month. The holistic view that cash flow planning offers means that advisors have points to discuss with clients during planning. Advisors then can analyze data better and make recommendations in the client's best interest. Gamma is a Morningstar research metric that measures how sound financial planning in five areas - asset allocation, withdrawal strategy, guaranteed income products, tax-efficient allocation and portfolio optimization - can deliver 29% more income on average to a retiree. In addition to this value, Morningstar Research estimates that a retiree could realize 22.6% more certainty equivalent income with a Gamma-efficient retirement income strategy than in our base case.
A few output options and tools are provided by our advisors via software. They range from an annual cash flow report with simulations of inflows, outflows and total portfolio assets to an interactive tool called Decision Center that allows the advisor to model recommendations live during a review meeting. Several key data points are applied to project a client's cash flow simulation. Projections include living expenses, liability payments, insurance premiums, gifting, taxes etc. Planned savings are also called an outflow if employee contributions to a qualified account, HSA or taxable investment are made by the employee. Total outflows minus total inflows gives a net cash flow number that is positive or negative.
All liquid investments like taxable accounts, tax deferred, cash etc. will be shown as total portfolio assets at end of year. Some factors that affect the ending total portfolio assets year over year are the growth rates for each account and the ending net cash flow. Simulation uses client inflows such as income, investment distributions, planned distributions and other inflows. And if the client has negative net cash flow, that deficit will have to be financed from available portfolio assets through liquidation. With a positive net cash flow, the surplus will be deposited into the client's core cash account. The core cash account is a hypothetical wallet which measures the inflows and outflows of the client. Advisors may not save excess cash at the end of the year if a client prefers.
An expense number can help advisors start cash flow planning conversations with University of California clients. Conversations about spending can be difficult if there are problems that should be addressed. A budgeting solution is a good starting point for discussion of client spending and impact on cash flow plan. With budgeting tools we provide daily updates on a client's spending transactions through connections to their financial institutions. This tool budgets the client's spending so that the advisor has an accurate picture of the spending which can be used for cash flow simulation and where improvements could be made.
Also for University of California employees to remember:
entering data - especially expenses - does not have to be time consuming or too finely detailed in cash flow planning. Your advisor and the software give you a lot of flexibility when entering expenses - from an annualized rollup of all expenses to major expense buckets (discretionary, etc.) and the ability to fill out a digital expense worksheet or classify transactions on the University of California client site to determine a client's true expenses for the year. Data entry takes time depending on how detailed you need it. Account aggregation is changing financial planning because it allows advisors to plan with their clients. In cash flow planning, aggregation provides an account balance with real-time information that improves a client's cash flow projection. Using account aggregation, we connect with thousands of institutions to collect client account information like balances, holdings, asset allocations and more.
By including accounts held away, aggregation makes the cash flow plan comprehensive. From this information the advisor also understands how an account accumulates for projection purposes. This helps the advisor make recommendations that better meet the client's needs. These provide fully integrated account consolidation (assets under management) and account aggregation (assets held away) functionality across the advisor and client experiences. More than $2 trillion of assets are connected via the platform. All linked accounts update values across the system - including financial plans - every day. We use a commercial aggregator - where more than 90 percent of this aggregation work is done in-house by the team with a small percentage coming from third parties.
A nationwide group of financial advisors known as The Retirement Group. We only plan for and design retirement portfolios for transitioning corporate employees. And each representative of The Group has been hand picked by The Retirement Group in select cities throughout the United States. Each advisor was screened for pension expertise, financial planning experience and portfolio construction knowledge. TRG believes in teamwork to find solutions to our clients' problems. A conservative investment philosophy guides the team in constructing client portfolios with laddered bonds / CDs / mutual funds / ETFs / annuities / stocks and other investments. They handle retirement / pensions / tax / asset allocation / estate / elder care issues.
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
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- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
This document uses different research tools and techniques. All attempts to estimate future results involve assumptions and judgments and are therefore only tentative estimates. The law, investment climate, interest rates and personal circumstances will all change and will affect how accurate our estimations are and how appropriate our recommendations are. Such a plan requires ongoing change sensitivities as well as constant re-examination and alteration of the plan.
So update your plan a few months before your expected retirement date and do an annual review. Nothing contained herein shall be construed as an attempt by The Retirement Group, LLC or any of its employees to practice law or accounting. We look forward to speaking with any tax and/or legal professionals you may select regarding the implications of our recommendations. Through your retirement years we will continue to update you on issues affecting your retirement via our complimentary and proprietary newsletters, workshops & periodic updates. Or call us at (800) 900-5867.
Sources:
1. Mariner Wealth Advisors. 'In Retirement, Cash Flow is King.' Mariner Wealth Advisors, 6 Feb. 2025, https://www.marinerwealthadvisors.com/insights/in-retirement-cash-flow-is-king/?utm_source=chatgpt.com .
2.Blanchett, David, and Paul D. Kaplan. 'The Value of a Gamma-Efficient Portfolio.' Morningstar Investment Management LLC, 25 Oct. 2017, https://www.morningstar.com/content/dam/marketing/shared/research/foundational/831611-GammaEfficientPortfolio.pdf?utm_source=chatgpt.com .
3. Fidelity Investments. 'Retirement Bucket Approach: Cash Flow Management.' Fidelity, https://www.fidelity.com/viewpoints/retirement/managing-cash-flow?utm_source=chatgpt.com .
4. Mariner Wealth Advisors. 'In Retirement, Cash Flow is King.' Mariner Wealth Advisors, 6 Feb. 2025, https://www.marinerwealthadvisors.com/insights/in-retirement-cash-flow-is-king/?utm_source=chatgpt.com .
5. The Tax Adviser . 'Planning for Cash Flows in Retirement.' The Tax Adviser, Dec. 2015, https://www.thetaxadviser.com/issues/2015/dec/planning-for-cash-flows-in-retirement.html?utm_source=chatgpt.com .
How does the University of California Retirement Plan (UCRP) define service credit for members, and how does it impact retirement benefits? In what ways can University of California employees potentially enhance their service credit, thereby influencing their retirement income upon leaving the University of California?
Service Credit in UCRP: Service credit is essential in determining retirement eligibility and the amount of retirement benefits for University of California employees. It is based on the period of employment in an eligible position and covered compensation during that time. Employees earn service credit proportionate to their work time, and unused sick leave can convert to additional service credit upon retirement. Employees can enhance their service credit through methods like purchasing service credit for unpaid leaves or sabbatical periods(University of Californi…).
Regarding the contribution limits for the University of California’s defined contribution plans, how do these limits for 2024 compare to previous years, and what implications do they have for current employees of the University of California in their retirement planning strategies? How can understanding these limits lead University of California employees to make more informed decisions about their retirement savings?
Contribution Limits for UC Defined Contribution Plans in 2024: Contribution limits for defined contribution plans, such as the University of California's DC Plan, often adjust yearly due to IRS regulations. Increases in these limits allow employees to maximize their retirement savings. For 2024, employees can compare the current limits with previous years to understand how much they can contribute tax-deferred, potentially increasing their long-term savings and tax advantages(University of Californi…).
What are the eligibility criteria for the various death benefits associated with the University of California Retirement Plan? Specifically, how does being married or in a domestic partnership influence the eligibility of beneficiaries for University of California employees' retirement and survivor benefits?
Eligibility for UCRP Death Benefits: Death benefits under UCRP depend on factors like length of service, eligibility to retire, and marital or domestic partnership status. Being married or in a registered domestic partnership allows a spouse or partner to receive survivor benefits, which might include lifetime income. In some cases, other beneficiaries like children or dependent parents may be eligible(University of Californi…).
In the context of retirement planning for University of California employees, what are the tax implications associated with rolling over benefits from their defined benefit plan to an individual retirement account (IRA)? How do these rules differ depending on whether the employee chooses a direct rollover or receives a distribution first before rolling it over into an IRA?
Tax Implications of Rolling Over UCRP Benefits: Rolling over benefits from UCRP to an IRA can offer tax advantages. A direct rollover avoids immediate taxes, while receiving a distribution first and rolling it into an IRA later may result in withholding and potential penalties. UC employees should consult tax professionals to ensure they follow the IRS rules that suit their financial goals(University of Californi…).
What are the different payment options available to University of California retirees when selecting their retirement income, and how does choosing a contingent annuitant affect their monthly benefit amount? What factors should University of California employees consider when deciding on the best payment option for their individual financial situations?
Retirement Payment Options: UC retirees can choose from various payment options, including a single life annuity or joint life annuity with a contingent annuitant. Selecting a contingent annuitant reduces the retiree's monthly income but provides benefits for another person after their death. Factors like age, life expectancy, and financial needs should guide this decision(University of Californi…).
What steps must University of California employees take to prepare for retirement regarding their defined contribution accounts, and how can they efficiently consolidate their benefits? In what ways does the process of managing multiple accounts influence the overall financial health of employees during their retirement?
Preparation for Retirement: UC employees nearing retirement must evaluate their defined contribution accounts and consider consolidating their benefits for easier management. Properly managing multiple accounts ensures they can maximize their income and minimize fees, thus contributing to their financial health during retirement(University of Californi…).
How do the rules around capital accumulation payments (CAP) impact University of California employees, and what choices do they have regarding their payment structures upon retirement? What considerations might encourage a University of California employee to opt for a lump-sum cashout versus a traditional monthly pension distribution?
Capital Accumulation Payments (CAP): CAP is a supplemental benefit that certain UCRP members receive upon leaving the University. UC employees can choose between a lump sum cashout or a traditional monthly pension. Those considering a lump sum might prefer immediate access to funds, but the traditional option offers ongoing, stable income(University of Californi…)(University of Californi…).
As a University of California employee planning for retirement, what resources are available for understanding and navigating the complexities of the retirement benefits offered? How can University of California employees make use of online platforms or contact university representatives for personalized assistance regarding their retirement plans?
Resources for UC Employees' Retirement Planning: UC offers extensive online resources, such as UCnet and UCRAYS, where employees can manage their retirement plans. Personalized assistance is also available through local benefits offices and the UC Retirement Administration Service Center(University of Californi…).
What unique challenges do University of California employees face with regard to healthcare and retirement planning, particularly in terms of post-retirement health benefits? How do these benefits compare to other state retirement systems, and what should employees of the University of California be aware of when planning for their medical expenses after retirement?
Healthcare and Retirement Planning Challenges: Post-retirement healthcare benefits are crucial for UC employees, especially as healthcare costs rise. UC’s retirement health benefits offer significant support, often more comprehensive than other state systems. However, employees should still prepare for potential gaps and rising costs in their post-retirement planning(University of Californi…).
How can University of California employees initiate contact to learn more about their retirement benefits, and what specific information should they request when reaching out? What methods of communication are recommended for efficient resolution of inquiries related to their retirement plans within the University of California system?
Contacting UC for Retirement Information: UC employees can contact the UC Retirement Administration Service Center for assistance with retirement benefits. It is recommended to request information on service credits, pension benefits, and health benefits. Communication via the UCRAYS platform ensures secure and efficient resolution of inquiries(University of Californi…).
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