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Investing for Income 11 Different Ways for Target Employees and Retirees

Fixed-income investing can provide an income stream to protect capital and provide financial independence for Target employees looking to retire comfortably, said Wesley Boudreaux, of The Retirement Group, a division of Wealth Enhancement Group.

'As more Target employees live longer than expected, an advisor can help you secure the income needed to fund a long retirement through instruments such as bonds and annuities,' said Patrick Ray of The Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

1. Creating streams of income for retiring Target employees.

2. Fixed-income investments include bonds, municipal bonds and preferred stock.

3. Work with a financial advisor to understand investments for retirement income.

Because many Target employees get more years in retirement, retirees have to carve out streams of income with which to live. That's the goal of investing for income - having enough income to cover your expenses so you can avoid tapping into your principal retirement savings. As a Target employee, investing for income may be less risky than investing for growth through traditional stock market investments. It's because fixed-income investing aims to help you as a Target employee preserve your capital so you can draw down ongoing income in interest or dividend form.

That's what makes investing for income a viable option for Target employees and retirees who like knowing what their investments will provide for them in the future. With this basic understanding of how investing for income can put you on the path to a more predictable retirement outcome than most traditional stock market-based plans can promise, let's look at 11 different ways you can invest for income. Most fixed-income investments are bonds. These have a set amount of interest to pay and a fixed amount to be paid back at maturity, called the par value. What comes to mind first when people think about investing in bonds is government bonds.

Those government bonds are debt securities issued by a government to fund government spending. They're issued by national governments and are considered low risk because they're backed by the government issuing the bonds. One example is a United States debt security backed by the United States. The U.S. Treasury Department also issues U.S. Treasury Bonds. U.S. Treasury Bonds are long-term bonds that mature in 10 to 30 years. But what if you're not a Target employee who wants to hang your cash for more than 10 years?

So there we have the second way to invest for income:

U.S. Treasury Notes. U.S. Treasury Notes are another type of debt security that the U.S. government issues to fund government spending. The loan also has an advertised interest rate, payable semi-annually until maturity. U.S. Treasury notes are offered at two-, three-, five-, seven- and 10-year terms.

For the Target employee:

If you think that's still too long to tie up your money, then item # 3 on our list may be for you. U.S. Treasury Bills are short-term debt obligations backed by the United States Treasury Department for terms of one year or less. They come in one, three, six and 12 month maturities. Because they have shorter terms, they will generally charge less interest than the two other options we discussed. We think those are reasonable short-term investments for Target employees and retirees. What if you want U.S. government bonds? As a Target employee, maybe you want to put your money where it counts - in something local - that will help local governments with government projects. Look next if that's the case. Municipal bonds are debt securities issued by state and local governments to fund public works and are used mainly to build or improve parks, roads, bridges, libraries or other infrastructure. As a Target employee, municipal bonds can help preserve capital while earning interest. Some municipal bonds pay no federal taxes and some are tax-free at the state and local levels as well. But interest earned on municipal bonds could affect your social benefits and the tax you might owe on those benefits.

That's why you as a Target employee should work with a financial advisor who understands retirement planning and saving before you invest in such securities. As a Target employee you need to know that corporate bonds are debt securities that corporations issue to raise money for ongoing operations, mergers and acquisitions or to expand their business. The term corporate bond is used for debt instruments issued by a corporation with at least one year maturities. Corporate bonds fall under two broad categories. The first is high-grade corporate bonds - investment-grade corporate bonds. The second category is high-yield corporate bonds or junk bonds. The two distinctions are based among other things on the risk that the bondholder assumes by investing in those bonds. Generally speaking, investment-grade corporate bonds will yield less interest than higher-risk, junk bonds. At TRG we work with Target employees to maximize return with minimum risk. Preferred stocks are equities that pay a fixed dividend and have a par value.

So even if shares' market value drops below par, investors will still receive the fixed dividend payment. Should that company ever redeem or call those shares, those shares are called back at par value. As a Target employee, you need to know the different classes of equities and stocks to make sound decisions. Mortgage-backed securities are investments secured by a basket of mortgages purchased by the banks that issued them. MBS receives periodic payments similar to bond interest payments. All of the above are options Target employees and retirees could consider for an investment strategy to generate income. A business development company is a closed-end fund that invests in organizations developing or seeking financial help. BDCs can offer high dividend yields and capital appreciation. BDCs have no par value but have loans to businesses in their portfolios that have par value. People forget about another type of fixed-income investment - Certificates of Deposit (CDs). You pay an agreed rate of interest in return for agreeing not to withdraw money from that account for a specified period of time until the maturity date.

When that CD term ends, the investor gets their principal back. Problem with CDs:

if you have an emergency and need to access those funds now, you could face early withdrawal penalties. You put money in CDs because it is insured by the Federal Deposit Insurance Corporation (FDIC). All of the amounts insured are capped, so check with your bank that the amount you put in that CD is within the limits of insurance. These are sometimes called money market deposit accounts or money market retirement savings accounts and are also considered fixed-income investments - most are backed by the FDIC - and usually carry a higher rate of interest than a traditional retirement savings account and permit account holders to make occasional penalty-free withdrawals. There are just six transactions per month - transfers or withdrawals. A contract between you and an insurance company under which you pay a lump-sum or series of payments and receive regular disbursements is called an annuity. These investments can provide a monthly income for a retiree but must be funded many years before you get any payout.

How to Invest for Income among the 11 ways to Invest for Income There's one common thread:

you can know how much income your investments will provide. Also know when you will get those interest or dividend payments. We say that by investing for income, you know with greater certainty what your financial future holds - certainty that most common stock investments cannot provide. Find out how fixed income investing or other types of investing works in our Retirement learning Library of ebooks and webinars on investing. Since increasingly many Target employees will live 20 or 30 years in retirement, you owe it to yourself to build stable streams of income you can count on well into your final years in retirement. What if you are one of the few who make it to 100? Rather than waiting for growth in an uncertain stock market, investing for income can reduce the risk that you run out of money before you run out of life. The first is finding a financial advisor who understands planning for retirement and how to best utilize fixed-income investments.

Working with a financial advisor from The Retirement Group means working with a fiduciary who knows how to help you invest for income. A nationwide organization of financial advisors called 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. 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.

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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. Brandon, Emily. '7 High-Return, Low-Risk Investments for Retirees.' U.S. News & World Report , Feb. 2025, www.money.usnews.com/investing/articles/high-return-low-risk-investments-for-retirees?utm_source=chatgpt.com .

2. 'Investment Options to Generate Income in Retirement.' U.S. Bank , Feb. 2025, www.usbank.com/retirement-planning/financial-perspectives/investment-options-to-generate-retirement-income.html?utm_source=chatgpt.com .

3. 'The Benefits of a Diversified Retirement Portfolio.' TIAA , Feb. 2025, www.tiaa.org/public/learn/lifetime-income/retirement-portfolio-diversification-strategies?utm_source=chatgpt.com .

4. 'Finding Fixed Income Investments for Retirement.' Charles Schwab , Sept. 2023, www.schwab.com/learn/story/finding-fixed-income-investments-retirement?utm_source=chatgpt.com .

5.'Fixed Income for Retirement.' M1 Finance , Jan. 2025, www.m1.com/knowledge-bank/fixed-income-for-retirement/?utm_source=chatgpt.com .

What are the key benefits provided by Target Corporation's Personal Pension Account and Traditional Plan for employees approaching retirement, and how do these plans ensure financial security during retirement years? Understanding the synergy between these two plans is essential for retirees, as they work together alongside Social Security and personal savings to replace a portion of an employee's paycheck after retirement.

Key Benefits of the Personal Pension Account and Traditional Plan: Target Corporation's pension plan includes two components: the Personal Pension Account and the Traditional Plan. These plans work in tandem to replace a portion of an employee's paycheck during retirement. The Personal Pension Account provides pay credits and interest that accumulate over time, while the Traditional Plan uses a final average pay formula. Together with Social Security and personal savings, these plans help ensure financial security in retirement(Target Corporation_Dece…).

How can employees elect different payment options, such as the Single Life Annuity or the Joint and Survivor Annuities, within Target Corporation's pension plans? It is crucial for employees to grasp not only the financial implications of these choices but also the necessary spousal consent required when designating a joint annuitant, particularly if the chosen joint annuitant is not the employee's spouse.

Payment Options and Spousal Consent: Employees can elect different payment options, including the Single Life Annuity, which provides the highest monthly benefit and ceases at the retiree’s death, or the Joint and Survivor Annuity, which continues payments to a surviving spouse. To elect a non-spouse as a joint annuitant, spousal consent is required, and this must be notarized to ensure compliance with plan rules(Target Corporation_Dece…).

In what circumstances might benefits not be paid under the Traditional Plan, and what steps can employees take to ensure they remain eligible for their pension benefits upon termination of employment? Target Corporation's policy outlines several scenarios where benefits could be denied, making it necessary for employees to be proactive in understanding their rights and responsibilities concerning plan participation.

Circumstances for Denial of Benefits under the Traditional Plan: Benefits under the Traditional Plan may not be paid if an employee leaves before becoming vested (less than three years of service). Employees should ensure they meet the vesting requirements and maintain eligibility by avoiding termination before they reach the minimum service period(Target Corporation_Dece…).

What procedures should employees follow to report changes in marital status, address, or beneficiaries to ensure compliance with the requirements of Target Corporation's pension plan? Employees must understand the importance of timely reporting these changes to avoid potential issues with their retirement benefits and ensure that their pension plan information remains up-to-date.

Reporting Changes in Marital Status or Beneficiaries: Employees must promptly report changes in marital status, address, or beneficiaries to Target's Benefits Center to ensure their pension records remain up-to-date. Failing to do so can lead to delays or issues in processing pension benefits(Target Corporation_Dece…).

How does Target Corporation determine the final average pay used to calculate retirement benefits under its pension plans, and what factors may affect this calculation? Employees nearing retirement should be fully informed about how their compensation is considered in determining their pension benefits, including aspects such as bonuses and overtime that may influence their final average pay calculation.

Final Average Pay Calculation: Target Corporation calculates final average pay based on the five highest years of earnings out of the last 10 years of service. This includes regular pay, overtime, bonuses, and commissions but excludes items like workers' compensation or long-term disability payments(Target Corporation_Dece…).

How can employees begin the process of rolling over their Target 401(k) accounts into the Pension Plan, and what advantages does this Pension Purchase Program offer? Understanding this rollover option is vital for maximizing retirement benefits, as it can provide employees with a stable income stream while avoiding unnecessary fees typically associated with purchasing annuities outside the plan.

Rolling Over 401(k) into the Pension Plan: Employees can roll over their 401(k) accounts into the Pension Plan using the Pension Purchase Program. This option offers several advantages, including avoiding fees associated with purchasing annuities outside the plan and receiving a stable income stream during retirement(Target Corporation_Dece…).

What are the implications of a participant's age and joint annuitant's age on the payment amounts under the various Joint and Survivor Annuity options at Target Corporation? Employees should be aware of how age differences can impact their pension payouts, as the specific percentages payable under these options may vary based on the ages of both the participant and their designated joint annuitant.

Effect of Participant and Joint Annuitant’s Age on Payments: The Joint and Survivor Annuity options are influenced by the ages of both the participant and the joint annuitant. The younger the joint annuitant, the lower the monthly payout due to actuarial adjustments. Employees should consider these factors when selecting an annuity option(Target Corporation_Dece…).

How are retirement benefits managed during potential plan terminations or amendments at Target Corporation, and what protections are in place for employees in these scenarios? Employees should be well-informed regarding their rights in the event of changes to the pension plan, including how benefits would be distributed and under what circumstances they may remain fully vested.

Plan Terminations or Amendments: In case of plan terminations or amendments, vested benefits are protected, and employees will receive their earned pension. If the plan is amended or terminated, Target ensures that vested benefits are distributed according to the plan's terms(Target Corporation_Dece…).

For employees retiring or leaving Target Corporation, what options are available with respect to unused vacation time and how might this be factored into pension calculations? Understanding how accrued time off translates into benefits could have a significant impact on an employee's financial positioning upon retirement.

Unused Vacation Time and Pension Calculations: Unused vacation time does not directly affect pension benefits but can be included in eligible earnings calculations that determine final average pay. Employees nearing retirement should consult with Target’s Benefits Center to understand how unused time may impact their overall benefits(Target Corporation_Dece…).

How can employees contact Target Corporation for assistance with their retirement benefits to address any questions or concerns they may have about their pension plans? Accessing the right resources and support is essential for employees to navigate their retirement benefits effectively. They can reach out to the Target Benefits Center at 800-828-5850 for more specific inquiries related to their personal circumstances. These questions aim to enhance employees' understanding of their retirement benefits, ensuring they are well-prepared for their transition into retirement.

Contacting Target for Pension Assistance: Employees can contact the Target Benefits Center at 800-828-5850 for assistance with their retirement and pension plans. This center provides support with any questions related to pension options, payments, and administrative requirements(Target Corporation_Dece…).

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For more information you can reach the plan administrator for Target at 10 South Dearborn Street 48th Floor Chicago, IL 60603; or by calling them at 1-800-440-0680.