New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Target Employees: Here Are 10 Terms Every Investor Should Know

For Target employees and retirees, understanding key investment terms like portfolio, stock, bond and mutual funds is important - and working with an expert like Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group, can help you tailor a plan that fits your Retirement goals,' he said.

'Target employees and retirees should understand risk, return and diversification in investing, and Tyson Mavar, a representative of the Retirement Group, a division of Wealth Enhancement Group, can help structure investments to achieve long-term financial security,' he said.

In this article we will discuss:

1. Typical investment components are stocks, bonds and cash.

2. Describe how mutual funds and ETFs diversify and reduce risk for investors.

3. Understand investment terms such as dividends, yield and market trends.

Just left Target and started investing? You may have heard unfamiliar terms. We therefore created this glossary to help Target employees and retirees become more confident investors.

Portfolio

The assets of someone or an organization are called a portfolio. A portfolio contains typically several asset classifications including stocks, bonds and cash. That includes your Target pension, 401(k), lump sum and annuity payments upon retirement. The asset allocation of a portfolio depends typically on investor risk aversion, time horizon and investment objectives.

Stock

Stocks are instruments that represent ownership in a business. Shares in the benefits package for most Target employees come with time in the workforce. Any shareholder can get a cut of the company's assets and profits. Shareholders are both beneficiaries and losers of their position - they win if the company succeeds and lose money if it fails.See how principal value and return on investment of stocks fluctuate with respect to market conditions. Shares transferred may have a value greater than or lower than their initial price.

Bond

The government agency or corporation is issuing a bond to raise money for current operations or new projects. Investors buying bonds become the issuer's creditors. Bondholders typically get interest payments periodically. Their amounts depend on the coupon rate, which is a fixed annual interest rate. These interest rates could also affect your Target settlement sum and annuity. Absent issuer default, bondholders should receive the full par value of the bond at the maturity date specified.The principal of bonds may change depending on market conditions. Prematurely redeemed bonds might be worth more or less than their face value.

More Articles You May Like:

Cash

Another investment or asset is cash. It consists of low-risk and liquid alternatives to money and currency.Typical alternatives to currency include savings accounts, certificates of deposit/CDs, and U.S. Treasury bills.The FDIC insures certificates of deposit (CDs) and bank savings accounts with generally fixed interest rates up to USD 250,000 per depositor per insured institution.T-rex securities are backed to the full faith and credit of the government for timely principal and interest payments.

Mutual Fund

It is a grouping of stocks, bonds and / or other securities purchased and / or managed by an investment company on behalf of many investors. The net asset value (NAV) of the underlying securities determines the price at which shares are purchased from and sold back to the investing company at the end of each trading day. Employees of Target have access to mutual funds managed by competent people and a broad investment mix. Diversification reduces risk but does not ensure a profit or prevent investment loss. Understand diversity to ensure a stress-free Target retirement.

Exchange-Traded Fund

A portfolio of assets prepared by an investment firm is called an exchange-traded fund (ETF). Unlike mutual funds however, ETF shares can be traded throughout the day on stock exchanges just like individual equities and the price may be higher or lower than the NAV depending on supply and demand. ETFs usually have low expense ratios but you have to pay a commission to buy or sell them - and your overall costs may be higher if you trade frequently.

The return and principal value of mutual funds and ETFs changes with the market. Shares transferred may have a value greater than or lower than their initial price. Check prospectus carefully before investing to understand fund investment objectives, risks, fees and expenses. Read the document before investing.

Dividends

Dividends are distributions by a company of its earnings to its shareholders - typically quarterly - in cash or additional equity shares. The dividend per share is decided by the board of directors of the corporation. An important tax consideration for buyers of Target dividends with lump sum payments is often not thought of. Many investors consider dividend payments a sign of a company's health and future prospects.

The yield on a dividend investment is high. Lower volatility and more stable returns mean investors must be prepared for periods when dividend payers detract from a stock portfolio. Profitable economic, market and political factors may affect a company's dividend payout. Generally speaking, dividends are unsecured and can be changed or eliminated.

Yield

Usually, the yield on an investment represents the current income received. Yield for a stock equals the sum of all annual dividends divided by the current share price. Yield on a bond: divide the annual interest rate by the current pricing. The return is comprised of price appreciation and depreciation and is not related to yield. Investments with a higher yield target involve more risk.

Index

A statistical composite called an index tracks the long-term evolution of economic conditions (like inflation) or financial markets. Many different indices are available for assessing how an asset performed. The S&P 500 Index is considered representative of the U.S. equity market overall.An unmanaged index does not necessarily reflect investment performance. No one can own an index directly. Past performances do not indicate future results. The real results could be different.

Bear/Bull Market

Typically a bear market involves falling asset prices that drop 20% or more in several major market indexes over a period of months or more. A bull market is a period of rising prices and investor optimism that lasts for months or years. All these market fluctuations could affect investor attitudes and actions.

Added Fact:

Target employee or retiree looking to learn more about investing should know about required minimum distributions (RMDs). RMDs are the minimum amounts that people must take out of retirement accounts - 401(k)s and traditional IRAs - by age 72, the IRS said in 2023 (IRS, updated 2023). Withdrawing the RMD may be punishable. Target employees and retirees need to understand RMDs when planning investments and preparing for retirement to avoid IRS penalties and interest rates.

Added Analogy:

Knowing investment terms for Target employees and retirees is like having an organized toolbox for a craftsman. All terms are tools that help investors navigate the maze of financial markets. Just as a craftsman needs a hammer and a wrench to drive in nails and a wrench to tighten bolts, understanding terms like portfolio, stock, bond, cash, mutual fund, ETF, dividends, yield, index and bear/bull market provides investors with the tools to build a secure and prosperous financial future. Familiarizing themselves with these terms allows Target employees and retirees to invest like craftsmen - picking the right tool for the job and building a long-term portfolio (Author, Date).

Articles you may find interesting:

Sources:

1. Johns Hopkins University Human Resources. Retirement Choice Glossary . 2019, hr.jhu.edu/wp-content/uploads/2019/06/RetirementChoiceGlossary.pdf?utm_source=chatgpt.com .

2. Protective Life. 'Retirement Glossary: Terms You Should Know.' Protective Life , 2023, protective.com/learn/retirement-glossary-terms-you-should-know?utm_source=chatgpt.com .

3. Carbon Collective. 'Retirement Planning Glossary | 20 Retirement Terms You Should Know.' Carbon Collective , 2023, carboncollective.co/sustainable-investing/retirement-planning-glossary?utm_source=chatgpt.com .

4. Internal Revenue Service. 'Retirement Topics - Required Minimum Distributions (RMDs).' IRS , 2023, irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds?utm_source=chatgpt.com .

5. Charles Schwab. 'IRA Withdrawals: Required Minimum Distributions.' Charles Schwab , 2023, schwab.com/ira/traditional-ira/withdrawal-rules/required-minimum-distributions?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…).

Additional Articles

Check Out Articles for Target employees

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.