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The Most Effective Financial Planning Techniques for Target Employees

'Target employees should review their retirement planning strategies to see if they are keeping pace with the economic environment, as consistent adjustments can help ensure long-term financial security,' says Brent Wolf, a representative of the Retirement Group, a division of Wealth Enhancement Group.

As we navigate changing market conditions, Target employees should periodically review their retirement plans and make adjustments where necessary to stay on track for their future goals, 'says Kevin Landis, of the Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

1. Employee benefits & pension trends.

2. Recent restructuring and layoffs impact retirement plans.

3. 401(k) adjustment tips for dealing with economic shifts.

Those at Target might notice how much more complex your financial planning needs get the longer you work there. Although you might have similar goals as other coworkers - saving for retirement after leaving Target or helping pay for your children's college - the components necessary to reach them all require careful management. The best Target financial planning strategies start with assessing your situation holistically and simplifying it by finding the right experts to help you.

High-Net-Worth Target individuals' comprehensive asset allocation. Your life may have a lot of moving parts because you work at a Target company. This makes sound financial planning essential. Complete financial planning examines your entire financial picture. It covers investment management, including strategic asset allocation/diversification, tax planning, and retirement planning before and after leaving Target.

Estate planning, risk & insurance, cash flow, college funding, executive compensation, and gifting to family and/or charities. And in investment management, a strategic asset allocation is key. You select the appropriate split between stocks, bonds, and other assets based on your financial goals and situation, called strategic asset allocation. Then you diversify within these categories as much as possible. If you took, for example, a 60% stocks 40% bonds allocation, you would have 60% U.S. large-cap stocks, 20% U.S. small and mid-cap stocks, and 20% foreign stocks within the stock band.

You may adjust your asset allocation as the market changes and your investments increase in value. During a bull market, for example, when stocks are outperforming, your stock portion might be 70% of your portfolio instead of 60%. Once this happens, rebalance to your target allocation by selling some stocks and using the proceeds to buy more bonds until you get back to the 60% to 40% split you wanted. You should only adjust your strategic allocation when things get really personal, like when you are retiring from Target or having a major life event.

Don't get duped into changing your allocation because of market events. Let your stocks grow during a bull market, but it would increase your overall portfolio risk and leave you overexposed when the market falls. A secondary financial planning consideration for high-net-worth individuals is how to manage taxes. The higher your income and net worth, the greater the tax burden. Think strategically about the kinds of investments and where you hold them to minimize taxes. You might, for example, keep income-producing investments like bonds or bond funds in a tax-sheltered account like an individual retirement account (IRA). Another way to reduce taxes is by giving to a charity or loved ones.

The IRS lets people deduct up to 100% of qualified charitable contributions made in cash to a qualifying charity, and give up to USD 15,000 per person per year without paying gift taxes yourself. Plus, any assets you gift to your beneficiaries today will reduce future estate taxes they will owe. Most investors' financial goal is retirement from Target retirement. Some would think that retirement planning should be easier for high-net-worth people - you have more assets to fund your retirement - but that is far from the case. High-net-worth individuals find retirement planning just as complex, if not more complex.

First, figure out how much income you'll need in retirement after leaving Target. Starting with your current monthly expenses is good. List all of your expenses as essential or discretionary - utilities and groceries - and those you could live without - restaurant meals and travel. Consider how you want to spend your retirement time as you review your spending. This helps you figure out how your expenses might change when you leave Target.

Maybe you spend less on transportation when you don't have to commute to and from work every day but more on travel when you travel through your retirement bucket list. Forecast your expenses as precisely as possible. You can be vague about what you will spend if that helps you out. You can revise your estimate as your retirement plans settle. You know how much you want to spend in retirement and can plan how you'll get that income. You could draw retirement income from investments like retirement and non-retirement savings, Social Security, real estate, or a business.

Like you did with your expenses - essential versus discretionary - you should create two categories of retirement income sources:

fixed and variable. Fixed sources of income have a set amount that you know will be paid out periodically - Social Security, a pension, or an annuity - for example. Variable income comes from sources that change value - like your investments. Your basic retirement expenses once you leave Target should ideally be covered entirely by fixed income sources. You'll get maximum flexibility with your retirement spending. When stocks are down, you can trim your discretionary expenses without sacrificing your living space. A second way to maximize your retirement income is managing your taxes during retirement. Retirement accounts are one such tool.

There are two types of retirement accounts:

Traditional, or pre-tax, accounts, and Roth, or after-tax, accounts. Traditional accounts allow you to deduct some contributions today. So you pay no taxes until you take the money out of the account. You can contribute today, but with a Roth account, you can take the money out tax-free when you leave Target. The main stumbling block to Roths is the IRS won't let high-income earners contribute. Individuals and heads of households making over USD 144,000 in 2022 can't contribute to Roth IRAs, and those making USD 129,000 or less can make reduced contributions. In 2022, for married couples filing jointly, the income phase-out range is set at USD 204,000, with couples earning more than USD 214,000 no longer contributing.

Saving for retirement in traditional and Roth vehicles, if you can, will help you with taxes when you leave Target. Since Roths aren't taxable when withdrawn, you can use them for tax-free income in retirement. Unless you can contribute to a Roth now, you can also talk to a financial advisor about making Roth conversions in lower-income years when you can afford to pay a little more tax in return for more future tax-free income. You can see that good financial planning doesn't stop when you stop working for Target. Most likely, you want to pass the wealth you've built up with your family through estate planning. And as complicated as retirement planning is, estate planning for high net worth is just as complex.

Estate planning is about getting as much of your inheritance as possible where you want it. And trust is one of the best tools for this. The types of trusts and customizations available make picking the right one and getting it set up properly a bit of a chore. Work with a financial professional and an attorney to determine the right type of trust and draft the appropriate trust agreement. And you need to insure your assets and income accordingly. This includes getting appropriate health, homeowners, auto, boats, and other vehicle and excess liability coverages. So you got long-term care or life insurance, or both. Maybe those fit your situation? Using a Financial Advisor From The Retirement Group Financial planning for a Target employee involves many moving parts.

Hence, many investors choose to work with a financial advisor - but not just any financial advisor. Partner with someone who understands Target company benefits for the best advice on financial planning. The Retirement Group advisors train to help Target employees develop a customized financial plan to meet your financial goals. The Retirement Group holds its advisors to high ethical and educational standards and demands that they serve their clients' best interests. Our advisors will never recommend an investment unless they are confident it is right for you. How a financial advisor is compensated is also an important factor when choosing one.

Advisor compensation may take one of three forms:

via commissions on investments or products they sell; via an annual, hourly, or flat fee (fee-only advisors); or a combination of fees and commissions (called fee-based advisors). Under a fee-only model, the advisor makes no commissions, so there is no incentive to promote one product over another. Instead of variable and obscure commissions, retainer-based fee models charge clients one fixed fee. That fee varies depending on your goals for wealth management and the services the advisor provides - so you get the personalized service you want.

A fee that is tailored to your needs and goals means your advisor will always work for you. About The Retirement Group The Retirement Group is a national group of financial advisors that works together. We only plan for and design retirement portfolios for corporate employees leaving Target. And each representative of The Group has been handpicked 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, and stocks. They handle retirement, pensions, tax, asset allocation, estate, and 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. 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. In your retirement years after leaving Target, we will keep you updated on issues affecting your retirement via our complimentary and proprietary newsletters, workshops, and periodic updates. Or call us at (800) 900-5867.'

Articles you may find interesting:

Sources:

1. Financial Samurai. 'How High Net Worth Individuals Invest: Asset Allocation Breakdown.' Financial Samurai , 15 Oct. 2019, www.financialsamurai.com/how-high-net-worth-individuals-invest-asset-allocation-breakdown/ .

2. Right Horizons. 'Asset Allocation: A Guide for High Net Worth Investors.' Right Horizons , 22 Dec. 2024, www.righthorizons.com/asset-allocation-guide-high-net-worth-investors/ .

3. Sensible Money. 'Retirement Benchmarks: Go Beyond the S&P 500 Index.' Sensible Money , 11 Oct. 2024, www.sensiblemoney.com/retirement-benchmarks-go-beyond-sp-500/ .

4. The IFW. 'Smart Strategies for High Net Worth Investing in the Current Market.' The IFW , 27 Sept. 2024, www.ifw.com/smart-strategies-high-net-worth-investing/ .

5. Equirus Wealth. 'Asset Allocation Strategies for High-Net-Worth Individuals.' Equirus Wealth , 17 Nov. 2024, www.equiruswealth.com/asset-allocation-strategies/ .

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.