Assets for Retirement Years

Most individuals will need to have at least fifteen to twenty years worth of assets to cover living expenses during retirement years. A significant portion of these assets will likely be needed for nursing home and health care expenses. Total living expenses for an individual during retirement years are projected to equal hundreds of thousands of dollars.

Assets for retirement years typically come from three sources: (1) Social Security, (2) employer-funded retirement plans, and (3) personal savings. For most individuals, personal savings will be essential to having adequate assets to cover normal and unusual expenses during retirement.

Indiana University sponsors two plans to assist eligible employees to save for retirement: the IU Tax Deferred Annuity (TDA) Plan and the IU Retirement Savings Plan. Both of these plans take advantage of federal and state tax regulations by deferring taxes on employee contributions and associated investment earnings until funds are withdrawn. This tax deferral provision offers two key advantages for employees:

• It allows employees to make higher contributions than would be possible if income taxes were immediately due. Retirement plan contributions are deducted from the employee’s salary before income taxes are calculated.
• It provides an opportunity for the employee’s account balance to grow quicker, as investment earnings are not taxed immediately. All of the investment earnings are left in the employee’s account to generate additional earnings.

There are many other provisions that offer unique value for participating employees, such as: investment opportunities across a wide array of stocks, bonds, and fixed income funds; funds that automatically adjust the investment portfolio based on the participant’s age; and continued participation following separation from Indiana University.

Eligible employees include Academic and Staff appointments of 50 percent or more FTE, along with some Hourly employees.

It is very easy to take advantage of these plans. Enrollment takes two simple steps.

1. Complete a short form to establish a retirement account with one or more of the associated investment vendors.
2. Complete a short form to initiate contributions through Indiana University’s HR/payroll system.

Payroll contributions can start and stop throughout the year.

Employee contributions to both of these plans are intended for retirement purposes, and there are no provisions for withdrawing funds for a financial hardship or other similar reasons while employed at Indiana University, except that the IU TDA Plan allows for early withdrawals after age 591/2.

Enrollment forms for both of these plans are available at campus HR offices, and details on all plan provisions are located at: www.indiana.edu/~uhrs/benefits/retirement.html.

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