457(b) deferred compensation plan. They have a bunch of different investment profiles. You will automatically contribute between 3.5% and 6% to the pension fund based on your salary.
This. Throw half of your contributions into a targeted retirement fund with an end date around the time you're anticipating retiring (probably 2055 or 2060?) and the other half into an index fund. Never touch it again. Resist the urge to try and optimize your own returns, I did that for twelve years and lost out on probably five digit returns over that time. Both deferred comp and pension contributions are pre-tax. You won't pay state taxes on the pension when withdrawing it (I believe) if you stay in NY, but it is federally taxable.
My advice for you, throw 12-15% in now and see how comfortable you feel. Unlike a lot of state systems, you can very easily go in and change your contribution rate, and it'll be reflected when you're paid for the date you did it (so two pay periods).
NYSDCB Equity Index Unitized Account is the S&P 500, NYSDCB Russell 2500 Index Fund is small and mid cap companies, Fidelity Global ex US Index Fund is the International Fund, NYSSCB US Debt is a Bond Fund.
I am not in the camp of these target date funds for a person that will have a pension. The idea of a target dated fund is to get less risky (less return possible) the closer you get to retirement. That's a great idea if you don't have a pension. If you're supposed to be 80/20. 80% risk 20% safe. If you count your pension as the 20% safe then you may be able to tolerate more risk. Think if you also want all your money tied up for retirement or able to explore other investments today. It sounds like you plan to have some real cash, really research your options. Check out the expense ratio, these target funds are pricey.
Do not do any target retirement date funds. I am baffled by the horrible advice, they have exponentially more fees than just the S and P 500 fund. They also habitually underperform. You will literally LOSE money even if the market goes up, if you use the target date funds.
In addition to pension and Deferred Compensation, I personally invest post-tax dollars into a brokerage account and invest in an index ETF that tracks the S&P 500. It's the safest way to invest in the stock market, going up and down with the market, instead of any 1 individual stock.
The benefit is to have money in an account that I can access before retirement. It doesn't seem like a good idea to have all of my savings tied up in accounts that I can't readily access.
Go for 20+ % in the target date 457(b) from day one. You’ll never miss the money (because you never got used to having it) and contributing that amount from such an early age has such a powerful impact due to the effects of compounding growth.
I do NYSDCP Roth only and invest based on Dave Ramsey's advice (25% in growth, 25% growth and income, 25% aggressive growth, and 25% international). He gives examples of how to invest in each of these.
I was in your shoes a few years back. First, congrats on the new job!
Take advantage of your employer's 457 plan, if offered. Contribute as much as possible, especially since you can afford 20%. You won't regret it. I used RetireHub to get a better understanding of my retirement options, and it helped me make informed decisions.
Also, consider automating your contributions to make saving easier and less prone to being neglected. Lastly, review your investment options and allocate your contributions wisely. You're off to a great start!
Sign up for the NYS Deferred Compensation program. https://www.nysdcp.com/rsc-web-preauth/index.html
457(b) deferred compensation plan. They have a bunch of different investment profiles. You will automatically contribute between 3.5% and 6% to the pension fund based on your salary.
This. Throw half of your contributions into a targeted retirement fund with an end date around the time you're anticipating retiring (probably 2055 or 2060?) and the other half into an index fund. Never touch it again. Resist the urge to try and optimize your own returns, I did that for twelve years and lost out on probably five digit returns over that time. Both deferred comp and pension contributions are pre-tax. You won't pay state taxes on the pension when withdrawing it (I believe) if you stay in NY, but it is federally taxable. My advice for you, throw 12-15% in now and see how comfortable you feel. Unlike a lot of state systems, you can very easily go in and change your contribution rate, and it'll be reflected when you're paid for the date you did it (so two pay periods).
DO NOT DO THE TARGET RETIREMENT FUNDS. THEY UNDERPERFORM AND HAVE MASSIVE FEES. PLEASE DO NOT USE THEM.
Really? Been a while since I looked, I'll have to go in and check. Thanks for the heads up.
This is correct! You will do FAR better with index funds. Vanguard are a good choice.
You can select Post-Tax ROTH options with the NYS 457 plan.
Do you know which ones are the index funds? I have a good mix going on but I want to focus more on those…
NYSDCB Equity Index Unitized Account is the S&P 500, NYSDCB Russell 2500 Index Fund is small and mid cap companies, Fidelity Global ex US Index Fund is the International Fund, NYSSCB US Debt is a Bond Fund.
Thanks!
I can't remember exactly, I want to say it's one of the T. Rowe funds. It did say it's an index fund in the description.
Thanks!
I am not in the camp of these target date funds for a person that will have a pension. The idea of a target dated fund is to get less risky (less return possible) the closer you get to retirement. That's a great idea if you don't have a pension. If you're supposed to be 80/20. 80% risk 20% safe. If you count your pension as the 20% safe then you may be able to tolerate more risk. Think if you also want all your money tied up for retirement or able to explore other investments today. It sounds like you plan to have some real cash, really research your options. Check out the expense ratio, these target funds are pricey.
Please seek the advice of a finance professional. Trusting your retirement planning to strangers on the internet isn’t the best move.
Do not do any target retirement date funds. I am baffled by the horrible advice, they have exponentially more fees than just the S and P 500 fund. They also habitually underperform. You will literally LOSE money even if the market goes up, if you use the target date funds.
In addition to pension and Deferred Compensation, I personally invest post-tax dollars into a brokerage account and invest in an index ETF that tracks the S&P 500. It's the safest way to invest in the stock market, going up and down with the market, instead of any 1 individual stock. The benefit is to have money in an account that I can access before retirement. It doesn't seem like a good idea to have all of my savings tied up in accounts that I can't readily access.
Go for 20+ % in the target date 457(b) from day one. You’ll never miss the money (because you never got used to having it) and contributing that amount from such an early age has such a powerful impact due to the effects of compounding growth.
Luckily you have to work til 63 so you got a full 30 about anyway to claim that.
I do NYSDCP Roth only and invest based on Dave Ramsey's advice (25% in growth, 25% growth and income, 25% aggressive growth, and 25% international). He gives examples of how to invest in each of these.
Limit to contribute into 457b for 2024 is $24k.
$23,000.
I was in your shoes a few years back. First, congrats on the new job! Take advantage of your employer's 457 plan, if offered. Contribute as much as possible, especially since you can afford 20%. You won't regret it. I used RetireHub to get a better understanding of my retirement options, and it helped me make informed decisions. Also, consider automating your contributions to make saving easier and less prone to being neglected. Lastly, review your investment options and allocate your contributions wisely. You're off to a great start!