Page 25 - DCAC November 2023 Files

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Savings strategy
As part of an overall financial wellness discussion, an Generally, our representatives encourage people to save
Empower representative also works with a participant to as much as they can. The tool recommends increasing
understand their current savings strategy. After talking savings by 3% or until the allowable limit is reached. It is
to the participant and analyzing their situation, the always recommended to save up to the company match
representative uses Empower’s decision support tool to given the financial benefit of doing so.
provide recommendations regarding savings rates and
steps the participant can take to improve their strategy. Depending on the features and availability of services
in a plan, savings strategies may include:

• Taking advantage of the company match.
• Making pretax versus Roth contributions.

• Paying down credit card debt.
• Saving in a health savings account (HSA).
• Avoiding loans.
• Saving to reach a goal, including making
catch-up contributions.

If, through all sources of retirement income, a participant
is on track to replace 100% of their desired retirement
income, a representative would not recommend an
increase in savings.

Pretax versus Roth
Many people don’t know if Roth is a good option for them. Empower representatives generally assume people
While our representatives’ suggestions related to this want to maintain the standard of living they enjoyed the
topic are primarily based on an estimate of a participant’s year before they retired throughout their retirement.
current and retirement year tax rates, the following are Two major factors evaluated in order to determine
also considered: a best-interest recommendation are age and salary.
• Tax preference When a plan participant climbs tax brackets as their career

• Required minimum distribution (RMD) preference progresses, their standard of living by age 65 relative
to early in their career is likely to be higher as well. As a
• Earnings curve and spending changes at retirement result, we may suggest to people under the age of 35 to
• Earned income tax credit consider saving in a Roth account if they earn more than
earned-income tax credit income limits.

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