Will CalSavers Save Me Enough Money for Retirement?

If you're wondering, "Will my CalSavers save me enough?" then you've come to the right place. In this guide, we'll walk you through everything you need to know about getting the most out of your CalSavers account. Whether you're new to CalSavers or a seasoned contributor, there are strategies to make your savings work harder for you.

Making the Most of Automatic Contributions

One of the key benefits of CalSavers is the convenience of automatic contributions. Your savings will be deducted directly from each paycheck, ensuring a consistent and effortless savings strategy. But did you know you have options to customize your contributions?

Personalize Your Account Settings

CalSavers offers you the flexibility to tailor your account to your unique financial goals. You can choose to stick with the default settings or make adjustments according to your preferences.

Automatic Increase Feature

To supercharge your savings, CalSavers includes an automatic increase feature. This feature will gradually boost your savings rate by 1% every year until it reaches 8% unless you decide otherwise.

The Default Rate

For those who prefer not to set their contribution rate, CalSavers offers a standard savings rate of 5% of your gross pay. This amount is deducted from your paycheck on an after-tax basis.

Finding the Right Rate for You

Your savings goals may differ from others, and CalSavers understands that. You have the freedom to modify your contribution rate at any time, ranging from as low as 1% to as high as you desire, within IRS limits.

Start Saving, No Matter How Small

We recognize that some individuals may find the standard savings options too aggressive. If that's the case for you, consider starting with a lower rate. By doing so, you'll retain a larger portion of your paycheck while still saving for retirement. Remember, even a modest start can lead to significant growth over time. To adjust your contribution rate, simply login to your account or reach out to our Client Service Team for assistance.

Contribution Limits

Because your CalSavers account is a Roth IRA, your contributions must adhere to the Roth IRA contribution limits set by the federal government. In 2023, these limits are $6,500 per year for a Roth IRA, or $7,500 if you are aged 50 or older.

Multiple IRAs? Consider the Impact

If you have other Roth or Traditional IRAs alongside your CalSavers Roth IRA, your CalSavers contribution limit may be affected. The amount you can contribute to your CalSavers Roth IRA will be reduced by the contributions made to your other IRAs.

While you are still allowed to contribute to all your accounts, it's crucial to ensure that your total contributions do not surpass the annual contribution limits. Remember that these limits apply collectively to all your IRAs, rather than on an individual IRA basis.

Employer-Sponsored Retirement Plans

If you are enrolled in an employer-sponsored retirement plan with another employer, rest assured that your contributions to your CalSavers Roth IRA won't impact your ability to contribute to your employer-sponsored plan.

Rollover Opportunities

CalSavers participants have the option to roll over funds from other retirement plans into their CalSavers account. Before making any decisions, it's advisable to consult with a tax expert or financial advisor to fully understand the steps involved and any applicable restrictions.

For rollovers originating from pre-tax retirement plans such as 401(k)s and 403(b)s, the transferred funds will be subject to taxation as they are converted from pre-tax to post-tax status for inclusion in a Roth IRA. To initiate a rollover into CalSavers, you can complete and mail an IRA Contribution Form to the Program.

Saver's Tax Credit Eligibility

Contributing to a Roth IRA through CalSavers can offer another enticing benefit: eligibility for the Saver's Tax Credit. If your income falls within specific limits, you may qualify for this credit, potentially reducing your federal tax liability by up to $1,000 for a given year.

In conclusion, your CalSavers account can be a powerful tool for securing your financial future. By understanding your options and making informed choices, you can ensure that your CalSavers savings work diligently to help you achieve your retirement goals. If you have any questions or need assistance, please don't hesitate to reach out to our dedicated Client Service Team. Start saving today, and watch your retirement dreams become a reality.

So, in the end, you will determine if CalSavers will save enough for you and your retirement needs. Now, what's the next step? Contact a TPG Specialist at 909.466.7876 for more information on this newer retirement program!

Don't get stuck with the doubt: "Will CalSavers Save Me Enough Money for Retirement?" Answer your question with the help of our experts. Call today!