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TAKE ACTION

APRIL 2022

Start preparing for retirement

Take a moment to focus on your financial well-being and make the most of your Costco Retirement Plan,* administered by T. Rowe Price.

*For Mainland and Hawaii employees, the plan is called the Costco Retirement Plan. For employees in Puerto Rico, it’s called the Costco Puerto Rico Retirement Plan. 

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Make saving for retirement a priority

Whether your retirement is decades away, or just a few years down the road, use this list and your Costco Retirement Plan to get ready. Start by visiting RPS.TRowePrice.com to view your Costco Retirement Plan.

Add an extra layer of security for your plan account by setting up multi-factor authentication. Multi-factor authentication helps keep your financial information secure by requiring two or more forms of authentication to verify your identity.

Name your beneficiary, the person (or persons) you choose to inherit your assets if anything should happen to you. If it’s been a while, check to ensure your beneficiary information is up to date.

Update your email address to receive timely newsletters and valuable saving insights.

Contribute enough to get the full matching contribution. Review your contribution now.

See if you qualify for the Retirement Savings Contributions Credit (Saver’s Credit). For low- to moderate-income employees who qualify, the Saver’s Credit means you can get a tax credit based on your tax filing status, adjusted gross income and how much you contribute. 

Make sure your T. Rowe Price Automatic Increase is turned on, so your contribution will be increased by 1% each year.

Strive to save 15% of your annual pay — it’s OK to work your way up to the suggested target gradually.

If you’re age 50 or older, consider making catch-up contributions. This allows up to an additional $6,500 (for 2022) to help you move closer to your retirement goal.

Get your financial house in order

Learn to budget, free yourself from high-interest debt and aim for higher savings goals with help from SmartDollar®.

Build an emergency fund equal to three to six months’ expenses to help you in case there are unexpected changes in your income.

Make a budget that matches your lifestyle and gives you room to save.

Create a plan to pay down credit card debt; paying off small balances first can motivate you to keep going.

Use your emergency fund instead of credit cards to offset surprise costs.

The following resources are available to help you get started on your retirement plan. They are confidential and are available to you at no extra cost.

 

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Take action

TAKE ACTION

MAY 2021

Maximizing investments for your retirement

The length of time you have before retirement — your investment “time horizon’’ — is an important consideration when determining your asset allocation strategy, or the mix of stocks, bonds and money market/stable value investments you select.

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All of these investment vehicles are available in your Costco 401(k) retirement plan from T. Rowe Price, whether you choose to create your own portfolio or select a pre-assembled portfolio, such as a target date fund or asset allocation fund.

Your goals, financial circumstances and risk tolerance level may change as you go from entering the workforce to retirement and beyond.

Finding a balance, decade by decade

Your 20s and 30s: Now’s the time to start saving and investing through your workplace retirement plan. And the sooner you enroll and start saving, the better. Here’s why: When you invest through the plan, any earnings are put right back into your account. The longer your money stays invested, the more it can potentially earn through compounding.

Because retirement is several decades away, consider a higher allocation to stocks. Your investments should have time to ride out any ups and downs in the market.

Your 40s: Even if you’re just getting started, you still have 20 to 25 years to build up your savings. So make the most of these years.

Historically, stocks provide better long-term growth potential when compared with bonds and money market/stable value investments.

Your 50s and over: As retirement approaches, you may want to consider cutting down on stock allocations, which are more vulnerable to ups and downs in the market.

Before passing up too much growth potential, though, remember inflation and the power it could have to erode your money. Consider keeping a portion of your portfolio in stocks to help stay ahead of inflation over the 20 to 30 years you may need your nest egg to last.

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Learn the basics

LEARN THE BASICS

MAY 2021

Investing terms 101

Don’t know your money market funds from your mutual funds? We’ve got you covered. Start your financial education with this handy glossary of investment terms. (Pro tip: Bookmark this page so you can refer back to it later!)

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Bonds and bond funds
These are also known as fixed-income securities, because the income they pay is fixed when the bond is sold. Bonds and bond funds invest in corporate or government debt obligations.

Commodities
These are physical commodities, such as an agricultural product (grains) or a natural resource (gold). A futures contract is an agreement to purchase or sell a commodity for delivery in the future.

Index funds
These funds invest in a particular stock market index, such as the S&P 500 or the Russell 2000. An index fund is managed passively and mirrors the performance of the designated stock or bond index.

Market-linked certificates of deposit (or structured CDs)
Returns are linked to the future performance of a market index, and may include stocks, bonds, foreign currency or other assets. These are designed for a long-term commitment (up to 20 years).

Money market funds
These are mutual funds that invest in short-term bonds. They usually pay better interest rates than a savings account but not as much as a certificate of deposit (CD).

Mutual funds
These invest in a variety of securities, which may include stocks, bonds, and money market securities. Costs and objectives vary.

Roth IRA
This is a personal savings plan for retirement where earnings that remain in the account are not taxed. Investments may include a variety of securities. Contributions are not tax deductible.

Stocks
Stocks represent a share of a company. As the company’s value rises or falls, so does the value of the stock. All Costco employees are eligible for the employee stock purchase plan, which allows you to purchase Costco stock through payroll deductions and eliminates brokerage fees through our partner, UBS Financial Services Inc.