Empower Hour with Texa$aver's Mike McLellan

Feel empowered to save for retirement this National Retirement Security Month. Hosts Suzanne and Crystal speak to Texa$aver Retirement Plan Advisor (RPA) Mike McLellan about investing at any age, consolidating plans, a magic number to double your money and more on Empower Hour.

Mentioned in this episode:

Texa$aver.com

Schedule a meeting with a Texa$aver Retirement Plan Advisor

The magic number: Americans say they need $1.06 million to retire

Learning curve

How scattered retirement accounts can hurt your financial future 

Transcript

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Intro Doesn't matter if someone knows everything there is to know about investing and Wall Street and all that stuff all the way down to one lady, she said, Mike, “I can't even spell 401(k)." If you're even that person or anywhere in between. We've got an investment choice for you and can support you no matter what.

It's National Retirement Security Month and we're here to empower you to save for retirement. Texa$aver RPA Mike McLellan talks investment advice, compound interest, a magic number to double your money, and more on today's Empower Hour.

ERS Suzanne Krause Welcome, everyone, to this month's Money Talks podcast. I'm Suzanne Krause

ERS Crystal Olvera: And I'm Crystal Olvera

SK And we are both editors and writers at ERS. And if you're a State of Texas employee, we're here to give you tips and information about how to best use your benefits. And this episode we are calling Empower Hour because October is National Retirement Security Month. And our guest today is Mike McLellan, one of the retirement plan advisors for Empower, which is the administrator of the Texa$aver 401(k) / 457 Program. We have some research from Empower that says that over half of Americans wish they had saved up more money in their retirement accounts when they were younger, so it's never too early to start. Also, that Americans are looking to save over a million dollars to be ready for retirement, but many people are not on track to reach their goals. So we really hope that the information that Mike is able to provide today can help everybody understand their retirement plan more and make the most out of saving for retirement. 

CO Right. And if you've ever been to an ERS summer enrollment fair or attended a ready, set, retire webinar, you might recognize Mike's voice. Now, if Texa$aver sounds new to you, it really shouldn't. But if you're still in the dark, that's why we've got Mike here. And he's here to give you the basics. So welcome, Mike. Can you tell us what that Texa$aver 401(k) / 457 Program is and what can you do with it? 

Empower Mike McLellan First of all, I'm really happy to be joining you all this afternoon here. One of my favorite parts of the job is talking to people and talking about the benefits of Texa$aver, and really the importance of it. So appreciate being here with you to talk about this stuff. You know, the Texa$aver plan is really only part of a retirement benefits package that the state of Texas employees get. I like to kind of jokingly say that the two parts that you can't really control that much are the ERS pension and Social Security. You certainly need to know about those. But the one part that you can control and have a lot of control over to, to have major impacts long term is Texa$aver. Texa$aver is a voluntary, tax efficient, ERS-sponsored investment savings plan that can really help to bolster your overall retirement picture. And it's one of those things where you it's very helpful to understand a lot of the basics to it, but you do not have to be some kind of an investment genius to make it really, really work well for you. Essentially, it's a plan that you decide to participate in voluntarily, like I said, and you decide the extent to which you participate by choosing either a dollar amount or a percentage amount that comes out of every paycheck that you get. And then that goes to us here at Texas at Empower. And then we invest that money for you. And that money grows long term for your retirement benefit. 

SK So, Mike, as I mentioned earlier, retirement planning is something a lot of people want more information about, and they do have really high goals for themselves across the board for their retirement and how much they expect to need and want to have to enjoy a nice, satisfying retirement. Why is National Retirement Security Month in October important and how can Empower help with that planning? 

MM I would say that there's probably two reasons, at least in my mind, that I had the attitude towards the month, and that is number one, it's to really help people just understand the importance of saving people. Can a lot of people that I talk to have this word of retirement in their head? It's kind of this nebulous concept. And so what what the month really does is it puts a focus on kind of some of the mechanics of how you even start to save money for retirement voluntarily into a plan like Texa$aver. And so whether it's emphasizing, you know, again, kind of mechanically, how you start or how you even start understanding a little bit more about it all the way to actually executing on that plan, a point of emphasis is definitely on understanding the importance of saving. But I think in a broader sense, the other part that's really a good piece of emphasis on, on the month is, you know, I think a lot of us tend to see retirement savings and retirement planning as very jumbled. Right. If we've had, you know, two or three or four jobs in our working careers, you may have had a retirement plan from a company that you had twenty years ago that you've kind of forgotten about. You may have started an IRA sometime, you know, ten years after that, and you might have all these pieces of the puzzle just kind of hanging out there in different parts, and you don't really know or understand how they all fit together. One of the things we can do is just help you get organized, at least in your head. I don't think you can have a clear pathway forward until you really understand the parts of the puzzle and how they all kind of work together. But to my earlier point, if you've got other retirement plans that you've kind of forgotten about or not even really sure how they fit into the picture, we can help you at least understand those other plans and put it together in a kind of a cogent plan going forward so that you'll understand what, if any, little nuance changes that you need to make. And so it's a good month to kind of put forward that message that time is of the essence. You know, time is one of those things that we've all got, but we're literally losing every single day. And I think this month is a good time to refocus on that, to help people build a better pathway to retirement so that they get the retirement that they deserve. 

SK That's a great point, Mike, especially about the scattered retirement plans. There was recently a Forbes article that addressed this very topic, because when you have all these different plans from different employers or something you've done, like a personal IRA or just different elements of different places, it can lead to potentially missed savings opportunities. You can potentially have confusion over if you're invested too conservatively or too risky, you might be paying too many fees that you don't need to be paying. So I think for people to take a look at their portfolio, either alone or with an RPA is really beneficial because, it can really make a difference in their total retirement picture and how much they're able to save down the road. 

MM Absolutely, I couldn't agree more. You know, a lot of the things that I encounter on a day to day basis are people that are just, you know, they just kind of don't understand some of the vocabulary words. And I always tell someone, hey, if I tried to come and do your job for the day, I wouldn't understand it. But if you taught me some vocabulary words, then that would give me a little bit better of an insight. And so I think a lot of that stuff comes down to just sort of understanding, again, where everything fits in, you know, what's the difference in a, in a 401(k) versus a 457? What is an IRA? What is the word Roth mean. So some of these little details are important to kind of understand. And I promise you they're not overly complex topics. But until you delve into them a little bit, you don't know how they all fit together. And so I think that could be helpful too.

CO I'll be honest, Mike, I do find it intimidating. I am not a finance person, and I also am someone who has a IRA, I guess, or a 401(k) with a previous employer with Fidelity. 

MM Right.

CO So would I be able to roll that over into my Texa$aver if I wanted to? 

MM Well, believe me, you're not the only one who doesn't understand some financial jargon. In fact, I love my job. I love my industry. One of the things I don't like about my industry is jargon, jargon, jargon. And so one of the things I've always dedicated my. It's confusing. Break all that down. It can be absolutely all those numbers. You got 401 and and 457 and 403, all kinds of different stuff. So I completely understand that. So to answer the question, in most cases, absolutely. You can roll over old workplace plans into the Texa$aver plan and the definition of a rollover. So not to use jargon here, the definition of a rollover is simply moving assets from one financial account to another financial account, but incurring no penalty to do so. So what we would generally refer to as a direct rollover would be where the previous 401(k) would literally write a check in a lot of cases to the Texa$aver plan FBO for the benefit of and then your name on that check. And then in most cases they would send that check, write to us at Texas, and you wouldn't even have to get involved with it after that. So it can be very convenient. Number one. And more importantly, though, number two, you're not going to have any tax ramifications from it.

SK If someone's not familiar with how to get started, what should they be doing? 

MM So obviously one of the first things is to reach out to us. You know, eighty, eighty to eighty five percent of my job is is talking with people one on one and doing what we call a retirement readiness review. Okay. And while that might sound kind of official and kind of maybe even intimidating a little bit, it's absolutely not. Really, what it is, is just sort of laying your cards out on the table and seeing what pieces of the puzzle we have working towards your picture for retirement. I always tell them you're going to walk away from that with two things. Okay. Number one, you're going to have an idea and have hopefully a clear picture about income at retirement. Okay. So we do an income projection. We put together the pension numbers. We look at Social Security and obviously we look at what you're doing to save money on your own, including mainly the Texa$aver plan. So income and income projection is the first thing that someone's going to get when they schedule one of those retirement readiness reviews. Number two is the investment side. I look at a portfolio of investments on a scale from one to seven, where one is very conservative and seven is very aggressive, and then two, three, four, five, six in the middle. And I think it's really, really important that everyone should know or have an idea where should you be? Okay, because you're different than someone else. So we look at we look at the investment strategy that you have inside of Texa$aver. And again we put that in the context of the rest of your retirement picture. I believe everyone should have with me or with one of my colleagues or with somebody once a year, once a year, I think is a good time, a good cadence for you to look at what is your pathway to retirement? You and I may sit down and meet and we talk, you know, this time next year and maybe the conversation is exactly the same, but maybe it's not right. Maybe there's been some changes in your life. Maybe at one point you were going to retire when you were sixty, and now you think you're going to retire when you're fifty seven, right? Or maybe some other goals in your future have changed. And so I think it is a good idea to check back in with us. Yeah. Exactly. Right. I ask people a lot, when do you want to retire? And I get the answer next Tuesday a lot. So maybe next week. Something that people really want to talk about. Exactly, exactly. I understand that totally. 

SK There's some interesting info about Gen Z that, uh, they have forty seven percent have not started saving for retirement yet, but they want to retire at age fifty four, which is a full twelve years earlier than Gen Xers. So I think, um, people really need to know how to get to that goal. 

CO Yeah, that that's so funny. It reminds me of my niece, actually. And she is, uh, going to graduate and become a financial advisor. And she herself sometimes tells me, like, I don't know why I need to worry about this. She's twenty one. Um, I don't know why I need to worry about retirement right now. And I'm thinking, girl, you are studying for this. You should know why. 

SK Oh my gosh. And people would love if they had learned a little earlier than, say, age twenty five, which is the average age when people feel like they've started learning about money. It's a little, you know, some couple decades now have already passed and you feel like you haven't learned about money. So I think we should maybe start as soon as possible. And I think I'd like to make a comment about the idea of the retirement readiness review. It almost sounds as though you have to be ready to be retiring. Like, it's a little bit of a funny name, but really, you want it's more like getting ready to be able to retire at any point. So it's not just for people that are already, you know, a few years away from retirement. The whole point is to become ready at any age, right? 

MM I would even that's a great point. I would even say the opposite of what you just said, meaning that the people that really need to do retirement readiness reviews are the people that are in their twenties. And if you think about it like this, they have the most to lose because by not taking advantage of the thing that they have in their corner and that's time. By not taking advantage of that literally, they're burning opportunity to to make income and to make investments in the future. You know, I've talked to people, obviously they're in their forties, for instance, a lot as well. And they they kind of feel under the gun and they know that they're getting closer. But if you think about it, someone that's in their twenties, they have the opportunity to amass quite, quite, quite an account. Uh, and that's not because they're necessarily earning, you know, they have a high income. It's because they'll take advantage of the assets that they've got in time. Uh, then that's really the important thing. So yeah, Retirement Readiness Reviews is not for someone who is four months away from retirement. Only that person can be benefited by it, no question about it. But absolutely, folks whose ages starts, you know, start with twos and threes. I get really excited when I talk to them because they've got a lot of potential that they have in their future. If and this is a big if, if they'll just take advantage and taking advantage of it is being intentional about it. So that's what we try to help them do. 

CO All right. Well, what about if their ages start with a four or five? I know you know, we talk a lot about, you know, how earlier is better. is it ever too late to start preparing?

MM I always bring up a Chinese proverb that says the best time to plant a tree was twenty years ago. The second best time to plant a tree is today. And so that that's a that's a phrase that really emphasizes the idea that there's nothing you can do about stuff you have or haven't done in the past. Today is what you have, right? And so when we talk about planning, it's never, ever, ever too late to to really look at this stuff because the benefit that you can make to yourself and to your future can last for years and decades into the future. So there's never a bad time to, you know, to start thinking about these things. Remember, there's there's really two benefits to saving in the Texa$aver plan. One is obvious and we're kind of focusing on that one. And it's an important one. And that's your saving money, right? Everybody knows you need to save money. There's going to come a day when you still need some money, but you're not getting a paycheck anymore, right? So that's why we save. So that one's obvious. But the second part of it is remember when we talk about Texa$aver neighbor stuff. There's a lot of tax benefits involved here as well that you can experience in tax year twenty twenty five, in tax year twenty twenty six, whatever year you're talking about. And so a lot of those benefits are really, really important as well. So I would absolutely say that no matter how old someone is, it's never a bad time to look at this stuff and put this, put this, especially the Texas neighbor plan in the context of your of the rest of your financial landscape. 

SK And, Mike, I think that, you know, people have a lot of competing priorities with their money and, you know, maybe they can't save a lot, they can only save a little. And working with a retirement plan advisor is a way that they could see kind of how they can grow and how that what amount of money they need to be putting in. either if they have to, you know, postpone an increase for six months or a year or something. But I think, uh, working with a retirement plan advisor is a real benefit of the Texa$aver program, so we encourage everybody to call at any point, you know, you can make it an annual event you do around your birthday or, you know, on a holiday when you have some free time or you can really call throughout the year, just ask questions or to get that full retirement readiness review. 

CO Now, Mike, what is the difference between a Texa$aver retirement plan advisor and maybe just a broad financial planner? what would each one help with? 

MM So let me talk about what I do first and what my team does and kind of what we bring to the table. You know, we are real experts in specifically the Texa$aver plan and how that fits in with the rest of someone's overall not only retirement picture, but we could expand that and say just general financial picture, okay. And so we're really good at being able to make actionable suggestions on the changes that you can make, uh, or the the path that you should stay on inside of your participation in the Texa$aver plan. And so what we do is, as I've said a few times now, we're trying to project into the future things like income and, and how you should be invested inside of the Texas labor plan. Sometimes during those retirement readiness reviews, I need to ask you about some other accounts that you may be investing in. Not because I want to give you any guidance on those plans, but again, I need to fit in the Texas plan in the context of your entire picture. So those are important to look at a broader financial planner. And again, that's kind of a very general term. But but some financial planners can be very helpful in other parts of someone's financial picture as well. So tax planning for one. Right. None of none of my colleagues on the RPA team that I'm on, we are not tax advisors. So we cannot give anybody specific tax advice. We can talk in general about some of the tax choices and benefits you can make, but we're not tax advisors. So tax advice can be really, really helpful. Estate planning right. Planning for transitioning not only from retirement from active working to retirement, but also legacy planning, if you will. College planning those are all things that a general financial advisor is going to be more specific about, or more general about. I should say that we are not going to be able to give direction on, but I encourage people all the time, and I work with a lot of participants that do have financial planners that still find a lot of value in that retirement readiness review, again, because we're the ones that can be specific about, you know, hey, Crystal, you really you know, you're saving this much money right now. If there's a way for you to save just a little bit more, that's one of the levers that you can pull to make your retirement picture a little bit better, for instance, so we can give you specific, actionable items on how to deal with retirement planning in specific.

SK  So, Mike, I'd like to go back to this idea of the importance of compound interest and saving early. You know, um, younger people are going to be living to probably about one hundred years old just with the way lifespans are improving. And so we're they're probably not even thinking to need to be able to save that many years into retirement. And it's just really important, especially during National Retirement Security Month, to, remind people of that potential, long life span and to get started now saving if they haven't already. I'd love if you could just dig a little deeper on the importance of saving early and compound interest. 

MM That's a that's a really great topic because it's a topic that really anybody should know about. Um, you know, I always like to point out when people start talking about compounding interest and how important it is to start as soon as you possibly can. There's a there's a little mathematical formula that we all learned and then probably forgot promptly after ninth or tenth grade math called the rule of seventy two okay. And the rule of seventy two seeks to illustrate how long it takes any amount of money to double In an investment given a particular interest rate. Okay. And so the way it works is you take the number seventy two and you divide it by the interest rate that you think you're going to get on a particular investment. Okay. So for instance, if you had an investment that was ten percent, you would take seventy two and you would divide it by ten. And the answer there is seven years, right. And so that that means that at ten percent, it takes one dollar seven years to double in any kind of investment. Okay. Well, when when people that are in my industry tend to talk about long term investment, especially in the in the US stock market, that's kind of the the thing that we talk about the most. You know the US stock market's going to average. We always like to be conservative and say on average somewhere between seven and eight percent okay. So if you took the eight percent number and you divided it by seventy two. Seventy two divided by eight is nine. And so what that means is you've got nine year periods in your life to be able to double money. Right. And so I really think it's important for people, especially early on, to really think about that. How much how many nine year periods do I have in my life for this money to double? And that really starts to shed some light on this idea of of compounding interest and the the value of starting as absolutely as soon as you possibly can. Right. There's two things that you need to be to, to have in order to be a successful retirement investor. One of them is consistency, right? You need to be a consistent investor. The Texas plan gives you that, by the way, by essentially giving you self-discipline to invest every single month, every single time you get paid. But the second thing you need is as much time as possible when you have time and consistency, that's really when you start to see the benefit and the value of that compounding interest. And let me tell you something else. You're not going to see the benefit or the value of that very much when you're in your twenties or when you're in your thirties, and probably not even in your forties. It's really not until you're in your fifties and 60s. When you start to see those balances start to double every every eight or nine years, that's when the value is going to come out. And so, man, I just can't emphasize enough of the importance of starting as early as you potentially can. 

SK I love that. And also just a reminder people, it's like they don't get the instant gratification, but one day they're going to check their balance and they're going to be so pleasantly surprised that they did that for themselves. 

MM Oh yeah. By the way, let me say something. Let me say something to the forty and the fifty year olds that are listening to me right now as well. When I do a retirement readiness review, I plan out for someone until they're into their nineties. Okay. So everyone that I talk to all qualifies as young when it comes to that. So I want to I want to emphasize that it's certainly important to talk to the twenty year olds, but the forties and the fifty year olds that are listening to me and beyond can benefit from that as well. 

CO All right, Mike, so I've come across some people who might say, I've got a pension, right? I've got a pension with the state they're going to pay me for the rest of my life. Why do I need a 401(k)? I mean, that's going to run out, right? And I know we we like to tell people. Hey. Yeah, you do have a pension, huge perk. You know, they are less common now. But why is it important to also have a 401(k). 

MM Yeah, really good topic to discuss here. What we really need to understand is there's two sides to every coin. Okay. Um, folks that work for and then eventually one day retire from the great state of Texas are going to have a pension. Most Americans do not have a pension in their future. And so absolutely, that's a huge, huge benefit. And so I want to I want to be able to emphasize that as a major part of a retirement plan. But there's something that we need to know about this pension and that these ERS annuities are not inflation adjusted. Okay. They're not inflation adjusted. And so I think I saw a stat the other day that the average ERS retiree is fifty eight years of age. And they get an ERS pension of somewhere in the neighborhood of eighteen to nineteen hundred dollars a month. So think about that for a second. You retire at fifty eight. Okay good good. I've got my stats right. You retire at fifty eight. It's your first month of retirement. That nineteen hundred dollars check comes in the mail and you're excited. Woo hoo! I'm retired now, and I've got this money coming in for the rest of my life. Well, guess what? That check is going to stay nineteen hundred dollars when you're fifty eight and when you're sixty eight, and when you're seventy eight, and when you're eighty eight, and when you're one hundred and thirty eight, it's going to stay that same amount. But guess what else is going to go up, right. The price of your groceries. That's what's going to go up and up and up. You see the biggest I would say threat, the biggest concern for people in retirement are and I'm talking to everybody, no matter what your age is here is not, you know, picking the right investment. That's what the media, I think, wants you to hear. The biggest threat is inflation, right. Okay. And the ERS pension is simply not inflation protected. Okay. However let's look at the other side of the coin. Okay. When you talk about being an investor in the Texa$aver plan okay. The Texa$aver plan is voluntary number one. So that means that you don't have to do it. Certainly the value can fluctuate up and down. We see the stock market's up. The stock market's down every single day and week and month and year we know that. But think about it like this. All right. As a consumer I hate inflation. You hate inflation I'm looking at my Apple iPhone right now. When I have to go buy a stupid new iPhone next year, it's going to be at least three percent more expensive just because of inflation. Okay. But what if I own Apple stock okay. What is inflation going to do to the value of that Apple stock. It's going to inflate it okay. Same thing with my Starbucks cup of coffee. My coffee is going to be more expensive. Ten years from now. But guess what else is going to be more valuable? The value of my Starbucks stock. And so here's the rule that I think is important for everybody to realize, right. Consumers like we all are. We hate inflation. Okay. Investors long term love inflation. All right. Because investing into things that have prices like stock that's a hedge against inflation. Because as inflation goes up so should the value of your investments. Right. So when you put those two pieces of the puzzle together, when you have a source of income, and I'm talking about your irrs annuity, when you have that that's stable and guaranteed. And the value is never going to change. But it does get eroded by inflation. But you put that with an investment that is not not necessarily stable. The value can fluctuate but is a hedge against inflation. Well, I tell you what. That's a powerful retirement income Picture that. Everybody listening to you right now that's in line for both the ERS pension and the Texas plan is really, really going to benefit from if they'll take advantage of both sides. 

SK And wouldn't it be great if every time inflation rose, we were all cheering it along because it was good for our retirement goals. 

MM That's exactly right. That's one of those things that's tough to see in the moment. But you can only kind of look back and see that those things have happened. So I understand that comment absolutely. 

CO Mike, that was an amazing explanation. I will be honest. Like, that really actually clarified a lot of things for me. Um, another thing that we do like to push, and I know you guys do also, is our three legged stool. Of course, you know, that annuity, it's going to be that amount for the rest of your life, and it's important to make sure that you're able to stay financially stable. So those other two legs of that three legged stool, it's going to be that Social Security. And of course, your 401(k) any IRAs or personal savings. So the more you have, um, the sturdier the stool, right. The better. Yeah. 

SK So I just want to emphasize a few more things about National Retirement Security Month. Some of the benefits the Texa$aver program include state employees automatically enrolled into the 401(k) at one percent. You also have the option of the 457 and during National Retirement Security Month, we'd love if you would consider being able to contribute beyond that one percent. and if you had opted out at one point and you're listening now. Thank you. And if you'd like to restart your Texa$aver contributions, that would be excellent as well. Finally, we want to emphasize the auto increase feature, which is, something you can set for yourself inside your Texa$aver dashboard. So whenever you're ready at any time throughout the year, you feel like in six months I want to start increasing it by either a dollar amount or a percentage amount. Um, you could do it on your own terms. You can put it when you expect a raise, when you expect any sort of windfall. And something I learned recently is that it is really helpful if you use a dollar amount instead of a percentage, because it makes it easier to understand. So if that helps you get started, use the dollar amounts and it'll be a little more, real to you, in your mind. And then finally, some of that Empower research said that men are more likely to feel confident they'll be able to retire on time compared to women, which is a shame. So just want to emphasize again that the Retirement Plan Advisors can help everybody have equality on that front and get, um, equally confident about their ability to meet their retirement goals. 

CO Come on, ladies, we can do this. I know I mentioned that I was a little intimidated by all of this. I myself, I'm just not that well versed in, in, uh, in this kind of stuff. So, um, what if I want to contribute? But I don't know anything about investing. Will you help with that? 

MM Right. Great question. I get this question quite a bit. And let me say before I answer it directly, let me let me throw a little bit of reality to everyone, whether you understand this stuff infinitely or whether you know nothing about it or whether you're somewhere in between, it all affects everyone the same way. Okay, we all are going to have a retirement. That retirement is going to have a price tag to it when all is said and done. And so again, this is this is a situation where your level of knowledge is not commensurate with the impact that it's going to have on your life and your family's life in the future. So that's the one thing that I want to point out again, whether you're an investing genius or you know nothing about investments, we've got some opportunities for you to be able to understand this stuff and to get some feeling of confidence. Remember a few minutes ago I mentioned that there's a lot of this is just vocabulary words. And so I like to spend some time really educating someone on the basics and the fundamentals. And I promise you, they're not that hard. But the fundamentals and the basics of understanding what these different investment choices are. I'd like to talk about different pathways of investing inside of the Texa$aver Plan. 

And you know, pathway number one is where someone automatically gets put into what's called a target date mutual fund. And that is what the name implies. It's a mutual fund that's based on a target date that that hits sometime in your mid sixties. And so the way it works in general is early on. It's a very aggressive, appropriately aggressive investment. But the closer and closer and closer we get to your target date. And again, that's sometime in your mid to late sixties, the more conservative that investment automatically gets. So it's kind of an autopilot feature, if you will. All right.

There's another pathway that allows you to go in and pick your mutual funds for yourself. Some people really enjoy that. Some people say, hey, Mike, I appreciate the information about the target date fund, but listen, I like this stuff and I like paying attention to it. So can I pick my own investments? Absolutely you can. The metaphor I use is that's you walking into the restaurant, and the waiter hands you the menu and says, you can have anything you want as long as it's on the menu. So we've got a great menu of investment choices that you can choose from inside of the Texa$aver Plan.

The third pathway is what I called the Managed Account Service. And the managed account service is essentially begins when you and I have that deeper conversation about your financial picture. And based on what your goals are, based on what some of your income sources are that we're going to talk about, our professional money managers would then come in and select a portfolio of investments for you. And then not only that, but every thirty days we go back and we revisit that portfolio. And if there needs to be some tweaking along the way because of some market movement, then then we can do that as well. So any different pathway that you want to choose, we've got that availability to you. Just to let you know that that first pathway and the second pathway, no additional fee whatsoever. The managed account service does have a fee. I think it's a really small fee for what you get. It's based on the amount of money that you've got in your account. That fee is zero point three five percent. So just to give you an example, if you've got ten thousand dollars in your account, that's thirty five dollars a year for that fee. That's less than three bucks a month for that professional management. So any way doesn't matter if someone knows everything there is to know about investing and Wall Street and all that stuff all the way down to one lady described it to me as Mike. She said, Mike, I can't even spell 401(k) if you're even that person or anywhere in between. we've got an investment choice for you and can support you no matter what.

CO It sounds like my mom that's

SK Going back to what Crystal mentioned about having a former employer’s plan and an IRA outside of Texa$aver. What are some of the benefits, again, of rolling over the plan in any outside plans into Texa$aver?

MM I get this question quite a bit and I really try to focus on I would say that there's two reasons. And there's one reason that people think of first, and there's one reason that people think of second. And they ought to probably think of the second one first. The first one is convenience, right? People like the idea of just having their money in one place. Uh, one username and password, one interface. You know, the Texa$aver website is a great website. It's just got a wealth of not only information about their their one four hundred one K account or four fifty seven account, but also just a huge financial tool, financial engine. People like having their money consolidated into one place. It's convenient. One app, all that good stuff. 

But the real reason that somebody should really think about that, in my opinion, is there's usually quite a fee difference. And if you think about it from the standpoint of you, if you have money in an IRA account with a with a great financial institution somewhere else, you're a retail customer, okay? You're paying retail fees. And not to get into the weeds too much about the way mutual fund fees work, but mutual funds as a financial investment product cost something to invest in, right? No matter what you're talking about, one of the great things about the mutual funds that are inside of the Texa$aver plan is that, you know, ERS's negotiated these fees. This is a state benefit that you're getting here. Okay. And so in addition to all the other great benefits, one of them is, you know, very low investment fees that you have inside of the Texa$aver plan for literally the same mutual fund that you could get somewhere else. I mean, two examples that are jumping in my mind right now. There are some great fidelity funds that are in there, and there are some great Vanguard funds that are in there. Okay, both of those funds carry with them fees. And so the fees inside of the Texa$aver Plan are extraordinarily low. Usually when you compare them to other outside plans. So convenience is the one that I think people think about first as far as rollovers. But the second one, and maybe the more important one is the fee difference. That usually is is the case when you consolidate that money in a state sponsored 401(k) / 457 plan, like Texa$aver. 

CO Mike, you have convinced me. I think I'm going to make an appointment with a retirement plan advisor. Yeah, I honestly have not actually had have made one before. Um, how can I go about doing that?

MM So there's a lot of different ways to do that. You see us out and about, uh, you know, at different, uh, you know, benefits fairs and webinars and things like that. You know, for everybody, I would say go to the Texa$aver website and you can find our contact information on there. We are located all over the state of Texas. I'm in the DFW area. We have somebody in El Paso, somebody in San Antonio, a few different people down in Austin. Uh, we have somebody down in Houston. Um, and so we've got people all over the place. So the Texa$aver website, you can literally go to there and on the main home page there, you can schedule an appointment with us. That link that's in there will take you to our time tab, our online schedule books. And you can click on that and pick out where you live and pick out your local retirement plan advisor and see when when he's got availability, when you've got availability and literally schedule that. So it's very, very easy to do. And, and that's something that's easy to do. But also let me say something else. You can certainly schedule those formal meetings whenever you want to, but also you can shoot us emails. Uh, our cell phone numbers are on, on the website as well. So, uh, I want everybody listening to me right now to really, really feel like we are a resource. And that resource is everything from long term financial help and guide on your retirement plans into your nineties all the way down to understanding, hey, how can I get this money rolled over and kind of everywhere in between? So there's a lot of different ways to connect with this, and I would just encourage everybody to do that.

SK I also encourage everybody to do it. And I know that I find the dashboard and the tools and everything really, uh, fun to look at. And, uh, there's a lot of great things inside Texa$aver. So once again, everybody that was Mike McLellan, RPA for the Texa$aver program. If you're lucky enough to be in the DFW area, he's going to be your RPA. And for everybody else, there are some really great RPAs. We also had Nick Fry, the Austin Area RPA on this program for our third podcast. If you want to go back and find that he talks about kind of a deeper, dive into the retirement readiness review. But in any case, Mike, thank you so much for being on our podcast. I think it was super informative. I hope everybody's excited to go review their retirement readiness and take a look at how they can achieve their financial goals and live a really good life.

MM It's been my pleasure. I appreciate y'all having me on here. I get excited when I get to talk to a lot of people about retirement investing and the tools that Texas brings. So, uh, if I could leave one word for everybody, it's, you know, use us as a resource. We are here to be educators, to be guides to you, to help you move to action and taking advantage of your pathway to retirement. Uh, so please reach out to us. We look forward to talking with you all. 

SK Thanks, Mike. So, happy National Retirement Security Month, everybody. And tune in to our November episode. We're going to have Treshayla Wilson back on from the Office of the Consumer Credit Commission, talking about holiday budgeting tips and savvy spending for the holidays. So thank you, everybody. And if you have feedback or questions, as always, please send your ideas to storyideas@ers.texas.gov because we'd love to hear your thoughts on Money Talks.