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In this issue:

• From Anthony's Desk
• Defined Contribution website redesigned for simpler use
• October is National Retirement Security Month
• New graduation requirement: Financial literacy
• SECURE 2.0 Act raises age for RMDs

From Anthony's Desk

Welcome to your September 2023 issue of the Proactive newsletter.

Saving for the future is important when it comes to your financial and retirement security. Setting clear goals and building good saving habits help prepare you not only for the major milestones, financial emergencies, and the necessities in life, but also for the activities and things you enjoy today.

Savings, checking, money market accounts, and certificates of deposit (CDs) can boost your savings by earning interest while keeping your money safe.

With all the changes over the past few months, many banks, credit unions, and other financial institutions — brick-and-mortar and online — are offering more competitive rates on their products.  It may benefit you to check on the rates of return on your accounts. With a little looking around, you can likely find higher-yield interest rates, which can result in real additional savings for you.

Saving and investing are habits, not destinations. We’re here to help you discover practices to save well, reduce debt, and build toward your retirement and financial security.

Retirement is about preparing. That’s why the Michigan Office of Retirement Services and Voya Financial work to provide you with useful resources, including for National Retirement Security Month in October.

We hope you find helpful information in this issue of Proactive.

Anthony Estell, director
Michigan Office of Retirement Services

Defined Contribution website redesigned for simpler use

The State Employees’ Retirement System Defined Contribution website has been updated and revamped to make things more accessible and simpler for you.

Besides a new landing page after a four-month review and redesign, the changes include specific pages for individual employee life stages:

• New employee.
• During employment.
• Nearing retirement.
• After retirement.

The improvements are a result of the human-centered design initiative which the Michigan Office of Retirement Services is working on with Voya Financial and Accenture Song. The goal is to improve experiences for all our Defined Contribution customers. 

The website updates also include a new forms and publications page; retirement and other resources; and extensive links to Voya, the State of Michigan 401(k) and 457 Plans, and the Michigan Civil Service Commission. The topics covered include creating a budget, prioritizing debt, savings strategies, financial wellness tips, establishing an emergency fund, loans and withdrawals from retirement savings, Social Security basics, retirement calculators, and planning for retirement.

The revamp also resulted in some tweaks to the Voya-hosted State of Michigan 401(k) & 457 Plans websites for Defined Contribution participants and related Plans information highlights e-books.

October is National Retirement Security Month

Living in an ever-changing financial landscape, saving enough for retirement is a genuine worry for many.  More than half of Americans (56%) say they are concerned that they won’t be able to achieve a financially secure retirement, according to the National Institute for Retirement Security.

While so many struggle with uncertainty, you can look ahead by taking an active role with your finances. Get to know your spending habits, set a realistic budget, maximize your savings for retirement, and other needs to get started.

Join the Michigan Office of Retirement Services (ORS) and Voya Financial as we host in-person and online events throughout October. In-person events are scheduled in Lansing on Wednesday, Oct. 11, and in Detroit on Thursday, Oct. 26. For more regarding in-person and online events, as well as registration information, check out our National Retirement Security Month website.

Be sure to follow ORS on Facebook, Twitter, and YouTube as we provide resources and share tips to help you reach your goals this National Retirement Security Month.

New graduation requirement: Financial literacy

Knowing how to save, budget, and invest properly hasn’t been a required part of high school curriculums in Michigan until now.

Starting with the 2023-2024 academic year, eighth graders must complete a half-credit personal finance course in high school to graduate. The requirement may be fulfilled as part of:

• The four-credit mathematics requirement.
• The two-credit language other than English requirement.
• The one-credit visual, performing, or applied arts requirement.
• An approved career and technical education program.

The Michigan Department of Education posted its personal finance standards in June 2023, which include learning about earning income, buying goods and services, saving, using credit, financial investing, and protecting and insuring.

Various studies say only a third of individuals have working knowledge of interest and mortgage rates and financial risk and thirty-eight percent of adults say their lack of financial literacy cost them an estimated $1,819 on average in 2022. About three out of four teens aren’t confident in their personal finance knowledge, a survey by debit card and money app Greenlight showed.

Michigan ranked 25th out of the 50 states and District of Columbia in financial literacy.

SECURE 2.0 Act raises age for RMDs

In December 2022, the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act raised the age in which individuals need to take a required minimum distribution (RMD).

RMDs are the minimum amounts, as set by the IRS, that individuals must begin taking withdrawals from retirement plan accounts, like a 401(k) , 403(b), or 457(b) accounts. More than the minimum can be taken but, if the minimum is not taken, the account owner is subject to an excise tax the SECURE 2.0 Act drops to 25%, formerly at 50%. It may be lower than 25% if the withdrawal is corrected in a timely manner.

Beginning in 2023, individuals must take their first RMD by age 73, and in 2033 by age 75. If you turned 72 in 2022, or earlier, you must adhere to the earlier rules, which would have meant taking the RMD by age 72.

The rules are slightly different for those who contributed to a 403(b) plan before 1987. See the IRS FAQs, Q16.

Many retirement plan administrators, like Voya, will send letters to those participants who need to take an RMD. Even so, the responsibility rests with the taxpayer to take the distribution at the appropriate time.