Welcome to the December 2024 issue of your Proactive newsletter.   

This is the time of year that revolves around the people we cherish and the things we like to do.  

In many ways, this mirrors what life in retirement can be like, whether that’s around the corner or down the road for you.  

As you embrace all the season’s fellowship and cheer, consider ways you can include some of this in your planning and saving for retirement. Strengthen your relationships, give to others and yourself, and set goals. 

Retirement planning takes preparation, readiness, and adaptation. It’s about crafting clear plans, staying connected, mindfulness, flexibility, understanding risks, and bracing to rebuild or begin anew. 

Our focus at the Michigan Office of Retirement Services is to empower you in navigating your retirement journey in secure and successful ways. You and your well-being matter to us.   

Have a safe, healthy, and peaceful holiday season.   

Anthony Estell, executive director 
Michigan Office of Retirement Services   

Did you receive a Small Steps flier in the mail around Dec. 9?  

If so, you should be aware that if you are currently contributing less than 15 percent of your gross pay to your State of Michigan 401(k) plan and are not signed up for an active Rate Escalator, you will see your contribution rate increase by 1% effective with the first available pay in March 2025.  

One percent is only $1 for every $100 you make. When you factor in the tax savings (your contributions are pre-tax, lowering your taxable gross), the impact to your take-home pay is less than you may think. This small adjustment to your take-home pay can bring significant long-term benefits.  

Here’s a hypothetical example of how participating in the Small Steps program could benefit you. (This is for illustrative purposes only. It’s based on pretax contributions, 26 pay periods per year and a 6% annual rate of return with no pay raises.) 

A new hire starts with a $50,000 salary and a contribution rate of 5% of their gross wages. Their contribution rate goes up 1% each year with Small Steps until it reaches the target rate of 15% and stays there until they retire after 30 years. This employee will have saved $479,907 toward their retirement – $276,618 more than an employee with the same start date, starting salary and a contribution rate that remained at 5% throughout their 30-year career. Add to that an employer match and salary increases, and the results could be even better. 

Use myOrangeMoney and other tools available in your State of Michigan 401(k) and 457 Plans account to see how you can impact your estimated monthly retirement income.