CalPERS Savings PLUS changes on hold

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pkcrafter
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CalPERS Savings PLUS changes on hold

Post by pkcrafter » Tue Nov 19, 2019 9:41 am

[Moved into a new thread from: My 401k /457b (California Savings Plus) Removing Most Index Funds --admin LadyGeek]

Spectre, that move by your plan provider is simply incredible in a world where most plans are adding index options. :twisted:

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

GriffinDork
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Re: My 401k /457b Removing Most Index Funds

Post by GriffinDork » Tue Nov 19, 2019 5:42 pm

I saw that last month. So I opened up a PCRA (the self-directed option savings plus offers) and moved most of my funds to Schwab. Much more choice for funds there anyways.

Mudpuppy
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Re: My 401k /457b Removing Most Index Funds

Post by Mudpuppy » Sat Nov 23, 2019 2:11 am

I saw this recently as well. It was enough for me to shake the dust off of this old account and see if anyone had posted about the change. Like pkcrafter, I was flabbergasted that they'd eliminate almost all of the index funds when most plans are adding more passive strategies. I've always joked that CA SPP is managed by people throwing darts or letting cats jump on a keyboard, but this really takes the proverbial cake when it comes to perplexing decisions.

By my back-of-the-envelope calculations (with some uncertainty for the new Mid/Small Cap fund and assuming that the Bond and International active funds keep the same ER they have currently), if I leave my AA as it currently is, this change will push my ER on this account from 0.09% to somewhere in the 0.42% to 0.45% range. It'll also push my overall ER over all accounts from 0.09% to about 0.27% to 0.28%. I realize that compared to what some folks have to deal with for fund options, this isn't absolutely horrible. But compared to the other voluntary retirement account option I have with my agency, which has a full set of Vanguard Admiral/Institutional index funds, this makes me more than a little grumpy.
[Edit: With fresh eyes in the morning, I spotted an error in my back-of-the-envelope calculations. The changes will only push the CA SPP ER up to about 0.27% and my overall ER up to about 0.20%]

I'm debating between the PCRA option or using CA SPP primarily for Large Cap, then rebalancing my other accounts for holding the rest of my AA. I could also send more of my monthly contributions to the other voluntary retirement account, instead of the 50/50 split I currently use between it and CA SPP. I'd hate to lose the investment space in a 457(b) plan, but I also hate to push up my ER too high. I see a new tab in my AA spreadsheet's future for running various scenarios.

Spectre, you might want to see if your agency has other voluntary retirement account options outside of CA SPP. Some agencies have access to the CalPERS options. Others have options specific to their agencies. Some agencies unfortunately are just stuck with CA SPP. Check with your HR/Benefits portal to see what your agency has available.

GodzillaBorland
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Re: My 401k /457b Removing Most Index Funds

Post by GodzillaBorland » Sat Dec 14, 2019 6:49 pm

Is the PCRA option available for both 401K and 457B. I currently have my 401K managed professional in Savings Plus and they have done a reasonable job. With the removal of index funds I am thinking of moving 401K this to PCRA. I already have some 457B in PCRA.
Thanks

retired@50
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Re: My 401k /457b Removing Most Index Funds

Post by retired@50 » Sat Dec 14, 2019 8:06 pm

pkcrafter wrote:
Tue Nov 19, 2019 9:41 am
Spectre, that move by your plan provider is simply incredible in a world where most plans are adding index options. :twisted:

Paul
I agree. This seems like a step backwards to me. I've quoted the linked website from the OP below in italics. I'd like to see the "research" they're referring to.
Regards,

4. Why are index funds being eliminated from the fund lineup?
Research shows that, with appropriate fee levels, carefully selected actively managed funds will more often than not outperform the benchmark index over long periods of time in some asset classes. This applies to fixed income, small and mid-cap equity, and international equity asset classes, so we are removing the Bond, Small Cap, Mid Cap, and International Index Funds from the Core Investment Fund lineup. We are maintaining the Large Cap Index Fund because research shows that actively managed funds are unlikely to outperform the index in this asset class.
This is one person's opinion. Nothing more.

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fortfun
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Re: My 401k /457b Removing Most Index Funds

Post by fortfun » Sat Dec 14, 2019 8:14 pm

retired@50 wrote:
Sat Dec 14, 2019 8:06 pm
pkcrafter wrote:
Tue Nov 19, 2019 9:41 am
Spectre, that move by your plan provider is simply incredible in a world where most plans are adding index options. :twisted:

Paul
I agree. This seems like a step backwards to me. I've quoted the linked website from the OP below in italics. I'd like to see the "research" they're referring to.
Regards,

4. Why are index funds being eliminated from the fund lineup?
Research shows that, with appropriate fee levels, carefully selected actively managed funds will more often than not outperform the benchmark index over long periods of time in some asset classes. This applies to fixed income, small and mid-cap equity, and international equity asset classes, so we are removing the Bond, Small Cap, Mid Cap, and International Index Funds from the Core Investment Fund lineup. We are maintaining the Large Cap Index Fund because research shows that actively managed funds are unlikely to outperform the index in this asset class.
Me too. I'm sure the provider is getting a kick back from American Funds, etc. :annoyed

Mudpuppy
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Re: My 401k /457b Removing Most Index Funds

Post by Mudpuppy » Fri Feb 07, 2020 2:39 am

FYI, the new Small-Mid Cap fact sheet is now available at https://www.savingsplusnow.com/iApp/tcm ... change.jsp

The Small-Mid Cap fund is a mix of 10 different investment managers with funds that track Russell 2500 and an estimated ER of 0.56%. As with other CA SPP fact sheets, they do not provide a visualization of the stock style. They also don't name the underlying funds (just the investment managers and mid cap or small cap), so it might be difficult to plug into MorningStar to estimate.

It also looks like they're updating the investment managers for the active Bond Fund, which they estimate will lower the ER from 0.21% to 0.15%. But, in the other direction, they are updating the active International Fund and that will increase its ER from 0.49% to 0.68%.

Northern Flicker
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Re: My 401k /457b Removing Most Index Funds

Post by Northern Flicker » Fri Feb 07, 2020 6:06 am

The Target Date funds look quite reasonable, with ERs in the 30-32 bp/yr range for the ones I looked at.
Risk is not a guarantor of return.

Spectre
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Re: My 401k /457b Removing Most Index Funds

Post by Spectre » Fri Feb 07, 2020 8:50 am

Mudpuppy wrote:
Fri Feb 07, 2020 2:39 am
FYI, the new Small-Mid Cap fact sheet is now available at https://www.savingsplusnow.com/iApp/tcm ... change.jsp

The Small-Mid Cap fund is a mix of 10 different investment managers with funds that track Russell 2500 and an estimated ER of 0.56%. As with other CA SPP fact sheets, they do not provide a visualization of the stock style. They also don't name the underlying funds (just the investment managers and mid cap or small cap), so it might be difficult to plug into MorningStar to estimate.

It also looks like they're updating the investment managers for the active Bond Fund, which they estimate will lower the ER from 0.21% to 0.15%. But, in the other direction, they are updating the active International Fund and that will increase its ER from 0.49% to 0.68%.
I received the "Savings Plus Fund Redesign and Reselection Initiative" pamphlet in the mail today. In the very back page it has the "Highest Potential Expensive Ratio for the Underlying Fund":

Bond Fund: .15%
Small-Mid Cap Fund: .56%
International Fund: .68%

Their Investment Fees (Section 3) explanation still bothers me but I'm over worrying about their fees and funds now that I transferred most of my money to Schwab PCRA. At this point I don't intend to use any Savings Plus funds other than the Large Cap Index Fund (only to keep my accounts open) from here on out.
lakpr wrote:
Mon Jan 06, 2020 6:10 pm
I am just saying that, before you retire / leave the employer, make sure there is at least $5000 in the plan. Not just $2500.
Thank you for the heads up! Did not know about this at all.
Last edited by Spectre on Sat Feb 08, 2020 10:34 am, edited 1 time in total.

Mudpuppy
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Re: My 401k /457b Removing Most Index Funds

Post by Mudpuppy » Fri Feb 07, 2020 12:39 pm

Northern Flicker wrote:
Fri Feb 07, 2020 6:06 am
The Target Date funds look quite reasonable, with ERs in the 30-32 bp/yr range for the ones I looked at.
It would be reasonable for someone starting out and it is reasonable in comparison to other employer plans. However, the issue I have with this fund line-up changes is I currently have my desired AA individually set inside CA SPP for an overall ER of 0.09% (ERs of 0.06% to 0.12% in the individual funds). In the new fund line-up, if I kept the same AA, my ER would be closer to 0.29% (ERs of 0.06% to 0.68% in the individual funds).

So the ERs of the new fund line-up are high in comparison to what is currently available in CA SPP. I have strong doubts as to whether the returns will be sufficiently higher in the new line-up to justify the increased ERs in most individual funds.

I've personally decided to put everything in CA SPP in Large Cap Index, then shift my primary retirement investing to the other voluntary retirement account that my agency provides (which has mostly Vanguard institutional funds for its core fund line-up). Not all CA employees have the luxury of a second voluntary investment account though. Using the Schwab PCRA or living with the increased ERs are the only options for those employees.

Countermoon
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Re: My 401k /457b Removing Most Index Funds

Post by Countermoon » Fri Feb 07, 2020 12:54 pm

Does anyone know if switching to the PCRA option in a 457(b) plan results in any changes to the rules? For example, 457(b) plans allow you to withdraw funds penalty-free at any age once you have separated from the employer. Obviously, this is a huge advantage over 401(k) plans. Is this impacted by switching to the PCRA?

go140point6
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Re: My 401k /457b Removing Most Index Funds

Post by go140point6 » Fri Feb 07, 2020 1:47 pm

How in the world am I just seeing this now? I can't believe I missed this. I use the various passive index funds to match my AA. I guess I'm going to have to take a hard look at my options.

wolf359
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Re: My 401k /457b Removing Most Index Funds

Post by wolf359 » Fri Feb 07, 2020 2:30 pm

Remember that financial advisors are no longer required to be fiduciaries. Most of the moves towards index funds was a reaction of industry towards compliance with that rule. Many of the big firms continued effective compliance on a voluntary basis. This may be an advisor going the other way.

You basically need to use the strategies for dealing with overpriced retirement plans in the past.
1. Use the lowest cost options available within the plan. If this leaves your individual account unbalanced, make up for it in other accounts, treating your portfolio as a whole.
2. Lobby your employer to provide better choices.
3. Look for other employment, or change employment periodically and come back, so you can rollover assets to a low-cost IRA.

Mudpuppy
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Re: My 401k /457b Removing Most Index Funds

Post by Mudpuppy » Fri Feb 07, 2020 2:52 pm

wolf359 wrote:
Fri Feb 07, 2020 2:30 pm
3. Look for other employment, or change employment periodically and come back, so you can rollover assets to a low-cost IRA.
One big caveat with this point: while a government 457(b) can be rolled over to an IRA, it then loses all of the benefits of a government 457(b), such as no penalty for withdrawing funds before 59.5 years of age. Unless the 457(b) funds are truly horrible (and the CA SPP changes are bad, but not horrible) or you don't have the minimum required balance, leaving it as a 457(b) if you're still young is probably a good idea. Then the 457(b) plan can act as another tier of emergency funds, should the worst happen, while still being available as a retirement account if nothing bad happens.

Northern Flicker
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Re: My 401k /457b Removing Most Index Funds

Post by Northern Flicker » Fri Feb 07, 2020 4:33 pm

Mudpuppy wrote:
Fri Feb 07, 2020 12:39 pm
Northern Flicker wrote:
Fri Feb 07, 2020 6:06 am
The Target Date funds look quite reasonable, with ERs in the 30-32 bp/yr range for the ones I looked at.
It would be reasonable for someone starting out and it is reasonable in comparison to other employer plans. However, the issue I have with this fund line-up changes is I currently have my desired AA individually set inside CA SPP for an overall ER of 0.09% (ERs of 0.06% to 0.12% in the individual funds). In the new fund line-up, if I kept the same AA, my ER would be closer to 0.29% (ERs of 0.06% to 0.68% in the individual funds).

So the ERs of the new fund line-up are high in comparison to what is currently available in CA SPP. I have strong doubts as to whether the returns will be sufficiently higher in the new line-up to justify the increased ERs in most individual funds.

I've personally decided to put everything in CA SPP in Large Cap Index, then shift my primary retirement investing to the other voluntary retirement account that my agency provides (which has mostly Vanguard institutional funds for its core fund line-up). Not all CA employees have the luxury of a second voluntary investment account though. Using the Schwab PCRA or living with the increased ERs are the only options for those employees.
You are taking a sensible approach. The TDF’s are also reasonable— an investor could view the extra roughly 20 bp ER as an advisor fee to take care of rebalancing. The TDF portfolios are also more diversified than a simple index fund portfolio.
Risk is not a guarantor of return.

zlandar
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Re: My 401k /457b Removing Most Index Funds

Post by zlandar » Fri Feb 07, 2020 9:21 pm

State of CA fund lineup has embarrassingly bad expenses when it has assets in the hundreds of millions.

Target fund .30% expense
International .68%

The large index and bond funds are ok. Anyone could log into VG and do better.

Someone is asleep at the wheel. Or eating some expensive meals at fancy restaurants on someone else's dime.

Spectre
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Re: My 401k /457b Removing Most Index Funds

Post by Spectre » Sat Feb 08, 2020 10:31 am

Mudpuppy wrote:
Fri Feb 07, 2020 12:39 pm

...However, the issue I have with this fund line-up changes is I currently have my desired AA individually set inside CA SPP for an overall ER of 0.09% (ERs of 0.06% to 0.12% in the individual funds). In the new fund line-up, if I kept the same AA, my ER would be closer to 0.29% (ERs of 0.06% to 0.68% in the individual funds).

So the ERs of the new fund line-up are high in comparison to what is currently available in CA SPP. I have strong doubts as to whether the returns will be sufficiently higher in the new line-up to justify the increased ERs in most individual funds.

I've personally decided to put everything in CA SPP in Large Cap Index, then shift my primary retirement investing to the other voluntary retirement account that my agency provides (which has mostly Vanguard institutional funds for its core fund line-up). Not all CA employees have the luxury of a second voluntary investment account though. Using the Schwab PCRA or living with the increased ERs are the only options for those employees.
We are in the same boat and came to the same conclusion. It takes a little bit more work and time (having to transfer funds from the Savings Plus accounts to the PCRA accounts takes about one to two days then purchasing funds after they are transferred in the PCRA takes another a day) but I feel it is worth the effort to maintain a low overall ER.

Hopefully enough people will do what we are doing to make Savings Plus realize how bad of an idea it was to scrap most of their index funds to begin with.
Countermoon wrote:
Fri Feb 07, 2020 12:54 pm
Does anyone know if switching to the PCRA option in a 457(b) plan results in any changes to the rules? For example, 457(b) plans allow you to withdraw funds penalty-free at any age once you have separated from the employer. Obviously, this is a huge advantage over 401(k) plans. Is this impacted by switching to the PCRA?
Short answer: It does not change the rules and switching to PCRA will not change this.

I spoke to a representative from Schwab PCRA first hand about this and she essentially said the funds from the Savings Plus 457(b) go into a Schwab account specifically for 457(b) funds. Upon retirement, you will have to move the funds back to Savings Plus' 457(b), into whatever funds they will have by that time. At that point you will be able to withdraw funds penalty-free. The only surprise from moving Savings Plus 457(b) funds to the 457(b) Schwab PCRA account was that the PCRA account does not differentiate Roth and Traditional 457(b) money, its just a sum of both.

go140point6
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Re: My 401k /457b Removing Most Index Funds

Post by go140point6 » Mon Feb 10, 2020 4:25 pm

Mudpuppy wrote:
Sat Feb 08, 2020 4:48 pm
I'm personally a bit too lazy for the time and extra steps involved in the Schwab PCRA route, but I have enough money in my other accounts that I can still approximate my desired AA across accounts with the CA SPP at 100% large-cap. In the short term, I'll be slightly overweighted in large-cap, but that should rectify itself over time as I switch my primary voluntary retirement contributions to the other account.

And you have perhaps more faith in the process than I do. I doubt anything short of strong lobbying by the various employee unions or legislative action will make CA SPP change its approach. The research they cite for eliminating most of the index funds is a report from the Callan Institute. Having read the report, I don't personally find it very compelling for their conclusions. I also don't like their plan to default everyone who doesn't change their allocations in the reselection window to a Target Date Fund, instead of the closest matching funds in the new line-up.
I also decided to not go the PCRA route and just shoved everything in large-cap index for now. I was able to readjust some other accounts to help bring the weighting back a bit where I want it but over-time it will get out of whack again because the contribution to SPP far outweighs my other options right now. I have some options to fix this over the next 2-3 years, so I'll keep a close eye on it.

And yes, I will have to make sure to log in during the readjustment window or whatever they are calling it to redirect back into Large Cap Index even though I'm 100% there now. It does seem strange that they are choosing to do it that way.

I love bogleheads. I still can't believe I missed this news about the SPP... no emails, no snail-mail... glad you all weren't asleep at the wheel... :beer

GodzillaBorland
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Re: My 401k /457b Removing Most Index Funds

Post by GodzillaBorland » Sat Feb 22, 2020 3:37 pm

Countermoon wrote:
Fri Feb 07, 2020 12:54 pm
Does anyone know if switching to the PCRA option in a 457(b) plan results in any changes to the rules? For example, 457(b) plans allow you to withdraw funds penalty-free at any age once you have separated from the employer. Obviously, this is a huge advantage over 401(k) plans. Is this impacted by switching to the PCRA?
You can always move your PCRA funds back to 457 (b) prior to separation, can't you?

Mudpuppy
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Re: My 401k /457b Removing Most Index Funds

Post by Mudpuppy » Sat Feb 22, 2020 8:23 pm

GodzillaBorland wrote:
Sat Feb 22, 2020 3:41 pm
retiredjg wrote:
Sat Dec 14, 2019 8:22 pm
While you are considering your choices, give some thought about whether you really want to contribute to both a 401k and a 457 tax-deferred account. If you have a pension (not unusual for state government workers) then 1 tax deferred account is likely to be enough. It may even be more than enough.

Use both if you can make Roth contributions to one of them. If not, use the lower cost plan and taxable for the rest of your savings.

It really is possible to have too much in tax-deferred accounts. I don't know if that applies to you, but you need to give this a look-see.
I have always wondered about this. My boss who retired recently at 60 only targeted to build $100k in his 401k; His CALPERS pension was $7800 a month and based on his trip reports, he is having a ball with that amount!. Are there good modeling tools that take into account CALPERS pensions? The 4% withdrawal after saving millions is a pipe dream for most.
Since CalPERS pensions are formula based, you can make projections based off the formula for your particular agency and job. I just use Excel for this. It's relatively simple to keep track of accrued pension (based on current number of service years) and projected pension (based on when you might retire), once you know the specific CalPERS formula that applies to you.

The uncertainty factor comes in projecting the future pension. There are a myriad of reasons why you might not maximize the pension. For example, you might be forced to leave the job market earlier than planned due to health concerns, an accident, or the like. The agency might also downsize or you might opt to leave for a different job. There's also the possibility the Little Hoover Commission recommendations will be implemented. Whatever the reason, you can't 100% count on the pension being as high as it would be under ideal circumstances.

My personal approach is to create a matrix of scenarios for CalPERS and Social Security, which gives me a range of voluntary retirement savings needed to cover the more likely scenarios. My current retirement savings rate is well above what I would need in the best case scenarios. But it's right in the middle of the range for the "things that could go wrong" scenarios.

I could afford to save even more in the retirement accounts to cover even more edge cases, but I've decided to put more money into down payment savings for my next house (or renovating my current house), since I have increasing caregiver responsibilities for an elderly family member and my current house is not well-suited towards those responsibilities.

GodzillaBorland
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by GodzillaBorland » Sat Feb 22, 2020 11:12 pm

I have built Excel spreadsheet based on both social security and CalPERS numbers.Calpers has a nice benefits calculator online where you can put your expected salary and year of retirement and it comes up with pension amounts. It even has a health premiums calculator if you are not fully vested by retirement date.

My question is more on what is the monthly numbers to target.Looking for some historical data on what people in Sacramento retired with to be comfortable.

lomarica01
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by lomarica01 » Sun Feb 23, 2020 12:36 pm

another retired state of CA worker here. I also will move a substantial portion to schwab and have spent many hours last week optimizing the best funds for each plan (including he wifes)

so while it is a pain to plan all this out and make the changes then make sure the changes actually happened the end result for me at least will be a more focused simpler portfolio with better choices in schwab for example I want a few low volatility funds.

The SPP has changed much over the last 30 years, I remember when the choices were mutual funds which you could follow on morningstar.
But now with them getting rid of most index funds it is just hard to understand, I guess someone has to follow the money to see where it leads.

Final thought, I am now DCA out of the SSP and figure that will take 15 years so there will most likely be other changes within that timeframe.

Final final thought be careful if you transfer the Roth accounts to schwab, I was told schwab does not keep the $$ in a separate Roth account which implies it will not stay tax free upon withdraw.

Mudpuppy
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by Mudpuppy » Sun Feb 23, 2020 3:09 pm

GodzillaBorland wrote:
Sat Feb 22, 2020 11:12 pm
I have built Excel spreadsheet based on both social security and CalPERS numbers.Calpers has a nice benefits calculator online where you can put your expected salary and year of retirement and it comes up with pension amounts. It even has a health premiums calculator if you are not fully vested by retirement date.

My question is more on what is the monthly numbers to target.Looking for some historical data on what people in Sacramento retired with to be comfortable.
You can figure out the monthly numbers in Excel too, by massaging some of their loan payment functions into retirement savings functions. Historical data isn't going to be available because the Freedom of Information Act only applies to the pension, not the living expenses or income tax rates of those receiving the pensions. Living expenses are a HUGE part of the calculation, as the following steps show:

The first step is to figure out how much you'll spend each year in excess of your projected pension+SS income after taxes (don't forget to account for taxes). That's going to be based off your current lifestyle, how you'd change your lifestyle in retirement (e.g. paid off house so no mortgage expenses, more money spent on traveling, moving to a more/less expensive retirement location, and so on), expected medical expenses (including long-term-care insurance premiums), and other factors like this. You also have to calculate for inflation between current dollars and future dollars, and some expenses may rise at a rate higher than inflation. So this is probably the hardest part to calculate, because there are so many variables.

This is also a very personalized calculation and online calculators will only be using the population average instead of your personalized projections. It can be good though to compare your calculation to an online calculator to make sure you're not too far below the population average. While some people can retire "on the cheap", if your calculations are too far below the average, you might not have properly accounted for all expected expenses. After all this, you end up with essentially a deficit between your projected after-tax pension+SS income and your projected expenses.

Once you have that deficit, you need to figure out how much to save in voluntary retirement accounts to cover that deficit. This calculation will be based on how many years you'll be in retirement and your expected real rate-of-return (after inflation) on investments during retirement. If your value from step 1 is a monthly deficit, either multiply the monthly deficit by 12 or convert your annual values for expected real rate-of-return and years of retirement into monthly values. Use the formula -PV(real_rate_of_return, time_in_retirement, deficit_value_from_step1) to calculate your retirement savings target. Note, this assumes you'll spend down your retirement savings to $0 before you die. If you want to leave an inheritance, use a longer time frame for years in retirement, pad the deficit value, or add the inheritance to the retirement savings target.

Finally, calculate how much you'd need to save annually to meet that retirement savings target. This calculation is based on your expected real rate-of-return on investments during your working years, how many years you'll be contributing to your retirement savings, your current retirement savings, and your calculated retirement savings target from step 2. For Excel, use the formula -PPMT(real_rate_of_return, 1, years_of_contributions, retirement_savings_target - current_retirement_savings). Some versions of LibreOffice can't calculate PPMT correctly with that formula, so you may need to instead use -PPMT(real_rate_of_return; 1; years_of_contributions; 0; retirement_savings_target - current_retirement_savings). This will return your annual savings goal to meet the retirement savings target.

Start off making these calculations for one scenario, then repeat for all other pension, SS, retirement age, etc. scenarios you want to run. Choose a good median value as your annual/monthly savings goal.

CA SPP also has an online retirement savings calculator, but they've simplified it down so much that I don't really use it anymore. It used to show a very clear range of savings growth based on different rates-of-return from Monte Carlo simulations, and that was useful to see the impact of the market on the growth of investments. Now it just has an average rate-of-return and projected expenses are based on your current income rather than population averages. Think of it more as a sanity check on your own calculations than anything else.

bbrock
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by bbrock » Wed Mar 04, 2020 10:09 pm

Saw this thread as I was about to create an applicable one.

My wife works for CA and participates in the a traditional 401k and ROTH 457 by SPP (Savings Plus Program). I too am amazed they are dropping all but one index fund in favor of active funds. There has to be a kickback or incentive for doing this, vs considering shareholders.

Anyhow, I am glad I came across this thread b/c I completely forgot she had this for a PCRA. This thread really sparked my interest to consider this given her total SPP assets are $263k. But, then it all came back to the K.I.S.S. mantra. Sure, it is not too much more complicated to have this PCRA, but moving everything into the new SPP Bond Fund with an ER at 0.15% vs. the current Bond Index at 0.08% would cost approx. $185/yr. I'll have all future contributions directed to the Large Cap Index with an ER of 0.06%. I'd move her 401k and 457 to the Large Cap index, but given that most of our account is taxable in our Vanguard flagship account, it would move our AA from 70% stocks/30% bonds to 80/20. So, hence, I'll move her assets to the new Bond Index Fund and all future contributions to the Large Cap index. And, it will still follow the KISS mantra for ~$185. That's tolerable until stuff can be re-balanced further.
bbrock

Spectre
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by Spectre » Tue Mar 17, 2020 4:59 pm

Just received an e-mail today from Savings Plus [via CalHR]:

"Given the national and California state of emergency declarations as a result of the COVID-19 pandemic and volatility in the global stock markets, we have decided to place the Savings Plus Program Fund Redesign and Reselection Initiative on hold until further notice."

Mudpuppy
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by Mudpuppy » Tue Mar 17, 2020 8:36 pm

Spectre wrote:
Tue Mar 17, 2020 4:59 pm
Just received an e-mail today from Savings Plus [via CalHR]:

"Given the national and California state of emergency declarations as a result of the COVID-19 pandemic and volatility in the global stock markets, we have decided to place the Savings Plus Program Fund Redesign and Reselection Initiative on hold until further notice."
Thanks for the update. We'll see if this is just a delay, or if they re-evaluate their decision to drop most of the index funds.

Zedon
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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by Zedon » Wed Mar 18, 2020 2:39 am

They seem to be trying to push people toward either actively managed funds or target date funds. I am now more likely to move towards PCRA now, but they do not make it easy. Their choices were mediocre before and this is not any better so I think I really have no choice but to go to Schwab if I want to have a balanced portfolio and not be in a target date fund. With the market in turmoil I'm not sure that this is the best time to make a move when the money will apparently be out of the market for multiple days.

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Re: My 401k /457b (California Savings Plus) Removing Most Index Funds

Post by GodzillaBorland » Sun Mar 22, 2020 4:38 am

Zedon wrote:
Wed Mar 18, 2020 2:39 am
They seem to be trying to push people toward either actively managed funds or target date funds. I am now more likely to move towards PCRA now, but they do not make it easy. Their choices were mediocre before and this is not any better so I think I really have no choice but to go to Schwab if I want to have a balanced portfolio and not be in a target date fund. With the market in turmoil I'm not sure that this is the best time to make a move when the money will apparently be out of the market for multiple days.
They cancelled redesign:
Given the national and California state of emergency declarations as a result of the COVID-19 pandemic and volatility in the global stock markets, we have decided to place the Savings Plus Program Fund Redesign and Reselection Initiative on hold until further notice.

raveon
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Savings PLUS changes on hold

Post by raveon » Thu Apr 02, 2020 1:15 pm

So the CA Savings Plus (401k) program was trying to pull a fast one by removing the index funds and pushing people into higher ER active managed funds. Today, got a notice that this change is hold given the 'COVID19 pandemic and volatility in global markets' .

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Re: Savings PLUS changes on hold

Post by Mudpuppy » Thu Apr 02, 2020 8:16 pm

This has already been covered in the thread about the CA Savings Plus Program changes: viewtopic.php?f=1&t=295475

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Re: CalPERS Savings PLUS changes on hold

Post by LadyGeek » Thu Apr 02, 2020 8:44 pm

A number of posts from My 401k /457b (California Savings Plus) Removing Most Index Funds have been moved into raveon's thread. The software sorts by time, pkcrafter's post is first.

The combined thread is in the Investing - Theory, News & General forum (news, general discussion). Please use this thread for general comments.
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