2024 Newsletter — Volume 2

Facing financial distractions: A guide to staying focused and reducing stress¹

Whether you're afraid of what you'll find when you look at your finances or overwhelmed by everything you need to do, know you're not alone. Many people feel money-related stress. But not confronting money problems won't make them go away.

Develop a money routine¹

Getting into a money routine and making that routine more enjoyable can help you rethink managing your finances. Mark your calendar to review your finances weekly, monthly or whatever works for you. This can reduce your financial anxiety and motivate you to make progress on your goals.

Start with your goals¹

The best way to face complex financial matters and learn the lingo is to take one step at a time. Start by thinking about your financial goals. If your goal is to save more, you might focus on learning about high-yield savings accounts. With the right resources, you can stay motivated to stay on track to reach your goal.

Avoid peer pressure¹

Remind yourself of what you're working toward when you feel the pressure to make a purchase outside your set goals. Try this by reducing your exposure to things that tempt you to overspend.

Prepare for emergencies¹

Emergency expenses can easily derail your finances and distract you from your goals. Experts recommend saving at least three to six months' worth of living expenses in an emergency fund. However, start with a smaller goal and work your way up based on your financial situation.

Understand the consequences of early 401(k) withdrawals²

A 401(k) can be a valuable savings vehicle to prepare for retirement. Though if the thought of potentially needing those funds sooner has ever crossed your mind, it is important to consider the various impacts of withdrawing early from your 401(k). Here's what you need to know:

Early withdrawal penalty²

Withdrawing from your 401(k) before age 59.5 can trigger an early withdrawal penalty. The penalty is 10% of the total withdrawal and is an additional tax you pay on your tax return.

Income taxes²

In addition to the penalty, you may also need to pay income taxes on your withdrawal. If you withdraw from traditional 401k contributions (pre-tax), you will pay taxes on the distribution, not the contribution amounts today.

Exceptions²

There are some exceptions to the early withdrawal penalty, for medical expenses, military service or equal payment distributions. For the full list, visit the IRS page on tax exceptions.

Impact on compounding interest²

One of the biggest downsides of early withdrawals is the interruption of compounding interest. Early withdrawals reduce the amount available to compound, potentially costing you significant growth over time.

Retirement readiness²

Withdrawing funds early can also mean reducing one of your primary income sources for retirement. This could necessitate increasing your savings contributions later to get back on track, or even delaying your retirement by a few years.

Think twice before dipping into your 401(k). Your future self will thank you!

An exciting change is coming! We are becoming TruStage™ soon.

While our brand name is changing, there is no change to our company. You’ll notice our materials transition to the TruStage brand in the next few months, but your BenefitsForYou log in and customer service phone number will remain the same. Learn more about the brand change.