Matt Nelson  0:00  
Are you using your Medtronic 41k as effectively as possible, or are you making one of these five mistakes that my team commonly sees.

If you are participating in the Medtronic retirement savings plan, you already know the power of that savings vehicle. But unfortunately, we see some simple mistakes that could be avoided, whether that's not getting the full company match, not adjusting your contribution levels once you hit age 50, or having the money go to the wrong people when you die. In this video, I want to highlight some of those and provide some color as an advisor, and make sure to stay to the end, where I'm going to cover some benchmark savings amounts and how much you should have saved up at your particular age. I'm Matt Nelson and my team and I at perspective six group have been helping people retire for over 25 years, and I made this channel to share what's working and to help med tech professionals we work with make smarter decisions with their money. First, let's do a quick recap of how the company plan contributions work. There's a core contribution of three to 5% of your pay. There's a matching contribution of 3% and a discretionary match of one and a half percent. Now, fortunately, all new employees are auto enrolled at a 6% contribution level of their compensation. So they should be getting all of the company match. However, that brings me to mistake number one. Mistake number one is opting out and not participating in the plan at all. You could be giving up four and a half percent in company match if you aren't participating now, whether you just temporarily stopped contributing and forgot to go back, or whether you accidentally opted out when you first were hired, either way, you need to check that you are contributing to the plan. It's easy to do check your pay stub that you see contributions going in, or visit the fidelity net benefits portal, and you can check on your contribution level there. Now, as easy as this sounds, a survey was done in 2024 by Principal Financial Group that found six out of 10 people thought they were participating in the 401 k plan, and they weren't. So don't take it for granted. Check that you are actually contributing your 6% and that brings me to mistake number two, when you're first auto enrolled, one of the default settings is to add an auto escalation feature that will move your contribution level from 6% up by 1% a year until you hit a 10% level. And this is great. It's an easy button for you to just increase your contributions, but the mistake here is to just stick with the default. You can easily go into the same fidelity net benefits portal and adjust your auto escalation amount. Why not set it at two or 3% for 2025 the maximum contribution you can make to your 401 k is 23,500 so by using this auto escalation feature, you can get up to that level as quick as possible. And that brings me to mistake number three, once you get over age 50, you need to verify that you're taking advantage of the catch up provisions that are allowed so that you can contribute more than the maximums to your 41k plan. So I mentioned that $23,500 maximum a minute ago. That's for ages 50 and under. Once you get age 50 to 59 you're allowed to put in an additional $7,500 bringing the total to 31,000 for the year. From age 60 to 63 there's a special catch up amount of 11,002 50, which allows you to put in 34,007 50. Once you get to 64 plus, then the catch up drops back down to $7,500 so just make sure that you're actually capturing the ability to contribute more at those older ages, you may need to raise your percentage of contribution level or manually adjust to capture the catch ups. Mistake number four is having the incorrect beneficiaries listed. Now, whether it's because you were auto enrolled and never filled out the paperwork in the first place, or you just have incorrect information on file, you need to check your beneficiaries. If you don't have a form on file, there is a default method to pass on the balance in your account to your heirs. It's going to first go to spouse. If you don't have a spouse or domestic partner, it'll go to your children in equal parts, if no children, then the parents, then the brothers and sisters, and then your estate. Now while your balance will get out to family. It's not necessarily going to go to the family in the order or the amounts that you want it to be. So you really do need to choose your beneficiaries, fill out your own form and make the elections along with this, even if you filled out a beneficiary form in the past, you need to double check what's been. Designated. While it's very possible that you have the same spouse and the same children throughout your tenure at Medtronic, unfortunately, today, families are a lot more dynamic, and it's far too common for us to find beneficiary forms that are listing an ex spouse or other family changes that weren't intended. On top of this, as you go through some of your estate planning you may not want to have the default method of going to a spouse and then to children. You might actually want it in different proportions, or maybe skip your spouse altogether. So to avoid this mistake, double check what you have on file. And finally, mistake number five is not having a personal financial plan in place that helps you understand how much you should be saving to the Medtronic plan in the first place, you need to be actively considering your own personal situation. How much have you saved already? What is your current income? Your age? How long do you have to retirement if you haven't put together your own financial plan? We're happy to help you with that. Give you a second opinion. There's also plenty of do it yourself resources on the internet to get a directionally accurate answer. I told you I would leave you with some rules of thumb on what your savings level should be and how to benchmark yourself on how you're doing. Now, T Rowe Price has done some very good research in this area, and they actually put together a study, which we're going to link to the comments section below. That allows you to look up your age, your income, how much you've saved as a percentage of your income, and get a rough idea if you're on track. So just to give you a sense of how this works, we're going to look at someone with a $300,000 income, age 55 they're a sole earner in the household. Tira prices research is showing you need to have about seven and a half times your income saved up to be basically on track. That amounts to about 2.2 5 million, so two and a quarter million already in your retirement savings account, and that could be in the Medtronic plan or IRAs or elsewhere, that same individual at age 60 would really need to have a 10 times their earnings saved up, or about 3 million by the time they're 65 about 12 and a half times. So 3.7 5,000,003 and three quarters million. And this seems actually pretty on track with what we see with the work we do with clients. Now, like I said, we'll link to that matrix below, and you can look up your own situation. Just use this as general guidance for a much more accurate picture of your situation. You really need to take into account your specific social security amounts, any pension amounts that you might have, what your spouse has going on if you have a spouse, other inheritances that might come in. All of that is much more complex and needs to be put into a personal financial plan. Again, whether you do that on your own or you work with an advisor like our team, it's much better to have a personalized situation. But to get started, this gets you in the ballpark. If you want to get access to the report I wrote on how to maximize your 401 K, click on the link in the comments below and look for other videos on how to make your 41k plan at Medtronic work better for you until next time, remember, financial freedom takes more than money, so find your purpose and make a plan to live your life well. If you need any guidance, we're here for you. You.

Transcribed by https://otter.ai