LifeStage Retirement Income
Transitioning from saving for retirement to spending in retirement can be difficult. Decisions need to be made—from how much to take in distributions from your retirement accounts to assure your payments last your lifetime, to when to adjust those payments and by how much. LifeStage Retirement Income helps make this easier. LifeStage Retirement Income is available to manage your distributions in retirement at no charge.1 It issues monthly payments to you from your defined contribution account. LifeStage is intended to make your retirement income last for your lifetime with annual adjustments for changes in inflation, your age and account balance.
LifeStage Retirement Income can help provide peace of mind. It is designed to help make your money last—by avoiding taking too little out and enduring unnecessary hardship, or taking too much out and running out of money.
LifeStage Retirement Income—How It Works
LifeStage Retirement Income sets a “payment safety zone” based on the value of your United Methodist Personal Investment Plan (UMPIP) account, your age, and other factors noted in your LifeStage Investment Management profile. When you start using LifeStage Retirement Income, an amount that falls in the middle of your payment safety zone will be set as your monthly payment.
Every year, LifeStage Retirement Income calculates a cost-of-living increase, determines your new payment safety zone and then adjusts your payment if it falls outside the safety zone. Wespath Benefits and Investments (Wespath) notifies you of the new monthly payment amount in November.
LifeStage Retirement Income manages your installment payments, while LifeStage Investment Management manages the investment of your account, determining an appropriate investment strategy. This combination of services helps to provide regular monthly income with cost-of-living adjustments.
While retirement income payments generally increase with the cost of living, market downturns can prevent you from receiving increases, or in extreme circumstances, can result in decreases in your payment amount. Payments are deducted from your UMPIP account and will end when you no longer have money in your account. While the likelihood of running out of money is small, LifeStage Retirement Income cannot guarantee that the account balance will last for your lifetime. However—unlike most guaranteed products (e.g., annuities)—when you participate in LifeStage Retirement Income, your account will continue to be invested on your behalf and you can leave any remaining account balance for beneficiaries upon your death.
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Money on Reserve
When enrolling in LifeStage Retirement Income, you can set aside a reserve amount—up to 20% of your account balance—for anticipated expenses or emergencies. This money is not factored into your monthly payment calculation and is managed with a more conservative investment strategy.
If you have an emergency or unexpected life event that requires a substantial payment beyond your budget or what you have set aside in reserve, you can withdraw money from your account at any time. However, withdrawals may reduce the monthly payment if they cause it to fall outside the payment safety zone.
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If you aren’t sure whether LifeStage Retirement Income is right for you, or if you’d like to manage your own distributions but would like guidance, use the LifeStage Retirement Income Calculator in Benefits Access: Select “Take Action”; under PROJECT FUTURE VALUES choose “Calculate LifeStage Retirement Income.” The calculator lets you see how much your payments will be if you elect LifeStage Retirement Income.
If you are using the calculator for self-managing distributions, run the calculation annually to determine whether adjustments (increases or decreases) are necessary. This will increase the likelihood that your money will not run out. Remember, the calculations assume you invest through LifeStage Investment Management. If you self-manage investments, the calculator results may not accurately reflect your situation, and your account balance may be exhausted prematurely.
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In order to participate, you must:
Be eligible to take a distribution from your Defined Contribution Account
Have an account balance that is large enough to support a monthly payment of at least $100
Agree to roll defined contribution account balances into UMPIP
If you are eligible, sign up through Benefits Access—go to “Take Action”; under MANAGE DISTRIBUTIONS select “Sign up for LifeStage Retirement Income.”
You can opt-out of LifeStage Retirement Income at any time and determine your own monthly payment amount. You will still have access to the LifeStage Retirement Income Calculator at no charge. EY Financial Planning Services is also available to eligible participants to help determine an appropriate payment amount. If you keep your money at Wespath, you may reenroll in LifeStage Retirement Income at any time, provided you continue to meet the eligibility requirements.
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Additional details about LifeStage Retirement Income are available online through Benefits Access. Log into your account; select “Learn More” from the top toolbar; under “ACCESS RETIREMENT SAVINGS,” choose “LifeStage Retirement Income.”
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1 Costs for these services are included in Wespath’s administrative expenses that are paid for by the funds.