Making the Most Out of Your Kaiser Permanente Retirement Plan
Planning for retirement can seem daunting, but understanding the features of your Kaiser Permanente retirement plan can make the process smoother. This article helps break down some of the financial areas to consider as you make a plan for a great retirement.
Contributing to Your Retirement Accounts
You likely are enrolled in the defined benefit pension sponsored by Kaiser Foundation Health Plan, Inc. You also have options to make pre-tax or after-tax contributions to other retirement accounts as part of your employment.
How much should you contribute? The IRS sets limits on how much you can put into your retirement plans each year. For 2024, you can contribute up to $23,000 to a 401(k), 403(b), most 457 plans, or Thrift Savings Plan. If you're 50 or older, you can add an extra $7,500.
Kaiser Permanente often enhances employee retirement savings through matching contributions. This means that after you have been with the organization for a set period, Kaiser will match up to a certain percentage of what you contribute. Try to contribute enough to get the full match—it's essentially free money for your future.
Tax Benefits
Contributing to your retirement plan can help lower your taxes now. Unless you are saving in a Roth account, contributions are generally made before tax, reducing your taxable income for the year and providing immediate tax relief.
Getting strategic with your retirement accounts can position you to potentially lower your overall tax liabilities through careful planning around distributions and contributions. Consider talking to a financial advisor or tax professional to determine the correct balance of pre- and after-tax contributions. They can help you understand your amounts based on your current and future goals.
Understanding Vesting and Access to Your Money
Your retirement accounts will have specific rules regarding vesting, which is the process by which you gain full ownership over employer-contributed funds. Understanding your plan’s vesting schedule can help you make informed decisions about your career trajectory and retirement timing.
Distribution rules also govern when and how you can access your funds. Generally, you can start taking money out of your retirement accounts without penalties when you turn 59½ years old. If you need to take money out before then, there are rules and sometimes penalties.
Health Care Costs in Retirement
Health care is a big cost for many retirees, and the timing of when you enroll in Medicare is part of that calculation. As an employee, you might stay in house, so to speak, with Kaiser plans like Senior Advantage or Medicare Advantage when you retire. Including estimated health care costs in your retirement planning is important to help reduce surprises later.
Long-term care is another important consideration. This includes care that you might need for a prolonged period, such as nursing home care, home health care, or community services that help with daily activities. These costs can be significant, and they aren't typically covered by traditional health insurance plans or by Medicare.
Planning for long-term care expenses in advance is important because it allows you to explore different options, set aside savings specifically for long-term care, or consider long-term care insurance policies. By preparing early, you can put the resources in place to help maintain your quality of life and independence as you age.
Are You Ready to Retire?
Figuring out if you're ready to retire isn't just about how much you've saved. It means looking at your projected income vs. expenses, what you want your retirement lifestyle to be like, and planning for unexpected costs.
There are retirement calculators on the internet that can help you determine whether your savings are in the range of your goals. You can also work with a fiduciary financial planning firm to get more specific numbers and strategies to boost your savings if you’re behind.
Adapting to Life's Milestones
Major life events like marriage, divorce, or early retirement can significantly impact your retirement savings strategy. It's important to revisit and adjust your plan to align with your new circumstances. For example, the birth of a child or grandchild might prompt you to increase your savings to prepare for future educational expenses.
During times of change, it’s important to update your beneficiary designations on your Kaiser and non-Kaiser accounts to help ensure the funds will go to the appropriate people. Similarly, reviewing your investment allocations can help your retirement savings with your updated goals and risk tolerance. Regularly adjusting your plan in response to life changes is essential for keeping your retirement goals on track.
Conclusion
Using your Kaiser Permanente benefits fully means monitoring your finances and making adjustments as needed. If you want advice that’s specific to Kaiser Permanente's plans and your situation, consider talking to an advisor specializing in the financial planning needs of Kaiser medical professionals. Our Registered Investment Advisor (RIA) firm based in Northern California provides retirement planning to help Kaiser employees:
Enjoy a higher success rate than doing it on their own
Have “permission to do the things most important to them
Confidently spend money to make the most of their prime retirement years
Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Granite Bay and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.