Important Vista 401(k) 2024 changes!
- Part-time employees can now participate in the Vista 401(k) Plan! Please visit the vista401k.com website or contact the Retirement Services Department at (866) 325-1278 with any questions!
- 2024 IRS contribution limits have increased from $22,500 to $23,000, while catch-up contributions for those 50 years of age or older remain at $7,500.
Q1 2024 Plan Performance
By Constantine Mulligan, Director of Investments Partner, Cerity Partners LLC
Vista 401(k) Plan Fund Performance
The first quarter of calendar year 2024 resembled much of what 2023 provided to investors, with capital markets generating mostly positive returns across asset class as investors continued to digest what the coming year meant for potential rate cuts from the Federal Reserve, while also monitoring potential spillover from various geopolitical risks.
The Plan’s investments provided appropriate returns relative to their respective indexes and peer group averages in the quarter, with some even generating double digit returns. Low investment costs to participants continue to be a staple of each of the funds offered within the menu, as every fund can be found within the lowest cost quartile on a percentile basis relative to specific peer group averages.
The target date funds (managed by American Funds) have consistently been one of the most competitive products relative to the target date investment universe from both an absolute and risk-adjusted basis. These fund-of-fund strategies are comprised of underlying actively managed funds within each dated vintage but are still considered low cost compared to the peer universe.
The JPMorgan Equity Income fund maintained a Watch List status, with no material updates this quarter. The retirement transition of lead portfolio manager Clare Hart continues until the eventual retirement date scheduled for Fall later this year. There have not been any problems associated with the pending move, as the announcement has been transparent and includes a solid long-term transition plan.
FOR OUR CLIENTS WHO WISH TO TAKE A DEEPER DIVE, WE HAVE PROVIDED THE FOLLOWING ECONOMIC AND MARKET COMMENTARY. THIS WILL PROVIDE AN EXPLANATION OF THE OVERALL MACRO AND MICRO ECONOMIC FACTORS INFLUENCING THE MARKETS AND, IN TURN, YOUR VISTA 401(K) ACCOUNT. IF YOU HAVE ANY QUESTIONS OR WISH TO DISCUSS THESE MATTERS IN GREATER DETAIL, PLEASE CONTACT US AT (866) 325-1278 OR E-MAIL US AT 401K@VISTA401K.COM.
1st Quarter 2024 Economic and Market Recap
The first quarter of 2024 exhibited familiar economic trends, echoing those of the previous year. Inflation and consequent rate hikes persisted, albeit without pushing the economy into recession. While inflation gradually declined from its highs, concerns lingered regarding persistent factors. Labor markets remained robust, driving economic growth near long-term averages. Interest rates edged higher, delaying expectations for rate cuts. Despite this, equity markets rallied on anticipation of potential cuts, though uneven earnings growth reflected economic uncertainty. Real GDP growth for the quarter is estimated to be around 3%, influenced by rate hikes but offset by strong labor markets and consumer spending.
Housing markets remained resilient despite affordability challenges, with signs of improvement. Manufacturing showed signs of recovery after a period of contraction. Inflation, particularly in services, remained a concern, driven partly by shelter costs. However, real-time measures suggest a possible slowdown in inflation's ascent.
The labor market remained a pillar of economic strength, with continued job creation and wage growth outpacing inflation. However, sticky wage growth posed inflationary uncertainties. Productivity growth eased some pressure on wages, supporting corporate bottom lines.
Interest rates rose as economic strength persisted, with corporate credit markets showing resilience. Despite this, corporations adapted to the new financing landscape. Federal Reserve discussions shifted from rate hikes to potential cuts, aligning with market expectations for three cuts in 2024.
Internationally, Eurozone and Chinese economies faced challenges, while Japan saw modest improvements. Central banks globally felt pressure to ease policies amidst slow growth. The Fed, despite economic strength, signaled rate cuts to manage inflation.
In the US equity markets, large caps saw significant gains, driven by technology and energy sectors. However, disparities emerged among the market's top performers. Earnings expectations for 2024 remained steady, with large caps anticipated to outperform small caps.
The outlook for the second quarter suggests a deceleration in economic growth but no imminent recession. Consumer spending remains supported by financial asset appreciation and real estate values. Businesses, cautious amid rising rates, may increase spending as demand rises. Housing is expected to contribute to economic growth, aided by declining mortgage rates.
European economies show signs of stagnation, with export strength offsetting weakness in China. Japan anticipates a rebound in consumer spending. China's growth is expected to fall short of government targets due to a property debt crisis and restrained fiscal and monetary policies.
The Fed's efforts to manage inflation and economic growth will likely lead to rate cuts. Central banks globally may follow suit to stimulate growth. Bond markets remain stable, with low default rates and compressed spreads. Equity markets may see consolidation but continue to offer opportunities, especially with broader market participation.
Investors should consider the current economic state, with growth and declining inflation favoring equities. Bond markets provide an alternative amid monetary tightening. Overall, the outlook suggests a healthy equity market with potential buying opportunities in the second quarter.
March 2024 Fund Performance Chart
It’s Never too Late to Start Investing
Are you in your 40’s, 50’s, or 60’s? - It is never too late to invest in your future!
As life progresses, financial planning often takes center stage, with retirement looming as a significant milestone. For many individuals hitting the age of 40, concerns about retirement savings become more pressing. One common question that arises at this juncture is whether it's too late to open a Vista 401(k) account. The resounding answer to this question is no, and here’s why:
Time Remains on Your Side
First and foremost, time is still on your side, albeit in a slightly different form. While it's true that starting early in your career provides the advantage of long-term compounding interest, starting at 40 or later doesn't mean you've missed the boat entirely. Whether you are in your 40’s, 50’s, or 60’s, there's still a substantial period for your investments to grow.
Moreover, in the second half of your career, you may be near or at your peak income. This means you can contribute more to your Vista 401(k) account than you might have been able to in your earlier years. If you are 50 or older you can take advantage of catch-up contributions allowed by the IRS. These additional contributions can significantly boost your retirement savings as you approach retirement.
Risk Tolerance
Furthermore, in your 40’s, 50’s, and 60’s, you likely have a clearer understanding of your financial goals and risk tolerance. This awareness may allow you to make more informed investment decisions within your Vista 401(k) account. While time may be relatively shorter compared to starting in your 20s or 30s, the experience and knowledge gained over the years can help compensate for this.
Tax Advantages
Additionally, consider the tax advantages offered by your Vista 401(k) plan. Contributions made to your Vista 401(k) account are pre-tax, reducing your taxable income in the current year, and allowing your investments to grow tax-deferred until retirement. This tax-deferral can be particularly advantageous as you approach retirement age, providing potential tax savings and allowing your investments to grow.
Diversification
Diversification is another key aspect to consider when investing in your 401(k) plan. While there may be a temptation to pursue high-risk, high-reward investments, it's essential to maintain a balanced portfolio that aligns with your risk tolerance and retirement goals. Diversifying your investments across asset classes can help mitigate risk and optimize returns over the long term.
Financial Advisor – Cerity Partners
Lastly, seeking guidance from a financial advisor can provide invaluable assistance in navigating the complexities of retirement planning, especially when starting later in life. That is why the Plan offers the services of Cerity Partner’s, a registered investment advisory firm, to help you develop a personalized investment strategy tailored to your specific circumstances and goals, ensuring you make the most of your 401(k) plan in the years leading up to retirement. To speak to a Cerity advisor simply call (866) 325-1278 and request a Cerity representative. Please note this service is provided at no additional cost to you, the participant.
Carpe Diem – Seize the Day
While starting early has its advantages, it's never too late to begin investing in your 401(k) plan, even if you're 40 or older. With careful planning, strategic contributions, and informed investment decisions, you can still build a substantial nest egg to help support the retirement lifestyle you envisioned. Remember, it's not about how early you start; it's about taking action and making the most of the time you have left until retirement.
Contact Us
Invest in yourself today and achieve financial peace tomorrow!
Get started today by visiting Vista401k.com or calling us at (866) 325-1278.
Start Early – Invest Consistently
Why Invest in Your 20’s and 30’s?
Saving for retirement may not be at the forefront of your mind when you're under 40 years old, but it should be. While retirement may seem like a distant event, the earlier you start investing in your Vista 401(k) plan, the better off you will be in the long run. Here's why it's crucial to prioritize investing in your 401(k) in the earlier stages of your career.
Compound Growth in Investments
The power of compound growth is most effective when you start investing early. By contributing to your 401(k) in your 20s or 30s, you allow your investments more time to increase in value exponentially. This growth occurs as your investments earn returns, which are then reinvested to generate their own returns. Over time, this process can significantly enhance your retirement savings. The longer your money is invested, the more substantial your nest egg can become.
Maximizing Tax Benefits
Contributions to your Vista 401(k) are made with pre-tax dollars, meaning you lower your taxable income for the year. This not only reduces your current tax bill but also allows your investments to grow tax-deferred until you start withdrawing in retirement.
Preserving Financial Independence
Relying on your Florida Retirement System Pension Plan (or FRS Investment Plan) may not be a sufficient retirement strategy. Although it is an excellent start, you may also require a supplemental retirement plan to meet your needs. One such option is the Vista 401(k) Plan. By choosing to open a Vista 401(k) account you're taking proactive steps to help secure your financial future and maintain your independence in retirement.
Longer Time Horizon for Risk Tolerance
When you're under 40, you typically have a longer time horizon until retirement. This allows you to take on more risk in your investment portfolio, potentially leading to higher returns. While investing in stocks comes with volatility, over the long term, they tend to outperform more conservative investments like bonds. By starting early, you can better afford to ride out market fluctuations and benefit from the higher returns associated with equities.
Avoid the Procrastination Trap
It's easy to procrastinate when it comes to saving for retirement, especially when retirement seems far off. However, delaying investing in your 401(k) can have significant consequences. The longer you wait, the more you'll have to contribute later to catch up. Starting early establishes a habit of saving and investing, making it easier to stay on track as you progress in your career and life.
Building Financial Discipline
Investing in your 401(k) requires discipline and foresight. It teaches you to prioritize long-term financial goals over short-term desires. By committing a portion of your income to retirement savings early on, you develop responsible financial habits that can prove beneficial throughout your life. This discipline extends beyond retirement savings and can positively impact other areas of your financial life, such as budgeting and debt management.
Setting a Foundation for Financial Security
Your 40s and beyond are often characterized by increased financial responsibilities, such as mortgages, children's education, and healthcare costs. By investing in your 401(k) early, you're laying the foundation for financial security that can help alleviate some of the pressures later in life. Having a substantial retirement savings cushion allows you to focus on other financial goals without sacrificing your retirement plans.
Investing in your retirement before the age of 40 is not just a wise financial decision; it's crucial for ensuring a secure and comfortable retirement. The benefits of starting early far outweigh any excuses for procrastination. By prioritizing retirement savings now, you’re setting the stage for a more financially stable future, allowing you to enjoy your retirement years with increased peace of mind.
Nuts & Bolts: Invest Your DROP Funds
How to Invest DROP Funds in Your Vista 401(k) Account:
- Let the Florida Retirement System (FRS) know you would like to roll your DROP funds into your Vista 401(k) Account.
- FRS will provide the necessary form. Please complete that form and return it to FRS.
- Should you choose to roll your funds into the Vista 401(k) Plan, the Vista 401(k) Retirement Services Department sends a rollover form to you to complete and return to Retirement Services.
Note: If you do not have a Vista 401(k) Account you need only set one up prior to retirement and fund it with at least one payroll contribution.
Why Roll Drop Funds into Your Vista 401(k) Account:
- Consolidation: Individuals often accumulate multiple retirement accounts over their career. Consolidating these accounts makes it easier to track performance, adjust asset allocation, and plan for your financial future. Consolidation not only streamlines your financial strategy but also provides a clearer picture of your overall retirement readiness.
- Tax Advantages: DROP funds are treated as income the year they are paid out to participants. If you do not place these funds in a tax-deferred account the funds will be treated as income in that year. However, if you roll them into a tax-deferred plan like the Vista 401(k) Plan, taxes will be taken as you withdraw funds over the years. By then you may be in a lower tax bracket.
- Portability: Your DROP funds are portable. This means that should you choose to roll these funds out of your Vista 401(k) account, you can do so with no waiting period or penalty.
For additional details please contact the Retirement Services Department at (866) 325-1278.
Financial Wellness: Creating a Spending Plan
Once you have a general idea of how much you need to save each month to reach your retirement goal, you need to determine where you will find the money. There’s one simple trick for saving for any goal: spend less than you earn. The first step is to get organized by creating a spending plan or budget.
Add up Your Monthly Income: wages, average tips or bonuses, alimony payments, investment income, unemployment benefits and so on. Don’t include anything that you cannot count on.
Add up Your Monthly Expenses: mortgage or rent, car payments, average food bills, medical expenses, entertainment and so on. Determine an average for expenses that vary each month, such as clothing, or that don’t occur every month, such as car insurance or self-employment taxes. Review your checkbook, credit card records and receipts to estimate expenses; you probably will need to track how you spend cash for a month or two. You may be surprised to find out where and how much cash “disappears” each month. Include the amount you want to save each month as an expense.
Subtract Your Income from Your Expenses. You may have more expenses than income. This is not uncommon. You have three choices: cut expenses, increase income or both. There are hundreds of ways to reduce expenses, from clipping coupons to bargain hunting to comparison shopping. Increasing income could mean taking a second job, improving your job skills or education to get a raise or a better paying job, making money from a hobby or jointly deciding that another family member will work.
Budgeting Tips:
Pay yourself first. Put away first the money you want to set aside for goals. Have money automatically withdrawn from your checking account and put into savings or an investment. Join a retirement plan at work that deducts money from your paycheck. What you don’t see, you won’t miss.
- Put bonuses and raises toward savings.
- Make saving a habit. It’s not difficult once you start.
- Revisit your budget every few months to be sure you are on track.
If you have any questions please contact the Retirement Services Department at (866) 325-1278.
Helpful Links
The material herein is provided for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. The material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations. Situations differ among individuals and you should not assume that these generalizations or information apply to you. Keep in mind that past performance is no guarantee of future performance, and investments involve the risk of loss of principal and earnings. Additionally, neither your employer nor the plan administrator nor FBMC is able to provide you with investment advice--if you would like specific investment advice, you should consult Cerity Partners or your own personal investment advisor.