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The University of Texas UTSaver Retirement Programs offer all employees an excellent opportunity to save for retirement. These plans allow you to defer part of your salary either before or after taxes and invest that money with one of our five approved providers to save for retirement.
However, while many employees find it easy to select a company, they have questions regarding just how to invest their funds.
The UTSaver Tax Sheltered Annuity (TSA) and UTSaver Deferred Compensation Plan (DCP) offer both mutual funds and annuity accounts. Good choices depend on understanding your options. When creating your retirement portfolio, you need to consider whether mutual funds, annuity accounts or a combination are right for your savings goals.
What is a mutual fund?
A mutual fund is a pool of investments owned by many investors. These investors buy shares in the fund, and the fund invests the money, based on its stated objective. Mutual funds include choices in major asset classes such as equities (stocks), fixed-income (bonds) and money market securities. Investors share in the gains or losses of the fund, and returns are not guaranteed.
What is an annuity?
An annuity is a contract between an individual and an insurance company. Investors in annuities shift the risk of running out of money to the insurance company. Annuities are often more expensive than mutual funds because of this feature. There are two different kinds of annuities in your plan: “guaranteed” and “variable.”
What is a guaranteed (fixed) annuity?
A guaranteed or fixed annuity guarantees income during retirement. It is a way to save for retirement that preserves the value of your principal, pays a minimum guaranteed interest rate (with the opportunity for additional amounts) and lets you choose lifetime income payments when you retire. It is backed by the claims-paying ability of the issuing insurance company.
What is a variable annuity?
The value of a variable annuity fluctuates based on the market performance of its underlying securities, much like a mutual fund. Unlike fixed annuities, there is no guarantee of principal repayment or rate of return.
What if I need help choosing between them?
The UTSaver plans partner with Fidelity Investments, Lincoln Financial, TIAA, VALIC and VOYA Financial, to ensure employees receive the help they need. Each of these providers have licensed financial advisors on or near your campus who can sit down with you at no cost to discuss all of your investment options and to help you determine and then work toward your long-term goals.
To learn more about your retirement options, please visit www.utretirement.utsystem.edu or call your local benefits office.
