A Lifecycle Fund Could Be
Your Cure for Investment Paralysis
Set it and Forget it
The ABCs of
Investment Choices Information to Consider When Choosing a Lifecycle Fund
Investing for retirement can be a Lifecycle funds generally consist of individual mutual funds within the same
perplexing mix of choices: IRAs, fund family that invest in different assets, such as bonds, U.S. stocks and
403(b)s, 457s, annuities, mutual international stocks.
funds and money markets. • Different mutual fund families invest their funds differently, even for the
When you add in concerns about same retirement date. One asset allocation isn’t better than another;
Social Security and health care, there’s however, more stocks usually means more volatility.
no wonder many suffer from invest-
• Costs vary. Funds can charge from $21 for every $10,000 to $78 per
A lifecycle fund, which is a special
type of mutual fund, can help you • Some funds charge other fees, such as a front-end commission, which
shake off inertia and take action. immediately reduces the amount of money available for investing.
• The lifecycle fund manager allocates the most appropriate mix for your
Lifecycle Funds Are target date. Be aware that investing in a lifecycle and in outside funds
Easy and Effective may increase your level of risk more than your fund manager intended.
Lifecycle funds, also known as target • Although lifecycle funds may be more diversified than any single mutual
date funds, are designed to follow fund, the diversity may vary among fund families, affecting volatility.
you throughout your working life and
change as you approach retirement.
They frequently start out with aggres-
sive investments and automatically
grow increasingly conservative. You
can set it and forget it.
CalSTRS offers a lifecycle portfolio 40s: mid-career
through the Pension2® Easy Choice Rebalance allocations
Portfolio at www.CalSTRS.com/
CalSTRS Mission: 20s: starting out 60s: retirement age
Securing the financial future
How They Work Heavy with stocks Switch to more bonds
and sustaining the trust of
Once you select your target retirement
Teachers’ Retirement Board date and risk tolerance, a professional
Dana Dillon, Chair
Jerilyn Harris, Vice-Chair money manager takes over, calculating
Kathy Brugger the initial allocation and periodically
Michael Genest rebalancing that allocation as your
Harry Keiley retirement date nears. Watch Out for Fees plan keeps your costs low with
Bill Lockyer While in your 20s, lifecycle funds The flip side to the ease and conve- reduced fees and expenses and by
are heavy with stocks—generally a nience of a lifecycle fund is the fee selecting funds that are no-load and
Beth Rogers more risky but higher yielding invest- structure. Keep your eye on the costs, no-commission. You never have to
ment. As you approach your 50s and which frequently are hard to find. guess about our fee structure because
Chief Executive Officer eventually retirement, the lifecycle Costs are key because in long-term we tell you up-front what the fees are.
Christopher J. Ailman fund’s level of risk is gradually and investments such as these, higher
Chief Investment Officer automatically reduced because it costs can have a substantial impact on The Next Generation
Lynette Blumhardt switches to more conservative your retirement nest egg. From CalSTRS
Statements in this publication
bond investments. CalSTRS Pension2 personal wealth The CalSTRS Pension2 Easy Choice
are general and the Teachers’ lifecycle portfolio merges time
Retirement Law is complex and
specific. If a conflict arises between Benefits of horizon with risk tolerance and
information contained in this
publication and the law, any decisions Compounding Value at age 65 if investing starts . . . includes various mutual fund fami-
will be based on the law. lies. These features offer greater
Monthly diversification than most lifecycle
Your Money Matters is published once Current age Today In 3 years In 10 years
a year for active CalSTRS members contribution
and Cash Balance participants. Send funds. The funds are chosen and
your comments or suggestions to: 40 $100 $78,747 $61,014 $31,286 monitored by CalSTRS investment
Editor, Communications, M.S. 34 45 $100 $51,014 $38,397 $17,202 pros—the same people who invest
P Box 15275
Sacramento, CA 95851 50 $100 $31,286 $22,272 $7,160 your Defined Benefit portfolio.
Source: Why Wait savings calculator, 2007, available free from CalSTRS. See offer on the front page of this newsletter.
printed on recycled paper Note: This hypothetical illustration uses an assumed yield of 7 percent.
It’s An Adventure
Within travel, adventure travel is a growing
trend. If you want to climb Mount
Kilimanjaro or bike through the wine
country, regular exercise now will help you
By The Numbers
Climb the Stairs Today— • One-half of U.S. adults, or 98 million
people, have taken an adventure trip
Mount Kilimanjaro Tomorrow in the past five years.
• This includes 31 million adults who
engaged in hard adventure activities
like whitewater rafting, scuba diving
30 Quick Minutes It’ll Make You Feel Good and mountain biking.
How much exercise do you need now to get healthy The physical benefits range from lookin’ good to • A full 52 percent of adventure
and stay healthy into your later years? lowering the risk of some illnesses, such as: travelers are women.
• 30 minutes of moderate exercise each day. • Heart disease, • 41- to 60-year olds make up the
highest participating age group.
• Three 10-minute intervals provide the same • Cancer and
• Highest year-to-year, increased
benefits. • Diabetes.
consumer regional interest is
Moderate exercise includes activities that make you The mental health benefits include reduction of: South America.
out of breath but not sweaty like gardening, brisk
— • Stress and Source: the Adventure Travel Report, 2008
walking or cycling.
Source: American College of Sports Medicine
and the Centers for Disease Control and Prevention
And Prevent Mental Decline The Web site, adventurelogue.com
Another study found that regular exercise in midlife defines adventure travel as:
A Northern Arizona University study reduces the possibility of dementia by 50 percent and intentionally going beyond your
Alzheimer’s by 60 percent. Specifically, the researchers normal known area, seeking out
concludes that 10 minutes of exercise suggest that exercising as little as twice a week will
experiences which are unfamiliar.
can lift your mood. provide positive results.
One analyst believes that the study makes the case
for beginning good health habits early.
Keep Your Security Information Safe
• Get a summary of medical benefits • Sign up for the national Do Not Call unsolicited e-mail or other type of
paid in your name each year. Registry at www.donotcall.gov. electronic communication.
• Keep copies of medical records. • Sign up for the Direct Marketing • When you use the CalSTRS
• For more information, go to Association’s Mail Preference Service Web site, you agree to our terms
www.worldprivacyforum.org. at www.dmaconsumers.org to reduce and conditions available at
junk mail and junk spam. www.CalSTRS.com/help/privacy.
Medical Identity Theft Stop Unwanted Solicitations • Delete spam. – Use of our Web site is anonymous,
An estimated 250,000 Americans You can slow the onslaught of unwanted • Visit www.junkbusters.com/fax.html unless otherwise specified.
have their medical ID stolen each year, phone, e-mail, fax and mail solicitations, to find out how to reduce junk faxes. • CalSTRS securely transmits your
according to the World Privacy Forum. advises the California Department of warrant for direct deposit.
Thieves may use your medical information Consumer Affairs, by exercising these Protect Your CalSTRS Information
to receive health care or sell prescription consumer tips: CalSTRS uses your personal information
drugs. Protect yourself: • Stay off marketing lists. only to conduct CalSTRS-related business.
• Give health insurance info – Don’t fill out consumer surveys, • CalSTRS will never ask for your
to trusted providers. sweepstakes or warranty personal information in an
SUMMER 2008 www.CalSTRS.com Your Money Matters 3
PERMIT NO. 25
Web sites www.CalSTRS.com
Click Contact Us to e-mail
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Your Personal Information Quick, Current and Paper-free
“Logging onto myCalSTRS was easy. I found myself with
tremendous access to all sorts of valuable information
about retirement and planning for my future.”
—Alan Sitomer, high school teacher and
2007 California Teacher of Year
How easy is it to register for myCalSTRS? Free Gift
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Why Wait savings
• Review your benefit choices
calculator by sending an e-mail
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(Level II access) This paper calculator will help you
• Ask questions about your account and receive figure out how much money you can
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You check your bank statement online. Why not do the same with your
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