Kaiser Permanente retirement plans offer many advantages to help you prepare for retirement, from tax breaks and flexible investment choices, to tax advantages. But choosing where and what to invest can be daunting when you don’t understand the industry well.
Kaiser Permanente’s 401(k) retirement plan established with Vanguard Asset Management is a multiemployer defined contribution pension established in 1987 and administered by its fiduciary trust company and asset management. As one of the largest multiemployer pension plans in the US and an important source of funding for retiree healthcare benefits, this pension stands out amongst others like it as being managed by one of the world’s leading investment managers with over $6.2 trillion under management by Vanguard Group alone.
Vanguard Target Retirement 2045, 2050 and 2055 charges just 0.15% in fees annually for Investor share classes of its Target Retirement 2045-2055 series funds; significantly less than other target-date funds in this category and without increasing as you near retirement age. It makes Vanguard Target Retirement funds even more appealing as potential holdings for many 401(k) investors’ portfolios.
One factor which could have hindered VPMCX’s 10-year performance could have been its high allocation to airline stocks, which have been hit hard by industry turmoil and COVID-19-related disruptions. Yet even so, over the last three years VPMCX outpaced the S&P 500 while earning returns that put it among the top 9% of large-value funds.
Vanguard Small Cap Fund offers one of the finest small-cap funds for 401(k) investors, boasting a decent yield that surpasses that of the S&P 500 at 1.5%. However, management changes have taken their toll; Vanguard recently dismissed subadvisers Jackson Square and Baillie Gifford from its team, leaving only four managers to manage roughly 28% of portfolio assets; similarly, its quant team was recently revamped; longtime members James Stetler and Binbin Guo retired.
Most employer-sponsored retirement plans offer catch-up contributions, making this an easy and effective way for people approaching or already in retirement to boost their savings by contributing above the default amounts taken out of each paycheck. Unfortunately, only sixteen percent of Americans take advantage of this option according to Vanguard’s “How America Saves 2023.” If you are among the minority taking advantage of catch-up contributions then continue making them in order to maximize financial security for later years.