Lunch-N-Learn: Financial Literacy with Brandon Kidd

Jun 27, 2024 | Company News, Know-How | 0 comments

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By Rhea Koli, Strategic business Analyst

Circle Optics, a pioneer in innovative camera systems, is dedicated to attracting and retaining top talent by fostering a company culture built on the pillars of innovation, know-how, and synergy. Recognizing that a strong team is the foundation of its success, Circle Optics goes above and beyond to offer a competitive employee benefits package that includes a generous 4%  401(k) match—an exceptional offering for a startup. 

To further enhance the financial well-being of its employees, Circle Optics partners with Pinnacle Employee Services to provide comprehensive support and resources. Chief Operating Officer, Ian Gauger shared, “At Circle Optics, synergy is one of our core values. Partnering with Pinnacle Employee Services allows us to seamlessly integrate their expertise into our operations. Having a local firm where we know their names and they deliver customized presentations for our employee needs matters. Face-to-face interactions are important to our culture, and working with Pinnacle ensures we maintain these connections. Being rooted in the Upstate New York ecosystem is vital to us.”

Recently, the company hosted a Lunch-N-Learn session focused on maximizing the benefits of 401(k) savings strategies. This informative workshop led by Pinnacle’s Financial Advisor, Brandon Kidd , covered key points such as the importance of early and consistent contributions, the power of compound interest, and the various investment options available within the 401(k) plan. 

By prioritizing both professional growth and financial security, Circle Optics not only attracts top-tier talent but also ensures its employees have the knowledge and tools to maximize their earnings and secure their financial future. This commitment to employee well-being is a testament to Circle Optics’ dedication to creating a thriving and supportive workplace where innovation and excellence can flourish

Here are a few themes discussed.

Navigating the 401(k) Landscape 

 Kidd kicked off the session by explaining the basics of a 401(k) plan. A 401(k) is a retirement savings account sponsored by an employer, offering tax advantages to encourage saving for retirement. Employees can contribute pre-tax or after-tax income, depending on their financial goals and current tax situation. Pre-tax contributions reduce taxable income for the year, with taxes deferred until withdrawal during retirement. Conversely, after-tax (Roth) contributions are taxed upfront but grow tax-free, offering tax-free withdrawals in retirement. 

 The Power of Roth Options 

  Kidd highlighted the benefits of Roth 401(k) and Roth IRA accounts, especially for younger employees. With a Roth account, contributions are made after-tax, allowing the investment to grow tax-free. Upon retirement, withdrawals are entirely tax-free, providing a significant advantage given the uncertainty of future tax rates. For young professionals, starting with Roth contributions can be particularly beneficial, as they are likely not yet at their peak earning potential and have a longer horizon for tax-free growth. 

 Circle Optics’ Commitment to Employee Financial Wellness 

 Despite our startup status, Circle Optics matches 401(k) contributions up to 4%, demonstrating our dedication to employee financial wellness. Kidd emphasized the importance of taking full advantage of this match, describing it as “free money” that effectively doubles the employee’s contribution up to 4%. This match can significantly boost retirement savings over time, providing a substantial financial foundation for our team. As Kidd noted, many startups do not offer such generous retirement benefits, making Circle Optics stand out in the competitive job market 

 Key Takeaways and Practical Advice 

 Kidd provided practical advice on how to optimize retirement savings: 

1. Start Early: The earlier employees start saving, the more time their investments have to grow. Compounding interest can significantly increase retirement savings over time. 

 2. Maximize Employer Match: Employees should contribute at least enough to receive the full employer match, as this is essentially free money. 

 3. Diversify Investments: Circle Optics’ 401(k) plan offers 35 different investment options, including US markets, international markets, large-cap, and small-cap companies. Diversifying investments can help manage risk and optimize returns. 

 4. Consider Risk Tolerance: Younger employees might benefit from more aggressive investments with higher growth potential, while those closer to retirement may prefer more stable, conservative options. 

  Roth vs. Traditional: Making the Right Choice 

 One of the most enlightening parts of the session was the discussion on choosing between Roth and traditional 401(k) contributions. For high-income earners looking to reduce current taxable income, traditional 401(k) contributions may be more beneficial. However, for those anticipating higher future tax rates or seeking tax-free retirement income, Roth options are advantageous. 

  An Anecdote on the Power of Time in the Market 

 Kidd shared a powerful anecdote that resonated with many: “It’s not about timing it’s about time” He illustrated this with the story of two friends, Ben and Arthur. Ben started investing $2,000 a year at age 19 and stopped at 26, while Arthur started at age 27 and continued until age 65. Despite investing for fewer years, Ben ended up with more money at retirement because his investments had more time to grow. This story underscores the importance of starting early and staying invested for the long term. 

Real-Life Examples and Scenarios 

Kidd shared compelling examples to illustrate the long-term benefits of consistent contributions and the impact of compounding interest. For instance, a 23-year-old starting with $60,000 in annual income and contributing 4% (matched by Circle Optics) could accumulate nearly $900,000 by age 65, assuming an 8% annual return. Starting early and leveraging employer contributions can make a profound difference in retirement savings. 

Our recent finance session was not just about numbers; it was about empowering our team with the knowledge to make informed financial decisions. Circle Optics is proud to support our employees with robust retirement benefits, ensuring they can build a secure financial future while contributing to our innovative and growing company. By understanding and leveraging these benefits, our employees can confidently plan for a financially secure retirement. 

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Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice. Circle Optics encourages readers to consult with their personal financial advisor to make informed financial decisions.

Learn more about Circle Optics’ Corporate Culture

Leveraging Company Culture As Flywheel for Growth

Lunch-N-Learn: Behavioral Interviewing with Jennifer Sertl

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