This is saving

You can save by getting a bargain on something you need, or you can save by putting money aside for the future. With DCP, you can do both.

This is saving

The Washington State Deferred Compensation Program is a supplemental retirement savings program to boost your income when you retire. Whether you’re thinking of starting or have been saving for years, you can save even more with DCP.

Looking for an introduction to DCP? Check out the animated video to help you understand the program so you can feel comfortable meeting your goals.

We’ve also asked real DCP participants what they think of DCP and how it’s working for them. Read how your colleagues are using DCP to plan for the future.

Trying to decide how much to save? Use this handy calculator to determine your own retirement goals.

Enrollment is simple, and the minimum is just $30 per month. Online account access puts you in the driver’s seat, so you can change your contribution amount or investment options whenever you want.

Questions? Visit the DCP website or call the helpline at 888-327-5596.

Real people, real savings

Want to know how DCP works? DRS asked six DCP participants what they think of DCP and how it’s working for them. Read how your colleagues are using DCP to plan for the future.

Want to share your DCP story? Connect with us on Facebook.

Beau Perschbacher

Tax Policy Analyst, Department of Revenue

Beau started with an internship at the State Senate. A supervisor on his first post-college job encouraged him to save right out of the gate.

How did you start working in public service?

My senior year of college, I did an internship with the state legislature. The recruiters came by our campus a couple of times. I was a political science major, so it was definitely something I was interested in. I worked with Senator Mary Margaret Haugen when she was the transportation chair, and then the internship ended, but I’d made some good connections with the state and the legislative arena, and I was able to carry on.

I worked for Employment Security for a little while, and went back to the Senate. Eventually I came over to Revenue where I work on tax legislation and bill drafting.

How long have you been saving with DCP?

Since the very beginning, actually. Not during my internship – of course it wasn’t available to me then. But when I started with Employment Security, one of the lead workers told me I should start saving for retirement.

I thought I could use the money for something else, but he said, “Just put a little in and if you make more money, save more then, but it’s good to start when you’re young.” So I started right out of the gate. With the very minimum. Fifteen dollars a pay period. And then I’ve slowly increased it over time.

What questions did you have when you were signing up? How did you get answers?

I used the website. I thought the website was helpful when I was curious about how it worked. And to me it seemed very straightforward. You can pick the dollar amount.

Because when you start out you don’t have a ton of disposable income, I figured I’d start small and see how it goes. But eventually I didn’t miss it. And I was able to keep working on that. I could always check the website if I wanted to update anything.

How does saving with DCP affect how you budget?

You notice initially, once you up your contribution, but I was able to look at our budget and determine there was a little extra to put aside. After a couple of months you don’t even realize it’s gone. You naturally adapt your budget to not having that disposable income. It’s also nice to see how it’s growing over time - to see that and think about it in terms of my long-term financial picture.

How often have you changed your DCP contribution amount?

I think I’ve changed it twice. You know when you get a new job and you have to think about all that stuff and sign paperwork again? That’s when I did it. When I changed jobs, I looked up how much I was taking out and whether I could afford to increase it.

How would you describe your investment knowledge?

I think I’m fairly knowledgeable. I have some investments on the side that I do myself. Generally, I try to be a pretty passive investor: keep it and hold it, don’t really mess with it. I try to go for the low-fee index funds. I’m definitely not one who meddles with it a lot. I select a strategy and put it out of my mind. When I read something in the news that freaks me out, I’m not selling shares and moving things around.

What do you think of your investment options with DCP?

The DCP website has a lot of good information. If you really like specific strategies with your money, there are a lot of good options.

If you’re not interested in managing a specific strategy, I found it really helpful just to go with the strategy based on my age and when I plan to retire, because then the risk will change throughout my life. I like the auto-allocation. That’s great. I like to think of it as a good, well-rounded long-term investment for my retirement money. I definitely trust the judgment of the Investment Board in selecting that allocation for me. I don’t want to think about it.

What would you tell someone who is thinking about starting with DCP?

I would just say start small. If you’re worried, I totally understand. It’s hard not having the money in your pocket. I totally get that. But you can start small and it does add up eventually, which is nice to see. And you can always increase it or lower it.

You have some flexibility with how you change it, because your circumstances may change. If you have a lot of anxiety about it, I would just say start small and see how it goes, and you can always increase it later, if your circumstances change. You may notice you’re not missing that money as much as you thought.

Jessie Jackson

Executive Assistant, LEOFF Plan 2 Board

Jessie’s first job in public service was at the Department of Retirement Systems, so DCP was the obvious, simple way to save for retirement.

How did you start working in public service?

I started applying for state jobs that were interesting to me, and after a few interviews, I was offered a job at the Department of Retirement Systems. It was an Administrative Assistant 2 position, and I started in July 2013. Since then, I’ve received two promotions, and I currently work at the LEOFF Plan 2 Board as an executive assistant.

How long have you been saving with DCP?

I started putting money into my DCP account when I was promoted at DRS. I received a little bit of a pay increase, so I thought that was a good time to start saving in DCP. That was in December 2013.

Why did you start saving with DCP?

It seemed like a really easy way to start saving money for my future. It’s deducted from my paycheck already, so I don’t really have to do anything. Because I already worked at DRS, I knew it was an easy option, I was educated about it, and it couldn’t have been simpler to sign up for.

What questions did you have when you were signing up? How did you get answers?

I don’t know that I really had too many questions. But the first question I had was “What is the minimum amount I could put in?”

I went to the website to learn everything I needed to know. All the information I needed was available there. I thought it was great. It provided me with all the answers I needed, and it led me to sign up.

How does saving with DCP affect how you budget?

I had been a stay-at-home mom for the 3 years before I started my first job in public service, and I didn’t really have any extra money to budget for a DCP account. Then I received a raise, and I was able start saving. Contributions go directly from my paycheck into my DCP savings account, so I just pretend I’m not really being paid that money to begin with. I treat it like a secret savings account.

How have your DCP contributions affected your paycheck?

Because I waited to contribute to DCP until I received a pay increase, I haven’t experienced any difference in my paychecks. Every pay period I look at my earning statements. I see it’s been taken out, and then I see the column that shows me how much I have, and so that’s exciting, but it’s not affecting anything in a negative way.

What do you think of the Online Account Access?

I like that I can check it at any time, to see how much I have in there when I’m daydreaming about retiring. It’s an added bonus that I can automatically log in through my online DRS retirement account.

How often have you changed your DCP contribution amount?

I’m still making the minimum contribution. When my probationary period is over in my current position, I plan to put in more to my contributions, because I’ll be receiving a pay increase. I plan to increase my contribution a little more each year.

What do you think of your investment options with DCP?

I chose the Retirement Strategy Fund based on my age. Because I don’t know too much about investing, I like not having to think about it right now. I believe that’s a good one for me, and I know that I can change my investment option at any time online if I want.

What would you tell someone who is thinking about starting with DCP?

I would say they should do it. Don’t think about it, just go ahead and do it, because later you can only regret not doing it. And if you start now, eventually it will add up to a lot of money. I don’t have many close friends who currently save for retirement, so I encourage everyone to do it.

I don’t want to work for the rest of my life. As far as planning for the future, working for the state and receiving a small pay increase every year, I will reevaluate my contributions to DCP and add in a little bit more every time. It may be five dollars, but each year, I’ll continue to add more.

Sarah Mahugh

Audit manager, State Auditor's Office

Sarah needed someplace tax-free to save 401k funds from her previous private sector employer. She keeps saving with DCP because her dad encourages her to pay herself first.

How did you start working in public service?

I applied for a job at the State Auditor’s office in 2008. I started on the state audit team, and then moved on to auditing local governments, and now I’m back managing financial audits for state agencies and community colleges. I previously worked at a CPA firm, and I wanted a job where I could have an impact on my community.

Why did you decide to start saving with DCP?

I decided to start right away because I had a 401k I needed to rollover from the CPA firm. Saving with DCP was a way to do the rollover tax-free, and my HR department told me about the program.

Janna, my friend in HR, told me it was a really good program: DCP is a way to defer taxes and pay myself. That’s all it was, really. I also looked into the Roth IRA. My withdrawals when I retire could be higher with a Roth IRA, but then it wouldn’t come out of my paycheck tax-free now. I’d rather have more money in my paycheck, and I’m not as worried about when I retire.

This is convenient. I can just take it out of my paycheck as I go. It’s easy.

What have you noticed about the tax benefits of DCP?

Even though I might contribute a small amount each month, my net pay isn’t affected by that entire amount. My paycheck only decreases partially because the contribution comes out before taxes, and I don’t have to pay taxes on it until I retire.

What questions did you have when you were signing up and how did you get answers?

My biggest questions were, “What kind of a plan is this? What do my investments look like? What are my investment options?” I got my answers from DCP pamphlets that our office had, and I was able to see all the different investment options.

Also, I had meetings at the Washington State Investment Board at the time I enrolled in DCP. So they explained the Retirement Strategy Funds to me. They were brand new at the time. I remember them telling me how this program works: if you have an idea of when you are going to retire, you can invest in whichever fund matches your plans. The risk is based on when you’re going to retire. So I chose based on that – the 2050 retirement strategy adjusts my risk according to when I plan to retire.

How do you decide how much to save?

I do the projector online to figure out how much I think I’m going to need when I retire, and then I base how much I need to save for the year on that. And if my income level changes, or expenses change, then I can go online and change it.

In general, I try to do a percentage, about ten percent or so. I like that I can adjust it based on how much I need for the month.

So do you find yourself changing the amount pretty frequently?

Yep. I just change it online. It’s really easy. I forget my login, but they send me a new password pretty fast. You can see all the graphs… It’s great. That reminds me; I need to get on there.

Is there anything that’s changed over the years as you’ve been investing in DCP?

Even though HR told me about the program, there was definitely a time I thought, “Oh, I don’t want to do DCP anymore.”

But my dad always says, “It’s important you do this program because you always want to pay yourself back. You’re working really hard, so pay yourself first!” He encourages me to save and set goals for retirement.

What would you tell someone who is thinking about starting with DCP?

I’d tell them it’s really convenient. It’s super easy, you don’t have to worry about anything. You just fill out the paperwork, and then it automatically starts. You can go online and change your investment strategy, your investment options, at any time. You can go online and change how much you invest at any time too.

It’s a really easy and convenient way to save for your retirement and make sure you’re paying yourself before you pay taxes. If you keep building your money up in your retirement, it’ll pay off.

Noah Crocker

Senior Financial Analyst, Washington State Transportation Commission

Noah knew he wanted to save as much as possible thanks to his finance degree. He chose DCP because it was convenient and easy to make his contributions by payroll deduction.

How did you start working in public service?

When I graduated college, I started applying for jobs, and I landed a great job at the state Treasurer’s Office. That was the start of my public service: pretty much lucking out and landing in a great job. I was managing a debt portfolio. We were selling Certificates of Participation, getting funds for state agencies to build projects and helping local governments build different things and acquire equipment.

Why did you start saving with DCP?

Since my background in college was all about finance, I knew the importance of saving money early. I started using DCP because it was convenient, and I didn’t have to think about it. The money just came out of my check and went toward the retirement plan that I set up. So it was easy.

I started with something a little bit higher than the minimum. I was trying to contribute as much as I could toward my savings while still balancing my other financial responsibilities. Over time, I keep growing that figure, trying to reach the maximum. I’m not there yet, but I’m hoping to maximize my annual contributions while I’m young and benefit from all the returns of compounding interest.

What do you think of your investment options with DCP?

I think when I first started, the options were a little more cumbersome. I appreciate the way the Investment Board has changed them over the years, like adding the Retirement Strategy Funds. Those weren’t offered when I started, so I had to really think about my portfolio and diversify the way I wanted to. As the Retirement Strategy Funds came into play, I started to allocate more of my money there, rather than specific asset classes.

Especially for people just starting with DCP, a Retirement Strategy Fund would be a great option. They can simply put all their money into the one that matches when they plan to retire and let the portfolio managers allocate it as they need to. That was a great improvement that I’ve seen in the program.

What do you think of Online Account Access?

I think it’s gotten better. It’s easier, and I don’t need to use it as often. I check it maybe quarterly. I just check my financials, log in real quick to see how I’m doing. But other than that, I don’t have much interaction with the online access, aside from when I want to change my contributions. That’s been real easy, changing the contributions and checking my quarterly balances when I want to.

How does saving with DCP affect how you budget?

I would probably say it’s the other way around. I budget to save for DCP because I put retirement first. I want to retire as soon as possible. I want to be on my way to adventures, so I try to maximize my retirement contributions as much as I can while meeting all my other obligations.

Have you noticed anything about how DCP affects your paycheck or the tax benefits of saving with DCP?

Every time I think about changing my contribution, I calculate to see how it will change my taxes and my paycheck. But honestly I don’t think about it, because it just happens. I tend to forget about it, which is good. I just make my automatic contributions and check my account and see that it’s growing. It’s doing everything I want it to do.

What would you tell someone who is thinking about starting with DCP?

I think you’ve definitely got to do it. Set it up to be automatic, go more than the minimum. Go to where it’s just a slightly uncomfortable but you’ll be able to make everything happen in your life. You don’t want to have a negative impact by committing too much money to it, but you want to keep increasing it as soon as possible. Don’t wait. Try to maximize it as soon as possible.

Marc Harrison

Human Resources Consultant, Department of Health

Marc signed up for DCP as soon as he learned about it thirty years ago and has been encouraging others to sign up ever since.

How did you start working in public service?

I was going to be a pharmacy technician when I originally came to the Northwest. I went through a year at Clover Park Technical School, and I decided I needed to get into something else. I was always a good typist and organized; I knew where to put things – and where to find them, more importantly. So I thought, the state would probably use someone like myself. And that’s how I got started, as a Clerk Typist.

Why did you decide to start saving with DCP?

Well, I was always organized and keeping track of my money. I had read some things about DCP, too. Way back when, I think they gave out a “Welcome to State Service” packet that included a piece about putting money aside. It was about saving and how to supplement your retirement.

I knew it always works better if I defer part of my paycheck. So, if I can live on this amount, fine. I like having a safety cushion.

After I retire, I’m planning to relocate. There’s a little town in Arizona I like. That’s a big deal. I’m getting all the paperwork and logistics tied up neatly.

How did you budget how much you would be saving?

Well, I looked at what rent would be, and I asked myself what I needed for food and incidentals. And so I came up with a figure I could live on. Of course, this was back in 1984, so prices have changed slightly. At the time, I think I was living on about $150 dollars for two weeks. It was just myself, so I did. I still was able to save money.

How did saving with DCP affect your paycheck?

It reduced my taxable income. I noticed that. I was putting away some good chunks of money, but I was reducing that taxable income, and after a while, I didn’t notice what I could’ve taken if I didn’t do DCP. I never missed it.

What did you think of the investment options with DCP?

At first I was a little bewildered because I didn’t know what any of these things do, and I wondered if they could just strip me bare if I wasn’t paying any attention. So I was in the Savings Pool for a large chunk of my investments. Then I would venture out, and start trying some of the more aggressive funds. I thought there was plenty to choose from. The selection was good, I just thought that I would need to be more educated about it. The choices were there.

What do you think of the online account access?

It’s great. I check it almost every day, just to see. I have set points, when it goes to a certain amount – which I decide in advance – I can move money back to the less-aggressive Savings Pool or the Washington State Bond Fund. I think it’s important to pay attention, especially as I get closer to retirement, because I want to protect that amount I’m going to carry over.

What would you tell someone who’s thinking about joining DCP?

I would tell them they need to do it. This is available through the state; it’s easy to do. I would say, you’ve got to start early. Because DCP is going to supplement what you get from the state. Your state retirement is ok, but it’s still not enough. DCP will enable me to purchase five years of service credit. There’s no way I would’ve been able to do that without DCP.

Since I’m in HR, I hear a lot of people say, “I can’t right now. I don’t have enough right now.”

But I say, “You’ve got to start the habit now.” However much you can do.

I have people coming up to me asking, “How are you going to finance your retirement? Are you going to have to take a second job or what?” But I’m not. It’s because of the savings that went into DCP since 1985. 30 years. Don’t wait. Because it’s savings and it’s time.

Sandy Ledesma

Information Technology Specialist, Retired

Sandy set a goal to save in DCP for retirement. When she reached her goal, she was able to retire earlier than she thought.

How did you start working in public service?

I started in 1979, as a Clerk Typist 2 for what was then the Department of Fisheries. I worked in the Central Files unit. From there, I promoted to a Clerk Typist 3 position in the habitat management division. That was really fun. Then I transferred over to the Department of Agriculture, where I worked for three years in the fiscal office. I transferred to DRS in 1987. I’d been there ever since in various roles, until I retired in February.

Why did you decide to start saving with DCP?

When I started at DRS in 1987, the Deferred Compensation Program was a separate program, and someone came to talk to us about it. That talk influenced me to do it.

I could tell it was good, because they said you could start saving as little as $15 a pay period. So I did that. It was the smallest amount, because I couldn’t really afford to do any more. And I watched it build over the years. As I could, I increased it. Every time I got a raise, I pretended like I didn’t get it. I put it straight into DCP.

What questions did you have when you were signing up and how did you get answers?

I don’t really remember having a lot of questions. I remember that they explained that it was deferred, and you wouldn’t pay taxes on it until you take out the money. And so I thought, “Great! I’m deferring a portion of my income. It’ll build up over time, and I’ll have a little nest egg to supplement my retirement income.”

How did saving with DCP affect how you budgeted?

I looked at the bottom line of what I was going to get every month to live off of and what I could afford to put into DCP.

It changed over the years. There were times when I upped it, to where I was putting in a lot of money, and then things would change, and I would have to decrease it, but I never stopped my contributions completely. So I might go from the minimum to quite a bit more, and bounce back around based on what was happening in my life.

What did you think of your investment options with DCP?

I was very conservative in my investments, and I started in the Savings Pool. Over time, I started to get a little more aggressive, but I never really understood much about the stock market and how it worked. Once online account access was available, I would go and see what my investments were doing.

I didn’t lose a ton of money when the stock market took a fall either. I’ve mostly plodded along. I’d try a few other things here and there, but I was really conservative. I’m not a gambler.

What do you think of the online account access?

I love it, because I can get in there any time I want, look at things, and change things around. I could change the amount I was investing easily. I like to see what the different investments are doing. It’s wonderful.

How did DCP affect when you were able to retire?

It affected it a lot. I had a goal to get a specific amount in there by the time I retired, and I exceeded that amount. Not by a ton, but I exceeded it, so I looked at how long I’d been working, and I was one month shy of 35 years. I decided I was ready. I realized that with my retirement benefit and DCP, if I get in a bind, I can use some of that to help us out. If I decide to do some things around the house, it gives me a way to pay for it outside of my retirement income.

What would you tell someone who is thinking about starting with DCP?

I would tell people – and I have told people that aren’t investing in it – you need to start doing it now. I’ve said this to people I worked with who weren’t investing, including people who worked for the state for 35 years.

Every little bit is going to help. It’s a great program, and if I didn’t have it, I would only be getting my retirement benefit. Now I have a way to supplement that. I can leave it in there and watch it grow. I think it’s a great way to save for the future.