Financial Planning for Cincinnati Children’s Hospital Employees

A frozen pension stops accruing new benefits, but what you’ve already earned is still yours. What changes is that you now have a decision about where that benefit lives going forward.

There is no single right answer. The choice depends on your other retirement assets, your expected tax bracket now versus later, whether you need income soon, and what you want to leave behind. Each path carries a different tax outcome, and the difference between them can be significant. This is worth walking through together before you elect anything.

This is highly household-specific, and just because a colleague contributes a certain way doesn’t mean that approach fits your situation. The right mix depends on your long-term goals, your current versus expected future tax bracket, how much you already hold across pre-tax, Roth, and taxable accounts, and your time horizon until you need the funds.

Generally speaking, Roth contributions can make more sense if you expect to be in a similar or higher bracket in retirement, while pre-tax may be more advantageous if you expect your rate to drop. There’s rarely a one-size-fits-all answer, so it’s worth walking through the full picture together.

First, check what it does to your tax picture. A meaningful bump in income can push you into a higher bracket, reduce eligibility for certain deductions or credits, or change how much of a Roth contribution you’re allowed to make.

From there, the options are the usual ones in a specific order: high-interest debt first, then an emergency reserve if you don’t have three to six months of expenses set aside, then additional retirement or HSA contributions. If the extra income is recurring rather than one-time, it’s worth building it into a plan instead of deciding fresh each year.

Contribute the maximum allowed to benefit from tax-free use of funds for qualified medical expenses. You can also invest your HSA funds to grow savings for future healthcare costs in retirement. Used that way, an HSA functions as a supplemental retirement account with better tax treatment than either a 401(k) or a Roth. It’s worth confirming with an advisor that your contribution level and investment choices line up with your goals.

The five years before retirement are the window where decisions stop being theoretical. A few things move to the front:

1. Knowing your actual retirement income number rather than an estimate, including Social Security timing and any pension election
2. Understanding what your healthcare costs look like between separation and Medicare eligibility
3. Positioning your accounts so you have flexibility on which ones to draw from first, since the order matters for taxes
4. Reducing concentration and sequence-of-returns risk in your portfolio

Fifteen years out, the priority is contribution rate and allocation. Five years out, it’s coordination. Those are different conversations.