There are just a couple of things almost all American Tower retirees need when they hit retirement: predictable income and protection against a cluster of risks, which include longevity risk, performance risk and sequence-of-returns risk.
In the past we have seen retiring American Tower employees utilize the “4% rule,” where retirees take annual withdrawals start at 4% of the entire portfolio and increase with inflation. They then keep the remainder of the portfolio with at least 50% invested in equities. Based on historical data, this would give a American Tower retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective American Tower retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, American Tower retirees need to prepare for expenses over a longer time frame. In the past we would plan for a 15 to 20 year retirement, but now we need to prepare for a 30 to 35 year retirement. What is available to assist meeting the 35-year time frame?
The annuity strategy can assist with a few of the pitfalls we see in the 4% rule. For example:
If you need $50,000 per year in retirement and need that for 30 years, you may need $1.2 million in fixed income at a 3% interest rate. BUT if you look to fund $50,000 for 30 years, you can cover that expense with $800,000 by choosing the annuity option.
The other pitfall with the 4% rule is that it may not reflect a client’s risk tolerance. When you are accumulating assets, you can afford more volatility and can take on more risk than when in the retirement and withdrawal phase after leaving American Tower.
Also, should we see a drop in the market, you would be able to reduce your income using the 4% rule, which you cannot do if you choose an annuity option.
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What type of retirement plan does American Tower offer to its employees?
American Tower offers a 401(k) retirement savings plan to its employees.
How can employees of American Tower enroll in the 401(k) plan?
Employees of American Tower can enroll in the 401(k) plan through the company’s HR portal or by contacting the benefits department for assistance.
Does American Tower match employee contributions to the 401(k) plan?
Yes, American Tower provides a matching contribution to employee contributions made to the 401(k) plan, subject to certain limits.
What is the maximum contribution limit for the American Tower 401(k) plan?
The maximum contribution limit for the American Tower 401(k) plan is in accordance with IRS guidelines, which may change annually.
When can employees of American Tower start contributing to their 401(k) plan?
Employees of American Tower can start contributing to their 401(k) plan after completing their eligibility requirements, typically within the first few months of employment.
Are there any fees associated with the American Tower 401(k) plan?
Yes, the American Tower 401(k) plan may have administrative fees and investment fees, which are disclosed in the plan documents.
Can employees of American Tower take loans against their 401(k) savings?
Yes, employees of American Tower may have the option to take loans against their 401(k) savings, subject to the plan’s terms and conditions.
What investment options are available in the American Tower 401(k) plan?
The American Tower 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
How often can employees change their contribution amount in the American Tower 401(k) plan?
Employees of American Tower can typically change their contribution amount at any time, subject to the plan’s guidelines.
What happens to the 401(k) savings if an employee leaves American Tower?
If an employee leaves American Tower, they can choose to roll over their 401(k) savings to another retirement account, cash out, or leave the funds in the American Tower plan if allowed.
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