There are just a couple of things almost all Century Communities 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 Century Communities 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 Century Communities retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Century Communities retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Century Communities 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 Century Communities.
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 Century Communities offer to its employees?
Century Communities offers a 401(k) retirement savings plan to help employees save for their future.
Is there a company match for contributions to the Century Communities 401(k) plan?
Yes, Century Communities provides a company match for employee contributions to the 401(k) plan, helping to enhance your retirement savings.
How can employees enroll in the Century Communities 401(k) plan?
Employees can enroll in the Century Communities 401(k) plan through the company’s designated benefits portal or by contacting the HR department for assistance.
What is the eligibility requirement to participate in the Century Communities 401(k) plan?
Generally, employees of Century Communities who meet specific criteria, such as age and length of service, are eligible to participate in the 401(k) plan.
Can employees change their contribution percentage to the Century Communities 401(k) plan?
Yes, employees can change their contribution percentage to the Century Communities 401(k) plan at any time, subject to the plan's rules.
What investment options are available in the Century Communities 401(k) plan?
The Century Communities 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
Does Century Communities provide financial education resources for employees regarding the 401(k) plan?
Yes, Century Communities offers financial education resources and workshops to help employees understand their 401(k) options and make informed investment decisions.
What happens to my Century Communities 401(k) if I leave the company?
If you leave Century Communities, you have several options for your 401(k), including rolling it over to another retirement account, cashing it out, or leaving it in the plan if permitted.
Are there any fees associated with the Century Communities 401(k) plan?
Yes, like most 401(k) plans, the Century Communities 401(k) plan may have administrative and investment fees. Employees can review the plan documents for detailed information.
How often can employees contribute to the Century Communities 401(k) plan?
Employees can contribute to the Century Communities 401(k) plan through payroll deductions, which occur on each pay period.
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