Navigating Retirement: Annuities vs. IRA Withdrawals for Diamondback Energy Employees

There are just a couple of things almost all Diamondback Energy 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 Diamondback Energy 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 Diamondback Energy retiree about 30 years of retirement income.

As the economy constantly changes, a number of factors may force prospective Diamondback Energy retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.

As life expectancies increase, Diamondback Energy 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 Diamondback Energy.

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 Diamondback Energy offer?

Diamondback Energy offers a 401(k) retirement savings plan to help employees save for their future.

Is there a company match for contributions to the 401(k) plan at Diamondback Energy?

Yes, Diamondback Energy provides a company match for employee contributions to the 401(k) plan, enhancing your retirement savings.

How can I enroll in the 401(k) plan at Diamondback Energy?

Employees can enroll in the Diamondback Energy 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

What is the eligibility requirement to participate in Diamondback Energy's 401(k) plan?

Most employees at Diamondback Energy are eligible to participate in the 401(k) plan after completing a specified period of service.

What investment options are available in Diamondback Energy's 401(k) plan?

Diamondback Energy's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.

Can I change my contribution percentage to the 401(k) plan at Diamondback Energy?

Yes, employees can change their contribution percentage to the Diamondback Energy 401(k) plan at any time, subject to certain guidelines.

Does Diamondback Energy offer loans against the 401(k) plan?

Yes, Diamondback Energy allows employees to take loans against their 401(k) plan balance, subject to the plan's terms and conditions.

How often can I change my investment allocations in the Diamondback Energy 401(k) plan?

Employees can change their investment allocations in the Diamondback Energy 401(k) plan as frequently as they wish, typically through the plan’s online portal.

What happens to my 401(k) if I leave Diamondback Energy?

If you leave Diamondback Energy, you have several options for your 401(k), including rolling it over to another retirement account, cashing it out, or leaving it in the Diamondback plan if eligible.

Are there any fees associated with the Diamondback Energy 401(k) plan?

Yes, there may be administrative fees and investment-related fees associated with the Diamondback Energy 401(k) plan, which are disclosed in the plan documents.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

For Diamondback Energy, the company offers a 401(k) plan under the name "Diamondback Energy 401(k) Plan" with eligibility based on service and age requirements that vary slightly depending on employee classification. The company uses industry-specific terminology and acronyms, including "FANG" as its stock symbol and commonly referring to its operations as part of the Permian Basin. For its pension plan offerings, while there is no traditional defined benefit pension available, Diamondback provides substantial retirement contributions through its 401(k) plan, matching employee contributions up to 6% of salary (Diamondback Energy) (Diamondback Energy). Regarding the years of service and age qualification, employees typically become eligible for Diamondback Energy’s 401(k) match after completing one year of service. The matching contributions are vested gradually, with full vesting occurring after 5 years of service. While detailed documentation does not explicitly list a traditional pension formula, the 401(k) match is a significant part of their retirement strategy

Restructuring and Layoffs: In early 2024, Diamondback Energy announced a restructuring plan aimed at streamlining operations and reducing costs. The plan included a reduction of 5% in workforce to align with the company's strategic goals and to enhance operational efficiency. This restructuring was influenced by fluctuating oil prices and the need to adapt to a more competitive market. Given the current economic environment, understanding these changes is crucial for investors and employees to make informed decisions.

In 2022, Diamondback Energy provided stock options and RSUs to senior executives and key employees. The RSUs typically vest over a four-year period. Eligibility was determined based on performance and tenure.

Company Official Website: For the most direct and accurate information on Diamondback Energy's health benefits. Industry News Sources: Reputable news outlets that cover employee benefits and changes in healthcare policies within the industry. Employment and Benefits Websites: Sites like Glassdoor, Indeed, or LinkedIn for employee reviews and company benefit details. Company Reports: Annual reports or benefits summaries released by Diamondback Energy. Healthcare and Insurance Providers: Websites of insurance providers that partner with Diamondback Energy, if available.