There are just a couple of things almost all J.M. Smucker 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 J.M. Smucker 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 J.M. Smucker retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective J.M. Smucker retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, J.M. Smucker 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 J.M. Smucker.
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 savings plan does J.M. Smucker offer to its employees?
J.M. Smucker offers a 401(k) retirement savings plan to help employees save for their future.
Does J.M. Smucker provide a company match for contributions made to the 401(k) plan?
Yes, J.M. Smucker provides a company match on employee contributions to the 401(k) plan, which helps to enhance retirement savings.
What is the eligibility requirement to participate in J.M. Smucker's 401(k) plan?
Employees are eligible to participate in J.M. Smucker's 401(k) plan after completing a specified period of service, typically within the first year of employment.
Can employees at J.M. Smucker choose how their 401(k) contributions are invested?
Yes, employees at J.M. Smucker can choose from a variety of investment options for their 401(k) contributions based on their risk tolerance and retirement goals.
What is the maximum contribution limit for J.M. Smucker’s 401(k) plan?
The maximum contribution limit for J.M. Smucker’s 401(k) plan aligns with the IRS limits, which are updated annually.
Does J.M. Smucker allow employees to take loans against their 401(k) savings?
Yes, J.M. Smucker allows employees to take loans against their 401(k) savings under certain conditions and guidelines.
Are there any fees associated with J.M. Smucker's 401(k) plan?
Yes, like many retirement plans, J.M. Smucker's 401(k) plan may have administrative fees and investment-related fees, which are disclosed in the plan documents.
Can employees at J.M. Smucker roll over their 401(k) savings from a previous employer?
Yes, employees at J.M. Smucker can roll over their 401(k) savings from a previous employer into J.M. Smucker’s 401(k) plan.
When can employees at J.M. Smucker start withdrawing from their 401(k) accounts?
Employees at J.M. Smucker can typically start withdrawing from their 401(k) accounts at age 59½, subject to certain conditions.
Does J.M. Smucker offer any educational resources for employees to learn about their 401(k) options?
Yes, J.M. Smucker provides educational resources and tools to help employees understand their 401(k) options and make informed investment decisions.
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