There are just a couple of things almost all MSC Industrial Direct 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 MSC Industrial Direct 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 MSC Industrial Direct retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective MSC Industrial Direct retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, MSC Industrial Direct 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 MSC Industrial Direct.
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 MSC Industrial Direct offer to its employees?
MSC Industrial Direct offers a 401(k) retirement savings plan to its employees.
How can employees at MSC Industrial Direct enroll in the 401(k) plan?
Employees at MSC Industrial Direct can enroll in the 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.
Does MSC Industrial Direct offer matching contributions to the 401(k) plan?
Yes, MSC Industrial Direct offers a matching contribution to the 401(k) plan, which helps employees grow their retirement savings.
What is the vesting schedule for the 401(k) matching contributions at MSC Industrial Direct?
The vesting schedule for matching contributions at MSC Industrial Direct typically follows a graded vesting schedule, which means employees earn ownership of the contributions over time.
Can employees at MSC Industrial Direct contribute to their 401(k) on a pre-tax basis?
Yes, employees at MSC Industrial Direct can make pre-tax contributions to their 401(k) plan, reducing their taxable income.
What is the maximum contribution limit for the 401(k) plan at MSC Industrial Direct?
The maximum contribution limit for the 401(k) plan at MSC Industrial Direct follows the IRS guidelines, which are updated annually.
Are there options for Roth contributions in MSC Industrial Direct's 401(k) plan?
Yes, MSC Industrial Direct offers employees the option to make Roth contributions to their 401(k) plan, allowing for tax-free withdrawals in retirement.
What investment options are available in MSC Industrial Direct's 401(k) plan?
MSC Industrial Direct's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
How often can employees at MSC Industrial Direct change their 401(k) contribution amounts?
Employees at MSC Industrial Direct can change their 401(k) contribution amounts at any time, subject to the plan's guidelines.
What resources does MSC Industrial Direct provide to help employees understand their 401(k) options?
MSC Industrial Direct provides educational resources, including workshops, online tools, and access to financial advisors to help employees understand their 401(k) options.
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