There are just a couple of things almost all Murphy USA 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 Murphy USA 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 Murphy USA retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Murphy USA retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Murphy USA 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 Murphy USA.
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 is the purpose of the 401(k) plan at Murphy USA?
The 401(k) plan at Murphy USA is designed to help employees save for retirement by allowing them to contribute a portion of their salary on a pre-tax basis.
How can employees at Murphy USA enroll in the 401(k) plan?
Employees at Murphy USA can enroll in the 401(k) plan through the company’s benefits portal during the open enrollment period or upon their hire date.
Does Murphy USA match employee contributions to the 401(k) plan?
Yes, Murphy USA offers a matching contribution to the 401(k) plan, which helps employees maximize their retirement savings.
What is the maximum contribution limit for the 401(k) plan at Murphy USA?
The maximum contribution limit for the 401(k) plan at Murphy USA follows the IRS guidelines, which are updated annually. Employees should check the current limits for the year.
Can employees at Murphy USA take loans against their 401(k) savings?
Yes, Murphy USA allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.
What investment options are available in Murphy USA's 401(k) plan?
Murphy USA's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.
How often can employees at Murphy USA change their 401(k) contributions?
Employees at Murphy USA can change their 401(k) contributions at any time, subject to the plan's rules and guidelines.
Is there a vesting schedule for the employer match in Murphy USA's 401(k) plan?
Yes, Murphy USA has a vesting schedule for the employer match, which determines how much of the matched contributions employees are entitled to based on their years of service.
Can employees at Murphy USA access their 401(k) funds before retirement?
Employees at Murphy USA may access their 401(k) funds before retirement under certain circumstances, such as hardship withdrawals or after reaching a specific age.
What happens to the 401(k) plan if an employee leaves Murphy USA?
If an employee leaves Murphy USA, they have several options regarding their 401(k) plan, including rolling it over to another qualified plan, cashing it out, or leaving it with Murphy USA.
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