There are just a couple of things almost all Nasdaq 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 Nasdaq 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 Nasdaq retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Nasdaq retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Nasdaq 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 Nasdaq.
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 Nasdaq offer to its employees?
Nasdaq offers a 401(k) Savings Plan to its employees.
How can employees at Nasdaq enroll in the 401(k) Savings Plan?
Employees at Nasdaq can enroll in the 401(k) Savings Plan through the company’s HR portal during the enrollment period.
Does Nasdaq match employee contributions to the 401(k) Savings Plan?
Yes, Nasdaq provides a matching contribution to employee contributions made to the 401(k) Savings Plan, up to a certain percentage.
What is the vesting schedule for Nasdaq's 401(k) matching contributions?
The vesting schedule for Nasdaq's 401(k) matching contributions typically follows a graded vesting schedule over a period of years.
Are there any investment options available within Nasdaq's 401(k) Savings Plan?
Yes, Nasdaq’s 401(k) Savings Plan offers a variety of investment options, including mutual funds and target-date funds.
Can employees at Nasdaq take loans against their 401(k) Savings Plan?
Yes, employees at Nasdaq may have the option to take loans against their 401(k) Savings Plan, subject to specific terms and conditions.
What is the minimum contribution percentage for Nasdaq employees participating in the 401(k) Savings Plan?
The minimum contribution percentage for Nasdaq employees participating in the 401(k) Savings Plan is typically set at 1% of their salary.
Does Nasdaq allow for catch-up contributions in its 401(k) Savings Plan?
Yes, Nasdaq allows employees aged 50 and older to make catch-up contributions to their 401(k) Savings Plan.
How often can Nasdaq employees change their contribution amounts to the 401(k) Savings Plan?
Nasdaq employees can change their contribution amounts to the 401(k) Savings Plan at designated times, typically during open enrollment or at specific intervals throughout the year.
What resources does Nasdaq provide to help employees manage their 401(k) Savings Plan?
Nasdaq provides resources such as financial counseling, online tools, and educational materials to help employees manage their 401(k) Savings Plan.
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