There are just a couple of things almost all NOV 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 NOV 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 NOV retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective NOV retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, NOV 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 NOV.
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 NOV's 401(k) Savings Plan?
The purpose of NOV's 401(k) Savings Plan is to help employees save for retirement by allowing them to contribute a portion of their salary on a pre-tax or after-tax basis.
How can employees enroll in NOV's 401(k) Savings Plan?
Employees can enroll in NOV's 401(k) Savings Plan by accessing the company's benefits portal and following the enrollment instructions provided.
Does NOV offer a company match for contributions to the 401(k) Savings Plan?
Yes, NOV offers a company match for contributions to the 401(k) Savings Plan, which helps employees maximize their retirement savings.
What types of investment options are available in NOV's 401(k) Savings Plan?
NOV's 401(k) Savings Plan provides a variety of investment options, including mutual funds, target-date funds, and other investment vehicles tailored to different risk tolerances.
Can employees change their contribution percentage to NOV's 401(k) Savings Plan at any time?
Yes, employees can change their contribution percentage to NOV's 401(k) Savings Plan at any time through the benefits portal, subject to certain limitations.
Is there a vesting schedule for the company match in NOV's 401(k) Savings Plan?
Yes, there is a vesting schedule for the company match in NOV's 401(k) Savings Plan, which determines when employees fully own the matched funds based on their years of service.
What is the minimum age requirement to participate in NOV's 401(k) Savings Plan?
The minimum age requirement to participate in NOV's 401(k) Savings Plan is typically 21 years old, although employees can start contributing once they meet this age requirement.
Are there any fees associated with NOV's 401(k) Savings Plan?
Yes, there may be fees associated with NOV's 401(k) Savings Plan, including administrative fees and investment management fees, which are disclosed in the plan documents.
How often can employees change their investment allocations in NOV's 401(k) Savings Plan?
Employees can change their investment allocations in NOV's 401(k) Savings Plan at any time, although there may be restrictions on frequent trading.
What happens to an employee's 401(k) account if they leave NOV?
If an employee leaves NOV, they have several options for their 401(k) account, including rolling it over to another retirement account, cashing it out, or leaving it in the NOV plan if eligible.
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