There are just a couple of things almost all Otis Worldwide 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 Otis Worldwide 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 Otis Worldwide retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Otis Worldwide retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Otis Worldwide 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 Otis Worldwide.
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 401(k) plan offered by Otis Worldwide?
The 401(k) plan offered by Otis Worldwide is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.
How can employees enroll in the 401(k) plan at Otis Worldwide?
Employees can enroll in the Otis Worldwide 401(k) plan by accessing the employee benefits portal or contacting the HR department for assistance.
Does Otis Worldwide offer a company match for the 401(k) contributions?
Yes, Otis Worldwide offers a company match for employee contributions to the 401(k) plan, which helps employees save more for retirement.
What is the maximum contribution limit for the 401(k) plan at Otis Worldwide?
The maximum contribution limit for the 401(k) plan at Otis Worldwide is in accordance with IRS guidelines, which may change annually.
Can employees at Otis Worldwide change their contribution percentage to the 401(k) plan?
Yes, employees at Otis Worldwide can change their contribution percentage to the 401(k) plan at any time during the year.
What investment options are available in the Otis Worldwide 401(k) plan?
The Otis Worldwide 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to choose based on their risk tolerance.
Is there a vesting schedule for the company match in the Otis Worldwide 401(k) plan?
Yes, Otis Worldwide has a vesting schedule for the company match, which means employees must work for a certain period before they fully own the matched funds.
How can employees access their 401(k) account information at Otis Worldwide?
Employees can access their 401(k) account information through the online benefits portal provided by Otis Worldwide.
What happens to the 401(k) plan if an employee leaves Otis Worldwide?
If an employee leaves Otis Worldwide, they have several options for their 401(k) plan, including rolling it over to another retirement account or cashing it out.
Are loans available against the 401(k) plan at Otis Worldwide?
Yes, Otis Worldwide allows employees to take loans against their 401(k) plan, subject to certain terms and conditions.
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