There are just a couple of things almost all Owens Corning 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 Owens Corning 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 Owens Corning retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Owens Corning retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Owens Corning 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 Owens Corning.
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 Owens Corning 401(k) Savings Plan?
The Owens Corning 401(k) Savings Plan is a retirement savings plan that allows employees to save for retirement through pre-tax and/or after-tax contributions.
How can I enroll in the Owens Corning 401(k) Savings Plan?
Employees can enroll in the Owens Corning 401(k) Savings Plan by accessing the enrollment portal through the company’s HR website or by contacting the HR department for assistance.
What are the contribution limits for the Owens Corning 401(k) Savings Plan?
The contribution limits for the Owens Corning 401(k) Savings Plan are set by the IRS and may change annually. Employees should check the latest IRS guidelines or consult the Owens Corning benefits team for current limits.
Does Owens Corning offer a company match for the 401(k) Savings Plan?
Yes, Owens Corning offers a company match for employee contributions to the 401(k) Savings Plan, which helps employees maximize their retirement savings.
When can I start contributing to the Owens Corning 401(k) Savings Plan?
Employees can start contributing to the Owens Corning 401(k) Savings Plan as soon as they are eligible, typically after completing a specified period of employment.
How often can I change my contributions to the Owens Corning 401(k) Savings Plan?
Employees can change their contribution amounts to the Owens Corning 401(k) Savings Plan at any time, subject to the plan's guidelines.
What investment options are available in the Owens Corning 401(k) Savings Plan?
The Owens Corning 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.
Can I take a loan from my Owens Corning 401(k) Savings Plan?
Yes, Owens Corning allows employees to take loans from their 401(k) Savings Plan, subject to specific terms and conditions outlined in the plan documents.
What happens to my Owens Corning 401(k) Savings Plan if I leave the company?
If you leave Owens Corning, you have several options for your 401(k) Savings Plan, including rolling it over to an IRA or a new employer's plan, cashing it out, or leaving it in the Owens Corning plan if eligible.
Is there a vesting schedule for the Owens Corning 401(k) Savings Plan?
Yes, Owens Corning has a vesting schedule for company match contributions, meaning employees must work for a certain period to fully own those contributions.
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