There are just a couple of things almost all Rocket Companies 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 Rocket Companies 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 Rocket Companies retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Rocket Companies retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Rocket Companies 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 Rocket Companies.
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 Rocket Companies offer to its employees?
Rocket Companies offers a 401(k) retirement savings plan to its employees.
Does Rocket Companies match employee contributions to the 401(k) plan?
Yes, Rocket Companies provides a matching contribution to employee 401(k) contributions, helping employees save more for retirement.
What is the eligibility requirement to participate in the Rocket Companies 401(k) plan?
Employees of Rocket Companies are eligible to participate in the 401(k) plan after completing a specified period of service, typically within the first year of employment.
Can employees of Rocket Companies choose how to invest their 401(k) contributions?
Yes, employees at Rocket Companies can choose from a variety of investment options within the 401(k) plan to align with their retirement goals.
What is the maximum contribution limit for the Rocket Companies 401(k) plan?
The maximum contribution limit for the Rocket Companies 401(k) plan is in accordance with IRS guidelines, which are updated annually.
Does Rocket Companies allow for catch-up contributions in its 401(k) plan?
Yes, Rocket Companies allows employees aged 50 and older to make catch-up contributions to their 401(k) plans.
How often can employees at Rocket Companies change their 401(k) contribution amounts?
Employees at Rocket Companies can change their 401(k) contribution amounts at designated times throughout the year, typically during open enrollment or as specified by the plan.
What happens to my 401(k) if I leave Rocket Companies?
If you leave Rocket Companies, you have several options for your 401(k) savings, including rolling it over to another retirement account, leaving it in the Rocket Companies plan, or cashing it out.
Are there any fees associated with the Rocket Companies 401(k) plan?
Yes, like most 401(k) plans, the Rocket Companies 401(k) plan may have administrative fees and investment-related expenses, which are disclosed in the plan documents.
Can employees take loans against their 401(k) at Rocket Companies?
Yes, Rocket Companies allows employees to take loans against their 401(k) balance, subject to the terms and conditions of the plan.
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