There are just a couple of things almost all Sally Beauty Holdings 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 Sally Beauty Holdings 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 Sally Beauty Holdings retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Sally Beauty Holdings retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Sally Beauty Holdings 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 Sally Beauty Holdings.
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 Sally Beauty Holdings?
The 401(k) plan offered by Sally Beauty Holdings is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are deducted.
How can employees of Sally Beauty Holdings enroll in the 401(k) plan?
Employees of Sally Beauty Holdings can enroll in the 401(k) plan by completing the enrollment process through the company’s HR portal or by contacting the HR department for assistance.
Does Sally Beauty Holdings offer a company match for the 401(k) contributions?
Yes, Sally Beauty Holdings 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 Sally Beauty Holdings?
The maximum contribution limit for the 401(k) plan at Sally Beauty Holdings is in accordance with IRS guidelines, which can change annually.
Can employees of Sally Beauty Holdings take loans against their 401(k) savings?
Yes, employees of Sally Beauty Holdings may have the option to take loans against their 401(k) savings, subject to certain terms and conditions.
What investment options are available in the Sally Beauty Holdings 401(k) plan?
The Sally Beauty Holdings 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
How often can employees change their contribution amounts to the Sally Beauty Holdings 401(k) plan?
Employees of Sally Beauty Holdings can change their contribution amounts to the 401(k) plan at any time, subject to the plan’s guidelines.
What happens to the 401(k) savings if an employee leaves Sally Beauty Holdings?
If an employee leaves Sally Beauty Holdings, they can roll over their 401(k) savings into another retirement account, cash out, or leave the funds in the plan if allowed.
Is there a vesting schedule for the company match in the Sally Beauty Holdings 401(k) plan?
Yes, there is a vesting schedule for the company match in the Sally Beauty Holdings 401(k) plan, which determines when employees fully own the matched contributions.
How can employees of Sally Beauty Holdings check their 401(k) account balance?
Employees of Sally Beauty Holdings can check their 401(k) account balance by logging into the plan’s online portal or by contacting the plan administrator.
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