There are just a couple of things almost all Sprouts Farmers Market 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 Sprouts Farmers Market 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 Sprouts Farmers Market retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Sprouts Farmers Market retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Sprouts Farmers Market 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 Sprouts Farmers Market.
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 savings plan does Sprouts Farmers Market offer to its employees?
Sprouts Farmers Market offers a 401(k) retirement savings plan to its employees.
Does Sprouts Farmers Market match employee contributions to the 401(k) plan?
Yes, Sprouts Farmers Market provides a matching contribution to employee 401(k) contributions, subject to certain limits.
What is the eligibility requirement for Sprouts Farmers Market employees to participate in the 401(k) plan?
Employees of Sprouts Farmers Market typically become eligible to participate in the 401(k) plan after completing a specified period of service.
How can employees of Sprouts Farmers Market enroll in the 401(k) plan?
Employees can enroll in the Sprouts Farmers Market 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.
What types of investment options are available in the Sprouts Farmers Market 401(k) plan?
The Sprouts Farmers Market 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
Can Sprouts Farmers Market employees change their contribution percentage to the 401(k) plan?
Yes, employees of Sprouts Farmers Market can change their contribution percentage to the 401(k) plan at any time, subject to plan rules.
Is there a vesting schedule for the employer match in the Sprouts Farmers Market 401(k) plan?
Yes, there is typically a vesting schedule for the employer match in the Sprouts Farmers Market 401(k) plan, which determines when employees fully own the matched funds.
At what age can Sprouts Farmers Market employees start withdrawing from their 401(k) plan without penalties?
Employees of Sprouts Farmers Market can generally start withdrawing from their 401(k) plan without penalties at age 59½.
Does Sprouts Farmers Market allow loans against the 401(k) plan?
Yes, the Sprouts Farmers Market 401(k) plan may allow employees to take loans against their account balance, subject to plan provisions.
What happens to the 401(k) plan if a Sprouts Farmers Market employee leaves the company?
If a Sprouts Farmers Market employee leaves the company, they can choose to roll over their 401(k) balance to another retirement account, cash out, or leave it in the Sprouts Farmers Market plan if permitted.
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