There are just a couple of things almost all Sun Communities 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 Sun Communities 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 Sun Communities retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Sun Communities retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Sun Communities 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 Sun Communities.
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 Sun Communities offer to its employees?
Sun Communities offers a 401(k) retirement savings plan to help employees save for their future.
Does Sun Communities match employee contributions to the 401(k) plan?
Yes, Sun Communities provides a matching contribution to the 401(k) plan, helping employees maximize their retirement savings.
What is the eligibility requirement for Sun Communities employees to participate in the 401(k) plan?
Employees of Sun Communities are eligible to participate in the 401(k) plan after completing a specified period of service, typically within the first year of employment.
How can Sun Communities employees enroll in the 401(k) plan?
Sun Communities employees can enroll in the 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.
What investment options are available in the Sun Communities 401(k) plan?
The Sun Communities 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
Can Sun Communities employees change their contribution percentage to the 401(k) plan?
Yes, employees at Sun Communities can change their contribution percentage at any time, subject to certain restrictions.
Is there a vesting schedule for the employer match in the Sun Communities 401(k) plan?
Yes, Sun Communities has a vesting schedule for employer matching contributions, which means employees must work for a certain period to fully own those contributions.
What is the maximum contribution limit for the Sun Communities 401(k) plan?
The maximum contribution limit for the Sun Communities 401(k) plan follows the IRS guidelines, which are updated annually.
Are there any fees associated with the Sun Communities 401(k) plan?
Yes, like most 401(k) plans, the Sun Communities 401(k) plan may have administrative and investment fees, which are disclosed in the plan documents.
Can Sun Communities employees take loans against their 401(k) savings?
Yes, Sun Communities allows employees to take loans against their 401(k) savings, subject to the plan’s terms and conditions.
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