There are just a couple of things almost all Tenneco 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 Tenneco 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 Tenneco retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Tenneco retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Tenneco 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 Tenneco.
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 Tenneco's 401(k) plan?
Tenneco's 401(k) plan is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out, helping them build a nest egg for retirement.
How can I enroll in Tenneco's 401(k) plan?
You can enroll in Tenneco's 401(k) plan by accessing the employee benefits portal and following the enrollment instructions provided there.
Does Tenneco offer a company match for the 401(k) contributions?
Yes, Tenneco offers a company match for employee contributions to the 401(k) plan, which helps employees maximize their retirement savings.
What is the maximum contribution I can make to Tenneco's 401(k) plan?
The maximum contribution limit for Tenneco's 401(k) plan follows the IRS guidelines, which can change annually. Employees should refer to the latest IRS limits for specifics.
When can I start contributing to Tenneco's 401(k) plan?
Employees can start contributing to Tenneco's 401(k) plan after they have completed the eligibility requirements, typically within the first few months of employment.
What investment options are available in Tenneco's 401(k) plan?
Tenneco's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.
How often can I change my contribution amount in Tenneco's 401(k) plan?
Employees can change their contribution amount to Tenneco's 401(k) plan during designated enrollment periods or as allowed by the plan rules.
Can I take a loan from Tenneco's 401(k) plan?
Yes, Tenneco's 401(k) plan may allow employees to take loans against their account balance, subject to specific terms and conditions.
What happens to my Tenneco 401(k) if I leave the company?
If you leave Tenneco, you have several options regarding your 401(k), including rolling it over to an IRA or a new employer's plan, or cashing it out, though taxes and penalties may apply.
Is there a vesting schedule for Tenneco's 401(k) company match?
Yes, Tenneco has a vesting schedule for its company match, which determines how much of the matched contributions you own based on your years of service.
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