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For ConocoPhillips employees, understanding the impact of financial decisions through detailed cash flow planning is critical to retirement planning - achieving goals while optimizing tax implications and withdrawal strategies - Kevin Landis, representative of the retirement group, a division of Wealth Enhancement Group.
'Cash flow planning provides a road map for managing spending, saving and retirement so that employees know when to retire and how to spend their retirement years wisely' - Paul Bergeron, of the retirement group, a division of Wealth Enhancement Group.
In this article we will discuss:
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1. Role of cash flow planning in helping ConocoPhillips clients manage spending, saving and goal funding.
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2. How cash flow planning tools help you decide when to take your retirement & how to manage your assets post-retirement.
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3. Benefits of account aggregation & real-time data for creating accurate financial plans.
Modeling goals and expense funding for each year of a ConocoPhillips client's projected lifetime reveals how chronological and priority goal funding affects multiple client goals. The biggest decision clients face in their ConocoPhillips retirement is whether to retire from ConocoPhillips this year or next year. Showing how asset allocation changes due to withdrawals - and the tax implications of those withdrawals - our advisors can better assess client outcomes year over year and help clients decide when to retire from ConocoPhillips.
Clients can understand where their money went and where it will go to fund their life goals with cash flow planning. At any life stage, this type of planning can be used - early accumulators, mid-career accumulators, pre-retirees and ConocoPhillips retirees. Early Adopters' cash flow planning can help Early Adopters understand spending, saving and funding of emergency and ConocoPhillips retirement accounts. Starting cash flow planning should involve proper savings for early accumulators. But good planning also involves getting the client's financial house in order and getting the proceeds invested in a solid, diversified portfolio, says financial planner Michael Kitces.
Pre-and post-retirement pre-retirees from ConocoPhillips could use cash flow planning to illustrate how current spending translates to retirement spending and how current spending impacts funding all of their goals. ConocoPhillips retirees could apply cash flow planning to understand how spending affects distribution of income to fund goals and outlive retirement savings. And third-best use of our cash flow tool - decide whether ConocoPhillips employees should leave ConocoPhillips this year or next year. Cash flow planning can keep our ConocoPhillips clients on the right financial path by integrating income & expenses, investment performance, education funding, insurance and estate planning.
Cash flow planning can also help our ConocoPhillips clients understand where they lose money unnecessarily. Fees, miscalculations, wrong insurance, penalties and other charges can really add up quickly for many families. They lose on average USD 200 a month. The holistic view that cash flow planning offers means that advisors have points to discuss with clients during planning. Advisors then can analyze data better and make recommendations in the client's best interest. Gamma is a Morningstar research metric that measures how sound financial planning in five areas - asset allocation, withdrawal strategy, guaranteed income products, tax-efficient allocation and portfolio optimization - can deliver 29% more income on average to a retiree.
In addition to this value, Morningstar Research estimates that a retiree could realize 22.6% more certainty equivalent income with a Gamma-efficient retirement income strategy than in our base case. A few output options and tools are provided by our advisors via software. They range from an annual cash flow report with simulations of inflows, outflows and total portfolio assets to an interactive tool called Decision Center that allows the advisor to model recommendations live during a review meeting. Several key data points are applied to project a client's cash flow simulation.
Projections include living expenses, liability payments, insurance premiums, gifting, taxes, etc. Planned savings are also called an outflow if employee contributions to a qualified account, HSA or taxable investment are made by the employee. Total outflows minus total inflows gives a net cash flow number that is positive or negative. All liquid investments like taxable accounts, tax deferred, cash, etc. will be shown as total portfolio assets at the end of the year. Some factors that affect the ending total portfolio assets year over year are the growth rates for each account and the ending net cash flow.
Simulation uses client inflows such as income, investment distributions, planned distributions and other inflows. And if the client has negative net cash flow, that deficit will have to be financed from available portfolio assets through liquidation. With a positive net cash flow, the surplus will be deposited into the client's core cash account. The core cash account is a hypothetical wallet which measures the inflows and outflows of the client. Advisors may not save excess cash at the end of the year if a client prefers. An expense number can help advisors start cash flow planning conversations with ConocoPhillips clients. Conversations about spending can be difficult if there are problems that should be addressed.
A budgeting solution is a good starting point for discussion of client spending and impact on cash flow plan. With budgeting tools, we provide daily updates on a client's spending transactions through connections to their financial institutions. This tool budgets the client's spending so that the advisor has an accurate picture of the spending which can be used for cash flow simulation and where improvements could be made. Also for ConocoPhillips employees to remember: entering data - especially expenses - does not have to be time-consuming or too finely detailed in cash flow planning.
Your advisor and the software give you a lot of flexibility when entering expenses - from an annualized rollup of all expenses to major expense buckets (discretionary, etc.) and the ability to fill out a digital expense worksheet or classify transactions on the ConocoPhillips client site to determine a client's true expenses for the year. Data entry takes time depending on how detailed you need it. Account aggregation is changing financial planning because it allows advisors to plan with their clients. In cash flow planning, aggregation provides an account balance with real-time information that improves a client's cash flow projection.
Using account aggregation, we connect with thousands of institutions to collect client account information like balances, holdings, asset allocations and more. By including accounts held away, aggregation makes the cash flow plan comprehensive. From this information, the advisor also understands how an account accumulates for projection purposes. This helps the advisor make recommendations that better meet the client's needs. These provide fully integrated account consolidation (assets under management) and account aggregation (assets held away) functionality across the advisor and client experiences. More than USD 2 trillion of assets are connected via the platform.
All linked accounts update values across the system - including financial plans - every day. We use a commercial aggregator - where more than 90 percent of this aggregation work is done in-house by the team with a small percentage coming from third parties. A nationwide group of financial advisors known as the Retirement group. We only plan for and design retirement portfolios for transitioning corporate employees. And each representative of the group has been hand-picked by the retirement group in select cities throughout the United States.
Each advisor was screened for pension expertise, financial planning experience and portfolio construction knowledge. TRG believes in teamwork to find solutions to our clients' problems. A conservative investment philosophy guides the team in constructing client portfolios with laddered bonds / CDs / mutual funds / ETFs / annuities / stocks and other investments. They handle retirement / pensions / tax / asset allocation / estate / elder care issues.
This document uses different research tools and techniques. All attempts to estimate future results involve assumptions and judgments and are therefore only tentative estimates. The law, investment climate, interest rates and personal circumstances will all change and will affect how accurate our estimations are and how appropriate our recommendations are. Such a plan requires ongoing change sensitivities as well as constant re-examination and alteration of the plan. So update your plan a few months before your expected retirement date and do an annual review.
Nothing contained herein shall be construed as an attempt by the Retirement Group, LLC or any of its employees to practice law or accounting. We look forward to speaking with any tax and/or legal professionals you may select regarding the implications of our recommendations. Through your retirement years, we will continue to update you on issues affecting your retirement via our complimentary and proprietary newsletters, workshops & periodic updates. Or call us at (800) 900-5867.
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
Sources:
1. National Institute on Retirement Security (NIRS). 'Retirement Insecurity 2021.'
National Institute on Retirement Security
, Feb. 2021,
www.nirsonline.org/wp-content/uploads/2021/02/FINAL-Retirement-Insecurity-2021-.pdf
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2. U.S. Congress. 'H.R. 2954 - Securing a Strong Retirement Act of 2022.'
Congress.gov
, 2022,
www.congress.gov/bill/117th-congress/house-bill/2954/text
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3. Groom Law Group. 'Summary of Provisions in the Securing a Strong Retirement Act (H.R. 2954).'
Groom Law Group
, 2022,
www.groom.com/resources/summary-of-provisions-in-the-securing-a-strong-retirement-act-h-r-2954/
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4. Börsch-Supan, Axel, and Courtney Coile. 'Social Security and Retirement around the World.'
National Bureau of Economic Research
, 2023,
www.nber.org/brd/20234/social-security-and-retirement-around-world
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5. National Academy of Social Insurance. 'Social Security and Retirement around the World.'
National Academy of Social Insurance
, Dec. 2019,
www.nasi.org/research/social-security-archive/
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How does the retirement process at ConocoPhillips provide guidance to employees in selecting the most beneficial form of payment? In what ways can employees utilize available resources to maximize their understanding of the pension options offered by ConocoPhillips?
The retirement process at ConocoPhillips provides employees with various resources to guide them in selecting the most beneficial form of pension payment. Employees can access the "How to Choose the Best Form of Payment" link on Your Benefits Resources™ (YBR) to learn more about their options and determine what works best for their financial situation(ConocoPhillips_Your_Ret…).
What steps must be completed by employees at ConocoPhillips to ensure they initiate their retirement process accurately and avoid any delays? How crucial is the timing of these steps in determining the Benefit Commencement Date (BCD)?
Employees at ConocoPhillips must initiate the retirement process by requesting their pension paperwork 60-90 days before their Benefit Commencement Date (BCD). Timing is crucial, as missing deadlines may delay the BCD and associated payments. Completing all steps on time ensures that the retirement process flows smoothly(ConocoPhillips_Your_Ret…).
Given the complexities associated with the lump-sum pension payment option at ConocoPhillips, what considerations should employees take into account before electing this choice? How does the current interest rate at the Benefit Commencement Date impact the lump-sum amount?
Before electing a lump-sum pension payment, ConocoPhillips employees should consider the current interest rate at their BCD, as it directly affects the lump-sum amount. A higher interest rate typically reduces the lump-sum payment, making timing and rate awareness critical(ConocoPhillips_Your_Ret…).
In what ways can ConocoPhillips employees ensure their Pension Election Authorization form is completed correctly to facilitate timely pension payments? What are the implications of not adhering to the required notarized consent for married participants?
Ensuring the correct completion of the Pension Election Authorization form is vital for timely pension payments. For married participants, notarized spousal consent is required, and failure to provide this could result in delays or issues with payment processing(ConocoPhillips_Your_Ret…).
How does choosing direct deposit for pension payments at ConocoPhillips streamline the retirement process for employees? What should employees know about setup and changes regarding direct deposit after initiating their pension benefits?
Choosing direct deposit for pension payments simplifies the process for employees at ConocoPhillips, as it enables automatic payments to their bank account. Employees can set up direct deposit during their retirement process or update it at a later time(ConocoPhillips_Your_Ret…).
For employees considering rolling over their lump-sum pension payment from ConocoPhillips, what procedures should they follow to ensure compliance with IRS regulations and to avoid tax penalties? How can effective planning influence the success of this rollover?
Employees electing to roll over their lump-sum pension payment must follow specific IRS regulations to avoid tax penalties. Effective planning, such as obtaining rollover paperwork and adhering to IRS rules, ensures compliance and smooth fund transfer(ConocoPhillips_Your_Ret…).
What resources does ConocoPhillips provide for employees to calculate and project their retirement income? How can these tools empower employees to make informed decisions regarding their future financial security?
ConocoPhillips provides employees with tools such as the "Project Retirement Income" feature on YBR, empowering them to calculate and project their retirement income. These resources help employees make informed decisions about their financial future(ConocoPhillips_Your_Ret…).
How do deadlines play a pivotal role in the benefits process for retiring employees at ConocoPhillips, and what specific dates must be adhered to in order to avoid payment delays? Can you provide examples of consequences resulting from missed deadlines?
Deadlines are critical in ConocoPhillips' retirement process, as missing them can delay pension payments. For example, requesting pension paperwork after the 15th of the month can delay the BCD by a month, affecting the pension payout date(ConocoPhillips_Your_Ret…).
What are the added advantages for employees at ConocoPhillips who actively seek assistance or information from the Benefits Center during their retirement planning? How can this proactive approach enhance their overall retirement experience?
Employees who seek assistance from the Benefits Center during their retirement planning benefit from personalized guidance. This proactive approach ensures that they fully understand their options and deadlines, enhancing their overall retirement experience(ConocoPhillips_Your_Ret…).
How can employees at ConocoPhillips contact the Benefits Center to receive personalized assistance in navigating their retirement options? What specific resources and support can they expect when reaching out for help?
ConocoPhillips employees can contact the Benefits Center by calling 800-622-5501 or accessing YBR online. The Benefits Center provides personalized assistance and guidance, helping employees navigate their pension options effectively(ConocoPhillips_Your_Ret…).
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