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'These turbulent economic times require that FedEx employees rely on the structured support of employer-sponsored retirement plans to maintain stability in their investment strategies,' says Wesley Boudreaux of The Retirement Group, a division of Wealth Enhancement Group. 'Discipline helps protect your financial future from market volatility.'
Financial experts say FedEx employees should strengthen their long-term investment strategies, particularly in target-date funds, since such plans will automatically adjust to their retirement goals, says Patrick Ray of The Retirement Group, a division of Wealth Enhancement Group. 'Keeping a course rather than reacting to short-term market shifts may be key to a financially secure retirement.'
In this article, we will discuss:
1. Economic Trends & Investor Behavior: Analyzing whether and how the recent economic downturn has affected investor activities, especially among 401(k) retirement plans, as well as the implications of preserving investment strategies during market fluctuations.
2. Financial Health & Consumer Behavior: Trends in personal savings, credit card debt and financial health of American consumers reported in recent studies and how they reflect broader economic conditions.
3. Future Financial Security Strategies: Looking at financial planning and the role of automatic saving features in 401(k) plans, and how to get professional financial advice about navigating economic uncertainty and preserving long-term financial security.
The 2022 Stress in America Study by the American Psychological Association found that money is the number one cause of stress for Americans—the highest level since 2015—according to the annual survey. That said, folks at FedEx should understand how this recent economic downturn has affected investor activity. The Federal Reserve says more than half of U.S. adults and their partners received non-labor income in 2020 from investments, interest, Social Security, and unemployment. As inflation grew and markets performed poorly, Americans could not just liquidate assets in their retirement accounts.
An estimated 90% of investors in 401(k)-style retirement plans administered by Vanguard Group kept or increased their savings rate in 2022. And trading among retail investors managing their own assets sank to a two-decade low. With the S&P 500 undergoing a yearly devaluation in proportions equal to 2008, retirement savers stayed away from selling assets and giving up long-term security. FedEx workers with 401(k) accounts continue to invest, save, and avoid emotional financial decisions.
American consumers are displaying signs of financial stress as personal savings rates drop and credit-card balances return to pre-pandemic levels. The 2022 Financial Health Network's Annual Financial Health Pulse Report found that 31% of Americans considered themselves financially healthy fell from 34% in 2021 to 31% in 2022. That said, unemployment is down 0.1% from last year's November-December rates, and hourly earnings for private-sector employees rose 4.6% through December 2021.
Data published in June by Vanguard shows 9% of workers with 401(k) accounts cut back on savings rates starting in 2021—up from 7% a year ago. Just 4% of investors managing their own 401(k) assets moved money from one fund to another last year—down 2% from 8% in 2021 and 4% from 10% in 2020. And people in Vanguard 401(k) plans held 74% of their assets in stocks—up 2% from 72% in 2020.
All things considered, people working for FedEx should understand that some of the investor tenacity to hang onto assets through market declines may be partly due to automatic features designed to remove obstacles to saving and investing. 58% of the plans that use Vanguard's services had target-date funds compared with 32% in 2012. Typically, target-date funds contain stocks and bonds partially indexed to an investor's age and projected retirement date at the time of opening the fund, called a 'glide path.'
A glide path is constructed so that a person can take a growth-oriented approach in his prime earning years and then save capital toward retirement age or 'target' year. Then most of those plans increase employees' savings rate by some percentage (usually 1%) every year up to a 10% limit or more. Behavioral economist and Nobel Prize-winning advocate for automatic 401(k) features Richard Thaler compares these advances to GPS driving. Thaler says such features let investors pick the right path and stay the course without overthinking.
And yet despite all this, people working for FedEx should also recognize that recent strong performance in the market may be reason to hold stocks longer. The S&P expresses an annualized return of 11.3% between 2019 - 2022 despite a 19.4% downturn in 2022. Dow Jones Market Data says that number exceeds the index's 5.8% annualized return since 1928.
Although the market performed well, not all metrics point to better retirement safety nets. In addition to growing early withdrawals from qualified retirement accounts and a 20% drop in the average 401(k) balance to USD 112,572 by 2022, more Americans struggled to keep up with financial emergencies and higher prices. Hardship distributions for things like preventing evictions and paying medical bills were record highs. Loan initiations climbed 9%. Taken together, employees at FedEx should contact a financial advisor to avoid the consequences above. If you plan properly, The Retirement Group customizes a retirement plan for you.
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- Corporate Employees: 8 Factors When Choosing a Mutual Fund
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- 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?
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- 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!
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Sources:
1. American Psychological Association. 'Stress in America 2022: Concerned by Inflation.' APA, 2022, www.apa.org/news/press/releases/stress/2022/concerned-future-inflation .
2. American Psychological Association. 'Money and Stress.' APA, 2022, www.apa.org/topics/stress/money .
3. American Psychological Association. 'Stress in America Report.' APA, 2022, www.apa.org/pubs/reports/stress-in-america .
4. American Psychological Association. 'Inflation, War, and Stress in 2022.' APA, 2022, www.apa.org/news/press/releases/2022/03/inflation-war-stress .
5. American Psychological Association. 'Speaking of Psychology: Financial Stress.' APA, 2022, www.apa.org/news/podcasts/speaking-of-psychology/financial-stress .
What are the implications of the Funding Target Attainment Percentage for FedEx Corporation employees, and how does it impact the security of the pension benefits offered by FedEx Corporation? This question seeks to explore the nuances of the funding target attainment percentage as reported in the annual funding notice, examining how this metric not only reflects the financial health of FedEx Corporation's pension plan but also how it affects employee confidence in future benefit payments and retirement planning.
Funding Target Attainment Percentage: The Funding Target Attainment Percentage for FedEx Corporation indicates the degree to which the pension plan is funded. A percentage of 101.33% for 2022 suggests that the plan has sufficient assets to cover its liabilities, providing security for employees' pension benefits. This high percentage likely increases employee confidence in the stability and reliability of their future pension payouts, essential for long-term retirement planning.
How does the merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan influence the benefits currently available to FedEx Corporation employees? This question aims to delve into the practical changes that may arise due to this merger, assessing whether it aligns with employee expectations regarding their pension benefits and how the transition process is managed by FedEx Corporation.
Merger of Pension Plans: The merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan appears to have been strategically managed to maintain benefit stability. Despite increasing liabilities by 5.3%, the merger was structured to ensure no negative impact on the benefit amounts payable to participants from either plan, preserving the expected pension benefits for all affected FedEx Corporation employees.
In terms of investment strategies, what measures does FedEx Corporation implement to ensure that its pension plan investments align with the long-term liabilities expected to be paid out to retirees? This question encourages an exploration of the investment policies in place, examining the asset allocations and risk management strategies that FedEx Corporation employs to ensure sustainable funding for its pension obligations, which could potentially include detailed analyses of stocks, debts, and alternative investments.
Investment Strategies: FedEx Corporation employs a diversified investment strategy across equities, fixed income, and alternative investments, aiming to meet long-term pension liabilities. This approach, which includes both active management strategies and the limited use of derivatives, is designed to generate returns that exceed market indices, thus ensuring adequate funding of pension obligations.
What options do employees of FedEx Corporation have for accessing their pension plan statements, and how frequently are these statements generated? The focus here is to understand the communication strategies employed by FedEx Corporation regarding pension benefit statements, including technological access points and the importance of these documents for employee financial planning.
Pension Plan Statements: FedEx Corporation provides annual pension plan statements through their Retirement Service Center, available electronically each fall. Employees can access their statements online or request them if notifications are not received, ensuring transparency and aiding in personal financial planning.
How are contributions to the FedEx Corporation Employees’ Pension Plan determined, and what role do excess contributions play in the plan's overall funding strategy? This question aims to educate employees about how the company balances mandatory contribution levels with potential excess contributions, exploring how these factors interact to influence the plan's solvency and employee benefits.
Contributions to the Pension Plan: Contributions to the FedEx Corporation Employees' Pension Plan are calculated to meet at least the minimum legal requirement and potentially include voluntary excess contributions. These excess contributions can help manage the plan's funding level and ensure its solvency, benefiting overall pension security for employees.
What types of benefits are guaranteed under the Pension Benefit Guaranty Corporation (PBGC) for FedEx Corporation employees, and what limitations exist that employees should be aware of? By focusing on the guaranteed benefits, this question prompts a discussion on the security of specific benefits provided by FedEx Corporation and highlights limitations, allowing employees to understand their rights fully.
PBGC Guarantee: The Pension Benefit Guaranty Corporation guarantees certain types of benefits for FedEx Corporation employees, such as pension benefits at normal retirement age and most early retirement benefits. However, there are limitations, such as exclusions for benefits without vested rights and recently increased benefits, which employees should be aware of to fully understand their pension security.
In what ways does the FedEx Corporation plan to adjust its pension funding strategy in light of changing federal laws that impact pension obligations? Employees are encouraged to consider how legislative changes influence corporate policies surrounding retirement benefits and the proactive strategies FedEx Corporation might take to remain compliant while ensuring the security of employee pensions.
Adjustments to Funding Strategy: FedEx Corporation is likely to adjust its pension funding strategy in response to legislative changes affecting pension obligations, such as those introduced by recent acts adjusting how pension liabilities are calculated. This proactive approach aims to ensure compliance with new laws while continuing to secure the financial health of the pension plan.
What are the steps that FedEx Corporation employees must take if they are considering retirement, particularly in how to navigate the pension plan and gain access to their benefits? This question aims to provide clarity on the retirement process, ensuring that employees are equipped with the necessary information regarding required documentation, timelines, and points of contact within FedEx Corporation.
Steps for Retirement Planning: Employees considering retirement should contact the FedEx Retirement Service Center to navigate their pension plan benefits. This process involves understanding necessary documentation, timelines, and available support, facilitating a smooth transition into retirement.
How does FedEx Corporation plan to manage potential funding shortfalls in the pension plan, and what mechanisms are in place for notifying plan participants should such an event occur? Employees would need to understand the proactive measures put in place by FedEx Corporation to address funding-related challenges while also knowing what this means for their benefits.
Managing Funding Shortfalls: In the event of potential funding shortfalls, FedEx Corporation has policies in place to manage such situations, including strategic contributions to mitigate shortfalls. The company maintains transparency with plan participants about funding levels and any significant changes affecting the pension plan.
For those seeking more information about their pensions and retirement options, how can FedEx Corporation employees contact relevant departments, and what resources are available for assistance? This question provides an opportunity for employees to familiarize themselves with contact points such as the FedEx Retirement Service Center, emphasizing the importance of open communication channels for addressing inquiries related to their pensions. Feel free to consult the provided document for more in-depth exploration of these topics.
Contacting for Pension Information: FedEx Corporation employees seeking more information about their pensions or retirement options can contact the FedEx Retirement Service Center. This center provides essential resources and support, ensuring employees have access to all necessary information regarding their retirement planning.
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