New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
Navigating Retirement: Annuities vs. IRA Withdrawals for AECOM Employees
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With crude oil volatility near 80% and prices spanning $50 to $120 per barrel over the past six months, energy cost uncertainty influences economic conditions across industries. Petroleum-based materials, heavy equipment diesel, and the mortgage rate inflation driven by energy costs create multiple layers of oil price exposure for construction and homebuilding. Retirement savings strategies at AECOM should account for how energy price cycles influence inflation, interest rates, and market returns over the long horizons that retirement planning requires. Professional guidance can help you navigate the indirect effects of oil volatility on your retirement planning and ensure your strategy accounts for these dynamics.
There are just a couple of things almost all AECOM 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 AECOM 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 AECOM retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective AECOM retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, AECOM 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 AECOM.
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.
As you plan your transition from AECOM into retirement, understanding the company's benefit structure can help you make more informed decisions. According to publicly available information, AECOM maintains an active defined benefit pension plan, which provides retirement income based on factors such as years of service and compensation history. AECOM also offers retiree healthcare benefits to eligible employees, which can provide meaningful coverage for those who retire before reaching Medicare eligibility at age 65. Because the specifics of your pension formula, vesting schedule, and benefit eligibility depend on your individual employment history and plan documents, We encourage you to review your Summary Plan Description (SPD) or speak with AECOM's HR or benefits team for the most current details.
What is the 401(k) plan offered by AECOM?
AECOM offers a 401(k) plan that allows employees to save for retirement by contributing a portion of their salary on a pre-tax or after-tax basis.
How does AECOM match employee contributions to the 401(k) plan?
AECOM provides a matching contribution to the 401(k) plan, which helps employees increase their retirement savings.
What are the eligibility requirements for AECOM’s 401(k) plan?
Employees of AECOM are generally eligible to participate in the 401(k) plan after completing a specific period of service, typically within the first year of employment.
Can I change my contribution percentage to AECOM's 401(k) plan?
Yes, employees can change their contribution percentage to AECOM's 401(k) plan at any time, subject to certain guidelines.
What investment options are available in AECOM's 401(k) plan?
AECOM's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
How can I access my AECOM 401(k) account information?
Employees can access their AECOM 401(k) account information through the plan's online portal or by contacting the plan administrator.
What happens to my AECOM 401(k) if I leave the company?
If you leave AECOM, you can choose to roll over your 401(k) balance to another retirement account, leave it in the AECOM plan, or withdraw the funds, subject to tax implications.
Is there a loan option available through AECOM's 401(k) plan?
Yes, AECOM allows employees to take loans against their 401(k) balance under certain conditions.
How often can I change my investment allocations in AECOM's 401(k) plan?
Employees can change their investment allocations in AECOM's 401(k) plan as often as they wish, typically without restrictions.
Does AECOM offer financial education resources for 401(k) participants?
Yes, AECOM provides financial education resources and workshops to help employees make informed decisions about their 401(k) savings.
For more information you can reach the plan administrator for AECOM at 300 South Grand Avenue Los Angeles, CA 90071; or by calling them at (213) 593-8000.
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