New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
Navigating Retirement: Annuities vs. IRA Withdrawals for Centene Employees
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Crude oil prices remain elevated and volatile, with annualized volatility around 80% and prices ranging between $50 and $120 per barrel over the past six months. Facility energy costs, ambulance fleet fuel, and medical supply chain logistics connect healthcare service providers to sustained oil price movements. Centene employees building long-term savings should recognize that oil-driven economic conditions can affect both the growth of their portfolios and the purchasing power of their eventual retirement income. Working with a financial advisor helps ensure that energy market uncertainty does not undermine your long-term retirement and financial goals.
There are just a couple of things almost all Centene 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 Centene 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 Centene retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Centene retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Centene 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 Centene.
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 Centene into retirement, understanding the company's benefit structure can help you make more informed decisions. According to publicly available information, Centene does not maintain a traditional defined benefit pension plan, making your 401(k) plan and personal savings the primary vehicles for retirement income. Centene does not appear to offer a formal retiree healthcare program, so healthcare coverage planning before Medicare eligibility at age 65 is an important consideration. We encourage you to review your Summary Plan Description (SPD) or speak with Centene's HR or benefits team for the most current details.
What type of retirement plan does Centene offer to its employees?
Centene offers a 401(k) Savings Plan to help employees save for retirement.
Does Centene provide a matching contribution for its 401(k) plan?
Yes, Centene provides a matching contribution to encourage employees to save for retirement.
How can Centene employees enroll in the 401(k) Savings Plan?
Centene employees can enroll in the 401(k) Savings Plan through the employee benefits portal during open enrollment or after they become eligible.
What is the eligibility criteria for Centene’s 401(k) Savings Plan?
Employees at Centene are generally eligible to participate in the 401(k) Savings Plan after completing a specified period of employment.
Can Centene employees make changes to their 401(k) contributions?
Yes, Centene employees can change their contribution amounts at any time through the benefits portal.
What investment options are available in Centene's 401(k) Savings Plan?
Centene offers a variety of investment options including mutual funds, target-date funds, and other investment vehicles.
Is there a vesting schedule for Centene’s 401(k) matching contributions?
Yes, Centene has a vesting schedule for matching contributions, which means employees must work for a certain period to fully own those funds.
How often can Centene employees review their 401(k) account statements?
Centene employees can review their 401(k) account statements quarterly through the online benefits portal.
What happens to my Centene 401(k) if I leave the company?
If you leave Centene, you can choose to roll over your 401(k) balance to another retirement account or withdraw the funds, subject to tax implications.
Does Centene offer financial education resources for its 401(k) plan participants?
Yes, Centene provides financial education resources and tools to help employees make informed decisions about their 401(k) savings.
For more information you can reach the plan administrator for Centene at 7700 Forsyth Blvd. Clayton, MO 63105; or by calling them at +1 314-725-4477.
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