There are just a couple of things almost all CSX 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 CSX 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 CSX retiree about 30 years of retirement income.

As the economy constantly changes, a number of factors may force prospective CSX retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.

As life expectancies increase, CSX 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 CSX.

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 CSX into retirement, understanding the company's benefit structure can help you make more informed decisions. According to publicly available information, CSX maintains an active defined benefit pension plan, which provides retirement income based on factors such as years of service and compensation history. CSX does not appear to offer a formal retiree healthcare program, making healthcare coverage planning an important consideration if you retire before 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 CSX's HR or benefits team for the most current details.