Navigating Retirement: Annuities vs. IRA Withdrawals for International Flavors & Fragrances Employees

Healthcare Provider Update: Healthcare Provider for International Flavors & Fragrances International Flavors & Fragrances (IFF) typically utilizes a variety of healthcare providers for their employee health plans. Major insurers in the United States, such as UnitedHealthcare, Anthem Blue Cross Blue Shield, and Cigna, often feature in employer-sponsored health plans, providing a range of medical services to employees. The specific provider may vary by state and plan design, emphasizing choices that offer broad networks and comprehensive coverage for IFF staff. Potential Healthcare Cost Increases in 2026 Healthcare costs are poised for significant increases in 2026, impacting employees of International Flavors & Fragrances. As the expiration of enhanced premium subsidies under the Affordable Care Act (ACA) looms, many workers could face steep premium hikes, with some states projecting increases exceeding 60%. Coupled with rising medical costs driven by inflation and high-demand specialty medications, employees may find that their out-of-pocket expenses rise sharply. Proactive financial planning and a thorough review of benefits will be essential for those looking to mitigate the financial impact of these changes. Click here to learn more

There are just a couple of things almost all International Flavors & Fragrances 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 International Flavors & Fragrances 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 International Flavors & Fragrances retiree about 30 years of retirement income.

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

As life expectancies increase, International Flavors & Fragrances 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 International Flavors & Fragrances. 

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.

 

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