New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
Navigating Retirement: Annuities vs. IRA Withdrawals for Maximus 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. Client demand uncertainty during volatile economic periods and consultant travel costs connect professional services firms to broader oil-driven macro conditions. Maximus 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 can help you position your planning strategy for sustained energy price uncertainty.
There are just a couple of things almost all Maximus 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 Maximus 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 Maximus retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Maximus retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Maximus 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 Maximus.
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 Maximus into retirement, understanding the company's benefit structure can help you make more informed decisions. According to publicly available information, Maximus does not maintain a traditional defined benefit pension plan, making your 401(k) plan and personal savings the primary vehicles for retirement income. Maximus 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 Maximus's HR or benefits team for the most current details.
What is the 401(k) plan offered by Maximus?
The 401(k) plan offered by Maximus is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.
How can I enroll in the Maximus 401(k) plan?
You can enroll in the Maximus 401(k) plan by completing the enrollment form available through the HR portal or by contacting the HR department for assistance.
Does Maximus match employee contributions to the 401(k) plan?
Yes, Maximus offers a matching contribution to employee 401(k) plans, which helps to enhance your retirement savings.
What is the maximum contribution limit for the Maximus 401(k) plan?
The maximum contribution limit for the Maximus 401(k) plan is set annually by the IRS, and you can check the latest limits on the IRS website or through Maximus’s HR resources.
Can I change my contribution percentage to the Maximus 401(k) plan?
Yes, you can change your contribution percentage to the Maximus 401(k) plan at any time by submitting a request through the HR portal.
When can I start withdrawing from my Maximus 401(k) plan?
You can start withdrawing from your Maximus 401(k) plan at age 59½, or earlier under certain circumstances such as financial hardship.
Are there any fees associated with the Maximus 401(k) plan?
Yes, there may be administrative fees associated with the Maximus 401(k) plan, which are outlined in the plan documents provided to employees.
Does Maximus provide investment options within the 401(k) plan?
Yes, Maximus provides a variety of investment options within the 401(k) plan, allowing employees to choose based on their risk tolerance and retirement goals.
How often can I change my investment allocations in the Maximus 401(k) plan?
Employees can change their investment allocations in the Maximus 401(k) plan as often as they wish, subject to the plan's guidelines.
What happens to my Maximus 401(k) plan if I leave the company?
If you leave Maximus, you have several options regarding your 401(k) plan, including rolling it over to another retirement account, cashing it out, or leaving it with Maximus.
For more information you can reach the plan administrator for Maximus at , ; or by calling them at .
https://www.thelayoff.com/#google_vignette https://www.sec.gov/ https://www.pbgc.gov/ https://www.benefitspro.com/?slreturn=20240819130635 http://pension360.org/ https://www.thelayoff.com/ https://finance.yahoo.com/ https://www.marketwatch.com/
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