There are just a couple of things almost all Medical Mutual of Ohio 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 Medical Mutual of Ohio 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 Medical Mutual of Ohio retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective Medical Mutual of Ohio retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, Medical Mutual of Ohio 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 Medical Mutual of Ohio.
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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What type of retirement savings plan does Medical Mutual of Ohio offer?
Medical Mutual of Ohio offers a 401(k) retirement savings plan for its employees.
Does Medical Mutual of Ohio match employee contributions to the 401(k) plan?
Yes, Medical Mutual of Ohio provides a matching contribution to employee contributions, up to a certain percentage.
What is the eligibility requirement to participate in the Medical Mutual of Ohio 401(k) plan?
Employees of Medical Mutual of Ohio are eligible to participate in the 401(k) plan after completing a specified period of service.
How can employees of Medical Mutual of Ohio enroll in the 401(k) plan?
Employees can enroll in the Medical Mutual of Ohio 401(k) plan through the company's HR portal or by contacting the HR department.
What investment options are available in the Medical Mutual of Ohio 401(k) plan?
The Medical Mutual of Ohio 401(k) plan offers a variety of investment options, including mutual funds and target-date funds.
Can employees of Medical Mutual of Ohio take loans against their 401(k) savings?
Yes, Medical Mutual of Ohio allows employees to take loans against their 401(k) savings, subject to specific terms and conditions.
What is the vesting schedule for employer contributions in the Medical Mutual of Ohio 401(k) plan?
The vesting schedule for employer contributions at Medical Mutual of Ohio is outlined in the plan documents, typically based on years of service.
How often can employees change their contribution amounts in the Medical Mutual of Ohio 401(k) plan?
Employees can change their contribution amounts in the Medical Mutual of Ohio 401(k) plan at designated times throughout the year.
Does Medical Mutual of Ohio offer educational resources for employees regarding their 401(k) plan?
Yes, Medical Mutual of Ohio provides educational resources and tools to help employees understand their 401(k) options and investment choices.
What happens to my 401(k) savings if I leave Medical Mutual of Ohio?
If you leave Medical Mutual of Ohio, you can choose to roll over your 401(k) savings into another qualified retirement account or leave it in the Medical Mutual of Ohio plan, subject to certain conditions.
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