Navigating Retirement: Annuities vs. IRA Withdrawals for Olympic Steel Employees

Healthcare Provider Update: Healthcare Provider for Olympic Steel The primary healthcare provider for Olympic Steel is typically Cigna HealthCare. Olympic Steel, like many employers, partners with specific insurance companies to offer health benefits to its employees. Potential Healthcare Cost Increases for 2026 As we approach 2026, Olympic Steel may face significant healthcare cost increases alongside broader market trends. Expected premium hikes in the Affordable Care Act (ACA) marketplace could exceed 60% in certain states, driven by rising medical costs, the potential expiration of enhanced federal premium subsidies, and substantial demands from large insurers. Consequently, employees enrolling in these plans might see their out-of-pocket expenses surge by over 75%, aggravating budget constraints for the company and its workforce. With a projected employer-sponsored insurance increase of 8.5%, Olympic Steel must prepare for an environment where healthcare expenses will be a critical concern, likely leading to shifts in benefits and out-of-pocket responsibilities. Click here to learn more

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

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

As life expectancies increase, Olympic Steel 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 Olympic Steel. 

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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