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Navigating Retirement: Annuities vs. IRA Withdrawals for Option Care Health Employees

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

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

As life expectancies increase, Option Care Health 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 Option Care Health.

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 is the 401(k) plan offered by Option Care Health?

The 401(k) plan at Option Care Health is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

How can employees enroll in the 401(k) plan at Option Care Health?

Employees can enroll in the Option Care Health 401(k) plan by completing the enrollment process through the company’s HR portal or by contacting the HR department for assistance.

Does Option Care Health offer a company match for the 401(k) contributions?

Yes, Option Care Health offers a company match for employee contributions to the 401(k) plan, which helps employees grow their retirement savings.

What is the vesting schedule for the company match at Option Care Health?

The vesting schedule for the company match at Option Care Health typically follows a graded vesting schedule, meaning employees earn rights to the company contributions over a period of time.

Can employees change their contribution percentage to the 401(k) plan at Option Care Health?

Yes, employees at Option Care Health can change their contribution percentage at any time, subject to the plan’s rules and limits.

What investment options are available in the Option Care Health 401(k) plan?

The Option Care Health 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.

Is there a loan option available for the 401(k) plan at Option Care Health?

Yes, Option Care Health allows employees to take loans against their 401(k) balance under certain conditions, providing a way to access funds if needed.

What happens to my 401(k) account if I leave Option Care Health?

If you leave Option Care Health, you have several options for your 401(k) account, including rolling it over to a new employer’s plan, an IRA, or cashing it out, though cashing out may incur taxes and penalties.

How often can employees contribute to the 401(k) plan at Option Care Health?

Employees can contribute to the Option Care Health 401(k) plan with each paycheck, allowing for consistent savings throughout the year.

Are there any fees associated with the 401(k) plan at Option Care Health?

Yes, like most 401(k) plans, the Option Care Health 401(k) may have administrative fees and investment fees, which are disclosed in the plan documents.