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Navigating Retirement: Annuities vs. IRA Withdrawals for Peloton Interactive Employees

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

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

As life expectancies increase, Peloton Interactive 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 Peloton Interactive.

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 Peloton Interactive?

Peloton Interactive offers a 401(k) plan that allows employees to save for retirement through pre-tax contributions, helping them build a financial future.

How can employees of Peloton Interactive enroll in the 401(k) plan?

Employees can enroll in the Peloton Interactive 401(k) plan by accessing the benefits portal and following the enrollment instructions provided during their onboarding process.

Does Peloton Interactive match employee contributions to the 401(k) plan?

Yes, Peloton Interactive provides a matching contribution to the 401(k) plan, which helps employees maximize their retirement savings.

What is the vesting schedule for Peloton Interactive's 401(k) matching contributions?

The vesting schedule for Peloton Interactive's 401(k) matching contributions typically follows a standard schedule, allowing employees to gradually earn ownership of the matched funds over time.

Can employees of Peloton Interactive take loans against their 401(k) savings?

Yes, Peloton Interactive allows employees to take loans against their 401(k) savings, subject to the terms and conditions outlined in the plan documents.

What investment options are available in Peloton Interactive's 401(k) plan?

Peloton Interactive offers a range of investment options in its 401(k) plan, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.

How often can employees change their contribution amounts to the Peloton Interactive 401(k) plan?

Employees can change their contribution amounts to the Peloton Interactive 401(k) plan on a quarterly basis or as specified in the plan guidelines.

What is the minimum contribution percentage for Peloton Interactive's 401(k) plan?

The minimum contribution percentage for Peloton Interactive's 401(k) plan is typically set at 1% of the employee's salary, but employees are encouraged to contribute more if possible.

Are there any fees associated with Peloton Interactive's 401(k) plan?

Yes, there may be administrative fees associated with Peloton Interactive's 401(k) plan, which are disclosed in the plan documents provided to employees.

How can employees track their 401(k) savings at Peloton Interactive?

Employees can track their 401(k) savings at Peloton Interactive by logging into the benefits portal, where they can view their account balance and investment performance.