New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
Navigating Retirement: Annuities vs. IRA Withdrawals for ResMed Employees
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Oil market turbulence continues to ripple through the broader economy, with crude swinging between $50 and $120 per barrel and annualized volatility near 80%. Petrochemical inputs for pharmaceutical production and cold-chain distribution logistics create tangible cost pressure when crude prices remain elevated. Retirement savings strategies at ResMed should account for how energy price cycles influence inflation, interest rates, and market returns over the long horizons that retirement planning requires. 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 ResMed 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 ResMed 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 ResMed retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective ResMed retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, ResMed 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 ResMed.
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 ResMed into retirement, understanding the company's benefit structure can help you make more informed decisions. According to publicly available information, ResMed does not maintain a traditional defined benefit pension plan, making your 401(k) plan and personal savings the primary vehicles for retirement income. ResMed 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 ResMed's HR or benefits team for the most current details.
What is the 401(k) plan offered by ResMed?
The 401(k) plan at ResMed is a retirement savings plan that allows employees to save a portion of their salary on a tax-deferred basis.
How does ResMed match employee contributions to the 401(k) plan?
ResMed offers a matching contribution to the 401(k) plan, typically matching a percentage of employee contributions up to a certain limit.
When can I enroll in the ResMed 401(k) plan?
Employees at ResMed can enroll in the 401(k) plan during the initial onboarding process or during the annual open enrollment period.
What types of investment options are available in ResMed's 401(k) plan?
ResMed's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
Is there a vesting schedule for ResMed's 401(k) matching contributions?
Yes, ResMed has a vesting schedule for matching contributions, meaning employees must work for a certain period before they fully own the matched funds.
Can I take a loan against my 401(k) with ResMed?
Yes, ResMed allows employees to take loans against their 401(k) balance, subject to certain terms and conditions.
How can I change my contribution rate to the ResMed 401(k) plan?
Employees can change their contribution rate to the ResMed 401(k) plan through the online benefits portal or by contacting HR.
What happens to my ResMed 401(k) if I leave the company?
If you leave ResMed, you have several options for your 401(k), including rolling it over to another retirement account, cashing it out, or leaving it with ResMed until a later date.
Does ResMed provide financial education regarding the 401(k) plan?
Yes, ResMed offers resources and workshops to help employees understand their 401(k) options and make informed investment decisions.
Are there any fees associated with ResMed's 401(k) plan?
Yes, there may be administrative fees associated with managing the ResMed 401(k) plan, which are disclosed in the plan documents.
For more information you can reach the plan administrator for ResMed at , ; or by calling them at .
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