Navigating Retirement: Annuities vs. IRA Withdrawals for Schnitzer Steel Industries Employees

Healthcare Provider Update: Offers medical, dental, vision, life, and disability insurance, along with a 401(k) retirement plan and paid time off 1. Employees also have access to FSAs and wellness programs. As ACA premiums are projected to rise sharply in 2026with some states seeing increases over 60%Schnitzer Steel is expected to adjust its benefit structures. This may include higher deductibles, coinsurance, or out-of-pocket maximums, making it essential for employees to review their options and optimize HSA/FSA contributions to offset rising costs Click here to learn more

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

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

As life expectancies increase, Schnitzer Steel Industries 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 Schnitzer Steel Industries. 

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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