Navigating Retirement: Annuities vs. IRA Withdrawals for TJX Employees

Healthcare Provider Update: For TJX Companies, the primary healthcare provider is Aetna, which offers various health insurance plans to employees. As we look ahead to 2026, TJX employees may face significant increases in healthcare costs due to a confluence of factors affecting the entire industry. Record spikes in Affordable Care Act (ACA) premiums, driven by factors such as rising medical costs, the potential expiration of federal premium subsidies, and aggressive rate hikes from major insurers, could lead to many employees seeing their out-of-pocket expenses surge by 75% or more. Employers like TJX are likely to adjust their benefit structures in response, potentially transferring more healthcare costs onto workers, thereby putting additional financial pressure on households. Click here to learn more

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

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

As life expectancies increase, TJX 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 TJX. 

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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