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Navigating Retirement: Annuities vs. IRA Withdrawals for Vertex Pharmaceuticals Employees

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

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

As life expectancies increase, Vertex Pharmaceuticals 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 Vertex Pharmaceuticals.

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 Vertex Pharmaceuticals?

The 401(k) plan at Vertex Pharmaceuticals is a retirement savings plan that allows employees to save a portion of their salary before taxes are deducted.

How can I enroll in the 401(k) plan at Vertex Pharmaceuticals?

Employees can enroll in the Vertex Pharmaceuticals 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

What is the employer match for the 401(k) plan at Vertex Pharmaceuticals?

Vertex Pharmaceuticals offers a competitive employer match for contributions made to the 401(k) plan, which is designed to help employees maximize their retirement savings.

At what age can I start contributing to the Vertex Pharmaceuticals 401(k) plan?

Employees at Vertex Pharmaceuticals can start contributing to the 401(k) plan as soon as they are eligible, typically upon their date of hire.

How much can I contribute to the Vertex Pharmaceuticals 401(k) plan each year?

The contribution limits for the Vertex Pharmaceuticals 401(k) plan align with IRS guidelines, allowing employees to contribute up to a specified maximum amount each year.

Does Vertex Pharmaceuticals offer a Roth 401(k) option?

Yes, Vertex Pharmaceuticals offers a Roth 401(k) option, allowing employees to make after-tax contributions to their retirement savings.

Can I change my contribution amount to the Vertex Pharmaceuticals 401(k) plan?

Yes, employees can change their contribution amounts to the Vertex Pharmaceuticals 401(k) plan at any time, subject to plan rules.

What investment options are available in the Vertex Pharmaceuticals 401(k) plan?

The Vertex Pharmaceuticals 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles tailored to different risk tolerances.

When can I access my funds from the Vertex Pharmaceuticals 401(k) plan?

Employees can access their funds from the Vertex Pharmaceuticals 401(k) plan upon reaching retirement age, or in certain circumstances such as financial hardship or termination of employment.

How does the vesting schedule work for the Vertex Pharmaceuticals 401(k) plan?

The vesting schedule for the Vertex Pharmaceuticals 401(k) plan determines how much of the employer match you are entitled to keep based on your years of service.