There are just a couple of things almost all West Pharmaceutical Services 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 West Pharmaceutical Services 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 West Pharmaceutical Services retiree about 30 years of retirement income.
As the economy constantly changes, a number of factors may force prospective West Pharmaceutical Services retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.
As life expectancies increase, West Pharmaceutical Services 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 West Pharmaceutical Services.
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 types of contributions can I make to the West Pharmaceutical Services 401(k) plan?
Employees of West Pharmaceutical Services can make pre-tax and Roth (after-tax) contributions to the 401(k) plan.
Does West Pharmaceutical Services offer a company match for the 401(k) contributions?
Yes, West Pharmaceutical Services provides a company match for employee contributions to the 401(k) plan, subject to certain limits.
When can I enroll in the West Pharmaceutical Services 401(k) plan?
Employees can enroll in the West Pharmaceutical Services 401(k) plan during the initial enrollment period upon hire or during the annual open enrollment period.
What is the vesting schedule for the West Pharmaceutical Services 401(k) company match?
The vesting schedule for the company match at West Pharmaceutical Services typically follows a graded vesting schedule over a period of three to five years.
Can I take a loan against my 401(k) with West Pharmaceutical Services?
Yes, West Pharmaceutical Services allows participants to take loans against their 401(k) balance, subject to plan rules and limits.
What investment options are available in the West Pharmaceutical Services 401(k) plan?
The West Pharmaceutical Services 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and stable value funds.
How can I access my West Pharmaceutical Services 401(k) account information?
Employees can access their 401(k) account information through the West Pharmaceutical Services online portal or by contacting the plan administrator.
Are there any fees associated with the West Pharmaceutical Services 401(k) plan?
Yes, like most retirement plans, the West Pharmaceutical Services 401(k) plan may have administrative and investment fees, which are disclosed in the plan documents.
What happens to my 401(k) if I leave West Pharmaceutical Services?
If you leave West Pharmaceutical Services, you can roll over your 401(k) balance to another qualified plan, cash it out (subject to taxes and penalties), or leave it in the West plan if you meet certain criteria.
Does West Pharmaceutical Services offer financial education resources for 401(k) participants?
Yes, West Pharmaceutical Services provides financial education resources and tools to help employees make informed decisions about their 401(k) savings.
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