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Healthcare Provider Update: FedEx's healthcare provider is primarily Cigna, which partners with the company to offer health insurance solutions to its employees through a range of plans, including High Deductible Health Plans paired with Health Savings Accounts. In 2026, FedEx employees may face significant healthcare cost increases, mirroring a broader trend across the nation. With the expected elimination of enhanced ACA premium subsidies, some workers could see their out-of-pocket premium costs surge by over 75%. Coupled with the anticipated double-digit rate hikes from major insurers and rising medical expenses, the financial burden on employees is poised to escalate sharply, potentially impacting their overall healthcare affordability. Click here to learn more
'FedEx employees must carefully consider their retirement withdrawal strategies to maintain a sustainable income, as decisions on the timing and method of withdrawals can impact their financial health in retirement.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.
'By structuring the right withdrawal strategy, FedEx employees can better navigate the complexities of retirement, helping their hard-earned savings last throughout their retirement years while potentially managing the risks associated with market volatility and unforeseen expenses.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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Four retirement withdrawal strategies to help your savings last.
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The impact of tax considerations, required minimum distributions (RMDs), and Social Security benefits on your retirement income.
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The importance of planning for health care costs in retirement.
Retirement is the culmination of years of dedication, hard work, and saving. As a FedEx employee, you’ve likely worked diligently to build your retirement savings. However, once you’ve accumulated your nest egg, the challenge becomes converting that sum into a sustainable income to cover what could be decades of retirement. A major concern for many retirees, including those in the oil and gas industry, is outliving their savings. It’s critical to understand how to manage your retirement funds wisely to help make them last.
Having a healthy retirement fund is essential, but it’s equally important to know how to manage that fund effectively. Your retirement well-being depends on the decisions you make about withdrawing funds from your 401k, IRA, or other accounts. If you withdraw too much too quickly, you risk depleting your savings too soon, leaving yourself financially vulnerable. Conversely, if you withdraw too little, you may not be able to live comfortably. Therefore, choosing the right withdrawal strategy is key to optimizing your savings.
Below are four strategies that FedEx retirees can consider to help their savings last:
1. The 4% Rule: An Age-Old Method
One of the most widely recognized retirement withdrawal methods is the 4% rule. According to this approach, retirees withdraw 4% of their original retirement portfolio balance in the first year of retirement. Each subsequent year, the amount withdrawn increases to keep pace with inflation. For example, from a $500,000 portfolio, the first year’s withdrawal would be $20,000 (4% of $500,000). The following year, if inflation is 3%, the withdrawal would rise to $20,600. The 4% rule aims to strike a balance between making withdrawals and allowing the funds to grow over time.
That said, some financial professionals have raised concerns about whether the 4% rule is still the best strategy, particularly in light of market volatility. In tough market conditions, the 4% rule might accelerate the depletion of your assets. Some advisors recommend reducing the withdrawal rate to 2.4% in such cases to help safeguard long-term funds.
2. The Fixed-Dollar Approach: Consistency and Confidence
The fixed-dollar withdrawal method involves setting a specific amount to withdraw each year during retirement. This amount is periodically reassessed based on financial needs and investment performance. The primary benefit of this approach is stability, as you know exactly how much you will receive every year. However, one downside is that it doesn’t account for inflation. Over time, as living expenses increase, the purchasing power of your fixed withdrawal will decrease.
Furthermore, similar to the 4% rule, the fixed-dollar approach can be risky during market downturns. If your investments don’t perform as expected, you may end up withdrawing more than your portfolio can sustain. Therefore, it's important to regularly reassess your plan, particularly during periods of economic uncertainty.
3. The Strategy for Total Return: Emphasis on Growth Assets
The total return strategy focuses on keeping your portfolio predominantly invested in growth assets, such as stocks. You would only withdraw enough to meet your immediate living expenses while allowing the rest of the portfolio to grow. The goal of this approach is to balance long-term growth potential with withdrawal needs, letting your assets grow as much as possible while still providing the income you need.
This strategy may appeal to retirees who have a significant financial cushion and a higher risk tolerance. However, it does carry the risk of having to sell investments at a loss during a market downturn, which could affect long-term growth. It’s best suited for those who are comfortable with volatility and who have a deep understanding of market performance.
4. The Bucket Strategy: A Layered Approach to Risk and Reward
The bucket strategy divides your retirement assets into multiple 'buckets' based on when the funds will be needed. The first bucket holds enough cash for immediate expenses, typically within the next 6-12 months. This money is invested in low-risk, liquid assets like money market funds or high-yield savings accounts. The second bucket is for medium-term needs, typically one to three years, and might include bonds or certificates of deposit (CDs). The third bucket holds long-term growth assets, like stocks, mutual funds, or exchange-traded funds (ETFs), and is meant to be used in five+ years.
This strategy aims to provide both short-term stability and long-term growth by investing in a mix of lower-risk and higher-risk assets. The short-term buckets are optimally insulated from market volatility, while the long-term buckets can ride out market fluctuations for potential growth. While this approach requires careful planning and regular rebalancing, it can offer peace of mind for retirees, allowing them to manage short-term expenses while still benefiting from the growth of their investments over time.
Other Elements That Impact How Long Your Retirement Funds Last
While choosing the right withdrawal strategy is essential, several other factors can impact the longevity of your retirement funds. For FedEx employees, it's crucial to consider the following:
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Tax Considerations:
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Understanding the tax implications of your withdrawals is vital. Traditional retirement accounts, such as 401ks and IRAs, defer taxes on contributions and investment gains until you start taking distributions. In contrast, Roth accounts offer tax-free distributions. Planning your withdrawals to take advantage of lower tax brackets in retirement can be a smart strategy. For example, you might withdraw from tax-deferred accounts first, allowing Roth accounts to grow tax-free.
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Required Minimum Distributions (RMDs):
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The IRS requires that you begin taking minimum distributions from your traditional retirement accounts when you turn 73. Failing to take these distributions can lead to significant penalties. Since Roth IRAs are not subject to RMDs during your lifetime, delaying withdrawals from these accounts can be advantageous.
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Social Security Benefits:
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For many retirees, Social Security serves as a key source of income. The decision of when to start receiving benefits is a critical part of your retirement strategy. Starting early at age 62 results in lower monthly payments, but waiting until your full retirement age or even 70 can increase your benefits by as much as 8% per year.
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Health Care Costs:
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Health care costs are an often-overlooked aspect of retirement planning. According to a 2023 study by Fidelity, a 65-year-old couple retiring in 2023 can expect to spend an estimated $315,000 on health care costs over the course of their retirement. 1 Planning for these expenses and adjusting your withdrawal strategy accordingly is essential to helping your savings last.
Bottom Line
Choosing the right withdrawal strategy is a critical step in making your retirement savings last. Whether you opt for the 4% rule, the fixed-dollar method, the total return strategy, or the bucket approach, each strategy offers different benefits and risks. By also considering tax implications, RMDs, Social Security, and health care costs, you can better prepare for a comfortable retirement.
For FedEx employees, planning ahead and using the right strategy can help you enjoy a stable, financially independent retirement. By understanding how your withdrawal strategy interacts with other elements of retirement planning, you can position your nest egg to last for the long haul.
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- Stages of Retirement for Corporate Employees
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- Corporate Employees: 8 Factors When Choosing a Mutual Fund
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- Stages of Retirement for Corporate Employees
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- How Are Workers Impacted by Inflation & Rising Interest Rates?
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Sources:
1. Fidelity. ' Fidelity Releases 2023 Health Care Cost Estimate .' 21 June 2023.
2. Colucci, Julie. 'Retirement Withdrawal Strategies To Extend Your Savings.' Bankrate , May 2025, pp. 1–3.
3. Reichenstein, William. 'A Roth 401(k) Is a Tax Break Hiding in Plain Sight.' Barron's , May 2025, pp. 2–4.
4. London, Hali Browne. 'Diversify or Risk Running Dry: 12 Additional Income Streams For Your Retirement.' Investopedia , May 2025, pp. 5–7.
5. Bengen, Bill. 'The Guy Behind Retirement's 4% Rule Now Thinks That's Way Too Low.' MarketWatch , May 2025, pp. 3–5.
6. Allianz Life Insurance. 'Ditch the Fear: A Guide to Embracing Retirement Preparedness.' Kiplinger , May 2025, pp. 1–2.
What are the implications of the Funding Target Attainment Percentage for FedEx Corporation employees, and how does it impact the security of the pension benefits offered by FedEx Corporation? This question seeks to explore the nuances of the funding target attainment percentage as reported in the annual funding notice, examining how this metric not only reflects the financial health of FedEx Corporation's pension plan but also how it affects employee confidence in future benefit payments and retirement planning.
Funding Target Attainment Percentage: The Funding Target Attainment Percentage for FedEx Corporation indicates the degree to which the pension plan is funded. A percentage of 101.33% for 2022 suggests that the plan has sufficient assets to cover its liabilities, providing security for employees' pension benefits. This high percentage likely increases employee confidence in the stability and reliability of their future pension payouts, essential for long-term retirement planning.
How does the merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan influence the benefits currently available to FedEx Corporation employees? This question aims to delve into the practical changes that may arise due to this merger, assessing whether it aligns with employee expectations regarding their pension benefits and how the transition process is managed by FedEx Corporation.
Merger of Pension Plans: The merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan appears to have been strategically managed to maintain benefit stability. Despite increasing liabilities by 5.3%, the merger was structured to ensure no negative impact on the benefit amounts payable to participants from either plan, preserving the expected pension benefits for all affected FedEx Corporation employees.
In terms of investment strategies, what measures does FedEx Corporation implement to ensure that its pension plan investments align with the long-term liabilities expected to be paid out to retirees? This question encourages an exploration of the investment policies in place, examining the asset allocations and risk management strategies that FedEx Corporation employs to ensure sustainable funding for its pension obligations, which could potentially include detailed analyses of stocks, debts, and alternative investments.
Investment Strategies: FedEx Corporation employs a diversified investment strategy across equities, fixed income, and alternative investments, aiming to meet long-term pension liabilities. This approach, which includes both active management strategies and the limited use of derivatives, is designed to generate returns that exceed market indices, thus ensuring adequate funding of pension obligations.
What options do employees of FedEx Corporation have for accessing their pension plan statements, and how frequently are these statements generated? The focus here is to understand the communication strategies employed by FedEx Corporation regarding pension benefit statements, including technological access points and the importance of these documents for employee financial planning.
Pension Plan Statements: FedEx Corporation provides annual pension plan statements through their Retirement Service Center, available electronically each fall. Employees can access their statements online or request them if notifications are not received, ensuring transparency and aiding in personal financial planning.
How are contributions to the FedEx Corporation Employees’ Pension Plan determined, and what role do excess contributions play in the plan's overall funding strategy? This question aims to educate employees about how the company balances mandatory contribution levels with potential excess contributions, exploring how these factors interact to influence the plan's solvency and employee benefits.
Contributions to the Pension Plan: Contributions to the FedEx Corporation Employees' Pension Plan are calculated to meet at least the minimum legal requirement and potentially include voluntary excess contributions. These excess contributions can help manage the plan's funding level and ensure its solvency, benefiting overall pension security for employees.
What types of benefits are guaranteed under the Pension Benefit Guaranty Corporation (PBGC) for FedEx Corporation employees, and what limitations exist that employees should be aware of? By focusing on the guaranteed benefits, this question prompts a discussion on the security of specific benefits provided by FedEx Corporation and highlights limitations, allowing employees to understand their rights fully.
PBGC Guarantee: The Pension Benefit Guaranty Corporation guarantees certain types of benefits for FedEx Corporation employees, such as pension benefits at normal retirement age and most early retirement benefits. However, there are limitations, such as exclusions for benefits without vested rights and recently increased benefits, which employees should be aware of to fully understand their pension security.
In what ways does the FedEx Corporation plan to adjust its pension funding strategy in light of changing federal laws that impact pension obligations? Employees are encouraged to consider how legislative changes influence corporate policies surrounding retirement benefits and the proactive strategies FedEx Corporation might take to remain compliant while ensuring the security of employee pensions.
Adjustments to Funding Strategy: FedEx Corporation is likely to adjust its pension funding strategy in response to legislative changes affecting pension obligations, such as those introduced by recent acts adjusting how pension liabilities are calculated. This proactive approach aims to ensure compliance with new laws while continuing to secure the financial health of the pension plan.
What are the steps that FedEx Corporation employees must take if they are considering retirement, particularly in how to navigate the pension plan and gain access to their benefits? This question aims to provide clarity on the retirement process, ensuring that employees are equipped with the necessary information regarding required documentation, timelines, and points of contact within FedEx Corporation.
Steps for Retirement Planning: Employees considering retirement should contact the FedEx Retirement Service Center to navigate their pension plan benefits. This process involves understanding necessary documentation, timelines, and available support, facilitating a smooth transition into retirement.
How does FedEx Corporation plan to manage potential funding shortfalls in the pension plan, and what mechanisms are in place for notifying plan participants should such an event occur? Employees would need to understand the proactive measures put in place by FedEx Corporation to address funding-related challenges while also knowing what this means for their benefits.
Managing Funding Shortfalls: In the event of potential funding shortfalls, FedEx Corporation has policies in place to manage such situations, including strategic contributions to mitigate shortfalls. The company maintains transparency with plan participants about funding levels and any significant changes affecting the pension plan.
For those seeking more information about their pensions and retirement options, how can FedEx Corporation employees contact relevant departments, and what resources are available for assistance? This question provides an opportunity for employees to familiarize themselves with contact points such as the FedEx Retirement Service Center, emphasizing the importance of open communication channels for addressing inquiries related to their pensions. Feel free to consult the provided document for more in-depth exploration of these topics.
Contacting for Pension Information: FedEx Corporation employees seeking more information about their pensions or retirement options can contact the FedEx Retirement Service Center. This center provides essential resources and support, ensuring employees have access to all necessary information regarding their retirement planning.
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