Abcs of Retirement for Dow Incorporated Employees

Should Learn

The move from Dow Incorporated employment to retirement can be challenging. As financial experts, we recognize the problems that may lie ahead and have compiled this unique study to answer some of your most important issues about retirement. When it comes to retirement, public-sector employees confront many of the same obstacles as their private-sector counterparts. They are anxious about the sufficiency of their retirement savings and doubt the significance of social security in their retirement preparations. In addition, they must consider the possibility of a pension and whether or not they should invest in standard retirement accounts to augment it. Here are six factors to consider as you near retirement. Always consult a Financial professional to verify that you've covered all of your bases.

Do You Desire Retirement?

If you look about your neighborhood, you'll find that people of retirement age are still employed, from museum employees to medical professionals to the guy who makes your coffee. These seniors wouldn't be working if it weren't necessary, right? Well, maybe. They may be working because they desire to. Many retirees have stated that the first 24 hours of their retirement were the most enjoyable.

After that, they realized that they missed their occupations, the regular routine that a work provides, and everyday interaction with people. Or they may be working because they have no other option. Their retirement savings fell short of their survival requirements. Their Social Security income is insufficient, and their other investments do not appear to make up the difference. There are retirees who never intended to retire. Then retirement occurred, and the retiree's financial situation had the ultimate say: return to work! Then there is the retiree who is enthusiastic about retirement. This retiree does not work for two reasons: they are no longer required to and they choose not to. So, which are you, and how will you achieve your retirement objectives?

There are three guiding principles for a successful retirement:

PREPARE: Preparation provides the impetus for the majority of other undertakings in life, including starting a business, becoming physically active, taking charge of one's health, and learning a language. The same holds true for your retirement planning. Preparation can help ensure that you are on the right path to achieve your objectives.

It took years of hard labor, perhaps decades of sacrifice, and prudent planning to construct your retirement. One mistake, one bad investment, and you've lost everything. There is a time and a place for taking chances, but protecting your money, especially if they have been built up over a lifetime, must take precedence. Do not become distracted with the latest and greatest.

PROSPER: Those that meticulously plan their retirements and adhere to disciplined financial methods typically have a prosperous retirement. Start early, remain prudent, and see your money increase. As an Dow Incorporated employee, you're now in a position to consider your next steps.

Schedule a meeting with your financial advisor to develop a plan. Identify your planned sources of income and expenses. How much will you receive from Social Security, pensions, investment returns in retirement, and other sources? Compare your revenue to your anticipated expenses to get a general notion of where you stand. Working with a financial professional enables you to design a flexible, long-term strategy that can adapt to your needs. Determine your retirement strategy. How much money will you need to sustain your desired lifestyle?

Are you interested in traveling? Would you like to relocate to a warmer state or decrease your residence? Consider your costs for medical treatment. You become eligible for Medicare at age 65, so you'll need medical insurance. Such may be offered by your current job to cover the gap if you retire before that age. It may be prudent to purchase additional insurance to fill any coverage gaps. What will your legacy be? How much do you intend to leave your loved ones? Do you have sufficient life insurance to meet your spouse's ongoing living needs if you die first?

You can contact your HR department if you have any questions.

Are You Able to Retire?

Dow Incorporated employees may very possibly be required to retire at a certain age. However, contrary to popular belief, the average retirement age for both public and private sector employees is 62. Public and private sector employees experience the same retirement-related fears and uncertainties. Despite the fact that the average retirement lasts between 14 and 17 years, it is prudent for retirees to have enough invested and saved to outlive the average lifespan of 79 years. Budgeting and managing your finances provide a more disciplined outlook on retirement, which reduces financial anxiety.

Once you have developed some budget forecasts, you will be more positioned to determine how you wish to spend your retirement years. Multiplying your current monthly expenses by 75% to 85% is a straightforward and reasonable method for estimating your monthly retirement expenses. As an illustration, you spend $3,000 every month while employed. Expect to spend between $2,250 and $2,550 throughout retirement. After determining your expenditure levels, consider your income to get a whole picture.

This includes your Dow Incorporated Social Security payouts, pensions, and other forms of retirement income. If you have been able to save for retirement through Dow Incorporated employment or investment income, you can use the funds to enhance your lifestyle, make up for any income gaps, or cover extra expenses. You will need to constantly monitor your retirement withdrawals over time to maintain the longevity of your retirement funds. A healthy and active lifestyle can add more than five years to a retiree's life expectancy, according to the U.S. Census Bureau.

Obviously, one issue with these life-expectancy formulae is 'x': your mortality. You cannot accurately determine your budget with that amount. Despite the fact that your longevity relies on a number of things, including your lifestyle, your health, and your genetics, the data indicates that you can anticipate living longer than your parents or grandparents. By 2060, the average American's life expectancy is projected to grow from 79.7 years to 85.6 years. In the past, the percentage of annual withdrawals retirees could make from their retirement savings was calculated using an outdated calculation, the 4% rule.

The guideline may no longer apply in today's more volatile economy. A financial expert can assist you in navigating a complex and confusing investment market. You may not be able to change the 'x' factor, but you can influence the other variables in the calculation.

Here are four ways you might modify your retirement formula to achieve a more secure and enjoyable retirement:

While still employed by Dow Incorporated, you can raise your retirement savings contributions. Maximize your tax-deferred retirement plan contributions. If you are 50 or older, you can make catch-up payments to your retirement account.
If possible, defer receiving Social Security benefits. If you are younger than 70, you can enhance your Social Security payments by delaying when you begin receiving them and by pursuing a second career.
Consider your existing living expenses. With the children grown and living on their own, it may no longer be necessary to have such a huge home. You should consider moving into a smaller, cozier space. In order to reduce expenses, you can postpone large purchases during the early years of retirement. Thus, you can maintain a healthy retirement account for a longer period of time.
There is a mandatory retirement age for many governments employment, but that does not imply you must stop working. Retirement might be a wonderful opportunity to pursue a long-desired job or to try something new. Numerous public employees take use of the option to retire early in order to pursue part-time employment or a second job.

Your years of expertise working for Dow Incorporated have afforded you numerous opportunities. You may be able to create your own schedule and pursue hobbies or long-desired interests if you have a part-time job. Employment income may alter the amount of Social Security benefits you get, at least until you reach full retirement age.

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How Will Your Retirement Appear?

An ancient sage once stated, 'People perish where there is no vision.' The same can be said about retirement. Determining when and how you will retire from Dow Incorporated is crucial, but visualizing your retirement may be the most crucial aspect of your overall approach. Numbers and schedules are meaningless without a driving vision to propel them forward. Your vision for retirement provides the basis for your later years.

Your concept must be meticulously constructed, detail by detail. Once you have an idea of what you will do, how you will spend your time, and where you will travel, write it down. Don't omit any details. How will you fill your time? What are your immediate and long-term objectives? Plan it out. Plan your ideal retirement on a daily, monthly, and annual basis. Do you intend to take a vacation?

When and where will this occur? How usually? What plans do you have for the day? Where will you go and what will you specifically do? Do you wish to travel, see your relatives, or join social or recreational groups? Writing down your replies can facilitate the transition to retirement. After laying the groundwork for your vision, you should begin to build upon it. You have already compiled the data. You have already determined the flow of money.

Adapt your picture of retirement to the financial realities you've created over your working years. How much money will you have available for trips, for example? Apply your budget to your retirement vision and begin adjusting it so that it aligns with your financial reality. Merging the practical and idealistic sides may result in a more confident and joyful retirement, albeit it may necessitate adjusting your vision or reordering some of your objectives.

Here are some suggestions to assist you with the visioning process:

You can contact your HR department if you have any questions.

Who You Are?

This may be the most crucial question to consider when developing your vision. This is a personality index of sorts. Recall what you do or used to do in your free time while you were employed. What were your leisure activities? Which activities did you wish you had more time for? Consider how you will use your time differently after retirement.

What Is Your Top Priority?

This relates to imagination. Create a list of the activities you enjoy most. Volunteering, establishing a business, gardening, spending time with your grandchildren, or even returning to school could be on the list. Place the items in order of importance. What is the most essential? Your objective should be to make retirement rewarding and satisfying. Create a list of pet peeves and annoyances on the reverse side. What actions do you wish to avoid? It could be city traffic or needing to wake up early. Create a list of priorities in reverse order.

What Would You Like to Do?

Describe your daily routine. What are your plans? Retirement provides at least one valuable commodity: independence. You choose your daily schedule. Establish a timetable to provide anticipation and structure to your day in order to avoid boredom. Obviously, you may alter your timetable at any time; what matters is the concept. Developing your day must involve more than mere wishful thinking. What do you anticipate doing on a normal day during your first year of retirement? How about five years from now?

Consider your Inspiration
Are you having difficulty with certain parts of the brainstorming process? You are relieved to be retiring from Dow Incorporated, although not knowing exactly what you wish to do daily. You may perhaps be interested in a change of pace or a whole other activity. After decades of living life in a particular manner, you may be wishing for a change. You may like reading about retirees with odd or intriguing lifestyles.

What activities do they engage in, and how do they organize their lives? Not all activities in the south of France must involve skydiving and winery hopping. Occasionally, local newspapers and periodicals publish profiles of remarkable retirees who are making an effect in their communities. Some find having a part-time job to be an energizing pastime that keeps them involved and connected with others while allowing them to maintain a certain degree of independence from the demands of full-time employment.

The limit is the sky
At least in the beginning, do not limit your expectations. Let your mind run amok and follow it to see where it takes you. What have you always desired but never got the chance to accomplish? Perhaps your demanding job in the public sector or the responsibilities of raising a family kept you from exploring the limits of life. Perhaps this is the time. It is not required to be a fantasy. A few decades ago, the idea of conquering Mount Everest may have stirred your inner explorer, but your aspirations may have evolved over time.

You could opt to learn the guitar, improve your golf game, restore old vehicles, enroll in sculpture school, or travel to the Grand Canyon. Not to worry about making adjustments. Expect to make modifications later. Lifestyles do change. Your health or situation may affect your retirement plans. Your retirement plans aren't etched in stone.

You can contact your HR department if you have any questions.

How Do You Plan to Pay for Health Care?

RCOUPLES IN RETIRED STATUS MAY NEED AT LEAST $295,000 TO COVER MEDICAL BILLS...

Improved cardiovascular and infectious disease therapies have increased life expectancy and enhanced quality of life. Current retirees can anticipate living roughly two decades longer. Despite the fact that retirees are living longer, for healthier lives with improved access to health care, expenses continue to be their greatest obstacle, particularly in the context of shifting political opinions on the role of the government in insurance coverage and health care.

Analysts anticipate that couples in retirement will need at least $295,000 to cover medical expenses, not including care expenditures. This statistic excludes payments for early Dow Incorporated retirees whose Medicare coverage has not yet begun. The estimate includes spending for deductibles and copayments, fees for extra coverage for medical visits and prescription medicines, and other costs not covered by Medicare. Medicare enrollees should allocate 15% of their total budget for health care expenses. Employees in the public sector should explore whether their companies offer extended benefits coverage, which may pay the difference.

Here is an overview of the alternatives accessible to Dow Incorporated retirees:

Employer retiree health plans provide the majority of Medicare supplement coverage for one-third of beneficiaries, but this proportion continues to drop.
Medicare Supplement Insurance may provide supplemental coverage to Medicare recipients. The insurance meets Medicare Part A and Part B cost-sharing standards in full or in part.

You can contact your HR department if you have any questions.

What are Your available plan options?

Evaluating your many retirement plan alternatives can be intimidating, if not downright overwhelming. Your objective is to select a beneficial plan that meets your demands. As your retirement approaches, you should have all the necessary details and plans in place to ensure a seamless and stress-free transition.

On the journey to retirement, a financial professional can assist you overcome barriers and unforeseen problems. We can assist you in identifying aspects of your strategy that may want attention and that you may have neglected in recent years. As a public employee, you should be aware of your alternatives and choices for a prosperous retirement. Here is a list of the best strategies:

Defined Benefit Plans
Provide participants with guaranteed benefits based on their age, years of service, and income range. Employers manage pension fund investments, but retirement benefits are not contingent on investment performance.10 The Windfall Elimination Provision and other federal regulations may have an impact on your Social Security income. Employers and government organizations have sought to decrease or modify their pension commitments. Consult a financial expert for further information on the potential threats to your benefits.11

Plans with Defined Contributions
Allow employees to choose precise amounts or percentages of income to be set aside for their benefits by the employer. The most prevalent employer-sponsored plans restrict how and when employees can withdraw funds without suffering penalties. Common forms include 401(k), 403(b), 457, and Thrift Savings Plans. (TSPs). Employees decide their contribution levels from their paychecks based on the investment options provided by their company.12 The employees retain control over the tax-deferred funds invested in their accounts. The holder of the fund may transfer the money into an IRA or similar fund upon retirement.

Both defined benefit (based on the employee's ultimate average income) and defined contribution savings plans are incorporated into hybrid retirement plans. Dow Incorporated may offer a cash balance plan that allows workers to make contributions in the same manner as a defined benefit plan. At retirement, however, employees also have the choice of receiving either regular income or a lump sum distribution. In general, the hybrid plan generates lower returns than the defined benefit and defined contribution plans. Popularity is due to the plan's lump-sum feature, which allows participants to roll the money into IRAs or new plans. However, the lump-sum provision makes this provision the most risky. Investors bear full responsibility for their holdings.

Pre-Retirement To-Dos

Unprepared retirees face a number of obstacles, despite the fact that retirement provides the door for a richer lifestyle with more options for amusement and leisure. Here is an overview of advice:

Paint an image of your retirement future. Dream big. Use your imagination.
Carefully calculate your retirement expenses. The more precise you are, the better prepared you will be for unplanned expenses in the future.
Consider your projected sources of income. This may include pensions, savings accounts for retirement, and Social Security income.
Consider your options for healthcare coverage. Monitor Medicare and insurance expiration dates.
Read legal papers such as wills, trusts, medical directives, beneficiary information, and powers of attorney.
Contact your pension sponsor to acquire information regarding retirement requirements, payout alternatives, and required papers.
Consult a skilled financial expert who specializes in serving customers like you.

What Is Your Next Step?

You have constructed a vision for your retirement; you have painted a picture of your future existence. Retirement grants you the freedom and, presumably, the means to retire in style. However, enlisting the services of a financial expert can provide clarity and confidence, as well as help guarantee that your retirement goals remain on track.

Who to Contact?

We hope you found this guide to retirement to be helpful, fascinating, and reassuring. We will outline several straightforward measures you can take to ensure your retirement. As you enter the next part of your life, we are prepared to encourage and assist you.

We offer ourselves to you and your family as a resource. We are pleased to respond to any inquiries you may have regarding your specific financial condition and future objectives. Contact us immediately if you have any questions regarding the material in this report. We would love to speak with you.

About The Retirement Group

The Retirement Group is a nation-wide group of financial advisors who work together as a team.

We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.

TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.

Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.

Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.

Sources

What to do with an Early Retirement Ebook
Social Security Ebook
Lump Sum vs. Annuity Ebook
401(k) Rollover Strategies Ebook
Closing the Retirement Gap Ebook
GovExec.com, May 7, 2020
BLS.gov, March 12, 2020
MarketWatch.com, March 4, 2020
TheBalance.com, May 26, 2020
United States Census Bureau, 2020
BusinessInsider.com, May 13, 2020
BLS.gov, March 12, 2020
Fidelity.com, August 3, 2020
Medicare.gov, June 15, 2020
IRS.gov, January 9, 2020
Social Security Administration, January 2, 2020
TaxPolicyCenter.com, May 28, 2020
NASRA.gov, June 15, 2020
NASRA.gov, June 15, 2020

How does The Dow Chemical Companyâ€™s pension plan structure impact an employee's retirement benefits when considering different retirement ages? The Dow Chemical Company offers various options in its pension plan, and understanding these can significantly affect financial planning for retirement. An employee must weigh the benefits of retiring earlier with potentially lower monthly payments against the advantages of working longer and how this aligns with personal retirement goals and expectations.

The Dow Chemical Company’s pension plan and retirement ages: The Dow Chemical Company’s pension plan structure impacts employees' retirement benefits based on their retirement age. Retiring earlier results in lower monthly payments due to reduced service time and potential early commencement penalties, while working longer allows for more service accrual and higher monthly benefits. Employees must evaluate how these factors align with personal retirement goals, as choosing to retire early might not provide as much financial security as delaying retirement(The Dow Chemical Compan…).

What are the implications of the 20% mandatory withholding tax on lump-sum distributions from The Dow Chemical Company's pension plan, and how does the option to roll over affect an employeeâ€™s tax situation? Employees taking lump-sum distributions need to be cautious about this withholding rule as it can impact their immediate financial needs. Additionally, the rollover option provides a strategy to defer taxes, which can be crucial for long-term financial health. Employees should consider how to best utilize these rules in their personal financial planning.

20% mandatory withholding tax on lump-sum distributions: Lump-sum distributions from The Dow Chemical Company’s pension plan are subject to a 20% mandatory withholding tax if not directly rolled over into another qualified retirement plan. This tax can significantly impact an employee's immediate finances. However, opting to roll over the lump sum to a qualified plan defers taxation until funds are withdrawn, allowing employees to manage their tax liabilities better while continuing to grow their retirement savings(The Dow Chemical Compan…).

How does The Dow Chemical Company ensure that employees understand their eligibility for retirement benefits based on various service and age criteria? Eligibility considerations based on service years and age can significantly influence the retirement timeline for employees. Moreover, itâ€™s essential for employees to be well-informed about these factors to make educated decisions pertaining to their retirement and whether adjustments to their career plans are needed for maximizing benefits.

Eligibility for retirement benefits: The Dow Chemical Company outlines eligibility for pension benefits based on a combination of service years and age. Typically, employees become vested after three years of service or upon reaching age 65 while still employed. The company ensures that employees are informed about these eligibility criteria through various resources, such as the Dow Benefits Service Center, enabling them to make informed retirement decisions(The Dow Chemical Compan…).

In what ways can employees of The Dow Chemical Company appeal decisions regarding their pension benefits, and what processes are in place to facilitate these appeals? The appeal process is critical for employees who might feel that their benefits have not been administered correctly. Understanding the correct procedures and having access to the right resources can empower employees to effectively advocate for themselves in the face of administrative decisions.

Appealing pension benefit decisions: If employees believe there has been an error in the administration of their pension benefits, The Dow Chemical Company provides a formal appeal process. Employees can file a claim, and if denied, they have the right to appeal the decision. The Retirement Board oversees these appeals, and employees must follow the outlined procedures for their appeal to be considered(The Dow Chemical Compan…).

What strategies can employees of The Dow Chemical Company employ to maximize their pension benefits while transitioning to retirement? Employees must navigate complexities such as contribution limits, benefit formulas, and personal retirement savings. A strategic approach, which includes understanding the timing of retirement and how it interacts with pension claims, can lead to more favorable financial outcomes in their retirement years.

Maximizing pension benefits: Employees at The Dow Chemical Company can maximize their pension benefits by carefully planning their retirement timing. Key strategies include working longer to accrue more service years, reviewing contribution limits, and understanding the benefit formula used. Aligning personal savings and pension claims with the optimal retirement age can result in more favorable financial outcomes(The Dow Chemical Compan…).

How can retirees from The Dow Chemical Company navigate survivor benefits, and what are the eligibility criteria for spouses or domestic partners? Survivor benefits are an essential aspect of retirement planning, especially for employees concerned about providing for their loved ones after death. Itâ€™s vital for employees to understand both eligibility and what benefits their partners might receive, fostering peace of mind during retirement planning endeavors.

Survivor benefits for retirees: Retirees from The Dow Chemical Company can opt for survivor benefits to provide financial security for their spouses or domestic partners. Eligibility for these benefits depends on the plan's structure, and employees should understand the options available to ensure their loved ones are covered after their death. These benefits include continued monthly payments or lump-sum options depending on the election made at retirement(The Dow Chemical Compan…).

How does The Dow Chemical Companyâ€™s defined benefit pension plan differ from other retirement plans, and what should employees know when comparing their options? Employees need to understand the distinctions between defined benefit plans and other types such as defined contribution plans for effective retirement planning. This understanding will help them better appreciate the benefits and risks associated with their choices and aid with decision-making processes.

Comparing defined benefit pension plan: The Dow Chemical Company offers a defined benefit pension plan, which differs from defined contribution plans like 401(k)s. In a defined benefit plan, the company guarantees a specific monthly benefit upon retirement, typically based on years of service and salary, whereas defined contribution plans depend on employee contributions and investment performance(The Dow Chemical Compan…).

What resources does The Dow Chemical Company provide to employees seeking detailed information about their retirement options, and how can they effectively utilize these? Accessing the right resources can bridge knowledge gaps regarding pension plans. Employees should know about dedicated pathways to assistance, such as benefit service centers and consultation avenues, to fully leverage their benefits package.

Resources for retirement information: The Dow Chemical Company provides several resources for employees to access detailed information about their retirement options. The Dow Benefits Service Center and My HR Connection are key tools where employees can request pension estimates, understand payment options, and clarify eligibility criteria. These resources help employees make informed decisions regarding their retirement planning(The Dow Chemical Compan…).

With changes in IRS rules becoming increasingly relevant, how do employees of The Dow Chemical Company stay informed about updates that may impact their retirement savings? Employees need to be active participants in their retirement planning by staying abreast of legal and regulatory changes that can influence their financial strategies. Having a clear understanding of these regulations can help ensure compliance while maximizing possible financial benefits under updated laws.

Staying informed about IRS rules: Employees of The Dow Chemical Company must stay informed about IRS rules that may affect their retirement savings. Changes in tax laws, contribution limits, or distribution rules can significantly impact financial planning. The company provides updates and resources to ensure employees are aware of relevant regulatory changes that might affect their retirement strategies(The Dow Chemical Compan…).

How can employees of The Dow Chemical Company reach the benefits service center for additional inquiries regarding their pension plan, and what information should they prepare beforehand? Knowing how to contact the benefits service center is crucial for employees seeking clarity on their pension plan benefits. Preparing relevant information ahead of time can streamline the process, allowing for a more productive engagement with benefits specialists and ensuring that employees receive precise guidance tailored to their situations.

Contacting the benefits service center: Employees seeking clarification about their pension benefits can reach the Dow Benefits Service Center via phone or online through the Message Center. It is recommended to have personal identification and details of the pension plan ready to streamline the inquiry process. Proper preparation ensures a productive conversation with benefits specialists(The Dow Chemical Compan…).

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For more information you can reach the plan administrator for Dow Incorporated at 1919 torrance blvd Torrance, CA 90501; or by calling them at 900-999-1009.