New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

The Five Biggest Stealth Costs in Retirement for Cummins Inc Employees

Healthcare Provider Update: Healthcare Provider for Cummins Inc. Cummins Inc. primarily administers its employee health benefits through major insurance providers, including UnitedHealthcare and Anthem Blue Cross Blue Shield (BCBS), among others. Potential Healthcare Cost Increases in 2026 As Cummins Inc. anticipates significant healthcare cost increases in 2026, employees should prepare for potential spikes in premiums driven by a combination of factors. A projected rise of up to 8.5% in employer-sponsored insurance costs, alongside the potential expiration of enhanced ACA subsidies, may lead many employees to see their out-of-pocket expenses grow considerably. With certain states experiencing premium hikes exceeding 60%, comprehensive financial planning, including the strategic use of Health Savings Accounts (HSAs), will become essential for mitigating the anticipated financial impact on individuals and families. Click here to learn more

'Cummins Inc employees must remain vigilant about hidden costs in retirement, as unexpected expenses like health care, taxes, and inflation can have a real impact on their long-term financial well-being. Proactive planning and budgeting for these stealth expenses can provide much-needed peace of mind as they enter retirement.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Cummins Inc retirees often underestimate the impact of inflation and unexpected medical costs on their retirement savings. By planning for these stealth expenses and adjusting their budgets accordingly, they may avoid unnecessary financial strain and maintain a comfortable lifestyle throughout retirement.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The five most common stealth expenses in retirement, including health care, taxes, emergencies, family-related expenses, and inflation.
The impact of inflation and unexpected costs on Cummins Inc retirees.
Strategies to reduce the burden of stealth expenses through proactive planning and saving.

Many Cummins Inc employees concentrate on budgeting and income management while making retirement plans. While this is crucial, planning for hidden or stealth costs—unexpected expenses that can occur and negatively impact finances—is often overlooked. Even with a well-thought-out budget, retirees may find themselves caught off guard by these expenses, leading to unnecessary stress.

Unexpected expenses are a significant factor in 43% of retirees feeling more financially worried than before retirement, according to a recent study by TheSeniorList.com. ¹ Many Cummins Inc retirees realize that they are unprepared for the hidden costs that emerge once they leave employment, despite saving substantial amounts for retirement. While $1.26 million is considered an ideal amount to retire comfortably, ² many Cummins Inc employees haven’t reached this target, making them vulnerable to unanticipated costs that could derail their financial plans.

“Cummins Inc retirees and pre-retirees recognize the imperative to plan for unforeseen financial events, but they often struggle to put aside sufficient funds to do so,” says Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement. The current high rate of inflation is making it more challenging for investments and savings to keep up with rising prices, exacerbating the issue. Notably, 20% of retirees and 35% of pre-retirees say they experienced a financial shock that caused them to lose more than 25% of their assets, according to the Retirement Risk Survey conducted by the Society of Actuaries (SOA) Research Institute. ³ This underscores the importance of addressing hidden expenses in retirement.

To help prevent financial strain, Cummins Inc retirees should prepare for and anticipate the five most common stealth expenses listed below.

Health Care Expenses

Cummins Inc retirees are often surprised by the full cost of health care, despite it being a known expense. Unexpected medical expenses, especially for serious or chronic conditions, can become a significant financial burden. 'Putting numbers around the potential cost of unexpected medical crisis is notoriously challenging, and even chronic health issues are hard to estimate, especially if they last longer than expected,' says Patrick Ray, a financial advisor at The Retirement Group, a division of Wealth Enhancement. The price of medical care might vary greatly. A hospital stay of two nights could cost about $20,000, but a longer stay or a serious illness could easily exceed $100,000. ⁴

Even for those with insurance, medical bills are a common source of hidden costs. Cummins Inc retirees may need to cover a significant portion of medical expenses due to escalating insurance premiums, co-pays, and deductibles. By confirming they have adequate insurance coverage, including supplemental insurance for unforeseen medical costs, retirees can manage these expenses more effectively. Home insurance can also provide additional financial support for unexpected costs, such as an injury on the property.

Taxes

Taxes do not disappear in retirement, despite what many retirees may assume. Many Cummins Inc retirees believe they won’t need to pay taxes once they stop working. However, this is rarely the case, especially for those with multiple income sources. 'Although many retirees no longer earn a salary, they still receive income from an array of sources, such as employer-sponsored plans, savings and investments, and Social Security,' says Kevin Won, a financial advisor with The Retirement Group.

Depending on its source, retirement income may be taxed differently. For example, distributions from retirement accounts like IRAs and 401ks are taxable, and Social Security benefits may be taxed if a retiree's income surpasses certain thresholds. Taxes on investment income can complicate retirement planning. Cummins Inc retirees can save on taxes by using strategic asset placement and planning.

Emergencies

Emergencies are an inevitable aspect of life, and their unpredictability makes them especially challenging to prepare for. These emergencies can include anything from car repairs and home maintenance to unanticipated legal or family medical expenses. Neva Bradley, a financial advisor at The Retirement Group, emphasizes the importance of putting money aside for these situations. On a fixed income, she explains, 'retirees who don't put funds aside for emergencies risk facing unexpected expenses that could reduce their monthly income, making it harder to cover necessary costs.'

Cummins Inc retirees can manage these unexpected costs by maintaining a separate emergency savings fund. It is important to set aside a percentage of funds specifically for emergencies, so retirees can cover expenses without having to dip into their primary retirement savings or return to work.

Family Emergencies

Financial emergencies involving family members can also be a significant hidden expense in retirement. Many retirees, including those at Cummins Inc, want to help their adult children or grandchildren during difficult times. Helping adult children in a crisis or contributing to grandchildren’s college tuition could cost up to $20,000 per year or more for tuition alone.

Major family events, such as the death of a spouse, can also create high expenses. For instance, typical funerals cost between $7,000 and $12,000, ⁵ and there may also be legal fees to settle the estate, which can range from $5,000 to $10,000 or more. ⁶ Financial advisor Kevin Won stresses the importance of planning for these expenses. “Retirees who want to help family members through tough times should think through how they plan to cover those costs,” he says.

Costs Associated with Inflation

Inflation is one of the most common and unpredictable expenses in retirement. Many Cummins Inc retirees aren’t prepared for their purchasing power to slowly decrease. Inflation can significantly erode the value of retirement funds, making it harder to maintain your desired lifestyle. 'Inflation isn't something you can control, but it is something you can plan for,' says Kevin Won. This begins by understanding how inflation could erode your purchasing power over time. For instance, investments of $50,000 annually today would notionally need to grow to $90,000 in 20 years to maintain the same purchasing power.

Inflation impacts every aspect of life, from housing and health care to food and transportation. Inflation and the cost of living were cited by 28% of retirees as the most unexpected aspect of their retirement planning, slightly surpassing the 27% who mentioned medical and health care costs, according to the SeniorList survey. Cummins Inc retirees living in older homes or regions susceptible to natural disasters may also face additional costs for repairs or insurance.

Three Strategies to Reduce Retirement Stealth Expenses

Fortunately, Cummins Inc retirees can take steps to prepare for and reduce the burden of these hidden costs.

Create a 'Stealth' Annual Budget

One practical approach is to create an annual budget specifically for stealth expenses. By planning in advance, Cummins Inc retirees can minimize the stress of dealing with unforeseen bills, which many mistakenly treat as emergencies. Neva Bradley advises, 'Budget for these expenses annually.' Regular retirement budgeting should include costs such as car updates or appliance replacements.

Delay Retirement

Delaying retirement by even a few months or years can help enhance a retiree's financial situation. Continuing to work allows retirees to save more, avoid early withdrawals from retirement accounts, and let investments grow. Neva Bradley recommends that Cummins Inc retirees 'push back retirement for as long as practical' to strengthen their financial position.

Put the Money Away Early

One of the most effective ways to prepare for unforeseen expenses is to start saving for retirement as early as possible. Paul Bergeron from The Retirement Group suggests using health savings accounts (HSAs) to save for future medical costs. 'Health care costs are on the rise and often exceed what retirees anticipate. An HSA can help,' he notes. Even without an HSA, Cummins Inc retirees should prioritize saving for medical expenses to cover co-pays, co-insurance, and uncovered health care costs that can quickly add up.

In Conclusion

Hidden costs, such as health care, taxes, emergencies, family-related expenses, and inflation, can significantly affect Cummins Inc retirees’ financial well-being. While these expenses are often unforeseen, retirees can take proactive steps to plan for them. By budgeting for unexpected costs annually, delaying retirement, and saving strategically, Cummins Inc retirees can alleviate the financial strain brought on by stealth expenses and craft a comfortable retirement.

The soaring expense of long-term care, often not fully covered by health insurance, is a major concern for retirees. Those who are currently 65 have almost a 70% chance of needing some type of long-term care services in the future. ⁷ Planning ahead for these costs, whether through insurance or savings, is crucial for safeguarding retirement income.

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Articles you may find interesting:

Sources:

1. TheSeniorList. ' Surprise Retirement Costs: What Seniors Need to Know To Protect Their Savings ,' by Amie Clark. 8 Oct. 2024.

2. CNBC. ' The 'magic number' to retire comfortably fell to $1.26 million--but people are less confident they can reach it ,' by Jessica Dickler. 21 Apr. 2025.

3. Society of Actuaries. “ Retirement Risk Survey Finds Financial Shocks .” Society of Actuaries, 19 Dec. 2024.

4. International Citizens Insurance. ' How Must Does Healthcare Cost in the U.S.? ' 2025.

5. Trust & Will. ' Funeral Costs 101 .' 2025.

6. Trustate. ' Estate Expenses - Who Pays What? ' 2025.

7. Administration for Community Living. ' How Much Care Will You Need? ' 18 Feb. 2020.

Other Resources:

Kiplinger. “The Five Biggest Stealth Costs in Retirement.” Kiplinger, 26 May 2025.

How does Cummins determine eligibility for participation in the Cummins Pension Plan, and what are the implications for employees who temporarily leave the workforce? This inquiry should delve into the specific criteria that define an eligible employee, such as citizenship requirements and exclusions, as well as the continuation of benefits and service credit during approved leaves or breaks in service at Cummins. It would also explore the complexities surrounding vesting and how service prior to a break is credited upon re-employment at Cummins.

Eligibility and Participation in the Cummins Pension Plan: Eligibility for the Cummins Pension Plan requires being an active employee, not participating in another Cummins defined benefit pension plan, and meeting certain citizenship or residency criteria. During approved leaves of absence, employees continue to accrue service credits, ensuring continuous growth in their pension benefits. Notably, vesting occurs after three years of service, securing the employee's entitlement to pension benefits upon leaving the company. The plan handles breaks in service by allowing reemployment within 12 months to count towards vesting and benefit calculations, safeguarding employee benefits against temporary disruptions in their career with Cummins.

What are the potential benefits and limitations of the forms of distribution available under the Cummins Pension Plan, and how should employees prepare for their pension benefit election? This question requires an analysis of various forms of distributions, such as lump sums versus annuities, highlighting the financial implications of each choice, particularly in relation to the IRS rules for 2024 regarding tax treatment. Employees should also consider how their family structure (e.g., marital status, dependents) may influence their decisions when electing a distribution method.

Distribution Forms and Tax Considerations: The Cummins Pension Plan offers various distribution forms, including lump sums and annuities, each with distinct tax implications under IRS rules for 2024. Employees must consider their family structure and tax status when choosing a distribution form, as these factors influence the tax treatment and financial outcome of their pension benefits. The plan provides clear guidelines on these options, ensuring employees can make informed decisions that align with their personal and financial circumstances.

In what ways do pay credits and interest credits accrue within the Cummins Pension Plan, and how can employees gauge their potential retirement benefits over time? This question will focus on the specifics of how pay credits are calculated based on an employee's compensation and service at Cummins, as well as the impact of interest credits on the total account balance and long-term retirement planning. It will also examine how employees can track these credits through the Cummins retirement resources.

Accrual of Pay and Interest Credits: The pension benefits at Cummins accrue through pay credits based on compensation and service, along with interest credits. Employees can monitor their accumulating benefits through the Cummins retirement resources, offering transparency and planning advantages. This structured accrual method supports employees in projecting their future pension benefits and making informed decisions about their retirement timing and financial needs.

How does Cummins ensure compliance with ERISA and other regulatory standards in the management of the Cummins Pension Plan, and what rights do employees have under these regulations? This query should explore Cummins' obligations as a fiduciary in managing employee benefits and highlight the key rights of plan participants. The discussion should include access to plan documents, the process for filing claims, and the significance of ERISA protections for employees retired from Cummins.

Regulatory Compliance and Employee Rights: Cummins diligently adheres to ERISA standards in managing the pension plan, emphasizing fiduciary responsibility and ensuring participants' rights are upheld. Employees have rights to access plan documents, participate in claims and appeals processes, and are protected under ERISA from any plan-related discrimination. This regulatory compliance not only secures the integrity of their pension benefits but also reinforces the legal framework protecting participant rights.

What role does the Pension Benefit Guaranty Corporation (PBGC) play in safeguarding the retirement benefits of Cummins employees, and how does this affect the perception of the plan's reliability? This question would examine the insurance coverage provided by the PBGC, what types of benefits are guaranteed, and under what circumstances benefits may not be fully covered. Employees might analyze how this federal insurance impacts their confidence in the plan, especially in light of changing economic conditions.

Role of the Pension Benefit Guaranty Corporation (PBGC): The PBGC insures the pension benefits under the Cummins Plan, providing a safety net that enhances the reliability of these benefits. Employees covered by the plan can gain confidence in the security of their pensions, knowing that even in the face of potential plan termination, the PBGC guarantees the core benefits, subject to certain legal limits and conditions.

How does the Cummins Pension Plan interface with employees' Social Security benefits, and what should retirees consider when planning for a sustainable retirement income? This inquiry will look at the coordination of benefits under the Cummins plan with Social Security, examining how pension income might influence Social Security calculations. It would require discussions on the timing of retirement elections and how they align with Social Security claims.

Interaction with Social Security Benefits: The Cummins Pension Plan is designed to integrate smoothly with Social Security benefits, offering provisions that help plan participants optimize their total retirement income. Understanding this interaction allows employees to strategically plan their retirement age and benefit commencement, maximizing their financial stability in later life.

What are the specific procedures and deadlines that Cummins employees should follow to successfully elect a distribution from the Cummins Pension Plan upon retirement? This question will necessitate a detailed look at the steps involved in initiating a benefit distribution, including the importance of spousal consent, the timing of application submissions, and any documentation that may be required. Understanding these processes can significantly affect the financial outcomes for retirees.

Procedures and Deadlines for Electing Pension Distribution: The Cummins Pension Plan outlines specific procedures and deadlines for electing a distribution upon retirement, emphasizing the importance of timely and informed decision-making. By understanding these processes, employees can avoid delays and ensure that they receive their pension benefits in the manner that best suits their post-retirement financial plans.

What are the implications of choosing to defer pension benefits and how does the Cummins Plan accommodate employees who opt not to start their benefits at the normal retirement date? This inquiry could address the potential financial consequences of deferring benefits, including eligibility requirements for such deferral and how it aligns with IRS regulations. Employees should critically evaluate their financial situations and retirement goals, weighing the allure of continued employment against starting their retirement benefits sooner.

Deferring Pension Benefits: Employees at Cummins have the option to defer their pension benefits beyond the normal retirement date, which can influence the financial value of their benefits. The plan provides guidelines on how deferral impacts benefit calculations and distributions, assisting employees in making decisions that align with their long-term financial goals.

How can Cummins employees designating beneficiaries ensure that their wishes are respected concerning death benefits, particularly in light of recent changes in the pension landscape? This question focuses on the options available to employees for designating beneficiaries, the process for updating these designations over time, and the specific forms that need to be completed to ensure compliance with the Cummins Pension Plan. It will also discuss the impact of state and federal laws on these designations.

Designating Beneficiaries and Ensuring Compliance: The plan stipulates clear processes for designating beneficiaries for pension benefits, ensuring that employees' wishes are respected and legally documented. This is crucial for planning and securing financial provisions for survivors, reflecting the plan's comprehensive approach to retirement benefits.

How can Cummins employees contact the Cummins Retirement Benefits Service Center to obtain more information about the Cummins Pension Plan and related retirement processes? This question emphasizes the various channels through which employees can reach out to the service center, the types of queries they can address regarding the Cummins Pension Plan, and the resources available online to assist with pension-related inquiries. Employees are encouraged to take advantage of these resources to make informed decisions regarding their retirement planning.

Accessing Information and Assistance: Cummins provides multiple channels for employees to access information and assistance regarding their pension plan, including online resources and a dedicated service center. This accessibility ensures that employees can obtain detailed information and personalized support, enabling them to navigate their pension benefits effectively.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Cummins Inc. offers a defined benefit pension plan named the Cummins Pension Plan, with vesting after five years of service. The pension formula uses final average salary and years of service to calculate benefits. Cummins also provides a 401(k) plan called the Cummins 401(k) Savings Plan, matching up to 6% of employee contributions. The plan supports both traditional and Roth contributions, with immediate 100% vesting for all contributions. [Source: Cummins Benefits Handbook, 2022, p. 15]

Operational Efficiency Layoffs: Cummins is undergoing layoffs to streamline operations and improve business efficiency, particularly in middle management, aligning with its zero-emissions goals (Sources: Daily Journal, CDLLife). Voluntary Staff Reductions: The company previously offered voluntary retirement and separation programs to reduce administrative costs amidst lower forecasted revenues (Source: Indianapolis Business Journal). Zero-Emissions Commitment: The layoffs are also tied to Cummins' "Destination Zero" strategy to achieve zero emissions, which involves significant operational shifts and role changes for many employees (Source: Indiana Public Media).

Cummins Inc. provides stock options and RSUs as part of its equity compensation packages. Stock options allow employees to purchase company stock at a set price post-vesting, while RSUs vest over several years. In 2022, Cummins enhanced its equity programs with performance-based RSUs. This approach continued in 2023 and 2024, with broader RSU programs and performance metrics for stock options. Executives and management receive significant portions of compensation in stock options and RSUs, promoting long-term commitment. [Source: Cummins Annual Reports 2022-2024, p. 75]

In 2022, Cummins Inc introduced updates to its healthcare benefits, including better access to specialized care and expanded wellness programs. The company continued to enhance its offerings in 2023 with additional telehealth services and mental health support. For 2024, Cummins Inc’s strategy remained focused on providing comprehensive coverage and integrating innovative health management tools. The company aimed to support employee well-being with robust benefits and digital health solutions. Cummins Inc’s updates reflected a commitment to addressing evolving health needs and improving overall satisfaction.

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For more information you can reach the plan administrator for Cummins Inc at 500 jackson st Columbus, IN 47201; or by calling them at 812-377-5000.

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