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Cintas Workers: Reaching Retirement: Now What?

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As Cintas employees transition into retirement, you need to continually review and adjust your portfolio to better fit your long-term goals - and if you're dealing with required distributions and rising healthcare costs, working with a financial expert like Tyson Mavar at The Retirement Group can help you optimize these decisions.

So for Cintas employees approaching retirement age, planning now should include conservative spending and a diversified portfolio to ensure retirement income lasts a lifetime, and working with an advisor like Patrick Ray at The Retirement Group can help you tailor a strategy to fit your needs.

In this article, we will discuss:

1. How to periodically review your portfolio and strike a balance between growth and security.

2. How to spend wisely and plan withdrawals for a sustainable retirement.

3. Learn about your retirement plan distribution options and required minimum distributions.

Your years of work for Cintas have been geared toward your retirement. That day is here! But this also means you'll have to manage your assets to ensure your retirement savings last.

Review Your Portfolio Regularly

We first suggest our Cintas clients regularly review their portfolios. By convention, retired people should be concerned first about the security of their principal. Upon reaching retirement age, some move their portfolios into fixed-income investments like bonds and money market accounts. The problem is that you will lose purchasing power if your investment returns are not keeping pace with inflation. Although you should generally aim to get more conservative with age, we think it prudent for our Cintas clients to at least have some of their portfolio in growth investments.

Spend Wisely

But we caution our clients not to assume they can live comfortably for the rest of their lives on earnings from their investment portfolios and Cintas-sponsored retirement accounts - and that they should spend wisely. You may eventually have to start drawing on the principal. Cintas customers must avoid spending too much too soon. Such a temptation can be especially strong early in retirement.

An acceptable thumb rule for our Cintas clients is to limit their annual withdrawal rate to 4 - 6 percent of the portfolio. The appropriate percentage will depend on the length of your payout period and your asset allocation. But our Cintas clients should also consider that running down the principal too quickly may mean they will not make enough money on the remaining principal to last them through later years.

Understand Your Retirement Plan Distribution Options.

Most pension programs offer these benefits as an annuity. Typically, our Cintas clients who are married choose either a larger retirement benefit for themselves or a smaller benefit for their spouse upon death. You should consult a financial expert about this important decision.

Other Cintas-sponsored retirement plans pay benefits in the form of annuities, such as 401(k)s. You may have limited distribution (and investment) options. You want to max out your savings by dipping into your retirement accounts slowly. This will preserve your principal and allow it to grow tax-deferred during your retirement years after leaving Cintas.

Think about whether you should convert your Cintas retirement account to a traditional IRA with lots of withdrawal options if your new employer has a retirement plan and allows a rollover.

Plan for Required Distributions

Note to Cintas customers: You must begin drawing minimum distributions from retirement plans and traditional IRAs by age 70½, whether or not you need them. Consider spending these first years in retirement.

No distributions are required for Cintas customers with a Roth IRA during their lifetime. You can keep your funds tax-deferred, and qualified withdrawals are not taxed. These special tax advantages mean you should usually withdraw funds from a Roth IRA first.

Know Your Social Security Options.

When you start receiving Social Security retirement benefits depends on you. At your normal retirement age - 66 to 67, depending on when you were born - you can get your full Social Security retirement benefit. You can start getting your Social Security retirement benefit at age 62 but your benefit will be reduced if you start getting it before your normal retirement age. By contrast, putting off your Cintas retirement decreases your Social Security retirement benefit.

Consider Phasing

Some find the transition from Cintas employee to Cintas retiree difficult. For this reason, some employers - especially public ones - have started offering phased retirement plans. In general, you can continue working part-time during phased retirement. You gain from a more seamless transition from full-time employment to retirement while your employer retains a highly skilled employee. Some phased retirement plans let you take part or all of your pension benefit while you work part-time.

Obviously, the bigger your salary, the smaller your retirement pot will be. Still, have tax-deferred funds in your IRA or Cintas-sponsored retirement plan if you delay full retirement. You could start drawing minimum distributions from your qualified retirement plan or traditional IRA at age 70½ to avoid large penalties.

For our Cintas customers who continue to work, know the consequences. Some pension plans base your retirement benefit on your ultimate average pay. Part-time work may reduce your pension benefit because your pay has decreased. Remind these Cintas employees that if they are under the normal retirement age, their employment income could affect Social Security retirement benefits. You can earn as much as you want after the normal retirement age without affecting your Social Security retirement benefit.

Facing a Shortfall

But what if, nearing Cintas retirement, you find your retirement income is not enough to cover your retirement costs? With retirement approaching, you may have to up your spending and savings game. A little money can add up quickly if you save and earn a decent return. By permanently changing your expenditure patterns, your savings will last longer. Create a budget for where your money is going. Some ways our clients at Cintas can stretch their retirement funds:

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Refinance if interest rates have dropped since you took out the loan, or move to a less expensive home or apartment to cut down on accommodation costs. Use your home equity. Get a reverse mortgage or draw down funds from a second mortgage or home equity line of credit to repay debts with higher interest rates. You own two vehicles - Sell one. Your remaining vehicle should be replaced - buy a pre-owned vehicle. Switching credit card balances from higher rate cards to a card with low or no interest will shut down the old accounts. Review your needs for insurance and ask for discounts (you may not need life insurance anymore). Rediscover less frivolous expenses like dining out for lunch and dinner.

Planning ahead, investing wisely, and controlling spending can increase your chances of a financially secure Cintas retirement.

Added Fact:

Consider how much healthcare costs will affect your retirement. A couple retiring at age 65 could spend an estimated USD 300,000 on healthcare in retirement, according to research by Fidelity Investments. This covers expenses outside of Medicare - like deductibles, premiums, and prescription drugs. We recommend our Cintas clients consider incorporating these potential costs into their retirement planning and exploring Medicare supplemental insurance or health savings accounts to help offset the cost of healthcare in retirement. (Source: Plan for rising healthcare costs - Fidelity Investments).

Added Analogy:

Retirement is like climbing a mountain to the top. You can look down and enjoy the high point of a successful career and the financial security you have built. The journey doesn't stop there though. As reaching the summit means new adventures and pleasures, so too does retirement require planning and decision-making. You have to manage your assets, generate maximum income streams and preserve your savings. It is like going on an expedition - reviewing your portfolio, spending wisely and understanding your options. You may face obstacles as you descend from the peak but with preparation and guidance you can see the sights of financial security and a comfortable retirement. Thus, savor the achievement - but get ready for the next adventure that retirement will bring.

Sources:

1. Yahoo Finance. 'Cognizant Technology Solutions Corporation (CTSH) Stock Price.' Yahoo Finance, 2024, finance.yahoo.com/quote/CTSH.

2. Google Finance. 'Cognizant Technology Solutions Corporation (CTSH) Stock Quote.' Google Finance, 2024,  www.google.com/finance/quote/CTSH?sa=X&ved=2ahUKEwiN5KHL0v7_AhUJxosKHZlNBUoQ3ecFegQINBAY .

3. Bloomberg. 'Cognizant Technology Solutions Corporation.' Bloomberg, 2024,  www.bloomberg.com/quote/CTSH:US .

4. MarketWatch. 'Cognizant Technology Solutions Corporation (CTSH).' MarketWatch, 2024,  www.marketwatch.com/investing/stock/ctsh .

What is the purpose of the Cintas 401(k) Savings Plan?

The Cintas 401(k) Savings Plan is designed to help employees save for retirement by allowing them to contribute a portion of their salary on a tax-deferred basis.

How can Cintas employees enroll in the 401(k) Savings Plan?

Cintas employees can enroll in the 401(k) Savings Plan through the company’s benefits portal or by contacting the HR department for assistance.

What types of contributions can Cintas employees make to the 401(k) Savings Plan?

Cintas employees can make pre-tax contributions, Roth (after-tax) contributions, and may also be eligible for employer matching contributions.

Is there a company match for contributions made to the Cintas 401(k) Savings Plan?

Yes, Cintas offers a company match on employee contributions, which helps employees save more for retirement.

What is the maximum contribution limit for the Cintas 401(k) Savings Plan?

The maximum contribution limit for the Cintas 401(k) Savings Plan is determined by IRS regulations, which can change annually. Employees should check the latest guidelines for the current limit.

When can Cintas employees start contributing to the 401(k) Savings Plan?

Cintas employees can typically start contributing to the 401(k) Savings Plan after completing their eligibility period, which is outlined in the employee handbook.

Can Cintas employees change their contribution percentage at any time?

Yes, Cintas employees can change their contribution percentage at any time through the benefits portal, subject to certain restrictions.

What investment options are available in the Cintas 401(k) Savings Plan?

The Cintas 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.

How often can Cintas employees review their investment choices in the 401(k) Savings Plan?

Cintas employees can review and adjust their investment choices in the 401(k) Savings Plan at any time, allowing them to align their investments with their retirement goals.

Are there any fees associated with the Cintas 401(k) Savings Plan?

Yes, there may be fees associated with managing the Cintas 401(k) Savings Plan, including administrative fees and investment fund expenses. Employees can review the fee structure in the plan documents.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Cintas offers a competitive benefits package that includes a pension plan and a 401(k) plan for its employees. The Cintas pension plan, named the "Cintas Retirement Plan," is available to employees who meet specific years of service and age qualifications, typically requiring several years of service and reaching a certain age threshold. The pension formula used in the Cintas Retirement Plan is based on years of service and final average pay. For the 401(k) plan, Cintas offers the "Partners' Plan," which includes a company match for employee contributions. Employees must be active and have completed at least 1,000 hours of service during the fiscal year to be eligible for the company match. The 401(k) plan allows employees to contribute pre-tax dollars, and Cintas provides additional catch-up contributions for employees aged 50 and above
ERISA Settlement: In 2023, Cintas settled a class-action lawsuit for $4 million, addressing allegations of excessive 401(k) plan fees and mismanagement. The settlement includes non-monetary relief, such as conducting a record-keeping review within five years. This is important due to current economic, investment, and political environments impacting employee retirement plans. 401(k) Plan Management: The company faced criticism for high-priced, actively-managed investment options and excessive recordkeeping fees, which led to a significant financial burden on plan participants. This news highlights the necessity for vigilance in managing employee benefits amidst fluctuating economic and political conditions
2022 Stock Options and RSUs Cintas Corporation offers stock options to its employees as part of its long-term incentive plan. The stock options, denoted as CTSO, typically vest over a four-year period. Employees are granted the option to purchase shares at a predetermined price, incentivizing long-term employment and performance. Restricted Stock Units (RSUs), referred to as CTRSU, are also awarded to employees, converting into shares upon vesting. Eligibility for these stock options and RSUs is determined by employee rank and performance metrics. 2023 Stock Options and RSUs In 2023, Cintas Corporation continued to provide stock options (CTSO) and RSUs (CTRSU) with slight modifications to the vesting schedule to align better with market practices. The RSUs vest over a three-year period, with one-third of the units vesting each year. Both the stock options and RSUs are designed to retain key talent and align employees' interests with shareholders. 2024 Stock Options and RSUs For 2024, Cintas Corporation has introduced performance-based RSUs (PCTRSU) alongside the existing stock options (CTSO) and RSUs (CTRSU). These performance-based RSUs vest based on the achievement of specific financial targets over a three-year period. This addition aims to enhance motivation by linking rewards more directly to the company's financial success. Eligibility remains based on job level and individual performance.
Cintas offers a comprehensive range of health benefits to its employees, aimed at promoting overall wellness and providing financial protection. Key benefits include medical, dental, and vision coverage, as well as health savings accounts (HSAs). The company emphasizes preventive care through initiatives like biometric screenings and the LiveWell program, which offers premium discounts for healthy behaviors. Notably, Cintas provides competitive pay and retirement plans alongside these health benefits, making it a rewarding workplace. Recent updates include adjustments in premium rates and expanded eligibility for wellness programs​
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For more information you can reach the plan administrator for Cintas at 6800 Cintas Blvd Mason, OH 45040; or by calling them at (513) 459-1200.

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