How Academy Sports and Outdoors Employees Can Navigate the Impact of Inflation on Their Pension Choices

Healthcare Provider Update: Healthcare Provider for Academy Sports and Outdoors Academy Sports and Outdoors employs various healthcare providers for its employees, with UnitedHealthcare being one of the prominent insurers offering plans through the Affordable Care Act (ACA) marketplace. Given the company's extensive workforce, they seek competitive healthcare solutions that cater to the diverse needs of their employees across different states. Potential Healthcare Cost Increases in 2026 As the landscape of healthcare costs evolves, 2026 is poised to bring significant challenges for consumers, particularly those enrolled in ACA plans. Experts anticipate sharp premium increases, with some states experiencing hikes exceeding 60%, primarily due to the expiration of enhanced federal premium subsidies and rising medical costs. The Kaiser Family Foundation warns that without legislative action, roughly 22 million marketplace enrollees could see their out-of-pocket costs soar by over 75%. This perfect storm of factors not only threatens affordability but also exacerbates access to vital healthcare services for millions. Click here to learn more

Rising interest rates also play a large role in the decision of whether Academy Sports and Outdoors employees should take their pension as an annuity or a one-time lump sum payment. As inflation continues to rise, the Fed has responded by gradually increasing interest rates, which decreases the value of future pension payments as well as the lump sum value. This is because the future pension payments are worth less today as the dollar devalues and the higher investment return drives the total present value of the payments down. To show this mathematically, imagine an individual with pension payments of $48,000 annually ($4,000 monthly), a 20-year time horizon, and a 5% interest rate

 

The present value of all of these payments is worth $598,186, which should roughly be the value of the lump sum payment. With a single percentage increase in interest rates from 5% to 6%, the new present value of the payments is reduced to $550,556, just under an 8% decrease over the old present value. Evidently, rising interest rates negatively affect the present value of future payments so given Federal Reserve Chairman Jerome Powell’s mention of 2-3 more interest rate hikes this year, the decision of whether to take a lump sum now or later could have a big impact on your retirement from Academy Sports and Outdoors.

 

'Taking your pension as a lump sum and knowing how to manage your funds to last for your retirement requires hard work.'

 

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In practicality, taking your pension as a lump sum and knowing how to manage your funds to last for your years of retirement from Academy Sports and Outdoors requires hard work. Figuring out how much to withdraw, when to withdraw, and how much you can spend each year are just a few of the many decisions that are needed to be thought out in order to maximize the benefit of taking your pension as a lump sum. If you don’t take the time to think out these decisions, you could find yourself running out of funds during your years of retirement from Academy Sports and Outdoors.

For our Academy Sports and Outdoors clients who would prefer the safety of a guaranteed stream of income for the rest of their lives, taking the annuity over the lump sum may be the better option for you. With taking your pension as an annuity though, there is no certainty that the company paying your pension will remain in business for the duration of your retirement so you run the risk of receiving smaller pension payments from the PBGC (Pension Benefit Guaranty Corporation) in the event that Academy Sports and Outdoors goes under. Both options have their pros and cons and in the end up to you to decide which suits your personal financial situation and lifestyle.

 

If you are interested in more information about this topic, view our e-book here:  https://retirekit.theretirementgroup.com/effects-of-inflation-e-brochure