New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
6 Retirement Myths Every Alaska Air Group Employee Should Not Fall For!
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Oil prices between $50 and $120 per barrel with 80% annualized volatility have created ripple effects throughout the economy over the past six months. Jet fuel typically represents 20 to 30 percent of airline operating costs, and hedging programs provide only partial insulation from sustained price increases. For Alaska Air Group employees building retirement savings, oil-driven inflation and market volatility make disciplined saving and diversified allocation more important, as energy cycles can disrupt both portfolio values and purchasing power. Professional guidance can help you navigate the indirect effects of oil volatility on your retirement planning and ensure your strategy accounts for these dynamics.
During our 30+ years helping retirees, the majority have been very excited to start the planning process. However, some have been surprised to find out our recommendations differ from what they have heard elsewhere.
This is because there’s a lot of misinformation swirling around. As a fiduciary, we are legally obligated to serve your best interests at all times. So, we can tell you achieving the retirement you desire is not going to happen if you’re sidetracked by myths and false information.
That's why we aim to debunk the top six retirement myths that Alaska Air Group employees may have heard. Our goal is to help you start building the retirement of your dreams today.
Myth #1: If I receive a pension, I do not have to make any decisions regarding my pension.
If Alaska Air Group offers you a defined-benefit plan, your pension is primarily the responsibility of the company. However, that doesn’t mean you just wait for a check in the mail once you retire. You have major decisions to make.
If offered a pension, employees can potentially elect to receive a monthly payout like a traditional pension or they could convert their pension into a one-time lump-sum benefit, which can be subsequently rolled over into an Individual Retirement Account (IRA) and then controlled by the retiree.
So, monthly or lump-sum pension?
Each payout has its own set of pros and cons. Deciding which option is most appropriate for you involves many factors. Deciding which option is most appropriate for you involves many factors. It is best done with the help of a professional, who can incorporate all aspects of your financial life – Social Security, 401(k), real estate, and inheritance into your decision.
Further, married Alaska Air Group employees may have survivor benefit options to consider. At retirement, it is possible that you have multiple survivor options to choose from for the monthly pension, but these are only available for a qualified spouse.
Myth #2: If I receive a pension from Alaska Air Group , Social Security becomes less important.
Social Security will likely be one of your primary sources of retirement income. And just like your pension, you should carefully consider how best to use it based on your personal needs.
The size of your Social Security benefit is greatly determined by your age when you claim. You can receive your full Social Security retirement benefit upon reaching your Full Retirement Age, which is age 66 or 67, depending on your date of birth. But you can claim a permanently reduced benefit as early as age 62. Delaying Social Security until age 70 entitles you to a higher benefit of up to 8% per year. A benefit at age 70 will be 76-77% higher than the payout if you start at age 62.
Ultimately, factors such as your other income sources, marital status and health should guide your decision, not just when you can get the biggest Social Security paycheck.
Myth #3: When I retire from Alaska Air Group doesn’t matter
No, no, no. When you retire has a major effect on the quality of your retirement.
For one, years of service is one of the primary factors in your pension calculation. Generally, the longer you work at Alaska Air Group, the higher your pension. Your pension is also impacted by interest rates, which fluctuate. When rates are lowered, lump-sum pension payouts are increased, and vice versa.
Plus, Alaska Air Group retirement benefits are not set in stone. They are subject to change. For example, the significant changes made to Alaska Air Group’s pension calculation, health care subsidies and retiree health insurance.
You may find that it is more financially advantageous to retire sooner or later than your desired retirement date.
Myth #4: Alaska Air Group stock is a good investment
Something Alaska Air Group employees should be aware of is that we commonly see employees invest an excessive amount of their 401(k) in their company’s stock. While it can be rewarding to own a piece of a respected company, it may be risky from a retirement planning perspective.
Firstly, most of your financial life becomes dependent on the performance of one company. That includes your current income and retirement income from the Alaska Air Group pension and 401(k) plan (if Alaska Air Group offers these to you). Such a high concentration of your financial well-being in a single company is risky. Secondly, a single stock can be riskier and more volatile than a mutual fund or the broader stock market. Therefore, the greater amount of Alaska Air Group stock you have in your 401(k), the more you can expect your investment return to fluctuate.
It’s more appropriate to diversify the investment choices in your Alaska Air Group 401(k) account (If Alaska Air Group offers you a 401K). That means selling your company stock and investing in mutual funds. The right mix of funds depends on your specific needs, goals and level of risk you’re comfortable with.
Myth #5: It’s better to leave my 401(k) with my company.
Upon leaving Alaska Air Group, you may leave some or all of your savings in your Alaska Air Group 401(k) account (If this is offered to you). However, there are a variety of benefits to rolling over your 401(k) to an Individual Retirement Account (IRA). These include greater investment choices, greater withdrawal flexibility, more withholding options, and professional management by an advisor of your choosing.
When done properly, no tax applies to the rollover. One area of your 401(k) that provides no flexibility is tax withholdings.Every withdrawal is subject to a mandatory 20% federal tax plus applicable state taxes.
Myth #6: Medicare will cover my medical expenses
One of the biggest expenses for most people in retirement is health care. Taking the time to review your options can help you plan accordingly and avoid large out-of-pocket costs that could derail your retirement.
Once you turn 65 you are Medicare-eligible You and your Medicare-eligible dependents are required to enroll in Medicare Part A (hospital benefits) and Part B (doctor benefits). These two parts cover about 80% of health care benefits for individuals, so it’s important to consider your supplemental coverage options.
That same shift from growing assets to drawing them down applies directly to the pension decisions in front of you at Alaska Air Group. Alaska Air Group maintains an active defined benefit pension plan, meaning eligible employees continue to accrue benefits based on years of service and compensation. If you are eligible for a lump sum payout, IRS Section 417(e) segment rates determine how the future annuity stream converts to a present-value payment - rising rates compress the lump sum, so monitoring the plan's stability period and lookback month is critical before you lock in your election date. The choice between a single-life annuity, a joint-and-survivor option, or a lump sum (where available) is generally irrevocable once made, and timing that decision relative to interest rate conditions can meaningfully affect your retirement income picture.
On the healthcare side, Alaska Air Group does not offer continued medical coverage to retirees, which means coverage through the company ends when employment does. Planning for the cost of health insurance during any gap between your retirement date and Medicare eligibility at age 65 is a critical step - marketplace coverage, COBRA continuation, or a spouse's employer plan are common options. Building an accurate estimate of bridge-coverage costs into your retirement income projection prevents underestimating one of the largest variable expenses retirees face. Connecting your specific Alaska Air Group benefits situation to a comprehensive retirement income plan - and understanding how each component interacts - gives you the most complete picture of what retirement will look like.
What type of retirement savings plan does Alaska Air Group offer to its employees?
Alaska Air Group offers a 401(k) retirement savings plan to help employees save for their future.
Does Alaska Air Group match employee contributions to the 401(k) plan?
Yes, Alaska Air Group provides a matching contribution to employee 401(k) accounts, subject to certain limits.
What is the eligibility requirement for Alaska Air Group employees to participate in the 401(k) plan?
Employees of Alaska Air Group are generally eligible to participate in the 401(k) plan after completing a specific period of service, typically within their first year of employment.
Can Alaska Air Group employees choose how much to contribute to their 401(k) plan?
Yes, employees at Alaska Air Group can choose to contribute a percentage of their salary to their 401(k) plan, within the IRS contribution limits.
Are there investment options available for Alaska Air Group employees within the 401(k) plan?
Yes, Alaska Air Group offers a variety of investment options within the 401(k) plan, including mutual funds and other investment vehicles.
How often can Alaska Air Group employees change their 401(k) contribution amounts?
Employees at Alaska Air Group can change their contribution amounts during designated enrollment periods or at specific times throughout the year.
Does Alaska Air Group allow employees to take loans against their 401(k) savings?
Yes, Alaska Air Group allows employees to take loans against their 401(k) savings, subject to the plan’s terms and conditions.
What happens to an Alaska Air Group employee's 401(k) account if they leave the company?
If an Alaska Air Group employee leaves the company, they can choose to roll over their 401(k) balance to another retirement account or cash out, subject to taxes and penalties.
Is there a vesting schedule for the employer match in the Alaska Air Group 401(k) plan?
Yes, Alaska Air Group has a vesting schedule for the employer match, meaning employees must work for a certain period before they fully own the matched funds.
Can Alaska Air Group employees access their 401(k) savings before retirement?
Yes, employees at Alaska Air Group may access their 401(k) savings before retirement under certain circumstances, such as financial hardship or qualifying events.
For more information you can reach the plan administrator for Alaska Air Group at 19300 International Boulevard Seattle, WA 98188; or by calling them at (206) 433-3200.
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