New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
6 Retirement Myths Every Avery Dennison Employee Should Not Fall For!
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The sustained volatility in crude oil markets, with prices ranging from $50 to $120 and annualized swings near 80%, creates economic effects that extend far beyond energy companies. Oil price instability feeds into the broader economic environment through transportation costs, manufacturing inputs, and consumer spending power. For Avery Dennison employees building long-term financial plans, this means that seemingly unrelated decisions, from 401(k) fund selection to the timing of major purchases, can be influenced by energy market conditions. For Avery Dennison 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 Avery Dennison 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 Avery Dennison 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 Avery Dennison 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 Avery Dennison , 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 Avery Dennison 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 Avery Dennison, 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, Avery Dennison retirement benefits are not set in stone. They are subject to change. For example, the significant changes made to Avery Dennison’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: Avery Dennison stock is a good investment
Something Avery Dennison 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 Avery Dennison pension and 401(k) plan (if Avery Dennison 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 Avery Dennison 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 Avery Dennison 401(k) account (If Avery Dennison 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 Avery Dennison, you may leave some or all of your savings in your Avery Dennison 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 Avery Dennison. Avery Dennison 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, Avery Dennison provides continued medical coverage to eligible retirees, which can bridge the gap between retirement and Medicare eligibility at age 65 or serve as a supplement to Medicare thereafter. Confirming the service and age requirements for retiree coverage, and understanding your premium contribution, is an important step in building an accurate healthcare cost projection. Coordinating Avery Dennison's retiree coverage with Medicare Part B and Part D enrollment timing can also reduce duplication and avoid late-enrollment penalties. Connecting your specific Avery Dennison 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.
How does the transition of the Avery Dennison U.S. Pension Plan to a group annuity contract affect current employees who are nearing retirement, and what steps should they consider taking during this transition to ensure their benefits are secure from Avery Dennison?
Current Employees Nearing Retirement: The transition to a group annuity contract should not affect the accrued benefits of current employees nearing retirement. The terms of the annuity payments will match those provided by the previous pension plan. Employees should ensure their personal information is updated and consult with the Avery Dennison Retirement Center to understand the timing of their benefits commencement during the transition period.
In what ways does Avery Dennison support employees who are considering their options for retirement benefits, particularly those who may not have previously explored their pension plan details prior to the transition to an insurer?
Support for Employees Exploring Retirement Options: Avery Dennison assists employees by providing detailed information through their retirement center and online resources. Employees are encouraged to review the changes and implications of the annuity transition and contact the retirement center for personalized advice, particularly if they have not previously explored their pension plan details.
Can you elaborate on the implications of the group annuity contract for employees who have recently retired from Avery Dennison, particularly concerning how their benefits are administered compared to the previous pension plan structure?
Recently Retired Employees: For those who have recently retired, the administration of their benefits will shift from Avery Dennison to the selected insurer but this should not change the amount, timing, or form of the benefits they receive. This ensures continuity in the administration of benefits without affecting the retirees directly.
For employees currently receiving benefits through Avery Dennison, how will the transition to the selected insurer impact the continuity and reliability of their monthly payments, and what measures are in place to safeguard these payments?
Continuity and Reliability of Payments: The transition involves the selection of a highly rated insurer, ensuring the reliability of ongoing monthly payments. Avery Dennison has put measures in place, including a thorough selection process involving an independent fiduciary, to safeguard these payments.
What are the specific protections offered to beneficiaries under the group annuity contracts once the Pension Plan transitions away from Avery Dennison's administration, and how do these protections differ from those provided under the Pension Benefit Guaranty Corporation (PBGC)?
Protections for Beneficiaries: After the transition, the state guaranty associations, rather than the Pension Benefit Guaranty Corporation (PBGC), will offer protection to beneficiaries. This shift means that while the federal insurance via PBGC will no longer apply, state-level insurance, which has its own limits and guarantees, will take over.
In light of the transition to the group annuity, how should employees at Avery Dennison go about updating their personal information, such as addresses or banking details, and what timelines should they be aware of during this process?
Updating Personal Information: Employees should update their personal details such as addresses or banking information through the Avery Dennison Retirement Center by specific deadlines during the transition period. Post-transition, such updates should be made directly with the new insurer.
How does Avery Dennison ensure that the financial health of the selected insurer for the group annuity contract is sufficient to meet the obligations to its retirees, and what standards are applied during the selection process?
Financial Health of the Insurer: Avery Dennison ensures the financial adequacy of the selected insurer through a rigorous selection process managed by an independent fiduciary. This includes evaluations of the insurer's financial stability, claims-paying ability, and overall business practices.
After the transition to an insurer is complete, what should employees of Avery Dennison do if they have questions regarding their retirement benefits, and how will communication be handled moving forward to ensure clarity and support?
Post-Transition Communication: After the transition, employees should direct their questions regarding retirement benefits to the selected insurer's service center. Avery Dennison will provide contact details and further instructions in a welcome kit following the transition.
How does the U.S. tax legislation impacts the retirement benefits of Avery Dennison employees who are transitioning to a group annuity, particularly concerning taxation of these annuity payments during retirement?
Impact of U.S. Tax Legislation: The transition to a group annuity may affect the taxation of retirement benefits. Employees are advised to consult with tax professionals to understand the specific impacts based on their personal circumstances.
For employees seeking more information regarding the details of their retirement benefits and the implications of the insurer transition, how can they contact Avery Dennison to discuss their specific circumstances and gain clarity on any outstanding questions?
Accessing Further Information: Employees seeking more details about their retirement benefits post-transition can contact Avery Dennison through their designated Retirement Center or access information via the company's dedicated benefits website. This is crucial for obtaining clarity on specific circumstances and outstanding queries regarding the transition.
For more information you can reach the plan administrator for Avery Dennison at 207 Goode Ave Glendale, CA 91203; or by calling them at +1 626-304-2000.
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