New Update: Rising Oil Costs are Affecting Retirement Plans. Will you be impacted?
6 Retirement Myths Every Paccar Employee Should Not Fall For!
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Crude oil prices remain elevated and volatile, with annualized volatility around 80% and prices ranging between $50 and $120 per barrel over the past six months. Diesel fuel for heavy equipment fleets, steel and component transport costs, and energy-intensive fabrication processes create substantial direct oil price exposure for heavy machinery and equipment manufacturers. Paccar employees building long-term savings should recognize that oil-driven economic conditions can affect both the growth of their portfolios and the purchasing power of their eventual retirement income. A financial advisor can help you build strategies that maintain progress toward retirement goals through periods of energy-driven economic turbulence.
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 Paccar 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 Paccar 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 Paccar 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 Paccar , 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 Paccar 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 Paccar, 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, Paccar retirement benefits are not set in stone. They are subject to change. For example, the significant changes made to Paccar’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: Paccar stock is a good investment
Something Paccar 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 Paccar pension and 401(k) plan (if Paccar 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 Paccar 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 Paccar 401(k) account (If Paccar 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 Paccar, you may leave some or all of your savings in your Paccar 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 Paccar. Paccar 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, Paccar 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 Paccar 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 is the primary purpose of Paccar's 401(k) Savings Plan?
The primary purpose of Paccar's 401(k) Savings Plan is to help employees save for retirement by offering tax advantages and a variety of investment options.
How can Paccar employees enroll in the 401(k) Savings Plan?
Paccar employees can enroll in the 401(k) Savings Plan by completing the online enrollment process through the company’s benefits portal.
What is the minimum contribution percentage for Paccar's 401(k) Savings Plan?
The minimum contribution percentage for Paccar's 401(k) Savings Plan is typically set at 1% of the employee's eligible pay.
Does Paccar offer a company match for contributions made to the 401(k) Savings Plan?
Yes, Paccar offers a company match for contributions made to the 401(k) Savings Plan, which helps employees maximize their retirement savings.
What types of investment options are available in Paccar's 401(k) Savings Plan?
Paccar's 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and company stock.
Can Paccar employees change their contribution rate to the 401(k) Savings Plan?
Yes, Paccar employees can change their contribution rate to the 401(k) Savings Plan at any time through the benefits portal.
At what age can Paccar employees begin to withdraw from their 401(k) Savings Plan without penalties?
Paccar employees can begin to withdraw from their 401(k) Savings Plan without penalties at age 59½.
What happens to Paccar's 401(k) Savings Plan if an employee leaves the company?
If an employee leaves Paccar, they have several options for their 401(k) Savings Plan, including rolling it over to another retirement account, cashing it out, or leaving it with Paccar.
Does Paccar allow loans against the 401(k) Savings Plan?
Yes, Paccar allows employees to take loans against their 401(k) Savings Plan, subject to certain terms and conditions.
Is there a vesting schedule for Paccar's 401(k) company match?
Yes, Paccar has a vesting schedule for the company match in the 401(k) Savings Plan, which typically requires employees to work for a certain number of years before they fully own the matched funds.
For more information you can reach the plan administrator for Paccar at , ; or by calling them at .
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