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Understanding Risk Tolerance: A Guide for Southwest Airlines Employees Navigating Retirement Changes

Healthcare Provider Update: Healthcare Provider for Southwest Airlines: Southwest Airlines collaborates with multiple health insurance providers, primarily utilizing Aetna and UnitedHealthcare for its employee health plans. These partnerships enable Southwest Airlines to offer its workforce a range of options for health coverage. Potential Healthcare Cost Increases in 2026: As we look ahead to 2026, Southwest Airlines employees are preparing for significant healthcare cost increases, which may greatly impact their out-of-pocket expenses. With projected ACA premium hikes exceeding 60% in certain states, the burden of rising healthcare costs is likely to be felt by employees more than ever. A recent industry survey indicates that over half of large employers are considering raising deductibles and out-of-pocket maximums, as they navigate growing medical costs driven by inflation and high drug prices. This financial landscape underscores the importance of proactive planning and informed health plan choices for employees aiming to mitigate these anticipated increases in healthcare expenses. Click here to learn more

The world of investing is very subjective--the investment plan that’s right for you depends largely upon the level of comfort that you have when it comes to risk. We'd like our clients from Southwest Airlines to remember that you can’t completely avoid risk when it comes to investing, but it's possible for you to manage it.

There are two aspects of risk tolerance for Southwest Airlines employees to consider: (1) the capacity of your investment plan itself to absorb losses, and (2) how comfortable you are personally with risk. The first aspect can be quantified--the more flexibility your investment plan has when it comes to potential loss, the more risk your plan can tolerate. For example, as we’ve discussed, a long investment time horizon may allow you to take on more risk than a short time horizon.

'You can’t completely avoid risk when it comes to investing, but it is possible for you to manage it..'

The second aspect, how comfortable you are personally with risk, is more of an emotional measure, and depends on many factors, including your objectives, life stage, personality, and investment experience. Some investors are comfortable with a high degree of risk, while others can tolerate only minimal risk. Individual risk tolerance is an important factor for Southwest Airlines employees in deciding which individual investments are appropriate for them, as well as how their investment dollars should be allocated among different investment classes.

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Investors are typically grouped into three categories for purposes of discussing risk tolerance: aggressive (those who have a high degree of risk tolerance); moderate (those willing to accept some degree of risk), and conservative (those who are risk averse).

What type of retirement savings plan does Southwest Airlines offer to its employees?

Southwest Airlines offers a 401(k) retirement savings plan to help employees save for their future.

Does Southwest Airlines match employee contributions to the 401(k) plan?

Yes, Southwest Airlines provides a matching contribution to employees who participate in the 401(k) plan, subject to certain limits.

How can employees enroll in the 401(k) plan at Southwest Airlines?

Employees can enroll in the 401(k) plan through the Southwest Airlines benefits portal during the enrollment period or after they become eligible.

What is the eligibility requirement for Southwest Airlines employees to participate in the 401(k) plan?

Most employees at Southwest Airlines are eligible to participate in the 401(k) plan after completing a specified period of service.

Are there any fees associated with the 401(k) plan at Southwest Airlines?

Yes, there may be administrative fees associated with the 401(k) plan at Southwest Airlines, which are disclosed in the plan documents.

What investment options are available in the Southwest Airlines 401(k) plan?

The Southwest Airlines 401(k) plan typically offers a range of investment options, including mutual funds, target-date funds, and company stock.

Can Southwest Airlines employees take loans against their 401(k) savings?

Yes, Southwest Airlines allows employees to take loans against their 401(k) savings, subject to specific terms and conditions.

What happens to my 401(k) savings if I leave Southwest Airlines?

If you leave Southwest Airlines, you can choose to roll over your 401(k) savings into another retirement account, cash out, or leave it in the plan, depending on the plan's rules.

How often can Southwest Airlines employees change their 401(k) contribution amounts?

Employees at Southwest Airlines can change their 401(k) contribution amounts at any time, subject to the plan's guidelines.

Is there a vesting schedule for the matching contributions at Southwest Airlines?

Yes, Southwest Airlines has a vesting schedule for matching contributions, which means employees must work for a certain period to fully own those contributions.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Southwest Airlines provides a defined contribution 401(k) plan with company matching contributions. Employees can contribute pre-tax or Roth (after-tax) dollars, and Southwest matches up to 9.3% of eligible compensation. The plan includes various investment options, such as target-date funds, mutual funds, and a self-directed brokerage account. Southwest also offers an Employee Stock Purchase Plan (ESPP) with a discount on company stock. Financial planning resources and tools are available to help employees manage their retirement savings.

Southwest Airlines provides both RSUs and stock options to employees. RSUs vest over time, providing shares, while stock options allow employees to buy shares at a set price.