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Understanding Risk Tolerance: A Guide for Watsco Employees Navigating Retirement Changes

Healthcare Provider Update: Watsco offers a comprehensive benefits program that includes medical, dental, vision, life, and disability insurance. Employees receive cash incentives for completing wellness assessments and have access to Teladoc for 24/7 virtual care. The company also provides a 401(k) plan with matching contributions and an Employee Stock Purchase Plan 7. Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average. 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 Watsco 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 Watsco 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 Watsco 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 is the primary purpose of Watsco's 401(k) plan?

The primary purpose of Watsco's 401(k) plan is to help employees save for retirement by allowing them to contribute a portion of their salary on a pre-tax basis.

How can Watsco employees enroll in the 401(k) plan?

Watsco employees can enroll in the 401(k) plan by completing the enrollment process through the company's HR portal or by contacting the HR department for assistance.

Does Watsco offer a company match for 401(k) contributions?

Yes, Watsco offers a company match for 401(k) contributions, which helps employees maximize their retirement savings.

What is the maximum contribution limit for Watsco's 401(k) plan?

The maximum contribution limit for Watsco's 401(k) plan is determined by the IRS and may change annually; employees should check the latest guidelines for the current limit.

Can Watsco employees change their contribution percentage at any time?

Yes, Watsco employees can change their contribution percentage at any time, typically through the HR portal or by submitting a request to HR.

What investment options are available in Watsco's 401(k) plan?

Watsco's 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to diversify their portfolios.

Is there a vesting schedule for Watsco's 401(k) company match?

Yes, Watsco has a vesting schedule for the company match, which means employees must work for a certain period before they fully own the matched contributions.

How can Watsco employees access their 401(k) account information?

Watsco employees can access their 401(k) account information through the online portal provided by the plan administrator.

What happens to a Watsco employee's 401(k) if they leave the company?

If a Watsco employee leaves the company, they have several options for their 401(k), including rolling it over to another retirement account, cashing it out, or leaving it with Watsco.

Are there any fees associated with Watsco's 401(k) plan?

Yes, there may be fees associated with Watsco's 401(k) plan, which can include administrative fees and investment management fees. Employees should review the plan documents for details.