New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Arconic Employees: The 4% Rule is Outdated—Here's How to Spend More in Retirement

Healthcare Provider Update: Healthcare Provider for Arconic Arconic, a leading provider of aluminum and aerospace products, collaborates with various insurance companies to offer healthcare benefits to its employees. The primary healthcare providers that partner with Arconic vary by location and include well-known insurers like UnitedHealthcare, Aetna, and Blue Cross Blue Shield, among others. Healthcare Cost Increases in 2026 In 2026, healthcare costs are expected to rise significantly, impacting employers and employees alike, including those at Arconic. The projected average increase in health benefit costs could reach nearly 8.5%, attributed to a perfect storm of higher medical expenses and the potential expiration of enhanced federal premium subsidies from the Affordable Care Act (ACA). Many employers are responding by considering changes to plan designs that shift more costs to employees. This could lead to out-of-pocket premium increases that may exceed 75% for a large portion of the workforce, making it critical for companies like Arconic to strategize their healthcare offerings effectively to mitigate financial impacts on their employees. Click here to learn more

'Arconic employees, by embracing a more diversified retirement portfolio and the updated 4.7% withdrawal rule, can potentially create a sustainable retirement income aligned with today's economic conditions, enabling them to live more comfortably without outliving their savings.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'Arconic employees can benefit from adopting Bengen's updated 4.7% withdrawal rule, as it provides a more flexible and sustainable approach to retirement planning, allowing them to withdraw larger amounts while still focusing on their long-term financial goals.' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The evolution of the 4% withdrawal rule and its updates.
The importance of diversification in retirement portfolios.
How retirees, especially those at Arconic, can benefit from the revised withdrawal strategy.

For many years, both pensioners and financial advisers have debated the idea of a sustainable withdrawal rate for retirement funds. The 4% rule, first proposed by Bill Bengen in 1994, quickly became a key guideline in retirement planning. According to this approach, in the first year of retirement, pensioners could withdraw 4% of their retirement funds; each year after that, the amount would be adjusted for inflation. The goal was simple: help pensioners live for 30 years without depleting their funds. However, after decades of success with this technique, Bengen has recently re-examined his strategy and concluded that retirees may be able to spend more than originally thought.

The 4% Rule’s Evolution

The financial community quickly embraced Bengen's original study after its publication in the Journal of Financial Planning in 1994. Using a straightforward portfolio of U.S. large-company equities and U.S. 5-year bonds, Bengen offered a simple method for pensioners to determine how much they could withdraw from their retirement savings. However, even as the 4% rule gained popularity, it overlooked important factors like inflation rates, asset allocation, and market volatility—issues that could arise in retirement.

By 2022, Bengen revisited his decades-old guideline. After a long career of studying retirement planning, he experienced what he called a 'breakthrough moment.' Instead of viewing stock returns as the primary factor in withdrawal rate calculations, Bengen realized that inflation should be given more weight. Consequently, he revised the 4% rule, raising the withdrawal rate to 4.7%. This change accounts for a more diversified portfolio and a broader mix of asset classes, offering retirees a more sustainable and generous approach.

Introducing the New 4.7% Rule

Under the updated approach, a retiree with $1 million in savings could withdraw $47,000 in their first year of retirement. This amount would then be adjusted for inflation in subsequent years, just as in the original 4% rule. However, the key change lies in asset allocation. The original rule was based on a basic stock and bond portfolio, while Bengen's revised model includes a diverse mix of asset classes such as international equities, bonds, small-cap stocks, and large-cap U.S. stocks. With this diversification, the 4.7% rule is considered a “worst-case scenario” for retirees hoping to avoid exhausting their funds within 30 years.

The Importance of Diversification

Bengen’s updated approach is backed by years of research and portfolio optimization. The more diversified portfolio—comprising U.S. stocks, foreign equities, bonds, and small-cap stocks—aims to offer greater stability. Bengen’s findings show that, under certain conditions, retirees could withdraw as much as 7% of their savings annually, especially if their portfolios were well-diversified. However, Bengen's study also emphasized the importance of rebalancing your portfolio regularly to align with your financial goals and risk tolerance as a retiree.

For those at Arconic, this revised withdrawal rate carries real implications. With the 4.7% rule, you can notionally spend more during retirement without depleting your funds—provided your portfolio is well-diversified. Given the changing financial landscape, Bengen believes retirees today, even those from large corporations like Arconic, may be able to withdraw between 5.25% and 5.5%, particularly in times of moderate inflation and high market valuations.

A Historical Perspective on the 4% Rule

Despite its appeal, the original 4% rule wasn’t without flaws. Bengen’s initial model didn’t account for prolonged low interest rates, market crashes, or long stretches of low inflation, all of which could impact a retiree’s financial stability. In response, Bengen began to expand his research and include more types of assets to increase stability.

His updated model showed that retirees who retired during economic downturns, like in the 1970s, needed to take a more cautious approach to withdrawals. In such circumstances, a 4.7% withdrawal rate would have been the most prudent option. On the other hand, retirees who experienced more stable financial times could comfortably withdraw around 7% of their savings. This illustrates how critical it is to account for the state of the economy when planning for retirement.

Adapting to Today's Economic Climate

The economic climate today is vastly different from the turbulent 1970s. Inflation is coming back under control, and stock market valuations are high. According to Bengen’s latest research, retirees today can potentially withdraw between 5.25% and 5.5% of their savings each year, depending on market conditions. This adjustment makes sure that retirees maintain their purchasing power and enjoy a fulfilling retirement over the long term.

Even with the current market conditions, Bengen remains cautious. Given the high market valuations, he advises retirees, including those working for large companies like Arconic, to remain mindful. While the 4.7% rule might still be a reliable option in the long run, it’s crucial for retirees to diversify their holdings and periodically revisit their withdrawal plans.

A Shift in Perspective

Bengen’s updated strategy might seem bold or controversial to those who have relied on the 4% rule for decades. After all, the 4% rule became a widely accepted approach, praised for its reliability and simplicity. However, Bengen believes in challenging long-held assumptions to improve financial planning, which includes adapting strategies to reflect changing market conditions. He encourages open discussions and critical thinking about retirement strategies, as this will ultimately lead to better planning and more financial independence for retirees.

In Conclusion

Bengen’s revised 4.7% rule offers retirees, including those at Arconic, a more generous and adaptable framework for managing retirement funds. By diversifying portfolios, rebalancing regularly, and staying attuned to current economic conditions, retirees can potentially take out larger withdrawals without fearing their money will run out too soon. While the 4% rule still holds historical value, it’s time for retirement strategies to evolve, reflecting the changing economic landscape. This updated strategy empowers retirees to live with greater financial independence and potentially enjoy a higher standard of living during retirement.

Research by the Financial Planning Association (FPA) also highlights how diversification can help enhance retirement stability. Incorporating alternative assets like commodities, bonds, and real estate into traditional portfolios can help retirees manage risk and maintain higher withdrawal rates. By diversifying, retirees may be better able to support their financial well-being, even during periods of economic uncertainty.

Arconic employees can now benefit from a more sustainable retirement withdrawal strategy thanks to Bengen’s 4.7% rule. The updated approach allows retirees to withdraw more money each year, benefiting from better asset diversification and a more comprehensive understanding of current market dynamics. It’s time to adjust your retirement strategy to reflect the current economy—so you can enjoy a more independent and fulfilling retirement.

Featured Video

Articles you may find interesting:

Sources:

1. The Wealth Advisor Staff. 'The 4% Rule Creator Reveals the New Safe Retirement Withdrawal Rate.' The Wealth Advisor, April 2025.

2. 'Diversify or Risk Running Dry: 12 Additional Income Streams For Your Retirement.' Investopedia, May 2025.

3. Kiplinger Staff. 'Why Keeping Growth in Your Portfolio After 70 Is Crucial for Your Financial Health.' Kiplinger, June 2025.

4. Financial Planning Association. 'Retirement Withdrawals: The 4% Rule Has Gotten a Boost.' YouTube, March 2025.

5. Nasdaq Staff. 'The Importance of Diversifying Your Retirement Portfolio.' Nasdaq, July 2025.

What retirement benefits and options are available to employees of Arconic Corporation under the Arconic Corp. Pension Plan A, and how do these benefits change based on factors such as age, service length, and retirement category? Employees of Arconic Corporation should understand their eligibility requirements for normal retirement, early retirement, and disability benefits as outlined in the company's pension plan documentation.

The Arconic Corp. Pension Plan A provides retirement benefits based on a formula that considers average earnings and service length, with normal retirement eligibility at age 65 and at least five years of service. Early retirement is available at age 55 with 10 years of service, with benefits reduced based on actuarial assumptions. Disability benefits are available after 10 years of service, and preretirement death benefits offer 50% of accrued benefits to surviving spouses(Arconic Corporation_ Ja…).

How does the frozen state of benefits and service accruals impact current and future retirees at Arconic Corporation? Employees should evaluate how the freeze, effective April 1, 2018, affects their retirement planning and what measures they can take based on their individual circumstances to optimize their retirement benefits.

The frozen state of benefits and service accruals, effective April 1, 2018, means no new service credits or compensation increases are factored into pension calculations for current employees. This freeze affects retirement planning as employees must now rely on frozen benefits and other savings plans to meet retirement needs. It’s important for employees to reassess their financial goals and consider additional investments to optimize retirement benefits(Arconic Corporation_ Ja…).

In what ways can Arconic Corporation employees ensure they meet the requirements for spousal benefits outlined in the pension plan, especially regarding preretirement and postretirement scenarios? Understanding the specifics of eligibility and benefits, such as the surviving spouse benefit calculations, is crucial for employees planning for retirement.

To ensure eligibility for spousal benefits, employees need to meet certain requirements. Preretirement surviving spouse benefits require at least five years of service, and postretirement spousal benefits reduce the participant’s monthly benefit by 5%, with 50% of the reduced amount paid to the spouse if the participant dies first. Employees should understand these provisions to plan for their family’s financial security in retirement(Arconic Corporation_ Ja…).

What are the implications of the actuarial assumptions used by Arconic Corporation in valuing its pension obligations, and how do these assumptions affect the funding of the retirement plan? Arconic Corporation employees should examine how changes in interest rates and mortality tables influence the company's ability to meet its pension obligations.

Actuarial assumptions used in Arconic Corp.’s pension valuations, such as interest rates and mortality tables, directly impact the funding of retirement plans. Changes in these assumptions can affect the pension plan’s obligations and the amount of required contributions, making it important for employees to understand how these factors influence the stability and sufficiency of their retirement benefits(Arconic Corporation_ Ja…).

Can you explain the process by which Arconic Corporation employees can appeal decisions related to their pension benefits, and what support does the company provide during this process? Understanding the proper channels for appeals and the types of documentation required can be vital for employees facing issues with their pension benefits.

Employees can appeal pension benefit decisions through Arconic Corporation’s formal process, which includes submitting an appeal with supporting documentation. The company provides guidelines on what documentation is required, and employees should follow these closely to ensure their case is reviewed thoroughly. The support provided can include detailed responses to clarify benefit calculations and decisions(Arconic Corporation_ Ja…).

What resources are available to Arconic Corporation employees to help them make informed decisions about their retirement benefits, and how can they access these resources efficiently? Employees should know where to find comprehensive materials and support services concerning their retirement plans.

Arconic Corporation offers various resources to assist employees in making informed decisions about their retirement benefits. Employees can access comprehensive plan documents, financial planning tools, and counseling services through the company’s HR department and retirement plan administrators to ensure they fully understand their options(Arconic Corporation_ Ja…).

How does the Arconic Corporation define "average earnings" for calculating retirement benefits, and what methodologies are in place to ensure accuracy in these calculations? Understanding the basis for average earnings will allow employees to better project their pension benefits and prepare for retirement.

Average earnings, used in calculating retirement benefits, are defined as the average of the five highest consecutive calendar years of compensation within the last ten years for most participants. For certain participants, different rules apply based on service and plan conditions. Employees can review their earnings history to ensure accurate calculations and projections for retirement planning(Arconic Corporation_ Ja…).

What criteria does Arconic Corporation use to determine eligibility for deferred vested benefits, and how can employees maximize their advantages in this area? Employees need to be aware of the vesting schedule and how to plan for potential career transitions while maintaining their benefits.

Eligibility for deferred vested benefits in Arconic Corporation’s plan requires five years of service, and benefits can commence as early as age 55, with reductions based on actuarial calculations. Employees should plan career transitions carefully to maximize their vested benefits, especially when considering leaving the company before retirement(Arconic Corporation_ Ja…).

How can Arconic Corporation employees prepare for the potential tax implications of their pension benefits upon retirement, especially in light of IRS regulations for 2024? Being informed about tax strategies related to retirement income can significantly enhance retirees' financial wellbeing.

Employees preparing for retirement should understand the tax implications of pension benefits, particularly in light of IRS regulations for 2024. Strategies such as tax deferral and proper timing of distributions can help minimize the tax burden on retirement income, significantly enhancing financial outcomes(Arconic Corporation_ Ja…).

What contact methods does Arconic Corporation provide for employees wishing to learn more about their pension plan details, and how can employees best utilize these methods to get their queries resolved? Understanding the effective ways to communicate with the company for assistance is key for employees navigating their retirement benefits.

Arconic Corporation provides multiple contact methods for pension-related inquiries, including direct access to HR representatives and pension plan administrators. Employees are encouraged to utilize these resources effectively by preparing questions in advance and keeping detailed records of their communications for follow-up and clarity(Arconic Corporation_ Ja…).

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

Arconic has announced a major restructuring plan that includes significant layoffs across its North American facilities. The restructuring is aimed at streamlining operations and reducing costs amid ongoing economic uncertainties. Additionally, Arconic is revising its pension and 401(k) benefits in response to shifting market conditions and regulatory changes.