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Cigna Employees: The 4% Rule is Outdated—Here's How to Spend More in Retirement

Healthcare Provider Update: Healthcare Provider: Cigna Cigna is a global health services provider that offers a broad range of health insurance plans, including individual and family plans, employer-sponsored group plans, disability insurance, and dental, behavioral health, and pharmacy management services. Known for its commitment to connecting customers with care, Cigna also emphasizes wellness and preventive health options in its offerings. Healthcare Cost Increases in 2026 As the healthcare landscape evolves, consumers can expect substantial increases in health insurance premiums for 2026. Recent forecasts indicate that Cigna will raise individual market premiums by an average of 29.4% in states like Colorado. This surge is attributed to a combination of factors, including rising medical costs, anticipated losses of federal premium subsidies, and aggressive rate hikes across the industry. If enhanced tax credits expire as expected, over 22 million ACA marketplace enrollees could face out-of-pocket premium hikes exceeding 75%, compounding the financial strain on American families seeking affordable coverage. Click here to learn more

'Cigna 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.

'Cigna 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 Cigna, 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 Cigna, 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 Cigna, 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 Cigna, 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 Cigna, 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.

Cigna 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.

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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.

As an employee of CIGNA Corporation, what steps should you consider taking to understand the implications of the pension plan amendments established under recent legal interpretations? CIGNA Corporation has experienced significant changes in its pension plan, which resulted from the Amara case. In light of these changes, what should employees examine regarding their accrued benefits, and how might the historical context of these amendments impact their retirement planning?

Employees of CIGNA Corporation should thoroughly review their accrued benefits under the pension plan amendments following the Amara case, which reformed the employer's cash balance plan. It's essential to analyze how these changes affect the value of their pension benefits, especially for employees who joined the company before 1997. Understanding these amendments can significantly impact retirement planning(CIGNA Corporation_May 2…).

In what ways does the concept of ""wear-away"" as discussed in the context of CIGNA Corporation's pension plan amendments affect current employees nearing retirement? Understanding how this mechanism operates within the pension plan can help employees better strategize their retirement. Employees at CIGNA Corporation should analyze whether they could potentially experience delays in benefit accrual as a result of these changes and the legal principles that underpin them.

The "wear-away" concept, introduced in CIGNA’s pension plan amendments, can delay benefit accrual for employees nearing retirement. This mechanism often results in a period where no additional benefits are accrued, which could affect employees' retirement timing. Employees should carefully evaluate whether this delay might affect their pension expectations and strategize accordingly(CIGNA Corporation_May 2…).

How can CIGNA Corporation employees determine whether the current pension plan accurately reflects their rights under ERISA? With ongoing legal interpretations and potential reforms stemming from court rulings, employees need to assess how these rulings apply to the pension plan's amendments. This may require looking into the details of the summary plan descriptions and how to clarify their rights to future benefits.

To ensure that CIGNA’s pension plan reflects their rights under ERISA, employees should examine the summary plan descriptions and other relevant documents. Legal rulings like the Amara case can lead to reforms, so employees must clarify how these decisions impact their future benefits(CIGNA Corporation_May 2…).

What resources are available to CIGNA Corporation employees wishing to seek personalized advice regarding their specific retirement scenarios, particularly in light of changes brought about by the Amara case? Understanding the complexities of retirement benefits is crucial, and employees may benefit from tapping into CIGNAâ€™s human resource department or designated benefits counselors for guidance tailored to their circumstances.

Employees seeking personalized advice regarding retirement planning, especially in light of the Amara case, should consult CIGNA’s human resource department or designated benefits counselors. These professionals can provide guidance tailored to individual retirement scenarios, ensuring a clear understanding of pension and 401(k) options(CIGNA Corporation_May 2…).

How does the restructuring of the CIGNA Corporation's pension and 401(k) plans impact the overall retirement benefits landscape for employees who joined before and after the 1997 changes? Employees should look at the comparative advantages and disadvantages provided by both plans to make informed decisions regarding their retirement savings strategies and expected outcomes.

CIGNA employees who joined before and after 1997 should analyze the restructuring of the pension and 401(k) plans. The changes led to different retirement benefits, with cash balance plans affecting post-1997 employees. Comparing both plans’ advantages and disadvantages is crucial for making informed decisions about savings and retirement strategies(CIGNA Corporation_May 2…).

To what extent are CIGNA Corporation employees safeguarded against the financial impacts of fluctuations in interest rates in relation to their pension benefits? Employees should be aware of how the pension plan uses interest rate assumptions and their potential implications for the valuation of their pension benefits, particularly those who have been affected by the changes introduced in 1998.

Employees should understand how interest rate fluctuations impact the valuation of their pension benefits, especially those affected by the 1998 changes. Interest rate assumptions play a crucial role in determining the value of cash balance pensions, and employees must stay informed about these variables(CIGNA Corporation_May 2…).

What procedural steps must CIGNA Corporation employees follow to contest any discrepancies or misunderstandings about their pension benefits? Knowledge of CIGNA Corporation's dispute resolution process can empower employees to take action when they feel their rights have not been adequately represented or upheld, particularly in the wake of significant plan amendments.

To contest discrepancies in their pension benefits, CIGNA employees must follow the dispute resolution procedures laid out by the company. This process is especially important after the significant amendments resulting from the Amara case, as employees may need to defend their rights to accrued benefits(CIGNA Corporation_May 2…).

How has the legal environment surrounding pension plans, particularly through cases like the Amara lawsuit against CIGNA Corporation, influenced the benefits structure offered to employees? This question encourages employees to explore how changes at the judicial level redefine what retirement benefits can look like and the implications for their long-term financial security.

The Amara lawsuit influenced CIGNA’s pension structure by leading to a judicial reformation of the pension plan. Employees should explore how these legal decisions have reshaped the benefits landscape, as it directly affects their long-term financial planning and retirement security(CIGNA Corporation_May 2…).

What specific changes in eligibility criteria for early retirement benefits should current CIGNA Corporation employees be aware of, especially regarding the transition to the cash balance plan? Employees need to scrutinize the implications of these changes and how they may affect their decisions about early retirement and associated benefits.

Employees should be aware of changes to early retirement eligibility resulting from the transition to a cash balance plan. These adjustments, introduced after 1997, may alter the terms under which early retirement benefits are accessible, impacting decisions about retirement timing(CIGNA Corporation_May 2…).

How can CIGNA Corporation employees effectively reach out to the HR department or benefits specialists to get more information about their retirement options? Understanding the channels of communication established within the company for discussing benefits will be crucial for employees seeking clarity on their rights and the provisions of the pension plan following the recent amendments.

CIGNA employees can reach out to the HR department or benefits specialists for more information on their retirement options. These channels provide crucial insights into pension plan amendments and can clarify how the Amara case and other legal changes affect employees’ retirement benefits(CIGNA Corporation_May 2…).

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

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Cigna offers RSUs and stock options to certain employees. The RSUs vest over a specific period, encouraging retention.