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

Sears Holdings Retirement Planning: Preparing for Rising Health Care Costs and Longer Lifespans

Healthcare Provider Update: Healthcare Provider for Sears Holdings Sears Holdings typically provides healthcare benefits to its employees through various insurance plans, often with national insurers such as Aetna, UnitedHealthcare, or Anthem Blue Cross Blue Shield being among the health carriers they have partnered with. The specific providers can vary by location and employee selection during open enrollment periods. Potential Healthcare Cost Increases in 2026 As we progress into 2026, the healthcare landscape is expected to face significant challenges, particularly for employees of Sears Holdings. Forecasts indicate steep premium hikes, with some states imposing increases of over 60%, largely influenced by rising medical costs and the potential expiration of enhanced ACA premium subsidies. The Kaiser Family Foundation highlights that without congressional intervention, millions of marketplace enrollees could see their out-of-pocket costs surge by more than 75%. This convergence of factors threatens to impose a substantial financial burden on both individuals and employers, necessitating proactive strategies to mitigate rising expenses. Click here to learn more

'With longer life expectancies and 25–35 year retirement horizons becoming more common, Sears Holdings employees should regularly revisit their income, Social Security timing, and withdrawal strategies to build flexibility into their plans and account for inflation, health care costs, and market cycles,' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'As retirement timelines stretch to 25–35 years, Sears Holdings employees should view longevity, inflation, and sequence-of-returns risk not as abstract concepts but as planning variables that require flexibility, disciplined income coordination, and periodic review,' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How increasing longevity is reshaping retirement timelines for Sears Holdings employees.
Structural shifts in pensions, inflation, health care, and Social Security.
Practical strategies to adapt retirement income planning for 25–35 year retirements.

by Neva Bradley, CFP®, Wealth Enhancement

For many years, retirement planning often assumed a post-career life of a few decades, with retirement occurring around age 65. For long-tenured Sears Holdings employees, that traditional model may no longer fully reflect today’s realities.

Longevity data underscores the importance of flexibility in planning.

In 2024, average life expectancy in the United States at birth was 79 years, with women living 81.4 years and men 76.5 years, according to the Centers for Disease Control and Prevention (CDC). ¹

These figures reflect national birth averages.

However, planning solely around averages can be misleading. By definition, roughly half of individuals will live beyond the midpoint. Depending on retirement age and personal longevity, retirement for many Sears Holdings employees may extend 25 to 35 years.

That extended time horizon may increase exposure to key retirement risks.

Revisiting Retirement Assumptions

Today’s retirement landscape looks different than it did for previous generations of Sears Holdings employees.

- Defined benefit pensions are considerably less common in the private sector. As of September 2025, only about 14% of private sector workers have access to a defined benefit plan, according to the Bureau of Labor Statistics. ²

- Over extended periods, medical costs have generally risen faster than overall consumer prices. ³ While Medicare provides meaningful coverage, it does not include most long-term care services or many dental services.

- In June 2022, inflation reached 9.1% year over year—the largest 12-month increase since 1981, according to the Bureau of Labor Statistics. ⁴ While headline inflation has since waned, even modest shifts in inflation, health care expenses, and market performance can materially affect outcomes over multi-decade retirements.

For Sears Holdings employees planning a retirement that could span three decades, these factors deserve careful evaluation.

Understanding Longevity Risk

Longevity risk refers to the possibility of outliving one’s financial resources.

The longer retirement lasts, the greater the exposure to market cycles, inflation, and health care costs. Sequence-of-returns risk— the impact of market declines early in retirement while withdrawals are occurring—can significantly influence long-term portfolio durability.

Retirement strategies for Sears Holdings employees should account for these variables, particularly given potentially long retirement timelines.

How Retirement Planning Can Adapt

1. Plan for a Range of Ages

Rather than planning to a single life expectancy figure, stress-testing retirement scenarios to age 90 or 95 can add resilience. For Sears Holdings households, building in flexibility helps account for longer lifespans.

2. Reevaluate Withdrawal Strategies

While the traditional 4% guideline was based on a 30-year retirement horizon, it failed to take inflationary pressures and sequence-of-return risk into account. Withdrawal strategies that consider spending flexibility during varying market conditions may support long-term sustainability.

3. Consider Social Security Timing

Delaying Social Security beyond full retirement age increases benefits through delayed retirement credits up to age 70. ⁵ For some Sears Holdings employees concerned about longevity risk, higher lifetime income from Social Security may strengthen long-term cash flow stability

4. Maintain Balanced Allocation

While risk management remains essential, maintaining exposure to growth-oriented assets may help retirement savings keep pace with inflation across extended retirement periods.

5. Layer Multiple Income Sources

Retirement income for Sears Holdings employees may include:

- Social Security
- Pension income
- Investment withdrawals
- Part-time work
- Annuity income

Diversifying income streams can help reduce reliance on any single source.

If You’re Already Retired

Adjustments remain possible. Reviewing spending habits, withdrawal strategies, investment positioning, and health care planning can help align financial resources with the expected duration of retirement.

Decisions such as reducing discretionary expenses or downsizing can be practical planning strategies.

If You’re Still Employed

Consistency is key. Ongoing savings, appropriate investment exposure, and planning for income flexibility can support long-term durability. For some Sears Holdings employees, phased retirement or part-time work may ease the transition and extend earning years.

The Bottom Line for Sears Holdings Employees

Life expectancy remains higher than historical norms, and many retirees face retirement horizons of 25 to 35 years. Over longer retirements, inflation, health care costs, market volatility, and longevity risk carry greater weight.

Modern retirement planning emphasizes flexibility—layering income sources, adjusting withdrawals, maintaining diversified growth exposure, and preparing for a range of outcomes.

The Retirement Group works with Sears Holdings employees to stress-test retirement strategies, evaluate longevity risk, and assess income alternatives. To discuss your retirement planning needs, call The Retirement Group at (800) 900-5867.

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Sources:

1. Centers for Disease Control and Prevention, National Center for Health Statistics. ' Mortality in the United States, 2024 ,' by J. Xu, S. Murphy, K. Kochanex, E. Arias. NCHS Brief No. 548, January 2026.

2. U.S. Bureau of Labor Statistics. ' Employee Benefits in the United States .' March 2025.

3. Rakshit, Shameek, et al. “How Does Medical Inflation Compare to Inflation in the Rest of the Economy?” Peterson-KFF Health System Tracker , Kaiser Family Foundation, 2 Aug. 2024, www.healthsystemtracker.org/brief/how-does-medical-inflation-compare-to-inflation-in-the-rest-of-the-economy/ .

4. U.S. Bureau of Labor Statistics. Consumer Price Index—June 2022 . U.S. Department of Labor, 13 July 2022, www.dol.gov/newsroom/economicdata/cpi_07132022.pdf .

5. Social Security Administration. ' Delayed Retirement Credits .'

How does the Sears Holdings Pension Plan differentiate between normal retirement, early retirement, and late retirement options for Kmart participants? In what ways do these options influence the retirement planning process for employees of Sears Holdings, and what specific considerations should Kmart employees be aware of when choosing one of these retirement paths, particularly in relation to their vested status?

Differentiation of Retirement Options: The Sears Holdings Pension Plan offers distinct options for normal, early, and late retirement. Normal retirement is available at age 65 or after five years of plan participation, whichever is later. Early retirement can be taken from age 55 but before 65, provided the employee is vested, with benefits subject to actuarial reduction unless certain conditions are met (like having at least 90 points, which is a sum of age and years of credited service). Late retirement pertains to any retirement after the normal retirement age, with pensions recalculated to reflect the delay in benefit commencement.

Considering the frozen status of the Sears Holdings Pension Plan, how does this impact the benefits eligibility for Kmart employees, and what implications does it have for their retirement savings strategies? In what ways should current employees factor in this frozen status when evaluating their overall retirement readiness and potential alternatives outside of the company plan?

Impact of Frozen Status: The freezing of the Sears Holdings Pension Plan on January 31, 1996, means that there have been no new accruals of benefits or participants since that date. For Kmart employees, this impacts their benefits eligibility by capping the pension benefits at levels earned up to the freeze date. Employees need to consider this stagnation in benefits when planning for retirement, potentially seeking additional retirement savings avenues to bridge any shortfall.

What are the essential calculations involved in determining the retirement benefits under the Sears Holdings Pension Plan for Kmart employees? Specifically, how do the Career Average Pay and Final Average Pay formulas come into play, and what factors should employees consider when estimating their future retirement payouts?

Essential Calculations for Retirement Benefits: Pension benefits for Kmart employees under the Sears Holdings Pension Plan are calculated using either the Career Average Pay or the Final Average Pay formulas. These calculations take into account an employee's years of credited service and compensation up to the freeze date. Factors like estimated Social Security benefits and specific formulas (such as a deduction based on Social Security benefits under the Final Average Pay formula) play crucial roles in determining the final pension payout.

How can Sears Holdings employees best navigate the process of applying for benefits under the Pension Plan? What specific steps should participants take to ensure their applications are processed correctly, and what important deadlines should they be aware of to avoid any negative consequences on their retirement benefits?

Navigating the Benefits Application Process: To apply for pension benefits, employees must submit a formal application, ideally 30 to 90 days before the intended commencement date. It is crucial to ensure all personal information, including marital status and spouse details, is up-to-date to avoid delays or inaccuracies in benefit processing. Missing application deadlines can lead to postponed benefit payments or unwanted default options.

In what situations can Kmart employees expect to receive a Deferred Vested Pension, and how is the calculation for this pension affected by their previous employment and vesting service? Employees should be aware of the important factors influencing their eligibility and the steps necessary to maintain their retirement benefits after leaving the company.

Eligibility and Calculation for Deferred Vested Pension: A Deferred Vested Pension is available to employees who leave the company after becoming vested but prior to qualifying for retirement. The calculation mirrors that of a normal retirement pension, with possible early commencement reductions. Understanding the timing of benefit commencement and the potential reductions for early start is vital for planning.

How does the Sears Holdings Pension Plan address tax considerations for employees receiving both monthly payments and lump sum payments upon retirement? What tax implications should Kmart participants be aware of, particularly in relation to IRS rules for distributions and potential penalties for early withdrawal?

Tax Implications of Pension Receipt: Pension payments, whether monthly or lump sum, are subject to federal taxes. Monthly benefits are taxed as ordinary income, while lump sums might be eligible for special tax treatments or rollover options to defer taxes. It’s important for Kmart employees to consider these implications and possibly consult with a tax advisor to optimize tax liability.

What are the rights and protections afforded to Kmart participants under the Employee Retirement Income Security Act (ERISA) as they navigate their retirement benefits with the Sears Holdings Pension Plan? How can employees leverage these rights to ensure they are receiving all the benefits to which they are entitled?

ERISA Rights and Protections: Under ERISA, Kmart employees are entitled to certain rights including the ability to appeal denied benefits, access to plan information, and assurances of fair and equitable treatment of their benefits. Leveraging these protections ensures that employees receive all due benefits.

What steps should Kmart employees take to update their personal information to ensure they continue receiving their benefits without interruption, especially in the context of missing participants or uncashed checks? What resources and contacts at Sears Holdings are available to assist with these updates?

Updating Personal Information: Maintaining accurate personal information with the pension plan is crucial for uninterrupted benefit payments. Employees should promptly update changes such as address, marital status, or beneficiaries to prevent issues with benefit distributions or lost checks.

How does the process of transferring between affiliated employers impact pension benefits for Kmart employees under the Sears Holdings Pension Plan? What considerations should be taken into account concerning Credited Service and Vesting Service during such transfers, and how can employees ensure they do not lose any entitled benefits?

Impact of Transfers Between Affiliated Employers: Transferring between Sears Holdings’ affiliated employers can affect pension benefits differently depending on whether the employer participates in the pension plan. It's essential to understand how such transfers impact credited and vesting service accruals.

For Kmart employees seeking more information about their benefits under the Sears Holdings Pension Plan, what is the best way to contact company representatives? How can they effectively communicate their questions or concerns to ensure they receive accurate and timely information regarding their retirement benefits?

Contacting Plan Representatives: Kmart employees seeking clarity on their pension benefits should contact the Sears Holdings Pension Service Center. Effective communication, including prepared questions and necessary documentation, will aid in obtaining accurate and comprehensive information.

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

Sears Holdings Corporation's pension plans were taken over by the Pension Benefit Guaranty Corporation (PBGC) following the company's bankruptcy. The two defined benefit pension plans have been frozen since 2005, meaning no new benefit accruals are added. The plans are underfunded by approximately $1.4 billion, with PBGC assuming responsibility to ensure pension payments continue. These plans cover about 90,000 participants who worked for Sears, Roebuck and Co., and Kmart Corporation. Despite the underfunding, PBGC is expected to cover the vast majority of pension benefits owed under these plans. Participants can manage their benefits and verify information through PBGC's online platform or service center.

Bankruptcy and Store Closures: Sears Holdings emerged from bankruptcy with significant store closures, reducing from nearly 700 stores to less than 25. The company has been liquidating its remaining assets and recently announced more store closures in 2024. The focus is on resolving bankruptcy-related issues and managing the liquidation process effectively (Sources: The Layoff, Yahoo Finance).

Sears Holdings offered both RSUs and stock options before its bankruptcy. RSUs vested over time, providing shares, while stock options allowed employees to buy shares at a fixed price.

Sears Holdings, now part of Transformco, has faced numerous challenges in recent years, impacting its ability to provide comprehensive employee healthcare benefits. The strategic transformations initiated since 2017 aimed to improve operational performance and liquidity, which included measures such as obtaining additional loan proceeds and real estate sales. However, the company's financial struggles and store closures have also led to significant changes in employee benefits, including healthcare. As part of its efforts to stabilize and restructure, Sears has focused on reducing outstanding debt and pension obligations, contributing almost $4 billion to its pension plan since 2005 due to prolonged low interest rates. In 2023, Transformco continued to navigate its financial challenges, which have influenced its healthcare benefits offerings. The company has aimed to maintain basic healthcare coverage for its employees despite ongoing restructuring efforts. This includes providing access to medical, dental, and vision plans, although the specifics of these benefits and any enhancements over the past years have been less prominently highlighted compared to the broader financial strategies and operational changes. The focus on financial stability and cost reduction remains critical for Transformco as it seeks to ensure the viability of its employee benefits programs amid economic uncertainties.

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For more information you can reach the plan administrator for Sears Holdings at 3333 beverly road Hoffman Estates, IL 60179; or by calling them at 1-800-697-3277.

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