Top 401(k) Pitfalls Every KBR Employee Should Know for a Brighter Retirement

Healthcare Provider Update: Healthcare Provider for KBR KBR, a company known for its engineering and construction services, provides health insurance through its partnerships with major health insurers. As of now, KBR employees have access to healthcare coverage options primarily through UnitedHealthcare, which is one of the largest health insurers in the United States. This ensures that employees can receive comprehensive health services, including preventive care and specialty treatments. Potential Healthcare Cost Increases in 2026 In 2026, healthcare costs are projected to surge significantly, exacerbated by a challenging blend of factors. Many states are staring down potential increases in health insurance premiums beyond 60%, particularly influenced by the expiration of enhanced federal premium subsidies that could cause out-of-pocket costs to skyrocket by over 75% for most ACA marketplace enrollees. Coupled with rising medical expenses driven by inflation, the anticipated premium hikes reflect a perfect storm for consumers, increasing the financial burden on both individuals and families during a critical period. Insurers report significant revenue growth but also face mounting pressures that may further distress access to affordable healthcare coverage. Click here to learn more

In today's evolving economic landscape, a significant challenge facing many Americans is securing a comfortable retirement from KBR, as the rising cost of living and savings deficits pose substantial hurdles. This situation is further compounded by difficulties in funding retirement accounts, a concern highlighted by a recent CNBC Your Money Survey revealing that 41% of workers do not contribute to a 401(k) or employer-sponsored plan.

Despite the clear advantages of workplace retirement plans, many KBR employees are not fully utilizing these opportunities. Joe Buhrmann, a senior financial planning consultant at eMoney Advisor, notes that only a small subset of workers are maximizing their employer-sponsored plans to build a substantial nest egg. One critical aspect often overlooked is the employer match, a crucial component of retirement savings. Shockingly, data from Fidelity, the largest 401(k) plan provider in the U.S., indicates that about 22% of plan participants are not receiving the full match.

The average company match for a 401(k) plan, as reported by Fidelity for the third quarter of 2023, stands at 4.7% of a worker's salary, typically ranging between 3% and 6%. Consequently, couples with dual employer savings plans could strategically benefit from prioritizing the plan with the more generous employer match. Mike Shamrell, Fidelity’s vice president of thought leadership, emphasizes the importance of contributing enough to attain the full match, which could translate into thousands of additional dollars annually towards retirement savings. To facilitate this, Shamrell suggests auto-escalating contributions, allowing for a gradual increase in savings each year.

The IRS has responded to these challenges by increasing the contribution limits for retirement accounts in 2024, with the thresholds now set at $23,000 for 401(k) plans and $7,000 for IRAs. This adjustment provides an opportunity for increased savings in anticipation of KBR retirement.

However, a concerning trend is the withdrawal of funds from retirement accounts during tough financial times, which undermines the benefits of compound interest. Reports indicate a rise in 401(k) withdrawals amidst prolonged high inflation. Financial experts generally advise against tapping into these funds. If necessary, understanding the distinctions between a loan and a withdrawal from a 401(k) is crucial. A 401(k) loan allows borrowing up to 50% of the account balance or $50,000, whichever is less, with a repayment period of five years. On the other hand, withdrawals may incur a 10% tax penalty if taken before age 59½, except in specific hardship situations.

Looking ahead, a new provision set to take effect in 2024 will enable savers to make a single withdrawal of up to $1,000 annually for personal or family emergencies, offering a lifeline in immediate need situations.

The final piece of advice revolves around maintaining a long-term perspective. Despite market volatility leading to a nearly 25% loss in 401(k) account balances in 2022, Fidelity reports an average balance rebound of $107,700, an 11% increase from the previous year. Workers consistently investing in their plan for 15 years have witnessed their average balances soar from $56,300 in 2008 to $448,800. Therefore, it is crucial to have an appropriate asset allocation and contribute consistently, irrespective of market fluctuations. Changes to a 401(k) should not be based on short-term market trends, as this could result in missed growth opportunities or unnecessary risk exposure.

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An important consideration for those nearing retirement, particularly around age 60, is the potential impact of Required Minimum Distributions (RMDs) from 401(k) plans. Starting at age 72, retirees must begin taking RMDs from their 401(k)s, which are calculated based on the account balance and life expectancy. This can significantly affect tax liabilities and retirement income planning. As reported by the IRS in 2023, failing to take these distributions can result in a hefty 50% excise tax on the amount that should have been withdrawn. Thus, effective planning for RMDs is crucial to avoid unnecessary taxes and optimize retirement income for KBR retirees

In summary, understanding and maximizing employer-sponsored retirement plans, being cautious about withdrawing retirement funds, and maintaining a long-term investment strategy are pivotal for building a secure financial future and a comfortable retirement.

Navigating a 401(k) plan effectively is akin to captaining a sailboat on a long voyage. Just as a skilled sailor must understand the intricacies of their vessel, know when to adjust the sails to catch the wind, and be aware of weather changes, individuals approaching retirement must similarly understand the nuances of their 401(k) plan. Maximizing employer matches is like harnessing favorable winds – it propels you further without extra effort. Avoiding premature withdrawals is akin to not dipping into your emergency supplies unless absolutely necessary, preserving resources for when they're truly needed. And planning for RMDs (Required Minimum Distributions) is like charting your course in advance, ensuring you're not caught off guard by unexpected currents (tax liabilities) later in your journey. Just as a successful voyage requires continuous attention and adjustment, so does managing a 401(k) for a secure and comfortable retirement from KBR.