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

Unlocking Retirement Potential: A Strategic Approach for Sonoco Products Employees to Navigate Their 401(k) and Social Security Options

Healthcare Provider Update: Healthcare Provider for Sonoco Products Sonoco Products, a global packaging solutions company, collaborates with various healthcare providers to manage the health benefits of its employees. While specific providers may vary by location and plan selections, many large employers like Sonoco typically partner with prominent insurance carriers such as UnitedHealthcare, Anthem, and Cigna. Potential Healthcare Cost Increases in 2026 In 2026, healthcare costs for employees of Sonoco Products may experience significant increases due to anticipated premium hikes related to the Affordable Care Act (ACA). With projections indicating that premiums could rise by as much as 18% to 66% in certain states, many employees may face sharp out-of-pocket costs, particularly if enhanced federal subsidies expire. These increases will be driven by soaring medical costs and insurers' need to adjust for both economic inflation and the potential loss of critical financial support, raising concerns about accessibility and affordability for many subscribers. Click here to learn more

Sonoco Products individuals who are approaching or in retirement have a lot of decisions to make in the present financial environment, and these decisions can have a big impact on their financial well-being. The timing of Social Security benefit claims is one example of such a decision. The general consensus is that claiming Social Security benefits after reaching full retirement age (FRA) will optimize the monthly benefit. On the other hand, the truth is that individual financial circumstances, including debt, inflation, and medical expenses, may force people to think about utilizing these benefits sooner.

For Sonoco Products individuals who want to postpone receiving Social Security benefits until they reach their FRA, which is presently 70 years old, the idea of a 'Social Security bridge' has become popular as a calculated option. This tactic entails generating income in the interim by utilizing other Sonoco Products retirement assets, such as 401(k) money. By doing this, people can take advantage of the higher monthly benefits that come with delaying claiming and prevent prematurely drawing from Social Security benefits.

A common strategy for setting up a Social Security bridge is to take early, penalty-free withdrawals from 401(k) accounts, with the maximum amount allowed to be taken out being the amount of early Social Security benefits. With this strategy, people can maximize their future Social Security payments while still covering their living expenses.

A study conducted by Boston College's Center for Retirement Research provides evidence in favor of the feasibility of delaying Social Security benefits with 401(k) assets. According to the research, delaying Social Security payments results in a larger monthly payment amount, which offers a more considerable financial buffer in later years. The report also shows that employer-sponsored bridging programs, which help employees implement this method, are becoming more and more popular.

Approximately 71 million people were actively participating in 401(k) plans as of September 2022, and the total value of their funds was over $6.3 trillion. This sizeable retirement savings pool highlights how well 401(k) funds can function as Social Security bridges.

Postponing Social Security benefits has substantial financial benefits. The Social Security Administration increases the monthly income by 8% for each year that the beneficiary is delayed past the full retirement age, up to the age of 70. Retirement income may rise significantly as a consequence of this increase. For example, Sonoco Products retirees who achieve full retirement age at age 67 but choose to postpone receiving benefits until age 70 may earn a 24 percent boost in their monthly income.

To illustrate, consider the maximum monthly benefits for someone filing in 2024:

- $2,710 for filing at age 62.
- $3,822 for filing at full retirement age (which varies based on birth year).
- $4,873 for filing at age 70.

The average monthly Social Security payout as of March 2023 was $1,833, which is less than these statistics. Furthermore, beginning in January 2024, Social Security benefits will incorporate a 3.2% cost-of-living increase.

Although there are obvious financial benefits to delaying Social Security, early access to 401(k) savings might have psychological repercussions. Assuming that longer investment periods provide higher returns, many view early withdrawal from retirement savings as a financial mistake. Notably, Suze Orman and other personal finance authorities have warned against taking early withdrawals and highlighted the hazards.

Featured Video

Articles you may find interesting:

But it's important to understand that Social Security offers a theoretically limitless stream of income, but 401(k) accounts have a finite amount of funds. Because of this disparity, using 401(k) money as a bridge to expanded Social Security payments makes sense, especially in light of the possibility that Congress will act to preserve the program's viability after its projected 2035 depletion year.

However, there are hazards associated with bridging. For example, retirement distributions are taxable in at least 38 states, so Sonoco Products retirees who are planning to leave 401(k) assets to their heirs may have to make tough choices.

Sonoco Products individuals who are getting close to retirement would benefit from expert financial counsel because of these intricacies. Personalized advice on navigating the complexities of retirement planning, such as the smart use of 401(k) funds to optimize Social Security payments, can be obtained from a certified financial advisor.

In conclusion, careful assessment of one's unique financial situation, risk tolerance, and long-term objectives is necessary when deciding whether to postpone Social Security benefits in favor of early 401(k) withdrawals. Sonoco Products individuals can optimize their retirement income and ensure a more secure and comfortable retirement with the correct plan and professional advice.

In July 2023, the National Bureau of Economic Research released a research that offers important information to anyone thinking about deferring Social Security benefits by taking money out of their 401(k). According to the research, this tactic can greatly improve the stability of retirement income, particularly for highly compensated professions within Sonoco Products. It highlights that people can maximize their income streams and lower their risk of outliving their assets by carefully planning when to take withdrawals from retirement accounts and postponing taking Social Security. With this method, which offers a more managed and financially safe transition into retirement, experienced Sonoco Products individuals are especially likely to have high 401(k) balances.

Think of your retirement journey as a well-thought-out long-distance flight. Your 401(k) provides enough funds to cover a large portion of the journey, much like the first gasoline that powers a jet engine. But in order to guarantee a steady and uneventful flight, you must ascend to an ideal altitude, which is similar to postponing receiving Social Security income. You can prolong your flight's duration and guarantee a smoother, more comfortable journey by making prudent use of the first fuel (401(k)) and delaying the ascent to the higher altitude (Social Security benefits). The strategic timing of Social Security claims and 401(k) withdrawals can lead to a more secure and prolonged financial stability, just as in aviation where resource management and timing are crucial. This will ensure you reach your destination—a comfortable retirement—with ease and efficiency.

In the context of the retirement benefits provided by Sonoco Products Company, what are the different scenarios that could lead an employee to choose either the Normal Retirement Benefit or the Early Retirement Benefit, and what factors should be considered in making this decision? Additionally, how do these benefits interact with the vesting service and benefit service calculations specified by Sonoco Products Company?

Normal Retirement Benefit: Available at age 65, provides full monthly pension calculated by a predetermined formula. Early Retirement Benefit: Available from age 55 with 15 years of service, but monthly payments are reduced to account for the longer payment period. Employees must weigh the reduction in monthly benefits against the potential need or desire to retire early. Considerations: The choice largely depends on personal financial needs, health status, and employment circumstances. Early retirement reduces monthly benefits, which could impact long-term financial stability.

Considering the details about tax implications in the Sonoco Pension Plan, what steps should employees take to ensure they understand the taxation of both monthly annuity payments and lump sum payments when they retire from Sonoco Products Company? What resources does Sonoco offer to assist employees in navigating these tax obligations effectively?

Monthly Annuity Payments: Subject to federal income tax; state and local taxes may also apply. Employees can choose whether or not to have taxes withheld. Lump Sum Payments: Subject to mandatory 20% federal withholding if not rolled over into another qualified plan. Employees must consult with tax professionals to understand the taxation and potential penalties, especially if under age 59½. Resources: Sonoco provides access to benefits specialists through their Benefits Center and recommends consultation with tax advisors to manage tax obligations effectively.

How does Sonoco Products Company define and calculate the "Maximum Plan Benefit," and what impact do IRS limits have on the benefits that employees may receive upon retirement? Furthermore, how does this ensure that employees understand their entitlements under the plan?

Defined by IRS limits, which cap the annual benefits an employee can receive. For 2018, the limit was $220,000. Impact: Ensures high earners are aware of the maximum pension they can draw annually, and helps in planning additional retirement savings if necessary.

For employees at Sonoco Products Company who may be considering reemployment after retirement, what are the potential impacts on their pension benefits, and what guidelines does the company provide regarding how these benefits are recalculated upon re-entering the workforce?

Pension benefits cease during reemployment and resume upon re-retirement, recalculated based on additional service. This could affect decisions on returning to work post-retirement. Guidelines: Sonoco outlines how benefits are recalculated and emphasizes consulting with the Benefits Center to understand the specific impacts.

In what ways can employees of Sonoco Products Company calculate their required service years to determine pension eligibility, and what nuances exist in the vesting and benefit service calculations? How do these calculations affect the retirement planning process for long-term employees?

Vesting Service: Determines eligibility for a pension. A minimum of five years is required for a vested pension benefit. Benefit Service: Used to calculate the amount of pension. It includes periods of employment but may exclude certain leaves or breaks in service. Implications: Understanding these definitions helps employees plan their career and retirement timing to maximize benefits.

Employees at Sonoco Products Company are often curious about the various forms of payment they can choose for their pension. What are the available options, and how do these options differ in terms of financial implications for the retiree and their beneficiaries?

Options: Single life annuity, joint and survivor annuities (50%, 75%, 100% survivor benefits). Financial Implications: Each option impacts the monthly benefit amount and the security it provides to beneficiaries, necessitating careful consideration based on marital status and financial needs.

Understanding the process of applying for plan benefits can be complex for many employees. What are the specific steps that Sonoco Products Company employees need to follow to apply for their pension benefits, and what resources are available to help streamline this process?

Process: Initiated via Sonoco Benefits Center, involving choosing a retirement date, understanding benefit options, and completing necessary paperwork. Resources: Detailed support through retirement specialists aids in navigating the process smoothly.

Many employees may not be aware of their rights under ERISA as participants in the Sonoco Pension Plan. What specific rights and protections do employees have, and how can they assert these rights if there are disputes or issues regarding their pension benefits at Sonoco Products Company?

Provides specific rights regarding plan information, appeal processes for denied claims, and protections against plan abuses. Asserting Rights: Outlines steps to take if there are disputes over pension benefits, including the right to sue after exhausting administrative remedies.

If a Sonoco Products Company employee experiences a significant life change, such as divorce or a domestic relations order, what procedures must they follow regarding their pension benefits, and how does Sonoco manage such situations under the guidelines laid out in the plan documentation?

Procedures: Employees must follow specific procedures for dividing pension benefits in the event of divorce, under a Qualified Domestic Relations Order (QDRO). Management: Sonoco’s Benefits Center provides guidance and necessary documentation to ensure compliance with legal requirements.

For employees looking to learn more about their retirement options and benefits at Sonoco Products Company, what contact information is available for them to reach out for assistance? How can employees utilize these resources effectively to gain a clearer understanding of their retirement planning?

Available through the Sonoco Benefits Center, offering comprehensive support for retirement planning and benefit queries, essential for effective retirement planning.