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ScanSource Employees: Discover Innovative Spending Strategies for Retirement in 2024

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Healthcare Provider Update: ScanSource offers medical, dental, and vision insurance to its employees, along with access to Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Mental Health Benefits. Additional perks include paid time off, tuition assistance, and flexible work arrangements 1. As ACA premiums are projected to rise by 1518% in 2026, ScanSources employer-sponsored coverage may offer more financial stability compared to marketplace plans. With enhanced subsidies set to expire, employees relying on ACA alternatives could face out-of-pocket increases exceeding 75%. Click here to learn more

The classic 4% rule, developed by financial planning professional William Bengen in the early 1990s, remains a widely recognized benchmark for managing retirement savings. According to Bengen's study, based on historical returns and a 30-year withdrawal period, retirees are advised to withdraw 4% of their retirement savings in the first year, and then withdraw the same dollar amount adjusted for inflation in subsequent years. However, evolving economic conditions and financial strategies highlight the importance of more flexible and dynamic approaches to retirement spending. This article explores different flexible methods to help ScanSource retirees preserve their nest eggs while accommodating market fluctuations.

Dynamic Spending Approaches

A dynamic spending method involves adjusting withdrawals based on market performance. This strategy allows retirees at ScanSource to decrease their withdrawals in down markets to preserve their assets and increase spending when markets are healthy. This flexibility can have a significant impact on long-term financial stability and provide opportunities to fully enjoy prosperous years.

Guardrails Approach

The guardrail approach sets upper and lower limits around the initial withdrawal percentage. When withdrawals exceed these limits, adjusted for inflation, they are modified by ±10% to align with the guardrails. For example, a retiree with an initial investment of $1.5 million and a withdrawal margin of 4.5% might withdraw $67,500 in the first year. The guardrails would be set at 5.4% and 3.6% of the portfolio value each year.

Why Is It Effective?

The guardrail method allows management of the sequence of return risks, especially at the onset of withdrawal, by mitigating excessive withdrawals in weak markets and allowing increased spending in robust markets. This method can be particularly beneficial in preserving long-term financial health for ScanSource employees. Moreover, reducing withdrawals from pre-tax retirement accounts can also result in lower taxes, thus contributing to overall financial preservation.

Annual Inflation Adjustments

This strategy involves ceasing inflation adjustments to the withdrawal margin in years following a market downturn. For example, if the initial withdrawal amount was $67,500 in 2022, and the S&P 500 had decreased by 18.11% with an inflation of 8.3%, the withdrawal amount in 2023 would be $67,500 rather than increasing to $73,103. Over time, these periodic reductions can significantly extend the lifespan of retirement savings.

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In conclusion.

Discussing flexible spending and withdrawal strategies offers various options to enhance the adaptability of retirement plans beyond the traditional 4% principle. When evaluating these methods, retirees should consider factors such as:

  1. Lifetime withdrawal rates
  2. Tax implications
  3. Legacies for loved ones and associations
  4. Cash flow stability

Regular review of withdrawal and spending rates with a financial advisor is essential to ensure they align with personal priorities and financial goals. Moreover, retirees have the option to switch methods as circumstances change, maintaining rigorous monitoring to avoid prematurely depleting their retirement savings.

Retirement planning is an ever-evolving process, and adopting a flexible approach to spending and withdrawals can help you pursue confidence and satisfaction throughout retirement. This is particularly relevant for employees at ScanSource, where understanding and navigating market dynamics is part of the corporate culture.

What is the 401(k) plan offered by ScanSource?

The 401(k) plan offered by ScanSource is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

How does ScanSource match employee contributions to the 401(k) plan?

ScanSource provides a matching contribution to the 401(k) plan, typically matching a percentage of the employee's contributions, up to a certain limit.

When can employees at ScanSource start contributing to the 401(k) plan?

Employees at ScanSource can start contributing to the 401(k) plan after completing their initial eligibility period, which is usually outlined in the employee handbook.

Does ScanSource offer a Roth 401(k) option?

Yes, ScanSource offers a Roth 401(k) option, allowing employees to make after-tax contributions to their retirement savings.

What investment options are available in ScanSource's 401(k) plan?

ScanSource's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.

How can employees at ScanSource access their 401(k) account information?

Employees at ScanSource can access their 401(k) account information through the plan's online portal or by contacting the plan administrator.

What is the vesting schedule for ScanSource's 401(k) matching contributions?

The vesting schedule for ScanSource's 401(k) matching contributions typically follows a graded schedule, meaning employees earn ownership of the match over time.

Can employees at ScanSource take loans against their 401(k) savings?

Yes, ScanSource allows employees to take loans against their 401(k) savings, subject to certain terms and conditions outlined in the plan.

What are the withdrawal options available in ScanSource's 401(k) plan?

ScanSource's 401(k) plan may allow for various withdrawal options, including hardship withdrawals, loans, and distributions upon retirement or termination of employment.

Is there an annual limit on contributions to ScanSource's 401(k) plan?

Yes, there is an annual limit on contributions to ScanSource's 401(k) plan, which is set by the IRS and may change annually.

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For more information you can reach the plan administrator for ScanSource at , ; or by calling them at .

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