Raytheon Retirement Benefits: Understanding the Options
As you begin to sort through your Raytheon retirement plan offerings, it is important to consider what you envision for your life in retirement. Raytheon offers many options to support your retirement journey, and you want to select the options that will best help you reach your personal goals.
Pension Payout Options
Raytheon offers several pension plans, all with different payout options. These pension plans have payout options that range from a one-time lump sum to the ability to spread out payments over the remainder of your life or even provide payments to a beneficiary after your passing.
You should consider other income streams that you will receive in retirement and your current and projected tax situation to ensure you choose a payout option that will support your lifestyle.
When considering your pension benefits, be aware that you may have both a taxable and a non-taxable portion. Any payments from the taxable part are taxed at ordinary income rates, while the non-taxable portion may allow you for other planning opportunities, such as Roth conversions and capital gains rate benefits.
The earliest you can claim your Raytheon pension is age 55 if you are fully vested (you must have worked at Raytheon for at least five years). Keep in mind that there may be a reduction to your benefit if you choose to commence your pension early, or at the normal retirement age if commenced before your Social Security retirement date.
If you decide to retire after the normal retirement age, you may receive increased pension payments, and your pension will begin whenever your Raytheon employment ends. If your employment with Raytheon ends before you turn 65 and you are not vested, you will lose your pension.
These points are all important to remember to ensure you maximize your benefit.
401(k) Overview
Raytheon’s 401(k) plan offers options for pre-tax, Roth, and after-tax contributions. You will want to consider the current and future tax rate environment when determining the best option for contributions.
Pre-tax contributions allow you to benefit from a tax deduction today while pushing the taxation of those dollars down the road at withdrawal.
Roth contributions are taxed as the money is put into the account, so if you expect to be in a higher tax bracket in the future, Roth contributions may be a good option. All contributions and withdrawals will be tax- and penalty-free after age 59.5.
Like Roth contributions, after-tax contributions are taxed as income today. Upon withdrawal, contributed amounts are tax-free, but earnings are taxed at ordinary income rates.
The 401(k) plan offers both active and passive investment options. Active investment managers attempt to time the market in hopes of achieving superior returns, compared with passive investment managers, who believe in efficient markets and aim to capture the market’s return.
It’s essential to consider your risk tolerance since you want to ensure you have an investment mix that you are comfortable with and that aligns with your specific goals.
At the onset of retirement, a 401(k) rollover to an IRA is a common theme. An IRA generally allows for increased investment options, increased access to investment guidance and advice, and even account consolidation, if eligible.
However, keep in mind the 10% early withdrawal penalty if retiring before age 59.5. If you plan to retire before reaching 59.5, you might think twice about rolling your 401(k) to an IRA, as any withdrawals prior will incur this penalty.
Instead, if early retirement is a goal, you may leave want to leave your 401(k) with Raytheon until you reach age 59.5. This will help you circumvent the 10% early withdrawal penalty.
Final Retirement Considerations
When looking at your benefit options, you should ask yourself questions such as:
What do I envision my retirement looking like?
Do I have a plan for my pension and 401(k)?
How do I efficiently use the benefits I’ve accumulated over my life?
These are just a few of the many questions that are likely circling in your mind. It is vital to view your financial situation as a whole to answer these questions.
Navigating all your retirement plan benefits can be intimidating and leave you with questions, such as “How do I live my best life today while ensuring everything down the road is planned and provided for?” Our Greenwood Village, CO fiduciary financial planning firm has years of experience helping Raytheon employees navigate their benefit offering and plan for their new life ahead.
You can schedule a complimentary call to discuss your benefits, and be sure to stay tuned for our Raytheon benefits presentation.
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