By Marnina Delahanty
The latest bad pension news shows, yet again, how crucial it is that we take charge of our retirement planning as independent individuals. Not even historical business anchors such as General Electric can be taken for granted to do so for us. Increasingly, well-diversified portfolios include non-traditional funding, such as life insurance. Are you prepared?
GE announced it is freezing an estimated 20,000 salaried American workers’ pension plans, according to The Wall Street Journal. The company plans to offer pension buyouts to a further 100,000 former employees who have yet to start taking monthly pension payments. Furthermore, GE will freeze the plans of an estimated 700 employees who hold supplemental pensions. These primarily target executives. Since 2012, their pension plan has not accepted new entrants. The changes will not affect retirees’ pensions already in distribution status, the company assured retired workers.
“Returning GE to a position of strength has required us to make several difficult decisions, and today’s decission to freeze the pension is no exception,” Chief Human Resources Officer, Kevin Cox told MarketWatch. “We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees.”
A Common Trend
By phasing out guaranteed retirement, the conglomerate joins the vast majority of U.S. manufacturers. Underfunded by $27 billion at the end of 2018, GE’s pension deficit could be reduced $8 billion through these cuts. The remaining $19 billion gap suggests more changes are necessary.
Heed the Warning
Increasingly, we as individuals must take charge of our own retirement planning. Diversifying our portfolios can include untapped options such as retirement-funding life insurance. For those who prove eligible, advantages over IRAs and 401Ks include unlimited contributions, no maximum income, and early borrowing options without tax penalties. As with Roth IRAs, contributions are made on a post-tax basis. Plans can be structured such that retirees receive principal and cash value growth UNTAXED.
To partner with a broker who will help you achieve your retirement goals, contact Asurea.