The Lockheed Martin Retirement is a new program that Lockheed Martin has created to help employees prepare for retirement. Lockheed Martin has been providing life insurance and healthcare benefits for its employees since 1912. They want to continue this tradition in the future with Lockheed Martin Retirement.
Lockheed Martin Retirement is an innovative approach to retirement savings that can provide you with peace of mind and security when it comes time for your retirement years.
What is Considered Normal Retirement Age for a Lockheed Martin Employee?
With social security, you can get benefits early or late. You will get money when you retire. If you want to get benefits early, you might not get as much money when you retire because it starts when you are older than if you waited until your normal retirement age. Your Social Security benefit is not reduced or increased if you take it at normal retirement age.
You don’t need to worry about math because the statement will list the expected amount of money that you will get. Find out what happens if you take Social Security at an age other than when you are supposed to. You can do this by reading some of our posts. The normal retirement age varies, but it’s usually 66 and some months old.
Defined Contribution Plan, Defined Benefit Plan. Let’s Define Both!
You may have heard these words when it comes to retirement plans. The difference is that one gives you a set amount of money, and the other pays you based on how long you worked for them. If an employee has been working at Lockheed Martin longer than they were hired, they may be exposed to both.
Due to the higher administration costs, defined benefit plans are becoming less common. There are fewer of them now. Though some types of organizations, such as government jobs and educational institutions, still have such plans, they’re not completely irrelevant. While both are great retirement plans in their own right, we’ll explore the differences between them.
Defined Contribution Plan
- Money from a 401K is usually taxed as ordinary income dollars when withdrawn unless you choose the Roth option.
- The most common type is a 401(k)
- Lower administrative costs for an employer
- The employee is responsible for investment selection
- Contributions are deducted from employee’s pay
- Employer matching is sometimes available
- Individual account per employee
- More common than defined benefit plans
- Required minimum distributions beginning at age 72
Defined Benefit Plan
- Required minimum distributions beginning at age 72
- Typically taxed as ordinary income when withdrawn
- The employee is not responsible for investment selection
- The employee is usually not required to make a contribution
- The most common type is a pension
- Less common than defined contribution plans
- The benefit is based on a formula that considers how long you have worked at the company.
- Tends to offer survivorship options
- Higher administrative costs for the employer
Planning for retirement is hard. A plan where you pay money each month and then get a set amount of money every month is one way to plan for retirement. You may also want to do a plan where you get a set amount of money every month based on the work that you have done during your entire life.
You do not need to be worried anymore because you now know the difference between a constructive contribution plan and a defined benefit plan. Now they can help you with your retirement journey, no matter what type of plan you have. They have an encounter with a lot of different retirement plans, and we’re ready to help.
What are the Pros and Cons of Defined Benefit Plans?
If you worked at Lockheed Martin and were eligible before January 2016, you are one of the few lucky employees to participate in their pension plan. A pension plan is a type of defined-benefit plan that isn’t as popular because it has many costs, and the employee bears the risk for investments. But it is important that you know how much this means for your future.
- If a plan is insured, the Pension Benefit Guaranty Company will protect a lot of the money that people have earned.
- May offer cost of living adjustments
- Tax-deferred savings
- Assets are managed by professional money managers
- This means that the laborer does not have to put any money into the 401k plan, so there is no risk for them.
- The retirement benefit amount is known in advance
- Survivor options available
- Some plans don’t allow lump-sum payments
- Benefits usually not payable until the normal retirement age
- Typically won’t benefit an employee that leaves employment prior to retirement
- The employee has no control of investments
- A person who fails to have a job might work less. A person with a job can work more.
- More costly to administer for the employer
Taking Full Advantage of Lockheed Martin’s 401(k)
What if they told you there was a way to get free money? You can receive free money through Lockheed Martin’s 401(k) plan. Lucky for you, the company has plenty of it! If you know the rules and how to take advantage of them, the company will give you as much as possible. Below are points and tricks that will help you get the most out of your insurance. Follow these, and you’ll have an easier time.
- What’s Old: Your employer matches 50% of the first 8% that you contribute to your retirement. This means that if you contribute the full amount, then Lockheed will also contribute 4%. This is a total combined contribution of 12%.
- What’s New: Lockheed Martin is a good employer because it added 6% to the retirement account for its employees. This is more than before when they only had 2%.
- Unique to Lockheed: Lockheed Martin has a plan in which you can contribute up to 40% of your base pay. There is the highest amount of money that can be put into a profit-sharing plan. The maximum contribution amount for a profit-sharing plan is either 100% of your income or $57,000 ($63,500 with over 50 catch-ups). Companies’ limits for salary deferral are usually $26,000. But Lockheed allows more. If you can contribute this extra amount to your retirement savings, you will be able to grow it quicker (and retire sooner)!
- Maximum Benefit: The 401(k) that Lockheed provides is a good way to save money. If you contribute 8% of your salary, the company will also provide 10%. That’s more than 3% of what most employers give. If you do it, then your account will have more time to grow.
Now that you know how great Lockheed Martin’s matching program is, you can take advantage of it to make your retirement earnings even higher.
Importance of Beneficiaries on your Lockheed 401(k)
Naming and reviewing beneficiaries on your retirement plan is important. You should know who will get it when you die. Many people think that their will is enough to make sure they have power over what happens to their money after they die. But it may not always be true. So, it is important to review the people who will get your money and make changes as needed.
When you first go to the Savings Plan Participant website, you need to list a beneficiary. You can do this by proceeding to the Account Information section. Lockheed has a plan set up so that if you are married, your spouse is the primary beneficiary. If you want to select someone else as the primary beneficiary, you can do that too. Your spouse must write down in a form that they are giving up their right to be the main beneficiary of your life insurance.
You can list up to five people you want to get your money. You can list them by the percentage that they will get. They will get that percentage of your money when you die. If you die and there is no beneficiary, your money will go to your spouse if you’re married. If you’re unmarried, it will go to your estate.
You can have your beneficiaries specifically designated when you die. First, this means that you will be able to direct the money to the people you want. Second, probate will not happen because the assets will go directly to your named beneficiary. The third is the ability to withdraw funds over a longer period of time. This means that you can have your money and funds that are invested and grow tax-deferred or tax-free. The contentment that you get is the most valuable advantage of all.
Now that you know the Importance of Beneficiaries on your 401(K) from Lockheed, you should take a few moments to log into LM People and see who is listed as a beneficiary. Don’t forget to review the people you want to get your money from your other retirement accounts, annuities, and life insurance policies.
IRA Contribution and Deduction Limits
By now, you may have apprehended about an IRA. It is a great way to save money for the future. But there are limits on these IRAs. Having a 401(k) at Lockheed Martin is a good way to save money. But an IRA also provides:
- More funds diversification.
- More control and flexibility.
- Access to investment managers not currently in the 401(k).
There are two ways to fund an IRA. You can either take a 401(k) from your job and put it in an IRA, or you can make contributions. Taking a 401(k) from your job is usually a good idea after you reach the in-service eligibility age for your company or once you retire. You can keep control of your retirement funds. This means you can do what you want with them. You will be able to make contributions to the IRAs. Some rules apply to IRAs. Let’s talk about a few of them now.
- If under age 50: $6,000 per year
- If age 50 or older: $7,000 per year
- Adjusted gross income is not a factor
Some of the money you spend on your house can be deducted. But there are limits to the amount. They are different for every person.
- Fully deductible: If your income is $104,000 or less, then you qualify for this.
- Partially deductible: The modified adjusted gross income is between $104,000 and $124,000.
- Not deductible: If you make $124,000 or more, then you can get a mortgage.
You can always put money in a retirement account, even if you make too much money. But it may not be deductible. If you want to appease your 401(k) into an IRA or have an IRA in addition to your Lockheed Martin 401(k), you should talk with a retirement specialist from Lockheed Martin. If you are getting prepared to retire or want to plan ahead, come to your retirement planning workshops. They help people like you!
Steps to Choosing Your Lockheed Pension Survivor Benefit
Facing your Own Mortality
Facing your own death is not easy. It’s something that we all must perpetrate eventually. We all have an end date to our lives, but there is nothing that you can do about it. You don’t know when you will die. It is best to find out how old your parents, grandparents, etc. were when they died and then add in your current state of health.
People who are 65 years old in the United States can expect to live another 19 years and six months, on average. Since many people have medical advancements, they might live for a long time. This means you need to think about how long you are going to live.
Assessing your Current Assets
Your pension may not be enough to cover your needs during retirement, so you might need to save up money and buy things (e.g., a house) that can make it worth living. Do you have sufficient money saved up to live without working? If not, then you need to save some more. You can estimate how much by using two rules of thumb.
- Multiply by 252 – If you want to have a certain amount of money in your retirement portfolio, you will need to multiply that number by 25. In this example, if you want to withdraw $40K from your retirement account per year, then you would need at least $1M in the account.($40,000 x 25 equals $1 million.)
- 4% Rule2 – aThe investment must earn at least 4% per year. You can withdraw this amount of money each year without dipping it into your principal, but it will be less than the amount you would have if you withdrew more. If you have $1,000 000 in your portfolio when you retire, then you can take out $40 000 in the first year. Then every year after that, you should take out more money because it will be worthless.
Knowing your Options
It is important to know what your pension survivor benefit options are. Your personalized website inside Lockheed’s LM People will allow you to estimate your pension benefits and see the variety of options available for your survivor benefit. Follow this path to get there: LM People > Pay and Benefits > LM Employee Service Center. Once you are inside, make a report. There are four reports: Single Life Only, 100% survivor, 75% survivor, and 50% survivor.
- Single Life Only – This is the amount you would receive for your life, and your pension would end when you die. If you want to give a bit of money to your spouse, then this might not be the best option.
- 100% Survivor – This is how much you will receive for your whole life, and after you die, if your spouse lives longer than you, they will get the same amount of money until he or she dies. This is the lowest pension benefit available. But it also gives your spouse the most money every month.
- 75% Survivor – If you, the retiree, live for a long time and your spouse lives too, then he or she will get 75% of your pension payment. If you die before him or her, then he or she will not get the pension payment.
- 50% Survivor – This is the amount that you, the retiree, would get each year. When your spouse dies, then he or she would also get 50% of your pension payment until they die too.
Once you have gathered your survivor benefit options, figured out how much money you will need, and found out how long you are going to live, it is time to pick the best option for you. At least you have completed the first three steps.
How your Lockheed Martin Pension Benefit is Calculated
Figures used for the calculation:
- Final average pay: The average of the top three years of your last ten years on the job.
- Social Security breakpoint: Figure out the average maximum wage base of Social Security. This can change every year, so you will need to find out what it is this year.
- Accrual rate: Use your final pay to calculate how much money you will get when you retire.
- Credited service: Years you were an employee of Lockheed Martin.
- 25% X Final average pay up to Social Security breakpoint X Credited service up to 35 years
- 5% x Final average pay in excess of Social Security breakpoint X Credited service up to 35 years
- 5% x Final average pay X Credit service over 35 years
- Pension benefit
The formula helps people understand how to calculate their Lockheed pension benefits and the factors that are involved. There is no need to agonize about calculating this yourself. When you get your benefits information, you will receive an estimate for how much money you will get from the pension. It will tell you how much money comes from each option if someone dies.
You should read the summary plan description to be sure you know how this calculation works. If you would like an analysis of your pension benefits, speak with us.
How Much Should I Spend in Retirement?
Figuring out the amount you will be able to spend when you retire can be just as hard as calculating how much money you need to save for retirement. Too much money spent, you will run out of money sooner. Too little spent, you will not enjoy your final years to their full potential. They are here to help you not worry so much. They want to offer you an idea of how much is a good number for withdrawal rates.
You will need to take money out of your 401(k) or your pension with Lockheed Martin when you retire, especially if you want to buy something like a house. To figure out how much money you can take each year after retirement, add up the value of all your investments and multiply by 4%. This number can change. It can change every year with inflation.
The 4% rule is a method that is quick and easy. It may not work for everyone, but it will give you a usual estimate. Some people need more money than others. Some people are more risk-averse than others. The most appropriate amount of money for you to withdraw each year may be different than the most appropriate amount of money for someone else. To get a more accurate estimate of your retirement, talk to Lockheed Retirement Specialists!
Lockheed Martin is making significant changes to its retirement program to provide more savings for employees. Lockheed Martin recently announced an enhanced retirement program, providing more savings through a defined contribution plan for eligible employees.
This enhancement is designed to help increase take-home pay, minimize out-of-pocket costs, and ensure that eligible participants are able to save at least ten times what they would have under the old system.