2024 Tax Changes and Inflation

It is imperative for individuals to be aware of new changes made by the IRS. The following will be the primary elements affecting employees:

The standard deduction for 2024 will rise to $21,900 for heads of household, $29,200 for joint filers, and $14,600 for single taxpayers and married filers filing separately.

Individuals who are blind or over 65 can increase their standard deduction by an extra $1,550. If you are not a surviving spouse or are not married, that amount increases to $1,950.

Contributions to retirement accounts: You can lower your tax liability by making contributions to your employer's 401(k) plan, and the maximum amount you can save has been raised for 2024. In 2024, the maximum contribution amount that people can make to their 401(k) plans will rise to $23,000, from $22,500 in 2023. For workers who are 50 years of age or older, the maximum catch-up contribution will rise to $7,500.

You should be aware of the following significant changes to the Earned Income Tax Credit (EITC) if you are a taxpayer who works for a corporation:

For qualifying taxpayers with three or more qualifying children, the maximum Earned Income Tax Credit amount for tax year 2024 is $7,830, up from $7,430 for tax year 2023.
Those who are married and file separately may be eligible: If you fulfill certain requirements, you may be eligible to claim the EITC as a married filing separately. This was not accessible the year before.

Cash charitable contribution deduction: The special deduction that let individuals who are not itemizers to claim a deduction of up to $300 (or $600 for married couples filing jointly) for cash gifts to approved charities has ended.

Changes to the Child Tax Credit

• For children aged five and under, the maximum tax credit is $2,000; for children aged six to seventeen, it is $3,000 per qualified child. Furthermore, unlike in 2023, you are not eligible to get a portion of the credit in advance.
• If your adjusted gross income is less than $200,000 if you're filing singly or less than $400,000 if you're filing a joint return with a spouse, you qualify for the Child Tax Credit as a parent or guardian.
• A partial refundability of 70% that applies to people whose tax liability is less than the credit amount.

 

2024 Tax Brackets

 

Over time, inflation diminishes buying power because rising prices result in a basket of products becoming more expensive. You will need to account for increasing costs in your plan if you want to keep your retirement quality of living the same when you leave your business. Although the Federal Reserve aims to maintain annual inflation of 2%, in 2023 that rate skyrocketed to 4.9%, a sharp rise from 1.4% in 2020. Even though costs have increased significantly overall, there are certain areas, like healthcare, to be mindful of if you are close to or already retired from your employer.All of these elements must be taken into account when creating a comprehensive retirement plan from your employer.

*Source: Forbes, Bankrate, Yahoo, IRS.gov

Recent Layoff Announcements & Other Lockheed Martin News

Operational Efficiency: In an effort to cut expenses and increase efficiency, Lockheed Martin is restructuring its workforce, which will result in the layoff of about 1,000 workers (Source: Reuters). Strategic Priorities: The company's primary areas of concentration are aerospace and military. Financial Performance: Lockheed Martin reported a 5% increase in net sales for the third quarter of 2023, despite these changes, primarily due to robust demand for its defense goods (Source: Lockheed Martin).

 

Blogs You May Enjoy:

Planning Your Lockheed Martin Retirement

Whether you're twenty or sixty, you need to take regular action when it comes to retirement preparation.
The majority of Americans actually have no idea how much money they will need in terms of savings or income.
Regardless of your age or where you are in the planning process, we hope this guide will give you a solid overview of the actions you need to do in order to streamline your retirement transfer from your employer and maximize your benefits.

You are aware that investing and saving are important, especially since time is on your side if you get started early. However, you lack the knowledge or experience to determine whether you are saving enough for retirement even after you leave your job.

"A separate study by Russell Investments, a large money management firm, came to a similar conclusion . Russell estimates a good financial advisor can increase investor returns by 3.75 percent."

Source: Is it Worth the Money to Hire a Financial Advisor?, the balance, 202

Starting to save as early as possible matters. Time on your side means compounding can have significant impacts on your future savings. And, once you’ve started, continuing to increase and maximize your contributions for your 401(k) plan is key.

As the decades pass, your career is probably well underway, and your income most likely reflects that. But paying a mortgage, raising kids, and saving for college can make it difficult to save for retirement.

One of the most common planning conundrums is deciding between college or retirement savings. Financial planners will typically advise you that saving for retirement should take precedence over anything else, as you will be responsible for funding your retirement while your child will typically receive financial assistance.

Your particular financial circumstances and aspirations will always determine how much we advise you to invest for your retirement. Nonetheless, during your 30s and 40s, think about setting aside at least 10% of your income for retirement funds.

When you reach your 50s and 60s, you should be at the height of your earning potential and have some of your biggest expenses—like a mortgage or raising children—behind you or shortly in the rearview mirror. Now could be a good time to see whether you can increase your retirement savings target to 20% or higher of your income. This may be the last chance that many individuals have to put money down.

Employees who are 50 years of age or older in 2024 have the option to contribute up to $23,000 to their 401(k) or retirement plan. After they reach this cap, they can make additional $7,500 in catch-up payments, for a total annual contribution cap of $30,500. Every year, these caps are revised to account for inflation.

If you’re over 50, you may be eligible to use a catch-up contribution within your IRA.

Why are 401(k)s and matching contributions so popular?

These retirement savings vehicles give you the chance to take advantage of three main benefits:

1. Compound growth opportunities (as seen above)

2. Tax saving opportunities

3. Matching contributions

Matching contributions are just what they sound like: your employer (in this case, Lockheed Martin) matches your own 401(k) contributions with money that comes from the company. If Lockheed Martin matches, the company money typically matches up to a certain percent of the amount you put in.

Unfortunately, many people don’t take full advantage of the employer match because they’re not putting in enough themselves.

According to a 2022 Principal Financial Group study, 62% of employees said that their employer's 401(k) contributions were very crucial to achieving their retirement objectives.

As per the "2022 Financial Life Benefit Impact Report" published by Bank of America, out of the eligible employees who participated in a 401(k) plan, 58% of them contributed less than $5,000 in the current year.

Less than one in ten participants' contributions, as allowed by IRS Section 402(g) and set at $23,000 for 2024, were determined to have exceeded this ceiling.

According to a Financial Engines report published in 2020, "Missing Out: How Much Employer 401(k) Matching Contributions Do Employees Leave on the Table?", workers who don't take full advantage of their employer match usually leave $1,336 in additional retirement savings on the table annually.

You aren't receiving the entire business match, for instance, if your employer will match up to 3% of your plan contributions and you only contribute 2% of your salary. Your firm is now matching the whole 3% of your contributions, for a total combined contribution of 6%, just by increasing your contribution by 1%. You aren't throwing money away by doing this.

Employees in the Salaried Pension Plan

 

 

Qualifications

• Employees who met the eligibility requirements for the previous pension plans and were employed before January 1, 2006, are eligible for the new program.
• After January 1, 2006, new hires are not qualified for the defined benefit pension plan.
• The LMCO Capital Accumulation Plan, a defined contribution plan, is open to new workers.
• An employee of LMCO who left the company prior to 2006 and was then hired again after that year is not eligible to re-join the pension plan.
• A salaried Lockheed Martin employee is what is considered an employee; consultants, contractors, and hired workers do not meet this requirement.

Vesting

• When an employee vests, it indicates that they have acquired an irreversible pension benefit right.
• After five years of vesting service or upon attaining age sixty-five, the employee is completely vested.
• Each month when a full-time employee completes an hour of work, they will be recognized with 190 hours of vesting service.
• The real amount of hours worked will be credited to a part-time worker.
• Every year an employee completes at least 1000 hours of qualifying service, they are credited with one year of vesting service.
• The employee will receive credit on a pro-rated basis out of 1000 hours if they work fewer than 1000 hours in a year (4).
  
  

 

Assumptions:

• Hired: Sept. 1st, 2005
• Worked continuously until July 31st, 2012 (4)

Pension Formula Components

Final Average Pay

• Calculated using the average of the employee's three largest years of pay, over the last ten years

Here is an example of how Final Average Pay is calculated. This example is only for depiction purposes, individual situations will vary. (4)

Social Security Breakpoint

• Based on Social Security Breakpoint chart (calculated using date of birth) (See Appendix Graph #1)

Credited Service

• 1 year of credited service for any year in which the employee works at least 2,080 hours.
  
• If employee worked less than 2,080 hours, receives pro-rated credit based on 2,080 hours(4).
  
  
• Assumptions:
  • Hired: Sept. 1st, 2005
  • Worked continuously until July 31st, 2012 (4)
• 

Early Retirement

• Normal retirement is at age 65, or 55 and above with 5 years of vested service
• If an employee is vested and he retires at age 60 or above – there is no reduction from his monthly pension (4)
• If an employee is vested and wishes to retire before age 60, his monthly pension will be reduced by the amounts in the following chart: (See Appendix Graph #2)
  
  

Early Death

• If the employee dies before retirement, their spouse is able to receive benefits if they were vested
  • Payments will begin at the earlier of these two situations (whichever comes first):
    • One month after death if spouse was over 55
    • Retiree’s 55th birthday  
• If the employee dies after retirement their spouse may receive benefits if one of the following methods of payment were chosen
  • Joint and Survivor Annuity (50%,75%,100%)
  • 5 Year or 10 Year Guarantee (4)

 

Pension Formula

 

Pension Estimator Detail

1. An extensive pension calculator tool is accessible via the intranet of the LM Employee Service Center for a large number of employees. You can test alternative claims options and simulate different commencement dates using this tool. The calculation of your LM pension is broken down as follows:
2. Identify "Final Average Pay (FAP)." This entails taking the average of your three highest yearly salary values prior to 2016 for the majority of employees.
3. Determine the "Credited Years of Service (CYS)" for yourself. This is calculated for the majority of current employees by using the time difference between your start date and the complete freeze date of the pension, which is December 31, 2019.
4. Take out your "Social Security Covered Compensation (SSCC)" from a table that the government has supplied; this is an important component of the pension calculation.
5. Determine the "Benefit per Year of Service." The calculation is simple to use if your FAP is less than your SSCC: FAP * 0.0125. Use this calculation, though, if your FAP is higher than your SSCC: (SSCC * 0.0125) + ((FAP – SSCC) * 0.015).
6. Calculate your "Monthly Accrued Benefit" by dividing your "Credited Years of Service" (CYS) by your "Benefit per Year of Service" (the outcome from Step 4) and then dividing by 12. It should be noted that workers who begin receiving benefits before the age of 60 may be subject to an Early Retirement Penalty, while those with CYS values higher than 35 may earn somewhat higher payments.
7. Determine your "Monthly Pension Benefit from Lockheed Martin." Your pension may be subject to an early retirement penalty based on your age at retirement and the age at which pension benefits begin. If this is the case, reduce your "Monthly Accrued Benefit" by the relevant Reduction Factor by consulting the tables supplied.

 

Putting it all Together

Assumptions:

• Final average pay: $70,000

• Age: 65
• Year born: 1947
• 40 years of credited service
• Social Security Breakpoint: $67,200

 

Assumptions:

• Final average pay: $80,000
• Age: 65
• Year born: 1947
• 30 years of credited service
• Social Security Breakpoint: $67,200

 

Payment Options

One of the most crucial aspects of preparing for your retirement at Lockheed Martin is considering what to do with your pension. What is the appropriate way and time to take the lump sum or annuity? For you and your family, what is best?

You should regularly simulate your pension benefit in retirement and the pension payment alternatives that will be available to you using the tools and resources provided on The Retirement Group's e-book Library, such as the Retirementkit.

You can also call The Retirement Group at (800)-900-5867 to speak with an advisor specializing in Lockheed Martin. We will arrange for you to speak with a Lockheed Martin-focused advisor who will assist you in beginning the retirement process and explain your payment.

Life Insurance
Guaranteed monthly payments (spouse gets nothing) till death
50%, 75%, 100% Joint and Survivor Annuity
Get reduced monthly benefits; spouse gets 50–100% of benefits upon death

Income Level to 65 or 62 Years Old
Prior to the age of 65 or 62, as you choose, receive larger payments; after that, receive lower payments that are leveled out by Social Security benefits.

Ten or five years of guarantee
Get lesser monthly payments for the remainder of the selected time period upon early death; in the event of an early death, payments will be provided to a beneficiary.

Total Amount

• Only individuals whose benefits are less than $5,000 are eligible for the lump payment (compelled to take the lump money).

This illustration compares the various payment options, based on the assumption that the monthly annuity for a single life is $2,000.Individual outcomes may differ; this example is merely intended to serve as an illustration.

*Payable during guarantee period only

 

Lump-Sum vs. Annuity

When a retiree is qualified for a pension, they are frequently given the option of receiving a lump sum payment all at once or pension payments for the rest of their lives. The lump sum is the equivalent present value of the monthly pension income stream – with the idea that you could then take the money (rolling it over to an IRA), invest it, and generate your own cash flow by taking systematic withdrawals throughout your retirement years.

One advantage of choosing the monthly pension option is that the payments are assured to last a lifetime (well, as long as the pension plan stays solvent and stays in operation). Thus, whether you live 10, 20, 30, or more years after retiring  from your company, you don’t have to worry about the risk of outliving the monthly pension.

The principal disadvantages of the monthly pension are the early and premature deaths of the joint annuitant and retiree. This often translates into a reduction in the benefit or the pension ending altogether upon the passing. The other downside, it that, unlike Social Security, company pensions rarely contain a COLA (Cost of Living Allowance).  As a result, with the dollar amount of monthly pension remaining the same throughout retirement, it will lose purchasing power when the rate of inflation increases. 

In contrast, selecting the lump-sum gives you the potential to invest, earn more growth, and potentially generate even greater retirement cash flow. Additionally, if something happens to you, any unused account balance will be available to a surviving spouse or heirs. However, if you fail to invest the funds for sufficient growth, there’s a danger that the money could run out altogether and you may regret not having held onto the pension’s “income for life” guarantee. 

Ultimately, the “risk” assessment that should be done to determine whether or not you should take the lump sum or the guaranteed lifetime payments that your company pension offers, depends on what kind of return must be generated on that lump-sum to replicate the payments of the annuity. After all, if it would only take a return of 1% to 2% on that lump-sum to create the same monthly pension cash flow stream, there is less risk that you will outlive the lump-sum. However, if the pension payments can only be replaced with a higher and much riskier rate of return, there is, in turn, a greater risk those returns won’t manifest and you could run out of money.

 

Interest Rates and Life Expectancy

The amount that defined benefit pension plans pay out in lump sums depends on both your life expectancy at retirement and current interest rates.

Rising interest rates have an inverse relationship to pension lump sum values.  The reverse is also true; decreasing or lower interest rates will increase pension lump sum values. Interest rates are important for determining your lump sum option within the pension plan.

The Retirement Group believes all employees should obtain a detailed RetireKit Cash Flow Analysis comparing their lump sum value versus the monthly annuity distribution options, before making their pension elections.

Even in a situation where interest rates are high, a monthly annuity covering all or part of the pension may still be a more alluring option than a lump sum payment.

A free Cash Flow Analysis from The Retirement Group will show you how your pension options stack up and play out over the course of your retirement years, which could be two, three, four, or more decades in retirement. Every person's circumstances are unique.

 

By knowing where you stand, you can make a more prudent decision regarding the optimal time to retire, and which pension distribution option meets your needs the best.

 

 

Your Lockheed Martin 401(k) Plan

401(k) Savings Plan

Workers are urged to sign up for a 401(k) savings plan as soon as possible. You have the option to invest before taxes and/or after taxes (regular or Roth), and you can select from a wide range of investment options with varied risk profiles. Additionally, pre-tax and Roth contributions from other qualified plans may be carried over.

Vesting

You immediately vest in the company match as a participant.

Furthermore, you might be qualified to roll over a dividend from a former employer's qualifying plan into the Savings Plan if you have an account in that plan.

Note: Regardless of your donations, the company still contributes 6%. Furthermore, you will receive a corporate match equal to 4% of your pay if you contribute 8% of your pay.

When you retire, if you have balances in your 401(k) plan, you will receive a Participant Distribution Notice in the mail. This notice will show the current value that you are eligible to receive from each plan and explain your distribution options. It will also tell you what you need to do to receive your final distribution. Please call The Retirement Group at (800)-900-5867 for more information and we can get you in front of a retirement-focused advisor.

Next Step:

• Watch for your Participant Distribution Notice and Special Tax Notice Regarding Plan Payments. These notices will help explain your options and what the federal tax implications may be for your vested account balance.
• "What has Worked in Investing" & "8 Tenets when picking a Mutual Fund".
• To learn about your distribution options, call The Retirement Group at (800)-900-5867. Click our e-book for more information on "Rollover Strategies for 401(k)s". Use the Online Beneficiary Designation to make updates to your beneficiary designations, if needed.
  

Note: If you voluntarily terminate your employment from your company, you may not be eligible to receive the annual contribution.

 

Lockheed Martin Retirement Savings Plan 

The company contributes up to 10% of your salary for retirement (effective 1/1/2020).

* Company matches 50% on the first 8% that you contribute, up to a maximum match of 4%

* Company contributes 6% of your base pay regardless of your contributions.

 

 

More than 50% of plan participants acknowledge that they lack the necessary time, interest, or knowledge to effectively manage their 401(k) investments. However, seeking assistance has advantages that go beyond practicality. Research such as this one from Charles Schwab demonstrates that plan members who receive assistance with their investments typically have more successful portfolios: Net of fees, the annual performance difference between the recipients and non-recipients is 3.32%. This implies that by contacting an advisor, a participant who is 45 years old could see a 79% increase in wealth by the time they are 65. That’s a pretty big difference.

Getting help can be the key to better results across the 401(k) board.

A Charles Schwab study found several positive outcomes common to those using independent professional advice. They include:

• Improved savings rates – 70% of participants who used 401(k) advice increased their contributions.
• Increased diversification – Participants who managed their own portfolios invested in an average of just under four asset classes, while participants in advice-based portfolios invested in a minimum of eight asset classes.
• Increased likelihood of staying the course – Receiving advice improved the likelihood that participants would stick to their investment goals, reducing their reactivity in volatile market conditions and increasing the likelihood that they would stick with their initial 401(k) investments during a downturn. Don’t try to do it alone. Get help with your company's 401(k) plan investments. Your nest egg will thank you.

In-Service Withdrawals

Generally speaking, you can withdraw amounts from your account while still employed under the circumstances described below.

It’s important to know that certain withdrawals are subject to regular federal income tax and, if you’re under age 59½, you may also be subject to an additional 10% penalty tax. You can determine if you’re eligible for a withdrawal, and request one, online or by calling the Lockheed Martin Benefits Center.

Rolling Over Your 401(k)

As long as the plan participant is younger than age 72, an in-service distribution can be rolled over to an IRA. A direct rollover would avoid the 10% early withdrawal penalty as well as the mandatory 20% tax withholding. Your plan summary outlines more information and possible restrictions on rollovers and withdrawals.

Because a withdrawal permanently reduces your retirement savings and is subject to tax, you should always consider taking a loan from the plan instead of a withdrawal to meet your financial needs. Unlike withdrawals, loans must be repaid, and are not taxable (unless you fail to repay them). In some cases, as with hardship withdrawals, you are not allowed to make a withdrawal unless you have also taken out the maximum available plan loan.

You should also know that the plan administrator reserves the right to modify the rules regarding withdrawals at any time, and may further restrict or limit the availability of withdrawals for administrative or other reasons. All plan participants will be advised of any such restrictions, and they apply equally to all employees.

Borrowing from your 401(k)

Should you? Maybe you lose your job, have a serious health emergency, or face some other reason that you need a lot of cash. Banks make you jump through too many hoops for a personal loan, credit cards charge too much interest, and … suddenly, you start looking at your 401(k) account and doing some quick calculations about pushing your retirement off a few years to make up for taking some money out.

We understand how you feel: It’s your money, and you need it now. But, take a second to see how this could adversely affect your retirement plans.

Consider these facts when deciding if you should borrow from your 401(k). You could:

Lose growth potential on the money you borrowed.
Deal with repayment and tax issues if you leave your employer.
Repayment and tax issues, if you leave your employer.

Net Unrealized Appreciation (NUA)

When you qualify for a distribution, you have three options:

• Roll-over your qualified plan to an IRA and continue deferring taxes.
• Take a distribution and pay ordinary income tax on the full amount.
• Take advantage of NUA and reap the benefits of a more favorable tax structure on gains.

 

How does one calculate net realized appreciation?

An employee must first be qualified to receive benefits from a qualifying company-sponsored plan. The employee often accepts a "lump-sum" payout from the plan, disbursing all assets over the course of a year, upon retirement or reaching age 59 1⁄2. You can roll over the mutual fund and other investment portion of the plan into an IRA to further avoid taxes. After that, the highly valued firm stock is moved to an account that isn't for retirement.

When you move business shares from a tax-deferred account to a taxable account, you will receive a tax benefit. You currently apply NUA and are liable for ordinary income tax on the stock's cost base alone. The stock's increased value over its base is taxed at the lower long-term capital gains rate, which is now 15%, rather than the higher regular income tax. This could result in savings of more than 30%.

Would you be interested in speaking with a financial advisor from The Retirement Group one-on-one for a complimentary one-on-one session to learn more about NUA?

IRA Removal

IRAs, 401(k)s, taxable accounts, and other retirement funds may be among your assets under Lockheed Martin.

How therefore should you use your retirement income to maximize efficiency?

Instead of first taking money out of tax-deferred funds, you might want to think about using taxable accounts to cover your income needs in retirement. Your retirement funds may last longer as a result of this since they might grow tax-deferred.

It is also necessary to schedule the required minimum distributions (RMDs) from traditional or rollover IRA accounts, as well as from any employer-sponsored retirement plans.

This is because the IRS will be requiring, starting in 2020, that you start taking withdrawals from these kinds of accounts when you turn 72. The IRS may impose a 50% penalty on the amount you should have taken if you don't.

A new law permits anyone who turned 70½ before the end of 2019 to begin taking their RMDs on April 1 of the following year, when they turn 72.

Your IRA has two options for flexible distribution.

You have a few options when it comes to using your IRA to make money or to collect your required minimum distributions. Whichever option you select, IRA distributions are taxable on your income and, if you're under59½, may also be subject to penalties and other requirements.

Partial withdrawals: You can take out any quantity from your IRA whenever you want. By the time you turn 72, you will need to withdraw enough money from one or more IRAs to cover your annual required minimum distribution (RMD).

Systematic withdrawal plans: Set up recurring, automated withdrawals from your IRA at the frequency and amount that best suits your needs for retirement income. If your withdrawal plan does not comply with Code Section 72(t) regulations, you may be liable to an early withdrawal penalty of 10% if you are under 59½.

You can establish a systematic withdrawal strategy, ascertain RMD obligations, compute RMDs, and comprehend distribution choices with the assistance of your tax advisor.

Your Lockheed Martin Benefits

HSAs

Health Savings Accounts (HSAs) are frequently praised for helping people with high-deductible health plans manage their medical costs. Beyond only controlling medical costs, HSAs offer advantages over more conventional retirement plans such as 401(k)s. This is especially true if employer matching contributions have been fully utilized.

Recognizing HSAs

Individuals with high-deductible health insurance policies can open tax-advantaged accounts called Health Savings Accounts (HSAs). High-deductible plans are those that have a minimum deductible of $1,600 for single people and $3,200 for families as of 2024, according to the IRS. Triple tax benefits are offered by HSAs, which permit pre-tax contributions, tax-free investment growth, and tax-free withdrawals for approved medical costs.

HSA yearly contribution caps for 2024 are $4,150 for singles and $8,300 for families, plus an extra $1,000 for those 55 years of age and above. HSA funds, in contrast to those in Flexible Spending Accounts (FSAs), accrue and are carried over for an unlimited period of time.

Evaluating HSAs and 401(k)s After Matching

Contributions beyond the employer's maximum match in a 401(k) result in less immediate financial rewards. HSAs can serve as a strategic supplement in this situation. 401(k)s provide tax-deductible contributions and tax-deferred growth, but withdrawals are subject to taxes. In contrast, health savings accounts (HSAs) offer tax-free withdrawals for medical costs, which account for a sizeable amount of retirement spending.

HSA as a Tool for Retirement

The HSA shows its strength as a powerful retirement tool after age 65. The money can be taken out for anything, with the exception of ordinary income tax if it is used for non-medical costs. This flexibility is comparable to that of typical retirement plans, plus it comes with the bonus of tax-free withdrawals for medical bills, which is quite helpful considering the rising cost of healthcare in retirement.

Moreover, unlike Traditional IRAs and 401(k)s, HSAs do not have Required Minimum Distributions (RMDs), giving investors greater flexibility when it comes to retirement tax planning. Because of this, HSAs are especially beneficial for people who wish to reduce their taxable income or who may not need to access their savings right away when they retire.

HSA Investment Strategy

First, you should invest in an HSA cautiously, making sure that there are enough liquid assets to pay for short-term deductibles and other out-of-pocket medical costs. But after a safety net is in place, investing in a diverse range of equities and bonds and managing the HSA like a retirement account can greatly increase the account's long-term growth potential.

Making Use of HSAs in Retirement

HSAs can pay for a variety of retirement-related expenses:

Healthcare Costs Before Medicare: HSAs Can Cover Medical Expenses to Help You Become Enrolled in Medicare Healthcare Costs After Medicare: Medicare premiums and out-of-pocket medical expenses, such as dental and vision care, which are frequently not covered by Medicare, can be paid with HSAs.
Long-term Care: The money can be used to pay insurance premiums and for appropriate long-term care services.
Non-Medical Expenses: HSA funds may be withdrawn for non-medical costs up to the age of 65 without penalty, although income tax is due on these withdrawals.

In summary

In conclusion, after the advantages of 401(k) matching are fully realized, HSAs can be a better option for retirement savings due to their special advantages. Because of their tax benefits and flexibility in using funds, health savings accounts (HSAs) are a crucial part of an all-encompassing retirement plan. People can optimize their retirement financial health and ensure their medical and financial security by carefully controlling their contributions and withdrawals.

Short-Term & Long-Term Disability

Short-Term: Depending on your plan, you may have access to short-term disability (STD) benefits.

Long-Term: Your plan's long-term disability (LTD) benefits are designed to provide you with income if you are absent from work for six consecutive months or longer due to an eligible illness or injury.

What Happens If Your Employment Ends

Your life insurance coverage and any optional coverage you purchase for your spouse/domestic partner and/or children ends on the date your employment ends, unless your employment ends due to disability. If you die within 31 days of your termination date, benefits are paid to your beneficiary for your basic life insurance, as well as any additional life insurance coverage you elected.

Note:

1. You may have the option to convert your life insurance to an individual policy or elect portability on any optional coverage.

2. If you stop paying supplementary contributions, your coverage will end.

3. If you are at least 65 and you pay for supplemental life insurance, you should receive information in the mail from the insurance company that explains your options.

4. Make sure to update your beneficiaries. See the Lockheed Martin SPD for more details.

Beneficiary Designations
As part of your retirement and estate planning, it’s important to name someone to receive the proceeds of your benefits programs in the event of your death. That’s how Lockheed Martin will know whom to send your final compensation and benefits. This can include life insurance payouts and any pension or savings balances you may have.

Next Step:

When you retire, make sure that you update your beneficiaries. Lockheed Martin has an Online Beneficiary Designation form for life events such as death, marriage, divorce, child birth, adoptions, etc.

If you are unsure about Lockheed Martin benefits, schedule a call to speak with one of our Lockheed Martin-focused advisors

Schedule a Call

Social Security & Medicare

Understanding Social Security and filing for benefits can be challenging for many retirees, but knowing the best ways to do so is crucial to budgeting for your retirement income. Social Security benefits should be a component of your overall withdrawal strategy rather than your exclusive source of retirement income.

Gaining an understanding of Social Security's fundamentals and utilizing them to your advantage will enable you to obtain the maximum benefit possible.

When you initially become eligible, it is your obligation to enroll in Medicare parts A and B. You must continue to be enrolled in order to receive coverage for costs that qualify for Medicare. This also holds true for your dependents who qualify for Medicare.

You should be aware of how your Medicare eligibility or retirement medical plan selections affect your available possibilities. Prior to leaving your job, visit ssa.gov, call your local Social Security office, or give the U.S. Social Security Administration a call at 800-772-1213.

They can help determine your eligibility, get you and/or your eligible dependents enrolled in Medicare or provide you with other government program information. For more in-depth information on Social Security, please call us.

Check the status of your Social Security benefits before you retire. Contact the U.S. Social Security Administration, your local Social Security office, or visit ssa.gov.

Are you eligible for Medicare, or will be soon?

If you or your dependents are eligible after you leave Lockheed Martin, Medicare generally becomes the primary coverage for you or any of your dependents as soon as they are eligible for Medicare. This will affect your company-provided medical benefits.

You and your Medicare-eligible dependents must enroll in Medicare Parts A and B when you first become eligible. Medical and MH/SA benefits payable under the Lockheed Martin-sponsored plan will be reduced by the amounts Medicare Parts A and B would have paid whether you actually enroll in them or not.

For details on coordination of benefits, refer to your summary plan description.

If you or your eligible dependent don’t enroll in Medicare Parts A and B, your provider can bill you for the amounts that are not paid by Medicare or your Lockheed Martin-specific medical plan … making your out-of-pocket expenses significantly higher.

According to the Employee Benefit Research Institute (EBRI), Medicare will only cover about 60% of an individual’s medical expenses. This means a 65-year-old couple, with average prescription-drug expenses for their age, will need $259,000 in savings to have a 90% chance of covering their healthcare expenses. A single male will need $124,000 and a single female, thanks to her longer life expectancy, will need $140,000.

Check your plan summary to see if you’re eligible to enroll in Medicare Parts A and B.

If you become Medicare-eligible for reasons other than age, you must contact the Lockheed Martin benefit center about your status. *Source: Lockheed Martin Summary Plan Description

Divorce

For 28% of couples over 50, the ideals of "happily ever after" and "til death do us part" will never come true. Assuming they would retire together, most couples have been saving money for decades together. They have to pay for things like pre- or post-retirement living after a divorce, but they only have half (or less) of their funds left.

Your ex-spouse(s) might be interested in receiving a share of your retirement benefits if you are divorced or in the process of getting divorced. Prior to receiving your pension, you must give Lockheed Martin the following paperwork for any ex spouse who might be interested.

• A copy of any Marital Settlement Agreement (MSA) and the court-filed Judgment of Dissolution or Judgment of Divorce
• Copy of the Qualified Domestic Relations Order (QDRO) that was filed with the court

In order to prevent your pension payout from being suspended or postponed, give Lockheed Martin the documents that they want. Please give us a call to learn more about what to do if your divorce is affecting your retirement benefits.

Regardless of how recent or ancient the divorce is, you must submit this paperwork to your employer's online pension center. *Source: U.S. Department of Labor, 2019; "Generating Income That Will Last Throughout Retirement," The Retirement Group, "Retirement Plans - Benefits and Savings." 2019's Fidelity

Social Security and Separation If any of the following conditions are satisfied, you may apply for a divorced spouse's benefit:

• You are at least sixty-two years old.
• Before being divorced, you were married for a minimum of ten years.
• At the moment, you are single.
• The ex-spouse of yours is eligible for Social Security payments.

The amount of your spousal benefit, which is half of your former spouse's entire benefit amount if they were to claim it at full retirement age (FRA), is greater than your own Social Security benefit. You can apply for your divorced spouse's benefit before your ex-spouse files for Social Security, unlike in the case of a married couple. However, this is only applicable if you have been divorced for a minimum of two years and your ex-spouse is at least 62 years old. Before you can file as a divorced spouse if the divorce occurred less than two years ago, your ex-spouse must already be receiving benefits.

You can apply for your divorced spouse's benefit before your ex-spouse files for Social Security, unlike in the case of a married pair.

Even being divorced does not bar you from receiving survivor benefits. If any of the following apply to you, you may be eligible for the survivor benefit of a divorce:

• Your former partner passed away.
• You are sixty years of age or older.
• Before the divorce, you were married for at least ten years.
• You are unmarried (or you got married again after turning 60).

Are you going through a divorce?

You remain married even if your divorce isn't finalized by the time you retire. There are two choices available to you:

Retire before the divorce is final and choose a minimum 50% joint pension with your spouse, or obtain your spouse's notarized signature consenting to an alternative pension option or lump sum.

Put off retiring until after your divorce is finalized and you have the necessary divorce records.

Source: The Retirement Group, “Retirement Plans - Benefits and Savings,” U.S. Department of Labor, 2019; “Generating Income That Will Last Throughout Retirement,” Fidelity, 2019

Survivor Checklist

In the unfortunate event that you aren’t able to collect your benefits, your survivor will be responsible for taking action.

What your survivor needs to do:

1. Report your death. Your spouse, a family member, or even a friend should call your company’s benefits service center as soon as possible to report your death.

2. Collect life insurance benefits. Your spouse, or other named beneficiary, will need to call Lockheed Martin's benefits service center to collect life insurance benefits.

If you have a joint pension:

1. Make the first payment of the joint pension. It is not automatic to receive a joint pension. To begin receiving joint pension payments, your joint pensioner must fill out and return the paperwork from Lockheed Martin's pension center.

2. Have enough money saved up to pay for living expenses. In order to ensure that your spouse receives their own pension payments at the beginning of the same month as you, they must be prepared with enough savings.

If your survivor has medical coverage through Lockheed Martin:

1. Decide whether to keep medical coverage.

2. If your survivor is enrolled as a dependent in your Lockheed Martin-sponsored retiree medical coverage when you die, he or she needs to decide whether to keep it. Survivors have to pay the full monthly premium.

Life After Lockheed Martin

It might make sense for you financially and emotionally to continue working even though you are ready for some downtime and relaxation away from the demands and routine of your full-time job.

The financial advantages of employment

Make up for lost investment or savings value. It is great for lump sums but more difficult to generate portfolio income due to low interest rates. Some people work longer hours in an attempt to offset the underperformance of their investments and savings.

Maybe you took a company offer and left earlier than you wanted and with less retirement savings than you needed. Instead of drawing down savings, you may decide to work a little longer to pay for extras you’ve always denied yourself in the past.

Meet financial requirements of day-to-day living . Expenses can increase during retirement and working can be a logical and effective solution. You might choose to continue working in order to keep your insurance or other benefits — many employers offer free to low cost health insurance for part-time workers.

Emotional benefits of working

When you thought you would be leaving the workforce, you may find yourself with extremely alluring job opportunities.

Staying active and involved. Retaining employment, even if it’s just part-time, can be a great way to use the skills you’ve worked so hard to build over the years and keep up with friends and colleagues.

Enjoying yourself at work . You are not required to plan your own life according to the retirement age that the government has set for you through the Social Security program. Many people genuinely enjoy their employment and continue working because their jobs enrich their lives.

Lockheed Martin interested in planning their retirement may be interested in live webinars hosted by experienced financial advisors. Call 800-900-5867 to register for our upcoming webinars for Lockheed Martin employees.

Sources