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 lets individuals who are not itemizers 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 alone 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% applies to people whose tax liability is less than the credit amount.


Tax Brackets for 2024

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 targets an annual inflation rate 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

Planning Your The Boeing Company Retirement

Recent Layoff Announcements & Other Boeing News

Boeing announced large workforce layoffs in 2023 as a result of persistent production issues and a decline in demand for airplanes. Boeing made employment losses in a number of areas, including engineering and manufacturing, in an effort to cut expenses and streamline operations in the face of a volatile market. In addition, the business disclosed a $6 million charge for employee severance expenses for the first quarter of 2024 (The Layoff).

In an effort to cut expenses, Boeing has implemented early retirement benefits and voluntary layoffs for qualified staff members. The business still offers full retirement benefits to its past employees, such as a 401(k) plan and a number of health and wellness initiatives. It is essential to comprehend these advantages in the current political and economic environment.

Retirement planning is a verb. And consistent action must be taken whether you’re 20 or 60.

The truth is that most Americans don’t know how much to save or the amount of income they’ll need.

No matter where you stand in the planning process, or your current age, we hope this guide gives you a good overview of the steps to take, and provides some resources that can help you simplify your transition into retirement and get the most from your benefits.

You know you need to be saving and investing, but you don’t have the time or expertise to know if you’re building retirement savings that can last.

"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 401(k) contributions is key, and can lead to huge windfalls later on in your life.

As decades go by, you’re likely full swing into your career, and your income probably reflects that. However, the challenges to saving for retirement start adding up: a mortgage, raising children and saving for their college.

One of the classic planning conflicts is saving for retirement, versus saving for college. Most financial planners will tell you that retirement should be your top priority, because your child can usually find support from financial aid while you’ll be on your own to fund your retirement.

How much we recommend that you invest toward retirement is always based on your unique financial situation and goals. However, consider investing a minimum of 10% of your salary toward retirement through your 30s and 40s. So long as your individual circumstances allow, it should be a goal to maximize The Boeing Company's contribution match.

Over 50? You can invest up to $19,500 into your retirement plan / 401(k).

As you enter your 50s and 60s, you’re ideally at peak earning years with some of your major expenses, such as a mortgage or child-rearing, behind you or soon to be in the rearview mirror. This can be a good time to consider whether you have the ability to boost your retirement savings goal to 20% or more of your income. For many people, this could potentially be the last opportunity to stash away funds.

In 2022, workers aged 50 or older can invest up to $27,000 into their retirement plan / 401(k). Once they meet this limit, they can add an additional $6,500 in catch-up contributions. These limits are adjusted annually 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, The Boeing Company) matches your own 401(k) contributions with money that comes from the company. If The Boeing Company 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.

$1,336 - A 2020 study from Financial Engines titled “Missing Out: How Much Employer 401(k) Matching Contributions Do Employees Leave on the Table?”, revealed that employees who don’t maximize the company match typically leave $1,336 of potential extra retirement money on the table each year.

- If The Boeing Company will match up to 3% of your plan contributions and you only contribute 2% of your salary, you aren’t getting the full amount of The Boeing Company's potential match.

- By bumping up your contribution by just 1%, The Boeing Company is now matching 3% (the max) of your contributions for a total contribution of 6% of your salary. You aren’t leaving money on the table.

Whether you live in the U.S. or Puerto Rico, you'll receive quite a bit of useful information from this article! Speak with a The Boeing Company-focused advisor by clicking the button below.

Boeing's Final Average Pay Defined Benefit Pension Plan
The Final Average Pay (FAP) formula, in instance, is part of the Boeing Company's defined benefit pension plan, which aims to give employees a steady and predictable retirement income based on their wages and length of service.


This is a thorough explanation of the FAP formula's operation along with a calculation example.

The Final Average Pay Formula's Components

*Final Average Pay (FAP): This is the mean of the highest wages for the employee over a given time period, usually the final five years of employment or the highest five years in a row within the previous ten years.

* Years of Service (YOS): The entire amount of time a worker has been employed by Boeing and made pension plan contributions.

*Benefit Multiplier: A proportion that represents the part of the FAP an employee receives for each year of service and is used to compute the pension benefit.


The FAP Formula's Operation



The following is the basic formula used in the FAP formula to determine the annual pension benefit: Years of Service × Final Average Pay × Benefit Multiplier =Pension Benefits Each Year


An Illustrated Calculation

Let's assume the following:

* The $90,000 Final Average Pay (FAP)

* The 30-year Years of Service (YOS)

*1.5%, or 0.015, is the benefit multiplier. Retirement Benefit Annually = $90,000 × 30 × 0.015 = $40,500




An employee with 30 years of service, a 1.5% benefit multiplier, and a final average pay of $90,000 would receive an annual pension benefit of $40,500.


Extra Things to Think About
Vesting criteria: In order to qualify for pension benefits, employees must fulfill specific vesting criteria, which include a minimum number of years of service.

Penalties for Early Retirement: An employee's pension benefit may be decreased if they choose to retire early.


For instance, a reduction factor (e.g., 5% annually) is applied for each year that the employee retires before the standard retirement age of 65, in the event that the employee retires at 60.

Cost-of-Living Adjustments (COLA): While not usually included, COLA is a feature of certain pension systems that allows payouts to be adjusted for inflation.

Example of Reduction in Early Retirement:
If the decrease factor is 5% annually and the worker in the aforementioned case retires at age 60 rather than 65:

Determine the Reduction:

*Years prior to typical retirement age: five

*Total reduction: 25% (5 years x 5% annually)

Put the Reduction into Practice:

*Pre-reduction annual pension benefit: $40,500

*Amount of reduction: $10,125 ($40,500 × 25%).

* Pension benefit reduction: $40,500 minus $10,125 equals $30,375.

As a result, rather than receiving a $40,500 annual pension payout, a retiree at age 60 would receive $30,375.

References
The Summary Plan Description (SPD) and other retirement plan materials that Boeing provides to its employees contain comprehensive information about the company's pension plan, including the Final Average Pay formula. Visit Boeing's Retirement Benefits page for information that is available to the general public. The Boeing Pension Value Plan (PVP) Summary Plan Description and other relevant documents that are accessible to employees via Boeing's HR resources also contain detailed information.



Boeing's Defined Benefit Final Average Pay Pension Plan: Age Penalties and Reductions

Retirement benefits under the Boeing Company's Defined Benefit Final Average Pay (FAP) Pension Plan are determined by an employee's highest average salary and number of years of service. An employee's pension benefits may be lowered if they decide to retire before the plan's standard retirement age. The extended time frame during which the benefits will be paid is compensated for by these reductions. This is a thorough explanation of age reductions and penalties, along with a mathematical example.

Early Retirement and the Typical Retirement Age

* Normal Retirement Age (NRA): 65 is the usual definition for this. When an employee retires at this age or later, the FAP formula is used to determine their full pension payments.

*Early Retirement: Workers may leave their jobs before the NRA, typically beginning at age 55. However, because of the longer payment period, an early retirement reduces the pension benefit.

Factors that Reduce the Option to Retire Early

For each year that an employee chooses to retire ahead of the NRA, the pension benefit is decreased using a predetermined reduction factor. The common way to express these components is as a percentage every year.

An illustration of a decrease factor might be 6% annually in the event that an employee departs five years early.

Reduction in Pension Benefit Calculation

*Find the Final Average Pay (FAP) by averaging the highest earnings over a given time frame, such as the previous five years.

* Determine the Entire Pension Benefit:

*Apply Early Retirement Reduction:

*Compute the percentage of overall reduction.

To calculate the reduced benefit, apply this reduction to the total pension benefit.

An illustration of a calculation

Suppose:

$90,000 is the final average pay (FAP).

30 years are the Years of Service (YOS)

1.5% (or 0.015) as the benefit multiplier

65 is the typical retirement age.

60 is the early retirement age.

Reduction Ratio: 6% annually


Method by Method Calculation:

Compute the Full Pension Benefit: 90,000 × 30 × 0.015 = $40,500 is the Full Pension Benefit.

Determine the Total Reduction: Prior to NRA: 5 years, or 65 minus 60 years

All-In Percentage Reduction: 6% x 5 Years = 30%

Reduced Pension Benefit Calculation:

$12,150 is the reduction amount ($40,500 x 30%).

Pension Benefit Reduction: $40,500 – $12,150 = $28,350

Instead of receiving the full $40,500 in pension benefits, an employee who retires at age 60 would receive $28,350 year.

References
Boeing's Summary Plan Description (SPD) and other retirement plan documents given to employees contain information about Boeing's pension plan, including specifics about early retirement reductions and the Final Average Pay formula. Visit Boeing's Retirement Benefits page for information that is available to the general public. Comprehensive plan details, like as computations and reduction factors, are usually provided in the SPD that may be obtained through Boeing's HR departments.

Restricted Stock Units (RSUs) and Stock Options for Boeing

As part of its remuneration plan, Boeing provides Restricted Stock Units (RSUs) and stock options to talented workers, encouraging them to align their interests with the company's long-term performance. This is a description of several equity compensation plans, outlining the requirements for qualifying and their availability.

Boeing Stock Options

1. First, what are options on stocks?

Employees with stock options have the ability, after a certain vesting time, to buy Boeing shares at the exercise price, also known as the strike price. Since the value of the options rises in tandem with the stock price, the objective is to inspire staff members to contribute to the company's expansion.

2. The Way They Operate:

*Grant Date: The day that employees get their options.

*Vesting Period: The amount of time workers have to wait in order to use their options. Boeing's vesting plan usually takes a few years to complete.

*Exercise Price: Typically set at the market price on the grant date, this is the price at which employees can buy the shares.

*Expiration Date: Usually set at ten years from the date of award, this is the deadline by which staff members must exercise their options before they expire.

3. As an illustration

Date of Grant: January 1, 2024

There are 1,000 options.

$200 per share is the exercise price.

Vesting Period: 25% annually for 4 years.

Date of Expiration: January 1, 2034

The employee could purchase shares at $200 and possibly sell them at $300 to realize a profit of $100 per share if the stock price increases to $300.




Boeing Restricted Stock Units (RSUs). RSUs: What Are They?

Employees are awarded restricted stock units (RSUs) with a vesting term and other conditions. RSUs have intrinsic value upon vesting since they reflect real shares of stock, unlike stock options.

2. The Way They Operate:

Date of Grant: The day the RSUs are awarded.

The duration of time over which restricted stock units (RSUs) vest, usually determined by tenure or performance benchmarks. RSUs usually vest over a period of three to five years.

Settlement: Employees receive real Boeing stock shares upon vesting.

3. As an illustration

Date of Grant: January 1, 2024

There are 500 RSUs.

Vesting Period: Five Years (20% Annually)

20% of the RSUs, or 100 shares, vest annually. The vested shares would be worth $25,000 if the stock price at the conclusion of the first year is $250 a share.



Availability and Eligibility
1. Who Is Able to Get Them?

Executives: As part of their remuneration packages, senior executives and top management frequently earn substantial stock options and restricted stock units (RSUs).

Key Personnel: To keep and inspire high-achieving staff members and those occupying pivotal positions, stock options and RSUs may be awarded.

Broad-Based Grants: In an effort to promote employee ownership and match employee interests with those of shareholders, Boeing occasionally gives stock options or RSUs to a larger group of workers.

2. Awards Based on Performance and Tenure:

Performance-Based RSUs: These are dependent on meeting predetermined benchmarks for business performance, including growth in profits per share (EPS) or revenue targets.

Tenure-Based Awards: These incentives encourage long-term employment by vesting according to the length of service with the organization.



First, Tax Aspects 1. Stock Options:

Non-qualified stock options (NSOs) are taxable at exercise as regular income.

Incentive Stock Options (ISOs): Subject to specific requirements, like holding periods, they may qualify for advantageous tax treatment.

2. RSUs

taxed at vesting as regular income, determined by the shares' fair market value.



In summary
Boeing's RSUs and stock options are effective strategies for drawing in, keeping, and inspiring workers by lining up their goals with the company's achievements. Based on performance and duration, these equity awards are usually given to leaders, senior personnel, and occasionally larger employee groupings. Employees are better able to maximize their benefits and match their efforts with the company's growth objectives when they are aware of the mechanics and tax consequences of these awards.

Sources: Available on Boeing's Investor Relations page and through internal business resources, the annual reports, proxy statements, and employee benefits documents provide particular and in-depth information.





The Executive and Deferred Compensation Plan (409A Plan) of Boeing
Synopsis: With effect from January 1, 2020, Boeing's Executive Supplemental Savings Plan (ESSP) is a nonqualified deferred compensation plan created to give highly compensated employees and a small group of managers access to additional retirement benefits. The Internal Revenue Code's Section 409A, which controls when deferral elections and distributions are made in order to prevent early taxation, applies to the plan.


Qualifications:

Senior executives and highly compensated staff members listed on the E-Series Payroll are eligible employees.

Eligibility: Certain plan contributions are not available to elected officers or workers recruited or promoted onto the E-Series Payroll on or after January 1, 2020.


Parts of the Scheme:

* Benefits of Restoration:

These reinstate advantages under Boeing's Voluntary Investment Plan (VIP) that were previously restricted by IRS sections 415 and 401(a)(17).

*Leadership SSP+ Business Contributions:

For qualified employees, they offer extra contributions based on a portion of yearly incentive plan payouts.

*Contributions to DC SERPs:

additional retirement benefits for highly compensated staff members and a small group of managers.

*Additional Postponements:

Permit deferral of basic pay and awards under incentive compensation plans for qualified personnel.


Elections for Deferral:

*Deferral Types: Workers are able to postpone performance prizes, monetary incentives, and base pay.

*Ultimate Postponements: Base pay of up to 50%; 100% monetary incentive; 100% performance bonus

* Election Periods: In order to comply with 409A laws, elections must be held within the allotted times, and modifications are restricted.


Contributions of the Company:

*Restoration Matching Contributions: Equivalent to base pay deferrals made by employees.

*Restoration SSP+ Contributions: Limited by IRS, based on base wage.

*Executive SSP+ Contributions: Given in exchange for monetary rewards.

*DC SERP Contributions: Extra payments made to qualified workers in accordance with their salary and length of service.


Forfeiture and Vesting:

*Vesting: Contributions typically become vested either instantly or after predetermined service durations.

*Forfeiture: If a termination occurs for a reason other than a layoff, death, or disability, any vested sums may be forfeited.


Distributions:

*Distributions may be given in installments or in one large amount.

*Time is determined by the employee's individual choices, in accordance with 409A regulations.

* Distributions to designated workers (highly compensated officers) are subject to a six-month delay.

An illustration of a calculation Let us consider an executive who receives a $300,000 basic salary plus a $200,000 annual cash incentive. The deferred payments would be as follows if the executive decided to withhold 10% of their basic pay and 50% of their cash incentive:

*Deferred Base Salary: $30,000

*Deferral of Cash Incentive: $100,000

The contribution would be as follows if the executive also receives a Restoration SSP+ Company Contribution of 5% of their base salary (beyond IRS limits):

$15,000 is the restoration SSP+ contribution (5% of $300,000).

[Source]
The document "The Boeing Company Executive Supplemental Savings Plan" has a summary of the specific details. Consult the official documentation from Boeing's HR department and compliance resources for more information and confirmation.

Lump-Sum vs. Annuity

Retirees who are eligible for a pension are often offered the choice of receiving their pension payments for life, or receive a lump-sum amount all-at-once.  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.

The upside of electing the monthly pension is that the payments are guaranteed to continue for life (at least to the extent that the pension plan itself remains in place and solvent and doesn’t default). 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 major downside of the monthly pension are the early and untimely passing of the retiree and joint annuitant.  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

Current interest rates, as well as your life expectancy at retirement, have a significant impact on lump sum payouts of defined benefit pension plans.

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.

As enticing as a lump sum may be, the monthly annuity for all or a portion of the pension, may still be an attractive option, especially in a high interest rate environment.

Each person’s situation is different, and a complimentary Cash Flow Analysis, from The Retirement Group, will show you how your pension choices stack up and play out over the course of your retirement years which may be two, three, four or more decades in retirement.

 

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 The Boeing Company 401(k) Plan

When is the last time you reviewed your 401(k) plan account with The Boeing Company or made any changes to it?

401(k) Savings Plan

Workers are urged to immediately enroll in their 401(k) savings plan. The first 10% of base and incentive pay that qualified nonunion employees contribute to their 401(k) will be matched dollar for dollar by Boeing when they sign up for the Boeing Company 401(k) Retirement Plan.

Vesting

As a participant, you vest in the company match with 100% immediate vesting.  You’ll be fully vested in your and the company’s contributions as soon as they’re made and can choose from a variety of investment options.

In addition, if you have an account in an eligible plan of a former employer, you may be eligible to roll over a distribution from that account to the Boeing 401k Retirement Plan. 

If you have funds in your 401(k) plan at retirement, you will receive a Participant Distribution Notice through 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.
  

More than half of plan members acknowledge they lack the knowledge, interest, or time necessary to manage their 401(k) investments. But the benefits of getting help go beyond convenience. Studies like this one, from Charles Schwab, show those plan participants who get help with their investments tend to have portfolios that perform better: The annual performance gap between those who get help and those who do not is 3.32% net of fees. This means a 45-year-old participant could see a 79% boost in wealth by age 65 simply by contacting an advisor. 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 – Getting advice increased the chances of participants staying true to their investment objectives, making them less reactive during volatile market conditions and more likely to remain in their original 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.

Your The Boeing Company 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

Unless your employment ends due to disability, your life insurance coverage and any optional coverage you purchase for your spouse, domestic partner, and/or children expire on the date of your employment. 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 The Boeing Company SPD for more details.

Beneficiary Designations
Specifying a beneficiary for the proceeds of your benefit programs in the event of your death is a crucial step in retirement and estate planning. That’s how The Boeing Company 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:

It is important that you update your beneficiaries when you retire. The Boeing Company has an Online Beneficiary Designation form for life events such as death, marriage, divorce, child birth, adoptions, etc.

If you are unsure about The Boeing Company benefits, schedule a call to speak with one of our Boeing Company-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 are not designed to be the sole source of your retirement income, but a part of your overall withdrawal strategy.

Knowing the foundation of Social Security, and using this knowledge to your advantage, can help you claim your maximum benefit.

It’s your responsibility to enroll in Medicare parts A and B when you first become eligible — and you must stay enrolled to have coverage for Medicare-eligible expenses. This applies to your Medicare eligible dependents as well.

You should know how your retiree medical plan choices or Medicare eligibility impact your plan options. Before you retire, contact the U.S. Social Security Administration directly at 800-772-1213, call your local Social Security Office or visit ssa.gov .

Together with enrolling you and/or your qualifying dependents in Medicare, they can also help you determine your eligibility and provide you with information on other government programs. 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 The Boeing Company, 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 The Boeing Company-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 The Boeing Company-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 The Boeing Company benefit center about your status. *Source: The Boeing Company Summary Plan Description

Divorce

The ideas of 'happily ever after" and 'til' death do us part' simply won’t materialize for 28% of couples over the age of 50. Most couples have saved together for decades, assuming all along that they would retire together. After a divorce, they face the expenses of a pre-or post-retirement life, but with half their savings (or even less).

If you’re divorced or in the process of divorcing, your former spouse(s) may have an interest in a portion of your retirement benefits. Before you can start your pension — and for each former spouse who may have an interest — you’ll need to provide The Boeing Company with the following documentation:

1. A copy of the court-filed Judgment of Dissolution or Judgment of Divorce along with any Marital Settlement Agreement (MSA)

2. A copy of the court-filed Qualified Domestic Relations Order (QDRO)

Provide The Boeing Company with any requested documentation to avoid having your pension benefit delayed or suspended. To find out more information on strategies if divorce is affecting your retirement benefits, please give us a call.

You’ll need to submit this documentation to your company’s online pension center regardless of how old the divorce or how short the marriage. *Source: The Retirement Group, “Retirement Plans - Benefits and Savings,” U.S. Department of Labor, 2019; “Generating Income That Will Last Throughout Retirement,” Fidelity, 2019

Social Security and Divorce You can apply for a divorced spouse’s benefit if the following criteria are met: You’re at least 62 years of age.

You were married for at least 10 years prior to the divorce.

You are currently unmarried.

Your ex-spouse is entitled to Social Security benefits.

Your own Social Security benefit amount is less than your spousal benefit amount, which is equal to one-half of what your ex’s full benefit amount would be if claimed at Full Retirement Age (FRA). Unlike with a married couple, your ex-spouse doesn’t have to have filed for Social Security before you can apply for your divorced spouse’s benefit, but this only applies if you’ve been divorced for at least two years and your ex is at least 62 years of age. If the divorce was less than two years ago, your ex must already be receiving benefits before you can file as a divorced spouse.

Unlike with a married couple, your ex-spouse doesn’t have to have filed for Social Security before you can apply for your divorced spouse’s benefit.

Divorce doesn’t even disqualify you from survivor benefits. You can claim a divorced spouse’s survivor benefit if the following are true:

1. Your ex-spouse is deceased

2. You are at least 60 years of age

3. You were married for at least 10 years prior to the divorce

4. You are single (or you remarried after age 60)

In the process of divorcing?

If your divorce isn’t final before your retirement date, you’re still considered married. You have two options:

1. Retire before your divorce is final and elect a joint pension of at least 50% with your spouse — or get your spouse’s signed, notarized consent to a different election or lump sum.

2. Delay your retirement until after your divorce is final and you can provide the required divorce documentation.*

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 The Boeing Company's benefits service center to collect life insurance benefits.

If you have a joint pension:

1. Start the joint pension payments. The joint pension is not automatic. Your joint pensioner will need to complete and return the paperwork from The Boeing Company's pension center to start receiving joint pension payments.

2. Be prepared financially to cover living expenses. Your spouse will need to be prepared with enough savings to bridge at least one month between the end of your pension payments and the beginning of his or her own pension payments.

If your survivor has medical coverage through The Boeing Company:

1. Decide whether to keep medical coverage.

2. If your survivor is enrolled as a dependent in your The Boeing Company-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 The Boeing Company

While you may be ready for some rest and relaxation, without the stress and schedule of your full-time career, it may make sense to you financially, and emotionally, to continue to work.

Financial benefits of working

Make up for decreased value of savings or investments . Low interest rates make it great for lump sums but harder for generating portfolio income. Some people continue to work to make up for poor performance of their savings and investments.

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

You might find yourself with very tempting job opportunities at a time when you thought you’d be withdrawing from the workforce.

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 . Just because the government has set a retirement age with its Social Security program doesn’t mean you have to schedule your own life that way. Many people genuinely enjoy their employment and continue working because their jobs enrich their lives.

Fortune 500 employees interested in planning their retirement may be interested in live webinars hosted by experienced financial advisors. Click here to register for our upcoming webinars for Fortune 500 employees.

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