Is Your RTX 401(k) on Track for Retirement?

When working with RTX (Raytheon Technologies) employees, we often walk them through an annual review of their RTX Savings Plan, the company’s 401(k) plan, and their asset allocation. It’s an opportunity to ensure their plan is on track for retirement before making new elections, especially if retirement is fast approaching. 

If you’re an RTX employee five years out from retirement, you can use this guide to help inform your progress and identify any adjustments that may be necessary. We share this and additional strategies in our RTX Planning Calendar, which outlines key dates and considerations for employees throughout the year.

How Do I Know I Can Retire from RTX?

The amount you need to retire depends on many factors, including your goals, lifestyle, health, and life expectancy; the cost of living; market activity; and more. Additionally, beyond numbers, we help clients identify their vision for retirement, whether it’s more travel, moving near the kids and grandkids, or a second career. With a few baseline assumptions in place, we can then run hypothetical scenarios using the Monte Carlo analysis simulation tool to map out your financial plan, with flexibility built in for uncertainty. Understanding how spending, expenses, risks, and market corrections could impact your portfolio is essential for creating enough savings and necessary financial buffers in retirement.

Once we have a better understanding of the income needs required to support your retirement goals, we can review your current allocations and contributions to work toward your ideal number. An in-depth financial plan is the foundation for guiding your decisions and giving you peace of mind that you’re on track.

What Should I Consider with My RTX 401(k) and Other Savings Plans Before Retirement?

Now is the time to develop a plan for generating income, aggressively saving, or possibly even cutting back on current spending to meet your goals, if necessary. Here are key areas you can review with the help of your financial advisor:

• Asset Allocation: Does your current allocation align with your goals, retirement timeline, and income? Consider whether you need to reduce your risk, park some money in conservative investments, or explore additional ways to save.
• Withdrawal Strategies: A tax-efficient withdrawal plan in retirement is crucial for reducing your tax liability, ensuring sufficient income, and offsetting new expenses. It’s essential to discuss the structures, distribution, and timing scenarios with an advisor to create a withdrawal plan that suits your needs.
• Stock Concentration: If you are an executive who also receives stock compensation, it can create added concentration risk. To minimize concentration risk, review how much RTX stock you hold collectively in stock awards, your 401(k), and deferred compensation accounts. If more than 15% of your total portfolio is invested in company stock, consider strategies like diversifying your employer match. 
• RTX Lifetime Income Strategy (LIS): Review if you have allocations in the LIS — it may have defaulted a portion automatically if you didn’t make certain elections in the past. Discuss with your advisor whether investing in the fund makes sense for you, as it comes with some tradeoffs, including higher costs as you age and prohibiting the net unrealized appreciation strategy if you hold company stock, among others. Learn more about the LIS.

What Conversations Should I Have as I Near Retirement?

Working extensively with RTX employees, we’ve observed common questions related to compensation, benefits, and retirement, which we can help address on your path. Here are a few retirement topics to think about:

• Expectations for Couples: Have you and your spouse or partner discussed and compared your retirement goals and expectations? Here are questions you can consider:
  • Is it only one or both partners retiring?
  • What will income in retirement look like, considering factors like inflation and taxes?
  • How will you spend your time?
  • Will you retire in a high-cost area, like San Diego, or relocate?
  • How will you manage healthcare?
  • Will you support dependents, adult children, or aging parents in retirement?

• Timing Your Retirement: Many factors impact the timing of your retirement, including:
  • Benefits: Consider whether to stay for the annual bonus in March or later in the year if early retirement could impact certain benefits like deferred compensation. Consult your plan administrator or advisor to learn more.
  • Stock Vesting: Review your vesting schedule to see how much you have vested, how much you may forfeit upon your retirement, or if you qualify for accelerated vesting and the associated tax implications.
  • Sufficient Savings: Discuss with your advisor when it’s financially feasible to retire. This period is pivotal to refining your goals, developing an income and budgeting plan, and making necessary changes that sustain you throughout your post-career life.

Should I Contribute More to My RTX 401(k)?

Contributing more to a 401(k) or not depends on your current situation and goals. To help inform your decision, review the following:

• Do you have the appropriate balance of retirement income sources? We recommend pre-retirees have four financial buckets in retirement: cash, taxable accounts (e.g., stocks and mutual funds), tax-deferred accounts (e.g., 401(k) plans), and tax-free accounts (e.g., Roth IRAs and health savings accounts). Once you review what you have, you can then decide the next steps:
  • Do you have excess cash? Consider putting those excess funds toward maximizing your retirement account contributions. Ensure that you have a sufficient emergency fund first.
  • Do you have plenty saved in your retirement accounts? Consider pausing or reducing your 401(k) contributions and putting funds toward a non-retirement brokerage account for more balance and better tax treatment in retirement.
  • Are there other scenarios at play? Review other 401(k) strategies you can consider in this blog post.

How Do I Know if My 401(k) is on Track Toward Retirement?

When you decide to retire is one of the most important decisions of your life, affecting your future security, lifestyle, and ability to support you and your loved ones for decades after your career. Rest assured, in addition to a clear financial plan, periodic updates with your advisor, and proactive action, there are signs indicating your 401(k) is on track, including:

• You Have a Solid Financial Plan: You’re likely on track if your plan includes:
  • Clear spending parameters and a realistic budget.
  • Both essential and “fun” expenses.
  • An understanding of your income streams and how much is needed from your investment portfolio to support your lifestyle once you are no longer working. 
  • A recommended asset allocation that takes your goals and desired spending into consideration.  

• You’re Not Relying on a Single Outcome: If you find you have sufficient cash buffers and plans for contingencies, you’re probably on track. 
  • As part of the aerospace industry, you’re familiar with the term redundancy, or incorporating backups in missions, so if one system fails, another takes over. Similarly, in financial planning, your strategy should consider uncertainty and be adaptable to changes. If you find yourself relying heavily on a single outcome such as strong market returns or the proceeds from a home sale to support your retirement, you may need to reassess. 

• You’ve Mapped Out Your Retirement Cash Flow: Having a clear outlook into your income needs and how and when you’ll withdraw retirement income is a good sign you’re on track toward retirement. You’ve likely prepared for:
  • Tax-efficient withdrawals, and know when and from where to withdraw funds to sustain your income while continuing to support growth.
  • Spending changes in retirement, including periods of increased expenses early on for travel or new costs for healthcare or assisted living as you age.
  • Unexpected expenses, due to changes in a marriage, death, health concerns, market shifts, and other factors.

Prepare for Your RTX Retirement with CCMI

Retirement planning, including navigating the ins and outs of your RTX 401(k) and other benefits, can become complex and feel overwhelming.  You don’t have to navigate it alone. 

At CCMI, we have firsthand experience and years of working with employees of RTX through the retirement process. We can provide specialized guidance to help simplify the process, get the most out of your benefits, and ensure you’re on track toward achieving your future goals. In addition to resources in our blog, we dive into special considerations, timelines, and other RTX-specific strategies for your 401(k) and other benefits in our RTX Planning Calendar. 

Most importantly, retirement is about more than numbers. Once the fundamentals are in place, we’ll help you think bigger—whether that means more time with family, travel, new hobbies, or giving back. Together, we’ll make sure your retirement plan supports the life you want to create. 

Want to stay ahead and informed for retirement? Click here to sign up for your copy of the RTX Planning Calendar. As always, please contact us if you have any questions.