Are you are getting ready to retire from Harley-Davidson, or are you being offered a severance?
It’s important to find a good financial advisor, avoid some potential pitfalls and make use of some little known rules that can make your retirement a success.
You’ve probably worked at Harley-Davidson for 10, 20, or even 30+ years! Whether you’re in production or an executive it’s vital that you make the best choices for you and your family as you transition to retirement or evaluate your severance.
Retirement Planning & Severance Checklist
What You Will Need To Decide
You’ll need to make decisions on your:
- Pension – Monthly or lump sum, when to start it?
- Health insurance – COBRA, or something else?
- Stock Plans – What to do with HOG stock?
- 401(k) – Keep or rollover?
- Social Security – When to start, based on an overall plan?
It’s amazing how many questions you’ll need to answer in such a short time frame. Download our retirement and severance checklist so you don’t miss any steps!
3 Potential Pitfalls:
Retirement can be exciting and overwhelming at times. Please watch out for these areas and make sure you don’t miss out on any opportunities.
- If you are getting a severance it could drastically change your tax situation for this year.
- Please project out whether your taxable income will be lower, or higher than normal and find ways to either decrease that taxable income, or take advantage of what could be a lower tax bracket.
- There are many different ways your pension could be calculated and paid out. Run many scenarios, based on retirement date and age to determine when your pension ‘maxes’ out, how much your monthly amount and lump sum option grows by waiting, or drops by taking early.
- Remember to complete your pension start forms, before you want the pension to start.
3 Successful Secrets of a Retirement from Harley-Davidson
Because of all the turmoil at Harley-Davidson and in the overall economy we’ve worked with more Harley-Davidson employees since the summer of 2019 than any other company. Here are some tips we can share after watching so many employees navigate their retirement or severance from Harley-Davidson.
- If you are part of the Management Deferred Compensation Plan project out your future distributions.
- If it pays right after retirement/severance it could greatly affect your taxes in that year, especially if you get paid a severance.
- If you are retiring soon, and especially if you are signed up for the 5 year payout option, you may want to match the risk in your account to when it will pay out and look for more conservative investments.
- Don’t automatically rollover your 401(k), especially if you are 55+.
- Many people are unaware that when you leave a company at the age of 55+ you can take money from the 401(k) without a 10% early withdrawal penalty.
- If you are between 55-59 ½ think twice before rolling over your 401(k) to an IRA, because taking money from your traditional IRA before 59 ½ could subject you to that 10% penalty. And it could have been avoided if you had kept it in the 401(k).
- Before you retire, run pension scenarios based on different ages. You’ll be able to see when your monthly pension maxes out, how much it grows (if at all) over time, and how much your lump sum option grows by waiting. This doesn’t take much time and will give you incredible insight on how to maximize your pension.
As you can see creating a successful retirement from Harley-Davidson takes a lot more than filling out one form and telling your boss when you want to retire!
You get one shot at retirement and there’s no room for mistakes so please find a financial planner who focuses on retirement and has successfully helped many employees retire or deal with their severance.
2 Quick Ways To Tell If You Found The Right Financial Advisor For You
A good financial advisor has worked with Harley-Davidson employees before, focuses on retirement planning and knows how look into the options available to you.
But how can you tell if you’ve found the right advisor?
A good financial advisor is curious, and wants to get all the facts. They should be asking questions, and gathering information specific to your unique situation. A curious advisor is a good sign.
But here are the 2 key things this advisor should be doing:
When you work with a financial advisor to decide all your retirement and severance benefits they should:
Help you get projections on each of your pension options. You would be amazed at how your pension numbers could change based on the month you retire, the month you take it, whether you take a lump sum, or monthly pension.
You should be able to run projections based on different retirement dates, different ages you take your pension, and different payout options. This is a huge decision that could make or lose you $100k+ over your lifetime all because of when you signed a form and what boxes you checked.
Your advisor should help you get this info and make a reasonable comparison between monthly and lump sum, and show you how taking your pension earlier or later could change your retirement.
Project your tax situation based on the year you retire / get severance, and the years afterward. Retirement and Severance can create a lot of taxable situations, whether its your lump sum severance payout, incentive/bonus payouts, Deferred Comp paying out, or stock options coming due.
They should be helping you find ways to reduce your taxable income if that year is looking to be higher than normal, or taking advantage of a lower tax bracket if that is the situation.
Retirement Planning & Severance Checklist
You’ve worked hard for 10, 20, 30+ years helping millions enjoy the open road and we appreciate it. We’ve enjoyed working with all our clients and love helping them make sure their retirement is successful, whether its from Harley-Davidson today, or by taking the right steps with their severance to keep their retirement on track.
To speak with a specialist about planning for your retirement or severance please call us at 262-333-8353 or send us a quick note.
Resources For Harley-Davidson Employees:
Fidelity 401(k) site
Harley-Davidson Retiree Club on Facebook