Retirement planning for Coke employees
Retirement planning for Coke employees can be an overwhelming task, especially if you’re unsure about what retirement benefits are available to you through your employer. Knowing whether you have a pension, a retirement savings plan, or a supplemental 401k can make a big difference when it comes to creating a retirement cash flow strategy that supports your goals.
Here in Atlanta, many people are employed by the Coca-Cola Company. Coca-Cola is unique in that they offer a wide range of retirement benefits that employees can take advantage of (assuming they qualify). Ready to learn more about what options are available to you, and how they fit into your retirement plan? Let’s dive in.
What’s Available To You?
The typical American employer offers an employer-sponsored retirement savings plan, like a 401k, and that’s it. Occasionally, you may find a company that also offers stock options to high-level employees or C-level executives as part of their compensation plan. However, at Coca-Cola, employees have many more retirement-focused benefits available to them. Let’s take a look at a few of your options.
Coca-Cola is one of the few companies left in the United States who continues to offer an employee pension plan. A pension plan, or defined benefit plan, is a vehicle where (after vesting) you’re eligible to receive funds in retirement from your employer – no contributions from you required.
For Coca-Cola managers or upper-level employees, a Supplemental 401k Plan may be offered. This type of plan gives highly compensated employees the opportunity to continue receiving matching contributions from their employer even if their salary would otherwise phase them out.
Supplemental Pension Plan
The Coca-Cola Supplemental Pension Plan (SPP) covers employees who were originally participating in the KO Prior Pension Plan before it was merged with the CCR Prior Pension Plan in 2013.
As is the case with most employers, Coca-Cola offers employees the ability to contribute to a company 401k for retirement savings. The company offers to match 401k contributions up to 3.5% for every 6% of your salary you contribute.
In some cases, you may have a portion of your employee compensation set up to be paid to you at a later date. Taxes on this income are also “deferred” until you receive a payout.
Long-Term Awards (Stock Options)
The Coca-Cola Company offers a variety of long-term awards for upper-level employees including stock options, RSUs (Restricted Stock Units), and Growth Share Units. These three options each work differently but are set up to incentivize employees to stay with the company for 3 years or more.
Creating a Retirement Income Plan
It’s often helpful to look at your retirement income as a “three-legged stool.” In other words, it’s comprised of:
Employer pension (or alternate employer compensation).
Start by looking at what you can expect to receive from Social Security by heading over to the SSA website. Then, you can calculate your expected employer pension benefit by reaching out to your plan provided through the Coca-Cola Company.
Of course, Social Security and pension benefits are the two components of your retirement income that you have minimal control over. There’s some speculation that Social Security may not last forever, and that the payout future retirees receive may be different than what is currently estimated. As for your pension plan, chances are that what you currently calculate as a retirement benefit will remain consistent. However, there have been cases where a company goes bankrupt or hits financial hard times, and pension benefits disappear as a result.
Keeping these two things in mind, it’s important to calculate how much you can expect to receive from both Social Security and your pension, but be prepared to fill any gap that exists with your personal retirement savings.
How Much Savings Will You Need?
The best way to estimate your necessary retirement savings, and to make sure you’re maximizing the retirement benefits available to you, is to reverse engineer your goals. Start by asking yourself:
What type of lifestyle do I want to live in retirement?
Be specific! Are you staying in your current home? Do you want to travel to Europe each year? Will you want to hire help around the house as you age? What will your estimated medical expenses be?
As accurately as you can, estimate how much money you’ll need during retirement. If you’re struggling to come up with a final figure, using a retirement savings calculator like this one can help. Once you have your ideal retirement number, start to work backward toward a savings goal. This might look like:
(Ideal Retirement Number) – (Total Expected Social Security) – (Total Expected Retirement Benefit from Pension) = Retirement Savings Goal
If you’re finding that there’s a bigger gap than you expected between your Retirement Savings Goal and what you’re currently on track to have saved by the time you retire, don’t panic. You can always adjust your retirement lifestyle goals (example: downsizing or paying off your mortgage before you retire), or increase your savings in the years before retirement.
It’s also worthwhile to speak with your HR representative or a fee-only financial planner who is well-versed in Coca-Cola Company benefits to ensure you’re taking advantage of all your compensation and retirement savings options.
In the coming weeks, I’ll be publishing several blog posts that give a more detailed overview of your retirement-focused benefits as an employee of the Coca-Cola Company. Use these blog posts as tools to help set yourself up for retirement success! Of course, if you ever have any questions, I encourage you to reach out. I’m here to help answer any questions you may have!