Whether you realize it or not, you took your first steps toward retirement when you received your first paycheck. And ever since, your contributions to Social Security and your 401(k) Plan have continued to steer you toward retirement. As you approach that milestone, you’ll want to be sure you have the income and health care coverage you’ll need to live the life you envision after Seagate.
Planning Starts Now
If you poll 10 people who are preparing to retire—or who have retired recently—you’ll hear a similar refrain: “I wish I’d started planning for this sooner.” You can. Whether you’re in your 20s or your 60s, you can take steps now to ensure you can afford to retire when you want to and do what you’ve been dreaming of in your retirement years.
As you begin planning for retirement, think about how you’d complete these sentences.
- I want to retire when I’m ___ years old, in the year 20__.
- In retirement, I want to spend my time ________.
- To retire securely, I’ll need to save $_________.
- The retirement accounts that can help me best meet my savings goals are ________.
- To meet my retirement savings goal, I’ll need to contribute $____ each month to my retirement savings accounts.
- To ensure my savings grow to the amount I’ll need to retire, they should be invested in ________.
- In retirement, I’ll pay for medical expenses and long-term care with _______.
Get a Handle on Your Finances
For curated advice about one small thing you can do to meet a financial goal or eliminate a financial stressor from your life, sign up for Seagate’s Financial Wellness Email Series.
Countdown to Retirement
Once you’ve determined when you’d like to retire, you can use this checklist to help you make crucial decisions and take the necessary steps to guarantee you’re retirement-ready.
2–5 Years before Retirement
Check in with a financial advisor. Develop a retirement budget, and plan the income stream that will make your savings last.
Pay off any 401(k) loans you may have. Contact Fidelity to learn your options for paying off your loan while you’re still working or in retirement.
Revisit former employer retirement accounts, and determine if you should roll the balances into other accounts. If your previous employer is no longer in business, you can search the Pension Benefit Guaranty Corporation and the Employee Benefits Security Administration for remaining plan assets.
To use the legal plan to help with estate planning, real estate transactions, and other major financial transactions, be sure you enroll in ARAG’s UltimateAdvisor or UltimateAdvisor Plus plan during Open Enrollment.
1 Year before Retirement
Speak with your financial advisor to ensure you’re still on track to retire as planned. Take the opportunity to review health care and other insurance coverage.
Decide when to start collecting Social Security. The longer you wait after your full retirement age (up to age 70), the more your monthly Social Security benefit will increase.
Practice living on your retirement income while you’re still collecting a paycheck. You’ll get a sense of the lifestyle you’ll have on your retirement budget (and you can bank the remainder of your paycheck).
Start the retirement process with Seagate. You’ll want to have a conversation with your manager and work together, as needed, on a transition plan. If you may be interested in reducing your work time prior to retiring, check out the Legacy Program to see if you meet the requirements.
When You Retire
If you're moving:
- For tax reporting purposes, you will need to keep your address updated with Seagate through the end of the calendar year in which your employment ends. If you keep your 401(k) account with Seagate or continue to hold Seagate ESPP shares after you leave the company, you will need to keep your address updated on an ongoing basis. To update your address, call HR Central toll-free at 877-844-3333.
- If you participate in the Seagate 401(k) Plan, Fidelity will contact you about your account options and provide you with a special tax notice within 30 days of receiving your termination information from Seagate.
Consider COBRA medical coverage if you’re not eligible for Medicare when you retire. PayFlex will send you information about COBRA costs and enrollment.
Enroll in Medicare Part B. You have up to eight months after your Seagate coverage ends to enroll without penalty. Note: If you purchase COBRA medical coverage until you’re eligible for Medicare, that coverage does not extend your penalty-free Medicare enrollment period.
Information Is Power
From 1:1 sessions with retirement advisors to informative articles, detailed checklists and other tools, Fidelity can help you plan for financial security in retirement.
Saving for Retirement
How much money you’ll need in retirement differs for everyone, but financial experts suggest you should set your sights on 80% of your pre-retirement income to live comfortably. Typically, retirement income comes from three sources: personal savings, Social Security, and employer-provided (Seagate) plans.
This includes your savings accounts (including your HSA), your home and any other real estate holdings you may have, individual retirement accounts (IRAs), stocks and bonds, and any other assets that might provide income.
It’s one thing to have a variety of income sources to set you up for your post-working years, but it’s quite another to manage all those income sources and ensure they’ll provide lasting retirement income. Fortunately, Fidelity can help with that.
You contribute to Social Security in every paycheck you receive, and, once you retire, all those contributions help to replace some of your pre-retirement income (on average, 40%). How much you receive depends on your earnings, the number of years you’ve contributed and when you begin collecting Social Security benefits. The Social Security Administration website provides more details.
Although you can begin collecting Social Security benefits at age 62, you’ll receive up to 30% less than if you waited until you reached your full retirement age of 66 or 67. And for every year you delay after your full retirement age (up to age 70), your benefit will increase 8%.
There’s another reason to consider waiting to claim your Social Security benefits. When you sign up for Social Security, you’re automatically enrolled in Medicare Part A, and Medicare enrollees are not eligible to contribute to Health Savings Accounts (HSA). If your goal is to maximize your HSA nest egg, you may want to wait until after you leave Seagate to begin collecting Social Security. Or, if you will continue working at Seagate after age 65, you can plan ahead and stop your HSA contributions six months prior to claiming Social Security. See Medicare Coverage Part A below.
If you’re not sure when to start receiving Social Security, Fidelity has an on-demand webinar that may help you decide.
Seagate offers a 401(k) Plan with a generous employer match and an Employee Stock Purchase Plan, both of which can help save toward retirement. Your HSA, too, is another valuable savings tool. At age 65, you can withdraw your HSA funds to pay for non-qualified expenses at any time; although you’ll pay regular income taxes on those withdrawals, you won’t pay an additional penalty. You can avoid paying taxes on your HSA funds by using them only for qualified medical expenses.
Small Steps Now Lead to Big Returns
Even small increases to your 401(k) contributions every year add up over time, especially when you get the Seagate match.
Seagate’s Legacy pilot program provides an opportunity for you to ease into retirement—and transition your knowledge to others—by reducing your work schedule to 60% over 6 to 12 months as you mentor a colleague or work on a specific project. If you’re approved to participate in Legacy, you’ll receive 60% of your base pay during your Legacy assignment and a completion bonus of 10% of your base pay at the end of your assignment.
To apply for this program, you must meet the following three criteria:
- An employee in the U.S., UK or Singapore
- At professional level 4–7 or management levels 3–6
- Have at least 10 years of service (does not apply to UK due to local regulations)
If you’re interested in participating in this voluntary program, start the ball rolling by speaking with your manager and completing a Legacy Program Participation Agreement Form for the US, UK or Singapore. For more information, review the US FAQ, UK FAQ or Singapore FAQ.
Health Care in Retirement
As a Seagate employee, you probably get your health coverage through Seagate or your spouse’s plan. Coverage during retirement is different. Generally, people are covered by Medicare, the federal health insurance program for people 65 and older.
If you’re covered by Seagate and you retire before you turn 65, you’ll need to purchase medical coverage until you become Medicare-eligible.
You Don’t Have to Enroll in Medicare When You Turn 65
If you’re still working and covered by Seagate or another employer-sponsored medical plan when you turn 65, you can wait to enroll in Medicare without a penalty for up to eight months after you retire.
You can first enroll in Medicare during your Initial Enrollment Period (IEP), which starts three months before the month of your 65th birthday and ends three months after the month of your 65th birthday. (Example: If your birthday is in March, your IEP will begin on December 1 prior to your birthday and end on June 30.)
Medicare is divided into parts A, B, C and D. Here’s what you need to know now about each component. For additional information, visit the Medicare website.
Medicare is complicated, so we want to make sure you’re aware of the following information:
- If you’re enrolled in a Seagate medical plan, you won’t be penalized if you wait to enroll in Medicare until after you retire—even if it’s after age 65. Your covered spouse/domestic partner can also wait to enroll without a penalty after you retire.
- If you enroll in Medicare, you cannot contribute to a Health Savings Account (HSA) or receive HSA contributions from Seagate. To avoid IRS penalties, go to US Benefits Enrollment/Changes to stop HSA contributions when you enroll in Medicare.
Medicare Part A
When you apply for Social Security benefits before or at age 65, you are automatically enrolled in Medicare Part A. This hospital insurance is usually premium-free and covers inpatient stays and care in a skilled nursing facility. To avoid automatic enrollment in Medicare Part A, do not apply for Social Security benefits to begin at or before age 65.
Note: When you apply for Social Security benefits, your enrollment will be retroactive for up to six months before you contacted Social Security. If you’re Medicare-eligible when you apply for Social Security (or will become Medicare-eligible within six months), you’ll want to stop all contributions to your HSA at least six months before applying for Social Security to avoid a tax penalty.
Medicare Part B
This medical insurance covers doctor visits, lab tests, vaccinations and other outpatient services.
During your IEP, you’ll need to enroll in or decline Part B coverage. If you’re working and covered by a Seagate medical plan, you can decline Part B coverage.
There is a penalty for enrolling in Medicare Part B after your IEP, but you won’t pay the penalty if you enroll in Medicare while you’re still working and covered by Seagate or within eight months after your Seagate coverage ends. This same rule applies to your covered spouse.
You pay a premium for Medicare Part B. The amount you pay is based on your income from two years before you apply.
Medicare Part C
Medicare Advantage plans, also known as Medicare Part C, are an all-in-one alternative to Original Medicare. These plans are offered by private companies and approved by Medicare. They bundle Parts A and B, and usually Part D (prescription drug coverage). Medicare Advantage plans vary; many cover services Original Medicare doesn’t. You’ll pay out of pocket for Part C coverage.
Medicare Part D
Medicare Part D helps pay for prescription drugs. It’s offered to everyone with Medicare, and although the coverage is optional, it is also recommended. Plans vary by cost and the drugs they cover. To learn more, visit the Part D web page.
Medicare and Your HSA
If you enroll in Medicare, you will not be eligible to contribute to the Health Savings Account (HSA) or receive HSA contributions from Seagate. To avoid excess HSA contributions (and subsequent IRS penalties), you should be aware of these rules:
- The amount of your allowable income tax deduction for HSA contributions will be prorated for the year you enroll in Medicare. For example, if your Medicare coverage starts in June, your HSA limit for the year will be five-twelfths of the full-year amount, for the time (January through May) when you were not covered by Medicare.
- When you apply for Social Security benefits, you will be enrolled automatically in Medicare Part A, and that coverage will be retroactive for up to six months before you contacted Social Security. To avoid a tax penalty, you should consider stopping contributions to your HSA at least six months before you apply for Social Security or Medicare. To stop contributions, go to US Benefits Enrollment/Changes or call HR Central for assistance.
Keep in mind that you can use the money you saved in your HSA to pay for Medicare premiums and any eligible out-of-pocket medical expenses.
If you retire before you’re eligible for Medicare—and you’re not covered on your spouse’s health plan—you can enroll in coverage through COBRA or through a government health insurance marketplace.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), you can continue your Seagate-sponsored health plan coverage for yourself and any dependents you cover for up to 18 months after your employment ends. You’ll receive a COBRA enrollment packet within 30 days after leaving Seagate. You’ll pay the full cost of this coverage. To learn more about COBRA benefits, call PayFlex at 800-284-4885.
Health Insurance Marketplace
Government-sponsored health insurance marketplaces, also known as exchanges, were created by the Affordable Care Act. You can shop the exchanges for coverage for yourself and your family. To get started, visit healthcare.gov, or if you live in California, check out coveredca.com.
Long Term Care Insurance
There may come a time when you’re unable to perform the activities of daily life, such as eating, bathing, dressing yourself and moving around your home unassisted. If you need help with those activities, long term care (LTC) insurance can help you pay all or part of those costs.
The Seagate group LTC plan contains provisions that are not available in today’s market and offers lower rates than you may find on the marketplace. To learn more and apply for coverage, visit SeagateLTC.com.