The crude oil and natural gas industry has faced significant challenges since the COVID pandemic, including supply disruptions, price volatility, and rapid inflation. However, heavy cash flow for oil and gas companies has led to a plethora of high-paying jobs for many professionals. Below, we discuss tips and tricks that can help oil and gas professionals make the most of this industry's income flexibility while also putting away a solid nest egg for the future.
Create a Plan and a Plan B
Having a financial plan tailored to your unique situation can be one of the keys to a comfortable retirement. A financial professional can work with you to set goals and targets for your annual retirement contributions, asset allocation, and even health and disability insurance.
It's also important to plan for potential contingencies, such as health issues, a parent needing extra assistance in their golden years, or a sudden job loss. Having a solid Plan B can go a long way toward giving options even when you're faced with unexpected challenges.
Many oil and gas companies provide generous benefits, including paid time off and even retirement medical subsidies. As you're preparing to retire, make sure you're doing so at the time that is most advantageous. In some cases, this may be on January 1, when certain benefits accrue. In other situations, you may gain extra benefits by retiring just after your employment anniversary date.
If you're expecting to be eligible for any bonuses in the near future, waiting until after they hit and then delivering your two-week notice can help maximize the financial benefits available.
Eliminate High-Interest Debt
If you have credit card debt, paycheck advance loans, personal loans, or other high-interest debt, eliminating this debt or reducing your interest rate can help keep more money in your pocket. This becomes even more important if you're planning on retiring soon, as high-interest debt can take a disproportionate chunk out of your retirement budget without providing any immediate benefit.
Retire at 55 Without Penalties
If you'd like to retire after age 55, you may assume that you have to wait until at least age 59.5 (when you can withdraw from a 401(k) or IRA without paying a penalty)1, or age 67 (when you're eligible for Social Security and Medicare).2
However, some oil and gas companies have provisions in their 401(k) plans that provide you with extra flexibility—including being able to take penalty-free withdrawals as early as age 55. The details of this type of withdrawal can vary, with some plans providing one-time withdrawals while others set up a monthly distribution to the new retiree. Your employer's 401(k) custodian can provide additional information about the available options.
Planning for a comfortable retirement can be challenging, especially for those who work in a volatile industry. A financial professional can help. By working with a professional that takes your unique personal and financial factors into consideration, you can make informed decisions about your future with confidence.
1 “401K Withdrawal Age and Early Retirement Rules,” SmartAsset, https://smartasset.com/retirement/401k-early-withdrawal
2 “Retirement Age Calculator,” Social Security Administration, https://www.ssa.gov/benefits/retirement/planner/ageincrease.html
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or insurance product(s) may be appropriate for you, consult your financial professional prior to investing or purchasing.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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