For those interested, the IRS published the March interest rates used for pension calculation. For those that are thinking of retiring within a year or two and are considering to take the lump sum distribution, you’d be wise to pay attention to interest rates. Remember that the higher the interest rates, the lower the discounted present value amount you would receive. FYI, the last time the 3-month weighed average rate was higher was in December 2019. Note that a 1% increase in interest rates will result in approximate 8 to 10% loss in the lump sum distribution amount you would receive.
15 replies (most recent on top)
If the 25-35 yr people are not pulling the plug right now they will find out by the end of the year they have lost more then they will make in the next 5 years.
I don't know about you but I EOI'd and took the lump sum in December 2020 and my investments were doing great for a while but are not looking so good lately. Don't discount the merits of having a good ol' steady paycheck today by any means, lol!
Even if you were not planning to retire it was a good opportunity to cash out. Plenty of people found good jobs eksewhere or consulting from home. Win win. I know a couple drillers who cashed out and moved to the Austin hill country to work for DrillingInfo. Their homes have almost doubled in value.
Yep. If you were going to retire in a year or two, you missed the boat. With the EOI and severance, not only did you miss out on a year’s pay and vacation payout, you missed out on a peak lump sum pension payment.
@2mxl, Yes sir, the beauty of the internet. You can be whoever you want to be, rich , poor doesn't matter, talk about having retired whenever you wanted to, even though the company pushed you out, share stories about the amazing success that you had in the market, whether you did or not makes no difference mate, even when it's obvious that you didn't or you wouldn't be posting and wasting away here, it's all good. LMAO!
Chevron, not me, chose the perfect timing for lump sums with the late 2020 layoffs as Dec 2020 was the lowest ever interest rate. This was followed by a good stock market run and huge real estate run. Those who retired, grabbed the lump sum (and severance and health), invested it, and moved out of Houston to a hotter real estate market are laughing now. They are laughing harder if they had CVX shares on hand to sell at the current record prices ($173 last week!).
@2exi, Cool story, bro, this is where I come for all my laughs reading the posts from the certified losers who all claimed they took the lump sum at the exact perfect time (after the fact) and that they bought or sold, or held CVX (all after the fact), with their 20-20 hindsight, lmao! No sour grapes at all, I have a Caymus SS open. Go ahead and pretend that you are a successful person who just happens to troll and post on thelayoff.com some more. You fit right in. Keep the lines coming, you're the best entertainment I've had in a while ol coot. Please don't stop! rotfl....
@1vwz… sour grapes. This is precisely where you need to go for retirement info. We’ve experienced the what and what not to do. Maybe you’re still smoldering about not taking the 2020 severance? I still have some Chevron stock, so please do work hard to pay my dividend!
@1hrj: I concede that I probably lost money working an extra year. There is the interest on the invested lump, as you suggest, and also given that I am planning to relocate and houses have gone up 20% this year I lost there also. Add to that I could have had a 2% mortgage (I am planning to pay cash for the new residence, but at 2% I would have borrowed 80% of the money and invested the difference). Water under the bridge. The big difference is I was not ready to retire last year and now am ready to move on: The choice cost me, but I am not unhappy.
The market was up about 20% in 2021, not 40%. So if you retired in late 2020 with a $2 million lump sum, you are up $400K vs not having retired and slogged along at your desk. Plus you would have been paid a year of salary during 2021; let's call that $300k. And had your healthcare covered, maybe $12,000. And got your 2020 bonus, perhaps $80k. So, in 2021 you would have taken in $380K plus health, call it $400K plus same amount in lump sum appreciation gives you up $800K for the year.
and to think about what your lump sum pension rolled into an ira would have done when equities were up 40+% in 2021
Didn’t really work for free as my salary is less than half my total compensation and health care costs are small beans on the big picture. That said, value of my 25 years pension did not raise at all last year and is about to take a much bigger hit if the Fed follows through on their 1-1.5 point bump up by year end. My back of envelope is my pension value could drop over 10% by year end. This was not the only consideration, but one reason I just pulled the plug and filed my retirement paperwork.
Rates are rising fast. Don't get caught with your pants down. And never underestimate the opportunity to have the lump sum at your fingertips if the market crashes this year. I know Chevroids who cashed out in 2008 before the big market crash, invested their lump when the DOW was around 10,000 and are dancing now that it is more than triple that.
yea, I generally go to the layoff.com and read pathetic loser's comments when I want retirement related info. lmao!
Anyone thinking about retiring soon has worked for free since the transformation gravy train package. You lost a year's severance pay plus 200K less on the lump sum!! Oh, and free COBRA Medical for a year due COVID!!