Is the Lump Sum option still available? The IRS Segment Rates are at an all time low and life expectancies have increased. These are components of the lump sum calculation that would substantially increase the lump sum value of your pension. If you are eligible for a Xerox pension, this may be your opportunity to walk away with a big bag of cash. I took the money and ran a few years ago and have no regrets!
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The lump sum decreases after 62 because of mortality tables. Roughly the lump covers retirement from 62 to 82. 20 years. If you wait until 63, the lump only has to cover 19 years, so it is less. Never mind financial planners, consider the morality of the world we live in today when deciding. A bird in the hand can’t be eliminated in the future.
We have a number of retired managers and CSE's that when taking the lump sum got both the TRA and the CBR. this was a couple of years ago.
At that time I had done calculations with the projections and noticed that I was going to lose 25k in 1 month (December) and over 100k in the next 12 months. Called HR for an explanation and was told that the future calculations are determined off of a formula that the government puts out each October (31st). Among the factors involved are morbidity rates and projected interest rates. Life expectancy that year had dropped due to the o—id epidemic, and the government was looking at maybe rolling up the interest rates. This only effects the lump sum calculations. HR also said that I would only receive the larger of the 2 investments regardless of what anybody else said. That is what was on the benefits web site also and had been there for years until THAT October.
At that time there was a calculation you could do on the benefits website that was somewhat different than the usual calculation program and it indeed did show that the lump sum benefit would be a total of both combined down to the penny.
So in reality, I got my 401k out, got a lump sum of both the TRA and the CBR, and a 3rd check of a smaller amount that I can only guess what it was for. Required to retire by November 1st of that year to save the value of the investments. I had already taken all of my vacation time. I had 40+ years with the company and was 65+ years old. Loved my Job but hated that the company no longer cared about either the employees or the customers.
Hope this helps those of you out there thinking about pulling the plug. For me I have a great financial investment group that looks out for my money (projected out until we hit 99 years old). We have more way more discretionary spending money than when I was working. Our expenses are up (especially healthcare, thank you Obama).
Suggestions: Don't think you can do retirement investments by yourself. Stay away from the big guys like the Edward Jones of the world. My financial group doesn't charge me a penny to run my investments. They have multiple strategies for different investments that include safeguards in case of a downturn. If you have a mortgage on your house, refinance to the lowest percentage rate you can get. Don't pay extra to pay it off. That's old school thinking. Your investment people should be making you more money than that mortgage interest rate, throw the money that direction. Enjoy retirement!!!! It's not the end, just the beginning.
Makes no difference what age you are..The only thing 55/30 does for you is allow you retire with the option of purchasing medical insurance but since most actions are layoffs of younger people it doesn't make any difference. The larger of the two is what you get...(CBRA/TRA)...Model your pension and select all payouts...go to the lump sum option assuming you are eligible for that and that number will be the higher of the two. Depending on your age, the RIGP value (part two of the calculation) will be quite different if your 55 or 65...the closer to 65 the less the value. Mine at 65 was 1300 dollars. At 55 it was 18500. Any calculation beyond 3 months is pointless...the bond rates change every month...higher the bond rate the less your account will be, bond rates lower yield a higher sum. Now the interest rates could be the same a year from now or 5 years from now but there is no guarantee of that so they select the higher interest rate (6.5 percent by default) and your account will always appears less the farther out you speculate....A good financial advisor can explain in greater detail why you would want to wait or what the RIGP values mean at your particular age. FYI...I had a fellow co-worker try to get me to believe he got both but end result it was his 401k and TRA added together...He was disappointed to say the least as he thought he was getting the large amount PLUS his 401k...
I have always heard that if you are age 55 and have 30yrs of service or more, you get both funds and there is even some hidden money as the first person stated. I will have 33yrs this year but only 52 years old so trying to make it to the magic number but it is a risk.
I have calculated my retirement in benefits web and the lump sum number starts going down if i work past 62 which is when I am planning to retire anyway assuming things do not go south in the economy.
I just retried at 60. The lump sum was basically 19.5 years of payments when I calculated it in the model. The total lump sum is not only TRA or CRBA. There is additional monies involved. Of course everyone's situation is different based on years worked, age, and an average salary before 2012 when the pension was stopped. If I waited 2 more years to 62 the model said I would get about 30k more. 62 to 65 did not seem to make much of a difference in the total. I retired, took the lump sum and rolled it into my 401K (which was about the same amount as the pension lump sum) tax free. I am gambling that I can make more from the pension lump sum in investments than to get fixed payments for 19.5 years or even beyond. Since I left six months ago I have made over 100k in fairly conservative funds in the 401k (with the pension lump sum included) because of a strong market. But it can easily go the other way. Like someone said above, consult a financial advisor because your situation will depend on it. If your ready to retire, have low debt, paid or almost paid off a mortgage etc, than the lump sum is a great option. It also takes discipline to keep that money in IRA's or 401K working for you. But if you were to cash it out and get taxed you could hamper money put aside for your retirement. Use the modeling tool and try several different ages and scenarios. You might be pleasantly surprised with the amount. Don't risk losing that money, and become informed on your options. But consult with someone who knows, be it a pro, family member or friend.
On the news yesterday they announced that gov't revised US Life Expectancy and it is dropping by one year in US due to Covid deaths. Unfortunately this will get factored into the actuarial table at some point - and the lump sum will be less as a result. Don't know when that Life Expectancy revision cuts in and they revise - it is confusing to understand the factors and formulas to determine Lump Sum pension (life expectancy, etc). Would feel better if that was all published and available - but, it is like a treasure hunt to try and find.
:@ddw+19tuivM9 Agree with you totally especially if you are near retirement. One other thought is go to xeroxbenefitsweb and do a model of your retirement. Pick a month from now (go to far into the future the numbers becomes a "grey" area and are less accurate) and then check the pay out options. If lump sum is still on the list then you are good for that. It will tell you what you are eligible for whether it be full lump sum or a combination lump sum/annuity. I started after Jan 1, 1990 so I check often and that gives you an idea of where the fund value is. When you start seeing "annuity/lump sum combination you know the fund value is getting low!!!
First and foremost you need to talk to your financial advisor about all the "what if's" Now that that is out of the way...I just retired and you get the larger of the TRA or CBR, not both together. Depending on how long you have been here either one could be the larger of the two. For me the TRA was triple what the CBR was. For my coworkers they were about equal (makes a HUGE difference as to when you started). They sent out a letter a couple of years ago that said if you started before January 1st, 1990 you got the larger amount in a lump sum option. After January 1st, 1990, the payout could be part annuity and lump sum. Or it could be a total annuity depending on how the fund was funded. I believe if the fund was 80 percent or better you got the lump sum...between 50 and 80 percent it was half lump sum and the rest in an annuity...under 50 percent was a total annuity. At the rate people are retiring, getting laid off etc, I can't think the fund is doing all that great. Personally and my financial advisors thoughts are you do NOT want to take an annuity from Xerox because of how the company is doing. The TRA is doing good because the bond rates are low (bond rates high equals less money)... From May of this year to December my TRA jumped 86,000...was well worth waiting especially in an election year. Of course your mileage may vary. The only know thing is it's time to get out of this sh*t show company before you loose your shorts on only being able to take an annuity.
So for the lumpers; the "already-lumped" as it were – was it just RIGP or CRBA (whichever was greater) or was it combined? HR docs look like it's the former, but the bennieweb calculator combines them. Thinking of lumping out soon and that might affect my timing.
Me too at 56 years old with 29 years I got a pretty nice lump sum with life expectancy what it it is now. I would have only gotten about 50k more if I worked there until 65 according to the estimator. Easy choice since lump sum probably won’t be an option soon with the % funding where it is.
The interest rates used to calculate lump sums change monthly. If the interest rates go up, the lump sum goes down. Age is also a part of the calculation. But so is your life expectancy.
Are you 62 years old or under ? To me it looks like you get the max pay out age 62