On a brighter note.....the rate has lowered significantly that lump sums are figured on. The new rate will be locked in sometime in November. Voyager Fiancial has estimated a clients 506K lump will be 586K with the new rate. As you know it will vary from person to person....but its going up about 80K if you can make till November!
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Example:
My pension estimate went from 352k to 426k when the Fed lowered the 2019 rate .75%. (To 1.75%)
ATT uses the corporate bond rate now instead of the GATT rate.
Now that the Fed has lowered the rate 1.75% in 2020 to 0%, My pension that I’ll take in 2021 should soar to around 600K if the rate doesn’t change before the end of the year rate announcement locks in. Gonna take that fat lump and not look back.
As I STATED everyone’s number will be different ....Voyager ran a guys 506k with the admitted guesstimate....it was 586k. Call Voyager and they will be glad to talk to you.
@11eIPTt4-1kxz how much $ it goes up depends on what your balance is. For me it will be nowhere near the example stated. However an increase is an increase.
Like someone said, Google "How interest rates affect lump sum pension amounts"
@11eIPTt4-1oel
This post is 100% true. It's been stated before on how the lump sum works. It will happen in December, 2019 and take effect on Jan. 1, 2020. It will last the whole year once it gets past December. If the Fed rates drop in 2020, it will not go into effect until Jan. 1, 2021. The actual percentage of increase will depend on the Corporate Bond Rate.
I am confused. OP said new rate will lock in, in November of this year. And 5% is a far cry from 80K. I guess the real question we want an answer to, is if the Feds lower the interest rate another .25%, how much extra in $ will our lump sum be worth??
I met with Fidelity and they explained it to me. The lump sum pension is based on the corporate bond rate which is based on the Fed interest rate (which went down .25 twice in 2019). The new lump sum pension % rate will be announced in Dec (Dec 18 was the announcement date in 2018). It will take effect on Jan 1 for all of 2020. When you log into Netbenefits on Jan 1, you will see an increase in lump Doeprediction is 5% more than what it was on Dec 31. If you take your lump sum before then, you are missing the increase.
@11eIPTt4-1chy Take the lump sum. It won’t die with you.
@chy Basically as interest rates decrease it will increase lump sum payouts.
The 80k statement was just an example of a particular situation based on a calculated balance, it probably would have been better stated as a percentage.
There are many articles out there that can be researched to get a better understanding.
Google "How interest rates affect lump sum pension amounts"
Can someone please dumb it down for those of us that aren’t real familiar with how rates affect pensions and such? Does this mean if the fed rates go down again this year, that it’s possible for all of our lump sum values to increase by 80k this year??
But what's better to take at this point if i bail or am forced out by not taking an outsource or surplus? Take the Pension (as I have one), or take the lump sum, and have it willable/estateable, and not shut off when I go if I take the pension. Seems like the amount you get as a lump sum, and invest, will be ultimately better than the dole of the pension.
Are you talking about the GATT rate decreasing and making the lump sum increase by that much?
People can get burned when the market turns down.
You only get burned if you sell. Analysts are now looking at 50% equities portfolios for retirees.
Any new fbo rumors based on the conference calls scheduled for Monday?
The next FOMC meeting is October 29-30th. The decision to lower, maintain or raise rates will be announced on 10/30 at 11am PDT. Let's hope for another .25% reduction.
Hallelujah !!!
FBO = Financial Billing Operations. Outsourced to Accenture
Captain Obvious here, In a low rate environment it’s particularly difficult to generate income without significant exposure to the equities market. People can get burned when the market turns down. Be careful out there people.
What is a FBO announcement?
FBO Announcement on Monday, it will be close but the Ivy League beancounters have most likely maximized the benefit to T and the pain to the employees.