Anyone know the ratio of people taking lump sum vs pension?
I wonder what it was historically.
Is anyone taking pension these days?
I was a pension person my whole career. Not now.
28 replies (most recent on top)
Another 2008 right around the corner, with this whole infrastructure package spending is out of control. Is your advisor telling you this? Pigs get fat hogs get slaughtered, don’t risk your retirement in the stock market this can’t continue remember they still get their 1% when the bottom falls out
Take the lump sum. If management doesn’t get the balance sheet back in order, they’ll have to renegotiate the pension sometime in the next 40 years just like the auto companies and every other industry have done. Coupled with high inflation on the horizon, you’d have to be mentally impaired to take the monthly payments.
Don’t y’all mean ‘take the pension as a lump sum or annuity’? It is a Pension that you can take 2 different ways (lump sum or annuity) or a combo of both.
It is a PENSION regardless of how you have it distributed. Makes me wonder about some of y’all that didn’t know that. Must be in EMIT.
I early retired (also forced) third quarter 2021 and took lump sum. Initially was going to split between annuity and LS, but no longer has faith in longevity of it all.
Married, spouse employed, house and cars paid for, one rental property. We have lived well below our means over the years and I can’t recommend that enough.
To the young person calling retirees greedy - YOU are the greedy person, expecting long time hard working people to give up their livelihood so you can succeed? Succeed with grit and determination and hard work like the rest of us.
In the late career retirement course, E&Y data shows approximately 80% take lump sum. I don’t know how that compares historically
We've hit top on the market. You can take the lump sum, but you're going to want to see market bottom before committing it to investments.
Lump sum, every time. It’s the only way to make sure that your family gets ALL of the money to which you’re entitled.
Madoff promised 8% pa to lure in the boomers.
Market volatility is your friend. You can take risks to win big and retire before 40 or stick to boomer investing tactics and retire in your 60s.
@2ade+1d6Z55dX Doubled your money in 3 months? Did you invest with another Bernie Madoff?
Sorry but don't believe you. The only way to double a large sum of money (like a lump sum) would be to invest in a very highly speculative investment. Any investment which can double in 3 months can go to zero even faster. Nobody who has worked for years to earn a pension lump sum would be that stupid.
Take the lump sum and invest it. I doubled my money in 3 months.
I’m 56 and taking the lump sum as soon as I see interest rates climb enough to knock out 5% age growth. Inflation will erode the annuity and the lump sum is better option to leave an inheritance. Work to get debt free or low debt and wisely invest lump sum (bonds, stocks,) and live reasonably. In the meantime I’m investing and supplementing living with 401k while looking for another job.
The reality is the drop in 08 took on average 3 yrs to surpass where they were before. Not 10
Simple. Pension is not inflation protected. Take lump sum.
Be careful remember 2008 when the bottom fell out , these sharks still get their 1% took 10 years to come back . Most had to go back to work.Those that got out of the market never made it back, There is a major reset in our future, your willing to take a chance in the stock market , once the Feds start to taper interest rates will rise and the Market will react,and very tough to time, those that have the stomach will stay in. But you have to live on something. No advisor will guarantee 6% conservative. This market can’t continue. The split between lump and annuity is a safe route. Just be careful XOM will be around a long time.
While the company pension could go under at any time, it was mentioned that the government has some guarantees you'd be covered.
That's comforting enough for me.
I'm going lump sum in November.
I retired going on 3 years ago. I'm one that had a lot of years and age was 58.5. Thanks PIP. Not
I took 75% in annuity and invested the 25%. I had no debt thankfully. Have since added a car note.
So this method works for me. Will take social security probably before age 65 for sure.
Complements to 2nd responder @jpt+1d6Z55dX - good summary.
And nice to see a real Layoff/Separation relevant post here. Wow.
I retired in Feb (forced really), and took the lump at really good payout rate.
I know about 8 others gone to retirement in past 1.5 years.
Only 1 has taken the pension. Had reasons.
My sizable lump is now in Fid growth fund as I've continued to consult (2/3 prior pay).
How it has grown! Probably a third in 6 mos.
I'll be going to Income/Growth fund at some point - my monthly payout will be higher than the stone-cold XOM pension promised.
Unless it all falls apart of course. Like XOM off the Dow.
As a cigar smoker with a penchant for single-malts, and a bachelor, I'm happy without any Actuarial predictions.
But that's just me.
There is probably a higher percentage of folks taking the lump sum the last few years because lower interest rates = higher payout.
Why would you trust XOM with anything in the base case. They can’t run a company much less a retirement plan
Since you can take the pension or lump sum in 25% increments, many people take 25% as a pension for daily expenses and the rest as a lump sum.
Given historically low interest rates - Lumps sums are the most common. If you want some of your retirement as an annuity. Taking the company annuity is the cheapest option.
OP here, I was wondering how many retirees are taking lump sum now vs some years back.
I am guessing it used to be close to 50/50 and now more like 95/5.
@akk+1d6Z55dX
Exactly what are you on ? We supported the culture because we worked here ? In the first place, the culture was different, not good but very different in the past. Second, where are you working, in heaven maybe ? You’ve got corporate angels paying you ? As for “greedy”, work 20-30 years, save some money and then have some know-nothing call you “greedy”, you’ll see how ridiculous that looks.
A few more factors to add to the post by @jpt+1d6Z55dX
Are you single or married? Do you want to leave an inheritance? Do you think you will live longer than from the mortality tables XOM uses to calculate your lump sum? Do you want to put the money in an annuity? If so compare the expense ratio to XOM's, it is hard to beat.
There are several retirement planning groups on campus and Yammer. Join and start going to the monthly meetings and you will get better educated on the subject.
Greedy retirees and retirement eligibles.
You have caused serious disservice to the society and the next generation of you g employees by virtue of working for this company and supporting the extremely bad (no) work culture that we have now
Someday he’ll will await for some of you
Is the company still offering lump sum to those leaving before retirement eligible? If so, when does that offer come?
I think it has been a general mix with probable majority during the last 2 years taking the lump sum due to all time historic low interest rates yielding highest lump sum payouts.
It comes down to your personal situation. If your house is paid off and your completely debt free and kids off the payroll, there is case to be made for taking pension if you assume inflation will be moderate in coming years. In this scenario, between the pension and your noting your social security payments will see inflation adjusted increases, you won’t run out of money. The main risks to consider for your long term horizon is if high inflation occurs and the long term solvency of the pension program. While there is government gaurentees on the pension should the program become insolvent their are limits to what government would step into cover. As usual, there really is no gaurantees to get full amount if program becomes insolvent if company where to experience a black swan event.
In taking the lump sum, if invested wisely and somewhat conservatively, you can likely do much better than what the pension payment would yield and be certain you retain full control of your money independent of future impacts in the evolution of the company and the future energy situation. In taking the lump sum and investing wisely, you hedge much better against inflation risk and risk of company pension problems.
It all boils down to your own financial situation, personal financial risk tolerance, and your outlook on the inflation rate long term and your view of the company long term.
I financial planner can help you run the different scenarios to understand trade offs of lump sum versus pension.
Hope this helps.
If you mean people leaving before they’re retirement eligible, I’d be willing to bet it’s close to 100% lump sum