How many of you will jump ship before December 1st to avoid the interest rate increase?
For retirement eligible, coming to work on the first of December has a huge cost. Staying another 3 months past that potentially another big cost.
Each quarter you stay, you lose more than your salary, so essentially you are doing volunteer work.
Everyone that is eligible should give notice immediately and beat the December deadline.
I retired from EM early 2022 and took the lump sum. I was concerned about the stock market in 2022 so I just put the LS in a 4% CD to avoid the 2022 20% stock market correction. I took a 5% portion of the LS and bought Nvidia stock. I was going to buy Arista Network's stock at the same time with another 5% of the LS but it never dropped below my price target. The Nvidia stock has gone from 45 dollars to 230 dollars. I still have the remainder in the CD but have never used any of the LS yet. I'm fine with the results so far.
If retirement eligible with 30 years of service and stay past December 1st, you lose equal to 3 months of pay. If interest rates continue up, next quarter lose another 3 months of pay.
It becomes volunteer work, losing as much each quarter as you earn each quarter.
Timing is important …
Lump sum calculations based on the month of the quarter that you retire.
Make sure you understand the fine print or it may put your calculations in the next quarter.
Must have opened a valid IRA prior to Voyager writing the check, otherwise Voyager withholds tax as if income.
@f1 Taxed as income if you take it as cash, if you transfer to IRA no taxes until you withdraw it.
A lot of those 'retirements' are probably FU XOM, I'm not doing a PIP, I've had enough of the Hunger Games. For those US employees that remain, may the odds be ever in your favor and may you make it to retirement.
Is there a Federal and State withholding tax on the lump sum?
I plan to jump in November, take the lump sum, and withdraw 4% annually.
The interest gained above 4% will grow the principle amount so that my 4% amount is larger each year and possibly keeps up with inflation.
Annuity seems to be around 6% annually of my LS amount, but is fixed. In a few years, if my return is around 10%, my 4% of my principle will exceed the annuity amount significantly. In 30 years my 4% will far far exceed the annuity amount significantly.
That is just my personal opinion and in my projections based on taking out 4% and gaining more than 4% each year. I might just lose it all.
@ev depends on your situation, your risk tolerance, many things, not a one size fits all answer
Which one is actually better, the lump sum or annuity? I’ve talked to many employees and it’s about 50/50 on which option is better.
I am taking the LS.
I will depart in November and first day of retirement 01 December, so 4th quarter interest rate applies.
Well, I had considered working into early next year, but am now heavily reconsidering.
Newsflash, not everyone takes lump sum, and interest rate doesn’t have same impact on annuity. So many other factors to consider, than just the rate itself, so you can all stop with the $2 uninformed financial counseling. Also, if you knew the ultimate employee targets, you’d also know increase in retirements will not save most of your jobs but accelerate your downward movement in the rank with fewer to age dis-crim-i-Nate against.,
If I had retired when interest rates dipped, I would have taken a 25% penalty on the lump sum. I did not realize how the interest rates would rise and full retirement next year interest rate calculation seems to make my lump sum look like it gets a 25% penalty.
I will jump in November and get the 4th quarter interest rate.
I am shocked at the number of people who could retire and do not. Don’t they ever look at alight and realize what interest rate changes will do to their lump sum.
Timing is important.
Anyone who was RE in 2022 (or want to leave before fully RE) are probably kicking themselves. Historically low interest rates occurred in 2021/early 2022. That means losing out on a generous lump sum payout that could be re-invested into a strong financial market that has delivered double digit gains over the last four years.