If you planning to retire in 2024 and looking to take the lump sum, pay close attention to the segments interest rate the next two months. The rates keep climbing, and as they climb lump sum value goes down. Current projection is 10-15% decrease from last year. We will know for sure what the % by the end of September.
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I’m glad I retired last November and took the lump sum. I was happy with my job, but tired of all the BS. Feel sorry for the new folks that don’t have a pension.
I’m NOT going to gloat because I know very well that anything can happen in life. I’m thankful for my opportunity, and I wish all the current employees the very best.
One final word. I’m dismayed at the current leadership. It reminds me of the Jack Nasser days.
I took the lump from the Aug separation and sent it to my vanguard advisor and it’s looking pretty good this year. The contributory went into a Roth.
I feel fortunate that I got 9 month pay and unemployment will run out in 10 weeks.
Still on cobra till next February. Milking uncle Henry till the end.
My 2017 certified pre owned escape is consuming coolant so a new engine might be in the works all under extended warranty
It just keeps on giving.
A smart employer might have surveyed the employee base with a pulse like questionnaire and would have got a bunch of folks to retire last year for half the cost and zero headaches. They could have also offered to retrain the good ones that wanted to stay or with an option to be converted to contract employees.
The retirement lumpsum formula involves interest rates (from August of previous year), age and the estimated longevity. In a nutshell, it is calculated as the amount of money (including the interest earned in the following years) needed to cover the monthly pension payments from your current age to the average longevity of the Americans.
Waiting longer to retire means less time between the retirement age and the average longevity, less money is needed and lower lumpsum. Higher interest rates means more interest is generated, less money is needed and lower lumpsum.
Anybody that was able to retire last November and didn't, lost a major opportunity for lumpsum. This year, the economy looks weird. If we follow Carter years, high interest rates will be around for a while. If the economy crashes and burns, we'll see lower rates, but not as low as last year.
For the Ford employees that didn't retire or don't want to retire yet (I understand there are other reasons to stay at Ford besides salary, like health insurance or feeling useful, or not knowing what to do in retirement), the best choice now is waiting to be laid off. Those employees will get a package, and a few extra paychecks until that time comes.
Last November, I was an advocate for lumpsum, since it was a perfect opportunity. This year, I think that retiring with the annuity is the best choice. No, I still do not believe Ford will emerge unscathed from all the stupid decisions, and it will probably end in bankruptcy. However, the losses in lumpsum are too great, many people don't know how to handle money (or investments) and maybe PBGC will step in to guarantee some percentage of the pension (if the worst comes).
@1cng+1nOXYbmq Yes, companies will often offer lump sum buyouts to people already receiving pensions, but they typically do that when it is most beneficial to them because the interest rate is high and the payout low.
I heard that if you don’t apply for retirement right away, say ur ready a couple of years after you leave, you could get served up the lump sum option again. Maybe by then interest rates will go down again. Of course not everyone can do that.
@1ahb+1nOXYbmq – Congrats! I heard that the average lump sum was $1M.
28% is $280K. If you just put that $280K in T-bills you would be earning a monthly income of ~$1,160 (assuming 5% interest). That’s some serious cash!
My coworker is kicking himself for not retiring last November. He thought the interest rates would go down in 2023 and he would recover from % drop in 2025 with the added benefit of salary income for the years he was going to stay
He complains that he is "working for free for a couple of years". If OP is right, he will need to work "for free" for another year or two. He fired his financial advisor (he recommended that he stays.
I took the lump sum and retired last year. I am glad I did or I would have lost 28% of my pension funds.
@tey+1nOXYbmq - wow, that is huge!
I doubt interest rates will decrease anytime soon, so might as well retire now rather than wait.
Last year to this years dropped 25%. Huge exodus last fall because of this.