i have been let go, was going to cash in the Lump sum, but with interest rates continuing to plunge, Iam thinking of delaying till I turn 60, any thoughts would be appreciated
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You're right, 7olk. But unfortunately, many Chevronites confuse "LBYM". Instead of "Living Below Your Means", they are instead, Living Beyond Their Means.
I suggest that the person start thinking about LBYM. If a family of five can live on one CVX salary then certainly one 54 yo can and save half. Unless he/she has a severe spending problem.
@7pqf, and because we were laid off, this has put many of us in a position of getting financial advice. That's exactly what people on this site are asking and interested to find out. The advice about the 72(t) account is sound. It's the only option available for a retiree under 55 years of age to pull money out of his retirement accounts and avoid the 10% IRS penalty.
Whatever you do, Don't take financial advice from the butthurt laid-off losers on this site. They are laid off for a reason. Get a clue.
@6siz, speak to a Financial Advisor at Vanguard about your need to withdraw from your 401k and bypassing the 10% early withdrawal penalty. You would want them to explain how a 72(t) early distribution account works. You do not have to move all of your 401k money into such an account, only the amount you require. I think the 72(t) can be set up within the 401k itself, otherwise it will be handled out of an IRA, which Vanguard can also help you with. Good luck.
I was laid off last year and Iam 54. I have no income this year. Is it worth withdrawing from my 401k even with a 10 percent penalty as my only income will be what I withdraw from my 401K account ?
If anything happens to the annuity (which is very remote), Chevron would have to become insolvent. If that happens, then the PBGC will guarantee the continuation of the annuity payments. There is a maximum limit depending on your age. Currently, a retiree who is 65 years old and receiving a single life annuity is $5,011 per month. You can find a table at www.PBGC.gov.
Very unlikely that anything happens to the Annuity, but I will still take the Lump Sum
Do a little research. The annuity is not untouchable. If Chevron continues in the meltdown, chucks of the business may be sold off, and your new company will change the rules and can absorb a lot of the annuity fund. Google it.
Moving from stocks to bonds at this low level of rates a good idea ??
Good luck to you, 4xvh. Hurry and move your piggy bank quickly.
jwj - u get it....It's ur cash take it an invest it. I have done very well just using no load index funds...SPYDR 500 etc...they beat the Lipper average and are dam cheap loads and fees. But father time is knocking at my door and I will have to look at bonds. I can remember when bombs were for old people....Oh wait I am old lol. But I will reallocate my savings this month!
@4sra, don't try to make good sense with with Obama administration running amuck. It's all political. Interest rates remain low to support this leftist government and to keep our debt of 19 trillion from getting out of hand. If we raise interest rates, we won't afford to continue borrowing and paying for the large interest tab and maintain the all the entitlement programs like social security, Medicare, not to mention the Democrat welfare programs that keep some of their constituent blocks feeding at the trough. It's a presidential election year, so don't expect interest rates to be raised. Don't be surprised for it to go down a click to give the stock market a temporary kick (for votes). It's always for the votes.
Even with a very strong June Unemployment report, interest rates still go down, don't understand it
Or wait til 60 to take your annuity, same rationale, I agree. the lump sum vs annuity is another topic/thread but as some have concluded, it is a personal choice and would benefit some more than others, being actuarily equivalent.(us that's how it's spelled)).
I agree, unless you need the money
Iam 53, waiting till 60 to cash out my lump sum appears to be by far the best option.
@1yqk, I agree the Chevron prnsion annuity is a good deal. But, it doesn't pay much to postpone taking it after age 60. That's the age its no longer reduced by the early retirement factor. Also, the annuity rate of return is closer to 6%, not 4.5% as you stated.
Even if you are over 65 and you plan to take annuity payment, if you dont need immediately, it pays to wait. Chevron pays 4.5% interest on the money you postponed receiving. Beats the market interest rate handily.
Whatever you do, don't take investment advice from the butthurt deadwood posting on the Layoff.com. Think about it.
Why don't you guys make this one thread? There was a thread with this same question a few days back. This site is in shambles with no administrators. They would have combined those fragments. This is like a rerun. Also lump sum vs annuity is a completely different topic. Stay on topic, Financial wannabees. We've heard your spiel. The lump sum ain't for everybody. Some people here would rather security than the get rich schemes that you guys peddle. They usually only benefit the FA's, bankers and brokers who always make money whether you do or not. Chevron's annuity is a better deal than you can get on the open market - it's been discussed ad nauseam. Unless you want your kids to be dependent spoiled brats and not learn the value of a dollar. You won't regret it when you're dead, I can assure you. You'll be dead. Dead people don't regret.
Iam not sure about your statement that interest rates can only go up from here, link at the negative yields in Japan and Germany
I would take the 5% garenteed for now! Interest can really only go up from current lows, and that lump sum invested in an annuity later will buy more. My off the cuff, and those previous, aside, it is good advise to find a high quality fee for service advisor... Spend a couple grand up front to make good choices from your situation will pay back big over time.
That's right, avt. If you getting an automatic 5% "return" annually just by waiting out retirement until you are 60, why pull it out now and RISK trying to get the 5%? If you can afford to wait a few more years, do it. Just be cognizant that any turnaround in interest rates could wipe out some of that expected gain.
I, for one, decided a year ago to take the annuity instead. I had my reasons and with 27 years on the job, the monthly annuity was good enough for me. Besides, the rate of return for my annuity compared to my lump sum was 6.1%. Not bad for NO RISK. If I outlive the 78 years the government says my mortality table is figuring, then I'm making money. If I need extra cash, I'll take it from the $1.6MM I have in my 401k or from Social Security in as little as 3.5 years when I reach 62.
Why I would risk the market ups and downs when Iam getting a guaranteed 5 % by not cashing in my pension till I turn 60 ?
Always, always, always take a lump sum and invest it yourself. Why would you trust someone else with your money? Take the money and run. You don't put it in a savings account or annuity at the bank. NEVER. What you need to do is open up a SELF-DIRECTED IRA as a vehicle in which you can invest your cash in dividend-paying (monthly distribution) ETFs for 5%+ returns. Take a look at any of the monthly income ETFs from iShares or Vanguard etc... and put your money in the market for the yield. It doesn't matter about the ups and downs of the market, the only important thing for you now is monthly income. If you don't understand how to do any of this, find a fee-only financial advisor who doesn't work on a commission basis and set up your financial future.
Interest rates are low. The 10-year treasury just hit an all time low today. Mortgage rates will follow and go down too. For everyone with a mortgage and facing a possible layoff soon, consider refinancing your home now, while you still on the payroll. Credit unions are probably your best bet for the lowest rate and closing costs.
The longer you can delay until age 60 and with interest rates low, the better chance you will come out a winner if considering the lump sum pension. You will profit by diminishing the early retirement factor by 5% per year until your age 60 and profit further if the 3-month average in the corporate bond interest rates go down too. You will have to figure if it's worth it to you to postpone the pension for those reasons, then turn around and risk it all in an IRA that will generate enough growth in a flat market to last you the rest of your life. If interest rates were rising or would do so by your age 60, you could also consider an annuity, if it's sufficient to help you live on. Otherwise, the lump sum pension will be your best choice and waiting as long as possible until age 60 to collect it would benefit you.