Thread regarding Chevron Corp. layoffs

I agree with -myca. I was going to post the same comment, but there, it has already been said. For me, I would continue to work for as long as I enjoy my job, for I won’t regard it as “work”. But would look to retire at 65 to still have the energy and health to travel, pursue a hobby and enjoy life in general. Plus, at that age, I can draw on Social Security and get lower cost health insurance premiums. Your mileage and interests may vary, but that is my plan. The Chevron pension is a smaller part of my retirement nest egg. My 401k and Roth IRA balance are 4.5 times larger than the lump sum amount. Besides, I might consider the annuity instead. It’s looking better all the time.

I get that point in general but "work for free" is a bit of an exaggeration and would only be in extreme cases. After all, you still have health care benefits and the advantage of not having to draw from any other investments or savings. And many employee's lump sum is not that many times their salary or are taking the annuity so the 10% reduction would not apply.

It is interesting to note there are two other factors which may influence retirement dates (and explain the current rush of retirements). One is that if you have worked a very long time, your lump sum may be large relative to your salary. Thus, a 1% rise in interest rates and 10% lump sum reduction could be larger than your salary thus you would work for free (or for stock options or 401k saving). The other is the flattening of lump sum accruals at age 60. There is a big inflection at 60 and the lump sum slows increases. Thus, the wave of retirements for older guys who have many years but modest annual stock grants.

It is funny the recent retirement rush was people monitoirng interest rates. The next one will be people who did not watch them but will notice them soon when checking their benefits as rates just ticked up.

Just before I retired, I reported to a (thought he was) "know-it-all" who couldn't come to grips with the concept that with interest rates rising that his lump sum pension would be educed in later 2018 months to the point that he was working (virtually) for free (reduced lump sum was greater than his pay). I think he plans to retire in 2018 but he failed to listen to the "economics" of receiving a reduced lump sum.

It is a decision/analysis that each employee should consider at-length before deciding to retire

dkgg, Understood. which explains why you are on this site posting on a thread about interest rates and their effect on pension lump sum buy-outs.

People who have money don’t talk about pensions because they don’t have to worry about things like that. The people who scrape along the bottom trying to hold onto their miserable jobs for a few more years can talk about pensions until the cows come home ....well you may have to work until you’re 90.

cdgx, Yes I totally agree 100%, there are one or two here who chose the pension lump sum and are regretting what could become a big financial mistake in their later years and complain a lot here, trying to justify it to themselves. The one chance at a great deal on a relatively risk-free income stream passed up. Now they are at the mercy of the market during retirement, not a good place to be. However, I am over 60 and have over 37 years with CVX and many peers who have taken the pension as an annuity and have absolutely no regrets at all and don't even know or care about this site. As stated accurately below, it would be a bore. I know very few who took the lump sum pension. Most jumped at the opportunity for low risk. The deal cannot be matched, if you consider commission fees, etc. Of course most of these 30 + year CVX employees have a wealth of other assets and the pension is only a small part of it. To put it in a low risk category to better balance all the other risky assets typically held as a diversification strategy is a no-brainer.

There are definitely one or two who chose the pension and troll around here writing their hands and regretting a bad financial mistake which can not be reversed. As long as they can buckle down expenses they can survive, at least.

@bslh - Beleive me when I say I’d rather 100 times over, be bored to tears having to hear repeatedly about the pension annuity or lump sum rant than to have NO pension at all. I’m sure everyone who is honest would also agree. Now go outside and play.

I bet you folks bore your partners to tears telling them about your lousy annuity or lump sums.

@bbve, your reasoning for choosing the annuity is a good one. It could also be a reason for others too, although it’s not a great solution for everyone. The lump sum may be wise choice given a person’s particular situation or goals. I chose the pension annuity for much the same reasons you did. I did so more for diversification and the guaranteed income stream for me and wife. She is not well versed with the stock market, mainstream financial investing or tax strategies as I am. I do discuss these things with her and try to interest her in learning, but if it’s not your thing, what can be done? The annuity works well for us anyway. It’s only one income stream and it serves as a base to plan with. Social Security will become another income source soon, and it will add to a secure foundation. Our sizable 401k and IRA retirement accounts are conservatively managed by me. We have never lost any principal over the years, I’m happy to say. If I die first, eat down the road I hope, she can always seek trusted advise or a wealth management company to take over that part of our invested assets.

That's one of many reasons why I much prefer the pension annuity deal that they promised, which is much better than what most of the industry offers, then letting them buy me out. And it's potential income insurance for your surviving younger spouse, if that's the case.

"The books aren't gonna read themselves!!!". Just a point of clarification - books can actually do that now.

2gwa, That's so sad that you do not have much of a pension, nor do you have many investments at all, and are not prepared for you future since you "did not study hard and got lousy grades and ended up with a lousy job and in a mess". That describes no one that I know in the office at Chevron, none of my highly educated, highly compensated coworkers with the healthy pensions and savings as well as lucrative outside investments which I discuss with future retirees at length daily. It's completely obvious that you are describing yourself and are a low level worker. You are unique, and there is no way that you could get into such a predicament other than being incompetent, nor know of one other than having that condition on your own, I feel honestly horrible for you. Attempting to Project your pathetic , hopeless situation on others won't help. I can assure you.

Go back to school, get a better position and start saving. It's never too late to turn your pathetic, hapless life around! Chop chop - Get on it! The books aren't gonna read themselves!!!

-2zeo: “practically everyone and their brother [who is] investing [is] laughing to the bank! Buy broad, hold long, trade seldom and you will not only be laughing but doing better than 90% of the active traders.

@2gyp - Whatever your situation is yours only. But I completely disagree with your premise that “investing is about 80% luck, and a small amount of know-how, patience, and diligence”. It’s just the opposite in-fact. It’s 20% luck and to be successful investing, it requires lots of know-how and diligence. If it was as you suggest, practically everyone and their brother would be investing and laughing to the bank.

The bottom line here is you folks don’t have much of a pension to fund your retirement. You should have studied harder and got better grades and then got a better job instead of the mess you find yourself in.

1bwz, He could be like me, who's 401k is much small than the lump sum value of my pension, but have outside investments which dwarf both, including brokerage accounts, real estate, rentals, etc. Got in at the right time. Investing is about 80% luck, and a small amount of know-how, patience, and diligence, I'm convinced. Call me lucky.

@1yxi, if your pension lump sum is 2X the amount of your 401k, I’d guess you are an employee with less than 10 years and you only contribute the minimum to your 401k in minimal risk or fixed income funds (money market or bonds). Worse yet, you have more than 10 years on the job, but you invested your low contributions to your 401k in high risk volatile funds and never monitored them frequently or you always chased performance, reallocating your money at the wrong time and not getting anywhere. Which is it, because it’s one or the other?

The value of your 401k depends on your contribution history and investment performance. If you contributed the max allowable including company match (under 415 limits) for the last 20 years (1997-2017) and got S&P500 market returns (including dividends) you would have about $2 million today. 30 years would give you about $6 million.

Most people don't max their contributions from the year they are hired and thus have less. I think for many people the 401K and pension lump sum are similar.

Your lump value is strictly years of service and current wage. So CEO and I could have identical max 401K balances but CEO would have a higher lump sum based on his salary and CIP bonus of about $4 million. If I am paid salary and bonus of $200k/yr, Mike is earning 20x more so his pension lump should be 20x more. If my lump sum at 35 years is $2 million, his is $40 million. Both of us would have 401K under $10 million but in his case lump = 4401k, by my lump = 0.2401K.

I don't know about you but my pension is 2x more than 401k.

Sure, everyone’s financial situation and goals are different. But, chase every last buck and nickel and you can lose focus of the whole picture. Pension lump sums for long service employees should be anywhere from 1/3 to 1/4 the size of their 401k balance. Why worry so such over the smaller portion of your retirement nest egg? By working another year, you get paid, and you can contribute more to your 401k to easily offset interest rate erosion of your future pension lump sum. Work another year and you are able to make up any market setback there could be. Work another year and you get closer to collecting larger social security benefits. And finally, working longer would hopefully bring raises in your salary that will boost your pension lump sum. If you enjoy your job and you work toward paying off your debts, you will always profit economically. Don’t be preoccupied so much with the pension. That part is guaranteed.

The math checks out.

but your pension is kinda eroding

If you don't have enough money to retire after 30 years you messed up somewhere along the way.