Can someone pls share that date? Ty
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I gave up and left Nov '22 after 25 years. I can't believe a company I was so fiercely loyal to did what it did to its best employees. Used to feel like a family. It's a shame. Good luck to those of you still there.
@5jsn+1o66ZXkz. There are a number of other factors. While the mortality table drives the lump sum down as you get older, the monthly pension used to calculate lump sum is decreased by a few percent for every year you are less than 65. Also, the early retirement supplement is payable until 62, so the lump sum value takes that into account as well.
I see many looking at the rising interest rates, but @2aet+1o66ZXkz said something important: mortality table. The life expectancy of women dropped 0.8 year and the men's went down 1 year.
The formula for the lump sum is resolving the equation where the amount of money today, plus all the interests earned every year, will cover the monthly payment from the day the person retires until the average life expectancy.
For all the men that didn't retire last year, you are now 1 year older, and have 1 year less of life expectancy. That means 24 monthly payments gone from the calculation vs last year.
So in the best case scenario, where the man is now 50 years old, with 30 years at Ford, he lost already 8% of the lump sum vs last year. For a 60 years old man, he lost 15%. That's considering the same interest rate. If we include that interest rates more than doubled in a year (from 2.33 in August 2022 to 5.13 today), the lump sum losses are going to be above 28% (28% was best case scenario calculation).
So now the question is, to take the reduced lump sum or the monthly payment? Many people are not smart about money, and end squandering the lump sum. On the other hand, are you willing to bet with your pension, that Ford is going to be around in 10 years? PBGC may go down itself too, or probably just give you a partial payment.
I can't say I completely understand how the segment rates work other than segment 1 is for years 0-5, segment 2 years 6-20 and segment 3 years >20. I believe the August rates are used for the "next year" (i.e. August 2021 for retirements thru December 1 2022, August 2022 for retirements thru December 1 2023, etc.)
August 2021 0.66 2.50 3.12
August 2022 3.79 4.62 4.69
June 2023 5.26 5.23 5.16
Also, mortality table and years of service are other factors than can increase or decrease your lump sum.
Nov ‘22 retiree here… last year I was using lump sum/pension estimator tool, I found each year of staying (already age 55, beyond 22yrs service) basically increased lump sum about 6,7,or 8 percent. So if you stayed thru this year, from last year you got an increase, but IRS rates might decrease everything by 10% due to interest rate rise, so it might be just a couple percentage puts down.
So everyone agrees lump sum went down by about 25%, but don't agree on next year's hit. It was 2.25 that created the 25%, but next year it is a full 3.0. So it will be worse than the 25% hit. Simple math.
You can see the IRS rates here: https://www.irs.gov/retirement-plans/minimum-present-value-segment-rates
- Keep an eye on the August rates. Ford Uses those.
- My guess we'll see about 10% down for 2024 (ret. after Dec.1 2023)
Don't tell us we did not warn you. If you had over 30 years last year and did not retire you are working for free.. If you don't retire this year you will be working for free next year too. Its going to be a hard hole to dig out of unless you put your faith in Ford keeping its word on fully funding the pension monthly payments.
I bet we will see our Pre HRA and HRA after age65 benefits trimmed too...
Nobody is safe from these clowns in charge.
I can't imagine lump going down again more than 10%, not 33%.
Lump sum still a good option bc you will get control of your $ and let it grow vs a monthly pension that never adjusts.
@jjq+1o66ZXkz. Lump sum formula went down about 20% this year. The lump sum vs pension decision was easy last year. Now, it is more difficult. But if you are convinced that the lump sum option is still best for you, it will go down some more if you don't retire by Nov 30. At this point, the pension is probably a better option until interest rates fall.
Ask a financial planner to run the numbers for you. Since there is no fed meeting this month, the rates are all already known from the fed, just not officially published by the company yet.
Additional 33%?!?! You clearly have no idea of what you're talking about.
Might as well take monthly instead of lump sum at this point
If you did not take lump sum last year by dec 1, it went down by 25%. If you missed that but don't go by this dec 1, you will lose an additional 33%. This clearly means lump sum is no longer a good deal. (the August IRS segments are used but the new calculations won't be available until mid-September. Last year, they were available on September 22.)
lnc+1o66ZXkz Please elaborate...
The lump sums will be down for next year, since interest rates continued to rise. You missed the boat, however, if you didn't, or couldn't, take it last year. A lump sum payout is no longer a good deal.
The August IRS segments are used but the new calculations won't be available until mid-September. Last year, they were available on September 22.
Sometime in September I believe