- Are you still happy with your decision?
- When you run the lump sum calculation and set the date for December, 1 2024, has your lump sum number recovered or is it still down x% from the December 1, 2022 high?
18 replies (most recent on top)
@3jtr+1sBr0JSO - Likewise! Combined both into IRA with 65/35 stocks/bonds split. Will withstand any long term downturn with ease. Sleep well at night knowing that I don’t have to depend on a Ford “pension”.
Things to consider when you choose monthly pension payment vs lump sum:
-
Monthly pension instead of lump sum doesn't take inflation into consideration
and your purchasing power just decreases each year due with inflation -
Lump sum investment options are wide open vs trusting Ford to choose how
to invest your pension money. -
My pension money rolled over into a traditional IRA along with my Ford 401k has
made about 12% annually since I left Ford in November 2022 and staying on path
Basically, both accounts in a conservatively invested traditional IRA
has been earning what my yearly salary was. No regrets whatsoever !
I told all my friends to get the he-l out... It was a perfect storm of low rates and high lump sum.... Also account for the market in 2022...so I took my lump sum and rolled it into an IRA and returns have been pretty good..
I agree that we will not see another event like this for some time.
@2iat+1sBr0JSO - You are 100% correct. Taking the pension in the U.S. is different than other countries. Although there is gov insurance that will guarantee a portion, the overall Ford pension payout and value is worse than any other developed country. Even Ford Canada employees have a better playout and security. Ford German employees have it the best.
The lump sum still had some positives. Sure the value has gone down, BUT
- The monthly pension amount never changes (what return do you need on the lump to at least match the monthly amount and can you do better)?
- You get all of it and can pass to your family - esp important if longevity isn't on your side
- If you roll it into an IRA, you will have zero income and can manage taxes and Healthcare subsidies
- You are no longer dependent on Ford to stay funded
I think I would still opt for the lump for total control of my money
I should have taken the lump sum in 2022. Now I will have to wait until 2026 for my pension value to be back to where it was in 2022. Basically I have lost 30% of the gains.
Yep, the lump sum payments doesn’t make sense at this point.
2022 was once in lifetime opportunity for those who took the lump sum. I don’t think we’ll see segments interest rate that low again for a long time.
My pension lump sum has gone down by 30% since 2022. I am not going to take the lump sum. I will take the monthly payment when I retire next year.
https://www.irs.gov/retirement-plans/minimum-present-value-segment-rates
Ford uses the August IRS rates of the prior year to calculate the next years lump sum payout. The higher the number the lower your lump sum payout is. The lump sum pay out was lower in 2024 but the decline was partially offset by higher raises and one more year of service.
IRS Present Value Segment Rates used to calculate the pension lump sum starting January 1 of each year.
Effective Date RATE 1 RATE 2 RATE 3
1/1/2022 0.66 2.50 3.12
1/1/2023 3.79 4.62 4.69
1/1/2024 5.45 5.52 5.43
Go to the IRS site at the End of September and compare the rates to the prier August. If the numbers are higher you get less money, if they are lower you get more.
Minimum Present Value Segment Rates | Internal Revenue Service (irs.gov)
@1pch+1sBr0JSO - OP here. Thanks for answering. You’re right. One would need to be mentally ready to retire. Best wishes.
I was 55+ with 30+ years in 2022, but wasn't ready to retire and didn't want to look for another job outside Ford. While the culture has changed quite a bit in the past couple of years, the job is quite easy. I may retire in the next year or 2, and if I were to take the lump sum, yes it would be 20% less than 2022. That means I worked the past few years for 30-50k/year. But to answer your question, I'm satisfied with my decision mainly because I didn't want to retire yet and I have enough "other" money that the lump sum reduction isn't all that important.
@1igo+1sBr0JSO - yes very possible if you tuned 55 or have 30 years of service after 2022. You would see a major jump in the lump sum / monthly pension numbers.
Makes me glad I was fired in August 2022. Got 9 months salary and grabbed my pension lump sum on the way out.
I’m up quite a bit, not sure why everyone is saying they are down.
It is down, I have not checked lately as it will get me depressed. I think I'm still off about 20%
It is way down.
It is down big time.