Thread regarding Chevron Corp. layoffs

-1bzu It has been shown to be actuarily equal, so if you live a normal life it makes not much difference. However, the lump sum is better if you plan on leaving it to your children. But with the annuity, you have a chance on them making a mistake and overpaying you like that fella below, who plans to steal from Chevron and his fellow retirees for the remainder of his life by accepting money that isn't his.

I am in the ESP and have selected the EOI so my days are numbered. I have 30+ years and cannot decide on the annuity or the lump sum which is looking pretty good right now. For the guys taking the annuity, what deductions is taking out? Specifically I know medical will be taken out what about FICA? I live in Texas so no State Tax. Any other deductions? I am leaning towards the lump sum so I can leave it for my children.

It is theft and tax fraud. They will eventually catch this. This is totally immoral to steal from the company like that.

Hey 1akd, perhaps you are envious of 1pfg. Leave him alone. How many people do you know that catch a lucky break like that? In any case, he said he's not spending it. If Chevron comes back one day demanding its return, he has it sitting there for that reason. Otherwise, it will go to his heirs later on.

@GwZJAzr-1pfg, You are taking/accepting money that is not yours and does not belong to you. Feel free to define that action any way that you like. Sleep Tight!

If I were you, 1pfg, I would keep the money and not spend it. If the error is not detected by Chevron by the time you die, that money will be distributed to your heirs and gone forever. By the time that Chevron makes the discovery, it will too late or too complicated for the company to get it back. Keep it and don't post anything more about it here. Enjoy your lucky break.

@1zrw, I sleep fine at night. I'm not the one committing a crime, it's only Chevron who is making a mistake. I'm not stealing the money since I'm transferring it to a separate account and not spending it. There seems to be no tax implications since the duplicate amount is not being reported anywhere.

Sorry - "conscience", but I'm sure you guys will catch that and make fun.

@GwZJAzr-1ynw, Can you sleep at night? That's the real question. It's obvious that you have a conscious, otherwise you wouldn't be posting about it. If you are not using the money, and never plan to, you might as well point out the flaw in their accounting. Then get a good night's sleep.

I have a dilemma that I previously posted on this site. April 15 (tax day) is approaching quickly and since May 2015, I have been receiving my monthly annuity payments from Chevron. The thing is, my annuity amount due is $4,389 but Chevron has been direct depositing exactly double that amount in my checking account each month. I haven't reported the discrepancy yet. To not touch any part of it, I opened new savings account and have been transferring the excess amount into the account every month. My dilemma is that when Chevron mailed me the 1099-R tax form in late January, it reports only the amount I was due to receive, not the duplicated amount. I chose initially to not have federal taxes withheld from my annuity payments, so it seems that keeping the excess money would have no tax implications as far as requesting a refund. Should I keep things the way they are until Chevron discovers the mistake or let them know now and return the excess money?

This is highly recommended (as someone also stated below):

How to Make Your Money Last: The Indispensable Retirement Guide Hardcover – January 5, 2016

www.amazon.com/Make-Your-Money-Last-Indispensable/dp/1476743762

This is the best thread so far on this site. Useful insights

Interesting discussion, my only concern with waiting till 2017 is it is like a gamble, you never know what might change in a year's time

@tuo, your comments reflect a better understanding of the issues than most CFAs would hope to have. But always good to get a different perspective.

@tuo, the subject you pursue answers too would best be addressed by a Certified Financial Advisor (CFA). You can talk to one at no cost at Vanguard, Fidelity, Schwab, and other places. From what you posted, I have the impression you are a fairly wise and intelligent person. The advise given here is done by anonymous people, some who know absolutely nothing. Seek a professional and read reliable articles on the subject. Good luck.

Iam leaning towards waiting till 2017 to put in for my lump Sum for 2 reasons

1. It is likely that IRS will start using a new set of mortality tables by 2017 which should favor an increase in your lump sum payments according to what Iam reading on the Internet

2. It appears that corporate bond rates will not increase by much if at all given the weakness in global economies which impacts what our Federal Reserve may do.

If rates stay the same , in combination with the new mortality

tables, it shoul pay off to wait till 2017 ?

Iam no expert, just trying to make the right call on this. Would appreciate feedback from the more experienced folks on this thread

Good for you, @xxs. You developed a retirement plan that works well for you. The lump sum is a great choice for some and the annuity for others (like me). Everyone's situation or needs are different, so one size does not fit all. In your case, you chose the lump sum since it works for you.

@GwZJAzr-xxs - This topic was discussed on an earlier thread at length. At the age of 63, you invariably have a healthy 401k that you can roll over into a brokerage and do all of those investments that you read about in that book by Ms. Quinn. In most cases the 401k account is roughly the same size as the lump sum. At the same time as that 401k grows and reaps all sorts of miraculous gains because you have become such a savvy investor from reading Ms. Quinn's book, you can enjoy the distinct advantage of a lifetime annuity for you and your spouse at a rate that you cannot get on the open market. This annuity is, in many cases, enough to live on. That plus when you take SS, it grows to an even higher monthly benefit, which, in most cases, is well more than enough to live quite luxuriously and travel in all but maybe the highest cost of living areas. The annuity is guaranteed regardless of market fluctuation and is your safety net. That's more than can be said of that investment account. That's the "best of both worlds" approach.

Thanks for the tip on that book.

It must be nice to get a fat severance check from the company that everyone hates and slings mud at on this site to be able to pay off mortgages and such. Life is tough working for a dependable major corporation that stands behind their word and backs up the employees that they had to cut when the price of oil crashes 400% by giving them enough to pay off mortgages, have stockpiles of cash, invest in stocks, etc. Seems like Chevron is/was/and always has been the place to work in good times and bad!!!!!

I just put in to receive lump sum after leaving at age 63. Decided against pension for a couple of reasons:

1: pension stops after you (and spouse, if you select joint) die, and if you die young and have dependents, basically too bad - in most cases (except 'sure' payment options) monies stop.

2: pension has no cost-of-living adjustment, and if inflation continues at historical 3 pct per year (it is presently lower, but 3 is the average) your pension loses half its purchasing power in 24 years. That is something to think about.

3: the pension is paid for your lifetime, and you will get the last laugh if you live to be 115 yrs old. BUT: it is increasingly common for pension plans to run into trouble. If a company declares bankruptcy, it can pretty much eliminate or at least drastically cut its pension obligations. Fortunately the Pension Benefit Guaranty Corporation (govt) is there to pick up A PORTION of the pension but except in rare cases you get a maximum of $5011 per month.

Some of this seems doom-and-gloom, or at least depressing, but that's the way it is and if it comes to pass, there won't be a lot you can do about it. Banks are not known for their compassion.

I got my hands on Jane Bryant Quinn's latest book (updated through end of 2015, came out Jan 2016) called How to Make Your Money Last: The Indispensable Retirement Guide. Listed for $27 on Amazon but they marked it down to $17 for introductory offer. It is a Godsend. In addition to investment recommendations (comes down to Vanguard S&P 500 index fund and a Vanguard bond fund, similar to what -mov said) for managing your own retirement funds, it takes you through the intricacies of annuities, pensions, asset allocation, IRA withdrawal strategies and total portfolio management, the whole 9 yards, pros and cons of every choice. It discusses various Wall Street vehicles that are designed to transfer your wealth to brokers. There are also sections on Social Security and healthcare / Medicare.

For $17 bucks, if you don't like it, pitch it. But what you have now is pretty much all you're going to have, so you need as much good information as you can get to make the decision that is right for you. Even if you have already pulled the trigger on your choice, this book can help you get the big picture and manage the rest of your life.

Live long and prosper.

20% cash 40% stocks 40% bonds. Using low cost index mutual funds and ETFs to accomplish this. About 15 to 25% of stock funds and bond funds are international. Vanguard for example gives online recommendations based on input you give or you can pay for advice if you feel unsure.

I used my lump sum to pay off mortgage and for home repairs.

various stocks and cash

For folks who have taken the lump sum, where are you investing it ?

No, that's something else. The Social Security Offset is a reduction in your pension amount that companies such as Chevron use to compensate for the fact that the company has paid Social Security taxes on your behalf while you were employed there. For every dollar in FICA taxes you pay, the company is required to pay a dollar as well, so they are funding your pension two ways. In essence when you retire they are saying "We paid for retirement by both funding your pension and paying half of your Social Security. We didn't want to fund your retirement both ways, so we're reducing your pension by an estimate of the half of your Social Security benefit that we paid for directly." It's legal and quite common in private defined benefit pension plans. Of course, as has been pointed out, they can't touch any of your Social Security benefit, they just reduce your single-life annuity pension (from which all the other forms of payment are calculated) by an amount that reflects this.

That's not how it works @GwZJAzr-ayc. No one can take your SS. Your SS benefits are independent of CVX. The government can do things in the future that we cannot predict,(means testing) or the system may become insolvent in the future, but that really is another discussion. I believe you are referring to the SS offset which provides you a GREATER upfront annuity payout until you receive SS, then the annuity is decreased by that same SS amount which makes your income relatively constant throughout, but a much higher rate upfront is provided as the annuity alone, to equalize the payments. The overall pension benefit, based on your total payments, is calculated to be the same. You are just getting the distributions in a different pattern. I do not believe, unless you plan on investing this money, that there is any difference in the payout. Someone else could clarify that in more detail.

Does anyone know about the Social Security offset if you take the Annuity? I do not understand it, and have heard that if you take the Annuity, Chevron takes your Social Security. This sounds crazy, but who knows?

If you don't do anything, your pension sits there waiting. It's not lost. However at some time later on, Chevron will send reminders to you in the mail.

What happens if you do nothing? Do they do some automatic distribution?

Good for you, epi. Chevron may have laid you off, but they didn't get rid of you all together. They still have to pay you every month for the rest of your life. Hahahaha. You had the last laugh.

I worked at Chevron for 26 years. Got laid off in mid 2015 at 58 years of age. I took the 100% Joint and Survivor Annuity.

I wasn't at Chevron very long. I'm taking the lump sum.