A question, I EOId and am near the end of my sixty day period, my separation day a couple of weeks away. My 401K money will remain in Vanguard for the time being but the main question I have is around my "retirement money." I've been told that I actually don't HAVE to do anything now, don't have to take either the lump sump or annuity until I am 70 years old, and that if I can afford to, it is better to let it sit and grow, at least until I am 62, I'm 57 right now. What are your thoughts on this? My main thought is that if I don't take it now, is their any chance I could lose it?
12 replies (most recent on top)
@2nev, You bring up a good point. One that gets too little thought and is overlooked by many. It's called the SOCIAL SECURITY OFFSET. Look it up in the Chevron Retirement Plan (SPD online document). Even though in the SPD, this topic is mention, it is explained superficially. You need to tell HR starting right now, to cover the Social Security Offset topic thoroughly when they start holding their HR Benefits and Pre-retirement Workshops.
There's an older thread on this Chevron Corp Layoffs board that has extensive discussion about this. It's well worth your time to search for it. It think the topic was called "Social Security Offset". This is the only input you have to change the calculation of your pension benefit. I can say that around 85% of all employees retiring or being laid off can improve their payout by simply sending the Chevron HR Service Center their Social Security annual statement prior to commencing their pension. Most retirees can expect to see a 5% to 20% increase in the pension amount Chevron is estimating. For those who already took their pension, the Retirement Plan rules still allow a retiree to send in their Social Security statement within 6 months of having started their pension, whether it was an annuity or lump sum. They are obligated to accept it and recalculate your benefit using your actual SS earnings. The subject is interesting and worthwhile bringing back up. I might look up the old topic and add to the discussion.
Did you include your social security estimate when you sent your package ?
Thanks
2zgi, your Retirement Commencement Papers (packet) takes about 4-5 business days to reach your mailbox once it's requested online or by calling the HRSC. The "packet" is good for 90 days, even though the calculations shown therein are estimated for the commencement date you initially elected. They will not go issuing you a new packet each time you want, unless the 90 day period on the one they last sent you has expired. I requested one just prior to leaving Chevron on my last day. I didn't send it back. I was able to still run retirement estimations online in the Benefits Connection website. As I saw the figures increasing, I postponed commencing my pension for another 6 months. At that time I requested a new packet, signed the papers and mailed it back in. It's recommended you make photocopies of all your paperwork before sending it back. Mail it back via FedEx or US Priority Mail to get a tracking number.
Interest rates plunged today because of BREXIT, you lump sum is going to increase further, agree that if you have not cashed it out, it makes senses to wait at least till the end of the year
Question, How long does it take after your request for the retirement package to reach you
We are not taking ours now... it went up 21000 from when I requested my packet 5 days ago. Gonna wait a bit longer...
I agree with the others who say take the pension by age 60, because the amount stops growing when you turn 60. If you are going to take it as a lump sum, you may want to cash out even before age 60, depending on when interest rates start going up. Right now the discount rates are falling, so it makes sense to keep waiting if you want the lump sum.
I won't be surprised to see Chevron make changes to reduce benefits in the pension plan or eliminate it all together. But, whichever it is, your vested benefit up to the date of any change will remain intact. So, don't worry about having to act prematurely. If you would like to leave your pension untouched for another 3 years, you are safe whether a revision is made to the pension plan or not. To ease your mind, the law requires all pension plan administrators to inform participants in advance of all upcoming changes, their rights, and available options. In some cases you may be grandfathered from being affected by the change. You will have sufficient time to make an informed decision.
Ank is spot on....roll it over at 60! But Chevron cutting the pension benefit is very relevant over the next decade. I would bet not in the next 3 years. So ensure you pull it out lump.
Agreed with first reply. I assume you have played with retirement calculator on website to get some real numbers. I wouldn't wait until 70. Either plan on now or at age 60.
+1 on the wait until 60. That is the greatest increase in benefit. It is unlikely that you cannot afford it. You can also do an early 401k tap without penalty, from what I understand, since you are over 55 and retired if you need that income.
Leave it of course!!! And it will surely grow to null. There will be no pension soon. All your money will be burned in the coming us financial system catastrophe.
OP, it depends on what you can afford to do while letting your pension sit and wait. The only thing working in your favor for doing that is your Early Retirrment Factor will be reduced by 5% per year. Full retirement age for the Chevron Retirement Plan is 60. If you can afford to wait 3 more years, you will eliminate this reduction. After age 60, your pension payout won't increase very much. At that time it will benefit you to take the annuity or roll over the lump sum to an IRA or into your Chevron ESIP 401k at Vanguard.