Thread regarding Chevron Corp. layoffs

You are a very astute investor if your 401k balance exceeds the lump sum. You have beaten the market and most investors!! No wonder you want the lump because you realize there is nearly a 100% chance of beating the assumed performance over any reasonable time period, even if you just put in in VTSAX.

6ujs, Yes, that is good advice. I am always learning. It's a shame that it's not the case for you, since you are poor, bitter, envious and hard-headed with nothing inside and will always be ignorant.

6cfk. A person who is up against the decision to choose lump sum or annuity, as far as everyone here that I know, is college educated. has multiple assets invested wisely, maxed out or close to max SS, and a healthy 401k which is larger than the lump sum payout value. And most of us enjoy or enjoyed our career at CVX. Many of us are math/science geeks and love crunching numbers, and will continue to do it in all applications, including financial. If you are accusing someone of not studying hard enough and having a better career, I sure don't know where you are looking, but I suspect it is in the mirror - LOL!

What? ...“worried about getting an extra fifty bucks...” You’re way off @6cfk. It’s a whole lot more than fifty bucks or even fifty thousand bucks. For most CVX employees who would be concerned with this decision, it could be $500,000. Not chump change.

If you hacks had studied harder you would have got better jobs and you wouldn’t now be worried about getting an extra fifty bucks by going this way or that with your pension provision. You just have to live with the mess you have.

You should see if you have enough in your retirement fund to go and get an education with. God knows, you certainly need it. Consider something like ‘legal and political philosophy’ to stimulate your mind instead of pensions for dummies.

6bex Wow, That is so sad that you feel that way. Like many here, I have had a wonderful, enjoyable and lucrative career and I am thoroughly pleased, excited and grateful to have a pension annuity make up for a small percentage of the bond portion of my portfolio. There is absolutely nothing miserable about it and never has been. I am also an avid investor. The comment that you made indicates not only a disgust with your own retirement prospects but also with your career and compensation itself. You should be the first one to take your own sarcastic and bitter advice. Most retirement age folks considering pension options have already won the game and have many options and income sources, including many years of 401k matching and stock purchases of buy one get one free.. You may be too young to know about that. lol

Please do consider your own advice so you don't depress the people who actually prepared and made the right decisions in life and career, unlike you.

The most boring people are those who go on and on about pensions. If you had a better-paying job in your miserable career you wouldn’t have to worry about how much you’ve got to retire on.

I will borrow a quote from very astute post from a thread I just read:

"The comparison is steeped as much in psychology, as in flinty numerical reckoning. The person with the (lump sum invested) will likely instead scrimp and settle for a smaller income, to better preserve the portfolio." That case, of course would most apply to the person with children they want to leave an inheritance to. I do not believe that is a healthy practice, IMHO......"teach a person to fish" instead. We have too many trust fund babies already.

The pension annuity is like free monthly money for your life of luxury, it keeps on coming, regardless of the stock market. Of course, assuming you have other assets as most CVX retirees do. You still go to Disney world. or wherever you like.........

@5tve, you’ve misconstrued what the other poster was saying. Read it again.

“The average insurance company is more likely to... [go]... bankrupt than Chevron”. Not sure this is true, if for no other reason than the average ins. company is more diversified across many industries. That Chevron’s annuity has better protection from the feds as a retirement plan than an off the shelf retirement annuity might or might not be true...can anyone else confirm this?

The Chevron annuity is on more solid footing than any insurance company out there that offers annuities that are less generous. The average insurance company is more likely to make ‘bad investment bets’ that would bankrupt it than Chevron would have of being “wiped out”. The primary thing to take into account is, your pension annuity is guaranteed by Chevron’s assets first before other creditors, if bankruptcy is your fear or concern. Secondly, any possible monetary shortfall of not being able to make the annuitants whole is guaranteed by the federal insurance trust called the Pension Benefit Guaranty Corporation (PBGC). I conducted a quick search for the Maximum Guaranteed Insurance Benefit Level, to find in 2016 it was $60,136 for a 65-year-old retiree in a single-employer plan. That amounts to $5,011 per month. I wouldn’t be too concerned with any so-called risk if deciding to take the Chevron pension annuity.

4ger, A global conflict has the potential to upset the stock market, the value of all types of investments and savings accounts, so called FDIC insured cash-like vehicles, and the value of the US dollar itself. To isolate the risk down to annuitants in any pension plan is quite the understatement. In that situation, things like Real estate may become king. But as far as normal financial risks the pension is insured somewhat by PBGC. That's something that you cannot say about most investment vehicles.

As we saw with Macondo, one drilling mistake can nearly bankrupt a company. One asleep at the wheel driller and your annuity may go up in smoke.

The annuity does have risk. A global conflict between US and China, or Russia, would devastate the global economy and investment instruments upon which pension plans are based. In addition, Chevron’s pension plan is only insured or guaranteed up to a certain level

The annuity has value against longevity risk. How risky is the assumption that the CVX pension fund remains fully viable for the next 40+ years?

Right you are @3qrw. Spot on. Most would take the lump sum because of their financial circumstances (and not so much that they think they can consistency outperform the annuity’s equivalent internal rate of return). I’ve been fortunate to be getting ‘killer returns on my 401k and IRA accounts since retiring but I’m not kidding myself about continued returns at those levels into my old age. Besides, keeping up with managing investments involves work and some worry. I’m fortunate to have retired with my mortgage already paid off and no other debts. I’m one of those fortunate retirees to have had the ability to take the Chevron annuity and have it work me. I hope the rest of you are able to plan ahead and equally make an informed decision when it’s your turn to retire and enjoy the fruits of your labor.

Traditionally, pensions have been distributed as an annuity. It's only more recently that companies have given the option of taking the pension as a lump sum. In fact, many companies are now doing away with the annuity option completely and only giving a lump sum, if they even offer a pension anymore. Giving a lump sum is advantageous for employer because they can give you your pension once and for all and be done with you. No long term responsibility for them. That being said, many employees if given the choice between the two will opt for the lump sum due to their personal financial circumstances.

-3cee, the hysterical laughter is the ‘norm behavior’ of most working employees who are either far off from retirement or those who have no understanding of what’s coming. Hint: We all must retire one day. Some prefer to think the market returns seen since March 2009 are expected to continue forever. Some know well that in retirement, what you have cannot be replaced and must be administered carefully for it to last. I’m sure those who laugh hysterically today will one day not be laughing so hard. Retirement is serious business.

Then why all the hysterical laughter around the water coolers at Chevron whenever anyone mentions the annuitants? As if they all live with their mother or something.

There shouldn’t be any ridiculing or put downs leveled against anyone for their preference or choice of taking their pension as an annuity or lump sum payout. Both are actuarially equivalent when taking the person’s statistical mortality into account. Some will gain and some will lose in their decision. Not because they chose one form of pension over the other, but because they either did better or worse in their investing strategy (lump sum) or they died later or earlier in life than statistically expected (annuity). There are other variables that can affect the two pensions, like taking higher distributions than necessary and outliving your retirement savings (lump sum) or realizing income erosion from fixed annuity payments that are minimized by inflation over the years. There are rewards and perils in both, but essentially they have the same value for most people who did their homework’s and due diligence.

Just bring up lump sum vs annuity question and inferiority complexes come out of the woodwork.

“Go back to English Composition 101”... Lol.

@1myb, you are the one and the same nutjob as the previous poster. Don’t try to fool the rest of us. BTW, everyone knows to direct their response to the original poster by actually referring to the OP (as I did with you, so no dumbazz confuses to whom I’m directing my remarks). Did you or the other dunce do that? Hell no, so I that it as I see it. Go back to English Composition 101 you moron.

@1khs, not only are you a dunce, but a moron. It’s you who lacks the comprehension. Geez, the crap one was wade through on this site is almost intolerable. Christ, give me patience.

The annuity is not a “buyout” you dunce. It’s the lump sum conversion that is the buyout. Being ignorant is not a good way to go through life. Wise up.

Go ahead and mock the annuitant. But one day it’s your turn to confront the future and the risks. Put all your eggs in one basket and pray you made the right decision. When principal is lost in the stock market while taking withdrawals to live on, you will realize too late how difficult it is to replace it to get back on track. Retirement is to enjoy and relax, not to continue worrying and looking for work again. Choose your path carefully.

You fail to understand that the guy who took the annuity only did so out of fear of the stock market. He is more afraid of the stock market than he is inflation. He will probably annuitize the rest of his investments or buy bonds. He will end up spending less each year as inflation eats him alive. His best option is short longevity.

There is no one correct choice. Insurance costs money (because someone else is assuming some risk). The lump statistically will deliver a better return than the annuity (no surprise there), but not for the lucky bottom performers (by luck or skill). I have seen several here brag they took the annuity and also are investing their 401 money’s very conservatively. These people seem misguided to me. If I take the lump, my investment mix may well be a bit more conservative. However if I take the annuity, I will want to invest the 401 funds a bit more aggressively... since the remaining risk is inflation. It is not rocket science, but obviously one needs to consider their whole estate... not each bit in isolation. From where I sit we are all in good shape (assuming we have been in the industry for a decade or two)... most would love to have the quandary of which bucket of money to consider primary.

Good choice, (my opinion).

Your choice will always be what’s best for you, OP. As long as you’ve done your research and due diligence, you cannot go wrong. Best of luck, because when it comes down to it, we don’t know what the future holds for us. We only try to guess and plan with what we know today.