Thread regarding Chevron Corp. layoffs

@1wb Yup. A lot of people talk about the lump sum like it is automatically the smart answer, but they ignore the utility value of guaranteed income. That is exactly the point Bill Perkins makes in “Die with Zero.” He argues that an annuity is basically insurance against living a long time, and that without one you are forcing yourself to self-insure, which usually means oversaving, worrying more, and dying with money you never really got to enjoy.  

That is also why delaying Social Security can make so much sense for somebody who already has assets and does not care about maximizing what gets left behind. My own Social Security statement shows about $2,900 a month at 62 versus $5,200 at 70, and that higher benefit lasts for life. So if someone has enough investments to bridge those years, waiting can be a very rational way to buy more guaranteed lifetime income instead of trying to squeeze every last dollar out of a portfolio.

Same basic idea with a pension. My Chevron estimate shows a lump sum of $780k or a single life annuity of $4,200 a month starting when I’m 60. For some people, especially with few or no heirs, that monthly check has real value beyond the spreadsheet. It reduces sequence-of-returns risk, lowers the mental burden of having to manage every withdrawal decision, and makes it easier to actually spend and enjoy the rest of your assets instead of hoarding them out of fear.

And for me, another big advantage of taking the annuity later is that it effectively acts like a bond floor under my retirement plan. My latest Fidelity statement shows my 401(k) is a little over $1.2 million, with about $980 k in stock and about $196k in bonds. If I know I’m going to have a Chevron pension annuity later, plus Social Security on top of that, I do not need my whole 401(k) to play the role of safety and steady income. That lets me keep the 401(k) invested more aggressively for long-term growth, because the annuity is already doing part of the job that bonds normally do. In other words, the annuity is not just an income stream, it is a built-in stabilizer that gives me more room to let the rest of the portfolio cook.

People act like taking guaranteed income is somehow losing, but for plenty of older folks it is the opposite. After decades of taking market risk, there is nothing irrational about wanting a base of income that just shows up every month so you can live your life and stop obsessing over whether every market drop is going to ruin your retirement.

@v9, I agree with that explanation and also that many people ignore the "utility value" of the annuity, like waiting to take SS when you are 70. A person with a lot of investments and few or no heirs doesn't need to leave a big nest egg when they die, or play the fools game of having milked the system out of the most pennies upon death. (when I'm dead I'll sure be happy that I got more SS). After playing the market for all the years, and also while leaving the lions share of your investments in play, the guaranteed annuity makes more sense for some folks. I get that you can invest the lump sum and end up with more, at a certain risk. A lot of people comment like they're 30 years old and want dat monnay, like they think it's lottery winnings and are so anxious to blow it. Most older folks I talk to are about half and half. Half take the annuity and are living large because that money streams in and they have no regrets but have other savings. Some take the lump sum but are still all concerned about the markets, your choice lol!

" Many financial advisers want you to take the lump sum because they are most likely not fiduciaries and want to su-ck up 1-2% or more in fees off of it."
100% correct.

I am approaching retirement (this year!) and have used a financial advisor for the last 2 years. I strongly suggest that anyone who is seriously considering the annuity option also spend a few bucks and hire an advisor to do comparative analysis of the lump sum vs annuity. Considering that the annuity option will be a fixed payment for life, i.e. not adjusted for inflation, it may leave you in a pinch later on if you are lucky enough to have a long post-retirement life. An advisor can take your entire portfolio (pension, 401(k), brokerage/bank accounts, etc) and run a spectrum of market performance scenarios and give you a probabilistic comparison of the two options. You may find out that you have a 90% chance of a better outcome with lump sum, and the downside of the 10% might not be that bad. As other posters mentioned, there’s a good reason why a vast majority take the lump sum. For my case it’s a no-brainer after reviewing the analysis, going lump sum.

In any case, use all resources available to you prior to taking maybe the biggest decision of your golden years!

Don't forget that you get to keep your airline miles and Marriott points.

Regarding the annuity. Simple question. Do you trust Chevron? If not, take the lump sum, like the VAST majority of retirees do. Then you're more in control of your financial future.

@w0One thing that’s important here is that not all pensions are created equal. Some of the horror stories you hear, like the airline examples, were plans that were already underfunded or in weak financial shape before bankruptcy. That’s a very different situation than what Chevron has.

Chevron’s pension is funded through a separate trust that’s legally distinct from the company’s operating assets. That matters, because the money to pay benefits isn’t just sitting on Chevron’s balance sheet, it’s already set aside and invested specifically for retirees. 

More importantly, the plan is actually well funded. The most recent numbers show it at roughly 120% funded, meaning it has more assets than liabilities right now.  A lot of the plans that ran into trouble historically were nowhere near that position.

On top of that, there’s still a federal backstop through the PBGC. If a company truly can’t support the plan and it gets terminated, PBGC steps in and pays benefits up to certain limits. For someone like me, with a projected benefit around $50K a year, that’s well within the PBGC coverage range.

So when I look at it, I see multiple layers of protection. You’ve got a well-funded plan, assets already sitting in a dedicated trust, ongoing company contributions, and then the PBGC as a backstop if things go really sideways.

For my needs, a guaranteed $50k/year gives me a solid floor that will take care of my basics and then some which allows more of my 401k to be in equities to gain as well as ride out any downturns.

Many financial advisers want you to take the lump sum because they are most likely not fiduciaries and want to su-k up 1-2% or more in fees off of it.

Virtually all Chevron retirement benefits are "at will", that is, Chevron can change or eliminate them if they choose. Over the years, Chevron has been crawling with retirement medical compensation, effectively reducing it. (To show you how far its value has eroded, there was a time, maybe about 20 years ago, when 'retirement medical' was a fully paid-for medical plan.) While a Chevron implosion bankruptcy is highly unlikely, remember that there are many creditors in line ahead of you should that happen. Take the lump sum and redistribute it as best as your financial advisor recommends. Then it's your money, you don't have to worry about any of Chevron's whims.

@v9 What happens to an annuity 10 years from now if Chevron files for bankruptcy? I know it sounds far fetched, but I am just curious. I remember by dad had friends that worked for the airlines years ago, and lost a lot of their retirement. I believe they got pennies on the dollar after the bankruptcy was settled.

@OP: LOL. Each person needs to do their own analysis. My warning was just that folks should avoid the mistake of thinking 6% annual payout of the lump represents %6 returns on investment: It does not! Bottom line, most will not live 33 years post-retirement, and thus most will not make even 3% rate of return on invesment from their annuity. Those lucky few that live 50 years post retirment will make 4% long-term retruns, but with 4% long-term return on investment often considered a safe "worse case" scenario it is hard to see how the annuity would ever be a winner! Yes the analysis becomes a bit more complicated if you assume a 6% annual withdrawal rate from the invested lump, but that never changes the basic conclusion.

@v8 I think you’re mixing up “rate of return” math with what an annuity is actually solving for.

An annuity isn’t really an investment in the traditional sense. It’s insurance against two specific risks: living a long time and having bad market returns early in retirement. Looking at it purely through a return lens misses that.

Your math assumes a steady 6–8% return and smooth withdrawals, but that’s not how real life works. The problem isn’t average returns, it’s sequence of returns. If you hit a bad market in the first 5–10 years of retirement while you’re withdrawing, that 6–8% assumption can break down pretty quickly. That’s exactly the scenario the annuity protects against.

Also, the “it takes 16.5 years to get your money back” framing is a bit misleading. That only really matters if you treat it like a bond with a maturity date. With a lifetime annuity, the point isn’t to “get your money back,” it’s to transfer longevity risk. If you live into your 80s or 90s, the outcome looks very different.

On inflation, I agree that a non-COLA annuity loses purchasing power over time. But that’s why I wouldn’t rely on it for everything. In my case, I’m thinking of it as a baseline income floor, not the entire plan. My 401(k) stays invested for growth, which is what helps offset inflation over time.

The “just take the lump sum and earn 6–8%” argument also assumes perfect execution over decades. In reality, you have to choose the right allocation, stick with it through downturns, manage withdrawals carefully, and avoid both panic selling and overspending. That’s a lot harder to do consistently for 30 years than it sounds.

For me, I’m not trying to maximize the return on every dollar. I’m trying to build a structure where I have guaranteed income I can’t outlive, I reduce early retirement risk, and I can let the rest of my portfolio stay invested and do its job.

If someone values flexibility or legacy above all else, I understand the lump sum argument. But saying annuities “never make sense” is just as one-dimensional as saying everyone should take them. It really comes down to what problem you’re trying to solve.

I think a lot of these comments are treating this as a generic “annuity vs lump sum” debate, but it really depends on the person.

In my case, I’m actually leaning toward taking the Chevron annuity, and I think it’s a solid option for certain people.

For me, it comes down to structure. That ~$50K/year pension gives me a guaranteed income floor that I can’t outlive. I’m planning to delay Social Security to 70, so having that steady income from 60–70 is valuable. It also means I don’t have to worry as much about sequence risk in the early retirement years. If the market drops, I’m not forced to sell my 401(k) to cover basic expenses.

The way I think about it is that the annuity acts like a “bond sleeve” in my overall portfolio. I’m 54, It lets me keep my 401(k) more aggressively invested for long-term growth instead of dialing everything down just to create stability.

Another big factor for me is that I’m not trying to maximize inheritance. I don’t have heirs, and even if I did pass earlier than expected, my 401(k) would still have plenty of assets left for anyone I want to leave money to. So the typical “you lose the principal if you die early” argument just doesn’t carry as much weight for me.

Also, I think people are a little too casual about saying “just take the lump sum and invest it.” Yes, markets have historically returned more over long periods. But reliably turning a lump sum into a guaranteed $50K/year income for life, regardless of market conditions, is a very different problem. That requires managing sequence risk, withdrawal rates, and longevity risk all at once. It’s not just about average returns, it’s about not running out of money in bad scenarios. The annuity solves that piece cleanly.

I also think people underestimate how simple the Chevron annuity is compared to the “take the lump sum and buy your own annuity” idea. In theory, sure, you can do that. But in practice, now you’re shopping the retail annuity market, comparing insurers, dealing with pricing differences, and trying to avoid expensive products. Chevron is basically offering a clean, institutional pension. There’s value in that simplicity.

That said, I don’t think it’s one-size-fits-all. If someone really values flexibility, wants to optimize for legacy, or believes they can get better pricing later, the lump sum might make more sense.

But for someone like me, who values predictable income, wants to reduce risk in the early retirement years, and isn’t focused on leaving a huge estate, the annuity is actually a pretty rational choice.

When considering the Lump vs. Annuity question, make sure you are structuring your analysis correctly (there is a reason almost no one chooses the annuity). Let’s say you find that the Annuity pays out 6% of the Lump every year, and you think "that is not bad for a guaranteed return on investment". That would be the wrong way to think about it! Consider that by getting %6 or the lump each year, it will take you 16.5 years just to get the lump value returned to you (zero percent rate of return after 16 years!), and it will take 33 years to get twice the value of the lump sum (so if you live for another 33 years your rate of return would be 100%, or about 3% a year). If you live 50 more years (unlikely for most if not all) then you would gain 200% of the lump paid after 50 years or about 4% annual return. When you consider most retirees will not live 33 years post-retirement, and inflation historically averages 3%, you need to conclude that the Annuity is just holding back inflation and providing not real investment gains. Instead consider the lump invested, returning 6% to 8% per year, with annuity equivalent payments withdrawn mouthy, and you will have a better comparison. My conclusion was that annuities never makes sense, even as a "part of your retirement income stream”. If you want guaranteed longevity protection consider a deferred annuity starting at age 90 (or just delay social security to age 70 for the only “annuity-like” protection available that is also inflation protected).

@q7 even worse is when employees put a huge chunk if their retirement portfolio in Chevron stock. It is doing well right now, but that is a big risk. Smart people doing not so smart things that will impact their chances for retirement.

@qm, No the Exxon folks are not "replicating this thread" at all. It's a completely different thread, happens to link this thread as a reference, as to where the "idea" is from. That is very far removed from the occasional CVX dork who cuts and pastes (plagiarizes) things on this exact Chevron section of this exact website, from wherever they feel like, without any quotes or references. This happens quite frequently, sometimes repeatedly, and is a prime example of how the culture/quality of employees at CVX today is severely lacking.

@q7 Agree with your comment. Don’t bother with the CVX annuity when you can take the lump sum and get an external annuity as downside protection as part of a well diversified portfolio.

folks at exxon are replicating this thread and customizing for EM:
@OP+1kn00k1dn

@q5, annuities make sense if they are an integral part of your retirement income stream. Too many people think of retirement income as ALL stock market or ALL annuity or ALL (fill in the blank). A smart financial advisor will have you diversifying your income stream from several sources, some risk-taking and some guaranteed. The goal is to never have to worry about the ups-and-downs of the stock market. That said, you usually have to take the lump sum option (joining the 95% of Chevron retirees) and re-allocate the money amongst several income sources. You cannot underestimate the value of a good financial advisor.

Is there any upside to the annuity option? I always figured lump sum given market growth , but seems the stability/predictability of an annuity may be attractive too.

Really good post……

no thinking here, took the package in September and couldn't be happier

OP, you're post exemplified that Healthcare in the USA is so effing ridiculously expensive compared to pretty much anywhere else in the entire world!!

I would be nearly FI today if not for being subject to healthcare in the USA. Although property taxes and homeowner insurance are getting there. I need to save at least an extra $1M to cover those buckets alone (>$40k/year). Crazy.

Individuals who retired in the past ten years had the good fortune of retiring into an ever rising market. Be aware of recency bias when it comes to planning - that future will look just like the recent past. Market corrections are the norm, not the exception, so planning needs to account for a scenario where you are withdrawing funds in a prolonged down market. Same with one’s health, the unexpected can and does happen. Not to say live your life being afraid of shadows, but be prudent in planning as once retired, your earning phase is over.

Great job, OP. One piece of advice - never, ever take out a Medicare Advantage plan. These are basically Obamacare for retirees. Low cost, but you get hit with co-pays on everything, and you have to get permission for just about everything beyond a check-up. Advantage plans only make sense if you plan on being healthy the rest of your life. If not, Medicare + supplement + prescription plan (+/- dental and vision plans) makes much more sense for retired people, and essentially duplicates your insurance while employed, and the cost is manageable, about $1,000/mo for a couple.

The 90 points is nearly worthless - don't hang around for it. Once you have saved about 25 annual expenses you can safely pull the plug - don't overcomplicate it.

@fz

FAT! I’m a man, I’m forty.

You know, this site often has real garbage and unhinged posts. This thread is the opposite and makes me so happy to see folks helping each other by sharing their knowledge. Thank you to the OP for initiating it and to everyone else contributing to it!

Also, I am not against the occasional fa-t joke … but maybe we save that for a different post, eh? 🤣

This is smartest analysis by smartest human I ever met.

But you are only human I ever met.
I tell joke.
Amaze amaze amaze.

Excellent list !

Two minor points:

1. Chevron Humankind only matches $2,000 of your qualified donations once you have retired (when you have the income and the time to volunteer with charities)
2. The one key variable I omitted from my financial analysis while planning for retirement was the return on stock market investment the year (or so) after retirement. You will have rolled your (likely) lump sum pension and 401(k) plan into an IRA then. In 2018-19, the stock market surged ~ 40% (made early retirement life much more comfortable :) )

I went through this exact transition, and honestly the COBRA phase is what really opens your eyes to what healthcare actually costs.

While I was on subsidized COBRA, my total premium was around $850/month, but I was only paying about $72 out of pocket for the 1st 6 months post layoff. That feels almost like a perk and it kind of lulls you into thinking healthcare isn’t that bad.

Then you look at COBRA without the subsidy and it’s a completely different story. You’re basically paying the full ~$800+ yourself. That’s the real number, and it hits pretty fast once the subsidy goes away.

After that I moved onto the Chevron pre-65 retiree plan, and this is where the points really matter. With my 71 points, Chevron covers part of the premium and I end up paying roughly $800/month out of pocket on about a $1,200 total premium.

That sounds expensive, and it is, but here’s the part people don’t always appreciate.

The coverage itself is actually really solid. I’m on the high deductible plan which makes me eligible to still put aside money for an HSA, and even that is better than what I was able to find on the ACA for roughly similar pricing. The deductible is $3,400 in-network with a $5,000 out-of-pocket max, preventive care is covered upfront, and once you’re through the deductible you’re generally at about 20% coinsurance for most services. It’s a real network plan too, not some narrow network lottery ticket where you’re constantly checking if something is covered. It’s pretty much the same rock solid coverage that I had as an employee with my same doctors and medicine.

That peace of mind matters more than I expected. I don’t have to game the ACA marketplace every year, I don’t have to worry about losing coverage, and I know exactly what I’ve got all the way to 65.

And honestly, looking back, even though I wanted to leave earlier before I got laid off in 2025, I’m glad I stayed as long as I did. Those extra years translated into more points, which directly lower what I pay now. This stuff isn’t theoretical. It shows up every single month.

So yeah, it’s not cheap, but it’s stable, predictable, and the coverage is legitimately better than what I could piece together on my own. At this stage, that’s worth a lot.

What helped a great deal to figure all this out was to use AI. I uploaded just about all the information from the ACA, from cobra, from Chevron, etc in it, analyzed all of it and broke it down for me.

what a genius analysis - thank you!