Thread regarding Chevron Corp. layoffs

I took the annuity and invested half my retirement portfolio in 4 cat houses in the Permian Basin. While the oilfield hands frac for oil out of the ground, my girls frac for money out of their wallets. My bar and snatch business is booming better than Wall Street.

Good info. Great stuff all around. Thanks for the thoughtful responses I can see how it could go either way. Personally, I hope that I am in a position to take either one and can afford either option. I suppose that if I still need to be accumulating and collecting and haven't reached my magic number yet I would still need the lump sum to invest. I hope that I am in the "spend down" mode by then, sipping a tall cool drink, and can sit back and enjoy life without bothering with market returns in either direction.

1Bvbt, Sounds great! My story is similar except that my invested assets have grown to quite a bit more than that, thanks to the recent bull market and some lucky picks. I have no need to risk any more than what is approximately 75% in the market in some form. That's why I chose the annuity, to balance it out a bit and give myself a bit of a "cushion". I have about a 70/30 Asset allocation and quite a few years emergency fund. So far I haven't had to touch the annuity and it's all going back into investments. I do appreciate that it is 100% joint-survivor though since my husband does not like to play the market as I do. I am trying to pull back though, and gradually move into the "set it and forget it" ETF's to make it more hands-off, as I get older.

Lump Sum guy here, but we each have to make our own decisions. I had two years pay saved, plus got a full year severence. Rolled over everything into a self managed IRA and over a year invested the over $3 million in a vatiety of good, solid dividend stocks. Among them, good old CVX, BP, F, GM, MGP, WPC, VZ, T, PM, JNJ, UPS, ABBV, ADT, GIS, O, etc. Living good, have touched zero in principal, and have reinvested between $40k and $60k of dividends each year. I’m 62 and planning on becoming dead for a while, so for the foreseeable future I’ll still be growing my portfolio, no differently than what I did as a CVX Employee. For tax management this works great, as I do not withdraw a cent that I don’t need in any given year. Again, to each his or her own, do some research, but to be honest with you, self managing and investing isn’t terribly difficult.

I did the math, crunched the numbers on several different retirement calculators and ended up deciding upon the annuity a while ago. I find it has proven to be more than enough, even without Social Security. Also have much more than the lump sum already invested. I haven't found that inflation affected the annuity noticeably. So I am delaying SS until 70. My purchasing power hasn't diminished much. It's a personal decision and may not be the same for everyone. I like the idea of getting a paycheck every month until we're both gone. I can't spend the money that I have now and my better half and I both drive the latest and greatest wheels and travel frequently. I understand that one size does not fit all. We have no heirs to have to leave anything to, or, rather, they do very well without help. Have fun and enjoy your retirement, is the main thing!

The posts the moderators cut is a continuing mystery. They leave some of the most offensive low-brow snitty bull and cut mundane chitchat.

I took the annuity and have been thoroughly happy with the decision. I have plenty left over from it and social security, which is COLA, to continue saving and investing. There's no way that I could spend it and all of my nest egg down before we leave this great Earth. We travel frequently and own late model vehicles and a nice home which is now way too much for just us two, so chances are we will be downsizing. I would recommend it to anyone asking, and good luck to all with your decisions.

@1ypsd, the lumpers will fare no differently if they burn through cash and pretend it will last forever.

Flashy new vehicles will be quite out of reach for annuItants. They will be driving Camrys their first ten years, then Corolloas, then used Yaris’.

@1wuof, I like your post and I also took the annuity for much the same reasons as you describe. But forgive me if I remain suspect to your high seven figure portfolio claim. I spent 27 years and Chevron and was a diligent saver and invested near maximum to my 401k. When I retired in 2015, my 401k balance was 1.58MM. Not quite a high 7 figures, but a respectable amount by most standards. How was it you amassed 7-9 million?

1tpkx, No, quite the contrary, there are hundreds of rational cases presented for the annuity, in this thread and the other related threads on this site which preceded it. In fact there are more rational and reasonable arguments and reals life examples for the annuity than the lump sum posted here. The advocates of the lump sump on here tend to be on the offensive and many have no recourse after being backed into a corner besides resorting to insults.

I happen to choose the lump sum by the way, for my own personal reasons.

Also inexperienced, naive investors just getting into the game without much financial expertise or much of a portfolio built up tend to prefer the lump sum.

-1tdbh: Well done, the first rational case for the annuity, and about time. It is not black and white for all. Different people have varying risk tolerance and different maturity handling heavy cash. The devil is in the specific numbers. I maintain, based on Chevron’s numbers, that most with some investment maturity and self control will do significantly better investing the lump. As others have said, this reflects that Chevron uses very conservative estimates to project potential investment gains in defining “equivalent”. If Chevron made other assumptions, the calculations might be very different. Then there is also investment maturity of different individuals . If you spend money like a drunken solder or freak on the first market correction, you would be better off getting the annuity.

I have been investing my saving in balanced funds for 35 years with reasonably good success. I see no reason not to continue into retirement, because I am hoping to live another 40 plus years. In 40 years the value of your annuity payments will be one third of their value today (assuming 3% annual inflation), whereas I expect my investments to continue to grow. To each his own.

@1sxay, What you suggest is something we do when we’re young and working, not when we’re older and retired. You have the luxury of working longer to make up for setbacks. That luxury no longer is available when you’re retired or time is not on your side. I went with the annuity for reasons that work for me. No regrets.

While I am confident that a lump invested in a reasonable stock & bond portfolio will generate significantly more returns than the annuity will pay out over an average retirement, I do not disagree that 20-30% stock market loses are normal and that these fluctuations are part of investing. If you pull out after a big drop or think you are so smart you can time the market so that you can jump in for the good and get back out to skip the bad then you would be better off with the annuity. If you hold your stock to bond mix constant long term (i.e., rebalance during market fluctuations) you will win in the end. One of the few times in life doing nothing is the best bet! Let me assure you that you do not need to be a financial genius to do nothing!

-1surg: Glad you find yourself with more than enough money for your life style, but you missed several opportunities to do financially better: for example you are now investing your annuity payments after tax but could have had the lump in a tax deferred IRA. If you folks really think investing in so complex and scary, requiring superstar abilities and hard work, then you should take the annuity. I, for one, plan to place the lump in a well balanced investment portfolio, define a reasonably conservative initial withdrawal rate, and set it and forget it. No high priced investment advisor, no shady brokers selling the next new thing, and no exotic investments. Vanguard (or similar), sensible mix of low-cost stock and bond index funds in an account that will rebalance automatically, and hold over long time window. Very simple. Over a decade or more this strategy has never failed to not only to return better than the current annuity pay out rates but to also keep up with inflation.

There is nothing wrong with living off the annuity and SS. Just don’t confuse your low cost living with a superior financial choice. If your goal is to, apparently, minimize living expense to maximize savings you come out much farther ahead with the lump sum. Annuity does nothing for savings.

To all of you lumper financial wizards, I’ll tell you this simple truth. For me, the J&S annuity and my social security fixed incomes are providing me about 160% of my expense needs. Yes indeed, I’m actually saving 60% of my monthly cash stream. The other $1.65MM in my 401k and IRA retirement accounts remain untouched since I retired 4 years ago while it continues to generate a conservative return.

It is definitely the case that if you don’t want to fuss with investing or if you don’t understand it, you may want to consider the annuity. I think that with sufficient due diligence you could hire an advisor and come out way ahead even with fees taking the lump sum. Additionally, nobody hires advisors anymore. You can purchase as few as two or three index funds and you are done. Set it and forget it. No ETFs. No churn. If it drops 30% who cares? Some of you clearly think investing is to generate income in some fashion and have concern that short term market swings affect that income. I’m not sure how that works. Short term swings are irrelevant. Your lump is invested so it grows quite well long term. You can spend off it every year at whatever rate works for you, regardless of the market.

At double the annuity amount it almost looks better than the lump sum. But not quite.

I took the double annuity instead of the single lump sum. That’s right, Chevron has been erroneously paying me twice my annuity amount for the last 3 years. It’s still coming steady.

This is like the abortion debate. Pick the the lump sum .... pick the annuity, but stop trying to convince everyone that your right and they are wrong.

I have noticed that every time interest rates tick up a bit, there is another wave of retirements in the technical, engineering and finance teams. Not so much in HR, admin, or support functions. Strange, isn’t it?

People seem not to grasp that the two options are only actuarily equivalent at a preposterously low rate of return, like half or less of what anyone with an index fund will achieve. So yes, they are the same, if you don’t know how to invest or are afraid, which is a legitimate situation for many.

Oh, I forgot - QUE the pathetic troll who has no argument, no rational reasoning, no life, no savings, etc and accuses OTHERS that they have no valid reason for their's. I'm still waiting to read a rational reason to choose the lump sum. sounds like it may have some merit. Just no one seems to know what it is - LOL!

I'll Wait, Popcorn dude or whoever you are that trolls here, counts off someone else's posts pretending to know who it is and doesn't add anything to the discussion.

The way it has been explained here, the annuitants want an annuity. The amount of the lump sum is irrelevant to them. You could triple their lump and they would still opt for the annuity. That is their preference.

For all of you taking the buyout and reducing the Chevron pension plan's liability and helping to shore it up - Thanks. You guys must sincerely love Chevron and really are team players.

Thanks and God Bless.

Yes, I took the lump sum. Besides all the investment return benefits, tax implication benefits, etc. reasons that make the lump sum a much more financial rewarding decision (yes, I have a liberal arts background, plus an engineering degree, plus an MBA) , I also thought about the very long term implications. I'm 55 yrs old, do I think that the Chevron teet will still be swollen 35-40 years from now? Not on your life! Some new battery technology will most certainly come along and with undoubtedly vast improvements in renewable energy sources, the petroleum age as we now know it will be vastly different. I really doubt that Chevron, in it current state, will even be a significant company, let alone one that can support its significant pension burden. When you talk about market risk, why not realize the risk that Chevron may not be able to fund its pension and your annuity. Once the default kicks in good luck with the Pension Benefit Guarantee Corporation. Your annuity will be reduced, significantly. Think about that risk for a moment.

@1patp, you are failing to take into account that even when the market is performing to your expectation, you are taking periodic distributions from Day 1. In down market periods while you take out money to live on, you sacrifice a lot. You are retired and not putting money back in to recoup your trajectory. Don’t be overconfident the market will always outperform the annuity over 30 years. In the overall averages, you are more likely to end up the same after 30 years— broke in your retirement account balance or the annuity stops when you’re dead. Either way, pick your poison.

Good points. The annuity is what it is, but what is compelling is the size of the lump sum in comparison. The interest rate assumption is crazy low so Chevron offers me at least double what they should in the lump sum. It is wayyy too much to pass up.

“Do you have a valid counterargument”:Yes. The annuity would return to me the value of the lump over 18 years, and at the end of that period the inflation adjusted value of the annuity payment will have dropped almost 50% (assuming 3% inflation). There is no time in history that the broad market has not returned more than the annuity payment PLUS enough to adjust the principle for inflation over a two decade period. The key to a conservative investment portfolio is to hold a mix stocks and bonds that can be rebalanced during market swings. Funds trapped in annuity are dead value, that can not be used to rebalance riskier stocks as markets fluctuate. In my case I have a large brokerage account which I need to spend down first (because it is not tax protected), plus I am likely to have a big capital gain from selling my house when I retire (it is almost paid off, but I will probably get something in the country (most likely smaller and less expensive) when I retire as the kids are long gone). With an annuity I would have to pay tax year by year no matter what other gains I have in a given year, but I can roll the lump directly into a tax deferred IRA where it will continue to grow tax deferred until I need it. Finally if I need financial flexibility, let’s say to buy that big ranch in the hill country or other investment opportunities that might arrive, I I can borrow against most of the value in an invested IRA account but would get comparatively very little against expected annuity gains. Expected total gains, long term stability in value, tax advantages, and financial flexibility all favor the lump over an annuity.

Saying you have other savings is not a valid reason to take the annuity. It is completely irrelevant, a red herring. You need to compare the lump sum to the annuity for your own case, not compare the lump sum alone to your savings plus the annuity. Saying the annuity currently covers most of your living cost is also not a valid means to choose between the lump sum and annuity. It is irrelevant. In fact it is dangerous to link annuity and living cost as the former is not COLAd and the latter is, especially without a mortgage. I could go all day.

@1pakk - 354 posts and not one of them intelligently articulates any rational reason for a successful person to have to stoop down and resort to taking the lump sum buy-out. Sorry, pal. Try again.

@1ocuy, You're telling us that you are so pathetic that you hang around this site reading 100+ posts, most likely responses to your own irrational drivel by many sensible people who read it and respond negatively? Say it ain't so - lmao! And you say you know a lot about "doublewide mortgages" if anyone needs to know. OK, don't need to know, but someone may - lol!

-1oqnh: 100 posts full of insults later, you are still unable to articulate any rational reason to take an annuity. So sad. Why is it I expect your doublewide mortgage is on overdue. Stupid people are soon parted from their money.

Seems like the best annuity option, if that is your thing, would the 10 or 15 year term certain. Inflation will k--l the value after that anyhow, so why not maximize the first years??

Yawn! Are we still arguing about this? Choose & move on!

1lgnn, You familiar with FANG stocks? You may need to rethink your comment. Or ditch your current FA. You missed the boat, dude.

I don't understand that fear the lumpers have either, couldn't agree more with how pathetic and sad the "lump-sum right now only" losers have to whine and squeal all the time on this thread revealing how afraid they are of the market and have been for so long. It's a little late to be deciding that you finally grew a pair and think that you are a big boy now and can invest for once in your life. Those tiny gonads are simply too little and too late. They just missed the biggest bull run of the century. Those of us who have no fear of the market, no fear of market risk, never did, never have, and have nice big fat nest eggs to show for it don't worry so much about the annuity vs lump sum decision. Many guys on this site cry like little babies thinking that them getting this windfall (lol, pathetic) will rescue them from years of poor performance and financial ignorance. It would be laughable, if it wasn't so sad and pathetic.