Thread regarding Chevron Corp. layoffs

The last 3 posts, whether from different individuals or all the same person, please go ahead and take your pension anyway you like. But don’t pretend to know what your talking about. As a matter of fact, you are not making a serious attempt to be convincing. I’m here LMAO, you shmuck.

The return on the annuity is actually negative by at least the inflation amount. Currently the Fed is actively trying to push inflation higher. No telling if they will succeed by but the annuity is a loser any way you slice it. It is only actuarially equivalent to a terrible investment. If that is how you like to diversify your portfolio, be my guest. It would be like Chevron diversifying their business portfolio by acquiring JC Penney.

Statement below that the Chevron pension annuity effectively returns 6% are simply false. The return is basically 4% (3.75% for joint). The annuity amount increases with total salary during time served, with an inverse of interest rate on your retirement date, and with your personal soc. security offset numbers, but all these variables change both the annuity rate and lump sum proportionally, so have no impact on effective return of the annuity vs. lump (non-inflation adjusted). Similarly any consideration of longevity just makes the annuity worse. If I expect a high probability of success to have investment returns greater than 4% forever (a common off the cuff assumption for retirement planing), then it really does not matter how long I live as I will always do better than the annuity (plus when I die, I would still have the lump!). It is a key mistake of inexperienced investors to think of the value of money as static: Money makes money and Static dollar amounts always decline in value due to inflation.

“good fit for diversification”... nonsense! Bad investments do not “diversity” good investments. Annuities are not recommended by professionals because the numbers (risk/reward) simply do not add up. Diversification is placing investments in different classes that can be rebalanced as conditions change, not locking money forever in a slow return investment. Popcorn girl, just because you post the same nonsense again and again and again does not somehow make your statements true.

If you are extremely comfortable investing, have extensive knowledge of trading individual stocks and exercising options, or simply choosing superior index funds/ETFS and assessing stock market risks then taking a guaranteed annuity is a good fit for diversification. That way you can remain in the market and take considerably more risks while having a secure back-up plan. This effective and efficient method has taken me in the last several years from just over $2MM in investable assets to mid seven figures in investable assets only, not including other NW components, paid off home + vacation home and vehicles. This is also possible with the lump Doeam not here to criticize anyone else's decisions or methodology. There are many paths and roads to success. It is not achieved from criticizing others on a thread who are likely more experienced than you. Good luck to all with your decisions.

Dumb@ss, take one or the other. It’s your decision. Both annuity and lump sum are effectively equal if you make the same assumptions on how long you’ll live. If you have no clue, Google your mortality age. That’s what is used to determine the lump sum amount. If you think you’ll outlive your statistical mortality age, then go for the annuity, the gift that keeps giving.

If you are actually comfortable investing then taking the annuity is a pretty dumb move as it locks in substantial losses vs the lump sum. If you think those who say so are thinking about wildly high returns, then you don’t understand investing as well as you think. I suspect you think you are an astute investor simply because you own a 401k.

2ptdp, That's an interesting conclusion that you arrive at from reading about many investors and being around investors who are all invested at varying levels of risk, most heavy into equities, and many who end up choosing the annuity. Do you not talk to your peers? I can only assume that you speak to others at work contemplating retirement and these decisions and know that most are fully invested and have no fear at all of the stock market and investing. I suspect that some are doing and did much better than you, and perhaps you are the one with fear of the market and that you won't be as successful? I only read about a rare few people on here that would not be as invested as they have always have been after receiving a pension. If they are like me, I would tend to risk more since the pension annuity represents the fixed income/guaranteed interest-like portion. In my case it would only be about 20% of my assets if I took a lump sum. Not sure what all the fuss is about and where some of you get this fear of the market from, fear of investing, and primarily, fear of taking the annuity. Everyone who says they took the annuity is happy, content, mostly wealthy, living the good life and continue to be invested at the same level as before, and the very few people who are deathly afraid of the annuity talk about all sorts of fears and apprehensions. Yet those same people hypocritically say it's others who have the fear. Fear of what? Being wealthy and successful and making sound financial decisions? Speak about your own fears. Look in the mirror and you'll find the only fear that you need to worry about.

My annuity provides a 20% return on my lump investment and I am sure a smart experienced investor that I also get 50% returns on my other investments... oh and did I tell you about the extra special deal I got from the tooth fairy?

Nothing dim about taking the annuity. It is strictly an emotional choice. If you can find a way to survive on just the annuity and are unable to stomach stocks at any cost, it is a great choice. I don’t personally know anyone in that boat, but they must be out there and someone here claims to have done it.

“why I chose the 100% Joint survivor annuity for me and DW”...what does DW stand for? Dimwit? If

I retired in 2015, similar to you, @2nmbk My pension annuity effectively delivers approx. 6% over my statistical lifetime vs comparing it to the lump sum calculation at a 4% annual drawdown also, which is why I chose the 100% Joint survivor annuity for me and DW. I have the majority of my portfolio in the market and have been averaging over 25% annually, of course it's more or less a hobby that I enjoy. I have no reason to touch my investments with the Annuity and Social security coming when I hit 70. The lump sum would be a good choice for some one who was not a successful investor, needs a boost, or needs money to pay off debt. I see no need to pass up an opportunity to shore up a lifetime fixed return at an exceptional value and still be able to play the market and get great returns. Of course, some do not have the financial acumen to do so. Good luck to all of you either way.

It's fun to dream about money that you don't have and pretend what you would do if you had a successful investing career, like the poster who posted the last 2 posts, replying to himself, lol.
Good thing that he is not in charge of anything important, like finances, since it is so minuscule, but, anywho, it's all great fun and entertainment - please don't stop now, I'm cracking up and can afford to! LMAO!

Exactly. It would be like saying you are the cleverest gambler ever and won millions at the c-sino, then let them pay you out with free buffet credits instead of cash.

You could be the laziest dumbest investor on earth and just buy a couple indexes and still come out light years ahead of the annuity. Admit it - you are scared out of your witx by stocks. It’s ok.

@2ovsf, I'm happy to read of the true success stories here of the financially savvy investors like yourself who know how to diversify with fixed income as well as equities and have won the game and were wise enough to put the icing on the cake with a guaranteed annuity pension plan. You obviously are at an elevated state of wealth where you can afford an annuity for you and your loved one until death. I'm sure you will be comfortable living in the lap of luxury until then. It's such a shame that others on this thread are poor investors and have not yet hit their number and will still be shuckin' and jivin' like lowly court jesters in the market trying to make gains so that they can one day live a kings life, like you. Congrats on your success and best wishes!

2owrh, Being retired and receiving a generous monthly annuity, I could not disagree more! I have considerable knowledge of investing and finance and have been a successful investor if you consider 40 years of investing and high seven figures success, Some may not and have done even better, understood. Yet I can buy everything I need and even money left over from the pension, and I haven't even started SS yet. My investments can keep growing, untouched with the guaranteed annuity. I travel and blow money now more than I ever did since I know I have it! I have never been in as much of a position where I "wished" for nothing, based on what money limited me to, until today.
Now taking it as a lump sum may be better for a very few people under some circumstances, not all, but don't come on here pretending that you know more than others years ahead of you about investing, money management, risk assessment, and retirement finance.
wow - I can get 25% if I invest in this, wow I can get 30% if I invest in that wow. Index funds get this.
What's stopping you? Why are you here and still at your day job if you're such a shrewd investor?
Yeah... uhh.. We know. We've heard it. and seen it. been there, done that. more often than you. Keep working, and dreaming.

Absolutely no one who has “considerable knowledge of investing and finance and who have been successful investors” would even think of getting an annuity. Annuities are for people who are afraid of risk and inexperienced or incompetent in handling money.

Totally apples and oranges. With apples you gain 4% per year and with oranges you get 10%....let me see, let me think...I guess I will take oranges!

It's not a misconception at all, not in the least, for those with a considerable knowledge of investing and finance and who have been successful investors their entire lives and choose the best choice by a long shot, the pension annuity. The IRR (Internal Rate of Return) of an annuity is a well known, commonly used value, and useful to compare to other investment vehicles, such as anything that you would invest the lump sum in, which invariably will have a higher risk level or perform more poorly, take your pick. Apple meet Orange. (nice to meet you) Google that, if you need to, thanks.
And yes, the actuarially equivalent lump sum and anything you choose to do with it and it's ROI, is also subject to the same inflation rates and negative effects as the annuity. Not sure what your point is.

A common mis-perception about the annuity is that is somehow equal to getting 6% of something. The first year distribution for someone who retires after a fairly long career could be 6% of the lump sum the first year. But because the annuity lacks inflation protection it rapidly collapses. If you took the annuity 30 years ago (1988), after a pretty low inflation run it would be paying you about 2.7% today. So the average over 30 years might

“pension annuity effectively delivers 6.1%”, I am skeptical of this statement. Is your “effective return” defined by your annual annuity payments divided by the lump you would have received... or some other measure? Single life or joint life annuity? Currently my ratio, if I retired today, is about 3.8% for the joint with spouse. I know it varies somewhat for individuals and initiation interest rates, but over 2% annual difference is a lot!

I retired in 2016. My pension annuity effectively delivers 6.1% over my statistical lifetime vs comparing it to the lump sum calculation at a 4% annual drawdown. Naturally I opted for the safer bet.

The lump sum is the typical choice for those who have little or no nest egg built up from years and years of fear of the market and/or financial/investing ignorance. Many feel that it is like a bail-out, helps them to get out of debt, and pay off bills. They see and read about people who did well during the recent bull run and think that they can get the same results. Usually poor saving and investing practices don't change overnight, however. The financially secure people who did well for themselves in their career, are successful and have reached their target goal choose the actuarially equivalent and financially superior annuity because they can afford it.

An annuity pension is a good idea for those who can not manage money or would worry too much about short-term fluctuations. For everyone one else there is a high probability you will do significantly better investing the lump yourself. There is a high price for that income “guarantee” (more than 50% of expected gains on average: the annuity effectively delivers 3.75% whereas even a conservative diversified account historically has yielded 7-9% before inflation correction). The allure of the income guarantee is an illusion anyway. There is a reason for all the historical stories about “poor pensioners”...even a short period of high inflation will destroy the value of the annuity payments forever forward.

Annuity best of class. No argument. Then again, shooting yourself in the foot is much better than placing a head shoot... which does not mean I would choose to have my foot shot up. But you know better.... it is a great deal relatively speaking.

@2ljcp, What more you want the annuity to provide? It already offers a higher monthly payment than you could possibly get if you took the lump sum buyout and purchased any other annuity with that money. The only influence you have that can make the pension annuity better for you are two things— continue lengthening your years of eligible service in the company and work to increase your last 36 months of eligible pay. That’s all you have the ability to do. Start working on that plan first thing tomorrow morning.

I wish there were more one could do on the annuity side. It seems bleak!

Quite the contrary, I am extremely comfortable with risk, as I have the bulk of my assets at various levels of risk invested in stocks, bonds, real estate and other exclusive bits. I also prefer to realize my well deserved potential gains on my investments in years going forward. I also, investment-wise, see no difference in pre and post retirement: The equation for smart investing does not change for me either. I could live another 1 week to maybe 240 years- that is long term!!!! but unrealistic, so I only consider realistic scenarios and remain on Earth. That I have more than I need makes no difference, as I can do whatever I want with my money down the road as well. I am not particularly worried about wealth preservation because I have that extremely taken care of, and since I am viewing success as the best probably for long term gains, the annuity is simply the best decision that can be made.

Quite a blitzkrieg of posts! Yes you can put all you have make under a rock for safety if that is what you prefer, although I am not convinced it is any “safer”. For me, having built up a nice sum over years of work, like yourself, I prefer to realize my well deserved potential gains on that sum in years going forward. I see no difference in pre and post retirement: The equation for smart investing does not change. I could live another 30 to maybe 40 years: that is long term! That I have more than I need makes no difference, as I can do whatever I want with my moneys down the road. If you are worried about wealth preservation the annuity was not the smartest choice, and if you are viewing success as the best probably for long term gains, the the annuity is simply a mistake.

2kpwk, In my case, I have over double the figures that you quoted there and have no desire to rebalance or anything else. I cannot spend down what I have now and have no heirs to leave it to. It's just a matter of how much the state will end up with, or hopefully, my charity allocation. I wisely selected my pension as an annuity for my husband and me, Joint survivor. It was 100% the absolute best decision I have ever made. We are well beyond the "need money for more happiness" time of our lives. It makes no difference whatsoever other than being able to afford a better nursing home during our final years. It's obvious that there are plenty of people posting on sites like this who lack the proper perspective to be representing the average O&G company retiree with substantial wealth and/or resources. It seems like a "what if you win the lottery" thread dominated by people with nothing.

From the posts and mathematical explanations as well as heavily risk-assessment laden analyses presented on this forum, the majority of serious retirees and lifelong experienced investors prefer the annuity (Don't shoot the messenger, I am still deciding). This, as has been noted, is not the preferred choice for everyone, particularly not a younger individual who has plenty of time to invest and needs to build his/her nestegg. That's a different situation. You feel different about finances the more or less you have and the more time you have left. That also raises a different question, if you have won the game, do you still need to play? Many people make these analyses from the "building" their nestegg viewpoint. Some consider that phase complete and are doing more spending. What are you "building" for? To continue doing the same? Will you ever just sit back and retire, enjoy your wealth and free yourself from market influences? Or have you not met your goal?

“I have much more saved up from the annuity payments than the lump sum would have been”...takes about 17 years to get the full value of the lump out in annuity payments....have fun waiting!

2kpwk, No worries, mate, I have much more saved up from the annuity payments than the lump sum would have been in short time, thanks to my portfolio performance, and still have the annuity payments streaming in regularly. Sure if I'd have taken the lump sum at the time and invested it, I may have a little more, but poof! Lump sum down the toilet No annuity til last me through my golden years. No one can predict the market and at the time I took mine, the risks were no different. Today - I can literally be in 100% cash until I die with no change of lifestyle whatsoever. The market does not bother me in the least.
And Yes, I have considered inflation.

I had to take the lump sum out of necessity. I had quite a bit of debt to pay off before I could retire comfortably. I may not have as much socked away as some of you speak of, if any of these tales of fiction are half-true, but there's a lot to be said about being out of debt, and having my mobile home paid off, at least for me it is. I will be happy with the tiny bit that's left of my lump sum and social security, and with the ACA, reasonably priced health care that I hope I can keep, unlike my doctor. If I was in a position to be able to take it as an annuity, I would have done that. I would be much more immune to market fluctuations, and would not have to be a "genius" as someone posted below. If I had made better choices earlier in life and could afford it to today, I would have taken the annuity.

It's going to be grim for annuitants but they really don't have any options once they have made the wrong choice. Imagine working and slaving all those extra years for nothing.

Further to my last post, if you have 3 million in stocks and 1 million in bonds & cash (an aggressive 75%-25% mix), a market correction (20% stock value drop) would require that you move $400k from bonds to stocks to “rebalance”... you are not going to do that with annuity payments before the next market rise!

• 2kdtp: If the market has a “normal” connection (20% down draft) a few annuity payments will be like pissing in a swimming pool... good luck with that plan. Everyone is brilliant after 5 years of growth.

Well, since I have multiple sources of income, including a pension annuity, SS, and real estate, I regularly balance my portfolio by using my annuity payment to purchase stocks and bond funds, as required. So there's that.

• 2juns: if your portfolio really holds 100% equites I am sure that you have done great these last five years, but it is a rather dangerous position. Eventually stocks will pull back, as they always do, and you will do better off if you were holding some reserves that you can put in when stock prices are lower. Most would suggest even rather aggressive investors should hold at least 30% bonds (or cash equivalents). You can be more aggressive in the types of stocks you pick, if that’s your thing, but that still does not remove the need to a reserve (particularly during a boom time like this, when stock price is relatively high). Whether or not one takes an annuity with part of your savings should not influence how you balance your other investments. An annuity is an entirely different income stream, moneys that can not be used to rebalance a portfolio during market fluctuations.