Thread regarding Chevron Corp. layoffs

“at some point in the future, your invested lump sum will diminish to zero”... this is not a forgone conclusion. In fact with reasonable controlled withdrawals one can maintain the base value the invested capital (lump) indefinitely.

I just ran Chevron’s calculator and it estimated %5.48 effective return for 100% J & S and %6.27 for single life. That value is not bad...maybe the annuity is a contender.

All of you are off the mark or got the wrong information handed to you. My 100% J-S Annuity in 2015 resulted in an effective rate for me of 6.05%. I calculated it and it was confirmed by a Certified Financial Analyst with Vanguard Investments. The guy honestly congratulated me.

• 3.75%?????? Take your foot off the brake pedal. You're doing something wrong. I can purchase 2 annuities like that on the open market with the Chevron annuity pension lump value. And it's actuarially equivalent for any given age. Look it up, don't dispute the term.

The 3.75% of the lump per year in my case is for the J&S annuity (based on Chevron’s calculator). I do not know the full equation, but I guess there must be an age parameter in the annuity to lump conversion function to explain these reported differences in “effective” rate of return. Most parameters (salary, years worked, etc.) should change the lump size and annuity payment amount proportionally.

XQF61HS, the numbers that I was given came out to 5.47%, you either had a lower monthly or higher lump payment than me.. I'm talking effective return, not IRR. Either way your numbers look way off. If my annuity offering was as poor as yours, sure that would be a different story. Happy that I was offered a generous one. And assuming that the market will continue a bull run is a special kind of challenged. To each his own.

I do not know why I read this thread, but hit it some time ago curious about Chevron layoffs of people I knew, and then come back now and then. Mostly nonsense (the guy making up stuff about the strength of the annuity choice), but some interesting bits. Everyone goes through wanting some guarantees in retirement and wanting to maximize returns (unfortunately the former comes at a steep cost, which always degrades the latter more than it reasonably should). I retired from Chevron about 19 years ago after volunteering for a package when my then current exploration region was sold. Between my severance, lump, IRA, and other investments I was by then independently wealthy (a statement which means little without a scale, because people’s life style expenses they need to be “happy” is so variable). For me the starting figure was about 5M. I put the whole lot in a investment brokerage with reasonable costs (in my case, Morgan Stanley) and then more or less let it ride. I would look at it a few times a year, but even then just mostly let the plan run as originally designed. At one point, maybe 8-10 years ago, my total had dropped in half (so under 3M), but I had a great time spending it, including an 8 month yacht rental around the Aegean Sea, a relaxing year in a farmhouse in Catalonia, and a cruise to Antartica among other adventures. The last 5 years I have developed some health issues and spend most of my time in the USA; commonly fishing the local bays and visiting the grand kids. All good, as I had some great “wild” retirement years and now am enjoying this slower pace (travel can be taxing after a few years, even at a leisurely pace) . Interesting also it that my total wealth has risen significantly recently, surpassing even my original amount at retirement. Just goes to show, enjoy it while you can. For me the annuity did not make a lot of sense, because the returns were projected to be much better investing the lump. If interest rates rise a lot short term, then that might change the equation.

@30ych, at some point in the future, your invested lump sum will diminish to zero. Your time horizon will be at the mercy of your management skills and the market. The averages you are assuming are too hopeful. One or several small to heavy setbacks along the road won’t be recoverable, I trust you understand. Meanwhile, the annuity will keep paying out like clockwork and without diminishing for the rest of your life. If you are fortunate enough to outlive your statistical mortality age, you gain with the annuity and lose with lump sum. If you die sooner than expected, it really doesn’t matter.

• 30haa: I am not forgetting that there will be a withdrawal load on an invested lump, but if those withdrawals are 3.75% annually, and on average my investments make 8%, then obviously the lump will continue to grow despite the withdrawal (and, based on the historical record, there is a high probability it will growth enough to even cover inflation). More to the point, if things go really south, I will can gradually spend down the lump... which will cover nearly two decades with no investment gains at all. I do not consider a diversified portfolio a single basket (it is a large number of baskets). Like most others retiring from Chevron, I also have other moneys (IRA, non-tax-deferred brokerage account and property) in the mix, but that is beside the point. One is best managing your wealth in a deliberate, integrated, diversified plan, and not as separate unconnected buckets.

@30eig, You are leaving out one huge thing in your comparison of the two pension options. You didn’t factor in any percentage or monthly distribution amount from your lump sum scenario. Keep in mind the annuity pays forever from day one until you’re death. Are you supposing a retiree is to invest the lump sum and not take any draws to live on? In my view, the annuity, if the monthly amount is at least $2,000, is a good choice because it serves as a guaranteed base amount to live on while making very minimum draws on your invested 401k and IRA balances. You can take larger draws in good times and lesser draws on those funds during years of lesser returns on your investments. I always bank on guarantees first and take calculated measures on uncertain ROI next. One can always tighten their belt for hard times, but if all your eggs are in one basket, like the market, you’ll need to endure the ebbs and flows as it comes. Hedging your bets is a good strategy. Take the annuity if you can.

Effective return paid forward to a 62 year old retiree by the annuity is 3.75% of the lump annually, which means it takes almost 18 years just to get the amount of the lump returned to you. In contrast 4% return is commonly assumed to be the worse case scenario long term from a balanced investment portfolio, with average returns most commonly 8-10% before inflation adjustments. Call me math challenged if you like, but 9% returns sound better than 3.75% to me! You may prefer to give up half your returns for a “guarantee” because of market fears or experiences with bad financial choices in the past. I, on the other hand, am very comfortable with normal everyday market risks based on many decades to investment experience. The lump rolled into an IRA is the only reasonable choice at today’s interest rates.

Well, all investments lose value to inflation, so there no difference there. And an invested lump sum can also lose principal, and lower the safe withdrawal value in some cases, unlike a guaranteed annuity. It's astounding how many people manage to get hired by Chevron without a basic understanding of math, not to mention economics. And the people who generally settle for a buyout are typically not successful investors, otherwise they would already have a substantial nest-egg ripe for distribution and not need to add to the aggressive part of their self-managed portfolio. It's only those who have not won the game that need to leave their little lump sum settlement to their mommy investment adviser and hope that one day that they will have enough to retire. It's a little late for that when you take the pension, assuming that you are waiting for the age to maximize it. Good luck with that in any event - you'll need it!

“best deal for longevity concerns”...no, not really. The annuity payments gradually loses value due to inflation, year after year. The best hedge for a long life is a diversified investment portfolio. Annuities are for s—ers at current interest rates... no where near a close call...which is why most recent Chevron retirees roll their lump into an IRA they control rather than leave it with mommy Chevron to invest for them.

@2Zenj- The annuity is a GOOD choice for just about everyone, and you know this to be true.
You see? I can say the exact opposite and it will hold as much truth as what you just said. The Bottom Line— everyone should do their own research and assess their real needs. All you get on this website is anonymous opinion or pure disinformation , not necessarily the absolute truth.

2Znzq- Your little game of make believe posts is not funny, particularly if even one person reads this and makes a bad choice about the retirement future. What is your motivation? The annuity is a bad choice for just about everyone, and you know this to be true.

It’s great to say everyone wants the annuity except for the fact it makes no sense. And nobody actually knows anyone who has taken it except one person here. Keep trying.

Reading this thread would leave one to believe that at least 80% to 85% of those retiring from Chevron wisely take the annuity, and 98% of the college educated retirees take the annuity. In a very recent Chevron HR retirement informational meeting the exact same statistic was stated, which reinforces the opinions posted here. 80% to 85% of Chevron retirees take the pension annuity.

The numbers that I heard and wrote down from a recent Chevron HR retirement informational meeting/presentation was that approximately half of the recent retirees (50%) choose the annuity and half choose the lump sum. There was no considerable slant in either direction. I was not surprised since they are considered equivalent in value. Maybe things have changed since the meetings that you guys attended. Mine was in the last few years, I'm guessing about 2 years ago.

@2Wzrz, Really? Are we now supposed to believe that Chevron HR is also part of the 'deep state'. Get real. The numbers the previous poster quoted for the % of retirees who select the lump sum over the annuity are in line with what I was told when I attended similar presentations back in 2015. Now maybe these numbers move a bit depending on the interest rate environment, but I doubt ever that in any given year, more retirees choose the annuity over the lump sum.

@2Wbnn, the HR presentations will always slant the “preference” toward the lump sum, because the company would prefer the retirees to avoid taking the annuity. It’s a subliminal message they promote at every opportunity. The company does not want to be responsible for carrying you financially after retirement. They would prefer to buy you off with a lump sum payout.

Reading this thread would leave one to believe that at least 80% to 85% of those retiring from Chevron take the annuity. In a very recent Chevron HR retirement informational meeting the exact opposite statistic was stated. 80% to 85% of Chevron retirees take the lump sum.

If you are relatively comfortable investing, have knowledge of trading individual stocks and exercising options, or simply choosing index funds/ETF's 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 $1 MM in invested assets to mid seven figures in invested assets only, not including other NW components, paid off home + vacation home and vehicles. This is also possible with the lump sum if you get lucky.
No reason 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.

@2Ljvv, +1, that's the impression I am getting too from the folks that I talk to. If you have a well thought out plan formulated and have been saving and investing since day one, the lump sum is insignificant and could be taken either way, and most choose the annuity for the guaranteed aspect of it. There are only a few people still struggling and trying to make ends meet that are considering a lump sum that I've come across. High level of debt. living from paycheck to paycheck, and being an unsuccessful investor/saver seems to be the common factor with the lumpers.

Most retirees and people getting ready to that I spoke to prefer the annuity. It's better to have the guaranteed income at that point in your life. Especially if married and take the 100% survivor.

This is my story which I have posted already, When I was laid off and had decided to finally retire, I requested my retirement application papers. When it arrived, I had 90 days to review, sign and return it for processing. I called Vanguard and they set up a date and time for a retirement advisor to call me. When they called, they were prepared to offer me an investment plan to manage my 401k portfolio. When they asked me about my pension lump sum value, I raised the question about possibly taking the annuity instead. The Vanguard Certified Financial Advisor analyzed the annuity IRR vs investing the lump sum conversion amount and determined the Chevron annuity to be very generous compared to any other fixed income investment he had ever seen. Based on my financial needs and wishes, he told me the pension annuity was a great fit for me. He offered me a great investment plan to manage my 401k portfolio. I have been thoroughly satisfied with my decision and excited, happy and spending like a sailor ever since!
in the case you like to peruse/stalk the comments and are pretending to be offended by a repeat post - F-U.
Good luck to all.

Well my my. It's apparent that someone on here is extremely jealous of another person more successful and wealthy than he is who happened to pick the financially and mathematically proven superior pension annuity. They also have a winning strategy for taxes. Win-win. I'm not surprised. I am a bit envious myself of those who made the best financial decisions throughout their lives and have a huge nest egg built up, enabling them to afford the better choice, the annuity. It's sad when you need to pay off debt, have your hands tied because you fared poorly in the market up until the time you retire and have to settle for a bail out to get you back on your feet. Can't blame the guy for being obviously jelly - lol!

@2Hlou - At the end of the day, everyone will need to take care of themselves. Don’t go believing too heartedly the government and paying your fair share of taxes will solve all problems. You do what you think is best. Leave it up to others to do what’s best for them. In these times we’re living in, the grass cutting investment this guy made sounds pretty smart to me. I’m sure it’s a safer bet and pays out more than the shaky stock market. After a lifetime working and paying taxes, at this stage of his life, keeping most of the earned money and not sharing his “fair taxes” is about right to me. Kudos. One day after retiring, I will probably do the same thing.

• 2Gzxm: Another great annuity success story: WTF? After 30 years he needs to keep working mowing lawns. He starts a cash based business so he can cheat on paying taxes. His multiple crews working for this illegal business presumably get no social security, unemployment ins., workplace comp...so it is basically a criminal enterprise, presuming mostly hiring illegal workers.

Me, I would rather invest my lump to get better returns, pay my fair share of taxes, do some volunteer work and give my excess to charities of my choice, and party on in retirement rather than potentially ending up in jail. You can follow your annuity “hero” instead.

2Exap, Good job! That sounds like another Chevron Pension Annuity success story. One of many, in fact the only success stories being reported here - annuity based. Good luck to you and your retirement side-gig business venture. I hope I can be half as successful.

I retired from upstream in 2016 at 59 years old. I EOI’ed after 29 years at Chevron and colkected a 1-year severance check and took my pension as the 100% J-S annuity. I invested my net $122,000 severance check in starting a grass cutting business. I purchased all the equipment and trailers and started with 4 crews who cut lawns and do light landscaping work. I rent a medium sized storage unit to keep the equipment and park my 2 modestly used pickup trucks. I earn a great return on my investment after expenses. I only report 10% of my income as gross revenue.

• Oh, My bad, my sincere apologizes to everyone here being truthful and not disingenuous like myself. The fact is that I simply cannot describe ONE plausible scenario based on historical data that a person would have a higher probability of success taking a lump sum relative to a reasonably invested portfolio left untouched and also being added to by taking the annuity....just one! Fact is the only thing guaranteed about the lump sum is the real value of that single fixed payment will drop over time....historically by over 50% in 20 years.

• 2Cvhf: Save your nonsense and obscuration, and simply describe ONE plausible scenario based on historical data that a person would have a higher probability of success taking an annuity relative to a reasonably invested lump....just one! Fact is the only thing guaranteed about the annuity is the real value of that fixed payment will drop over time....historically by over 50% in 20 years.

“established mathematically and financially with retirement calculators“... bull. Not once has anyone present fact based evidence to support the annuity as the better financial choice, not a single post. Many have posted analysis that supports investing the lump is the better choice. But I invite you again to present a single reasonable scenario showing the annuity will likely provide a better out come. While your at it please spare me your false characterization of those who chose the lump as most clearly know a lot more about investing than you!

@2xyuz yes, "the best pension option favors the Chevron annuity" is correct, unless you are a loser "with debts and obligations" as you have pointed out. Thanks for emphasizing that point which has been established mathematically and financially with retirement calculators countless times on this thread.

@2xeak, No, not nonsense— and not everyone on this site are trolls. Do your own due diligence if you remain suspect. It’s your life, you have to accept the consequences of your actions or decisions.

• 2xyuz: that’s simply nonsense, and I suspect you know it!

@2wvtt, “You will not live to be 81.5 years old, I guarantee it”??? Let me assure you that about 95% of healthy individuals who are already 62 years old WILL MOST CERTAINLY live past the age of 81.5. That’s the beauty of the Chevron pension annuity. It’s formula is still based on the average annuitant biting the dust around 81.5. If you’re one who is likely to live longer than that, the best pension option favors the Chevron annuity, because your odds of collecting more money over your lifetime goes up. Of course, if you need to pay off debts and obligations, or if you have a large investment to make, then take the lump sum option.

• 2wyvf No, he/she did not, but you have aptly displayed your ignorance, stupidity, and lack of education.

@2wvtt, thanks for your 50 cents, twit. That's about what it's worth - 50 cents, as it adds relatively Zilch to the topic being discussed, pension annuity vs lump sum

Your comment was:
"You will not live to be 81.5 years old, I guarantee it."
Good to know. I'll write that down. LMAO!

One of the most misguided nitwits posting here is the guy or gal (or what-have-you) who keeps pointing out that certain alternatives are "actuarily equivalent". That is true, but only from the perspective of the insurer or annuity under-writer. This is of no consequence to individuals who must choose based on their own circumstances. You will not live to be 81.5 years old, I guarantee it. You are very foolish to think that two things which are equivalent for an insurer or millions of people is there the same for each person. Even the insurer knows they are the same only over a large population and nothing applies to smaller populations and certainly not to a single person. I get the impression the person making these statements is basing their experience on comparing life insurance policies sold to him by his sister-in-law. Whole life, no doubt.