Thread regarding Chevron Corp. layoffs

That’s great @13akl. May you keep doing well in the stock market and patting yourself on the back. All it takes is one big setback and you’ll realize the safety and purpose of the pension annuity. Don’t put all your eggs in the same basket. The guy who coined that phrase was just like you once.

No one here posted "Best financial choice"...ya, that’s right. I for one am searching high and low for the stupidest financial choice...your advice has been very helpful, thanks.

-13qam: I could ask you the same question. If you are so sure the annuity is (was) the right choice for you, why obsessively post here on a beautiful day to be fishing?

No one is arguing the Chevron annuity offered at retirement is not “the best” deal you can get on an immediate annuity. If you need an immediate annuity to feel safe, then great, go for it. The numbers, however, suggest there is a high probability of much better returns (more than 2x) over your lifetime by investing the lump. By “the numbers” I am not talking about this year, or just the last few years since the Great Recession, I am taking about any and all 10 plus year period going back to the 1930s. Make your own choice based on you own risk comfort level, but you can’t legitimately keep say that taking the annuity is the “best” financial choice! I for one find discussion of different options interesting (balence funds, delayed annuity, getting life insurance instead of the dual annuity, etc.), and think it unfortunate that a few people keep posting again and again that the annuity is the only rational option and anyone who suggests otherwise must be in some way deranged and inferior. Give it a rest, to each his own.

It's true that if you think you may die early and the best recipient for your estate is Chevron, take the annuity as the curtailed payments will benefit them (and the pension fund). If you can think of any better recipient (charity, university, former boyfriend, etc), then the lump sum gives you infinite estate planning flexibility.

Most of you younger and inexperienced investors will realize as soon as you retire, your perspective will become more conservative. You will know it’s wise not to take big risks in the stock market.

It is not possible to predict the behavior of the stock market. Makes no difference if you have experience investing for 5 years or 50 years. If investing makes you uncomfortable because of the uncertain returns, you need to carefully consider the annuity route. It may make a lot more sense for you.

Investment these days is neither particularly difficult, nor particularly risky long term. Put your money in a couple of the major-brand low-cost broadly-diversified blend funds (fund cost can be below a tenth of a point) and just leave it there. Keep your withdraw rate reasonable (a good reference might be the equivalent annuity payment). Increase your withdrawal rate modestly as the amount increases over the original investment. Done. Go fishing.

13ilp, Yes I agree. Therefore, we can conclude that you are neither.

It’s well known that almost all people who talk too much of their wealth and investment savvy, are neither one of those. They are really quite the opposite.

I prefer to wipe my a-- with hundred dollar bills because they feel so much smoother. I know it is wasteful, but I have so much money I really don’t care. I know some id--ts who think Charmin with build in puff pillows are cheaper and better, but that’s because they are totally sorry a$$ losers who did not save enough for their retirement to be able to have true pleasure. My annuity alone funds 30 good solid wipes a month, which is all I need. When I get older and start getting early onset diarrhea my SS payments will kick in, giving me even more wipes per month, and that’s without even tapping my huge IRA. You see I planned well and am covered no matter how full of $hit I get.

@10avp, Do you seriously believe your gibberish? You’re wasting your time, but more importantly, other reader’s time.

It seems there is an rare case here of someone who is a very successful investor, but doesn't want to touch the tens of millions they have made on stocks (or bitcoin or whatever), presumably because they are not comfortable "decummulating" (scary skiing down that slippery slope they worked so hard to climb) and perhaps also enjoy investing (or have a gambling habit). So, they took the annuity and plan to live on that alone for their retirement (no doubt in a Houston tract house not far from a fabulous IHOP or Denny's restaurant). They like living on the annuity because it gives them the feeling they aren't spending their $20 million savings. They are free to invest that as they please because whether they grow it to $100 million or lose it all, they will continue living off the annuity and taking The Missus for the early bird special in their trusty Corolla.

-10gnz: So you have no answer as to why an annuity would be better, other than that you personally are rich enough to have one despite it being a bad idea. I also am rich enough, just not dumb enough. LMAO!

I took the pension annuity and I also receive SS. That accounts for all the income I declare and need to live on. But I have a sideline, mostly cash, business that has grown to triple the size of what is was since retiring. This more than supplements my needed income. My wife and I travel a lot and save money rather than touching our retirement accounts.

10juo Since you obviously have no solutions or game plan, maybe you should just risk it all in the market and cross your fingers. Plenty of people do. Some of us don't need to because we have saved and invested enough throughout our careers and we have "won the game" as they say. We can afford to be in the market.... or not. No one said or promised that the pension, with whatever time you have in , given it's value, will allow you to continue your current lifestyle indefinitely without other income sources, regardless of choosing the lump sum or annuity. There are plenty of retirement calculators out there to test your assets and allocation against a given time frame based on historical information and include pensions and SS. Try Firecalc.

If you planned on maintaining a high equity asset allocation and no bonds, stable income or cash-like type vehicles then why are you even asking the question? This isn't a financial or investment site, it's the laid-off loser complaints website lol.

“Nobody recommends a non-COLA adjusted annuity to anyone under at least 70”. That may be, but no one offers a “real” COLA adjusted annuity... period! I mean one that pays out an amount fixed to the prime rate (or similar). You can get annuities that bump your payments up by a fixed percent each year to offset assumed average inflation (like 1-3% a year), but that does not reduce risk of inflation being higher...it just more or less delays your payout. If I could get an annuity that adjusts (holds value) for inflation year after year I might consider it. Without such a guarantee, however, I am a loss as to how an annuity would decrease my retirement income risk. Can one of the annuity fan boys explain this?

I always assumed I would take the pension annuity as a back stop to my IRA and brokerage accounts. I like the idea of budgeting to a “paycheck” as I have always done, with my investment returns added for the “extras” to my base budget. Now that I have worked through the numbers with my “money guy” getting ready to retire, however, I can see the annuity today just does not add up. Ok, I am flexible and can adapt... I am taking the lump and rolling that plus a couple of IRAs from past employers into a vanguard account. Rock on my butthurt friends...I am out of here to margaritaville!

Nobody is spouting the same works for everyone. In fact, it is clear the annuity is the superior choice if you are not comfortable investing. Nothing wrong with that. Everyone has to sleep at night.

If the annuity is only 10% of your assets you either have a puny annuity or giant assets. Either way, you are better off investing so I hope you are.

“percentage has been falling lately“...ya like the last ten years of record low interest rates and thus annuity base rate ... not a huge surprise is it.

I happen to prefer the annuity and I don't give a rat's @ss if anyone calls me chicken or not. I have a generous pension from CVX that happens to be about 10% of my assets, if converted to lump Doejust don't care or need to have it all in equities. Call me whatever you like. I don't think it's a one size fits all thing, like some people here are spouting. There are more people who take the lump sum, percentage wise from what I understand, but since historically decent pensions are becoming rare, that percentage has been falling lately.

Yes, I agree. Those paralyzed by fear like little chickens of having a balanced portfolio including ample market exposure as well as the superior choice, a pension annuity will never win and will always be ignorant pathetic losers and pompous asswipes all full of themselves, with no knowledge of finance or economics. They will indeed succumb to the upcoming zombie apocalypse. So sad......

-Zxzb: it is entirely your choice, so there is no reason to be an a$$. There are no 100% guarantees in life, other than death and taxes. What I will predict is those paralyzed by fear of any risk are the most likely to slowly fall behind the rest, and everyone is f***ed during a zombie apocalypse scenario no matter what you choose. So pick your poison...your choice... there is no reason for all this unpleasant behavior and name calling here.

pwease look into your cwistal ball fuh me popcorn man. I want to be 100% sure of the future. pweese predict what the future is for me. I wisten to u an invest and be a garanntteee sure bet winna

“blowing it like the loser”.... ok, fair enough, there are two good reasons for selecting the annuity 1) discomfort with market fluctuations and 2) uncertainty with your ability to rationally invest a lump rather than spending it recklessly. Both perfectly reasonable. For rational folks, however, choosing to invest the lump is the closest one is likely to get to a sure bet winner.

The lack of logical reasoning this site is amazing. Imagine two retirees - both with the same social security and the same savings. You keep saying the annuity is better because the guaranteed losses from the annuity are made up for by social security and other savings, as if only the annuitants would get SS or have other savings. The fact that one can make up for the losses does not make the annuity better. It makes it worse! The lump sum will always work out better except in some historically unprecedented armageddon or zombie apocolypse (worse than a world war) which will likely be accompanied by 10-20% inflation.

The key theme from the annuity arguments is fear of losing money in the stock market. That is a very legit reason to take the annuity, but it is an emotional not financial reason. Everyone needs to sleep so do what you need to do. Same goes for paying off your mortgage - do it if you are rich and have the cash but don't fool yourself you are saving money. You are "buying" peace of mind and it comes at a cost.

There is also an argument that the annuity is better than open market annuities. Those annuities are generally terrible and nobody buys them until they are 70 or 80 when they make sense because inflation won't k--l the proceeds. Just because the CVX annuity is marginally better than something terrible doesn't make it a good choice. Nobody recommends a non-COLA adjusted annuity to anyone under at least 70 years.

@Ywme, I do not have 4-5 times the lump or anything near that and I do prefer a lump sum payment, for my own personal reasons, but there are plenty of reasons that older, wealthy folks may prefer a guaranteed annuity, especially with other market exposure. There are more folks like that than like me. Some just like diversification. No different than a stable income fund. Many would like the guarantee that their spouse will have an income after they die. The spouse may not be financially skillful or care about it, which would need protection. Also either you or your spouse will get older, and may not want to worry about finances when you get old and lose the ability to manage finances, or no longer care. There also are people who have a lot invested already(I know a few), but consider the pension & SS "mad money" - that they can spend away freely monthly, and not dig into their investments. They can afford that. Those types feel that you save to invest, not to dig into it, sort of psychological. The annuity affords them that luxury. Remember, the reason it is "actuarily equivalent" (not sure of that spelling)_- that's the cost for that guaranteed lifelong income stream, on the market =It's equal. both options. Don't let the trolls on this site fool you. If you want to argue that it isn't or what that means, that's another thread. Sure, I'm up 22% this year. Do I feel that it will continue indefinitely, No. Put "Guaranteed" in front of everyone's post who thinks they can do better in the stock market and other investments. You can't can you? That's the price that you pay for something that's guaranteed. The time that you retire may be just when the market crashes. Better luck next time. I am the type who wants and needs the lump sum to manage and have my portfolio grow. I have heirs to leave it to. Also my nest egg is not that big yet, nor do I expect it to be enough. I don't expect to ever be outside of equities.

-Ylhn: So it is completely unexplainable ... ok ... whatever... good luck.

@Ywme, Yes, I can explain. For you, my best advise is to just keep working. One day, you’ll come to the realization that will lead to understanding what useful purpose a good pension-style annuity will bring to your overall retirement. For now, keep drawing a paycheck.

Ok, so you have 4-5 times the lump and are an experienced investor comfortable with market risk, so why get an annuity? I agree Chevron’s annuity is a good deal relative to those from investment companies, but why get one at all. I do not understand your cost-benefit logic. Can you explain?

Those are all valid points @yqpx but I will have 4 to 5 times the potential lump sum already in the market upon retirement. In fact l do now. Fear of market risks is a non-issue. I understand that the pension annuity is the best available vs what you can obtain outside of Chevron. You guys on this thread make comments like yours as if you're teaching investing 101 to children. The only difference is the children are wealthier and already know more and are more successful than you.

-Xijk: “no valid argument for the lump”

1) High probability of better life time returns. In the worse case market the lump will last 25 to 30 years with withdrawal at the annuity rate, in the best case it will continue to grow in value forever with continued withdrawals at the annuity rate. In average times, one can expect 2-3 times the return of the annuity.

2) Better control of you tax obligation rolling the lump into an IRA and paying tax only when you withdraw money (rather than forced to pay tax year by year on annuity payments).

3) Flexibility: you can use the IRA money any time you need it, whereas selling an annuity to get cash out would come at a huge cost.

4) Better hedge on inflation, as during high inflation times one can move into investments with higher returns.

The only advantage of the annuity I have heard is a fear of market risk more than inflation risk...is there others? Annuity “insurance” comes at a steep price.

Yea , xihl thats funny. cornered and defeated. And still going on about popcorn and annuities being bad. I agree with the person who said don't come here for advice. And when I do retire i know better than taking the lump sum and blowing it like the loser on here who has obviously lost his mind.

That's right, and enjoy your extra-butter popcorn while you can afford it. You will one day look back on these as the Golden Years of your retirement when everything seemed so affordable.

Popcorn boy. You might want to check with your doc about your meds, because your obsessive-compulsive problem is acting up again. You have your annuity, for better or worse, so just enjoy your retirement already and give “it” a rest.

Xihl, Since you did not contribute to the discussion or answer the OP's question, you simply put yourself in the same category. Yet I'm certain you are one of the immature trolls posting below, anyway. Carry on.

Has anyone else noticed that lacking coherent arguments and feeling cornered and defeated, some people resort to petty personal attacks, lashing out at others and throwing up red herrings? So mature.

If you are already retired I suggest you stay off this site. You have nothing to gain and plenty of peace of mind to lose.

If not, this thread may be too convoluted to follow. If you are comfortable investing, take the lump. Otherwise, annuitize. Easy as that.

I weighed both options, Take joint annuity for life (which I initially favored) or take the lump sum into an IRA, When I looked at the information from my financial planner the better outcome on a number of different assumptions appeared to be lump sum with realistic returns on IRA investments. I backed it up with returns from past years on my earlier investments. Downside with jt annuity is early death and less for heirs. Lump sum returns exceeded what I could get in annuity for about +30 years. After 30 years frankly I'll be ready for a pine box anyway so incremental gain receiving the annuity won't mean much. Also with IRA I can hold off taking money until I need it and minimize the tax impact. With annuity I'll be paying uncle sam the taxes annually every year. The other factor is US debt and when uncle sam cranks up inflation the annuity is at risk. For me the decision was finally to take lump sum and have the money available if needed meanwhile growing in IRA investments. So is there a best decision... probably not. Enjoy your life either with an annuity or lump sum. Both ways you are going to come out ahead. I'm enjoying a very active life watching my nest egg grow without dipping into it for another couple of years.

Well said @Teeg