Thread regarding Chevron Corp. layoffs

Set aside all the pretend statements that annuitants are the “winners” and lump takers all “losers”, under what scenario (historical reference or reasonable forecast) would an annuity be “likely” to pay out more than investing the lump... for rich or poor? I still have not heard a compelling case...excluding ones based on fear of the market. Anyone focused on long-term wealth management should avoid annuities and particularly one they will depend on decades down the road. Sorry, but eventually one needs to let go of mommy’s nipple and start eating whole foods.

Wow, that's an great success story, living 'til 99. What company did he work for and was the pension like - a decent amount? I do admire people who are diligent and enjoy remaining in the workforce, being productive, contributing to society instead of the worthless snowflakes we have so many of today. I have spoken to dozens of people in my career over the years with prior jobs that had pensions like you speak of, and depending on the time in service, and other factors, the pensions were sometimes tiny, like one or two hundred a month. Still very much worth having, but not a major component of their retirement plan. By itself, that story adds little or nothing to the annuity vs lump sum question/option.

One of my relatives took an old fashioned pension when he retired at age 65. There was no other option in those days. He was smart though and took on a second job ages 65-72. He needed it since he lived to be 99 and by the time he was 80 or so inflation had eaten most of the pension. Luckily he was extremely frugal his whole life so it worked out for him but the last 15 years or so were pretty tight.

I understand what some of you are saying but I am simply not in a position with the wife and kids to take an annuity. I fall into the paycheck to paycheck category and still have plenty of bills to pay off, college expenses, etc. After I take the lump sum, pay off what I need to, figure out what's left - probably less than half, then I can start my retirement. hopefully I will be able to put food on the table. Congrats to those of you who have enough socked away to be able to take the pension annuity and live your life happy and secure or whatever you choose to call it. Some may think that's foolish financially, not me. I dream of that. All the bills paid, money in the bank, and growing, and living off of a secure guaranteed pension.

don't feed the trolls, Mqjw, the little child below with the aka popcorn boy, rotflmao blah blah blah is not here to add anything to the discussion, just a troll not even a chevron person or layoff victim, likely a loser in mommies basement. notice how they make one unrelated post then crickets.......

-Miui: aka popcorn boy, aka ROTFLMAO guy, and author of about half the posts on this thread, if you are retired, so well moneyed, and happy with your annuity why are you obsessively posting on a lay-off site? Should you not be enjoying your retirement years on some beach drinking margaritas?

Mqbx, Yes, I have seen that too on this site. Some people will post their finances, and give examples, and how they fared, most take the annuity and have not regretted it, Then there's one or two who took the lump sum and did well with that, Most of these folks are retired and settled, no worries. Then the heckler troll pipes up about the lump sum being to only way to go. You can tell it's the same person who pretends to be different and he makes up different stories to try to conceal it. Same troll, same overall message. Not fooling anyone. Keep it up it's entertaining. Maybe one day he will be wealthy too, like the annuitants that he thinks he is making fun of. I guess if you can't be a success. you can always make fun of successful people online anonymously like a coward to try to get revenge - LOL!

From reading this thread, more people choose the annuity and there are only a couple (obviously the same person or two) who argue otherwise. In this entire thread and the other similar ones, many happy retirees with ample assets have explained the purpose of the "Actuarially Equivalent" annuity and lump sum and given examples of their success, their finances, and how much they have available for their luxurious lifestyles. More prefer the annuity. On the other hand, there certainly seems to be a lot of posts from one or two pathetic butthurt individuals who have no financial intellect yet continue to spout hatred and vitriol towards the annuitants, green with envy at these well to do people who can afford to choose whatever they want. They recite the same old false argument about inflation, and such and such, as if these things aren't figured into the calculation of a lifetime annuity. Wow, what an earth-shattering discovery, you learned about inflation today? Have you learned about recency bias also? How about SORR? didn't think so. Keep spouting uninformed rhetoric at the people who are more successful than you and can afford the annuity and have loads of assets while you need a lump sum to kick start your investment life. That's rich - LMAO!

Yes, the annuity is better, I have no idea why anyone would take the lump sum, rich or poor, as it is clearly a financial mistake, a mark of being financially illiterate and a lifelong poor investor or no savings at all. There are just those who prefer to be nursing on the teat with mommy giving them their carefully measured share all at once rather than taking risk in the big bad world. Some were timid little children their entire life, others invested and have an appreciable nest egg. The market is a safe bet as long as you have been in for the long term throughout your life prior to retiring, won the game already, and don't plan on starting your investment career in retirement after your pension starts, a big mistake. If you don't have enough by now, or are in serious debt, that's sad. There are significant tax advantages having to investing yourself earlier throughout your life, if you planned correctly and made the right decisions before retirement. If you can afford the annuity, you have won the game and can spend whatever you want, virtually have no budget, and are living life to the fullest and will continue to do so until you die, thanks to the annuity. Considerable inflation risk exist that the hapless lumpers are chicken of, like little pathetic losers, with no savings is an indication that you have not fared well throughout your investment career, hence they need and want "all dat munah now"! . That said, I guess if you tend to be irresponsible with money and need to bail out of debt, the lump sum might be the only way to go as a last resort. if you have built up a healthy portfolio, as many posters here have given examples of, you can afford to take your pension as a 100% joint survivor annuity to provide for you and your spouse. If you are not so fortunate, and lack assets, and need more than the annuity + your other sources of income to maintain your current lifestyle or simply to make ends meet, the lump sum may provide that income if you are stupid enough to risk it in the market at retirement age. Or it may not. It's much better to be so financially sound that you could take it either way and it won't change your lifestyle, which is when you can afford a steady annuity income stream until you die.. Most people who can afford to take an annuity already have plenty in the market and are not pathetic losers like the ones with the tall tales they tell on this site.

@Lnxr, There are pros and cons to the Annuity and Lump Sum option. The decision that tips the scale in favor of one over the other is your personal circumstances. I can come up with several good reasons to select one over the other. I selected the Annuity for my reasons, and the one furthest from your assertion is that of risk aversion or financial savviness. I have a sizable portfolio of retirement account principal at work in the market already. When you diversify your entire investments, you open up your options and reduce volatility and overall risk.

I can’t see any advantages. I assume some just feel better budgeting to a paycheck, like they have their whole life, even if the result is in almost all cases lower total returns on investment. If it were not for inflation I might agree with the general concept. The annuity just returns your own money back to you for the first 17 years, and at even just 2% inflation that payment will be worth less by a third over that time. The argument for the annuity is you can’t outlive the payments... ok, but they can become close to worthless. I least with investing one generally expects higher returns during times of higher inflation.

So far on this thread and the other one nobody has really articulated a sound argument in favor of the annuity. They acknowledge it is inferior financially to the lump sum but seem to want it anyhow as it gives a guarantee without the worries of investing. I think that is the main advantage. Peace of mind in exchange for give up the access to funds and liklihood of a return. I wouldn't get any peace of mind since inflation would always be gnawing at me.

@Lwmm, if you make such quick and casual decisions in your financial life, you are in for a rude awakening. There’s no such thing as a bad financial decision unless you blindly roll the dice. The lump sum and the annuity are both valid and sound strategies if you’ve carefully assessed your needs in advance.

I have no idea why anyone would take the annuity, rich or poor, as it is clearly a financial mistake. There are just those who prefer to be on the nibble with mommy giving them their carefully measured share rather than taking risk in the big bad world. As others pointed out the market is a safe bet as long as you are in for the long term, there are significant tax advantages investing yourself, and considerable inflation risk living on a fixed income. That said, I guess if you tend to be irresponsible with money, the annuity might be the way to go.

@Lbds, Yes, I took the lump sum even though, contrary to what you spout, I have plenty of other assets to provide for a very secure retirement. When my time is up however, I prefer to choose who may benefit from my success, rather than give it back to some faceless insurance company.

Yes, it's much better, if you have built up a healthy portfolio, as many posters here have provided excellent examples of, which is when you can afford to take your pension as a 100% joint survivor annuity to provide for you and your spouse in their elder years when dealing with finances becomes burdensome. If you are not so fortunate, and lack assets, and need more than the annuity + your other sources of income to maintain your current lifestyle or simply to make ends meet, the lump sum may provide that income if you risk in in the market at retirement age. Or it may not. Another reason to take a lump sum is if you are of retirement age and managed to dig yourself deep into debt and need to pay it back. None of those later situations is desirable. It's much better to be so financially sound that you could take it either way and it won't change your lifestyle, which is when you can afford a steady annuity income stream until you die, without having to think about finances, whether you can or not. Most people who can afford to take an annuity already have plenty in the market. and some have rental property, etc and are not pathetic losers. That's the whole purpose of taking this option, for most. Not how much money you take to your grave when it becomes useless to you.

Kekg, Could you repeat that in English please? You seem confused.

@Kmhu, congrats on your success, yes, I took my pension as an annuity several years ago and I have not had to touch any of my brokerage accounts since then. It's like I'm still getting a paycheck. They are up over 50% and are worth more than the lump sum would have been or ever will be. I do invest a bit more risky than straight index. I have handily beaten the S&P, DJI and NAS regularly, but that's not really saying much, many people do. I have even been able to save in addition to what I spend of my pension. The only reason I foresee ever having to touch any part of my investments is when RMD comes along.

I took the lump about 5 years ago and remain happy with my choice. The value is up by almost 30%, which is about the S&P500 average I believe. I have not withdrawn any of it yet, as I am still spending down my brokerage accounts (the lump rolls into a tax deferred IRA, so am living on moneys in all my non-tax protected accounts first. A few more years I will be forced to start taking some IRA withdrawals and will start to get a soc sec check, both occurring around 70), but before then I am hoping the lump will be close to double the original amount (which would mean about 50% of moneys out would be taxed as capital gains). Your mileage may vary.

Great choice for you @Jnir. What’s $1.2MM in lump sum compared to $6MM total investments. You can stand to lose the 1.2 million and still be in excellent financial shape. I put in 26 years and got out with total invested assets of $2MM. Not as good as you, but not too bad by many standards. I’m debt free and own my $290k house outright, though I chose to take my pension as the joint survivor annuity. My wife and I are collecting our FRA social security benefits already. Those two steady income sources are providing us all the monthly income we need, plus something extra to save. I haven’t touched my $2MM original principal since retiring 5 years ago. I’ve seen it grow nicely since.

-Jcsi: a “going to to”: A new type of dress? I am guessing like a camo tutu but shorter.

Took my lump sum of $1.2MM a year ago when the segment interest rates were at historic lows and now it's worth $1.4MM. I am comfortable managing my money and have done a decent job as my 25+ career left me with a great property, no debt and $6MM+ of investments. I made my choice on what's best for me, no children to worry about. As others have said, make your choice and live with it, there are pros and cons for both.

No @Jchn. It’s the other way around. Chevron will be delighted to buy you out of your lifetime annuity and get rid of you completely. Depending on the amount of time you believe you have to live, if you outlive your statistical mortality age, it’s Chevron who will lose.

I am sure daddy Chevron will be delighted with your choice to let them keep you lump in return for less than you would have made had you bought their stock.

@Jpuv, You must be trolling or being juvenile. There is no sales charge percentage with the Chevron annuity. I think you know it and just stirring the pot, right?

“big difference“?... you avoid the 7% sales charge, I guess, but once in hand not much difference.

Who was it that posted “Any good financial advisor will tell you an annuity is a s---ers bet that inflation will always be subdued and investment gains always too risky to depend on” surely didn’t hear or read it correctly. News Flash: The advise you’re going to get from a Financial Advisor is to shy away from annuities sold by insurance companies on the open market. Good advise, if it fits your financial situation, is to consider the Chevron pension as a direct annuity. There’s a big difference.

Jfun; Ya I guess your right I am the one with a “distorted view of how investing works”

“Annuities are such terrible investments that the minute the government passed a law specifying that financial professionals had to act in their clients best interest, annuity sales fell off a cliff.”

https://www.marketwatch.com/story/why-annuities-are-a-bad-idea-for-almost-everyone-2018-03-05

https://www.fool.com/retirement/2018/05/02/when-is-an-annuity-a-good-choice.aspx

https://www.forbes.com/sites/forbesfinancecouncil/2018/03/29/five-reasons-not-to-buy-an-annuity/#7d20bb3561f7

https://seekingalpha.com/article/4251975-annuities-almost-always-bad-idea

https://www.paladinregistry.com/advisor/Nicholas.Terezis/just-say-no-to-annuities

https://www.balancepro.net/education/publications/annuitiesproscons.html

https://www.dividend.com/insurance-and-annuities/the-downside-of-annuities/

I could go on grandpa, but I guess you know better.

"while a guaranteed income is highly desirable as insurance protection against longevity, it is a fixed income, which loses purchasing power to inflation over time. Investing in an income annuity should be considered as part of an overall strategy that includes growth assets that can help offset inflation throughout the annuitant’s lifetime.

Under the right circumstances, the best age for starting an income annuity is between 70 and 75"

-Investopedia

Juqv, We've seen you post here incessantly day in and day out and you are the only one who has your distorted view of how you think investing works. There's a reason for that.

-Jiww: you are a complete psycho, posting nonstop and logging in many times giving yourself thumbs up. Maybe you should log off and start enjoying your annuity and “substantial other assets”. As for me, I have more than enough several times over and continue to work because I enjoy it. As for anyone else reading all this bull, if there are any besides dipshit and I, get your retirement advise elsewhere. Any good financial advisor will tell you an annuity is a s---ers bet that inflation will always be subdued and investment gains always too risky to depend on. Any bank with be happy to take on your “risk” for 50% of your gains.. which is basically the “deal” offered by the annuity. If you can’t handle money, farm the risk out. For the rest, the cost of the insurance against just one type of potential uncertainty is just too high. For me, when I retire, I am taking the lump, no question!

That’s the reason Chevron offers a lump sum buyout in their pension plan. It’s for those ex-employees who left the company early in their careers (on their own or laid off). For those who stuck it out and worked 20+ years, the annuity is the real prize the company rewards you with. The annuity is a guaranteed lifetime stream of money that serves as a baseline. Between the annuity and social security, the retiree can rely less on large distributions from their retirement savings. What’s so difficult to understand?

Iszn, That advice makes all the sense in the world. In case you are wondering, a person who has "amassed substantial assets" as you put it, is not seeking YOUR , or anyone else's advice on this forum. That is because they can afford a lifetime annuity, and you can not. You must leave your assets in play in the market, at risk, in the hopes on one day accruing the wealth that those who can afford a 100% joint survivor annuity until death, can. Keep working, saving, and investing until one day that you can, and perhaps you'll understand it. It's no different than insulting someone who drives a Lexus or Mercedes or loaded tricked out 4x4 and have no debt. Don't feebly attempt to insult or belittle those who have already won, unlike you, and are on the sidelines, watching and laughing at the likes of you.

My advise no sense @Iszn? Maybe not to you. Have you noticed how many thumbs down your comment is getting?

Ilbm, yes, because, by all means, that guy who has amassed over $10 MM, or even over 2 or 3 $MM, should be taking advice from you, who obviously has not. ROTFLMAO!

Ifkq, yes, yes, and YES! what it must be to be young, naive, ignorant, footloose and fancy free, stupid about finances, and ready to challenge the world!!!!! I thought the same thing for many years. I did not know anything about investing either, a numskull, like you, and like you stated about yourself. but you are still young. It takes a little time, not much for some, a lot for others, to acquire wisdom about finances, the stock market , options, shorts, puts, and investing in domestic and foreign markets. It is clear that you have not acquired that. You are still taking advice from your so-called leaders in the banking industry, whom you feel are leading you in the right direction with your feeble, minuscule assets. You go ahead and accept the buyout. Many of us thank you as well as your Advisor, and your brokerage. You could not make them and us more happy, in fact, elated! Thanks, thanks and thanks, from all of the annuitants for shoring up the annuity and making the program more sound. The more people that fall for and bite on the buy-out, an exceptional deal for CVX, the better for us. Thanks, thanks , and THANKS!!!!!

It's true that the annuity normally appeals to the lower echelons who are not aware of the stock market and also don't want a greedy ex-wife or girlfriend to learn about the lump sum. It is a good plan b for many hard working employees after many years in the trenches.

Iaes: Your advise makes no sense. If you have “amassed substantial assets”, why would you need an annuity. Countries where markets go south long term, also tend to have huge inflation. If that happened here, the only safety would be in having the flexibility to more assists into vehicles like short-term bonds or property that can hold some value ... investments locked in long term and fixed annuities would be a lead sinker to a portfolio. If nothing catastrophic occurs, plain vanilla balanced funds will do much better than the annuity long term. The only reason to get an annuity would be if you can’t trust yourself with money.

No one who knows anything about investing would take an annuity, period, no matter how much other moneys they had. The annuity is a holdover from yesterday when folks expected a company pension. And yes, since you asked, I am very grateful to Chevron for all the ways she compensates me, including the available options to take my retirement moneys.

You can thank Chevron for offering a pension in the first place. Many companies do not offer one. Secondly, you can thank Chevron again for allowing their retirees a choice of receiving the pension as an annuity or lump sum conversion.