Thread regarding Chevron Corp. layoffs

I don't know which one I'll choose, I am leaning towards the annuity. I have 80% of my assets in the stock market, in equities ETF's and individual stocks, no bonds. There's nothing wrong with having a safety net. In any event, the lump sum would only be about a quarter or less of my assets. I have spoken to many my age (late 50's, early 60's) in the process of making the decision and the large majority of them favor taking their pension as an annuity. That's not always the best choice for everyone, I would say that you need to be financially secure and set to be able to take the annuity. Those with outstanding debt, children that need help, etc, may need the lump sum to settle their finances. I consider it a privilege to be in the position where you don't need to play the market anymore and can just sit back and let the annuity checks roll in. It's something that you have worked for and earned. It's not for everyone.

What did you guys do for Chevron that make you so risk adverse? Hard to believe, as this industry is all about risk assessment and cost benefit analysis. I have aggressively saved and invested well over the last thirty years, so that now I have an impressive pile of wealth (that is, it is very impressive to me, relative to my needs, which is all that really matters). Having built that up by hard work, the last thing I would want to do is hide it under a rock for “safety”, where it gradually withers in value leaving me to eat beans my old age. No sir! My money stays balanced but moderately aggressive leaning forward. Sure there will be ups and downs, but I have more than enough to weather any downs and I expect long term to end up way ahead. Yes I know I can’t take it with me, but I can have it go in directions that make my happy... which does not include giving it back to Chevron in pension management fees!

Damn, @2fjpk, your post could have been written by me verbatim, with exception of Pearland. My wife and I live in Cinco Ranch in Katy. I think the younger generation will catch on soon enough. I too was young and started saving diligently at age 32. Age has a way of making most people wiser.

I saved a fortune during my long and successful career also. We compared the annuity to investing in Treasury bills (for the level of risk I prefer), asked an expert, and decided the annuity was the best for us (and wife insisted). We live very comfortably within our means now (luxury home in Pearland, late model SUV, international travel, restaurant lunches, etc). I figure as the missus and I age we can dial down our spending as inflation eats away the annuity. Social Security will kick in and shore things up before long but we can always drive the vehicles longer, cut back on home maintenance, or take holidays in Pensacola. We will sleep well knowing we don't have stock market calamities to keep us up all night. No gambling for us! You young people just starting out who forgot to save and put all your money in all the index funds all you like but you will learn one day.

I ended up taking the pension as an annuity after long deliberation. I have plenty of money exposed to stock market risks and fluctuation and am not short on retirement funds. I have been averaging over 15% returns as well for the last few years, although nothing phenomenal. I simply wanted to remain diversified and have a guaranteed source. I checked all of the available annuities at the time and the CVX offering was leaps and bounds a better value. In summary, you cannot get a better value on a guaranteed annuity on the private market. And to anyone who doesn't know, there's no financial sense in comparing unlike investment risk categories, like the stock market against something like a guaranteed annuity. If that was relevant, why would anyone invest in an S&P 500 index fund? There are many funds, higher risk level, which handily beat it. Just the same for Bonds, Real Estate, CD's etc.

2dnqf, That's not too shabby, all I have averaged since 2012 when I took the annuity is about 23-27% returns, of course I am not in any S&P type ETFs, just VTI and individual stocks. And I haven't even had to touch the annuity since I started receiving it, it's getting invested as well and will still be there until both me and the old lady kick the bucket, regardless of returns! My entire nest egg has more than doubled since then including withdrawals. Congrats on your retirement.

Always fun to have some comedy to read along with the truthful posts. Thanks for the colorful anecdotes. guy(s)!

I knew a guy who took the lump sum in 2000. He spent like a drunken sailor for a dozen years putting kids through college etc and still had more than he started with.

When I retired in 2014 I took the lump and put it in an IRA with gains tax deferred. Since then I have make almost 15% a year on this money, has I am still spending down my un-taxed-protected brokerage funds for living expenses. Yes I know that return is nothing to brag about (about average for the S&P500 in recent times), but I am very happy because with compounding it has now basically doubled. I am sure there will be downturns in future, but at this point I suspect I will always stay way ahead of the return I would have gotten from an annuity. Life is good.

When I was laid off in 2016 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 Doeraised 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.

For all of you charitable people 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.

I'm so happy that interest rates are dropping also. With the numbers I put into firecalc, considering my substantial portfolio and the annuity, I can withstand inflation rates as high as 5% and come out smelling like a rose. Not so with the lump sum. The lump sum. which is the preferred safe route for those with fear and no nuts, leads to a lower success rate. I suppose those people who choose that have no knowledge of investing, or simply can't stand to not have their money right away. That's a shame.

Interest rates are dropping again, increasing the amount of the lump sum. Look around at the gray hairs, are they starring off into space and contemplating checking out? You bet they are taking the LS. With the annuity choice, you just keep working....

Chevron’s dividend was 3.78% last year, just park your lump back home ;-).

There may be no financial reasons for you to take the annuity @2cgys, but don’t pretend to speak for everyone. Only id–ts think they can speak for all.

“There are plenty of credible variables you can set in firecal ... which would favor the annuity.” Like what? Basically for this to be the case you have to get your investment returns below about 3.75% ... before any discount for inflation. So real long term investment returns of about 2%. So please explain how you would plan to structure your investments to get such poor results.

There are plenty of credible variables you can set in firecalc as well as in other retirement calculators which would favor the annuity. In fact, in 90% of the typical retirement scenario's that I run in Firecalc, I have a higher success rate with the annuity than with the lump sum and more capital remaining. There is one person on here who is hell bent on focusing on one or two extreme scenario's which show otherwise, and that's OK. Take your money and blow it, no one cares. Most of us nearing retirement with a large nest egg have a more carefully thought-out strategy in mind.

There are no credible variables you can set in Firecalc which would favor the annuity. If you think you have found some, post them for all to see. The annuity is a money-loser best for those who don't like investing and are willing to live within the shrinking annuity value and horrific tax consequences. Nothing wrong with that as long as you know it up front.

When I put my numbers and spend rate using the annuity into Firecalc, -and my spend rate is much higher than the typical $60k or so per year that some people enter,($125,000) I get a 100% success rate, a 0% chance of running out of money with the annuity, and an over 90% chance that I will have $9MM or more when I die to leave to heirs. I get an 85% success rate with the lump sum and less remaining.
Since Firecalc is theoretical, and not a guarantee, I would settle for no less than a 100% success rate. After all, there are assumptions that are made with any calculator.

That's an awesome success story, @2alge, Thanks for sharing!

@2aluf, I totally agree. It was my situation when I retired in 2016 that I decided on taking the J-S annuity, as after 27 years with the company I already had over 3 times the lump sum buyout amount in my 401k, my house paid and not debt burden. By the way, it's possible to get a greater return in the market with the lump sum, but equally possible to lose a lot of it as well. Both pension options are actuarially neutral choices in the grand scheme of things. I’m happy with my decision and have no regrets. Inflation is of no concern to me. The 1977-1971 Jimmy Carter inflation era will not be repeated in my lifetime.

2azfa, Yes, that is spot on. During retirement, when you have double or triple what you need for FATFIRE, why would you want to pass up the one chance in a lifetime for an excellent value on an annuity? You're not a child anymore at that point, and have reached your target goal + some, several times over. The annuity and lump sum are actuarially equivalent. The company is not in the business of losing money, either way. You can risk anything in the market, and it's possible to get greater return, no secret here, investing 101, not sure who these guys think they're fooling or preaching to, children?

He's not losing anything by taking an annuity. In fact, it is yielding a lot higher than any other similar risk-level investment vehicles available. I take it investing and financial analysis is not your strongest suit.

If you are happy, that is all that matters. Life is not just about money. If you have other investments, maybe you can take on additional risk and recover part of what you are losing by choosing the annuity. Good luck!

I have been thoroughly pleased with my excellent financial status since starting my 100% joint and survivor annuity from Chevron. I love the fact that I get a paycheck and will til both me and the Mrs. pass away. I also have plenty socked away in other accounts, invested as well as a fat social security check coming so no fear of inflation, or anything else. We drive late model luxury cars, eat out, drink fine wine, live in a big house and constantly travel. What's not to like?

Even if one assumes no risk of default by Chevron, only the dollar count of the annuity is “guaranteed”, not the value of those dollars. It has already been discussed here many times, but look no further than Argentina or Venezuela to see what happens to folks on fixed pensions during a period of hyperinflation. “Not likely to happen in USA” you say, fair enough, but it is also unlikely that stocks will preform much worse than historical averages long term.

A person keeps ranting on and on here, from what I can see, trying to convince others that if you take your lump sum and risk it in the stock market, you may be able to beat the return of the pension annuity, depending on market performance but there's no guarantee. Now which part of this didn't everyone reading here not already know? You guys need to get a new line, or get a life, one or the other.

So the best example out forth in favor of the annuity, if I understand it, is someone who will spend far less than the annuity or lump invested income and so has 100% success in both cases. That is like saying I can live on one dolllar per day so I don’t care if you give me two dollars per day for life or ten billion lump sum. You are correct but they are not equal.

I’m happy that person is frugal but that is not even a vaguely sound example. Run firecalc again with higher spending and you will clearly see the difference.

And the only investing luck needed for the lump to be better is for the market to not have the absolute worst performance of all history by a wide margin. Nobody can prove it won’t happen but odds are extremely low and situation would likely have astronomical inflation to boot.

-29chk: At the risk of shingling post, to be clear my characterization of FIREcalc as simple may have been misconstrued as a slight of that program. For broad brush assessment I am a big fan boy! That said, in the weeds of specific investment class projections, including tax implications relative to mandatory IRA withdrawals and reinvestment plans... there are more comprehensive software systems available. Enough said, as again, I quite like FIREcalc.

-29chk: Whatever your numbers, it takes 17-18 years to get the lump value returned to you in annuity payments (dollar for dollar), at which time the real value of those payments will typically have dropped in half. If you could leave the lump untouched but invested during that time, living on other moneys, it is a safe bet that that money would have doubled over the same period. Whatever else you entered into FIREcalc, those basic facts are hard to overcome in an annuity vs lump comparison. Now if you already took the annuity, then no big deal... most of us who are (or were) with Chevron have more than enough to put food on the table and then some. Just don’t give me the c-ap-o-la spread by some here that the annuity is always the “safe” bet while the market too risky for all but fools. Any path has risks, but on average an invested lump will give you much better returns. If you played extensively with FIREcalc, as you claim, you know this is true! In my case I plan to retire at about 60, not far away, and the point I do agree with you is that the earlier one retires the more important it is to maintain an active investment portfolio.

I use firecalc as well, and I didn't see any real numbers entered posted here by the way, just "reported output" which is meaningless. However, I get better results. I have been using firecalc extensively for quite some time, and it is one of the best free online calculators available. I disagree that it is simplistic, I have used many which are much worse. There are many variables which can be entered, many that the gentleman below must have ignored. I have inputted my data in countless scenarios, I have a larger portfolio than the one in the post by "@XQF61HS-28mnj" as well as higher Social Security and Pension incomes (DINKS, hate us, lol!). Our spend rate is also a bit less. I adjust the asset allocation away from the default couch potato or sofa(?) which is heavy in equities, not typical for retirees as well as other tweaks to make it more realistic when evaluating a pension received later in life, as is typical. Firecalc defaults are better suited for FIRE-minded individuals, looking to retire early, with a longer horizon. I get a 100% success rate with either the lump sum or the annuity, and the surrealistic estimated amount remaining only varies a bit, sometimes more one way or the other, depending on the numbers used, but no significant difference enough to line your coffin with gold coins. That's why I lean toward the annuity, as one individual mentioned, it's guaranteed, that's not really a quality that you can enter into firecalc. So, in the long run, firecalc can be made to tell you whatever you want, based on the inputs. There's no need to manipulate it to prove one strategy is better than another. Just my 2 cents.

“100% guaranteed”...to lose value over time due to inflation...no if, only how fast. Still waiting for this big talk demo of numbers showing the annuity is a better value or has a better probability to delivering a stable return long term.

You can say what you want, but if you don't post any numbers then you are just trolling. Lumpers win!

yes - and one and the same as the (one) ( Count him, you only need one finger) 1 who believes that the lump sum risk is a better choice and thinks everyone who disagrees is all the same poster. you keep thinking that, dude, if it makes you feel better.

Is this the same mow-ron who has been on here time and time again trying to argue that risking your money in the market will yield greater returns than with a 100% guaranteed annuity? Gee! No one knew that! Apples and oranges. Sheer stupidity is what it is. Like listening to a used car salesman. When you get a kindergarten class together, try it on them, but they'll likely laugh you out of there.

Give it a rest pal.

FIREcalc is simplistic relative to some others, but it is fast and easy to use. My numbers: 3M in taxed and tax deferred accounts, 1M lump, and $60k per year in joint soc security payments starting a age 70. Chevron indicates taking the annuity rather than the lump will provide $51k/yr. Running FIREcalc with $200k yearly spend for 30 years and all else as the default value indicates 73% chance of success with the lump and 18.5% with the annuity. One can get down in the weeds to get a bit better predicted outcome, but not by a huge amount. Spending taxable accounts first (before IRA funds) helps a little and delaying SS (since it is the only real inflation protected pension one will ever get!). Playing with a wide range of pretend scenarios, there are NONE I can find that indicate a Chevron annuity will do better than a invested lump (except for cases where inflation is assumed to be less than zero).

-28jbc: Who are you trying to kid, you posted half the replies on this thread...the only one who obsessively posts bundles in rapid succession in favor of the annuity. All that and still not any rational case for taking an annuity: just insults and pretend negative scenarios about all those who disagree.

@28hod, I haven't seen any "calculations in detail in a post" at all in this thread, reading through all of it, and I haven't been reading, much less posting on this thread for long, so don't pretend like you know everyone who posts, asswipe. If you have the information, put up, if not, shut the Fk up or go back home to your mommie, little boy, since that's where you will be living, with no apparent ability to make wise financial decisions.

A 1989 dollar is today worth 50 cents... what exactly does your pension payment guarantee? If you are not in a trailer part today, you might want to start pricing your options. Long term investing is the only way to beat inflation... long term!

As to my numbers in FIREcalc, I provided my calculations in detail in a post long ago. You never reciprocated... and we all know why!

@27cqq-the one and only troll on this thread who has no mathematically sound financial reason for the poor choice of a lump sum, the least popular option among retirees, is calling other posters trolls. Priceless. Sure, show us your "magical math" in favor of the lump sum. We'll wait. Feel free to include fantastical market returns, as we're sure you will. And then explain in detail the guaranteed return properties, like the annuity has. No hurry. We have all day.

And I don't know any CVX retirees in trailers, maybe you do in your area or from your department. You might want to keep it to yourself, that's not helping your appearance or argument..