As you close in on retirement, you will face pivotal financial decisions. One is how you will receive your pension lump sum from Boeing.
Many engineers are choosing a lump sum that they can invest rather than a lifetime stream of monthly checks. That choice will significantly impact their future financial security.
Segment Rates
Boeing white-collar engineers in the Society of Professional Engineering Employees in Aerospace (SPEEA) can take their pension as a lump sum or fixed-income monthly checks for life. Historically, about half of SPEEA engineers have chosen the lump sum option.
A key piece of information – the segment rates used to calculate the present value of your lump sum payout – is adjusted each November. Segment rates mirror the yields investors would earn on high-quality corporate bonds.
As we approach the end of 2022, increasing interest rates impact segment rates. Depending on your date of retirement, a change in segment rates could significantly cut the amount of your lump sum payment. The resulting reduction in longevity protection can have serious financial consequences. As such, it’s essential to consider how the boeing pension lump sum option will impact your retirement lifestyle before making this critical decision. Obtaining the guidance of a qualified CERTIFIED FINANCIAL PLANNER(tm) practitioner is strongly recommended.
Mortality Tables
Working at the aeronautical giant comes with a lot of perks. Tuition reimbursement, competitive salaries, and advancement opportunities are among them. The most valuable perk for many Boeing employees is their pension, designed to provide them a steady income stream throughout their nonworking retirement years.
Those in the unionized SPEEA plan can receive their pension either as a lump sum that they can invest or as a lifetime annuity that provides fixed monthly checks for life. In recent years, about half of Boeing’s engineers have chosen the lump sum option.
But an interest rate increase that took effect this fall may slash their payouts, prompting some to retire early. Ultimately, whether to take a lump sum or annuity depends on your tolerance for risk and life expectancy. This is why it’s essential to consider the impact of rising segment rates before you make your decision.
Life Expectancy
Working at the aeronautical giant Boeing has many perks – tuition reimbursement, competitive salaries, and opportunities to grow and advance in your career. But one of the most popular perks is the pension plan that Boeing offers its employees and retirees.
When employees of the Society of Professional Engineering Employees in Aerospace (SPEEA) retire, they can choose to take their pension as a lump sum or as a regular monthly check for life. About half of the engineers who retire choose the lump sum.
Choosing the lump sum option leaves Boeing’s responsibility for your money in your hands, so you must invest it wisely to generate an income that lasts for as long as you live. The size of your lump sum depends on several factors, including life expectancy and risk tolerance. Your advisor can help you calculate your expected lifetime value, compare it to your lump sum options, and find the best strategy.
Investing
Boeing offers many perks to their employees, including tuition reimbursement, competitive salaries, and a robust pension plan. It is common for employees to rely on their pension to provide for them and their spouses in retirement.
The pension plan for engineers, part of the Society of Professional Engineering Employees in Aerospace (SPEEA), provides two options when they retire: a lump sum or regular annuity payments. The amount of a lump sum equivalent to a lifetime of monthly checks changes based on interest rates. Last year, for example, low rates meant that a lump sum payout was a large number.
Choosing one option over another comes down to many factors, such as tolerance for risk and life expectancy. A well-conceived financial strategy can help you determine your acceptable level of risk, grow your retirement assets, and leave you better prepared to manage change. Working with a CPA and a qualified financial consultant singapore is also essential to ensure that your investments work for you both now and in the future.
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