Defining what you want in the future requires careful thought. Finding a quiet place to think clearly and without distraction is essential.
When you retire, you must decide whether to take your pension as a lump sum or a life-long stream of monthly payments—choosing the former transfers many risks to you, including investment and longevity risks.
The Boeing Company pension calculator can help you calculate your retirement benefits. This tool can estimate your Boeing pension benefit and your lump sum payment. This tool is designed to work with a traditional defined benefit plan.
In addition, you can also check to see if you’re eligible for a withdrawal or if a rollover into an IRA would be better for you. Remember that any pullbacks are subject to regular federal income tax and, if you’re under age 59 1/2, an additional 10% penalty. Refer to your summary plan description for more information.
Suppose you’re a white-collar worker in the Society of Professional Engineering Employees in Aerospace, or SPEEA, union. In that case, you can receive your retirement payments as a lump sum or as fixed monthly checks for life. But in November, a looming adjustment to the company’s interest rate assumptions could drastically cut the value of a lump sum payout.
Calculate Your Lump Sum
A lump sum is a check that comes to you once you retire. The size of the lump sum depends on a few things: your risk tolerance, your life expectancy, and – if you’re a member – how your company calculates its annuity contribution, which is based on your Final Average Pensionable Pay subtotal – Social Security offset.
If you take a lump sum, remember that it will be taxed differently than your monthly pension checks. You can avoid some of that by having the lump sum invested, but you’ll want to know your investment returns.
The decision of whether to take a lump sum or pension is a complex one. To help you decide, finding a place to think without interruption is essential. Define what you want your future to look like and figure out how you can make it happen. Taking small steps towards those goals will get you there.
Calculate Your Monthly Payment
Planning for the future can feel daunting, but making small steps and surrounding yourself with people who care are crucial to achieving your goals. If you are looking to plan for the next few months, years, or even five years, consider how this can help you make a positive change in your life.
For example, a 57-year-old Boeing engineer who has decided to retire in November may have the option to choose between a lump sum payment or monthly pension payments for the rest of his life. A lump sum may seem like a good choice, but he must budget his spending carefully to avoid outliving the money.
Monthly payment starts with a base salary of your highest three consecutive years of employment and then is multiplied by the number of years you’ve worked for Boeing. Each pension plan has its formula; you should look into your specific options.
Calculate Your Retirement Income
Many factors can affect your retirement income, including your investments, Social Security benefits, part-time work, and various other sources. It is essential to run both optimistic and pessimistic scenarios to see if you have enough money for the lifestyle you want in retirement.
When running these calculations, consider expected inflation (general and medical costs) and your investment return before and after retirement. It would help if you also believed whether you want to include your spouse’s income in the calculations, as this could significantly increase your retirement savings.
If your estimated retirement income is insufficient to meet your anticipated living expenses, reducing spending or finding other ways to generate additional revenue is possible. A financial advisor can help you develop a plan for the future that includes your pension and other assets you may have, such as IRAs, 401(k) accounts, and taxable accounts.