MrFedEx
Engorged Member
Yes.
Early Retirement Payout
- Thread starter NonyaBiznes
- Start date
Yes.
I actually got a retirement kit outlining all my choices. No lump sum for the traditional. Why would they even offer one?
Oldfart
Well-Known Member
Not sure why you didn't get the option. It is right there on the website and has always been an option. Not a wise choice in my opinion but like I said, if you are single, nobody gets your traditional when you die so you might consider the lump sum option. I don't guess I have that option because I was in the traditional for over 25 years and you weren't. No idea.
SortaNeutral
Member
Letters went out in January offering lump sum payouts. From people I know that received the letter, they had one thing in common. All no longer worked @ Fedex, and all were not yet receiving payments.
UpstateNYUPSer(Ret)
Well-Known Member
These letters were a result of a change in the pension laws.
If that's the case I agree with Oldfart. I can certainly see FedEx wanting people to take it. Not surprising since they have the new pay plan that they're looking for other ways to offset it.
SortaNeutral
Member
Oldfart also makes a good point in by taking the offer as a single person, you can then name a beneficiary for the remaining balance after death. A trustee to trustee transfer before age 59 1/2 would avoid the 10% penalty for early withdrawal.
Rhoderunner
Well-Known Member
Not to mention the pension is under funded. Sitting at 83 % or so I recently read.
There is no lump sum option for the TPP.!
Oldfart
Well-Known Member
Yes there is. At least there is on mine. Might want to look at retirement.fedex.com. It is right there. Always has been.
59 Dano
I just want to make friends!
You'd want to take the lump sum if you can earn a better return than what it's paying you. If a year's worth of monthly payments is less than 6% of the lump sum offer, I'd take the lump sum. It's not hard to beat a 6% return. YMMV.
Oldfart
Well-Known Member
When you are in your retirement years, going conservative has to be an option. You don't want to risk another 2008 in the market.
My Traditional lump is barely 5 years worth of monthly payments. If I draw my monthly for 10 years I basically double my lump. I would hate to depend on the market to double my lump as I am drawing it down with withdrawals. While 6% a return would be close to what you need to double your lump, you have to remember you will be making withdrawals from your account during those years. If you pull $2000 a month from that account, which is close to my monthly payment, you would need to get a 17% return to double your lump in 10 years.
SortaNeutral
Member
I will have to see one of these lump sum payout offer letters. Like I said the letters went to people that have not worked at Fedex since before there was a portable pension. On top of that, their interpretation is they had 3 options : 1) lump sum 2) 5 year payout 3) 10 year payout.
UpstateNYUPSer(Ret)
Well-Known Member
My financial adviser suggested that I limit my 401k withdrawals to no more than 5% of the balance per year. With an expected return of 8%, the fund should continue to replenish itself for as long as I will need it.
Oldfart
Well-Known Member
I will be fortunate enough to be able to replace 100% of my current salary when I retire providing the market doesnt have a repeat of 2008 in the next 1 1/2 years. The 5% you mention is very doable as part of that. The 8% return is just a little aggressive for my habits when I do call it quits. I am getting about 8% overall now but have been slowly moving things to more conservative markets in preparation for retirement. In 2008, the market lost about 37%. It took many portfolios till 2012 or so just to get back that 37%. I don't want to have to adjust my lifestyle during retirement if the market decides to repeat that era. When I retire, I will be shooting for a modest 4% return and will live happily ever after with that. Anything above that will just add to what my kids will get when that time comes.
UpstateNYUPSer(Ret)
Well-Known Member
Keep in mind that I will also have a pension and SS.
Let's look at 5%. If a courier retires with a two thousand a month traditional pension payment, he'd need almost half a million invested with a 5% return to achieve that. Is FedEx offering half a million lump sums? Oldfart said the lump sum they're offering is equal to about 5 years worth of what his monthly would be. $125k or thereabouts? About the only thing offering more than 5% currently that I'm aware of is the stock market if you don't count junk bonds. There are safer stocks like utilities but generally you have to count on a long stretch of stock gains to grow your account considering you are drawing off it monthly. A major correction stops you in your tracks and can significantly reduce your equity. Which means you either do without or sell off stock to maintain your lifestyle. Much wiser to take that lifetime monthly payment.
And if you're paid enough to properly fund your 401k that can work. Most FedEx couriers aren't. And you have a better pension. We're talking about cashing out a traditional pension and investing in the stock market. Might work out, but very risky as one of the pillars of your retirement income. But a real boon to the company if they can get enough people to do it.
The person I know was with FDX 20 years and got fired 2 years ago. He was contacted and asked how he wanted his money from the traditional, so he was definitely around after the portable went into effect.
Oldfart
Well-Known Member
Spot on. Unless you are unmarried. Then the lump sum might be your best bet.
Similar threads
