If you’re a Boeing employee nearing retirement age, you’re facing a significant financial decision that could have a big impact on your lifestyle in retirement. That decision is between a lump sum pension payout and monthly income for life, which you can make only with professional advice.
Lump-Sum Pension
The Lump-Sum Pension is an increasingly common option for retirees. However, it carries risks and should be carefully considered by the recipient. If you receive your pension in a lump sum, managing it shifts from your employer to you. It also increases the risk that you may outlive your funds. The amount of your lump-sum payment is based on several factors, including your current age, salary, expected longevity, and interest rates. It’s essential to verify the information that your company has provided you before deciding on whether to accept the lump-sum offer.
Social Security
Social security is a system designed to maintain incomes in involuntary loss of earnings, an essential part of earnings, or disability. It’s a federal government program established in 1935 and is administered by the Social Security Administration (SSA). In the United States, Social Security pays Boeing retirement, survivors, and disability benefits. These benefits help millions of people throughout their lives. A person’s retirement benefit is based on their “premium-indexed average” (PIA) earnings. This PIA is indexed for inflation to retain its purchasing power during a person’s retirement years.
Retiree Health Insurance
A retiree health insurance plan is a type of medical coverage that usually pays after Medicare and can cover deductibles, copayments, and coinsurance. It may also cover things Medicare does not, like vision care, dental services, and prescription drugs. Retiree health benefits can be essential to a retiree’s overall financial security. They may be particularly beneficial for those with a family, are prone to high health care costs, or anticipate a long period of poor health. Studies indicate that fewer firms offer retiree health benefits than a decade ago. However, some firms continue to offer retirees these benefits.
Retirement Savings Plan
The retirement savings plan allows employees to save a portion of their salary pre-tax for retirement. The contributions grow tax-deferred and get matching assistance from their employer, too. The plan entails many investment options, including lifecycle, index, and actively managed funds. These are excellent options for investing in a low-cost, diversified portfolio that matches their risk tolerance. Employees have the option of contributing to a traditional IRA or Roth IRA. There are also SEP and SIMPLE IRAs for self-employed workers. Each type of IRA has different income limits and contribution levels, so it’s best to consult a financial professional before deciding.
Health Care Subsidies
If you qualify for health insurance, the federal government may offer a subsidy to lower your monthly premium and reduce other costs. These subsidies are not loans; you do not have to repay them. The Affordable Care Act (ACA) offers several subsidies to help people who cannot afford health insurance buy coverage on their own. These subsidies are based on your income and household size. The ACA’s tax credit subsidies are a big part of why the number of Americans covered through the marketplace has grown.