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Automotive Pension Information

Retirement is already in the top ten for life’s most stressful events, and if you work in the automotive industry, it may have just become a little more stressful. As you probably know, this local company has always had several decisions to make when faced with retirement, such as when to start your pension and which pension option is best for you and your spouse. 

Now, a large scale automotive company has thrown in a major game-changing option by offering retirees a large lump-sum pension buy-out in lieu of the traditional monthly pension check.  Whether or not to take a lump-sum may be the most important financial decision in your life.

Here are some considerations before you make this once in a lifetime and irrevocable choice:

  • What is the present value of your monthly pension?
  • How important is leaving a financial legacy to your children?
  • What are your monthly cash flow needs?
  • Will you need access to lump-sum withdrawals in retirement?
  • How confident are you in this auto maker's ability to stay solvent and not default on your pension during your lifetime?
  • What monthly amount, if any, would the PBGC cover if the auto company defaults on pensions?
  • Does PBGC cover Part A, Part B, Career Averaging, SERP and early retirement supplements?
  • What are you and your spouse’s life expectancy?
  • Will your pension be adjusted for inflation throughout retirement?
  • What are the tax considerations of pension income versus rolling a lump-sum to an IRA?
  • What other sources of income will you have such as 401(k), Social Security and spouse’s pension?

The above questions must all be considered before you make a decision on whether to take a lump-sum pension buyout or not.  There are also many other considerations such as when to take your Social Security, what to do with your before-tax and after –tax portions of your 401(k), which accounts should you spend down first in retirement and most importantly, can you afford to retire?

InvestWise Financial has the tools, experience, and knowledgeable advisors to help make sure you make the most appropriate decision for you and your family.  The advisors at InvestWise Financial in Bloomfield Hills, MI have met with thousands of auto company employees over the last 20 years.  With proper information and answers to your questions, you can make informed choices.  With this knowledge, retiring can be a joyful experience for you, rather than a stressful one. 

If you would like to consult with one of our advisors, please call our toll-free number 866.321.6228 to set up a free no obligation and confidential appointment to discuss your options.