In this 5 part video series, Certified Financial Planners and Advisors, Ryan and Gabe, cover the components of the ExxonMobil Benefits package and all of the factors to consider for planning your retirement. Click the list icon in the top right corner of the video to view all 5 videos or jump around to different videos.
VIDEO #1: ExxonMobil: Lump Sum vs Monthly Pension
Today we want to talk about ExxonMobil and some of the benefits plans that they have. One of the best benefits that Exxon offers is their pension available for their employees. We see very few privately owned companies still offering pensions. Let’s look at a couple of common questions and things to address. What are all of the components going into a pension? What are all of the important things we need to consider?
Interest Rates Affect Lump Sum Value
A pension is a lot of times referred to as a “defined benefit plan” which is offered by Exxon. What goes into the calculation has a lot to do with interest rates. What are the long-term interest rates? There are three interest rates they look at when calculating payment. Those interest rates determine the lump sum value, or the monthly annuity. You can take a monthly pension in the form of a guaranteed payment monthly for a set period of time, but with low interest rates it’s hard for retirees to pick that option. We’ve seen a large shift to the lump sum offer because of the low interest.
Lump Sum or Monthly Annuity
As the interest rates go up, which will occur over time, they will directly affect the value of that lump sum pension. We’ve seen the interest rates crash due to Covid-19 and because of this, that lump sum pension is nearly the highest it has ever been for most of our pre-retiree ExxonMobil clients. Because of this, we’re taking it into consideration when deciding to take a lump sum to invest or that monthly annuity. Even just a 1% change in that interest rate could mean up to 10% value in that pension. If you aren’t aware of this reach out to our team, we’re here to help, especially for those working at ExxonMobil.
VIDEO #2: ExxonMobil: Net Unrealized Appreciation
Another feature of ExxonMobil’s retirement plan is that they offer a “Net Unrealized Appreciation” (NUA). We’re going to talk a little bit about how an NUA works and why it’s such a powerful benefit.
ExxonMobil keeps an aging record of the stocks that you keep in your 401k. Exxon keeps track of the price that you purchased those stocks at in your 401k throughout the history of your payments. What’s nice about this is, so long as we have that aging of the stock, we have the ability to go back and pay an ordinary income on the basis of what we had payed for that stock years ago. All the appreciation since then we can potentially get as a longterm capital gain compared to ordinary income.
Longterm Capital Gains Can Be Adventageous
Where the tax rates sit right now, longterm capital gains can be advantageous compared to ordinary income rates coming out of the 401k. There’s also not the restriction on the stock that comes out where the basis is paid. There isn’t a requirement to be 59.5 years of age to get access to that money like there would be otherwise. You can use it as a non-qualified because you’re paying long-term capital gains.
This video series that we’re doing is based around ExxonMobil and the benefits that all employees of Exxon have access to. With any of your questions don’t hesitate to reach out to Ryan or Gabe at Strategic Retirement Plans.
Video #3: ExxonMobil: Medical Benefits Pre-65
One of the most important questions we get from people planning for retirement is, “What do I do for health care after retirement if I’m not yet age 65?” With ExxonMobil retirement, they offer a plan that is in place to help people before the age of 65 to give them health care.
Talking about the benefits of Exxon, an important and critical part of the retirement plan is their pre-65 medical benefits for retirees. We’re seeing that Exxon is having married couples pay between $400-600 per month. Which on the open market, buying themselves could be as high as $2500-3000 per month. Knowing this, your ability to retire with Exxon before age 65 is so much easier because you are subsidized as a retiree with medical insurance! AND it’s the same medical insurance that you’re used to having because its the same offer you had while working.
There is some contribution that you have to make, but it’s not even fully required for the retiree if you wish not to pay for this benefit. However, it’s a huge benefit when planning cash-full retirement for our retirees. If you have any questions on how these benefits work, or greater strategies on how to retire from ExxonMobil, reach out to our team at Strategic Retirement Plans.
Video #4: ExxonMobil: Voya 401k
The final area we wanted to touch on in our series of retiring from Exxon is the 401k, which is held at Voya. Voya is the custodian company of the 401k for Exxon employees. A huge part of someone’s retirement is their 401k and at Exxon those are handled by Voya.
Inside of that plan, you can have a pre-tax 401k which is what a lot of retirees are using. This is also where you own your employer stock for example Exxon, the source of our NUA money. After-tax dollars also get contributed which can be used for many things including reducing your basis on your NUA. Lastly, there could be some roth money.
Inside of this Voya plan, there are many ways to contribute your money to it. With our clients, we help them plan where to put their current money as well as their future income within this Voya. With any questions on this, reach out to our team we’d love to help you.
Video #5: ExxonMobil: Planning your Retirement
This is the last part of the series wrapping up the benefits for the Exxon Mobile employees and retirees. We’ve covered everything from pension and NUA to medical benefits and Voya 401k. It’s so important to get each of these things right when retiring, however, you also need to have a great retirement plan to get you from retirement to the very end.
A Joy Filled Retirement Requires a Plan
This is where we come in and help you plan things like social security, any steams of income you have, rentals, royalties, and risk on assets. Most importantly, we want to find out what your goals are in retirement and help you plan for those. What is going to bring you the most joy? How do we build a financial plan around that? We are there, bringing you through the ups and downs of life as well as the ups and downs of the market.
There are a lot of decisions you make that can have an impact on your retirement, like how you spend your money in retirement. We want to help you have the freedom and the joy that you deserve. We don’t want retirement to be a scary thing with lots of question marks and concerns. If you need any help with planning your retirement, reach out to us at Strategic Retirement Plans.
Strategic Retirement Plans is neither endorsed by nor affiliated with Exxon Mobil.