Retirement planning is a complex process built over years of hard work. 

For employees of companies like Chevron, you are wise to carefully weigh various key retirement factors – particularly the timing of your retirement. That’s because timing can directly impact the benefits you receive. 

Below, we explore a few crucial factors for Chevron employees to consider when choosing your ideal time to retire. 

First, Identify the Retirement Plans Available to You 

Chevron offers several retirement plans, each with unique features. Here’s a quick overview to help you identify which ones apply to you: 

• Chevron 401k Plan (Employee Savings Investment Plan - ESIP): A standard 401k plan for all employees 
• Chevron Employee Savings Investment Restoration Plan (ESIP RP): Designed for high-earning employees to supplement the ESIP 
• Chevron Retirement Plan (CRP): A qualified pension plan 
• Chevron Retirement Restoration Plan (RRP): A non-qualified pension plan that supplements the CRP 
• Deferred Compensation Plans (DCP): Available for upper management 
• Long-Term Incentive Plans (LTIP): Includes performance shares, stock options. and restricted stock units tied to company performance 

Consider Tax Strategies, Like NUA for Chevron Stock 

If you hold Chevron stock in your 401k or other workplace retirement savings plans, you may benefit from the net unrealized appreciation (NUA) strategy. NUA is the difference between the cost basis of the stock and its current market value. When distributing company stock from your 401k, you have two options: 

• Roll it into an IRA or another 401k plan 
• Distribute the stock into a taxable account and roll the remaining assets into an IRA or 401k 

The second option may lower your total taxes paid on a portion of your currently tax-deferred assets. 

Understand the Implications of Pension Distributions 

Chevron employees eligible for lump-sum pensions have two options: 

• Qualified Pension (CRP): Subject to IRS income limitations 
• Non-Qualified Pension (RRP): Created to offer additional retirement benefits beyond the CRP limitations 

Interest rates can significantly impact the lump-sum pension you can receive. That’s because there is an inverse relationship between interest rates and lump-sum pension values: As interest rates rise, the lump-sum pension value decreases, and vice versa. This relationship, combined with your retirement age, can determine the total pension amount you may receive. Fluctuations in interest rates around your retirement date can cause substantial variations in your pension. 

Chevron determines the pension lump-sum by referring to the interest rates of the last month before your retirement month. A slight adjustment of your retirement date by just a few weeks can make a significant difference in your pension outcome. 

For instance, if an employee commences their pension benefit in June 2025, the rates for March 2025 and the two preceding months would be used. This method involves blending the rates to determine the applicable rates for various segments of the pension. 

Another factor to consider is the Social Security offset component of your pension benefit.  Many employees receive reduced pension benefits resulting from their projected social security benefit, but Chevron often makes errors in projecting this amount, resulting in unnecessarily low pension payouts.  It is possible to correct this error, but it’s important to work with a specialist in determining whether or not the error is in your favor. 

Consider the Big Picture 

Factors like inflation and federal economic policies can be impactful to your retirement timing and withdrawal strategies. 

For instance, due to uncertainties in interest rate movements, some retirees may choose to delay their pension and instead rely on other retirement savings. This strategy allows you to retire but hold off on taking your pension until interest rates lower. 

Another key factor is timing your Social Security benefits. In partnership with a professional advisor, you can evaluate your overall financial situation to decide when the best time is to start receiving benefits. 

The Bottom Line 

The decision of when to retire should not be taken lightly. Maximizing your retirement benefits at Chevron requires a thorough understanding of these offerings and the decisions needed to coordinate them in a plan tailored to your unique needs. A professional financial advisor can support you in reaching your financial goals, enjoying the lifestyle you desire, and leaving a legacy for your loved ones and causes you care about. 

Professional financial advisors with Wealth Enhancement offer comprehensive wealth management, including tax strategy, estate planning, investment management, and more for Chevron employees. 

We believe in the power of planning ahead, and we’re ready to craft your financial future, together. 

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