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Chevron Lump Sums Decrease as Interest Rates Soar

Apr 21, 2022 2:16:23 PM
written by The Retirement Group

Want to see are most update to date blog on Chevron interest rates, click here.

Many Chevron employees who are waiting to commence their pension lump-sums, will now see a significant decrease in their value. With short, medium, and long-term rates rising significantly over the last month, the higher average rates will result in lower lump-sums for those retiring in June of 2022. This is because when Chevron employees elect the month they would like to begin their pension, Chevron looks back at the third, fourth, and fifth months' rates to calculate the pension disbursement. When these interest rates move up or down, your lump sum amount will move in an inverse direction, so if interest rates increase, your lump sum amount will decrease and vice versa.


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posted in Pension, Interest rates, Chevron, Inflation

ExxonMobil's 3rd Quarter Interest Rates Released, Pension Lump Sum Payments Likely to Decrease

Apr 20, 2022 4:43:54 PM
written by The Retirement Group

Want to see our most updated article on ExxonMobil interest rates, click here.

Interest rates are tending upward, if this trend continues it will decrease the value of ExxonMobil employees' pension lump-sums. The IRS has recently released the Segment rates for the month of March, recorded at: 2.44% / 3.71% / 3.94%. Over the course of 2021 and now into 2022, interest rates at ExxonMobil increased significantly, which greatly reduced many lump sum payments. With record low rates culminating in the first quarter of 2021, ExxonMobil employees have since seen a significant increase in interest rates. We saw rates rise consistently in 2021 and with the announcement of March segment rates those waiting until the third quarter will likely see an even further reduction in lump sums. This ongoing trend upward looks be an early indicator of bad news for ExxonMobil employees opting for a lump-sum in the future.


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posted in Financial Planning, Lump Sum, Pension, Retirement Planning, ExxonMobil, Inflation

Colliding Forces: Russia, Oil, Inflation, and Market Volatility

Mar 8, 2022 2:38:25 PM
written by The Retirement Group

The Russian invasion of Ukraine has drawn condemnation and punitive sanctions from the United States, Europe, and their allies. The humanitarian cost of war cannot be measured, and the long-term economic effects could take months or years to unfold. However, the early stages of the conflict pushed oil prices upward and sent the U.S. stock market plunging, only to see stocks bounce back and drop again — with more volatility likely.1

For now, it may be helpful to look at how the Russia-Ukraine conflict might affect the global oil market as well as U.S. consumers and investors.


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posted in Market Volatility, Inflation, Oil

The Fed Pivots to Fight Inflation

Jan 13, 2022 9:48:59 AM
written by The Retirement Group

On December 15, 2021, the Federal Open Market Committee (FOMC) of the Federal Reserve System made a significant shift in monetary policy in response to rising inflation. The Committee accelerated the reduction of its bond-buying program in order to tighten the money supply and projected three increases in the benchmark federal funds rate in 2022, followed by three more increases in 2023. Both steps were more aggressive than previous FOMC actions or projections.1

To understand how these steps might affect the U.S. economy, investors, and consumers in your area, it may be helpful to take a closer look at the FOMC's tools and strategy.

Jobs vs. Prices
As the nation's central bank, the Federal Reserve operates under a dual mandate to promote price stability and maximum sustainable employment. This is a balancing act, because an economy without inflation is typically stagnant with a weak employment climate, while a booming economy with plenty of jobs is susceptible to high inflation.

The FOMC, which is responsible for setting monetary policy in line with the Fed's mandate, has established a 2% annual inflation target based on the personal consumption expenditures (PCE) price index. The PCE index represents a broad range of spending on goods and services, and tends to run below the more widely publicized consumer price index (CPI). The Committee's policy is to allow PCE inflation to run moderately above 2% for some time in order to balance the periods when it runs below 2%.

PCE inflation was generally well below the Fed's 2% target from May 2012 to February 2021. But it has risen quickly since then, reaching 5.7% for the 12 months ending in November 2021 — the highest level since 1982. (By comparison, CPI inflation was 6.8%.)2-3

Fed officials, along with many other economists and policy makers, originally believed that inflation was "transitory" due to supply-chain issues related to opening the economy. But the persistence and level of inflation over the last few months led them to take corrective action. They still believe inflation will drop significantly in 2022 as supply-chain problems are resolved, and project a PCE inflation rate of 2.6% by the end of the year.4

The Fed's Toolbox
The FOMC uses two primary tools in its efforts to achieve the appropriate balance between employment and prices. The first is its power to set the federal funds rate, the interest rate that large banks use to lend each other money overnight in order to maintain required deposits with the Federal Reserve. This rate serves as a benchmark for many other rates, including the prime rate that commercial banks charge their best customers. The prime rate usually runs about 3% above the federal funds rate (see chart) and acts as a benchmark for rates on consumer loans such as credit cards and auto loans. The FOMC lowers the funds rate to stimulate the economy to create jobs and raises it to slow the economy to fight inflation.

The Fed's second tool is purchasing Treasury bonds to increase the money supply or allowing bonds to mature without repurchasing in order to decrease the supply. The FOMC purchases Treasuries through banks within the Federal Reserve System. Rather than using funds it holds on deposit, the Fed simply adds the appropriate amount to the bank's balance, essentially creating money out of air. This provides the bank with more money to lend to consumers, businesses, or the government (through purchasing more Treasuries).


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posted in Inflation

Inflation - How to Hedge Against it and What it Means for Value

Dec 10, 2021 2:54:28 PM
written by The Retirement Group

The Rise of Inflation


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posted in Inflation, Hedge, Value

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