How New Jersey Resources Employees Can Navigate the Impact of Inflation on Their Pension Choices

Healthcare Provider Update: Healthcare Provider for New Jersey Resources New Jersey Resources (NJR) is a publicly traded energy services company that provides natural gas and energy services to support their customers. They have partnered with various healthcare insurers to offer health benefits to their employees. While the specific healthcare provider for NJR does not seem to be explicitly documented, they typically leverage local and nationwide providers suited for corporate health benefits under state and federal health regulations. Potential Healthcare Cost Increases for New Jersey Resources in 2026 As we look ahead to 2026, healthcare costs are anticipated to rise significantly for New Jersey Resources employees. Due to factors such as escalating medical services costs and the expiration of enhanced ACA premium subsidies, individuals could face premium increases averaging nearly 36.5% for local government employees and 29.7% for school employees. This perfect storm of rising healthcare expenses, coupled with the pressure on insurers to maintain profitability, poses the risk of out-of-pocket expenses soaring, thereby underlining the urgent need for strategic financial planning in the upcoming year. Click here to learn more

Rising interest rates also play a large role in the decision of whether New Jersey Resources employees should take their pension as an annuity or a one-time lump sum payment. As inflation continues to rise, the Fed has responded by gradually increasing interest rates, which decreases the value of future pension payments as well as the lump sum value. This is because the future pension payments are worth less today as the dollar devalues and the higher investment return drives the total present value of the payments down. To show this mathematically, imagine an individual with pension payments of $48,000 annually ($4,000 monthly), a 20-year time horizon, and a 5% interest rate

 

The present value of all of these payments is worth $598,186, which should roughly be the value of the lump sum payment. With a single percentage increase in interest rates from 5% to 6%, the new present value of the payments is reduced to $550,556, just under an 8% decrease over the old present value. Evidently, rising interest rates negatively affect the present value of future payments so given Federal Reserve Chairman Jerome Powell’s mention of 2-3 more interest rate hikes this year, the decision of whether to take a lump sum now or later could have a big impact on your retirement from New Jersey Resources.

 

'Taking your pension as a lump sum and knowing how to manage your funds to last for your retirement requires hard work.'

 

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In practicality, taking your pension as a lump sum and knowing how to manage your funds to last for your years of retirement from New Jersey Resources requires hard work. Figuring out how much to withdraw, when to withdraw, and how much you can spend each year are just a few of the many decisions that are needed to be thought out in order to maximize the benefit of taking your pension as a lump sum. If you don’t take the time to think out these decisions, you could find yourself running out of funds during your years of retirement from New Jersey Resources.

For our New Jersey Resources clients who would prefer the safety of a guaranteed stream of income for the rest of their lives, taking the annuity over the lump sum may be the better option for you. With taking your pension as an annuity though, there is no certainty that the company paying your pension will remain in business for the duration of your retirement so you run the risk of receiving smaller pension payments from the PBGC (Pension Benefit Guaranty Corporation) in the event that New Jersey Resources goes under. Both options have their pros and cons and in the end up to you to decide which suits your personal financial situation and lifestyle.

 

If you are interested in more information about this topic, view our e-book here:  https://retirekit.theretirementgroup.com/effects-of-inflation-e-brochure