This option allows you have your benefit paid as a single lump sum rather than as a monthly annuity. Using the assumptions shown above, here is an example of how your benefit would be calculated under the Lump Sum Payment Option.

These assumptions are hypothetical and used only for illustrative purposes. Your benefit is based on the factors that apply to you when you start your benefits. The lump sum factor shown above is based on January 2017 interest rates. Higher interest rates result in lower lump sum conversion factors; lower interest rates result in higher lump sum conversion factors.

If you want all or part of your monthly benefit to continue to a survivor for his or her lifetime following your death, you can elect the Joint and Survivor Annuity Option.

Using the assumptions shown below, here are examples of how your benefit is calculated under the 50 Percent and 100 Percent Joint and Survivor Annuity Options.

• Single Life Annuity benefit = $2,700
• Member’s age at Annuity Starting Date = 58
• Joint annuitant’s age at Annuity Starting Date = 55
• 50% Joint and Survivor Annuity Option conversion factor = 0.9343
• 100% Joint and Survivor Annuity Option conversion factor = 0.8766

These assumptions are hypothetical and used only for illustrative purposes. Your benefit is based on the factors that apply to you when you start your benefits.

$2,522.61

X 50%

$1,261.31

EQUALS monthly annuity paid to your joint annuitant for his or her lifetime following your death

X 100%

$2,366.82
Monthly annuity paid to your joint annuitant for his or her lifetime following your death

Source: Chevron Retirement Benefits Example in the 2017 handbook. https://hr2.chevron.com/Images/2008RetirementHiredBefore010108_tcm36-7289.pdf

As you can see the monthly amount paid for the Joint and Survivor Annuity is about 10% lower than the single life. This is due to the actuarial tables which would be used on both lives, not just an individual.

You have worked hard for your retirement. After a long career at Chevron, you deserve to enjoy your retirement to the fullest. We know this decision can evoke a multitude of emotions and be overwhelming. Therefore, having someone who is a Chevron retirement specialist is key to make sure the entire process goes smoothly with no hiccups.

A big part of maximizing your retirement enjoyment comes from creating a strategic disbursement of your benefits. By understanding the timing of the payouts and tax implications of your benefits, along with the segment rates, we can determine the most tax-efficient retirement date for you that optimizes your income into your retirement days. While no specific date works for everyone, we have outlined several factors which could potentially affect your retirement figures.

First and foremost: Do you have enough money when combining your ESIP (Fidelity) account along with your lump sum or corresponding monthly payment from annuity?

This obviously is the most important component of when to retire. As I have counseled hundreds over the years, setting the overall total amount needed is imperative to a successful retirement. Once your asset goal is attained then it is time to put forth a real exit plan.

Maximizing the CIP plan is a consideration, but I do not feel it should be too much of a deciding factor.

Since the lump sum is typically a large amount of your total, where the segment rates are extremely important, much more so than the CIP payout. These 3 segment rates are published rates by the IRS and are prominent figures in calculating your retirement benefits. The lower these rates are at your retirement rate the better. Optimally, you would like to retire when the stock price or markets are higher, and rates are low. When you elect the month your benefits will begin, Chevron will look back at what the segment rate averages were 4,5 and 6 months prior to determine the rate used in the lump sum calculation. This can be confusing which is why I am constantly working with current employees on their strategy and running projections to have the most comprehensive and concise figures from which to work.

How many years you have been employed with Chevron along with your age are also the main factors on when you should leave. If you have enough years of service, your full retirement benefit occurs when you reach age 60. Also, the more points you have the higher percentage of your medical benefits are paid by Chevron.

Lastly, if you qualify for Resource Optimization Management (ROM) or Employee Selection Process (ESP) and are not “left standing”, this could provide a springboard to retirement. Receiving a severance can materially change your financial position as you will have the opportunity to delay taking withdrawals from the invested assets.

Whether or not your investment strategy should change during retirement is based on several factors, namely your overall knowledge of the markets, how much you have, and how much you will be spending monthly. One of the many benefits of having an investment advisor is the diversification we can offer from your previous investment options in Fidelity. Couple this with the ability to form a relationship with your advisor generally lends itself to rollover your assets to an advisor who specializes in the management of retirement assets and is familiar with the Chevron paperwork etc.

One of the most common questions asked is how much can I withdraw monthly? A good measuring stick is to take what your “total” salary is and cut in half. If you are making 140k, then you are more than likely living on 70k (after-taxes) on an annual basis. A good rule of thumb is to withdraw to 5.5% of your overall assets before social security and 4% of less once social security begins. This ratio has consistently proven to be successful due to the long-term overall performance of the markets, but may not be suitable for everyone. You overall balance will consistently fluctuate, but this trend should continue to be successful as it has in the past.

DISCLOSURES:
Investing in securities is speculative and carries a high degree of risk. You should carefully consider your investment objectives, potential risks, advisory fees and expenses before investing.

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable; however, its accuracy is not guaranteed. This presentation may not be construed as tax, legal or investment advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and are subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, here. Past performance is not a guarantee of future results.

Musso Retirement Advisors it not endorsed or affiliated with Chevron. While we believe this information is accurate, it is the responsibility of the Chevron employee to contact Human Resources for their specific retirement package.