Intermountain Health Pension Freeze: 3 Important Decisions for Your Retirement

Executive Summary

In this webinar, Carson Johnson, CFP®, explains what the Intermountain Health pension freeze changes and what it does not, then walks through three decisions caregivers may face: the role of the 401(k), whether to take monthly payments or a lump sum rollover, and when to claim the pension. The presentation is educational and general in nature, and none of it is tax, legal, or investment advice.

Welcome and What We Will Cover

Carson Johnson: So today I want to talk about the three important decisions that each of you as caregivers will need to make as it pertains to your retirement. And my hope is that with this pension freeze, there’s more options available to you and opportunities. And so my hope is that we can go over those opportunities and options available to you, so that you can be better prepared as you’re planning for your retirement.

But first, just a little bit about who I am, and for those of you who haven’t met me, my name is Carson Johnson. I am a partner and senior advisor here at Peterson Wealth Advisors. Along with me today is Jeff Sevy. He’s one of our certified financial planners as well, and he’ll be manning the questions and answers. If you have any questions, just message us and he’ll be the one responding. So I’m glad I’ve got him helping me out today.

Just a little bit about our firm. A big part of what we do is we help good people live their best lives in retirement. And so helping people transition from working into retirement and creating that income plan for them for the rest of their lives is what we do. And so that is the perspective that I hope to share with you today: how these pension decisions will impact you and your retirements.

But before we get into it, one quick disclaimer. What we’re just talking about today is educational and general in nature. I obviously don’t know all the individual circumstances of everyone here, so none of this should be viewed as tax, legal, or investment advice. And Peterson Wealth is not affiliated with or a sponsor of Intermountain Health. But the reason why we’re sharing this is because we work with a lot of current and former Intermountain Healthcare caregivers and retirees, and understand their benefits. And especially with a lot of these changes that are going on this year, have a good perspective on how it affects your retirement.

So with that out of the way, let’s start with some of the questions that we’ve been hearing that maybe some of you may be having as well. Because over the past several months, me and our other advisors here at the firm have had a lot of conversations about this pension freeze. And since then, we keep hearing some of the same questions over and over again like, “Am I losing my pension? Should I take the monthly payments or should I take the lump sum? When should I retire because of these changes?” And then probably the biggest decision or question that I think everyone should consider is, “How does this all affect my retirement?”

Right? And so some of you may have some of those questions there listed on the slide, and maybe others of you may have questions that aren’t listed here. And so, as we go throughout our conversation today, if you have questions, feel free to send a message to Jeff, or type in your questions and we’ll try to address them as we go along. But we’ll make sure we have some time at the end of our time today to answer any questions as well.

What Is Changing, What Is Not, and What Is New

So I think we need to start at the beginning and understand what’s actually happening with this pension freeze to make sure there isn’t any misunderstandings. Because with all the conversation that’s been going on, I think there’s also a fair amount of confusion about what’s changing with the pension and the new options available to you. And so before we talk about what you should do and those three important decisions, we first need to make sure we understand what’s actually changed or changing.

And so I’ve tried to simplify the announcement into three categories. What is changing, what is not changing, and then what is new. What are some new decisions that will be available to you starting next year?

And so the major change is pretty straightforward that everyone’s familiar with, is that the pension is being frozen. And so what that means is that at the end of this year, additional pension accruals or contributions will stop after this year. So continuing to work after that point will no longer increase your pension by working more years for Intermountain. So that’s the basics. That’s what we’re all familiar with in this announcement.

But what’s equally important is what’s not changing. The pension benefit that you’ve already earned is still yours. The freeze does not erase your benefit by any means, and you still have choices on how you can receive that pension benefit. And so in other words, your frozen pension does not mean you’ve lost that pension.

And then lastly, that last category, which I think is also important, is that there are some new options available to you as well. So Intermountain is enhancing the 401(k) plan, which we’ll talk about in a few minutes. There is also a new retiree medical savings account benefit, which we will dive into. And then I think probably the biggest change is that pension-eligible caregivers will have more flexibility around when they can begin their pension benefits, including the ability to claim it while you are still working.

Right? And so that’s where we’re going to be spending most of our time. Because all these different aspects create new choices, which is really why this conversation, this webinar, is so important, and why we wanted to put this together.

Three Key Dates to Know

As far as some of these changes that will be coming next year, I thought it’d be helpful to show you really the specific dates of these changes of when they will be happening. And so, if you haven’t started your pension yet, there are three dates that I encourage you to be aware of.

The first change is January 1st, 2027, and this is ultimately when the pension freeze takes effect. So no new pension benefits are earned after that point, and it’s also when the new enhancement to Intermountain’s 401(k) will also begin. And again, we’ll dive into that a little bit deeper in just a minute. But additionally, on January 1st, if you are a caregiver that’s 65 and older, you can start your pension even if you are still working. Which is very unique, because in the past, you wouldn’t be able to claim your pension benefit until you have officially retired. Because of this freeze, that does open that up as a possibility.

The second date is March 1st, 2027. So that’s when caregivers between 59 and a half and 64 can begin their pension while you are still working, or you can choose to wait to claim it later down the road. We’ll talk about the consequences and the pros and cons of claiming that today and how that might affect your decisions with retirement.

And then the third date is January 1st, 2030. And that’s the date tied to that new retiree medical savings account benefit. And again, we’ll cover that in more detail in just a few minutes.

So these are just important dates to be aware of that are really happening next year. None of these dates force you to do anything. You don’t have to make decisions by those dates, but they do open up some new choices available to you, and that’s the point of today’s conversation: the decisions start next year, but the planning should start now for your retirement.

The Three Big Decisions

So I think there are really three big decisions that every Intermountain Healthcare giver will need to make in light of these recent changes. So decision number one, which is what most people are asking, and probably most of you are wondering, which is when should I claim my pension benefit? I can claim it as early as 59 and a half, or I can wait till later in retirement, and what are the pros and cons of that?

Decision number two is how should you take your pension benefit? There are two common ways you can receive it, but there’s pros and cons to each of those options. And then decision number three is what role does the 401(k) have now that the pension is frozen?

And so all of these three decisions are very connected. A decision in one can significantly impact another. And so because of that, instead of starting with that first question, I actually want to start with decision number three and then two, and then once we understand those, we’ll be in a much better position to answer when should I claim? And so, that’s what we’ll be talking about today.

Now, just as a quick note, before we get into those decisions, some of you may have already claimed your pension benefit. And if you have, then most of what we’ll be covering today may not apply to you, but there might be some certain tax aspects to this where you may want to consider sticking around. But this is going to be primarily for those of you who haven’t started your pension benefit and the considerations you should be thinking about.

Decision 3: What Role Does the 401(k) Play Now?

So let’s go ahead and jump in with decision number three, which is what does the 401(k) do now? And what’s happening at Intermountain with this pension freeze is actually nothing new. It’s part of a much bigger shift that’s been going on for actually decades. This is just a chart that shows you that back in 1985, there were about 170,000, 175,000 traditional pension plans in the private sector, just like Intermountain. And today, there are fewer than 50,000 plans, and that number continues to decline year after year. And so these pension freezes aren’t anything new.

And because pensions are being frozen, what’s happening is that they’re being replaced by the 401(k). And so with that shift, the responsibility for saving for retirement and turning those savings into income that will last for potentially a 30-year retirement has moved from the employer providing the pension benefit to each of us and our 401(k)s and how we manage those correctly. And so, because the pension will be frozen, ultimately that means your 401(k) will carry more of the retirement workload going forward.

And the good news is that despite the pension freeze happening, Intermountain is helping a little bit with that through the 401(k). And so beginning next year, Intermountain is adding an automatic 2% contribution on top of the existing match. And so in this example, if you contribute 5% to your Intermountain Health 401(k), then Intermountain will contribute 4%, which is through their matching program, plus another 2% automatic contribution. And so that means that the equivalent of 11% of your pay is going into your retirement, even though only 5% of it is coming directly from your contributions, which will be helpful.

So one action item that I would encourage all of you to do is take a look at how much you are contributing to your 401(k). Because the pension is being frozen, that means that your 401(k) is going to do more of the workload, and you’ll want to make sure you run projections and calculate what your retirement savings will be by the time you retire, to estimate how much in investments you’ll have that you can use for your retirement. And, at the very least, make sure that you’re getting at least that full match, putting in at least that 5%. Because that way you’re not leaving any money on the table.

And then while you’re looking at that, I would also encourage you to take a look at how you are invested. Again, because the 401(k) is going to play a bigger role, how you are invested in your 401(k) will matter even more. And if you’re getting close to retirement and may be more aggressively invested, it may be a time to dial back those investments, just in case your retirement happens to coincide with a market decline. Right? And so taking a look at that would be a really great idea.

The New Retiree Medical Savings Account

Now with that enhancement to the 401(k), that’s actually not the only new benefit to be aware of. There’s one more that I think you should be aware of, which is that retiree medical savings account. And so, what this retiree medical savings account really is, is think of it as a $50,000 bucket that Intermountain will fund for you, and this account is set aside specifically for healthcare expenses in retirement. So you could use this account for health insurance premiums before age 65, use it for Medicare premiums after age 65, or really any other out-of-pocket medical costs that you may have. And so, for every medical expense that you have, drawing from this rather than pulling from your 401(k) can be a good resource for you.

Now, there is a catch. In order to qualify for this benefit, you need to meet three requirements. You need to be eligible and vested for the pension plan. You need to still be working at Intermountain until January 1st of 2030, so four more years for that, or three more years, I guess, almost. And then you need to retire at age 63 or older. And so if you miss any of those requirements, you don’t get that benefit. And so, if you’re thinking about retiring early, in your early 60s, this is a benefit that alone may be worth a couple more years of work. Right? It’s one of those trade-offs that you may want to weigh as part of your overall retirement plan.

Decision 2: Monthly Payments or a Lump Sum

So that’s the 401(k). Let’s move to decision number two, which is how to receive or take your pension benefit. Because once you become eligible for your pension, one of the biggest decisions is how you receive it. And broadly speaking, there’s two different choices or ways you can receive your pension benefit. You can elect a monthly payment that’s designed to provide income to you for the rest of your life, and potentially your spouse’s as well, depending on the election you make, or you can elect a lump sum that is equivalent to all the monthly payments that you would have received over your lifetime, paid upfront. And so neither of those options is automatically right or wrong, but they both have pros and cons associated with them.

And so if we take a look at the monthly benefit option first, what that gives you is simplicity and predictability. Right? You know a check is coming in every month. Intermountain is responsible for sending that check to you. And so it just happens. It’s automatic. But in return, there are also some trade-offs to be aware of.

So you do give up some flexibility because once you’ve made that election, made that choice, there’s no going back and changing it. You can’t ask for more money down the road or less money, and the amount is fixed, meaning that there’s no inflation adjustments. So the check that you start off with at the beginning of retirement will be the same as it is at age 85 or later. Right? Even though everything else around you will cost more because of inflation. And then the last kind of disadvantage of the monthly payments is that there’s limited or essentially no money left for heirs after you and potentially your spouse have gone. And so, that’s another consideration of the monthly payments.

So now let’s take a closer look at the lump sum, because I think that’s one that people tend to misunderstand. What the lump sum is, just as it sounds, is that it represents the value of your expected monthly payments over your lifetime, all paid upfront as a lump sum. And when I talk about this with people, they misunderstand this because they think that by taking the lump sum it means that it all will be taxable to you in the year that they claim it.

But although that is an option that you can choose, for many of you, if you’ve been with Intermountain for many years, your pension probably is quite significant. It might be hundreds of thousands of dollars that you don’t want to have to take as taxable income in the year that you receive it. That would jump you up into the highest tax bracket and potentially impact a lot of other aspects. So there is a way that you can take the lump sum that will avoid triggering taxes and penalties. And this is what is called an IRA lump sum rollover.

And so what this is, is it’s just simply a tax-free transfer from your pension to a retirement account like an IRA or 401(k). And so once that money is moved over, from that point forward, you control how it’s invested and when income comes out and so forth. So that control does create some opportunities to make sure you can invest it and have it growing for you. It gives you flexibility on how much you need to withdraw, whether at the beginning or throughout your retirement. As well as some tax planning opportunities available to you. And then also potentially leaving some money to your heirs or your children. If after you guys are gone, if there’s anything left in your IRA or 401(k), that will just go to your heirs.

But again, just with everything, there’s also the trade-offs. Right? And really I would sum up the disadvantage or the trade-off is that no one is guaranteeing a monthly paycheck anymore. Right? That money has moved over into your retirement account, and now you’re in charge of that money, and to make sure that it lasts for what could be a 30-year retirement. And so because there’s a lot more control, there’s also a lot more responsibility on your shoulders.

Two Risks Every Retiree Faces: Inflation and Volatility

And so when we talk about the lump sum, caregivers often ask the question, “Well, if I do this lump sum, then how should I be investing that money properly to be able to make sure it lasts the rest of my retirement?” And when it comes to managing it and investing it properly, it’s important to be aware of two risks that every retiree faces today.

And the first risk is that of inflation. Now, inflation is the gradual and lethal loss of purchasing power. And so historically, inflation has averaged about 3%, and at a 3% inflation rate, a dollar today will only be worth about 41 cents in 30 years from now. And so, just to put this in perspective in dollar amounts, a $3,000 monthly pension payment today will only buy about $1,200 worth of groceries and gas and everything else that sustains your lifestyle 30 years from now. So the check stays the same, but it buys less than half as much in the future. And so, unless retirees are willing to cut their lifestyle by 60% over their retirement, inflation has to be dealt with. It’s one of those risks that you don’t really hear about until you get to retirement. And, especially if you enjoy a long retirement, that inflation risk is even more emphasized.

So the way you combat or outpace inflation is by using equities or stock-related investments, because stocks are really excellent long-term investments because over time, they tend to keep up and outpace inflation. But again, the downside with equities is that in the short term, they’re very volatile, and if mismanaged, retirees can lose money investing in stocks in the short term.

So now this is where the second risk comes into play, which is short-term volatility. Right? Because we know we need to have inflation-fighting equities to keep up over time. But there is also that short-term volatility risk with your investments. And so on the other side, to be able to help combat short-term volatility is where we have more conservative investments like bonds, bank accounts, or what we call fixed income investments. And they’re fixed income because they aren’t as volatile, and they pay you a fixed interest rate or income. And so these are excellent short-term investments because they don’t fluctuate as much in value. Having a portion of your investments in them protects income from the short-term swings of the market. But over the long term, they’re poor long-term investments because they don’t make as much money over the long term to be able to keep up with inflation. And so really you need both. And the question is, how do you balance them?

And so this is a chart that shows how those two risks change over time. If you look at stocks first, in the short term, the risk of owning stocks is high because of volatility. But the longer you hold them, the more that short-term volatility and risk goes down over time. Fixed income investments or conservative investments are the opposite. So in the short term, it may seem like a safe place to be, but the longer you hold it, the more that inflation eats away at it, and the risk of inflation begins to impact those conservative investments.

And so the way you balance it is actually, in theory, quite simple. You simply match your short-term money needs with short-term fixed income investments while using equities or stock-related investments for your long-term money needs to be able to keep up with inflation. And so the money you’ll need for the first few years of retirement should be in safe, more conservative types of investments. And then the money you won’t touch for potentially decades belongs in stocks to be able to keep up and grow ahead of inflation.

And so that’s where a good retirement income plan really comes into play. It matches your future income needs with how your money should be invested today, and then it coordinates all of your other retirement resources. And so I’m talking about this because if you take the lump sum, that becomes your job to be able to manage that properly for the rest of your retirement and make sure you’re investing correctly based on when you need the money.

How Taxes Differ Between the Two Options

Now, there is one more important difference between the monthly benefit and the lump sum that often gets overlooked, which is taxes. Because many of you will have the option to either claim your pension now or later in retirement, and taxes become a key part of the decision. How you take your pension can result in two very different tax bills.

So if we take the monthly payments, for example, those payments are taxed as ordinary income, and so it’s as if it’s another paycheck. And so once you’ve made that election, again, there’s no take-backs. And so that money will come in no matter what for the rest of your life, and it essentially locks you into a minimum level of taxable income or a minimum tax bracket going forward. And I’ve seen firsthand working with retirees that it can be quite frustrating later in retirement because you have this minimum tax bracket that you’re in because of the pension, and then when you factor in Social Security and/or rental income or required minimum distributions from your investments, it can just bombard you with taxes later in retirement when you have very little flexibility to adjust that. Right?

And that becomes also very important if you plan on taking your pension while you are working, because if you do that, then you’re potentially stacking your pension income on top of your salary, which probably for many of you, you’re in your probably highest income years and highest tax bracket years. So that may or may not make sense to do.

So that’s the tax impact of the monthly payments. The lump sum rollover works a little bit differently. We talked a little bit already, but the direct rollover triggers no taxes or penalties once you move it into the IRA or 401(k), but you are taxed on it later as you withdraw from those accounts in retirement. But it does give you control over when and how much income you take from year to year. And it also opens up the door to many other tax planning opportunities like Roth conversions, for example. That’s where you can move money from your IRA into a Roth IRA, which can then grow tax-free going forward, and evaluating if that makes sense. Or for those of you who give regularly to charities, there are also qualified charitable distributions, which allow you to send money out of your IRA tax-free as long as it goes to a qualified charity, like a church or the American Red Cross, or whatever may be a qualified charity.

And so that lump sum can be a great option to give you that flexibility. But again, it doesn’t make the tax disappear. Because if you leave that money in your IRA and 401(k) for too long, eventually in your mid-70s, you’ll be required to pull out a certain amount of money out of those accounts, whether you need it or not. And then every dollar you pull out is taxable to you. And so the point really comes down to control.

So this is exactly why I mentioned at the very beginning today that we can’t really answer when you should claim your pension quite yet, because the answer depends on how you receive your pension benefit and the tax impact of that, because again, it can produce very different tax results.

Decision 1: When Should You Claim Your Pension?

So now that we understand what role the 401(k) has and understand the two ways you can receive your pension, I think we can now start to answer the question of when we should claim our pension benefit. And so I’ve created this easy decision tree to help show how this works. But I want to start with the easy group first, which is for any one of you that’s under the age of 59 and a half. And really, your options with your pension are quite simple. You don’t have a claiming decision to make yet. You aren’t eligible to begin your pension until you are 59 and a half. And so for now, really your focus should be on things like your 401(k), how much you’re saving into your 401(k), how you are invested, and the rest of your retirement preparation.

For those of you who are 59 and a half and older, that decision really becomes real starting next year and opens up some opportunities or options to you. You can claim your pension earlier or you can wait. And the reason why the timing matters is because the value of your benefit changes depending on when you claim. So if we think about age 65, that’s your anchor, your starting point. At age 65, you’re eligible to receive 100% of your pension benefit. If you claim before 65, that benefit is reduced, and that reduction comes out to be about 5% per year for every year you claim early, which is why at age 59 and a half, you’re roughly at 76% of your full benefit amount. And once you decide when to claim, that’s when the second decision we just talked about comes into play: how should you receive it? Should you take the lump sum or should you take the monthly payments?

So I thought it would be helpful to put some actual numbers to this to give you an idea of what this could look like. If we take a hypothetical example here and say a caregiver’s full pension at 65 is $3,500 per month, or they could elect a lump sum that’s equivalent to $500,000. If that caregiver claims at 59 and a half, the monthly benefit ends up being about $2,676 instead of the $3,500 at 65. That’s a difference of about $800 per month for the rest of your retirement, which can result in a significant difference, especially if you live a long retirement. You can see the same thing with the lump sum. At 59 and a half, that lump sum is equivalent to about $382,000, or if they wait to just claim it at 65, they receive the full $500,000.

So there are two key takeaways that I want to highlight here. First is that by claiming early, it creates a permanent reduction for the rest of your life. That reduction stays with you for the rest of your retirement. The second takeaway is just as important, which is that the pension benefit stops increasing, or there are no longer reductions or increases to your pension benefit beyond age 65. So waiting from 60 to 65, that’s certainly a consideration of if I claim early, what that will do to your benefit. But beyond age 65, it’s just going to stay the same amount at age 65 versus at age 70 or 75. And so for many of you that plan on working beyond age 65, that’s another important consideration, knowing that your pension is just going to stay stable and will not increase beyond age 65.

So knowing that, sometimes people bring up the question of, okay, if I don’t plan on working until 70 or 75, what happens if I take the lump sum and invest it instead? And this is a conversation that we’re having a lot with Intermountain Health caregivers, because if you claim it early and take the reduction and invest it, will that be better for me in the long term? Right? So remember, if you just wait till age 65, there’s no reduction, and you can get your full benefit. But if you claim it early, there’s those 5% reductions. And so think of those 5% reductions as the minimum return you would have to earn on your investments just to break even with waiting.

So, for example, let’s say you beat it and you get a better return than the 5%, and let’s say you get 7%. If you claimed at 59 and a half, your benefit would be reduced, but then if you invested it and earned a 7% rate of return per year, by age 65, you’d have about $554,000, which would put you about $55,000 ahead of where you would have been had you just done nothing and waited to claim until 65. So it can be beneficial if you invested it.

But it’s also what happens if you don’t get that 5% rate of return, right? What if you earn less than that? So, you can see also that gray line there. If you only earned a 3% rate of return on your investments from 59 and a half till 65, at 65, you’d only have about $449,000, which puts you about $50,000 behind had you just waited to claim your pension at 65. Right? Now, it’s also fair to say that what happens if you get a negative return, that also plays into this even more, if you mismanage it improperly. Also, remember, this chart is only showing the years from 59 and a half to 65. Right? What happens if you retire at 67, 70, or later? Then that also drastically changes the math. Because it might make more sense to invest if you do not claim it until later.

Four Questions to Ask Yourself

So the point is that there are several factors that come into this decision, and so sometimes it can be hard to actually decide what to do, because I don’t think the answer really comes down to a checklist that says that you should do X, Y, and Z. But I think it comes down to four questions that every caregiver should ask themselves to help them make that decision.

The first question is: do you actually need the money? If you need the income before 65, that obviously changes the discussion. Because you need it, even if that means taking a reduction. If you don’t need that income, then you have to ask yourself, what are you giving up by taking those reductions early? Does it make sense to do that, or should you just wait to claim it later?

And second is: how are you planning to take the pension benefit? We just talked about this, but if you’re choosing the monthly income, claiming early permanently reduces that income for the rest of your retirement. If you’re taking the lump sum, then that also has different tax and income consequences.

Which leads us to the third question, which is: what are you actually going to do with the money? Taking it early just to put it in the bank or spend it is very different from taking it and having a disciplined plan on how you’re going to use that or invest it or whatever may be the case.

And then the last question is: what else is happening with the rest of my retirement? When are you retiring? What does your tax situation look like? When are you claiming Social Security, and how should my 401(k) be invested? Those are all considerations that go into the pension decision as well.

So I always tell people that the pension formula can tell you exactly what waiting is worth or claiming early is worth, but it can’t tell you whether waiting or claiming early makes sense for you. The only way that you can answer that question is your overall retirement plan.

Looking at the Whole Picture, Not the Junk Drawer

Because what we’ve seen with retirees or those preparing for retirement is one of the biggest mistakes people make as they approach retirement is they take what we call in our office the junk drawer approach. Most of us have a junk drawer at home. It’s a place where everything gets tossed: batteries, tapes, old keys, random cords, et cetera. It’s a lot of helpful tools that we use all the time at our home, but none of it’s organized in a clean way.

And so retirement preparation often looks the same way. You may have a 401(k), a pension, Social Security, brokerage accounts, and such. And now on top of that, all of these pension decisions. And the mistake that we often see is people and pre-retirees will look at each benefit and say, “How should I maximize Social Security?” or, “How should I maximize my pension benefit?” But the goal really isn’t to maximize your pension or Social Security, in my opinion. I think the goal should be to get all of your pieces together and to figure out a way to maximize your overall retirement income. That should be the goal.

Because a decision in your Social Security, maybe waiting till age 70 to get the maximum Social Security may make sense for Social Security, but if you retire at 65, you have to draw your income from somewhere. Investments or a pension or something, which waiting till age 70 may mean less overall income if you do it that way, as an example. So I think that’s where the difference of having just a collection of retirement assets or accounts differs from actually having a retirement plan, because we all need our retirement resources to be working together.

And this is even more important for you as caregivers. You’re potentially balancing a pension lump sum or monthly benefit. That’s probably one of your largest assets in retirement. Your 401(k), Social Security, and taxes are all factored into this as well, making these decisions even more important.

Because when it comes to retirement, retirement doesn’t care which account a dollar happens to sit in, whether it’s your pension or your IRA or 401(k). In reality, all those things belong to the same household. It’s one portfolio. And once you begin to look at it that way, you can be much more intentional about where your safe money sits, where your growth money sits, which account you draw from for tax purposes, how you manage the volatility, the ups and downs of the market versus inflation, et cetera. And so if the piece of your retirement that is your pension is already playing it safe, you may be able to invest more aggressively in the 401(k) or other accounts to make sure your overall portfolio is where it should be. And so that’s the point, is that your pension decision affects everything else in your retirement. They’re not separate retirement decisions.

So I think the best thing that really any caregiver can do at this point of their planning is to have a plan. And as corny as that sounds, it’s true. Having a plan that factors in all these different aspects is so important because retirement before these announcements was already hard enough, to know when to claim Social Security or how much to withdraw from my investments and so forth. Now you’re adding several significant pension decisions on top of that. The solution isn’t to buy an annuity or to maximize just Social Security or just your pension. It’s about how all these pieces come together.

And so, when I say having a plan, that’s what takes me back to the couple I told you about at the very beginning. Being so nervous about retirement and how all these different pieces put together can feel a little bit unnerving. But when I met with this couple about a year or two after their retirement, it was amazing to see the transformation of no more stack of papers, no more nervous and frantically going through their questions, to relaxing and actually being able to enjoy their retirement that they’ve worked hard for. Because that’s the goal, is we’ve worked all these years to be able to finally enjoy what we’ve worked hard to save for.

Next Steps and Resources

So in the next year, you’ll have lots of important decisions to make as caregivers. Don’t feel pressured to make any decisions quickly or make decisions because now this is a new option available to you. Speak to people that are qualified to help you with these and understand these choices and run those numbers. And then most importantly, look at the decision in context of the rest of your retirement, not just the pension itself.

So if you’d like help with that, that’s something that we’re happy to do. There’s no cost or obligation to work with us by any means. It’s just simply a chance to get a second opinion and help you prepare for retirement. We can sit down with you, run your actual numbers, pension numbers, look at the lump sum versus the monthly benefit, coordinate it with Social Security and the rest of your plan.

We use a model that really sets us apart from others, we call the Perennial Income Model, and it’s a way to coordinate all of your retirement resources together into a single stream of inflation-adjusted income to last the rest of your retirement. And it is really, I think, the best way you can go about preparing for retirement. So if you want to keep learning about what that model looks like, we’ve written a book about it, and you can scan that QR code and request a complimentary copy of the book. And it has really great information about just retirement in general, concepts and preparation, as well as that model.

And then lastly, I’ll just mention, if you’re at the point where you’d like someone to just run your actual numbers and put together a plan for you, feel free to schedule that with that QR code as well, and we’d be happy to take a look at that with you and show you how all these things can be put together so you can worry less about these financial decisions going forward.

So that wraps up for today. Thank you all so much for being here today. I’ve been really looking forward to this webinar and hope it can be a resource for you today. This will be recorded, so feel free to re-watch it later if you missed anything. And I’ll stay on for the next few minutes to answer any questions that you have, and I wish you all the best for your retirement.

Question and Answer

Carson Johnson: Jeff, any questions that may have come up in the chat that we can help answer?

Jeff Sevy: Yes. We have one or two here. So the first one is, how much is the current pension given by Intermountain? So I assume they’re just trying to compare what they’re getting now with their pension versus how that compares to the 2% that Intermountain is replacing it with. And then second, where is the best place to review past contributions?

Carson Johnson: Okay. Yeah. Great question. So maybe I’ll take that first one. I don’t think the 2% enhancement to the 401(k) is going to be equivalent to what Intermountain was putting into your pension over the years, which is unfortunate. Granted, they are doing other things like the retiree medical savings account and things like that, but I don’t think it’s a dollar-for-dollar same contribution amount to the 401(k) versus what they were doing to the pension. I don’t know if there’s a place... Was the question where to go to see that, Jeff?

Jeff Sevy: Yeah. Where is the best place to review past contributions there?

Carson Johnson: There’s a tool that all caregivers have, which is called PensionConnect, and you can log in there. I don’t know if it shows you past contributions, though. It may have a history section. If you follow up with us, we probably can take a look at that and see where it’s at and send you a screenshot or some steps. But it would have to be in that PensionConnect tool, is my guess.

Jeff Sevy: Okay, perfect. And then the last question here, if you are retiring at 55 years old, can you claim the pension at that time?

Carson Johnson: Yeah, good question. So you cannot claim the pension until you are 59 and a half. So that’s another important consideration, right? Because if you retire at 55, then you may have to live on some other asset, some cash in the bank or a brokerage account, from 55 till 59 and a half. And then at that point, you can claim the pension early and also access your 401(k) accounts and IRA retirement accounts without penalties at 59 and a half as well. So yeah, you have to wait to claim the pension until 59 and a half.

Jeff Sevy: Perfect. And that was it for today, so thank you.

Carson Johnson: Awesome. Well, thanks, Jeff. Thank you all for being here, and stay tuned. We might actually be sending out a guide on some of these decisions and things that we talked about today. So just stay tuned on your email, and we might be sending that out shortly. So thank you all for being here, and have a great day.