Top Factors to Consider Before Opting for a Boeing Pension Lump Sum

Working at the aeronautical behemoth Boeing comes with many perks, including a pension. But, some employees are retiring before they know how much their assistance will be worth in retirement.

Many companies offer participants in their pension plans the option to take the estimated present value of their lifetime benefit as a lump sum. Here are five things to consider before accepting one of these offers.

The Company’s Financial Health

Boeing’s decision to offer pension lump sums to its employees is a strategy to limit the company’s massive pension liability. Companies like Boeing must funnel significant annual earnings to their pension funds to cover their growing liabilities.

With the company in a precarious financial position, reducing these expenses as much as possible makes sense. A lump sum payout can make more sense for some than a lifetime stream of monthly payments.

Many employees choose to take a Boeing pension lump sum regarding pension benefits. This is based on several factors, including their tolerance for risk and life expectancy. In November, interest rates increased, causing 2022 lump sum values to decrease, impacting many Boeing retirees deciding on a lump sum payment.

Life Expectancy

Boeing’s white-collar workers in the Society of Professional Engineers in Aerospace (SPEEA) can take their pension as a lump sum or as monthly payments for life. The lump sum option can reduce your benefits considerably depending on when you retire.

This article describes shifts in life expectancy and discusses the impact of those changes on the company’s ability to pay a lump sum or a regular annuity. In particular, it explains how increasing segment rates can affect the value of a lump sum estimate.

Life expectancy is the years a person is expected to live to a specified age. It is a crucial indicator of the overall health and longevity of a population. It is commonly reported at birth or some other fixed point, such as 85+.

Investment Returns

Choosing the lump sum option transfers responsibility for the money from Boeing to you. It is your responsibility to invest it wisely and ensure that it lasts throughout retirement.

Similarly, the size of your lump sum is based on broad actuarial data about people the same age as you. So, if you live longer than the average person, your lump sum will decrease in value even if interest rates remain the same.

For this reason, many retirees choose to take the lump sum and roll it over into a tax-deferred account. This enables them to diversify their investments and align/coordinate the portfolio composition in their Olympic history with their Boeing 401(k) funds. This delivers a more significant long-range benefit in terms of improved tax efficiency.

Financial Needs

More and more companies are offering participants in their pension plans a window of opportunity to take the estimated present value of their lifetime of monthly checks as a lump sum.

The calculation to determine what the lump sum is equivalent in actuarial terms to a lifetime of monthly checks is based on a formula that uses interest rates.

Segment rates adjust once a year, in November, and the current trajectory of rate increases will significantly impact future lump sum estimates. Some research shows that a 1% rate increase slices an average retiree off the lump sum.

Boeing’s online pension calculator is accurate but does not consider future segment rates. This skews the calculation and overestimates the lump sum estimate.


The value of a lump sum varies depending on interest rates. Inflation also reduces the purchasing power of a lump sum, as the same dollar will purchase fewer goods and services over time.

Boeing’s engineers get a unique pension calculation, as their lifetime stream of monthly checks is converted to a lump sum by calculating actuarial factors, including life expectancy and interest rates. When rates rise, as they did in November, the resulting decrease in their lump sum could be dramatic.

Machinists union members don’t have this option in their plan and face a different decision. Regardless of your face, running the numbers and considering your options carefully is essential. A seasoned advisor can help you assess your specific situation and provide guidance.