As a financial planner whose client base is largely made up of Chevron employees and retirees, I can’t tell you how many times I’ve gotten questions about early retirement in the last year. It seems people are enjoying the freedom of working remotely and are interested in at least exploring — if not executing on — their early retirement options.
This is an exciting prospect but a very serious decision, so I thought it would be helpful to lay out the key considerations to help my clients and other Chevron employees weigh their options. Review the points below to help you understand your choices, and feel free to reach out to me by clicking here if you would like to discuss further!
1. Review the “Rule of 55.”
Start by giving serious thought to your current age, spouse’s age if applicable, and your target retirement age. In general, 55 is the “golden age” for Chevron employees to retire early. We refer to it as the “Rule of 55.” If you leave before that, you’ll have to leverage Rule 72(T), which isn’t advisable, as it locks you into an extremely strict distribution plan. It’s also important to note that the Rule of 55 applies only to you as the Chevron employee, not your spouse (unless his or her company offers a similar plan).
2. Weigh your pension options.
For most clients, age 50-55 is a major accumulation phase — and Chevron clients are no different. Plus, the pension for Chevron employees starts really ramping up when you turn 50. The longer you stick with the company (in general), the more you accrue these pension benefits.
3. Know where your medical benefits stand.
From day one on the job at Chevron, you start accruing eligibility for retiree medical benefits. When deciding on your retirement timing, you must consider how much you have built up — for instance, when I turned 55, I was 97% eligible for retiree medical retirement benefits. But if someone retires before 50, they receive no medical retirement benefits at all.
No matter when you decide to retire, it’s important to find an advisor you trust, so you can be transparent and open in your financial situation and goals. While these are important considerations, there is no hard and fast rule that says you have to retire at a certain age, life stage, or on anyone’s timeline but your own.
Take me, for instance — I could have stayed eight months longer at Chevron for slightly higher retirement benefits, but I chose to focus on pursuing my passion of helping people at Warren Street instead. My goal with clients is to lay out the options so you can make an informed decision, knowing that ultimately the choice of when to retire is no one’s but your own.
If you’re interested in speaking further about your retirement options at Chevron and what your personal timing might look like, feel free to schedule a no-cost consultation with me at the link here.
Wealth Advisor, Warren Street Wealth Advisors
Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor
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