Rate Watch 2018 -February
Welcome to another edition of Rate Watch as we track the interest rate that is vital to the grandfathered pension at Southern California Edison. If you’ve missed any of our previous articles, you can find them here:
Rate Watch 2018 – January
Rate Watch 2017 – August
Rate Watch 2017 – July
Rate Watch 2017 – June
As our first rate for 2018, we feel that this could be a good indicator on the range of possibilities we might see as we approach the end of 2018. The official rate for the grandfathered pension plan in 2018 is 4.36, derived from the August 2017’s third segment minimum present value rate, but it is important to determine what you options could look like as we approach the official announcement. Let’s take a look at the most recent posted rates:
There has been a small uptick from December 2017’s 4.11, but insignificant in the short-term. However, as we say each month, when rates decrease the value of your lump sum payout goes up and vice-versa. The most recent rate is still below the official 2018 rate, but again, it is very early in the year and there is plenty of time for rates to move from now until the fall.
What is more important to note is the continued conversation of rising interest rates in the U.S., and how the Fed continues to look to raise rates in the long-term. The Fed and how the market reacts to these interest rate changes will be one of, if not the biggest, influence on rates this year.
As the fall approaches, it will be vital for SCE employees to examine the new official rate in comparison to the 2018 number of 4.36. Additionally, as employees plan for retirement, their pension should not be the only metric that they look at. Assets, debts, and income needs should all be analyzed prior to making a decision on retirement. Again, this metric is important to track for those prepared to make the plunge into retirement, but you should not base your decision off of rate changes or you pension alone.
Warren Street Wealth Advisors
Joe Occhipinti is an Investment Advisor Representative of Warren Street Wealth Advisors, a Registered Investment Advisor. Information contained herein does not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professioanl advisor should be consulted before implementing any of the strategies or options presented.
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