RAP/Pension InterestRate Chart June 2019

BP EMPLOYEES, 

May’s interest rates (for those of you retiring before September 1 st , 2019) dropped noticeably and are currently at some of the lowest levels in several years. It appears rates will continue to drop significantly lower next month as well. This is especially good news for Heritage employees who are looking to retire in the near future. While these rates are historically low it is important to understand the impact it has on your pension lump sum value so you can plan your exit date accordingly.

With the recent announcement last Wednesday by the Federal Open Market Committee on the direction of interest rates and our economy, it is clear their 2019 outlook has fundamentally changed. The FOMC in its own statement said the likelihood is “rather high” that it would be reducing interest rates later this year. The general consensus on Wall St. is the Fed will lower rates by 0.50% before the end of the year and it is currently factoring a 100% chance of a 0.25% rate cut in July.

You may be asking yourself, “What does this mean for my pension?” That answer is simple, expect it to go up by a noticeable amount in the next few months. The real question now is when’s the ideal time to file for your pension lump sum benefits. At this point, we would advise clients take a “wait and see” approach as rates continue to drop.

Remember, you get the benefit of hindsight when it comes to your pension. Pension interest rates published today don’t take effect until September 1 st , that means you can likely wait until the fourth quarter of this year before you need to act. Assuming our forecast maintains its high historical accuracy, we would expect that once rates stop falling they will remain low for a while before they begin to climb again. When and how that happens depends on a variety of issues ranging from global trade, domestic and foreign economic conditions and currency fluctuations just to name a few.

If you are considering retiring within the next one to two years, we would highly encourage you to talk with one of our retirement planning specialists who can help you understand what your potential retirement timeline looks like and how to strategically plan your exit. If you are a Heritage Employee, but do not know how to verify which formula you are receiving, please contact our office directly and we will assist you free of charge and with no obligation.

If you would like to discuss your personal situation in more detail, please reply to this email or call 877-739-6007 to schedule a private consultation. There is no charge for this service to BP Employees.

Tyler E Ryan

Capstone Wealth Advisors

877-739-6007

cwabellingham.com

 

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. 

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