Retirement Planning for Boeing Employees: Common Pitfalls to Avoid

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When you retire from Boeing, your choices can significantly impact your financial future. It can include deciding how and when to claim Social Security. Machinists union members can take their pension as a lump sum or a fixed-income monthly check for life. Many choose the lump sum.

Retirement Planning

Not Having a Financial Advisor

You can get help navigating the challenging Boeing retirement plans from an experienced financial advisor. For example, an advisor can help you determine the tax implications of taking money out of different accounts and show you how to make your dollars last throughout your retirement. Healthcare costs can be one of the most expensive expenses in retirement, so it’s essential to plan accordingly. Your advisor can help you choose the right Medicare-eligible supplemental health insurance plans for your budget and situation. In the past, Boeing negotiated changes to retirees’ medical coverage in their CBAs. During the negotiations for the current CBA, however, the parties agreed that retirees’ benefits would remain unchanged for the duration of the contract.

Not Taking Advantage of Your Company’s Retirement Benefits

Maximizing your retirement benefits can help you avoid enormous out-of-pocket costs that could throw off your entire plan. One of the most significant expenses that retirees face is health care. A well-conceived financial strategy can incorporate supplemental Medicare coverage to reduce those out-of-pocket costs. During the negotiations for the 2002 CBA, Boeing explicitly told the Union that “no change will be made to existing medical benefits for current and future retirees during the life of this Agreement.”

Study your plan documentation, such as your Summary Plan Description and any summaries of significant changes, to comprehend how you are eligible for retirement benefits. You should also know when you can start receiving your benefits. Federal law provides guidelines for when plans must begin paying benefits, but your plan may choose to start them sooner. Knowing the vesting schedule is essential to see when your employer’s contributions will become fully vested.

Not Having a Budget

When you retire, your expenses may change. You may no longer have a mortgage payment or childcare costs. You might also have new expenses such as out-of-pocket prescriptions, medical costs, and a different tax rate. Retirees must enroll in Medicare Parts A and B, which cover about 80% of health care costs for individuals. However, many retirees still have substantial out-of-pocket expenses and other concerns. Some experts recommend saving enough money to replace 60%-100% of your pre-retirement annual income. This approach considers expected average annual raises, anticipated inflation rates, investment portfolio performance, and more. However, this is only an approximation and may differ significantly. Consider putting together a detailed spending analysis to understand your retirement budget better. Start with your current monthly expenses and then multiply by 12. It will give you a ballpark figure of what you’ll need to save each year in retirement.

Not Having a Plan in Place

One of most people’s most significant assets in retirement is their home. However, if they are not careful, they could be overpaying for it and may have less money in their retirement. During negotiations for the 1986 CBA, Boeing introduced a new medical plan that included annual deductibles ($75 per individual and $225 per family) and coinsurance provisions. Although retirees initially protested these changes, neither the UAW nor any individual retiree sued.

Similarly, the current CBA does not include language restricting Boeing’s right to change class health benefits. Instead, the first sentence of Article XVI provides that “the provisions of the Group Benefit Plans not specifically modified herein will remain in full force and effect.” Thus, despite incorporating the Retiree SPDs, Boeing’s September 2006 and July 2009 changes uphold the presumption that retiree benefits do not vest. Moreover, the September 2006 and July 2009 changes bring the retirees’ benefits into line with those of active employees.