Updated 12/10/2009 by John Rudy
Updated 7/29/2014 by Stan Nissen
For some years prospective Raytheon retirees have been able to take advantage of a document I cobbled together in 2009. It has now been significantly enhanced/updated by Stan Nissen. As others retire, they will be encouraged to provide additional enhancements.
This information has been assembled by multiple Raytheon folks and refers to the LEGACY Raytheon retirement. There are dozens of retirement plans across the company.
OPTIMUM RETIREMENT TIME
- Under the new PTO policy it looks like December 31, is the time to retire to optimize your PTO Time. You could accumulate a maximum of 240 hours of PTO by your retirement year-end. The trick is not to take any PTO the year during which you plan to retire and make sure you have carried at least 40 hours from the prior year If you can sell back 240 hours of PTO, it will translate to a significant improvement to your monthly pension. The money is in the last check and it is averaged over 5 years. Just remember that selling back time means more money in your pocket per month for life, you just have to live to collect it.
- Working an extra few months might allow you to collect your RBI (March) and have it count into your pension. But you would not be able to sell as much PTO. Further, your pension will only increase based on the difference between your current salary and RBI versus the same data from 5 years earlier.
- Remember that Pension is calculated on the highest 60 contiguous months. Because we are paid twice a month some months (two) will have a third paycheck. So if boosting your last month with the PTO knocks off only a slightly smaller month at the other end then the improvement will be less than anticipated. This can easily be calculated as Raytheon sends out a document with your income from each month and you can request such a list on-line as well and receive it electronically.
- The pension is not indexed for inflation, though Social Security is, so think about how many years you have to live before figuring that you can retire.
- It is really good to retire in a month with three paychecks (like July 2009). That boosts the pension. In fact July, 2009 was even better as the 7/30 paycheck closed out the previous week so there was a fourth paycheck covering the last week, and then a fifth paycheck to cover the unpaid PTO. So for a person making $120K per year that extra check is worth $6K. Averaged over 5 years it is $1200. At a 50% pension that it $600. If you live for 20 years that is worth (ignoring cost of money) $12K.
RETIRING BEFORE (60) IS NOT A GOOD OPTION
- WARNING If you retire at (55) you lose 35% of your retirement and can never purchase Raytheon medical at the group rate again.
- WARNING If you voluntarily terminate employment before (55) you will not be eligible for your full Raytheon retirement (100%) until you are (65), anything less and you will take a big reduction, i.e., at 55 you get 50%.
- Pension is taxable income.
SUBMITTING YOUR RETIREMENT PAPERS
- No sooner than (90) days before your retirement date. Some people have done it within the last month, and retirement can be cancelled until nearly the last minute.
- All retirement dates begin on the 1st of the month following the month that you terminate. (Don’t retire on the 15th of the month unless you don’t care about being paid for (2) weeks.
- Your first retirement check arrives approximately 3 weeks after you retire. Checks are monthly, not bi-weekly.
- You can change your mind after you have requested your retirement papers and even if you have submitted your papers. Once you receive your first retirement check, it is too late; you can never change your election again.
- Photo copy of your birth certificate is sufficient; otherwise you require two documents that verifies your age. (License or Passport) will work. No expired documents, two documents verifying age required.
- You also have to provide your spouse’s birth certificate if they are going to get any portion of your retirement.
- If you are married and choose an option other then a joint and survivor, your spouse must sign-off on any option that does not include them and it has to be Notarized. See a separate discussion on this subject.
- The retirement center is currently taking up to (5) weeks from the time you call for your papers, until they show up at your house. Each step in the process can be time consuming, so start early.
- You do not get your final retirement number when you receive your papers. That will come later, after your last paycheck. Your last paycheck will include PTO sell back. You will not get your first retirement check until near the end of the first month you are retired. After that you will get checks at the beginning of each month.
- You have the option to submit your retirement papers and delay processing for 30 days. That is the default. The retirement package will include a waiver of that 30 day delay so that they process the papers immediately. You can submit your papers the day before your scheduled retirement. This will delay the first check as the documents are processed and the final pension is calculated, but it does lock in the date.
When you call for your retirement package you will receive (2) packages. Your Benefits Calculation Package & forms and the Raytheon Retirement Guide & forms. Note that they do NOT take into account future raises, RBI or other bonuses, etc. The number will always be incorrect because it does not take into account PTO sell back.
BENEFITS CALCULATION PACKAGE
- I recommend that you call the Benefits Center and ask for your Benefits Calculation Package (1) year before your planned retirement date (actually I have requested and received a package every year since my 55th Birthday). The numbers won’t change that much in a year and it will give you a chance to review the package. If you do that ahead of time, it will save you a lot of aggravation when you finally submit your papers. This also allows you to validate the income that is shown for you in each of the prior ten years.
- The final benefits calculation package contains the following forms:
- Tax Election for Recipients of Raytheon Pension form.
- Direct Deposit Request for your Raytheon Pension form.
- Application for Retirement and Pension form.
- Waiver of Right to Receive Notice as to Form of Benefit form. By Federal Law, a company must give you at least (30 days) to review your retirement papers. The benefits center will not start the process until (30) days after they receive your papers, unless you sign this waiver. If you are sure of your decision then sign it and send it in with the other forms.
- Policy for hiring back retirees and a form acknowledging that you have read and understood the policy. It is mandatory that you sign the form even if you have no intention of coming back to Raytheon. They will not process your retirement without this form.
- The package states the amount of Social Security that you will be getting. A number of folks have commented that this seems too high so it is a wise idea to validate the number. As of 6/2014 this is ~$31,700 if you’ve been working enough years and your salary exceeds the Social Security limit of about $100K and you are age 66 at retirement. The amount will vary based on your age.
- You must state the number of deductions you want Raytheon to utilize when calculating your take-home pay. Many people will not remember what they had set up at work. This information is available through the Payroll Office. Since your income will be lower you might not want to continue what you had at Raytheon.
RAYTHEON RETIREMENT GUIDE
The Raytheon Retirement Guide is a booklet that contains the following information (plus more)
- Information on how to withdraw your contributions to the contributory plan if you want to. Most old timers regret taking out their own money early on as you get penalized at retirement time.
- During the period prior to 1981, the Raytheon pension plan was contributory. Prior to 1976, you had to be 30 to participate in the Raytheon pension plan. From 1976 to 1981, the age was lowered to 25. At that time, you could either choose to participate in the Raytheon pension plan or have an IRA. You could not do both. If you elected to participate in an IRA, those years will not count as part of your service when Raytheon converted to a noncontributory retirement plan. As a result, your pension calculation times may have starts and stops so check it well.
- Social Security Benefits Verification. This is an interesting one, but be careful with it. Raytheon uses a Social Security amount based on estimates of your earnings history. Once you retire, you will have the opportunity to submit your detailed Social Security earnings history. This information will be used to recalculate your Raytheon pension. If using the new numbers would give you a higher pension, your Raytheon pension will be increased retroactively from your first pension check. In most cases the Raytheon SS65 estimated number is lower then the Social Security number. This works to your advantage. i.e., do your homework before you exercise this option or you could get burned by ending up with something less than you already have.
- Income Tax information regarding your pension. It’s taxable.
- Insurance Information.
- Medical Information. All the plans and rates.
- RAYSIP & RAYSOP information.
- Proof of age form for you & your spouse.
- Do a complete assessment of options taking into account your age and how long you expect to live. One option being recommended is to take the single life annuity and buying a life insurance policy with the savings over one of the survivor plans. If you are considering this option, you have to plan early to ensure that you are insurable for the amount of the life insurance policy.
- If you are under 62, look closely at the Social Security Option. Typically if you take the social security option, the break even time is typically 12 years (age 74).
SOCIAL SECURITY CALCULATIONS
- You should be getting a SS Estimate annually 3 months before your birthday. Once you reach (60), you can call SS at (800) 772-1213 and they will give you an estimate (based on your last full year wages) of what your SS number will be. This is a good check to make sure that Raytheon is using the correct figures. I checked my amount and it was calculated correctly (J. Rudy)
- Most of us will not be able to collect full SS benefits until we are 66 or older. Check your SS Estimate or contact SS for your full benefit age.
- Delaying SS can be beneficial if you believe you will live into your 80s. I was told that one could start collecting and then, after some years have passed, pay back what has been received to start receiving money based on a higher rate. I have not validated this.
GETTING ON MEDICARE
Unless you are already on disability payments, you are NOT directly informed as you near 65 that you must sign up for Social Security. As it takes a few months to get the Medicare Card this should be done a few months before you turn 65. To be fair to the government, there is a small note within the yearly SS letter we get, but if that is not seen then nothing happens. You need to get on Medicare Part A even if you are still working when you turn 65. You can sign up for Medicare without starting to collect Social Security. For most Medicare plans, you need to also sign up for Medicare Part B and for some plans, you need to sign up for Medicare Part D. In the latter case, you also need to choose a provider for Medicare Part D – the Raytheon Medicare Plus plan does not cover drug benefits. The various “Advantage” plans do generally include drug coverage. If you elect to use COBRA for up to 18 months after you retire, then you still need to sign up for Medicare Part A, but can delay the other parts.
- For most people the last 60 paychecks represent the data used in calculating the maximum pension. In fact it is the highest contiguous 60 months during the last 10 years. Because we are paid bi-weekly and because of bonuses or RBIs the months are not the same. Also the last month may include the payout for unused PTO. The booklet shows all the months of data so you can work the calculations yourself.
- Total Last (60) Paychecks ÷ (60) – SS@ max at retirement age x (Ray Time*) = Single Annuity Amount (SAA).
- Two months (different every year) have 3 paychecks. Don’t retire the month before a triple pay. July 2009 was a four paycheck month: July 2, 16 and 30. Furthermore, since the July 30th paycheck covers the two weeks through July 24th there is actually a fourth paycheck covering the final week. HR will call you to ensure they know what you worked this last week. Make sure it is 40 hours; no PTO.
- Ray Time* = 1st (20) years @ 1.8% = 36%. Remaining years multiply by 1.2%. Note if you were at Raytheon prior to 1981, this time is modified depending your age and whether you joined the contributory plan or not.
- Remember, your first year of service does not count in the time calculation.
- If you select the Joint & Survivor annuity, there is another factor that kicks in, depending on whether or not your spouse is older or younger than you are. If they are older, it is to your advantage. If they are younger you get penalized. Here is how it works:
- 50% Joint & Survivor Annuity = SAA x (90% Add .5% to 90% for every year spouse is older and subtract .5% from 90% for every year spouse is younger). SAA x (90% ± 0.5% year) = Your Amount x .50% = Spouse Amt.
- 66 2/3 J & S Annuity = SAA x (87% ± 0.66%/year) = Your Amount x 66% = Spouses Amount.
- 75% J & S Annuity = SAA x (85% ± 0.75%/year) = Your Amount x .75% = Spouse Amt.
- 100% J & S Annuity = SAA x (80% ± 1.0%/year) = Your Amount & Spouses Amount
- You must pick one of these options, but the Raytheon default is 50% if you were to die before retiring. So one message is that if you are really sick you should retire and lock in the 100% option. On the other hand if your spouse is really sick use the 0% to the spouse to boost your pension.
BUYING AN ANNUITY
- One of the options when you retire is to leave $0 to your spouse when you die. There are two cases where this makes obvious sense. (1) When your spouse is not expected to live very long and (2) when your spouse has his/her own pension and it is of comparable or larger size. Utilizing this option increases your pension by about 12% above the 50% option.
- Based on a casual survey it appears that a small percentage or employees choose this option for a third reason. They decide to use this “extra” money to purchase an annuity for their spouse. This is a very complicated subject and the following notes help one to determine what is best for them:
- The extra money you get from the 0% option IS taxable. You will get this extra money every month until YOU die.
- You can use this extra money (plus more, usually) to purchase a special kind of insurance where you lock in the premium for your life.
- For each year that passes your spouse’s expected lifetime decreases by one year. So, given that you are looking for an annuity to match the 50% of your pension that you are forsaking, the size of the policy can decrease over time. One of many ways to do this is to get, say, a policy for $300K and a policy for $100K, maintaining the second policy for only 10 years.
- If you die the face value of the policy is NOT taxable though if you invest it then the income is. When you die you can either take the lump sum or buy, with that lump sum, an annuity. The older your spouse is at that time the larger the annuity/month can be (or you can use only a portion of the payout to buy the annuity. If the spouse is sick, it makes more sense to take the lump sum.
- Remember cost of money. This is very important! You are paying for the insurance, at least in the early years, with money that is far more valuable that the money you will collect in the out years. That is how insurance companies make their money. In my calculations for the first 10 years I would be paying nearly twice as much (using after tax dollars) than I would be gaining with the 0% of taxed dollars.
- You can build an x-y plot with your death age and your spouses and calculate the relative value for each cell. Make sure you use present value for this and I have been unable to find a handy spreadsheet that does the work for you. There are areas in the graph where the insurance is a good idea, others where it is not
- The Raytheon Credit Union (at least in their Tewksbury office) has a woman who will give a free consult on buying the annuity.
- You will be covered under the same plan, unless you move to an area where the plan is not available. Then you will have to choose something else.
- (2009 data) If you retire at or after (60) medical will cost you at least $630.00 and $37.50 extra for dental per month/per person. Today’s Rates, these rates are going to change (increase) over time. There are 5 policy options that can be found at the Raytheon pension web site. Look them over closely as the premiums vary significantly. For the more expensive plans, like United Healthcare Gold it is closer to $900.
- Evaluate COBRA closely as an option for up to the first 18 months after you retire. COBRA will drop your cost by about 50%
- VERY IMPORTANT: In my case (John Rudy) when I retired they reset the deductible for drugs under MEDCO as if the deductible that I had met many months previously had not existed. So watch out for it.
- Apparently it takes about a month for the COBRA to kick in, though the payments are retroactive. That means that during the intervening month or so you must pay the full amount of medical costs. The moral is to get things done ahead of time so that you can minimize the medical payments during the first month after retirement. Here are the steps:
- After 2-3 weeks you will receive a letter from COBRA. You can fill out a form or do it on-line
- Doing it on-line is best though it is not obvious how to do it. Call Ceridian and they will walk you through the steps if necessary.
- Once they receive the form it takes a few days for them to process it
- Then they send a letter to the various insurance carriers
- Then the carriers re-instate you. This whole process can easily take a month. During this process you don’t want to have to get medical services because it is a pain. Medco, for example, will NOT fill a 90 day prescription. You have to go for 30 days from the local pharmacy and then worry about re-imbursement later.
- Individual policies are issued to you and your spouse. In the event that one of you dies, the other policy will continue uninterrupted.
- Raytheon group medical is available until you reach (65); then Medicare kicks in. At that time you can purchase additional medical policy from Raytheon to subsidize your Medicare. There are a number of options presented to each employee at various costs. Raytheon subsidizes these plans at $43 (2010) for each of you and your spouse. The cost of the Supplemental Medicare is subtracted from your Pension payment.
- In the event you are laid off, you can qualify for subsidized medical (60).
- The Personalized Medical Retirement Worksheet is in the retirement package. The worksheet is the form that you fill out to select your medical coverage and is sent with the Raytheon Retirement Guide.
- If you retire before making your medical selections.
- Your medical will continue and will be billed retroactive from the day you retire.
- You will not lose the medical option because as long as you have made no decision, the option will remain available to you until you do.
- Upon retiring, you will get a $2K paid-up whole life policy from Raytheon. If you have been buying additional insurance for at least 10 years before you retire, you will get an additional $5K of paid-up insurance for each $50K of additional insurance that you have purchased for the 10 years.
- The Raytheon Benefit Center is at 800-358-1231, Monday through Friday, 8 to 8.
- You will also get insurance conversion information for converting over your current Raytheon Insurance.
- Check on the premiums as they may be outrageous however, they might be worth looking into. If they waiver any pre-existing medical condition.
401K (RAYSIP) CONVERSIONS
- First, the Raytheon 401K does not allow you to withdraw from your 401K other than the Required Minimum Distributions which you must withdraw when you turn 70.5. You can take the money out of the 401K and roll it over into an IRA at any time. You can leave the money in the plan, taking only applicable RMDs. However, if you need to make a discretionary withdrawal, you will have to roll it over into an IRA – this option is not available.
- If you move your money to a non-Fidelity IRA, be sure that you have the other IRA set up and that Fidelity cuts the checks to that IRA so they do not take out the taxes. Fidelity will send you two checks. The larger check is for your pre-tax contribution, the Raytheon company match and any gains you made on your investments. This money is all pre-tax and will be taxed as you take it out. The second check is for any post-tax money that you put into your 401K. Since this money has been taxed, you do not have to put into your IRA. Make sure you discuss this with your tax advisor.
- Don’t close out your 401K plan the day you retire. The checks you get for your last pay check and any vacation time you have will have 401K contributions taken out. This will shield that money from taxes unless you have already maxed out on your 401K contribution.
- Once you retire, if you choose to move money from your RAYSIP, you must move all of it at once. If you only want to move some you must move some prior to retirement.
- Certain funds have a minimum investment time before they can be moved without penalty. So if you rebalance your funds shortly before retirement there may be a cost to move into a different 401K right after retirement. Check the rules for every fund you are in. e.g., some are 1% if moved before a year, one is 2% if moved within 60 days.
- If you die while your 401K funds are still within RAYSIP there are tax implications. DISCUSS THIS WITH YOUR ATTORNEY to determine the best time (if any) to move your funds.
- You can make out with your HCRA account if you can collect more than you paid in when you retire. They do not come after you for the difference; the money comes from the extra they take from those who deduct too much.
- While an employee the Raytheon matching gift program to universities is available. This ends when you are no longer an employee. It might make sense to make a larger than normal gift that last year to get the match, and then not donate for the next few years.
It’s true, you do get a rocking chair (or optionally one that does not rock) after (35) years of service. You have (2) choices, either a Boston Rocker or a Liberty Armchair. They come with a “Brass Plate” or an etched inscription with your name and a Raytheon Logo attached.
When talking to the Benefit Center they say that OC Tanner handles the chair. When calling OC Tanner at 800-693-1337 they say that they only handle Anniversary Gifts not Rocking chairs, and that I had to call Raytheon HR. After considerable research I found that they were made by Standard Chair of Gardner. 978-632-1301. I called them and learned that this is the only size chair that they make and they do not sell cushions. They recommend that folks go to department stores.
The rocking chair is terrible. (1) it is small and thus is tight to sit in it. (2) The back is straight and doesn’t conform to a person’s back. (3) It has no cushions. (4) Because of the unusual and small size of the chair, it is difficult to purchase cushions.
PERFORMANCE SHARING PLAN
- To be eligible for performance sharing, you must be an active employee for the 1st (6) months of the year that you plan to retire. If you are interested in Performance Sharing, then you should stay beyond July 1st of the year you intend to retire. I have been told that June 30th will suffice, but am not comfortable with that and so would suggest you leave on July 31st
- Remember, you are not guaranteed that you will get any money from performance sharing. You may stay until July 1st only to find out later that you are getting nothing.
- RBI is similar to Performance Sharing. If you are here after the end of June, you are eligible for a pro-rated amount. In order to be eligible you have to have completed and approved your Performance Screen and then complete the right side of the performance screen before you turn in your computer.
SHORT TERM DISABILITY
This is the new policy:
- In the event that you are sick enough to qualify for Short Term Disability you are no longer employed by Raytheon. You are temporarily off the Raytheon payroll and paid by Metropolitan.
- Because you are paid Metropolitan, you are no longer eligible for any company 401 contribution, nor can you contribute you share to your 401K.
- Any deductions that currently are taken from your paycheck, (Mortgage, Car Insurance, Life Insurance) are not deducted from Short Term Disability pay and it becomes your responsibility to make the payments.
- This document originally said “While Metropolitan is paying you, you are no longer getting a salary credit toward your retirement. You get a time credit, but no salary credit. So, if you happen to go out on STD within the (60) month period that they use to calculate your retirement numbers you lose on your retirement numbers. One week on STD cancels out one week of additional improvement that you would have got on your retirement numbers by selling back one week of vacation. If you stay on STD too long or repeat your stays on STD it will lower your pension numbers.” This is NOT true and you can validate this by looking carefully at the monthly records in the retirement package.
- If you have a company telephone or blackberry and you want to keep the same number for personal use, this is possible. You have to contact Linda Williams (Wireless Asset Management Dept) in Andover the month before you leave and you can transfer the number over to a personal account from the Raytheon business account. This may be outsourced to CSC in which case you would have to go through the Help Desk.
- You have to make the transfer of accounts within the same service provider, e.g. Verizon. You will have to negotiate with Verizon for the plan that you want.
- You can not keep the telephone hardware.
You no longer receive a “Verification of Retirement Form” in your Raytheon Retirement Guideline booklet. You now have to notify your supervisor (however you feel best – in person, e-mail, letter, etc) one month prior to your retirement date. He then notifies HR, who in turn will (as it is very dependent on the individual that you are working within HR) start the ball rolling for payroll. Your supervisor is supposed to provide you with the latest Checkout form
Check with both the library and document control a month or so before you retire to find out if there are any old books or documents that they may believe that you have. Neither are on the Check-out list.
Checkout isn’t too difficult; figure 1-2 hours. You will need your cell phone, pager, credit cards, etc. to turn them during check out. You will also need the ID Tag numbers (L7xxxxxx) from each item of computer equipment so that IS can log you out. They will impound your computer, so do not check out too soon before you actually want to leave. Upload all of your hard drive to a server for others to retrieve if necessary. Otherwise, it will all be lost!! You might also want to download your Lotus Notes phone list and your cell phone call list to take home and transfer relevant work files to your successor. Notes meeting notices are deleted!
This whole retirement process is pretty much open loop. You get zero feedback unless you call and ask questions and no one seems to know who to go to. After visiting Security get a Temporary badge to go back to HR for the final step.
Raytheon has a retirees association that sponsors a variety of events, meets with Raytheon management at least once a year, and puts out a newsletter. The newsletter is available from their site.
Assoc of Raytheon Retirees
www.raytheonretirees.org (web page)