Boeing Pension Calculator: Lump Sum vs Monthly Annuity

How Boeing calculates the lump sum

Boeing's salaried pension plan uses the IRS three-segment interest rate framework to determine lump sum values. The lump sum is the present value of your projected lifetime monthly payments, discounted at rates the IRS publishes monthly. Boeing typically locks in the November segment rates from the prior calendar year for each plan year's lump sum calculations.

The first segment rate applies to the first five years of payments (months 1 through 60). The second covers years six through twenty (months 61 through 240). The third applies to all payments beyond year twenty. Because the bulk of a pension's present value sits in the middle and later payment years, the second and third rates drive most of the lump sum amount.

When segment rates rise, future payments are discounted more aggressively and lump sums shrink. Retirees who separated from Boeing before the Federal Reserve's 2022–2023 rate hike cycle received significantly larger lump sums than peers with identical accrued benefits who retired in 2024 or 2025. The rate environment at retirement is one of the largest variables in the lump sum calculation.

The 2023 pension risk transfer to Athene

In 2023, Boeing completed a pension risk transfer moving a material portion of its pension obligations to Athene Annuity and Life Insurance Company. Affected retirees now receive monthly payments from Athene rather than Boeing directly, which has significant implications for their coverage.

When Boeing held your pension obligation, the PBGC stood behind it. The 2025 PBGC single-life maximum at age 65 is $7,607.83 per month. If your obligation transferred to Athene, PBGC coverage no longer applies. You are now backed by Athene's balance sheet and, as a secondary layer, your state's insurance guaranty association.

State guaranty associations are not the PBGC. Most states cap coverage at $250,000 in present value or limit the monthly benefit guarantee well below PBGC levels for higher-earning retirees. If your pension transferred and your monthly benefit is substantial, confirming both Athene's current credit rating and your state's specific guaranty limits is prudent.

For retirees whose pensions moved to Athene, rolling a lump sum to an IRA eliminates the insurer credit risk entirely. The IRA assets are yours, held in your name at a brokerage, not dependent on any insurance company's financial health.

When Boeing froze the pension

Boeing froze its defined benefit pension for non-union salaried employees effective December 31, 2016. Employees who were active through that date accrued benefits under the traditional formula; no new benefit credits have accumulated since. The pension still pays out at retirement based on service and earnings through the freeze date. Boeing enhanced its 401(k) matching contributions as part of the transition away from the defined benefit structure.

No COLA and the purchasing power problem

Boeing's salaried pension pays a fixed monthly amount with no cost-of-living adjustment. The benefit you receive in year one is the benefit you receive in year twenty-five. At 3% annual inflation, a $3,200 monthly benefit has the purchasing power of approximately $1,775 per month in 20 years — a 45% real income decline over a retirement that could easily span 25 to 30 years.

An invested lump sum does not automatically solve this problem — portfolio returns are uncertain and sequence-of-returns risk is real. But a portfolio has growth potential that the fixed pension structurally lacks.