"The Golden Albatross" Book - End of Chapter Resources: Chapter 12

Chapter Twelve Refresh

Welcome to the “End of Chapter Resources Page” for Chapter Twelve of The Golden Albatross book. In Chapter Twelve, I showcased two methods for making a Golden Albatross decision based on everything I’ve discussed in the book up to this point.

I labeled the first method the Grumpmatic Method. It’s nothing more than a thought experiment. In it, a person lists the objectively valuable aspects of their pension (discussed in Chapters 8 and 11) on one side, and the subjective issues (I discussed throughout Part 1 and some of Part 2) on the other. Upon doing that, a person can then weigh those issues against each other to come to a Golden Albatross decision.

The other method is far more (but not completely) objective. I call it the Mathemagic method. It’s used for placing a Rough Order of Magnitude (ROM) value on a pension. Unlike TDV, it includes Other Earned Pension Benefits (OEPBs) and takes pension safety into mind. You can use this ROM to help determine how much money you’d need to save and invest on your own to recreate the entire value of your pension (if you chose to leave). Knowing this can help those of us who are more numbers-oriented to make their Golden Albatross decision.

Is It Possible to Create Your Own Pension?

Which brings us to the idea of creating your own pension. Can it be done? According to the internet, it can! There is no shortage of ideas on how to do it, either. Just check out the Google search linked below to see what I mean. Please note, I don’t necessarily endorse the methods discussed in all of the articles:

- https://www.google.com/search?client=firefox-b-1-d&q=create+your+own+pension

That said, out of all the articles, the one linked below provides a clear and concise overview of the issue:

- https://www.thesimpledollar.com/how-to-create-a-diy-pension-plan/

My “Go-To” Source

However, I’d like to concentrate on “build your own pension” advice from two bloggers I trust, even if we don’t always agree.

The first is Darrow Kirkpatrick from the Can I Retire Yet? blog. He advises readers to use investments and Safe Withdrawal Rates (SWRs) to recreate a pension. But, he only advises this as long as the reader’s mental faculties allow for clear-headed decision making. Once that becomes too much, he then recommends readers convert part of their investment portfolio into an immediate annuity.

You can check out his entire list of articles on retirement withdrawals and annuities on his blog’s index page. Or, you just start with the article I linked below. From there, you can work your way around similar content on the blog. Alternatively, you can just buy Darrow’s book, Can I Retire Yet?, which I’m sure he’d appreciate:

- https://www.caniretireyet.com/retirement-withdrawal-strategies/

The Other Source

The other blogger I trust, although I don’t always understand, is Big ERN (aka Karsten) from the Early Retirement Now blog. He believes in the “save, invest, and employ a sensible Safe Withdrawal Rate (SWR) based on the math no matter what” approach. There’s no talk on his site of annuities as a replacement for an SWR once someone gets too old.

To be fair, as a guy who retired in his 40s, he doesn’t need to worry about the loss of his mental faculties just yet. However, his age, impressive resume, and mathematical acumen also mean he’s extremely aggressive with some of his advice (e.g. almost 100% stocks, all the time, no matter the situation). Yet, given the length of his intended retirement, he also knows when to be conservative. His preferred SWR of 3.5% for early retirees and FIRE followers is a great example of that trait.

The bottom line is that Karsten’s technical writing and pursuit of the most financially optimal path, regardless of human behavior, isn’t for everyone. It’s why I contrasted him with Darrow Kirkpatrick. That said, he wrote an extremely thorough article on the difference between running a pension fund for two people (i.e. the retirement portfolio he amassed for himself and his wife) and a real pension fund. It’s Master’s level stuff: