The Pension Series (Part 19): Pension Annuity vs. Lump Sum Analysis (Again) — Updated

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Substantive Revision

This is a substantive revision to the original Pension Series Part 19 article I published on 23 June 2019. I updated this article because I have a new method for calculating the Total Dollar Value (TDV) of pensions that do not possess a Cost of Living Adjustment (COLA). The new method is far more accurate than the old method, so I am updating all articles in which I used the old method.

I notified BrewDog (the subject of this article) and provided him with updated Master Pension Calculator spreadsheets that utilize my new method. I did this because the TDV of his no COLA pension changed significantly when I used the new formula. As a result, I also updated the two spreadsheets embedded in this article and some of the text. If you downloaded the old spreadsheets, delete them, and download the new spreadsheets with the new formula. The text changes are noted in blue below and include strike throughs of the original article’s verbiage when needed. I kept the italicized format for the verbiage cut and pasted from newer emails between BrewDog and myself. 

My apologies for any inconvenience this update may cause, or already has caused. I’m well aware that the updated version of this article no longer reads as clean and easy as the original post. However, I’m committed to ensuring the information shared on this blog is accurate. As a result, when new circumstances alter the accuracy of an old post, I feel obliged to update it, even at the expense of readability.      

If you want more information on why I updated the TDV formula for no COLA pensions, you can go to Part 4 of the Pension Series for the abridged version. That is the source article for all my TDV calculations, and as such I updated it first. If you’d rather read a more in-depth explanation about the impacts of inflation, and the correct way to incorporate it into TDV calculations, then you’ll need to wait for my book, “The Golden Albatross: How To Determine If Your Pension Is Worth It“. It’s currently scheduled to be published in early 2020 by ChooseFI publishing.

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Four Journey to FI Lessons Learned

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Big News!

I recently debuted in person as Grumpus Maximus at the Black FI-day 2025 camp in Christchurch, New Zealand. Though nervous about revealing my face, I had a fantastic time with 49 fellow Financial Independence (FI) enthusiasts. This included my New Zealand blogging buddy, Ruth from the award-winning Happy Saver podcast. All the attendees spent the weekend airing their “dirty financial undies” by sharing financial wins and losses, and crowdsourced solutions to reach their FI goals. The experience pushed me out of my comfort zone and convinced me to do more public speaking within the Australia/New Zealand FI community.

A rare GM sighting, kind of like Big Foot! Looks like I’m presenting a blank screen to my audience. I’m sure they were mesmerized.

However, to present down under, I need to discuss more than defined benefit (DB) pensions because they are neither a thing in New Zealand nor widespread in Australia. For the Black FI-day 2025 audience, I distilled four lessons learned from my and my wife’s meandering road to Financial Independence. I gave the attendees a look at my unvarnished personal finance history, complete with discussions about my money, career, and life mistakes. This examination of my past included my crucial Golden Albatross moment and the reasons behind it. The presentation was light-hearted in parts and heavy in others. Judging by the response, most received it well.

This blog post examines the four FI lessons learned that I presented at Black FI-day 2025. I explain why I chose each lesson, based on my personal experience and story. I can’t cover everything here, so I link to previous posts for relevant background information. These four lessons learned are straightforward enough that anyone on the FI path can apply them—not just those with pensions. As a result, this is the most broadly relevant FI article I’ve written in years.

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Track Your Money (Part 1)

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An American Problem?

I need to talk to you about an endemic problem afflicting many Americans…. the problem associated with tracking money. No, I am not talking about tracking money that finances terrorism or organized crime. I am talking about the need to track your money.

When I first published this article back in 2017, I cited an April 2014 Business Insider article that reported 61% of US adults did not track their money. That was only six years after the financial meltdown of 2008. At the time I thought that was pretty damning, but not surprising. Fast forward to 2025, after the post-COVID cost of living crisis, and those numbers reversed. A May 2025 report from Secure Data Recovery showed that 59% of Americans tracked their spending and 49% tracked savings. That’s a healthy turnaround, but it came with a kicker. Apparently 70% of the people who tracked their spending said it caused them stress.

As someone who has tracked their money religiously for the past 26 years, I can attest it takes time and discipline, which in and of itself can be stressful. I can also attest that sometimes the results don’t show what you want, which again may prove stress inducing. But that’s no reason for not partaking in the effort, though. I say that because I firmly believe that the insight gained from tracking your money is like a personal finance superpower.

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Seven Tax FAQs Answered for US to New Zealand Expat Pensioners

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In the last six months, the number of comments and emails in my inbox asking me questions about the practicalities of becoming a US to New Zealand expat increased significantly. Since I am the (only) defined benefit pension plus Financial Independence Retired Early in New Zealand blogger guy, the range of questions varied. Many of the questions included a defined benefit pension angle, while others included immigration pathway questions. However, if there is one unifying theme to the majority of the questions I received, it is international taxes.

The popularity of international tax questions from people interested in moving from the US to New Zealand should come as no surprise. Not only do people dislike paying taxes, but it is often hard to understand what the impacts of the US and New Zealand’s tax codes will be on a US expat moving to New Zealand. Thus, in some cases, after answering the initial set of questions, I pass the people asking the questions on to a trusted accountant for further discussions. In other cases, I take them on as a paying client and help them determine if their finances and retirement plans can survive the financial implications of the move.

However, not everyone who writes to me is at the point where they want to spend money to determine if a move is right for them. Many are still doing their initial research and are just gathering data points. So, in keeping with one of my original reasons for starting this blog (i.e., sharing my hard-learned lessons for free), I wrote an article that answered the most frequently asked tax questions related to moving from the US to New Zealand sent to me in the past six months. I based the answers on my hard-won knowledge gained during five years of pension hacking my way to early retirement in New Zealand. Continue reading →

The Complicated Financial Life of a US to NZ Expat

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I recently gathered the information needed to file my New Zealand taxes. This was a multi-week task that required downloading documents from family financial accounts spanning three different continents. It was as exciting as it sounds, and if it were the only tax experience I had to endure each year, it would be bearable. However, as an expatriate (expat) US citizen, I must also file US taxes annually because the US is one of a handful of countries that taxes its citizens no matter where they live. An additional complication is that the New Zealand and US tax years do not match up. Hence, the information I gather for one regime is not complete for the other. All of this leads me to the conclusion that as an expat US military retiree family, we lead a complicated financial life.

Suppose you’re considering becoming an expat, expat retiree, or expat military retiree (like me). In that case, your financial life need not be as complicated as mine. Don’t get me wrong, if you want to be an expat, you are accepting a significant amount of financial friction in your life. However, I’ve logged below several engaging lessons learned from my complicated financial life that should help you navigate that process more efficiently. Those lessons include the importance of paying for expert tax advice, as well as finding a money tracking program that can access all your accounts in their various currencies. There are several more, all of which are worth considering before making that move. Continue reading →

Pensionable Careers: Fed vs. Military Benefits (Part 1)

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A Word from the Publisher

This post is the first of a two-parter from longtime friend of the blog Chris Pascale. Chris was a US Marine who served in Iraq in the mid-2000s but is now a US federal employee. If you want to know more about him, you can read his short bio at the end of the blog post.

Chris is also a published poet!

Chris writes here in a private capacity, which is good because he has several strong but fact-based opinions on which pathway (federal or military) provides the better retirement benefits value proposition from a “worth vs. worth it“ perspective. I emphasize the term pathway because judging the worthiness of a pensionable career should be more than just an examination of the retirement benefits provided. It should also consider the pros and cons one will experience while working towards those benefits during their career, which is what Chris does.

In that light, Chris clearly believes the federal path is the better one. That’s a critical view to represent since I spend so much time on this blog talking about the advantages of my military retirement benefits. That isn’t to say that Chris doesn’t support those making a career in the military; he simply believes the career and retirement benefits should be more equitable. The remainder of this article and the next explain why. Take it away, Chris! Continue reading →

Life Strikes Back: BrewDog’s Lump Sum Update

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One great thing about taking a break from blogging is that once you start publishing again, people who missed your regular updates contact you with words of thanks and encouragement. Such was the recent case with BrewDog. You might remember him from Pension Series Part 19, in which I helped him analyze his annuity vs. lump-sum options connected to a small defined benefit pension from a previous employer. He recently sent me a note thanking me again for the help I lent him nearly five years ago (wow, how time flies)! In his polite email, BrewDog also provided an update on his lump-sum decision. Spoiler alert, he took the cash and forwent the annuity.

BrewDog taking the lump sum wasn’t a big surprise. He was leaning in that direction when I initially helped him. However, the ultimate reason why he took the lump-sum and some of the lessons he’s learned since are worth considering. They include the importance of:

  1. making a correct survivorship decision if you take a pension annuity
  2. directing your lump sum into a tax-efficient investment vehicle
  3. having a clear investment strategy for a lump-sum

If nothing else, I encourage everyone to read the first lesson learned. It’s an important one for any pensionable worker who decides to take an annuity over a lump sum because sometimes life intervenes in unfortunate ways. As for the rest of the lessons, they will help guide anyone who’s got a lump-sum decision similar to BrewDog’s. Regardless of whether you take the lump sum, internalizing the points stemming from his choice will help you make a well-informed decision. And, as I’ve pointed out numerous times, helping you make well-informed pension decisions is what this blog is all about! Continue reading →

Why I’m Offering Paid Pension Analysis Services

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Pension Analysis Services

I made some subtle changes to The Golden Albatross webpage the other day. First, on the home (aka splash) page, I added three paragraphs under a subsection called “Services” that briefly describe the paid pension analysis services I now offer. Those paragraphs also quickly explain why I’m charging for services. Second, I created a permanent page called Pension Analysis Services, where I provide an in-depth explanation of the range of services on offer. I also explain the technicalities of how hiring my services works.

In case you don’t want to click away, here it is.

Since “what I offer” got a web page, I wanted to circle back with an article about “why.” By doing so, I will have a permanent explanation for anyone who asks, nested under the “what I offer” page. More importantly, I want to explain “why” because paying me pension analysis is a marked departure from the original intent for The Golden Albatross website. In all, I provide five solid reasons, which I list below.  Continue reading →

Put Your (Pension) Money Where Your (House) Mouth Is

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Permanence and Pension Money

Greetings, long-lost readers! It’s been over a year since I published my last post about my return to work to qualify for a New Zealand residence visa. A lot happened over that time, so much so that a separate update is warranted. However, for this article, the easiest thing to say is that my return-to-work plan … worked! My family and I obtained NZ residence based on my employment in April 2023, I transitioned to part-time work in August 2023, and we bought and moved into a house in December 2023. It was a hectic but ultimately successful year, with few setbacks and much growth. As a result, my family and I feel truly blessed when we wake up to the stunning views each morning at our New Zealand home and are comforted by the permanence it provides. Couple that with the financial stability afforded through our monthly defined benefit (DB) pension money, and we are sitting well indeed.

Pension Money

The view from our new back yard.

The remainder of this post is about some of the concepts I put into action to purchase our house and achieve that permanence. As you may have deduced from the play-on-words in my title, the money from my DB pension played, and will continue to play, a key role in making that happen. As such, there are potential lessons to be learned for anyone with a DB pension playing a central role in their retirement who might also wish to purchase a house.

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FIRE in New Zealand: One Thing a Pension Cannot Buy

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Here’s an imaginary conversation that’s been playing in my head recently:

      • Almost non-existent long-term reader: “Hey Grumpus, I noticed you haven’t posted any new articles in a while. Is everything OK?”
      • Grumpus: “Thanks for asking, but unfortunately, no, everything is not OK. I’ve been mourning a personal loss.”
      • Almost non-existent long-term reader: “Oh…I’m sorry for your loss. Who are you mourning?”
      • Grumpus:“Not who but what.”
      • Almost non-existent long-term reader: “OK … That’s strange … What are you mourning?”
      • Grumpus:“I’m mourning the death of my defined benefit pension-enabled Financial Independence Retire Early (FIRE) in New Zealand lifestyle. It died in October 2022, when I returned to full-time work.”
      • Almost non-existent long-term reader: “Oh, I’m sorry to hear that! However, I’m afraid I must report you to the Internet Retirement Police (IRP) that Mr. Money Mustache talks about.”
      • Grumpus: “I understand. I’m now a FIRE imposter. Tell the IRP that I’ll go willingly.”

(Moments later, as the IRP is dragging a defeated Grumpus into the police van)

      • Grumpus: “My first attempt at a FIRE in New Zealand lifestyle is dead. LONG LIVE MY SECOND FIRE IN NEW ZEALAND LIFESTYLE!”

The End of a Short Era

You read that imaginary conversation correctly. My defined benefit pension-enabled FIRE in New Zealand lifestyle only lasted 1 year, 4 months, & 23 days. By FIRE in New Zealand lifestyle, I mean the time I spent in retirement with no GI Bill-sponsored or other full-time work-related income. During that time, my family and I lived in New Zealand, relying solely on the income from my Department of Defense and Veteran’s Administration (VA) pensions. I must admit, with a small amount of pride, we did an excellent job of staying under those spending limits.

Why, then, did I return to full-time work? I did it because a defined benefit (DB) pension cannot buy a New Zealand residence-class visa. And without a resident visa, an immigrant family like mine cannot FIRE in New Zealand. That’s not to say that money can’t buy residence in New Zealand because it most certainly can through an investor visa. However, in the post-pandemic New Zealand immigration system, that potential visa pathway was moved beyond my family’s ability to achieve. As a result, even though I’m guaranteed to earn the same inflation-protected amount of money each month until the day that I die, it wasn’t enough. I found myself at the uncomfortable crossroads of a return-to-work decision around September 2022. Continue reading →

This Is Your Pension On Inflation

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What do you think will be the Word of the Year for 2022?

My heart says it should be “Ukraine,” but my head says it will be “inflation.”

If I was a betting man, I’d bet with my head.

To be fair, one of the driving factors of 2022’s inflation is Russia’s illegal and immoral war in Ukraine. Specifically, it is the grain and gas shortages caused by the war and the international sanctions against Russia. However, that’s not the only cause of 2022’s inflation problem. It turns out that inflation’s rise in 2022 is a complicated story, one with many villains and few heroes, which also means it may be sticking around for some time. As a result, it’s an excellent time to analyze the vulnerabilities of a pension without an inflation-fighting mechanism. Continue reading →