The Pension Series (Part 24): The Golden Albatross vs. Black Pensions

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Black Pensions Matter

On April 4, 1968, Martin Luther King Jr. was assassinated in Memphis, Tennessee, while supporting a Black sanitation workers strike (Hutchinson, 2019). Most Americans probably know those sad facts because they either lived through them or studied them at school. However, most Americans probably don’t know that the sanitation workers’ demands included a “10% wage increase, fair promotion policies, sick leave, pension programs, health insurance, and payroll deduction of union dues” (Estes, 2000, p. 158). Civil Rights advocates, like Dr. King, saw pensions and the organization of Black labor as one of many ways to improve the lives of Black workers and a method to level the economic playing field (Schmitt, 2008). So, believe it or not, Black pensions matter, and have for a long time.

Jobs and civil rights. The issues haven’t changed (Library of Congress, 28th August 1963).

I don’t wade into the subject of race and pensions lightly. But, up to this point, my work on the Golden Albatross worth vs. worth it decision framework has focused solely on the issues a generic pensionable worker would need to consider. And, since I’m a White-guy, it’s reasonable to assume that my vision of that generic worker was White … and a guy.

My lack of consideration for how the Golden Albatross decision framework might need to adapt based on either sex or race seems myopic. It looks incredibly myopic when considering the global re-emergence of the Black Lives Matter movement in 2020, as well as the unequal devastation caused by the COVID-19 along racial and socioeconomic lines. As a result, this article marks my first effort to correct my mistake. Continue reading →

The Pension Series (Part 23): Organizational Culture and Pension Signals

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The Long Road to Pension Signals

I struggled with categorizing this post. It’s ultimately about the importance of pension signals that companies and organizations broadcast to their workers. For that reason, I made it a part of the Pension Series. However, I meander through several (somewhat funny) stories, and explain the importance of organizational culture, prior to arriving at pension signals. As a result, I could have placed it in my Life and Money section. In any case, if you don’t have the time to read my well crafted narrative, no worries, just skip to the last two sections. You’ll miss a lot of the context, but capture the main points. On the other hand, if you have time to take the long road to pension signals, please read onwards … which is actually downwards. Continue reading →

The Pension Series (Part 22): Analyzing Public Pension Plan Safety

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How Safe Is My Pension?

Pension plan safety is one of the most popular and relevant topics among the potential pensioners who read my blog. It’s popular because much like Social Security, chronic underfunding of certain types of pensions receives a lot of bad press in the U.S. As a result, many people think that all pension plans are circling the drain. While that isn’t true, as with most things in life, determining the truth about your pension plan’s safety is a somewhat subjective and complicated journey. However, that doesn’t mean you shouldn’t strive to answer the question, especially if the Golden Albatross has trapped you in its maw.

Pension plan safety

Instead of a circling the drain, how about a black hole sun?

There’s a reason why I started the Pension Series with the topic of pension safety. I said it then, and restated it more recently in my book; no issue cuts straight to the chase quicker than pension plan safety. That’s especially true when trying to determine if staying for a pension is worth it. If you are facing the gut-wrenching stay or leave decision at your pensionable job, and you decide there’s a high probability the pension won’t be there at retirement, then you may not require any further analysis. In other words, the realization that the pension won’t be there as promised effectively ends the internal debate. Continue reading →

Worth vs. Worth It: Stretching Out The Family Van

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Guest Post Time!

Howdy Folks! Friend of the blog, Chris Pascale, slipped me this article a few weeks ago to tide everyone over until I get another break from my master’s program. He took my Worth vs. Worth It decision process (which I developed for the pension decision and showcase in The Golden Albatross book) and applied it to his decision to replace his family’s van. Whereas my original article explained the theory, this post shows you the math. It’s a quick and easy read that will help you the next time you consider buying a car. It was worth my time to publish, and I believe it’s worth your time to read it.

— Grumpus Maximus Continue reading →

The Pension Series (Part 21): Lump-Sum Buyout Offers

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Grumpus the Prognosticator

Considering that I’m publishing this article during the COVID-19 Pandemic, I want to take a few paragraphs to acknowledge that these are troubled times without turning this into an article exclusively about the pandemic. As COVID-19 causes mass lock-downs and lay-offs all over the world, it’s forcing people to examine what their jobs and careers mean, especially if they no longer have one. Looking past the immediate onset of events, many are also questioning what employment will look like in a post-pandemic world with no vaccine close at hand. On the surface, then, it seems like an awkward time to publish an academic study of pension lump-sum buyout offers, which many people associate with the retirement end of a pensionable career.

Lump-sum buyout

Let me look into my crystal ball. I hope we can look back in a year and say I was wrong.

However, if the economic impact of the pandemic continues to suppress interest rates and cause significant amounts of market volatility, or a prolonged bear market, it will weaken many pension funds, similar to 2008 and 2009. Some will even enter the dreaded death spiral that I covered in Part 20 of the Pension Series. Under these circumstances, I’d expect lump-sum buyout offers to proliferate as pension funds de-risk to shore-up their finances. The two main methods for de-risking are lump-sum buyout offers and the same sort of Pension Risk Transfers (PRTs) I examined in Part 14 of the Pension Series. Therefore, it’s reasonable to assume that with more lump sums on offer more employees will take them, especially if they believe their pension funds are in the type of trouble I outline in Part 1 of the Pension Series.

Continue reading →

Making Bold Adjustments

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Hey folks! I hope everyone is staying safe and sane out there during the COVID-19 pandemic. Grumpus Familias is safely ensconced at our new home in Nelson, New Zealand. We love the place despite the nationwide COVID-19 lockdown. I attached a picture of the snow-capped mountains of Mordor that we can see from the hill we live on as proof.

Bold Adjustments

However, more on life in NZ in future posts, because I have another great guest post to share from Chris Pascale. Today’s topic is Making Bold Adjustments which fits perfectly as a subject for this blog. I hope you agree.

In case you’re a new reader, or just don’t remember, Chris is a Marine Corps veteran, a friend of the blog, and also an author. In addition to that, he helped me BIG time by editing my forthcoming book, The Golden Albatross, which I’m happy to announce that ChooseFI Media will publish in June! Stay tuned for more announcements soon.

Bold Adjustments

Concept art from the book! It’s so close to release, I can smell that new book smell.

Back to saying great thing about Chris, though! He is interested in many of the same things I am like personal finance, pension hacking, and family time. Yet, he looks at things differently than me, which means he always has a fresh angle or new topic in mind for the blog. You can check out his other guest posts by going to the Article Index. One more thing, as with all other guest posts on the blog, I supplied the pictures, captions, and what hopefully passes as comic relief.

OK, Chris, take it away …. Continue reading →

The Golden Albatross vs. Kiwi Arbitrage

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Long Time Comin’

For more than nine months I’ve promised several readers an article covering the geoarbitrage potential behind Grumpus Familias’ pending move to New Zealand — which I’m calling “Kiwi Arbitrage” in honor of the beloved flightless bird native to New Zealand. Yet, for one reason or another, I kept putting-off that particular task. In other words, I procrastinated. That’s something of an Olympic sport in certain parts of my life.

That said, I had several good reasons for procrastinating this time around. The most legitimate was the lack of approved entry visas. I didn’t want to waste time writing an article on New Zealand only for some reason to appear that would prevent us from moving. If you don’t think that was a realistic possibility, then you obviously haven’t read about my lifetime of Charlie Brown-like luck.

Alas, I can procrastinate no longer. Grumpus Familias’ visas arrived several weeks ago and no major obstacles sprang out of the military retirement process. As a result, flights and movers are booked and Mrs. Grumpus and I are busy selling off or donating a large fraction of our worldly possessions that we can’t or don’t want to take with us. While we haven’t “burnt the boats” just yet, we are close — which means this move is on like the proverbial simian made famous by ColecoVision! Continue reading →

Thankful For My Bronze Medal

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Thankful, Again

Happy Thanksgiving to all my U.S. readers! After a long hiatus, I’m back to writing new blog posts. My return just happens to coincide with my favorite American holiday and is in time for my annual Thanksgiving post. Fittingly, I have a long list of reasons to be thankful this year, some of which I will discuss in this article and some of which I will discuss in future ones. But, first things first. Does anyone know how much work it takes to properly retire from the U.S. military after 20 years of service?

thankful

The Grumpus Maximus household has a lot to be thankful again for this year.

I can reliably report that it takes a lot of effort if you want to do it correctly. Between Veteran’s Administration (VA) medical appointments, retirement paperwork, turnover with my relief, and a plethora of other tasks, my last few months of active duty just flew by! And then like that, it was over. I say that because in the last month I started Terminal Leave and hosted my retirement ceremony. Continue reading →

The Pension Series (Part 11) : Pension Lump Sum Case Study — Updated

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Substantive Revision

This is a substantive revision to the original Pension Series Part 11 article I published on 18 JAN 2018. 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. That said, the new formula didn’t change the results of this case study because the estimated value of the pension annuities on offer increased vice decreased. As a result, the new method only strengthened the recommendation I made for the ChooseFI listener to concentrate on comparing the difference in value between her $75,740 lump sum offer and the lifetime annuity starting at age 60. 

Any additions I made to the text are in blue. Sentences from the old version of this article that discuss my old TDV method are struck through. I only used the feature a few times in the text, mostly to replace the old TDV steps with the new. As a result, the article itself remains fairly coherent.  Continue reading →

The Pension Series (Part 13): The Master Pension Value Calculator (Updated)

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Substantive Revision

This is a substantive revision to the original Pension Series Part 13 article I published on 04 FEB 2018. 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. That said, the new formula didn’t change the results of this case study because the estimated value of the pension increased, instead of decreased. As a result, it only strengthened the argument for Ms. Money Penny to stick with the lifetime annuity. 

The major changes for this article are in the spreadsheet, not in the text itself. If you downloaded and used the old spreadsheet, you should delete it and download the updated version. Any additions I made to the text are blue, and I only used the strikethrough feature a few times in the text, mostly to replace the old TDV with the new sum. As a result, the article itself remains fairly coherent.  Continue reading →