Tag Archives: Financial Independence

The Pension Series (Part 6): Valuing Pension Subsidized Healthcare (Updated)

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A Much-Needed Overhaul

Not every blog post I publish stands the test of time. While I always aim to produce “evergreen” articles, meaning they stand on their merits regardless of age, I don’t always succeed. My original pension subsidized healthcare post was a great example of this shortcoming.

When I published the article, the US’s Affordable Care Act (ACA), also known as Obamacare, appeared on its way to the scrap heap due to domestic US politics. This made estimating the value of healthcare attached to a US-defined benefit (DB) pension even tougher. It also led me to rant about how overly complex and unfair the system was for those going through their Golden Albatross decision. As a result, I concluded that it was an invaluable benefit for those lucky enough to have healthcare attached to their pension, especially if they intended to retire before Medicare eligibility at age 65. Therefore, it should weigh heavily in their Golden Albatross decision.

That was it. I didn’t develop any complex formulas or provide helpful suggestions on accomplishing the seemingly impossible. Nor did I provide many links to others who had tried. So much for value-added, huh?

Absolutely none of that!

Continue reading →

The Pension Couch: Pension Roll-Over Questions

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What should pensionable employees who leave their job before normal retirement age (NRA) do with their pension at their former employer? Should they roll the pension over into a self-directed retirement account like an IRA? Or, should they wait until NRA and collect the annuity?

These are simple enough questions, but not ones I ever had to deal with personally since my pension never accrued a value while I worked. That said, there are ways to determine the answers to these questions. But, as with many things connected to pensions, such as the Golden Albatross inflection point, it often involves a mix of math and emotion. It certainly did for one reader who had a pension roll-over question, so I made it the topic of this Pension Couch post.

For those that don’t remember, Pension Couch articles are created from lightly edited and sanitized email/message exchanges in which I answer readers’ pension questions. Names and some details have been sanitized to protect the innocent. Also, don’t forget that I speak in general about pensions throughout this post because every pension plan is different. So, make sure you research your specific plan before taking any action! Continue reading →

Worth vs. Worth It: Homeownership

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A Word From The Editor

Guest post time! This article is another from friend of the blog, Chris Pascale. Never one to shy away from the controversial money topics, Chris takes on the homeownership versus renting debate. He does this by comparing the running costs of homeownership to renting over decades. In doing so, Chris concludes that while owning the property in which you live is usually a money-losing proposition, it’s a vastly smaller money-losing proposition than renting. Therefore, since we all have to live somewhere, owning is the most efficient use of one’s housing money.

Chris’s cost comparison methods are vastly different from my opportunity cost method, which determined my first home’s $750K opportunity cost. While I focused on what my down payment money could have been doing, Chris concentrates on the housing option with the least cost associated with it over time. Mine was very much a “property as investment” argument, while he makes a “most bang for the smallest buck” argument. Same topic, different points of view. We value differences of opinion at GM HQ, especially when backed up by numbers. That’s a royal “we” since GM HQ is still a one-man show.

Financial Independence (FI) enthusiasts who like to optimize their financial decisions for efficiency may find Chris’s homeownership argument particularly persuasive. Where FI adherents often look for the financial option with the 1% better outcome, Chris’s analysis shows that owning creates financial savings with a much higher order of magnitude. Not only that, but he presents his findings in a much more concise manner than I ever could.

Golden Albatross readers will recognize Chris’s “worth vs. worth it” argument as well. He’s good at relating his Life & Money articles to the basic value proposition this blog is built upon. For Chris, homeownership is very much “worth it.” So, with that introduction out of the way, sit back and enjoy the read. As always, the words are his, but the pictures and comments are my attempt to provide some levity!

   — GM 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?

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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 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.

Continue reading →

Golden Albatrosses Killed Your Golden Goose

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No Birds Were Hurt In The Making of This Post

Wondering where I’ve been lately? Well, I’ve taken advantage of some post-operative convalescent leave to concentrate on finishing my book. As a result, I haven’t spent any time writing new content for the blog. Fortunately, though, Chris Pascale saved the day and offered to write a guest post for this month. Chris is a published author, father, husband, accountant, teacher, and former U.S. Marine (although I’ve been informed there’s no such thing as a former Marine). He’s also a big fan and friend of the blog.

Chris reached out to me last year (2018) after he heard my interview on the ChooseFI podcast. He believed we had a lot in common including military service, money issues, and PTS. To prove it, he sent me a copy of his most recent book of published poetry called War Poems: A Marine’s Tour 2003-2008. Continue reading →

Paradigm Shifts

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New Year, Same Goal(s)

Happy 2019 everyone! I read somewhere recently that we should make goals and not resolutions at New Year’s, which brings me to the inevitable question:

What are your goals for 2019?

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Wait a minute, does one of those goals say “kill Grumpus Maximus”?

Since we’ve officially entered the last calendar year that I’ll be a part of the U.S. military, my goal for 2019 should come as no surprise. In October 2019, I’ll begin terminal leave, and on 01 January 2020, I’ll be officially retired … if all goes according to plan. I’m excited but also nervous. I got a lot of work to do in order to retire on the best terms possible from the military and to make sure my family and I are financially prepared. Continue reading →

The Opposite of Gutting It Out

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My Gutting It Out post must have struck a chord with many of my readers. It prompted numerous comments, re-posts, and questions on the Book of Face. It continues to be one of my most read articles, and it even prompted a fellow Financial Independence (FI) blogger to write an article about my article. That’s pretty cool if you ask me, and a fairly large ego stroke too!

However, as popular as that article proved to be, I don’t want anyone to think that “gutting it out” is the only path I advocate. It’s not. Nor could it ever be, since the entire premise which surrounds my self-described Golden Albatross inflection point implies a choice that someone makes to stay or leave a pensionable job. Thus, if some people choose to stay and “gut out” a pensionable job, it means others don’t or won’t. It’s for those contemplating that alternative that I dedicate this post. Continue reading →

Gutting It Out: What’s Worked For Me … So Far

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True Story Time

I was soliciting ideas for blog articles the other day in the Financial Independence (FI) pensioners’ Facebook Group I started called Golden Albatross/Golden Handcuffs. I floated the idea “Coping Strategies For the Last Few Years (i.e. Gutting It Out)” and received the following response from one of my group members:

“I have 6 years. Help me gut it out, and keep my eyes on the prize.”

Six-years eh? That’s probably not an all-to-uncommon time-frame for a person to lose motivation for their job, no matter the reason. I find that pension earners tend to get that “trapped” feeling near the end of their career. That isn’t the same feeling as my self-described Golden Albatross situation. I define the Golden Albatross as the tension a person feels between staying or leaving a pensionable career. In this case, the trapped feeling to which I refer comes after a person decides to stay at a job in order to earn a pension, but before that person can retire with a pension’s full benefits. That’s where I find that “gutting it out” truly comes into play, and it’s the topic I want to concentrate on in today’s post. Continue reading →