fixed income Archives - The Golden AlbatrossThe Golden Albatross

Pension Maximization

Helping pensionable workers determine the value of their defined benefit (DB) pension to make well-informed Golden Albatross decisions is the raison d’être for this website. Thus, I write most of my articles for pensionable workers trying to determine whether staying for their DB pension is worth it. However, those aren’t the only articles I write. Although much smaller in number, I also publish articles for pensionable workers who decide to stay. If a unifying theme to those articles exists, it’s pension maximization.

What’s pension maximization? In practical terms, pension maximization ensures your pension’s positive impact in retirement is as significant as possible. You maximize your pension by taking active steps during your pensionable career. My Gap Number, Roth vs. Traditional, buying back years, and pension geoarbitrage articles provide examples of actionable steps pensioners can take. That said, unlike my Golden Albatross-themed articles, I never laid out a framework for pension maximization. In other words, after a worker decides to stay, I never answered the simple “now what?” question.

The remainder of this article, and its follow-on, layout my framework for answering “now what?” I call this framework Grumpus Maximization.

Yes, it’s a somewhat cheesy metaphor. But, Grumpus Maximization is a catchphrase designed to stick, much like the Golden Albatross. Who knows? It might even aid future marketing attempts like printing t-shirts with “Got Pension?” on the front and “Get Maximized @ grumpusmaximus.com” on the back …

That’s not helping, is it? Fine, I’ll sidebar the marketing discussion for now. Continue reading →

Grumpus Maximus Comment: I originally wrote this post with the intent to create a clear and concise step-by-step on how to calculate your Gap Number. Turns out I wrote another tome. Some of you may prefer my ramblings. If so you are probably one of my relatives or friends. Or maybe you are waiting to laugh at another of my $750,000 dollar financial mistakes. Fair enough, all I can do is laugh about it too. But in case you don’t prefer my ramblings, I thought I would quickly refer you to some other resources that are clear and concise.

First off, check out Darrow Kirkpatrick’s website Can I Retire Yet?. I’ve talked about him before, so I won’t rehash my book and website review for him. On his site under the Index link, if you scroll down to the Retirement Equation section, he walks you through everything you need to do in order to make your calculations. The Mad Fientist also has a Planning section under his archive, which has several useful articles. Finally, check out the two booklets I reviewed in my book review section entitled Early Retirement Solutions: How Much Money Do I Really Need to Retire & Achieve Financial Independence? and Retire Sooner!: How to Optimize Your Plan to Achieve Financial Freedom by DJ Whiteside. They are what I used to make my calculations.