Tag Archives: pensions

The Death Binder!

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I am ready to meet my Maker. Whether my Maker is prepared for the great ordeal of meeting me is another matter. — Winston Churchill

Death Binder

Death and Binders

I did something different this week for work. I deployed to a foreign country for a military exercise. I’m writing this post from that country as a matter of fact. It’s the first time since my Afghanistan tour in 2013 that I’ve deployed abroad with all my gear. It’s also the first time since my financial awakening that I’ve deployed. Granted, I traveled multiple times on official orders since Afghanistan and was also stationed overseas for multiple years. However, except for our Permanent Change of Station (PCS) move from Europe to Hawaii, I consider my travel comparable to business trips. There’s something different about packing up all your combat gear that sharpens the mind. As a result, while not a tour to a combat zone, I used this military exercise as an excuse to build my “Death Binder”.

Just for the record, Mrs. Grumpus hates the term, Death Binder. In fact, she won’t let me call it the Death Binder in the house. Instead, we call it the “Financial Binder” or “Financial Folder”. However, I call it the Death Binder when she’s not around. I do that partly because of my love of heavy metal. There’s something about the term Death Binder that makes me want to throw the devil sign up in the air and bang my head while shouting “DEATH BINDER” in my loudest metal voice.

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Four Golden Albatross Financial Lessons

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A Message to Future You

financial lessons

Four Golden Albatrosses take flight

If you’re reading my articles in chronological order, either in real time or at some undetermined time in the future, you’ll know that my two preceding articles were counter-points to other people’s financial ideas. As much fun as I had writing articles that used macroeconomics to argue against other people’s theories; doing so courts a certain amount of negativity. Granted, the counter-points needed to be made, and I believe I kept the articles congenial, lighthearted, and fact-based. However, at the end of the day, I still argued against someone’s work as opposed to building my own. As a result, I hit the pause button on the Risk Series this week, in order to focus on a more positive message.

Ironically, despite my online negativity I’ve actually been doing some positive stuff in the real world — which just might be the understatement of a lifetime in regards to the internet. Over the past three weeks, I counseled three different military members and/or their spouses on financial issues. Two of those counseling sessions took place face-to-face; while the third took place via email. All of them proved a great experience … for me at least. I learn a lot about myself and other people every time I counsel someone. Whereas I felt like a reluctant financial voyeur during my first counseling session; I actually enjoy them now. Continue reading →

The Golden Albatross Financial Philosophy

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The Request

Golden Albatross

Professor X enjoying his lunch break.

A few months ago a military member from a mid-career service school approached me through my blog with a request. He’s an instructor, so let’s call him Professor X. One of Professor X’s topics is personal finance as it relates to effective management of one’s career. He’d read my blog and believed several of my articles were appropriate material for his students. As a result, he asked me to speak via video to his class. After we exchanged a few emails on proposed topics, legal conflicts of interest, and technical hurdles; I agreed to appear in uniform as a military member, smart in the ways of finance, but without mention of my blog.

With this scheduled event now only a few days away, I thought it prudent to script my remarks. I also thought it would be worth turning those remarks into a blog post. Since Professor X’s request forced me to distill numerous blog posts into one coherent speech about my financial philosophy, I figured some of my readers might find it useful. As a result, this post doesn’t cover any new territory. It simply synthesizes a lot of what I’ve written previously in one place. Who knows? If I ever write a book, this article might form a good basis for the first chapter.

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The Pension Series (Part 12): More Pension Lump Sum Analysis (Updated)

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Nerd Alert!

This article is a follow-up on the lump sum case study I conducted for the ChooseFI listener, Tess, in Part 11 of the Pension Series. If you missed it, that case study also aired as Episode 58R on the ChooseFI Podcast. I mentally debated if I should make this Part 11a considering the links between the two articles.  However, given this article’s length, and the alternate pension lump sum analysis method it outlines, I decided it warrants its own part in the series.

I’ll warn you now, this article is another deep dive into the world of pension lump sum offers. It won’t be my last either. Pension lump sum analysis is a rabbit hole. As I pointed out in my previous article, there’s no one correct method. A lot depends on what the pensioner values and the questions they are trying to answer. Proper analysis is also based on the strings attached to either the lump sum or the annuities.

pension lump sum analysis

Hello? Can anyone up there hear me? I got stuck down here analyzing my pension lump sum!

Fortunately, as a result of my appearance on ChooseFI 58R, several people reached out to discuss methods of calculating pension value and conducting lump sum analysis. We are currently in the process of compiling a spreadsheet with many of those methods baked in. It’s not quite ready though. So, for now, you have to put up with another wordy pension lump sum analysis from yours truly. Forewarned is forearmed. Continue reading →

The Gap Number Method in … ACTION!

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Click Bait

Like what I did there with the title? I created what’s called click bait. Most of the time my titles are boring, other times they are obscure. This time though I created an “action” title to capture readers’ interest in the Gap Number Method, because it gained some recent publicity. That’s about as creative as I get, adding the word “action” in all caps to a title.

Gap Number Method

How’s that for action? Mrs. Grumpus hiking in Kauai

Yes, I know. You’re wondering how, with only two readers who aren’t related to me, did I gain any publicity? Well, it turns out I have a face built for radio — or podcasting as the case may be.  Not so sure about the voice though.

In any case, on a recent (and so far my only) podcast interview on ChooseFI, the hosts asked me to explain my concept of the Gap Number. For those of you who need a refresher on the Gap Number, you can find the post where I coined the term here. In general, the Gap Number is the difference between your fixed income in retirement and your expenses. Expressed mathematically it looks like: Continue reading →

The Pension Series (Part 8): Deciding to Take a Pension Lump Sum

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We Interrupt Your Previously Scheduled Program …

Great news! You don’t have to read me waffling on about analyzing your pension lump sum offer this week at GrumpusMaximus.com. I published Part 8 of the Pension Series as a guest post for Darrow Kirkpatrick’s blog, CanIRetireYet.com, so you can read my waffling there instead.  Check it out at the following link.

Darrow’s site is a long time favorite of mine.  It is the one sight, more than any other, that inspired me to make the calculations and determine if early retirement was possible for myself and my family. Avid readers of my blog may already be familiar with his work as I reference it quit a bit. Luckily a mutual friend put Darrow and I in touch, and I now get to consider him a mentor and a friend.  Many thanks to Darrow for providing me the opportunity to write for his site, and gain exposure for the Golden Albatross message and GrumpusMaximus.com.  Darrow does not allow comments on his website, but feel free to post them to this article and let me know what you think.

Enjoy!

— GM

 

The Pension Series (Part 7): How to Create Your Own COLA

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St. George’s Thesis

Build Your Own Cola

“Cry — God for Harry! England and Saint George!”

How was your week? Productive I hope.  I spent most of my spare time drafting my pièce de résistance for the Pension Series as a guest post for one of my favorite blogs and bloggers. I’m excited, so stay tuned for the announcement as to when and where you can find it. Unfortunately, it means I’m short an article because I (stupidly) don’t keep any posts in the bank.

However, I am about to let you in on a little blogging secret.  Facebook provides an endless amount of material to write about. As proof of this point, about 10 days ago George, one of my awesome Golden Albatross Facebook Group members, asked the following sizzler of a question related to pensions and inflation-adjusted Cost of Living Allowance (COLA):

Basically, if my pension is say $50k [a year] with no COLA provided by my employer, what do I have to have saved in an IRA to be able to grow my pension with cost of living for the next 30 years? (50k+4%)+4%)+4%)etc. For 30 years…)
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Golden Albatross Pension and FI Decision Trees (1st Draft)

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“Exactly What Do You Think Is Happening Here Captain?”

“Fists in the air in the land of hypocrisy.”

Raise your hands if it’s hard to determine where I come down on some of the issues I address in this blog.  You’re not alone.  I do it on purpose.  The way I see it, for some topics, all I can do is describe the problem and provide some options to solve it. The choice is yours as to how to use the information I provide. I was reminded of that this past week as I interacted with several of my Golden Albatross Facebook group members about topics I should include in a money manifesto if I chose to write one for the blog. Continue reading →

The Pension Series (Part 3): What is Your Pension Worth?

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Grumpus Types Too Much

Anybody else exhausted from Part 2 of the Pension Series?  I know I am.  At 3200+ words it wasn’t concise.  Amongst all those words, you may remember my promise to help you determine your pension’s worth in future posts.  Well, the future is now, or at least partially.  Unlike Part 2 though, I intend to break up the discussion over the next several posts.  How many?  I don’t know yet; at least two, maybe more.  Since calculating your pension’s worth is more of a “how to process”, I hope the articles don’t need to be overly verbose.  I understand people don’t have time to read 3200+ word posts every week, and frankly, I don’t have the time to write them.

Calculating Your Pension’s Worth … Ain’t Like Dusting Crops

For this post, I will examine the three key inputs in determining your pension’s worth.  I will also examine some of the basic mathematical formulas used to calculate your pension’s worth.  I will keep it simple because I am not a math genius by any means (liberal arts major here!), and more than likely you are going to use a pension calculator to make the calculations anyway.  However, you should understand the inputs and formulas because like Han Solo said in Star Wars: A New Hope: Continue reading →

The Pension Series (Part 2): Worth vs. Worth It

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Prologue

I’ll admit up front this article won’t be to everyone’s liking which probably isn’t a good way to start out a blog post if you want people to read it.  However, there’s a likelihood that some readers will get no more than a few paragraphs in, and question what the hell any of this has to do with Financial Independence (FI) or pensions.  They may even think all I’m trying to do is blow my own horn.  I’m not, but I could see how it might appear that way if you don’t stick around to the end.  Admittedly, I used this post as an opportunity to engage in some much-needed writing therapy.  One of my Docs told me it would help to write about events from my career which contributed to my PTS.  Thus, dealing with the topic of  “worth vs. worth it” gave me the opportunity to kill two birds with one stone.  I’ll leave the determination of whether I successfully pulled it off up to you. Continue reading →