Tag Archives: Retirement Planning

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.

Continue reading →

Why I Trust My Plan … For Now

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Procrastination Pays Off

Plan

Failure to properly plan …

I’ve had a draft version of this article sitting in my inbox for some time. It never gelled, so I left it alone. However, a blogging friend and mentor of mine, Doug Nordman, recently published an excellent article at his blog The Military Guide entitled “Don’t Buy A Home When You Leave Active Duty“. The article challenged several of my planning assumptions and acted as a catalyst to complete this post.

I consider challenges to my retirement plan a good thing. They force me to re-examine and update it as I gain more knowledge, and as facts on the ground change. As such, this article isn’t so much a riposte to Doug’s article, as it is an acknowledgment of it. It’s a confirmation that Doug’s article contained great points which forced me to re-examine my planning assumptions, but despite the challenge, my plan still passes scrutiny. It’s a healthy, Bayesian inference exercise that everyone should conduct with their plan routinely. Continue reading →

The Golden Albatross vs. The Insurance Industry (Part 2): Annuity Valuation Case Study

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Insurance Annuity Valuation Question

Annuity Valuation

What me worry?

A reader, whom I’ll call Lady J, recently asked me if I could value her future insurance annuity scenarios vs. her current cash-out value. She wanted an annuity valuation done in the same manner as the Pension Lump Sum Case Study I wrote for the Pension Series. The question intrigued me. My initial reaction was, yes, I could. Since a Defined Benefit Pension (DBP) is just another phrase for an annuity; I didn’t think it would prove too hard if she could provide the appropriate details. I told Lady J as much, and she promptly supplied me with details I needed.

Surprisingly, the annuity valuation proved both easier and harder than I initially thought. Easier in the sense that based on the numbers provided by Lady J, my Master Pension Value Calculator spit out an answer to her question in no time. Harder in the sense that once I reviewed the terms of her annuity policy, and the facts surrounding her initial investment, it forced me to ponder numerous “what if’s”. Thus, consider this article in two parts. First, I walk through the facts surrounding Lady J’s situation and the process of annuity valuation. Second, I address a few different issues, both good and bad, I noticed with this annuity. 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 →

Track Your Money (Part 4): Mint All Breakdown

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Hidy Ho (Math) Campers!

As a result of the problems identified in my previous article with Mint.com’s annual “Net Savings Over Time” report, I decided to nerd out on money tracking again. Apologies to those of you who don’t enjoy these articles as much as some of my others. However, much like Darrow Kirkpatrick did with retirement calculators, I believe it’s important to understand the pluses and minuses associated with popular money tracking software. This is especially crucial considering the importance I place on tracking money, to begin with.

I spent several days prior to writing this article improving the fidelity of my data in my Mint.com account. I also rebuilt my entire 2017 financial year in Quicken. Doing so allowed me to total my net savings for the year in Quicken and verify if I made any mistakes with my Mint calculations.

Mint

The now infamous Net Income Over Time report display

To refresh everyone’s memory, when I initially ran Grumpus Familias’s net savings for 2017 through Mint as part of my annual end of year fiscal review, it reported we saved $70.5K. However, I didn’t trust that number due to my inability to verify whether or not Mint accounted for our annual Roth IRA transfer. The program, as far I could tell, didn’t allow for that determination. After spending a few days double checking entries, modifying several transaction labels, and re-displaying reports; Mint now shows an annual net savings of $69.5K. Obviously, I had approximately $1K of transactions mislabeled in my previous report. However, I still cannot verify exactly how Mint determines expenses and income for this report. As a result, I don’t trust this number any more than the previous one. Continue reading →

Track Your Money (Part 3): Passive Tracking

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A Passive Tracking Experiment

Passive Tracking

I’m ready to blow up this lab whenever you are!

In case you can’t tell from my title, this article is a follow-on to my previous two “Tracking Your Money” posts. In the first article, I reviewed my historical use of various software applications to track my money over the past 20 years or so. In the second, my brother (Grumpus Brotherus the Younger) reviewed the software application called You Need A Budget (YNAB).

If you did not read the first post in this series, you probably should. I don’t just say that because my brother’s post sucked (it did), and I think mine is much better (it was), or I want the extra site traffic (I do). No, I say that because I actually made a few worthwhile points in the post … if I do say so myself. However, if you’re unwilling or unable to go to the post, let me provide you a re-cap. Continue reading →

Work and Mental Health: Slaying the Dragon

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Am I only one I know, waging my wars behind my face and above my throat?

— Twenty-One Pilots, Migraine

How Was Your Week?

Last Friday wasn’t the best day for me mentally. I don’t know if the stress of a few hectic work weeks which included a lot of travel finally caught up, or if I missed my meds the night before. Maybe it was both. Maybe it was something else entirely. Either way, I didn’t feel the most stable. I think it was fairly apparent to several of my co-workers as I lost my cool (just a wee bit) during a meeting. For a moment, it felt like the bureaucracy was going to grind my bones to grist before I could escape. As a result, several hours after the meeting the weight of the Golden Albatross still felt insurmountable. Never a good feeling.

Work and Mental Health

It got me this week.

As one of my Facebook readers once wrote, “Some days you slay the dragon, some days the dragon slays you.” Friday the dragon slew me, and it caught me off guard. It’s been a while since I’ve experienced a day like it. In fact, it might be the first day in over a year that I’ve lost my cool in a work environment. Home is a different matter, and the typical battlefield where I struggle to keep these sort of emotions in check (which of course is worse, and a different story altogether). Losing it at work, on the other hand, is an anomaly. As a result, I wasn’t ready to handle it. Continue reading →

Post-Retirement Planning (Part 1): Teamwork

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A Team Grumpus Victory Lap

This past week was a big one in the short history of the Grumpus Maximus blog. My first guest post on a much bigger website drove a record amount of traffic to mine. The guest post was a result of collaboration between myself and Darrow Kirkpatrick of www.caniretireyet.com. I am happy to consider Darrow one of my two main mentors in this blogging adventure. My introduction to Darrow was facilitated by my other mentor, Doug “Nords” Nordman, who founded the Military Guide blog. Darrow and Nords are both great guys, not only generous with their time but knowledge as well. Together they make up my team in the blogging sphere. Whether or not they know it, their willingness to help me succeed translates into a special kind of teamwork for which I am immeasurably grateful.

Teamwork

Da Komrades, we built this victory monument to commemorate your week.

I blogged recently that when I retire from the military, what I will miss most is working with the great men and women I’ve had the honor of serving with and leading. For some reason, I’m the type of person who draws great satisfaction from working successfully together as a team to accomplish goals. The military life, despite its many drawbacks, definitely offers plenty of opportunities for teamwork. While not the only career that offers this opportunity, if teamwork is one of your main motivations in life, I could think of no better occupation to enter.

The Post-Retirement Teamwork Challenge

It remains to be seen if I can successfully translate the satisfaction I derive from teamwork opportunities in my full-time career to retired life. For someone like me who needs the sense of accomplishment which comes with teamwork, it begs the question as to what outlet I will turn to when retired. Certainly, blogging might provide more and bigger opportunities to collaborate, and I look forward to the possibility. Yet, as I stated elsewhere on this blog, I started blogging as a means of therapy and to help a friend plot a path through a Golden Albatross moment towards Financial Independence (FI). I’m not ready to give those reasons up and place all my hope for fulfillment in retirement on blogging. Continue reading →

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 →