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The Pension Series
Old 03-15-2019, 06:11 AM   #1
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The Pension Series

Found a series of articles relating to pensions (a popular topic), and how to value the amount, and so on. We have a decision coming up in about two years, for a private (I think) pension, which is associated with various trusts.

Just posting these for posterity...

The Pension Series (Part 1): Pension Safety - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...ension-safety/

The Pension Series (Part 2): Worth vs. Worth It - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...h-vs-worth-it/

The Pension Series (Part 3): What is Your Pension Worth? - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...pension-worth/

The Pension Series (Part 4): Total Dollar Value (TDV) of Your Pension - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...-dollar-value/

The Pension Series (Part 5): Survivorship (Updated) - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...-survivorship/

The Pension Series (Part 6): Valuing Pension Subsidized Healthcare - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...-6-healthcare/

The Pension Series (Part 7): How to Create Your Own COLA - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...7-create-cola/

The Pension Series (Part 8): Deciding to Take a Pension Lump Sum - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...sion-lump-sum/

The Pension Series (Part 9): Pensions and U.S. Federal Taxes - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...federal-taxes/

The Pension Series (Part 10): Geoarbitrage and Pensions - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...-geoarbitrage/

The Pension Series (Part 11) : Pension Lump Sum Case Study - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...um-case-study/

The Pension Series (Part 12): More Pension Lump Sum Analysis - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...-sum-analysis/

The Pension Series (Part 13): The Master Pension Value Calculator - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...ue-calculator/

The Pension Series (Part 14): Pension Risk Transfer - grumpusmaximus.com
https://grumpusmaximus.com/pension-s...risk-transfer/

The Pension Series (Part 15): The Pension Benefit Guarantee Corporation (PBGC) - grumpusmaximus.com
https://grumpusmaximus.com/pension-series-15-pbgc/

Pensions Archives - grumpusmaximus.com
https://grumpusmaximus.com/category/pensions/
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Old 03-15-2019, 06:47 AM   #2
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Any good takeaways from this? I opened part 3, since I thought it'd be the most interesting to me. It started with apologizing for the length of the first two parts, and how he really doesn't have time to write so much, but then on he rambles. I browsed the rest of that and part 4, but the more I read the more my eyes glazed over. That's why I've learned to like Kitces, he not only knows his topics but he knows how to write very well. So I don't think I'll spend any more time on this unless you can point out some worthwhile parts.
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Old 03-16-2019, 05:49 AM   #3
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I found an interesting pension calculator in one of the articles.

The links were posted for reference. The career military retiree explains his personal journey, and how he came to FI unintentionally. Pension is a good part of that, I'm sure. He examines the pension value question in some articles, and considers different methods of doing such.

Reading (sometimes skimming) is a good thing.
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Old 03-16-2019, 03:23 PM   #4
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omg, those are some looong articles.
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Old 03-16-2019, 03:38 PM   #5
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I'm not sure, but maybe I got lucky, back in the day. I asked my Megacorp if I had the option to take a lump sum in leu of a monthly benefit. They said absolutely NOT. End of the decision process - which is why I suggest I was "lucky". "One less thing" as Forest Gump would say.

Heh, heh, 14 years later, and the money still lands in the checking account every month. I hope to live to 99 to really stick it to Megacorp. YMMV
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Old 03-16-2019, 06:19 PM   #6
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Quote:
Originally Posted by target2019 View Post
I found an interesting pension calculator in one of the articles.

The links were posted for reference. The career military retiree explains his personal journey, and how he came to FI unintentionally. Pension is a good part of that, I'm sure. He examines the pension value question in some articles, and considers different methods of doing such.

Reading (sometimes skimming) is a good thing.
He's a good friend, and we get together for coffee every few months.

His Facebook group has tapped into a bunch of people who are dealing with pension math (particularly early retirement due to FI), or the company's ability to pay (versus taking a lump sum), or who are hostage to employer health insurance (until Medicare).

He just finished the first draft of his book, based partly on the pension series. He's retiring from the military later this year (at FI). He and his spouse are considering their location options.

Blogging about "The xxxx Series" is an emerging tactic. Jim Collins led the way with "The Stock Series" and Karsten Jeske (BigERN of Early Retirement Now) has a very good "SWR Series". (Warning: Karsten makes Dr. Doom sound like Shirley Temple, but Karsten's analysis is thorough.) Grumpus is building an audience with his series, but one blogger's writing style is not for everyone.

And pension analysis does not lend itself well to explainer videos or Instagram posts.

Quote:
Originally Posted by RunningBum View Post
That's why I've learned to like Kitces, he not only knows his topics but he knows how to write very well.
I read everything that Kitces writes, but my gosh does the man create some stream-of-consciousness compound-clause run-on sentences. I practically have to put both feet on the floor, sit up in my chair, put down my coffee cup, and focus on diagramming the structure.

I'm hoping to introduce Grumpus and Kitces to each other at a conference. They'd get along very well.
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Old 03-16-2019, 06:56 PM   #7
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Originally Posted by Nords View Post

I read everything that Kitces writes, but my gosh does the man create some stream-of-consciousness compound-clause run-on sentences. I practically have to put both feet on the floor, sit up in my chair, put down my coffee cup, and focus on diagramming the structure.

I'm hoping to introduce Grumpus and Kitces to each other at a conference. They'd get along very well.
I don't actually read Kitces that much, usually just when someone posts a link here, or if I look up a topic. What I like is that he has an executive summary at the top so you know exactly what this is about, and then he explains it thoroughly, with examples, and without straying too much if at all. At least from the small percentage of posts I've read from him.

In contrast, with Grumpus, in part 3 I thought he was going to talk about how to assign a net present value of what a pension was worth. It's fine that this wasn't the topic, but I was a third of the way in before I had a clue it was (I think) how pension payments are calculated. And then there was a long ramble on inflation, and a terribly formatted chart. Then some other stuff, and the takeaway summary starts as the post started, with an apology on it's length. In no way does he write like Kitces. Perhaps the stlye is similar, and maybe they have run-on sentences in common, but Kitces' are (usually?) on topic, not on Star Wars.
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Old 03-16-2019, 07:03 PM   #8
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Can someone who has read all of his articles, please explain [in 20-words or less] what is the formula to go from monthly pension payment to Net Worth?
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Old 03-17-2019, 06:56 AM   #9
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And pension analysis does not lend itself well to explainer videos or Instagram posts.
Rambling articles and stream of consciousness always bring to mind "Heart of Darkness" by Joseph Conrad. Jobs would say the journey is the reward.

What I found during my skimming of the OP rambling articles is that there is no clear-cut answer for some dimensions of pension analysis. The hope is that a neat formula can decide for you. But in those cases where funding level is a concern, for example, it's a binary decision. Either you trust 'em or you don't.
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Old 03-17-2019, 07:03 AM   #10
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Can someone who has read all of his articles, please explain [in 20-words or less] what is the formula to go from monthly pension payment to Net Worth?
I think the answer to that heard most often (E-R and Bogleheads) is pension payments are not part of Net Worth (usually) as the payment is only due you, in most cases.

So, you consider a pension payment in the same class as SSA, in that it supports your base expenses.

There is a PV calculation that can be used, but I am not the best person to describe how to do that.
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Old 03-17-2019, 07:09 AM   #11
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In contrast, with Grumpus, in part 3 I thought he was going to talk about how to assign a net present value of what a pension was worth. It's fine that this wasn't the topic, but I was a third of the way in before I had a clue it was (I think) how pension payments are calculated. And then there was a long ramble on inflation, and a terribly formatted chart. Then some other stuff, and the takeaway summary starts as the post started, with an apology on it's length. In no way does he write like Kitces. Perhaps the stlye is similar, and maybe they have run-on sentences in common, but Kitces' are (usually?) on topic, not on Star Wars.
The Search is the reward. ""Pension-Value-Master-Calculator"
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Old 03-18-2019, 09:04 PM   #12
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Can someone who has read all of his articles, please explain [in 20-words or less] what is the formula to go from monthly pension payment to Net Worth?
I did not read the articles, however, as a back of the envelope calculation, multiply the yearly amount of your pension by 25 to get a quasi net-worth calculation. That roughly approximates what you would have to have sitting in an account to pay your pension.

Another way is to go online and find a site which sells 'pensions,' i.e. you give them a lump sum and they 'annuitize' it for you for an amount of time you specify. You could place your monthly pension amount into their calculator, specify the timeframe and then it spits out the amount you need to send them to get that monthly amount.

The above are crude tools, but they do work for a well-educated guess on net worth value of pensions.
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