Rick Connor

Comments:

• Douglas, thanks for an interesting perspective. Home ownership promotes a unique combination of rational thinking and emotions. I've seen wildly different approaches at calculating the return on home ownership. Mike Piper posted an interesting approach, borrowing from Bill Bernstein. Most people I've discussed this with look at it as you described, without consideration of expenses, inflation, and imputed rent. I spent a good part of my career weathering mergers and acquisitions. My job moved 70 miles, then 3000 miles, then 40 miles, and finally 300 miles. With a lot of work, travel, and flexibility I was able to keep the family in place while staying gainfully employed. I thought it was the right thing to do then, and still do. But I worked with many people who made multiple moves for their career, and I can't say they were wrong. Geographic flexibility can be a boon to one's career, especially in certain industries. It's an area of our financial lives that is very individual.

  Post: Home Free

  Link to comment from January 16, 2025

• I read this article this morning, and vowed to get my steps in. Then I went out. The “feels like” temperature was about 10 degree with a biting wind. As I briefly walked my son’s 10 year old Boston Terrier, I wondered how many steps we could get before we froze. The poor little guy was shivering pretty badly. Me too.

  Post: What I Watch

  Link to comment from January 15, 2025

• I was contemplating a reply and read Edmunds and realized he captured my thoughts, and far more articulately. Especially the last sentence.

  Post: What I Watch

  Link to comment from January 15, 2025

• That’s the one! Good luck and I hope you can negotiate a “SS Earnings Test Salary offset”.

  Post: Retirement Realignment by Ken Cutler

  Link to comment from January 13, 2025

• This is correct except that for a short period of time, for some plans that didn't adjust their rates during the year, for some lucky few who met eligibility at the time, the interest rates were not the same or very close. Assuming a 25 year term, a change in the interest rate from 1% to about 4% reduces the present value of the annuity by roughly 30% for the same monthly payment. So an annuitant could effectively purchase the same monthly amount for 70% of the lump sum payment. To achieve a 50% reduction would require a larger increase in the interest rate, to almost 8%. Maybe there were some other, non-actuarial, conditions in Dan's pension. In our plan, there were early retirement subsidies for certain employees that were quite generous, but they only applied to the monthly benefit. not the lump sum calculation. If you met the criteria, you could claim aThe lump sum at 60, however, was calculated using an actuarially reduced monthly benefit amount, about a 35% reduction. thus, for those of us who were eligible, the lump sum offered was about 65% of the present value of the monthly benefit. If the lump sum calculation at 60 had used the great subsidized amount, the resulting greater lump sum amount would have been able to purchase a comparable annuity (in the rapid interest rate scenario) at less than 70%.

  Post: Obsessed with a financial stress-less retirement

  Link to comment from January 13, 2025

• It was the same with me in 2017 - the lump sum was about 30% of the Present Value of the monthly benefit. Part of that was the Early Retirement subsidy some of us were eligible for. The monthly was clearly the better deal at the time. The situation Dan relayed is an anomaly in my experience.

  Post: Obsessed with a financial stress-less retirement

  Link to comment from January 13, 2025

• Nice article Ken. You seem very well organized - I would expect nothing less. I had a question about your SS claiming strategy. You planned to claim at your wife's Full Retirement Age. (FRA).. I assume you are younger and that means you will be claiming before your FRA. In your response to Edmund below you said: "Once Lisa and I start taking Social Security in 2026, I’ll try to make sure I don’t exceed the earned income limit ($23,400 this year). " If you still have meaningful, remunerative work, would you consider postponing your claiming until you reach FRA? I think I remember a previous article where you explained that you had a unique SS claiming strategy recommended by Open SS. This reminded me of a situation at work. I had a physicist with a unique specialty in atmospheric scintillation and its impact on RF communication from space. he retired well before FRA, but wanted to continue to consult. He calculated to the penny the hourly wage he wanted, above his pre-retirement salary, to make up for lost SS benefits due to the earnings limitation. It was an interesting negotiation and a challenge to deal with HR and finance to get them to approve an "off-nominal" wage for a unique skill.

  Post: Retirement Realignment by Ken Cutler

  Link to comment from January 13, 2025

• I'm not an actuary, but I've spoken to a few, and pensions a re tricky things. Not every pension fund is set up the same. some, like my former employer, use IRS 417e defined rates for phased period of time. My brother-in-laws pension used a 10-year treasury rate for calculating lump sums. And I've seen interesting rules related to early retirement withdrawals, and various subsidies that come with them. The upshot is you need to look at the pension plan specifics to understand how it works. I can say with certainty, that in late 2022 several former colleagues of mine were able to take a lump sump, and then purchase a commercially available annuity with an equivalent terms to what their monthly pension would have been, for about 70% of the lump sum value. Ten year Treasury rates went from about 0.9% to 4% during 2022, and then closer to 5% for parts of 2023. As I said, we would need the details of the plan, and timing of the termination and annuity purchase to

  Post: Obsessed with a financial stress-less retirement

  Link to comment from January 13, 2025

• Not necessarily. Pension calculations can have some interesting nuances. I wrote about this unique situation in late November, 2022. Pension plans can define how often they update the interest rates they use to calculate lump sums. Plans may use the calendar year, meaning they only update the rates at the beginning of their. This happened in 2022 at my old employer. Interest rates rose sharply that year, but the pension admin was still using much lower rates. For my old employer, lump sum amounts would have dropped some 25% from December 2022 to January 2023. Insurance companies use current rates. This led to a rare case where it made sense to take a lump sum from the pension, and then purchase an annuity. Several of my former colleagues did exactly what Dan did. They were able to replicate their monthly pension with about 70% of the lumps sum amount. It would be interesting to understand the conditions that produced a "2 for 1" bargain in Dan's case.

  Post: Obsessed with a financial stress-less retirement

  Link to comment from January 13, 2025

• Michael1, thanks for emphasizing the more important aspect of the post. We bought our first vacation home at the NJ Shore 8 months before Hurricane Sandy. I remember the feeling of concern, not knowing what to expect. It was a week before we were allowed on the island to inspect the property. We were very lucky, we had no damage. I can't imagine the tremendous angst and pain these families are feeling.

  Post: Would You Rebuild?

  Link to comment from January 12, 2025