Know Your Pension|Grumpus Maximus - a podcast by Cody of Fly to FI and Justin aka Saving Sherpa
from 2020-08-04T11:28:52
Today's episode features Grumpus Maximus, author of The Golden Albatross and creator of the Grumpus Maximus website.
Grumpus was three years away from a pension when he had a breakdown.This pushed him to gather all the information he could on his pension to choose on staying or going.
Ultimately, he stayed and from then on became focused on teaching others how to understand and utilize their own pension plans.Listen, learn, and let us know what you think about this awesome episode!
Episode SummaryGrumpus'Beginnings
In the spring of 2016, he suffered a mental breakdownThis was while serving in the military
He was only 3 yrs from a pensionThis made him do a lot of investigating into his pension
He gives people advice on how to balance mental health and personal finance decisionsWe also talk about how to decide when to stop chasing the pension
This is important because there's often such a long time to earn the pension
Varieties of PensionsGrumpus highlights the vast differences in pensions
These differences make them more or less valuableDifferences include healthcare and inflation adjustment
One thing to look out for is how well funded the pension isIf it is only 50% funded, then it could be a riskier and less attractive pension
What is a Pension?Generally, it's some percentage of money based on your salary that you receive forever
You might have to work X number of years and at that point, you're fully vested
Some allow you to ramp up your pensions vs all or nothingThink partial vs cliff vesting
The main reason for a pension is for retentionIf you're ready to leave, they may offer you a lump sum
It's important to consider tax implications and how much value you're giving up
Grumpus also highlights that all plans must offer survivor benefitsThis is where your spouse or dependent would get a part of your pension after your death
Rely Only on Your Pension?Simply put, you shouldn't only rely on your pension
The closer you get to vesting, the more you can assume you'll have it
You also need to study how likely your pension is to actually existThis is on top of understanding how likely you'll be able to handle a single job for 20-30 years
Grumpus Moves AbroadHe moved to New Zealand and enjoying the conversion rate
We then discuss how the pension is taxed based on state/country you live inGrumpus is a big fan of the range of activities available in New Zealand
Cody couldn't agree more!
Key TakeawaysKnow Your Pension: The pension system isn't as simple as we thought, so study your specifics
The future is uncertain: At times we don't take action because we're pessimistic but then, unfortunately, we make future assumptions based on overly optimistic projections
Call to ActionStudy your pension! Even if you don't have a pension, chances are that you or your spouse has some type of benefits. Really dig in to make sure you fully understand and maximize those benefits.
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