By the Numbers

I received a compliment at work a few weeks ago from a data scientist that the company had hired to help develop/refine some of our analytics, mostly because I understand concepts such as Standard Deviation.  I forget what was specifically said, but it was along the lines of "he really understands analytics", or something similar to senior leadership.  I took it as a compliment.  Mostly though, I am glad it was said privately to me.  I hate being singled out in group settings.  

Anyway, I have been thinking a lot about numbers recently.  Here's some examples (courtesy of some god-forsaken Google A.I. thing):

• Coffee Consumption - I am in the 23% of the U.S. population that does not drink coffee.
• Alcohol Consumption - I am in the 38% of the U.S. population that does not consume alcohol.
• Tobacco Products - I am in the 80% of the U.S. population that does not use tobacco.  I suspect the number is far lower for those of us who have never even tried a tobacco product (which is me).

One could also argue that I am in the 20% of the U.S. population that is no fun.  This is okay though.  

The real number I have been thinking more about though is how long before I retire?  Before anything else, I should note that I am privileged in that finances are not a major driver of this decision.  Ms. Rivers and I have worked with a financial advisor, and we are in better shape than most when it comes to being ready to self-select out of the full-time workforce.  Much of that is thanks to both of us "technically" being (non-consensual) early retirees of Prudential Financial, one of the few companies around that still provides (or provided, depending on one's perspective) good retirement benefits.  Included as well is the fact that we have a basic plan for healthcare coverage as we get older.  

For the record, I will be 61 years old in April.

What drives a decision to keep working for 3+ more years?  I would certainly get a larger Social Security benefit.  I would also be closer to Medicare eligibility.  Both prior statements assume that some god-forsaken group of politicians doesn't screw it up.  Anyway, those are nice, but not compelling arguments.  What I think is the bigger issue for me is one of mental stimulation.  As has been noted in these postings since 2008, I sometimes have the attention span of a brain-damaged gnat.  Will I have enough to do?  I am sure that early on I would, but what after, for example, most of the house projects are completed?  I could continue to work on a part-time basis; see below.  I will also add that I believe I am at a place professionally whereby I probably will have the opportunity to keep working full time for a few years to come.  Business is good, the company is growing, and they seem to tolerate me (see paragraph #1).

What drives a decision to only work for less than 3 more years?  This one is far simpler to understand:  As currently constructed, my professional life is bad for both my physical and mental health*.  Now I know that I can control parts of those things.  The reality is that I am hard-wired to not say no to things and to people.  Quite frankly though, I have far more work than I have time.  Physically, I have gained more weight over the past 4+ years than I am willing to confess to, almost entirely because I literally don't have the time at work to get up and even take a 15-minute walk. Wolfing down a microwaved lunch most days while reading emails isn't helping either. Mentally, I would say that I have been working at trying to maintain a better balance in my head relative to the importance of work in my life, but that's an on-going struggle, and I lose, often.  Coming home mentally spent is also not a great thing.

Noted above is the fact that I can and probably will work part-time in retirement, regardless of when that actually occurs.  I have some thoughts about that, but nothing definitive.  Mostly, this would have to be something I enjoy, and which won't prevent me from regaining a better balance for my physical and mental health.  

None of these musings are new for me; in fact, I have been thinking about this for a few years now.  The closer I get to age 62. the more important it seems to become.  On the quasi-philosophical side of things, there is the very important and real concept of death...as in I will die at some point.  It's the space between here and there though that matters the most.  How much of that time should be dedicated to a non-corporeal entity that would likely replace me a month after my passing?  I think/hope that the people in my life I care about the most would miss me for far longer than that.

Lastly, I will note that 2025 will be an important year for me in the forward-looking department.  Maybe it all comes down to this:  If I have a good 2025, I will work longer.  We shall see.  Regardless, I'd love to hear the perspectives of others on this topic. 

So, there you have it, a posting about numbers.  Well, it's actually more about a larger question of how much we truly owe to an employer (any employer) than it is anything else.  Things CAN change though.  Scratch that...things WILL change.  This is not a bad thing.

******

(*) I recognize that there are people who are struggling to find a job these days, stressful or otherwise, and my privilege extends to employment.  I am grateful to be employed, and I would hate the thought of having to look for a job at my age.  Age discrimination in employment is a significant issue in the United States today.  If anyone is reading this and would like my help in finding a job, even if it's as simple as reviewing a resume, please just let me know.

Reach the Beach

“Don’t waste the time. Time is the final currency, man. Not money, not power - it’s time.”

- David Crosby

I say, with no disrespect to the memory of the late David Crosby, that the whole money/power thing is an interesting sentiment when you have had money and power to begin with.  This noted, he was right, and  the older I get, the more I understand the point.  This is a good way to being today's travel post.

So it's thinking about time that I'm here outside of Ocean City, NJ for an extended weekend mini-vacation.  We spent yesterday on the Ocean City boardwalk in the morning, and then later in the day at Longport and Margate City for the late afternoon/evening.  About 12,500 steps into the day, and it seems like it was a long day.  But yet, in the true spirit of David Crosby, it also seemed to pass by quickly.  And I have been thinking a lot about time lately.  

One of the traits that Ms. Rivers and I share is a tendency towards being planful.  We try to think things through and do what's right for the longer term, the bigger picture if you will.  I think that a point of commonality between our very different upbringings is the fact that neither of us grew up in households where there was a lot of money, which probably play a role in the whole security/planful thing.  Nowhere is this more evident than when it comes to retirement planning.  

As I've likely (I am not 100% sure, and I'm too lazy to check...) said before, this is the part of our life when we can see retirement on the horizon.  Not imminent, but not far away either.  The good news is that the whole planful stuff means that we will be financially ready.  So says our financial advisor.  For most folks that would be a relief...and for me it mostly is.  However...and you knew a "however" was coming...I often wonder if I'm ready in other ways.

I will note that physically, I am something of a wreck.  A "hot mess" and the younger folks would say.  While I have a good job that makes use of my skills, it's pretty demanding on my time, and while in years past I could make time for exercise, that hasn't been happening for years now.  Between the extra weight and a very actively lived 58 years behind me, the parts are starting to show some wear.  The point of discernment for me is trying to understand just how much of this just comes with the territory (i.e., something like my arthritic right big toe), and how much of it is actually self-inflicted.  The former I can't do all that much about, but the latter?  I'm feeling some guilt about that part.  The trick, if you want to call it that, is turning a fairly useless feeling like guilt into some concrete actions.  So far, I'm not doing so well.  But I have time...or do I?

One of the reasons why I enjoy the beach, in addition to the childhood memories associate with Atlantic City vacations, is the fact that the ocean is this hunkering big-a$$ed reminder of how large the world truly is, and how small the machinations in my head probably are.  Someone with the gift of brevity would says that it provides perspective.  I personally think it's actually more than that, although I can't come with reasons to exactly say why.  The saltwater smell hitting my nostrils is a kind of gentle reminder to me of a world that surpasses my dismay at physically aging and fears of forgetting, at some point, how to tie my shoes.  

I try to think about things like this from a 95/5 perspective.  This means that if I can take away some deeper sense from this (or other) experiences, even if it's just a small thing, then it's a good thing.  On the other side of the coin, as a wise person I know would say "why can't you just have a good time Steve?".  Maybe that's the 5% this time around.  Suffice to say, the jury is still out in the enlightenment department.

As for Ocean City NJ, well I was here once a long time ago.  In addition to being a typical Jersey beach town, it's simply and impeccably clean.  I also appreciate the whole "no smoking anything" policy that keeps the boardwalk not smelling like much of Atlantic City these days (see THIS posting) i.e., what I image to be the odor of Snoop Dog's limo. 

Today brings a trek to the beach in Brigantine, a spot we enjoyed when we were last in Atlantic City.  There's also this hotdog/ice cream joint we found that calls our names.  Loudly, and robustly, I will add.  I'm hoping to also finish one of the books I brought with me.  Yes, this is what passes for fun.  And this is okay, by the way.

It's Not A Pension Plan

Just a quick clarification for the masses.  

Often times, when politicians (in particular) want to paint a rosy picture of the economy, they will point to the stock market and talk about employee's "401(k) Pension Plans" increasing in value.  Well call me a stickler for details, call me a cynic, and call me someone with many years working in the retirement plan business.  Just don't feed me that particular line, as it's simply not true.

The untrue part:  401(k) Plans are not "Pension" plans.  Technically, they are considered "cash or deferral arrangements" according to the Internal Revenue Code.  This means that they do not provide any guarantee of benefits of any sort; employees basically just get out of it what they put in, plus any employer contributions (which are not mandated), plus any investment gains.  Or minus any investment losses.  These contributions and investment results, if positive, are tax deferred until a later date.  Basically, the employee bears all of the risks.

The above means that if an employee doesn't voluntarily put away enough money, well, technically speaking, they are "screwed".

A true part:  401(k) Plans were never intended to be replacements for actual pension plans.  By way of definition, a true pension plan is one where an employee would work for "X" years and get a lifetime monthly payment, for example, of "Y dollars", based on their pay and years of service.   Basically, under a pension, the employer bears all of the risks. 

The vast majority of companies in the United States no longer offer true pension plans.  Most do offer 401(k) plans.

So how did we get into this pickle?  Call it another victim of an ever-increasing desire to reduce corporate expenses.  Basically, the tax code makes having a true pension plan unfavorable for all but a very small number of employers.  The details of why that is the case are out of scope for a blog posting, but if you want to read more, click on THIS LINK from Investopedia.com for more information.

A bottom line of sorts:  If you work for an employer with a true pension plan, well, that is terrific.  If you don't, and the employer offers a 401(k) (or 403b or 457) plan, then by all means participate and contribute as much as you possibly can.  Also, because these plans rely on you to make investment decisions, take advantage of any professional advice offered by your employer or your own financial advisor.

On the (Vacation) Road, Part 5 - Thinking About the Future & Past

Sandbridge Beach, Virginia

One of the topics that regularly comes up when Ms. Rivers and I take some time to get away is retirement.  More specifically, where do we want to live when we retire?  By way of background, while Ms. Rivers was born in Allentown, she grew up in Philadelphia.  I, on the other hand, was born and grew up in Scranton.  While we both are relatively happy living in Northeastern Pennsylvania now, we share a common goal in retirement:  Warmer weather during the winter months.

I can't speak for my wife, but I really don't like those desperately cold winter mornings, and I'm even less fond of snow.  I'm not looking to live in the tropics, mind you, just somewhere that doesn't regularly offer a morning in the teens in January.  Everything else is up for debate.

The good news in all of this is that all things considered, we'll likely have the means to move when we do eventually retire.  That's a blessing we know others may not enjoy, and for that, we are very thankful.  Timing is up in the air, but probably on the order of 10-12 years from now.  The question though is this:  To move where?  That's where Captain Analysis (a.k.a. Me) comes into his own.

I'll leave the squinting to you.  A few things are readily apparent from the analysis to date:

• Scranton has a very low crime rate an cost of living.  We're not getting that combination anywhere else.
• We want to still be within driving distance to our families.  Granted that might be difficult to predict, but we figure PA/MD/DE/VA is probably a good bet.
• Northeast PA, in general, has a down-right creepily low number of sunny days per year. No wonder alcoholism is such a problem.

In the end, how much of this is wishful thinking vs. reality?  Not sure, but I do know this:  We've both worked...and are working...hard, so whatever we do, it will be to thoroughly enjoy ourselves.  We've earned that much.  Yes, this is one of the many places my mind goes when I'm not filling it with work stuff.

In other news, we had the honor of visiting the battleship Wisconsin yesterday, taking a tour of the engine room and related workings.  It was incredible.  The fact that our sailors worked in these conditions says a lot about what service means in the United States.  We owe these sailors...and all who serve and have served...a debt of gratitude.  Here are a few pictures:

(bow)

(stern)

(Street view)

(Below deck, "Broadway")

(16" shell & VW Beetle...the same weight)

Finally, my late brother Chris was stationed in Norfolk during the first part of his service in the United States Navy.  Seeing sailors crossing the street made me think of him, imagining that he would have been in that same uniform, crossing that same street back in 1984-1985.  That felt oddly good to me.

Scranton - Fraud or Stupidity?

It was recently revealed that six Scranton municipal retirees have been receiving double pension payments.

You can read about it HERE.

According to the Scranton Times, the total of the overpayments exceeds $474,000.

Now how, you may ask, could this get any worse?  Well, this being Scranton city government, it actually does.  Again, according to the Scranton Times, one of the double payment recipients happens to be the wife of a gentleman who was, at the time the payments were authorized, president of the pension board.  Citation HERE.

Yes, apparently the president of the pension board wasn't aware that his own wife was receiving a double pension payment OR he was aware but yet didn't know that she was ineligible for the double payment.

Let those facts sink in for a moment.

Done pondering?

Here's the bottom line:  Either someone (or "ones") committed fraud in this case by misrepresenting the eligibility of these individuals OR this was a case of gross stupidity/extremely poor administration on the part of the plan administrators.  Either outcome speaks VOLUMES about the governance of the City of Scranton.

Regardless, there needs to be an investigation by an impartial law enforcement agency into this whole mess.  That could be the FBI or it could be the State Police.  What it shouldn't be is anyone connected with politics (including the county District Attorney's Office) or governance in northeastern Pennsylvania.  This is not a minor administrative issue by any means, especially when viewed against the backdrop of Scranton's extremely under-funded pension plans.  It also begs the following question:  What other "mistakes" have been made with regards to pension payments?

Is Scranton actually even capable of self-governance?

I'm Not Impressed (Gambling)

So, our politicians want us to be all proud that Pennsylvania is #1 in gambling revenue. Well excuse me if I'm NOT impressed.

Story link HERE.

Look, I think gambling is a basically a way to tax stupid people. I've said that before, as have others, do I don't claim it as an original thought. If you want to gamble, then please be my guest. Mind you the odds are better you will find more money laying on the street than you will ever winning in a casino, but so be it. I do know some folks who seem to enjoy the activity, so basically I don't care...from that perspective. I've played slot machines four times in my life. That's pretty much enough, as I know the house ALWAYS wins in the end. You see, in Pennsylvania, the state basically acts like a mafia protection racket for the gambling industry. Think about it: the state protects territories and gets a big share of the profits. I seem to recall seeing stuff like that on The Sopranos.

What I do care about though that our political leaders want us to think that this whole business is somehow great, good, noble, etc. Yes, I'm sure that the subliminal message here is "just think how much we would be in the hole if we didn't have gambling revenue", but I prefer to think that this is just another, more subtle, form of taxation to fund a bloated state budget. Put another way, gambling revenue has yet again forestalled the inevitable day of reckoning when politicians actually have to find ways to fund their promises in real time. See the pension disaster for a good example.

Wait, I have a thought. Here's an analogy for you: Gambling revenue is to Pennsylvania's budget as Methadone is to Heroin. Yes, it can help solve the addiction, but alone (without counseling and other forms of intervention) all it does is substitute one vice for another.

Our political leaders...in both ridiculous caucuses...have no interest in actually dealing with the root cause of Pennsylvania's budget problem, namely that the state simply spends too much money on the wrong things. Gambling revenue simply helps hide the mistake. A little bit.

A final thought. For all you moral up tights out there, if gambling revenue is okay, then how about we go for the big one and legalize prostitution too? That way we can beat Nevada all the way around. Hey, a vice is vice is vice. Do we really think gambling is that much more moral of an activity than prostitution? Hell, I'll take it one step further: legalized prostitution...with proper controls in place...is probably less harmful to society than the sale and use of tobacco products.

The True Story of Merrill Lynch & The WalMart 401(k) Plan

I've tried to stay away from "geeky pension shop-talk" in this blog, but I was pointed to an article earlier today that I want to pass along.

Forbes Article, Merrill Lynch & Walmart


If you have any interest in your own retirement income security specifically, the contradiction in terms that is WalMart, or just how greedy some folks can be, this is an interesting read.

I'm not a lawyer, but it's pretty damn clear to me that at a minimum, WalMart's 401(k) plan fiduciaries did not adequately carry-out their responsibilities under ERISA. Taking that for granted, this goes one of two ways:

1. The Passive Neglect & Stupidity Road - Under this scenario, WalMart's benefits people simply didn't care about the fees being charged, investment returns being earned or the impact that limited (& poor) investment choice had on plan participants. Failing to act in the best interests of plan participants is a violation of fiduciary responsibilities, but stupidity and neglect isn't exactly criminal behavior...if it was, 80% of the Pennsylvania Legislature would be in jail. Also, if this is the actual reason why things got so out of control for the WalMart 401(k) Plan, then it definitely paints a picture of a corporate culture that placed little-to-no value on the associates who work for the firm. To put this in context, I have had some administrative experience with my own employer's 401(k) plan and I can tell you definitively that all investment fees were actively scrutinized constantly to ensure that plan participants earned the maximum return possible. I've also worked with very small employers who have been exceptionally diligent in making sure that their $2 million dollar 401(k) plan had reasonable fees.
   
2. The Greasy Palm Road - Under this scenario, WalMart's benefit people actually knew that plan participants were being over-charged for investments and that this over-charging was consented to along with Merrill Lynch and third-party investment providers. Why? Perhaps Merrill Lynch concocted this arrangement as a way to seemingly eliminate any direct administrative costs for WalMart. This would be shocking in a plan of this size (note that the dollar value of the plan is seemingly large, until of course you consider the number of plan participants), but it would also fit nicely into the worst view of WalMart by it's critics, where the company is a profit machine that uses employees in the same way that it uses bathroom supplies ("buy'm cheap, use'm & then throw them away").
   

I don't see a third scenario here. Either they knew or they didn't. If they didn't they should have. Remember, WalMart has some of the most sophisticated financial reporting systems in the business world today. These are folks who know how to account for the pennies.

The moral of the story? Pay attention to what your employer tells you about your retirement benefits. Read the stuff they give you. If you don't understand what it says, ask to have it explained to you. If you don't understand the explanation, ask again and again and again until you do. If you have access to a (trusted) financial professional, ask them to review your retirement plan information. You have nothing to lose but a lot to gain.