I officially signed up to be a Boeing pensioner, I think. Pensions may be something that has to be explained to young children in a generation or two. Maybe not. As of this week, years before I expected to begin receiving monthly payments, I clicked boxes and answered questions so that, about a decade before my plan, I will be receiving my Boeing pension. Optimizations based on conventional wisdom would suggest otherwise, but reality is more important. Working seven days a week at several jobs has not been sufficient for this ex-aerospace engineer to pay the bills. Important things are rarely done for only one reason, and that’s true here, too. The prominence of those other reasons wasn’t evident until after I hit confirm.
From 1980 to 1998 I was an engineer at The Boeing Company, a place where the The had to be capitalized. People within the company may appreciate the distinction between the titles: senior engineer, lead engineer, aerodynamic stability and control, flight systems, technical coordinator, customer engineer, etc. To people outside the aerospace industry, I was one of the people who help figure out how planes, rockets, and satellites fly or orbit; and how to deal with the incidents when things don’t go as planned. It was fascinating work, and I can fill hours of talks with properly sanitized anecdotes. The unsanitized anecdotes are saved for those who understand the jargon and realities of vehicles flying far faster and higher than evolution naturally allowed. In 1998 I quit, or retired, or left the company voluntarily during an auspicious opportunity. Retiring at 38 inspired others to inspire me to write my book about personal finance, Dream. Invest. Live.
I thought I was retired, labeled myself semi-retired, and was about to drop the semi- when my Triple Whammy negated the semi- and the -retired and threw me back to work. That transition has been chronicled in this blog, a long writing self-imposed writing assignment that has seen a transition from maybe having enough, to watching it fade away, to fighting to bring it back.
The fight’s been long, painful, unhealthy, and difficult – and is unresolved. My consulting and writing business has grown to within 17.5% of what I need to pay all of my bills including taxes, as long as I don’t spend much on repair or maintenance. Close is good, but I doubt the IRS will consider that sufficient if they’re the one bill left unpaid. There are an amazing array of potential projects, many of which have suggested hiring me for full-time employment – after they get their funding. There is an amazing potential within my portfolio, (check my semi-annual exercise), but the reality is that the companies’ news hasn’t been delivered. My savings are almost gone. My IRA is about 3% of what it was at its peak. My attempts at getting jobs are met with interest but not commitment. My house didn’t sell. The only source of that remaining 17.5% is from my pension that was designed to be accessed in a bit less than a decade from now. My bills can’t wait.
Personal finance is supposedly layers of math and logic, but emotions intrude because we are human. Many people tell me that they have enough money, but it’s locked up in an IRA or a house or some other investment. I understand the feeling. That feeling, however, is artificially induced by the penalty clauses or costs of accessing assets and incomes that are in our control. IRAs are meant to be used in your 60s (your specific age limit may vary), but they can be drawn upon by paying penalties. Houses and other assets can be sold, but you need to replace one housing solution with another. There is a middle ground between assuming assets and incomes aren’t available, and having free and easy access to everything. I’ve already spent much of my IRA while building my business, but it meant selling stock and then paying a penalty to pay my bills. The option was to be homeless and hungry, but with an IRA. I’ve tried selling my house, but the numbers suggest that staying where I am is cheaper than rent, while also holding onto an investment. I’ve delayed signing up for my retirement because of the penalties for accessing it early, but when left with only one reasonable choice choosing becomes easy.
To any Boeing ex-employees who are 55 or older, congratulate the company on making the process relatively simple. (Though I had to call their help line three times, and had to ignore two warning messages to complete the process.) The emotional hurdle was tougher. (Which is why I was glad to know someone else who got theirs early.)
Emotionally, receiving a pension carries imagery of old age, dependency, and a limited time offer. I balked for months because of that ingrained judgment. Money, wealth, income all carry emotional import that we as a society have infused in our culture. Money, wealth, and income are based on a notion of currency that is abstract that we created. I’ve spent four years trying to find sufficient income to sustain a very frugal lifestyle. The influence of emotional and societal judgments shrinks considerably when the list of choices essentially comes down to one. (There are those lottery tickets and risky stocks, but that’s nothing to base a plan on.)
As I filled out the forms and analyzed the options (I chose Accelerated Single, which sounds more like a lifestyle choice than a pension plan) I realized that accessing my pension now was comforting for more reasons than just paying my monthly expenses.
Every day I blog about “news for people who are eager and anxious about the future”.
(Pretending Not To Panic – my other main blog) Instabilities in our financial system convince me the financial world is due for a massive change. The assumptions behind my 40 year mortgage may be valid for year one, but are highly doubtful for year thirty nine. Waiting almost a decade for full maturity of my corporate pension may be waiting long enough for a fundamental shift to invalidate a supposedly secure commitment. Getting the money now is far more valuable than risking years of uncertainty for a small eventual increase. Besides, income now helps pay off double-digit credit card debt while waiting for my pension benefits to mature risks losses from inflation for the small price of a small effective annuity investment return.
I’m not advising anyone, except myself, to do anything. Personal finance is personal. I do suggest, however, that you check your assumptions about all of your assets and potential incomes. Are they really “locked up”, or were you just taught to think so? If you have more than enough, none of this may be an issue; but, considering that 1 in seven Americans are in poverty, at least some of them may have options that are more prominent than they imagine. Emotionally, I feel as if I capitulated to circumstances. Logically, however, I think I may have made one of my best decisions. Stay tuned. The first check supposedly arrives on April 1st, Fool’s Day and just in time for Tax Day. The story continues.