Three and a half years later

Wow! I am still retired.

Alex graduated from one of the best high schools in the country with every honor imaginable, including valedictorian. He completed enough high school hours to graduate twice! He is a National AP scholar. He has enough college credit to start as a Sophomore. He was admitted to the University of Chicago, but they give no merit money (and very little need money). A quarter of a million dollars for an undergraduate education just does not compute.

He will be going to St. Olaf College in Northfield, MN. Great school, and they wanted him! They sent merit money. Yeah! It is a Christian based school, with an awesome music program and a great economics department. It is the right distance away. The students and faculty are real people. Great fit!

Alyssa did just as well in Middle School. She is clearly a (the) top student. She is continuing her dance. She is in the Senior performing company at her dance academy, and made the high school dance team, and the freshman show choir before she even graduated from middle school. She is "front row" in all of these. Wow! Good looking and Smart! She made a wise decision to not run cross-country, even tho she might have been their top runner. There are just not enough hours in the week.

All of this is expensive. Unless I win the lottery, I will run out of money in about two years.
We will see.

Current resume

I am currently a “professional volunteer.” I serve as the board president of His Hands Free Medical Clinic, head the New Covenant Stephen Ministry leadership team, lead the Trekker’s ABF Missions team, serve as treasurer/ bookkeeper for the Cedar Rapids Serve-the-City organization, and coordinate the recording of Sunday services at New Covenant. I am a member of the Ignite! Team. I set-up and operate the lighting system at New Covenant on a rotating schedule. I meet with an e-team and a prayer partner weekly.

I am retired from Rockwell-Collins, where I served for 28 years in various roles including Strategic Planning Manager, Capture Team Leader, and Program Manager. Prior to Rockwell, I was a Senior Financial Analyst at Xerox Corporation. Before that, I was a Captain in the US Air Force, serving as a pilot in T-41, T-37, T-38, and EC-47 aircraft and Instructor/Flight Examiner/Aircraft Commander in C-141 aircraft. I completed one combat tour in Southeast Asia.

I have a Bachelor of Science in International Affairs/Economics from the USAF Academy, a Masters in Business Administration of Southern Illinois University at Edwardsville, and a Master of Arts in Management and Supervision from Central Michigan University. I am working on a Certificate of Non-Profit Management from Iowa State University Extension.

My wife Bobbie and I have two children. Our son Alex will graduate from Washington HS in May and our daughter Alyssa will graduate from McKinley MS in June. We have been attending New Covenant since 1999.

I am a member of the Linn County Association of Evangelicals and a life member of the USAF Academy Association of Graduates.

What has happened

I stopped working at the end of February 2004.

Then I took "terminal" vacation in March.

I retired on the first friday in April.

Since retirement checks arrive on the first of the month, I got no paychecks until May.

Some people wondered why I did that, instead of waiting until the end of April to retire, then collecting the vacation buy-out and getting the first retirement check immediately. Reason: IHTFP.

Every day is now different. I get to go on all of my kid's field trips and band trips and (very soon) show choir trips. I got to teach my son how to drive. I get to day-trade stocks full time. I get to study the Bible. I get to go to forums and seminars at the local colleges. I get to have lunch with my wife more than once a week. I get to do whatever God tells me to do. It's great!

Truth Question

If a man, standing in the forest, speaks...
is he still wrong?

Application Submitted!!!

YEAH! YEAH! YEAH!

I filled out all the paperwork. Bobbie and I went to the Credit Union over lunch and got the signatures witnessed and notarized. I returned to work and copied everything, filled out an envelope, and mailed the package (priority with tracing) to Seal Beach.

A MAJOR MILESTONE!!!

While Bobbie (my wife) and I were at lunch, she asked, "What is the first thing you will do?" Recognizing a trap when I see one, I said that I would clean out the office first, then do income taxes. That seemed to satisfy her. Then she asked if we should buy a second computer. She is nervous about what I will be doing...probably afraid that I will intrude on her space.

Excitement is building!! 17 work days remaining.

Formal Notice to My Supervisor

I finally spent the afternoon filling out the retirement paperwork. I have been avoiding this just like income tax returns. Read lots of complicated instructions, then fill out lots of forms.

I completed the form that notifies my supervisor and the local HR that I will be retiring and taking vacation prior to retirement. I got my supervisor to sign it and mailed it to HR. This is an other milestone. Retirement is becoming real.

Some pending items will delay the actual application until tomorrow:
I have to get two signatures from my wife. One has to be witnessed and one must be notarized. I also have to include a copy of a blank check for the direct deposit, even though I know the ABA and account number very well. I must include a copy of my birth certificate to prove my age. I must also include a copy of my wife's birth certificate and our marriage license, even though she will not be getting rights of survivorship.

18 work days remaining.

25 Workdays Remaining

The clock is really running out quickly now.

My supervisor is suddenly asking for a lot of work to be done ahead. "Prepare a schedule of planning events for the next year." "Prepare an outline for each planning presentation due for the next six months." They are getting nervous about my departure.

I had a zen moment over the weekend. My brother needs some court documents related to our father's estate from Texas. Ordinarily, I would make phone calls to locate the documents and send a check by mail and wait for two weeks. I realized that, if I wanted, I could get in my car and drive from Iowa to Texas, do the business, visit friends, and take my time doing it. WOW! What a new world I am facing!

Retirement Package Arrives!!!

The long-awaited retirement package has arrived. It is about an inch thick and requires that I fill out a lot of paperwork and submit documents, including my wife's birth certificate and our marriage license, even though we will not be selecting a survivorship options.

30 Workdays + 2 Hours

I was just formally cut out of a new task because I will not be around for any follow-on. It is being used as a familiarization exercise by my replacement. This is the first overt example of this.

I am, however, getting hit with a number of last minute analysis tasks. There are a lot of deadlines being set up for just-prior-to-my-departure.

I just briefed my next level director on the output of a consultant report, with my replacement present. They both knew that I had not read the consultant report on which I was briefing them, although I had helped them to prepare input data. I was able to give a coherent briefing, correctly, and to structure the description of the next level briefing (to the VPs) on the fly. It will be years before my replacement can do that.

Futility Is Rising

I had to go in to work yesterday [Saturday] to perform a totally meaningless calculation. Management did not like the trend lines from the last report, since they indicated a possible drop in market share. So...did they recognize that the unfavorable trend was well within the normal range of variation? No. They panicked. Did they try to fix the problem? No.

The decided to change the metric. We were not using the new metric because the "unknowns" are thrown out and they often exceed the number of the items counted. i.e. the expected error range is larger than the absolute value.

Pointy Haired Boss Nirvana!

"Never try to teach a pig to whistle. You waste your time and annoy the pig!"

This is a major factor in retirement decisions.

35 and Counting

People are beginning to react with surprise that I am still here. An amazing number of people are congratulating me on getting out.

A Milestone

I formally requested my retirement papers, via the internal web site. They will snail mail the paperwork within 15 days, along with a formal calculation of the monthly amount. My wife has to sign off on the [non] survivor option, since we will use some of the extra money to buy life insurance.

This really feels good. I have 36 work days remaining.

Why Retire?

This is a real no brainer. Even though I have been told repeatedly that I am doing a good job and that I have totally unique and valuable experience, my salary has been "redlined" for the past four years and my "incentive plan" has been cut below normal. When I asked why I got two responses: 1) "You make too much money." and 2) "You are not meeting expectations." When I asked what those expectations were (since I met all the objectives on my performance review) the answer was "I will let you know in two weeks." That answer was 13 months ago. The VP is still uable to articulate any expectations that I have not met.

The Board Chairman and CEO got a 17% raise this year. Employee raises this year will only average 2%. Based on my discussions with others, I suppose that CEO raise was included in the pool. Nationwide, job openings are exploding. People are about to leave this company in droves.

The Clock is Ticking

Not much going on related to my retirements. As stated below, I took the deal, even though they had sent a letter that said that it was not a good deal if one was planning to retire within 18 months. I took it anyway because: 1) I could use the money now [I was going to take a similar amount out of my IRA and pay the penalty] and 2) I don't trust them any further than I can toss a cat.

My clock is now down to 44 workdays. That equates to a February 27th last-work-day, followed by vacation, followed by an April 1st retirement. Even here they are getting shifty. They just changed the computer program that calculates retirement and it has a field that says my 85-point retirement is April 30th. If I actually run the calculator for a termination date of April 01, it shows that I get the full amount. The saga continues.

I Took the Deal

Hopefully, the check's in the mail!

Buy Out Deal

The company sent me a written offer to buy out a "long service plan."

The company had a long-standing offer to employees hired before 1982 and over age 55 to pay them 10 extra weeks of salary when they retire or voluntarily terminate. On Saturday, they sent an offer to buy out this plan. Actually, for me it will be a good deal, because I was planning to tap into my IRA this quarter to pay off some up-coming credit card bills (mostly for vacation trips). The amount is right to avoid tapping the IRA again this year.

The deal offers an immediate cash payout, with tax consequences, or a payout into a deferred savings plan (401K), with different tax consequences. The bad part of the deal is that the payout amount is discounted 9% per year from assumed retirement date. This has no impact on me, since I will be retiring in less than 6 months from now, but is a real rip-off for later retirees. The company claims that the 9% is their weighted average cost of capital. They are ignoring the fact that recent risk free investments pull in about 1%.

There is also a club involved. The offer states several times, some of them in bold-red letters, that the company can change or drop the underlying plan at any time. With these guys that means they WILL drop the plan in the very near future.

I will select the immediate cash payout. I need the money now. I have already max'ed out on FICA, so I avoid a 6% payout there. I avoid the 10% penalty on a withdrawl from the IRA. My tax rate in the future will be no worse than my current rate. So I will take the deal.

The Word is Out!

Well, the word is out that I am retiring. Based on detailed (day-by-day) calculations, I have 85 working days left. That means that the last work day will be the end of February and I will take vacation the month of March. Retirement is April 1st.

Evidently my retirement has been a subject in several higher level staff meetings. Mainly because they have already posted my job...two grade levels below mine and for about 1/2 the salary. Ha!

The Briefing

We got the briefing today. The Chairman briefed everyone who was a supervisor. I got to attend because I was DOA [Delgation of Authority] for my boss, who was out of town.

They did a very good job. It turns out that we are 800 million underfunded in the retirement plan. This is based on the actuarial table and expected investment returns. The company is kicking in 240 million to keep the plan solvent. They decided to keep the plan in place through September 2006. Good. That will let me retire in April 2003. In 2006. They will stop additional "earnings" for the defined benefit plan and start making additional payments to thee 401K plan.

This has two effects: 1) all of the investment risk shifts to the employees, and 2) so does the opportunity. The employees retirement funding will depend on how well the employee picks investments. Since I assume the retirement plan trustees have a fiduciary duty to protect assets, they have to invest in high grade (read low margin) investments. The employees can decide to take higher risks for greater returns.

Overall, they did a good job.

The Warning Letter

Over the past several years, there has been a real decline in the amount of medical coverage for both active and retired employees. We no longer have an effective medical plan.

Employees accrue 1/12th of their annual vacation earnings each month. The company expenses this vacation when earned and reverses the accrual when the vacation is taken. Unused vacation is thus a liability on the books. Until this spring, we could hold up to two years of vacation before accruals stop. The company suddenly changed this to 1.5 years and announced they would go to 1.0 years next spring. They originally gave 3 days notice, meaning most employees would be hit immediately. They relented and gave employees a month. Now they are asking, "Where are all the deadbeat employees?'' They are all taking their earned vacation before it is stolen.

On Thursday, the Chairman sent an email to all employees, telling them that the retirement plan was suddenly a half-billion dollar underfunded and that the company could no longer afford to meet its obligations. There will be a change to the retirement plan and to the entire benefit package. This underfunding occured because of the looting of the fund mentioned in the previous post and because they had been using 11% as the projected investment return for purposes of determining the level of funding.

Warren Buffet said that a 11% investment rate was legal, improper, a flagrant deception, and a misrepresentation. He was right.

On Thursday, we will find out the details of the changes. This will determine when I retire.

Background

I have worked for a major aerospace company since 1977. When I started, the company offered an 85-point retirement. That means that I can get full retirement benefits [about 50% of current pay] when I reach 85 points. Points are defined as age plus years of service (rounded up). Benefits are considered "earned" starting at about 5 years of service. No one can collect benefits before age 55.

The effect is that earned retirement doubles overnight as you reach 85 points.

In the 1980's, the company decided that this was too lucrative, so they changed the deal to some other plan. Having some morals [and trying to avoid lawsuits], they grandfathered the old plan for current employees [me] and applied the new plan to new employees.

Around this time the retirement fund was doing really well. Large government contracts were funding big bucks for the plan, interest rates were high and any fool could get a good return on investments. The board of directors decided that they could take "excess' money out of the plan, since they put it in, and record it as profit [paying tax on it.] This was quasi-legal at the time. Shortly thereafter, Congress figured out that this practice greatly increased the risk of future bankruptcy of retirement plans, which the public coffers would have to pay for. Congress passed legislation to make this practice illegal. While this law did not stop companies from looting the retirement plans, it did make it much, much harder. Now, they must generally terminate a plan to get the money out.

As time went on, the company was split up. Parts were sold to other companies, most parts were spun off into new stand alone companies. The retirement plans were split up by some arcane formula. Retirees and potential retirees were assigned to companies. [My wife, who used to work for the company, will draw a small retirement from Boeing when she reaches age 55. She has never worked for Boeing, who bought part of the company, a day in her life.]

Over the years, the company has made several changes to the retirement plans. They used to offer full medical benefits to retirees. Now the premiums to be paid by the company have been capped. They have slowed the rate of retirement "earnings". They have always been careful to state that the plan can be changed at any time. When they did the final spin off of the current company, they stated that they would only protect the current plan through FY2003, which ends with September.