JOE FACER; Not Just Another Rennaissance Man... A RETIRED ONE

Misc Important 401a Stuff, Important Links, E Mail To Me, Etc...

Hey! What's With All These Pages On The Defined Benefit and 401a Retirement Plan, Anyway?
342 Pension and 401a Defined Contribution Charts
Downloadable 401a Worksheet
My 401a Worksheets
My 401 Worksheets 2004, 2005, 2006, 2007,2008
Misc Important 401a Stuff, Important Links, E Mail To Me, Etc...
This Ain't My First Dance...


     The quick and dirty read of this is that when a company such as United or GM declares bankruptcy and offloads their pension liabilities on the PBGC, the pensioner's income gets immediately dropped to a capped amount. For a fitter like me, figure a 50% reduction in the defined benefit is pretty close and 100% reduction in any non cash benefit .  If a pension fund were to fail under inadequate funding without a bankruptcy, the pension fund would have had to cut down future benefits to apply the cash flow to meet existing reduced benefits and then failed to meet them for the PBGC to step in. The PBGC would maintain that level,  less nonmonetary benefits such as health coverages, through loans to the pension plan... LOANS,  NOT GRANTS, MIND YOU!  Think of it as fire insurance with a 50% deductable, you put the fire out before anybody shows up, no coverage of contents, you have to pay the living expenses back once you've rebuilt, and you rebuild on your dime. And the insurance company watches over your family finances in the meantime.  Pretty cold comfort and piss poor just gotta make sure you never need to use it.  

"The market always comes back."  "Hold on for the long run."  "Just be patient, you'll do OK"  "Ya gotta be in the market at all times to do well ."  "You can't time the market."  "If you sell now, you'll be out when the market turns up." "Chasing performance is a sure way to underperform."  "If you sell now,  you'll lock in the losses."  "Let the professionals make the decisions, they're a lot smarter than you are."
Above are a lot of the slogans and homilys given to you to to justify sticking with an investment decision, regardless of how poorly it may do. The table below gives you a damn good set of reasons to sell out of a position that goes bad as quickly as you can determine that it isn't working for you. Think of the 2000 to 2002 losses to my pension plans shown on the CHARTS page.  A 40% loss over two years requires a 66% gain to get back to even. Assuming the fund resumes its prior rate of appreciation, that could require 4 to 6 years just to get back to where you were 6 to 8 years prior.  Don't fall in the hole in the first place and you won't spend the rest of your life climbing out....

Courtesy of Dan Fitzpatrick and

Important  Links


        The Defined Contribution Fund management site.

        A lotta good information.

The Big Picture

        Check out the Apprenticed Investor Series. There are diamonds lying on the ground if you just look.

          To Sell Or Not To Sell.... That Is The Question....

          Pretty charts in pretty colors.....

          Type The Fund Name Or Symbol In The Quote Box

This is my 401a BLOG, the COFGBLOG. Click Here...

     For those not familiar with this part of the Internet,  a blog is a WE(B log).  Think of it as an online diary/column/whatever.  This is where I try to lay it down so it stays there and you try to pick it up and run with it.  The pictures, charts, and tables on the site tell you something.  But a picture is only worth a thousand words.  And you can't communicate much about a complex subject in a thousand words.  So this is where I try to fix that.  I intend to post at least once a week,  by Sunday evening at the latest... or by Saturday midmorning if it goes the way I hope...  or whenever it happens if it goes that way. I'd bet on Sunday evening for the weekly account maintenance and more often when things get volatile...
An RSS reader makes the whole thing a lot easier to deal with....  You automatically pick up new posts to the blog,  including unexpected middle of the night/week stuff. That's what I'd do....


If you want to comment on this or request more information, use the form below for Email direct to me.  See ya at the Hall....

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