Old Pensions and Confederate Money

  • Last week an unexpected event reminded me of a couple of important facts. Let me tell you the story.

     

    Mrs. Dollar Stretcher was going through some old papers when she found an annuity contract from 1986. That was the year that I left Smith Barney where I had worked as a stock broker. At the time they had a pension plan. As a separated employee I was given an annuity that would begin paying out when I reached age 65 in the amount of $31 per month.

     

    Here we are 30+ years later and I'm nearing the point where I could collect the annuity. My wife joked that it's a good thing that annuity won't be our only income! And, she's right. What you can buy with that amount is limited now and will become even more limited a few years from now as inflation raises prices.

     

    I was also reminded of something else from those Smith Barney years. We had an established, successful broker in the office. On his wall was a framed Confederate $100 bill. I asked him about it. Here's what he told me. That the bill had only a small value as a collectible. In fact, over the last 120 years it had earned negative interest. But if it were northern currency and had been put away for 120 years at 4% interest per year it would be worth over $11,000!

     

    He said that reminded him that making good investment decisions was important. I completely agree. Saving money is only the start. Letting compound interest grow your savings is the next step. How much it earns each year is often a function of your financial adviser and their recommendations.

     

    You're probably wondering what I'll do with the $31 each month that I'll be collecting. I'm not really sure. But I do know that I wish that I had been given a lump sum 30 years ago that could have grown to something substantial today. Had that been the case what I'd do with the money would be a much more interesting question!

     

    Keep on Stretching those Dollars!
    Gary


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