Short notes on things nobody explains properly.

What a cap actually costs you

People hear “your growth is capped at 9%” and picture losing 13 points in a year the index returns 22. That happens, and it stings. But it's the wrong frame, because you're not comparing against a year you were fully invested — you're comparing against a strategy where the down years don't take anything from you either.

The honest way to evaluate it is over a full cycle, including the bad years, and against the specific alternative you'd otherwise use. Against a savings account, the trade usually looks good. Against a low-cost index fund you'd genuinely hold through a 35% drawdown without flinching, it often doesn't. Most people are somewhere in between, and the question is which one you actually are — not which one you'd like to be.

How to read an illustration without being fooled by it

An illustration is a spreadsheet of projections, and it typically shows at least two columns: guaranteed and non-guaranteed. The non-guaranteed column is the one that looks impressive. It assumes the carrier keeps crediting at current rates for decades.

Read the guaranteed column first. That's the contractual floor — what you get if everything goes as badly as it's allowed to go. If the guaranteed column is something you could live with, the projected column is upside. If the guaranteed column horrifies you, no amount of optimism in the other column should fix that.

Then ask two questions: what are the guaranteed minimum cap and participation rates, and what happens if I stop paying in year four? An agent who answers both without flinching is one worth continuing with.

The retirement conversation teachers never get

Public school employees tend to feel covered, because there's a pension, and a pension sounds like a complete answer. Sometimes it is. Often it's most of an answer with a gap nobody ever measured.

The gap isn't mysterious. It's the difference between what the benefit will actually pay in dollars and what your household actually spends. That's a twenty-minute exercise with a pension statement and a bank statement, and almost nobody does it until they're within a few years of the date, at which point the options have narrowed considerably.

You don't need to buy anything to do that exercise. You just need to do it earlier than most people do. More on this here.