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Jonathan’s Parting Thoughts: No. 9

Jonathan Clements  |  Jul 3, 2026

"May you rest in Peace Jonathan. Right on with that advice, pretty much what Buffett says also. And for me, I am 85% Index Stocks, and 15% cash, no bonds needed."
- William Dorner
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Widow Tax

ArticleJohn Urban  |  Jul 25, 2026

THE WIDOW TAX is sold to the wrong households. It gets pitched to affluent couples as the reason to convert to a Roth or buy life insurance. The pitch says that when one spouse dies, the survivor files single, lands in a higher bracket, and gets clobbered. I ran the numbers for three couples at three incomes, and at the comfortable end the widow tax often costs nothing, or even less than nothing. The real cost lands lower down, on households nobody is selling anything to. What follows uses 2026 federal figures to show what the widow tax actually does in dollars, not in scary percentage points. The pattern runs opposite to the marketing. The higher your income, the smaller the hit, and the lower you go, the more it bites. Three Things Move When the first spouse dies, three things change, and they get bundled under one frightening label. One Social Security check stops, and a pension may shrink or end. That is lost income, and it is usually the largest of the three. It is not a tax. Spending shifts as well. The survivor pays one Medicare premium instead of two, but the mortgage still comes out of the same account. The third change is the only one the tax code causes: narrower single brackets, a smaller standard deduction and lower thresholds for the Medicare surcharge. The widow tax is that third piece alone, and the three households below measure how big it really is. The Affluent Couple Both spouses are over 65. Their income is about $360,000: $80,000 from Social Security, $210,000 from a pension and required minimum distributions, plus $30,000 in qualified dividends and $40,000 in long-term gains. They sit in the 24% bracket, and both already pay the Medicare surcharge. One spouse dies. The survivor keeps the larger Social Security check and most of the other income, landing at roughly $308,000. As a couple, they paid about $53,900 in federal income tax and a Medicare surcharge of about $9,240. As a single filer, the survivor pays about $55,000 in federal tax and a surcharge of about $6,355. The effective rate rises from 15.7% to 18.7%, which is the headline people remember. But the federal tax barely moves, up only about $1,100, because the survivor has less income to tax. The Medicare surcharge actually falls about $2,900, because two enrollees in the couple's joint tier cost more than one survivor a tier above. Net it all out, and the survivor pays about $1,800 a year less than the couple did. The rate went up, and the dollars went down. At the high end, the widow tax measured in money hands back a small refund. This is why the Roth conversion pitch aimed at comfortable couples misfires. If converting to Roth would cut the survivor's future taxable income without cutting the couple's lifestyle, the converted money was surplus. Surplus is money the survivor never needed to replace. Edward McQuarrie, a finance professor emeritus at Santa Clara University, made a version of this argument in a 2023 paper. He found the dollar hit inconsequential for affluent couples, and located any real cost lower down, where the Social Security torpedo bites. Where It Actually Bites Drop down to a couple with $180,000 of income: $60,000 from Social Security and $120,000 from a pension and required minimum distributions, all ordinary income. Both are over 65. The couple files jointly at $180,000; the survivor files single at about $150,000. As a couple, they paid about $17,148 in federal tax and no Medicare surcharge. The survivor pays about $22,737 in federal tax and a new surcharge of about $2,885. The federal tax rises about $5,600, and a surprising chunk of that comes from the collapse of the new $6,000 senior deduction, which phases out against a lower income threshold for singles. Then the survivor crosses into a Medicare surcharge tier the couple never paid. The total cost of widowhood here is roughly $8,500 a year, set against a $30,000 income loss. This is the one band where both the dollars and the rate move the wrong way. Now take a couple with $90,000 of income: $38,500 from Social Security, about the national average for two retired spouses, plus $51,500 from a pension and distributions. The survivor keeps the larger Social Security check and the full pension, landing at $73,500. As a couple, they paid about $3,433 in federal tax, at an effective rate of 3.8%. The survivor pays about $5,278, at an effective rate of 7.2%. There's no Medicare surcharge at this income, and there never will be. But the survivor's effective rate nearly doubles, because more of the Social Security benefit becomes taxable, up to the 85% ceiling, when the single thresholds replace the joint ones. The added tax is about $1,845, and the lost income is $16,500. Real money for a household least able to absorb it. It doubles the effective rate, and it hurts.  Read the three together and the widow tax points the wrong way from the marketing. At $360,000 it costs less than nothing, roughly a $1,800 annual saving. At $180,000 it costs about $8,500. At $90,000 it costs about $1,850, but the effective rate doubles. The affluent couples being sold protection don't need it. The middle couples who feel the sting are not being sold anything, and they're the ones for whom a few thousand dollars a year actually constrains a life. The tax code has three different mechanisms, and which one finds you depends almost entirely on your income. At the top, the Medicare surcharge does the work, and it falls. In the middle, the surcharge appears from zero. At the bottom, the Social Security torpedo raises the taxability of the benefit from 75% to 85%. The mechanism changes with the income, and so does the household's ability to absorb the hit. Plan Ahead This is where the widow tax conversation usually stops, and where I think it should start. The moves most likely to leave a survivor better off are the ones you make years before, and they help whether or not the widow tax ever bites. Converting traditional IRA money to Roth over several years before retirement smooths your taxable income. It lowers the required minimum distributions that will later push a single filer into higher brackets. It can also keep a survivor under a Medicare surcharge tier the couple never worried about. Drawing accounts in a sensible order, spending down the right buckets first, reduces the future tax base that a single bracket structure will tax more steeply. Managing required distributions as they grow, rather than letting them balloon off a rising balance, limits the single bracket exposure that builds across a long widowhood. A more tax-efficient bequest helps the people who inherit what is left. None of that is widow rescue. It is good multi-year planning that happens to compound in the survivor's favor. The widow tax is one input to that planning, not the reason for it. The reason is that the year your spouse dies is the worst possible year to be making financial decisions, and the more of those decisions you have already made, the fewer you hand to someone who is grieving. You can do a rough version of this at your own kitchen table, and you should, ideally long before you need to. Estimate the survivor's income after the smaller Social Security check and any pension change, then estimate the survivor's spending from your actual budget, not a generic rule of thumb. Subtract. If reliable after-tax income still supports the life the survivor wants, with margin, the tax rate was never the thing to worry about. Then project the survivor's federal tax, the net investment income tax where it applies and the Medicare surcharge as a single filer, and compare it to the couple. Keep the tax separate from the lost income, so you can see what the tax code actually did. Sometimes, as the affluent couple shows, it does you a small favor. Only then does a planning move earn a look, and only if you can answer what it costs today, what it might save later, who benefits and what has to come true for it to work. The widow tax is real, but it isn't the catastrophe it's sold as. At higher incomes it's not a cost at all. Lower down it is a real cost, and the lower you go, the more it's worth measuring, because the households it constrains have the least margin to spare. The planning that matters most is the kind you do years ahead, smoothing income, holding down future distributions, managing the surcharge tiers and putting the estate in order. Do that, and you've done right by your survivor, for reasons that have little to do with fear and a great deal to do with care. You'll have done it in the years when you still had the time, and the clarity, to do it well. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
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FIFA Financials

R Quinn  |  Jul 19, 2026

"OK, here is my story. Soccer not so much. Chicago Cubs, yes. I left Chicago in May of 2016 to move to TX. My Dad lived to be 101 never was able to see the Cubs win the World Series. That year as I lived in TX, the Cubs were destined to get to the World Series and of course I was skeptical. We wanted to go to a World Series game, but could not wait. Flew back to Chicago for game 6 of the playoffs, and it turned out to be PERFECT. With my Son and Son-in-law we went to see the Cubs shutout the LA Dodgers 5-0 on October 22, 2023. That trip cost $1700, but tickets like $200 each, experience and excitement that will last a lifetime. Maybe my Dad and I were the curse, because within a couple of months moving to TX, the Cubs won the World Series. So happy we went back to see a critical game."
- William Dorner
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Market Indicators

ArticleAdam M. Grossman  |  Jul 25, 2026

WHEN IT COMES to financial decisions, many investors subscribe to an approach known as evidence-based investing. The idea, as the name suggests, is to base decisions, whenever possible, on data rather than on intuition or other informal methods. This sounds logical. It isn’t perfect, though. Economic and financial indicators have weaknesses which are important to be aware of.  Consider, for example, the Cyclically-Adjusted Price-to-Earnings, or CAPE, ratio, developed by Robert Shiller, a Yale professor and Nobel laureate, along with a colleague. Owing to its pedigree, the CAPE is highly respected. And a study by the Vanguard Group found that the CAPE had the strongest ability to predict market returns among fifteen different metrics it tested. For these reasons, many view it as the gold standard for stock market valuation. But how accurate has it been?  For years, the CAPE ratio has been flashing red. Since 2018, in fact, it’s been more elevated than it was at the peak in 1929, just before the crash. It seems to be indicating extreme risk. And yet, the market has continued to move higher with only temporary setbacks, defying the CAPE’s warnings. Even Shiller himself has acknowledged that the CAPE’s predictive abilities can fall short. In 2021, he made this seemingly contradictory statement in an opinion piece: “The stock market is already quite expensive,” he wrote, “But it is also true that stock prices are fairly reasonable right now.” Here’s how he explained this seeming contradiction: While the stock market at the time was expensive by historical standards, he noted that investors should never look at any one metric in a vacuum. Investments need to be considered in comparison to other available options. On that basis, he said, stocks were not expensive, because bonds at the time were also expensive. Recognizing how the CAPE can register misleading readings under certain conditions, Shiller and a colleague have since developed a modified version of the CAPE called the Excess CAPE Yield. This new metric helps investors compare the prospective relative returns of stocks and bonds. Shiller’s message, in other words: The original CAPE ratio on its own shouldn’t be seen as conclusive. Another well-respected metric that’s stumbled in recent years is the Sahm rule. In general terms, this rule says that when the unemployment rate begins to increase at a particular rate, a recession is likely. In back-testing, it’s been shown to be remarkably accurate. Since 1959, it would have generated just two false positives. A few years ago, however, the Sahm rule threshold was breached, theoretically indicating a recession. But Claudia Sahm, the rule’s creator, was quick to explain why investors shouldn’t be nervous. “The Sahm rule is likely overstating the labor market's weakening due to unusual shifts in labor supply caused by the pandemic and immigration,” she wrote. And in the years since, as Sahm guessed, the economy and the stock market have indeed avoided recession. The upshot: Economic indicators may work—and even work reliably—for a period of time, but then break down when something about the economy changes in a fundamental or unique way, as occurred in the wake of Covid.  Economic indicators carry another fundamental flaw: In some cases, an indicator might be correct in its prediction but less than accurate in its timing. It might tell us what’s likely to happen, in other words, but won’t tell us when that event is expected to occur. Probably the most famous occurrence along these lines was in 1996, when Alan Greenspan, then the chair of the Federal Reserve, proclaimed that the stock market was exhibiting “irrational exuberance.” Greenspan turned out to be absolutely right: A bubble was forming in the market, valuations were irrational and a crash was coming. But he didn’t get the timing right. The crash that ultimately occurred didn’t arrive until early 2000—more than three years after he issued his warning. And in those intervening three years, the market more than doubled. Investors who got more cautious in response to the initial warning would have missed out on significant gains. Along the same lines, consider what occurred with the pandemic. When Covid appeared in 2020, it seemed to arrive completely out of left field with no warning. The reality, though, is that certain experts did have pandemic risk on their radar. A 2019 risk assessment by the Federal Emergency Management Agency (FEMA) highlighted the risk of a pandemic among a short list of concerns. The problem, though, was that the report was vague, describing a risk but without any indication when it might occur. It was like a clock with no hands. It was because of examples like this that the fund manager Peter Lynch has said, “It’s futile to predict the economy, interest rates, and the stock market...If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.” That’s humorous, but where does that leave us? On the one hand, we know better than to consult storefront psychics. But economic indicators aren’t terribly reliable either. Investor Howard Marks offers a helpful answer. In his book Mastering the Market Cycle, Marks offers this suggestion: Imagine, he says, a jar filled with a mix of balls of various different colors. No one can tell with the naked eye how many there are of each. But if you can at least have a sense of the mix, that can be helpful. By the same token, no economic indicator should be seen as conclusive, but taken together, they may provide a sense of where things stand. What does this mean in practical terms? Suppose, for example, you’re considering rebalancing your portfolio and wondering how aggressive to be in reducing risk. You could use Marks’s guideline in this case. If the market seems high, you might be a little quicker to reduce risk. But at the same time, we should always keep in mind the “irrational exuberance” episode as a cautionary tale. It’s a reminder to never veer too far in any one direction. As I’ve suggested before, a center-lane approach often represents the best path forward.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.  
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Can we be completely safe?

Ben Rodriguez  |  Dec 17, 2025

"I found the comments to date in reply to Regulatory Notice 26-02 where FINRA requested comment on proposed changes to help member firms protect senior investors from financial exploitation and all investors from fraud informative to me. My take, in a nutshell, is the current tools at some brokers have become inadequate to protect investors from ACATS fraud and their own self regulating body, FINRA, is striving to establish adequate tools to allow investors to protect themself."
- William Perry
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Buying a car in retirement

Julie C  |  Jul 11, 2026

"Julie, what happened was this: I was actually shopping for an SUV and was at the dealership test driving yet another one when my husband suggested I test drive the Camry. I relented and liked it. The next day after research, the salesperson wrote up the numbers and I signed and talked to Finance and was good to go. When I got home, I did an online search to send a link to a family member and lo and behold, the online price was $3000 less. I called and they (amazingly) apologized and rewrote the agreement - claiming an error was made by the internet team. If I had searched on line while I was originally sitting in front of the salesperson, I would've have found it. I was just lucky I wanted to share my purchase with my sister!"
- joanm114
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One Person’s Luxury, Another’s Necessity

Mark Crothers  |  Jul 21, 2026

"I will admit I haven't read all these comments, but I was struck by both the friend and the author recognizing the place that activiy-related socializing held for them. I think it is easy to think that our social needs should come from "friendships" that somehow magically develop or that we have had forever. But as I have retired, ended caregiving when my husband died, and am now experiencing a retired life on my own, as well as having relocated, I have come to value the socializing that occurs in all kinds of situations. Whether connections develop because of an activity, or whether it is just passing connections at an event, etc., we humans need that link to others, and we need to value that and focus on how we make that happen, to whatever degree, above all. It will keep us able to be alone much of the time in our lives, but happy, and mentally healthy, because we have a variety of connections."
- Wendy Holm
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Fear of the Unknown…

gnussen623  |  Jul 22, 2026

"Without reading the comments I wanted to respond. I would find something that you are passionate about and see if there is a way you can offer your skills and expertise by volunteering."
- Nick Politakis
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IRMAA & late filing of tax returns

Danbo  |  Jul 15, 2026

"William, your analysis is helpful."
- Danbo
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Go While You Still Can

DavidHLancaster  |  Jul 22, 2026

"Health issues have stopped our travel. I miss traveling and there are a few places on the bucket list we will never see, but the good news is we traveled to 45 countries and all 50 states before age caught up with us. Once you retire, putting off what you really want to do is not a good idea. No matter what, the future is limited. We started traveling the month after I retired. To Russia that time. We have been to Ukraine, Israel, all of Europe, Denmark and Sweden, Argentina, walked with Penguins on the Falkland Islands and more. No matter what you want to do, do it sooner than later."
- R Quinn
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Costa Rica: The Richest Man On The River

Andrew Clements  |  Jul 22, 2026

"Bob, thank you so much for sharing this information and for taking the time to read my post."
- Andrew Clements
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A discussion on health insurance, premiums, profits and such- a 50 year perspective most people don’t want to accept

R Quinn  |  Jul 15, 2026

"Dick, could you please comment on Mark Cuban's effort to lower drug prices with his Cost Plus Drug Company? I see with Part D coverage selecting a pharmacy such as CVS is often less helpful in getting a prescription filled (very expensive that is!) but one can fill it with MCCPDC at a VERY reasonable cost outside the Part D coverage. He talks about pharmacy benefit managers and their control of the system. Perhaps you would complain for once?"
- V Saraf
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Jonathan’s Parting Thoughts: No. 9

Jonathan Clements  |  Jul 3, 2026

"May you rest in Peace Jonathan. Right on with that advice, pretty much what Buffett says also. And for me, I am 85% Index Stocks, and 15% cash, no bonds needed."
- William Dorner
Read more »

Widow Tax

ArticleJohn Urban  |  Jul 25, 2026

THE WIDOW TAX is sold to the wrong households. It gets pitched to affluent couples as the reason to convert to a Roth or buy life insurance. The pitch says that when one spouse dies, the survivor files single, lands in a higher bracket, and gets clobbered. I ran the numbers for three couples at three incomes, and at the comfortable end the widow tax often costs nothing, or even less than nothing. The real cost lands lower down, on households nobody is selling anything to. What follows uses 2026 federal figures to show what the widow tax actually does in dollars, not in scary percentage points. The pattern runs opposite to the marketing. The higher your income, the smaller the hit, and the lower you go, the more it bites. Three Things Move When the first spouse dies, three things change, and they get bundled under one frightening label. One Social Security check stops, and a pension may shrink or end. That is lost income, and it is usually the largest of the three. It is not a tax. Spending shifts as well. The survivor pays one Medicare premium instead of two, but the mortgage still comes out of the same account. The third change is the only one the tax code causes: narrower single brackets, a smaller standard deduction and lower thresholds for the Medicare surcharge. The widow tax is that third piece alone, and the three households below measure how big it really is. The Affluent Couple Both spouses are over 65. Their income is about $360,000: $80,000 from Social Security, $210,000 from a pension and required minimum distributions, plus $30,000 in qualified dividends and $40,000 in long-term gains. They sit in the 24% bracket, and both already pay the Medicare surcharge. One spouse dies. The survivor keeps the larger Social Security check and most of the other income, landing at roughly $308,000. As a couple, they paid about $53,900 in federal income tax and a Medicare surcharge of about $9,240. As a single filer, the survivor pays about $55,000 in federal tax and a surcharge of about $6,355. The effective rate rises from 15.7% to 18.7%, which is the headline people remember. But the federal tax barely moves, up only about $1,100, because the survivor has less income to tax. The Medicare surcharge actually falls about $2,900, because two enrollees in the couple's joint tier cost more than one survivor a tier above. Net it all out, and the survivor pays about $1,800 a year less than the couple did. The rate went up, and the dollars went down. At the high end, the widow tax measured in money hands back a small refund. This is why the Roth conversion pitch aimed at comfortable couples misfires. If converting to Roth would cut the survivor's future taxable income without cutting the couple's lifestyle, the converted money was surplus. Surplus is money the survivor never needed to replace. Edward McQuarrie, a finance professor emeritus at Santa Clara University, made a version of this argument in a 2023 paper. He found the dollar hit inconsequential for affluent couples, and located any real cost lower down, where the Social Security torpedo bites. Where It Actually Bites Drop down to a couple with $180,000 of income: $60,000 from Social Security and $120,000 from a pension and required minimum distributions, all ordinary income. Both are over 65. The couple files jointly at $180,000; the survivor files single at about $150,000. As a couple, they paid about $17,148 in federal tax and no Medicare surcharge. The survivor pays about $22,737 in federal tax and a new surcharge of about $2,885. The federal tax rises about $5,600, and a surprising chunk of that comes from the collapse of the new $6,000 senior deduction, which phases out against a lower income threshold for singles. Then the survivor crosses into a Medicare surcharge tier the couple never paid. The total cost of widowhood here is roughly $8,500 a year, set against a $30,000 income loss. This is the one band where both the dollars and the rate move the wrong way. Now take a couple with $90,000 of income: $38,500 from Social Security, about the national average for two retired spouses, plus $51,500 from a pension and distributions. The survivor keeps the larger Social Security check and the full pension, landing at $73,500. As a couple, they paid about $3,433 in federal tax, at an effective rate of 3.8%. The survivor pays about $5,278, at an effective rate of 7.2%. There's no Medicare surcharge at this income, and there never will be. But the survivor's effective rate nearly doubles, because more of the Social Security benefit becomes taxable, up to the 85% ceiling, when the single thresholds replace the joint ones. The added tax is about $1,845, and the lost income is $16,500. Real money for a household least able to absorb it. It doubles the effective rate, and it hurts.  Read the three together and the widow tax points the wrong way from the marketing. At $360,000 it costs less than nothing, roughly a $1,800 annual saving. At $180,000 it costs about $8,500. At $90,000 it costs about $1,850, but the effective rate doubles. The affluent couples being sold protection don't need it. The middle couples who feel the sting are not being sold anything, and they're the ones for whom a few thousand dollars a year actually constrains a life. The tax code has three different mechanisms, and which one finds you depends almost entirely on your income. At the top, the Medicare surcharge does the work, and it falls. In the middle, the surcharge appears from zero. At the bottom, the Social Security torpedo raises the taxability of the benefit from 75% to 85%. The mechanism changes with the income, and so does the household's ability to absorb the hit. Plan Ahead This is where the widow tax conversation usually stops, and where I think it should start. The moves most likely to leave a survivor better off are the ones you make years before, and they help whether or not the widow tax ever bites. Converting traditional IRA money to Roth over several years before retirement smooths your taxable income. It lowers the required minimum distributions that will later push a single filer into higher brackets. It can also keep a survivor under a Medicare surcharge tier the couple never worried about. Drawing accounts in a sensible order, spending down the right buckets first, reduces the future tax base that a single bracket structure will tax more steeply. Managing required distributions as they grow, rather than letting them balloon off a rising balance, limits the single bracket exposure that builds across a long widowhood. A more tax-efficient bequest helps the people who inherit what is left. None of that is widow rescue. It is good multi-year planning that happens to compound in the survivor's favor. The widow tax is one input to that planning, not the reason for it. The reason is that the year your spouse dies is the worst possible year to be making financial decisions, and the more of those decisions you have already made, the fewer you hand to someone who is grieving. You can do a rough version of this at your own kitchen table, and you should, ideally long before you need to. Estimate the survivor's income after the smaller Social Security check and any pension change, then estimate the survivor's spending from your actual budget, not a generic rule of thumb. Subtract. If reliable after-tax income still supports the life the survivor wants, with margin, the tax rate was never the thing to worry about. Then project the survivor's federal tax, the net investment income tax where it applies and the Medicare surcharge as a single filer, and compare it to the couple. Keep the tax separate from the lost income, so you can see what the tax code actually did. Sometimes, as the affluent couple shows, it does you a small favor. Only then does a planning move earn a look, and only if you can answer what it costs today, what it might save later, who benefits and what has to come true for it to work. The widow tax is real, but it isn't the catastrophe it's sold as. At higher incomes it's not a cost at all. Lower down it is a real cost, and the lower you go, the more it's worth measuring, because the households it constrains have the least margin to spare. The planning that matters most is the kind you do years ahead, smoothing income, holding down future distributions, managing the surcharge tiers and putting the estate in order. Do that, and you've done right by your survivor, for reasons that have little to do with fear and a great deal to do with care. You'll have done it in the years when you still had the time, and the clarity, to do it well. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

FIFA Financials

R Quinn  |  Jul 19, 2026

"OK, here is my story. Soccer not so much. Chicago Cubs, yes. I left Chicago in May of 2016 to move to TX. My Dad lived to be 101 never was able to see the Cubs win the World Series. That year as I lived in TX, the Cubs were destined to get to the World Series and of course I was skeptical. We wanted to go to a World Series game, but could not wait. Flew back to Chicago for game 6 of the playoffs, and it turned out to be PERFECT. With my Son and Son-in-law we went to see the Cubs shutout the LA Dodgers 5-0 on October 22, 2023. That trip cost $1700, but tickets like $200 each, experience and excitement that will last a lifetime. Maybe my Dad and I were the curse, because within a couple of months moving to TX, the Cubs won the World Series. So happy we went back to see a critical game."
- William Dorner
Read more »

Market Indicators

ArticleAdam M. Grossman  |  Jul 25, 2026

WHEN IT COMES to financial decisions, many investors subscribe to an approach known as evidence-based investing. The idea, as the name suggests, is to base decisions, whenever possible, on data rather than on intuition or other informal methods. This sounds logical. It isn’t perfect, though. Economic and financial indicators have weaknesses which are important to be aware of.  Consider, for example, the Cyclically-Adjusted Price-to-Earnings, or CAPE, ratio, developed by Robert Shiller, a Yale professor and Nobel laureate, along with a colleague. Owing to its pedigree, the CAPE is highly respected. And a study by the Vanguard Group found that the CAPE had the strongest ability to predict market returns among fifteen different metrics it tested. For these reasons, many view it as the gold standard for stock market valuation. But how accurate has it been?  For years, the CAPE ratio has been flashing red. Since 2018, in fact, it’s been more elevated than it was at the peak in 1929, just before the crash. It seems to be indicating extreme risk. And yet, the market has continued to move higher with only temporary setbacks, defying the CAPE’s warnings. Even Shiller himself has acknowledged that the CAPE’s predictive abilities can fall short. In 2021, he made this seemingly contradictory statement in an opinion piece: “The stock market is already quite expensive,” he wrote, “But it is also true that stock prices are fairly reasonable right now.” Here’s how he explained this seeming contradiction: While the stock market at the time was expensive by historical standards, he noted that investors should never look at any one metric in a vacuum. Investments need to be considered in comparison to other available options. On that basis, he said, stocks were not expensive, because bonds at the time were also expensive. Recognizing how the CAPE can register misleading readings under certain conditions, Shiller and a colleague have since developed a modified version of the CAPE called the Excess CAPE Yield. This new metric helps investors compare the prospective relative returns of stocks and bonds. Shiller’s message, in other words: The original CAPE ratio on its own shouldn’t be seen as conclusive. Another well-respected metric that’s stumbled in recent years is the Sahm rule. In general terms, this rule says that when the unemployment rate begins to increase at a particular rate, a recession is likely. In back-testing, it’s been shown to be remarkably accurate. Since 1959, it would have generated just two false positives. A few years ago, however, the Sahm rule threshold was breached, theoretically indicating a recession. But Claudia Sahm, the rule’s creator, was quick to explain why investors shouldn’t be nervous. “The Sahm rule is likely overstating the labor market's weakening due to unusual shifts in labor supply caused by the pandemic and immigration,” she wrote. And in the years since, as Sahm guessed, the economy and the stock market have indeed avoided recession. The upshot: Economic indicators may work—and even work reliably—for a period of time, but then break down when something about the economy changes in a fundamental or unique way, as occurred in the wake of Covid.  Economic indicators carry another fundamental flaw: In some cases, an indicator might be correct in its prediction but less than accurate in its timing. It might tell us what’s likely to happen, in other words, but won’t tell us when that event is expected to occur. Probably the most famous occurrence along these lines was in 1996, when Alan Greenspan, then the chair of the Federal Reserve, proclaimed that the stock market was exhibiting “irrational exuberance.” Greenspan turned out to be absolutely right: A bubble was forming in the market, valuations were irrational and a crash was coming. But he didn’t get the timing right. The crash that ultimately occurred didn’t arrive until early 2000—more than three years after he issued his warning. And in those intervening three years, the market more than doubled. Investors who got more cautious in response to the initial warning would have missed out on significant gains. Along the same lines, consider what occurred with the pandemic. When Covid appeared in 2020, it seemed to arrive completely out of left field with no warning. The reality, though, is that certain experts did have pandemic risk on their radar. A 2019 risk assessment by the Federal Emergency Management Agency (FEMA) highlighted the risk of a pandemic among a short list of concerns. The problem, though, was that the report was vague, describing a risk but without any indication when it might occur. It was like a clock with no hands. It was because of examples like this that the fund manager Peter Lynch has said, “It’s futile to predict the economy, interest rates, and the stock market...If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.” That’s humorous, but where does that leave us? On the one hand, we know better than to consult storefront psychics. But economic indicators aren’t terribly reliable either. Investor Howard Marks offers a helpful answer. In his book Mastering the Market Cycle, Marks offers this suggestion: Imagine, he says, a jar filled with a mix of balls of various different colors. No one can tell with the naked eye how many there are of each. But if you can at least have a sense of the mix, that can be helpful. By the same token, no economic indicator should be seen as conclusive, but taken together, they may provide a sense of where things stand. What does this mean in practical terms? Suppose, for example, you’re considering rebalancing your portfolio and wondering how aggressive to be in reducing risk. You could use Marks’s guideline in this case. If the market seems high, you might be a little quicker to reduce risk. But at the same time, we should always keep in mind the “irrational exuberance” episode as a cautionary tale. It’s a reminder to never veer too far in any one direction. As I’ve suggested before, a center-lane approach often represents the best path forward.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.  
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Can we be completely safe?

Ben Rodriguez  |  Dec 17, 2025

"I found the comments to date in reply to Regulatory Notice 26-02 where FINRA requested comment on proposed changes to help member firms protect senior investors from financial exploitation and all investors from fraud informative to me. My take, in a nutshell, is the current tools at some brokers have become inadequate to protect investors from ACATS fraud and their own self regulating body, FINRA, is striving to establish adequate tools to allow investors to protect themself."
- William Perry
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Buying a car in retirement

Julie C  |  Jul 11, 2026

"Julie, what happened was this: I was actually shopping for an SUV and was at the dealership test driving yet another one when my husband suggested I test drive the Camry. I relented and liked it. The next day after research, the salesperson wrote up the numbers and I signed and talked to Finance and was good to go. When I got home, I did an online search to send a link to a family member and lo and behold, the online price was $3000 less. I called and they (amazingly) apologized and rewrote the agreement - claiming an error was made by the internet team. If I had searched on line while I was originally sitting in front of the salesperson, I would've have found it. I was just lucky I wanted to share my purchase with my sister!"
- joanm114
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One Person’s Luxury, Another’s Necessity

Mark Crothers  |  Jul 21, 2026

"I will admit I haven't read all these comments, but I was struck by both the friend and the author recognizing the place that activiy-related socializing held for them. I think it is easy to think that our social needs should come from "friendships" that somehow magically develop or that we have had forever. But as I have retired, ended caregiving when my husband died, and am now experiencing a retired life on my own, as well as having relocated, I have come to value the socializing that occurs in all kinds of situations. Whether connections develop because of an activity, or whether it is just passing connections at an event, etc., we humans need that link to others, and we need to value that and focus on how we make that happen, to whatever degree, above all. It will keep us able to be alone much of the time in our lives, but happy, and mentally healthy, because we have a variety of connections."
- Wendy Holm
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Fear of the Unknown…

gnussen623  |  Jul 22, 2026

"Without reading the comments I wanted to respond. I would find something that you are passionate about and see if there is a way you can offer your skills and expertise by volunteering."
- Nick Politakis
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IRMAA & late filing of tax returns

Danbo  |  Jul 15, 2026

"William, your analysis is helpful."
- Danbo
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Manifesto

Jul 24, 2026

NO. 73: WE SHOULD be alert to things we think we know—which managers or stocks will shine, which way markets are headed—that, in truth, are unknowable and yet may poison our decisions.

humans

Jul 25, 2026

NO. 42: WE'RE OVERLY influenced by information that’s easy to recall. Think about Warren Buffett, or Amazon, or Apple. Even casual observers of the financial world know about the huge gains associated with each. The danger: We become captivated by such winners and assume it’s easy to get rich by investing with top money managers or betting on select stocks.

act

Jul 25, 2026

ACCESS FINANCIAL accounts from a dedicated device. Online thieves could load malware onto your computer, which then captures usernames and passwords for your financial accounts. To protect yourself, buy a low-cost notebook computer or other device to check your financial accounts—and never use it to read emails or visit other websites.

Truths

Jul 24, 2026

NO. 89: HOUSES don’t appreciate much. Over the long haul, home prices have climbed just one percentage point a year faster than inflation—and much of that gain would have been offset by maintenance costs, property taxes and homeowner’s insurance. Instead, the big gain comes from the rent or, if you live in the house yourself, the imputed rent.

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Best of Jonathan Clements

Manifesto

Jul 24, 2026

NO. 73: WE SHOULD be alert to things we think we know—which managers or stocks will shine, which way markets are headed—that, in truth, are unknowable and yet may poison our decisions.

Spotlight: Retirement

Going too far with FIRE: The downside of being in the financial advice business – RDQ

R Quinn   |  May 30, 2025

I always thought the glowing stories of FIRE folks were a bit dodgy. Much of the time they aren’t even retired in the traditional sense. Sometimes they go too far sharing their acquired wisdom for cash.
I followed one blogger for several years. She shared her frugal ways, extreme in my view like buying her two-year olds shoes in a second hand thrift shop. She wrote a book, gained a lot of publicity, was featured in news articles and gave advice. 

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Funded Ratio vs Monte Carlo – Different Routes to Get to the Same Destination (or not)?

Bill Minter   |  May 18, 2025

I find the “liability matching” concept as outlined in Dr. Wad Pfau’s “Funded Ratio”  helpful based on our household-specific inputs I provide.  This analysis, while based on different inputs than those of Monte Carlo simulation, has given me another way to project whether we expect to have adequate financial resources for the remainder of mine and my spouse’s life.
I have used Mike Piper’s simplified funded ratio example spreadsheet to “run the numbers” using the following inputs for each year of our expected life spans:

1) Select a conservative,

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A new glitch in retirement planning to consider

R Quinn   |  Dec 24, 2024

An article in today’s Wall Street Journal illustrates a problem I never considered.
Many retirees who paid off their mortgage as part of retirement planning are now finding that increases in property taxes and home property insurance are so significant those payments now exceed the former mortgage payment thus putting some retirees in a financial bind. 
It seems applying a standard inflation factor to future costs for those items may not be accurate. 

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Financial Happiness

Adam M. Grossman   |  Jan 24, 2026

ACCORDING TO THE World Happiness Report, Finland ranks as the happiest nation in the world, a title it’s held for eight years in a row.
Each time this report is updated, it makes the news for a day or two but then fades. That’s for good reason, I think. As much as Finland might be a nice place, it isn’t necessarily practical to suggest that anyone pick up and move.
The good news, though,

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You Might Be Ready to Retire…Who Would You Rather Be?

stelea99   |  Jun 10, 2025

Dear HD readers:  We had so much fun with the original version of this post, that I thought it might be fun to add a 3rd possible route to funding retirement at $138,000/yr.   Of course, there is no reality in this, no real personal info, it is just a scenario.  And, most important, any legal route that get you to your desired retirement income is the right one for you.
 
One of my friends is hitting 73 in August and we were discussing his need to do an RMD this year. 

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Open Questions

Adam M. Grossman   |  Jul 4, 2026

AS WE CELEBRATE 250 years since the Declaration of Independence, I’m reminded of an expression that’s popular in the investment world: “This time is different.”
The phrase dates to a 1993 publication titled “16 Rules for Investment Success,” authored by the veteran investment manager Sir John Templeton. Rule number 11 included the following admonition: “The investor who says, ‘This time is different,’ when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.”
Templeton’s message,

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Spotlight: Rohleder

You Don’t Have Mail

Howard Rohleder   |  Jul 17, 2022

MY NEW ROUTINE is walking directly from the mailbox to our recycling container to deposit most, if not all, of that day’s mail. For years, I’ve been steadily reducing the amount of mail I send and receive. After reading Jonathan Clements’s experience with check washing, I’m looking to take this even further. I remember when mail was important. My wife talks of growing up in Cleveland where, during the Christmas season, mail actually arrived twice a day. Now, our street randomly fails to get its daily mail delivery, presumably due to staffing shortages. Every day in our neighborhood, UPS, FedEx and Amazon are making deliveries, sometimes more than once. I’m also diligent in watching my email because that’s where I get my utility and credit card bills, personal correspondence, ads from stores or restaurants I patronize, and notifications that new content has been added to sites such as Barron's or HumbleDollar. Meanwhile, very little of importance comes in the U.S. mail. Remember handwritten letters? I suspect the Smithsonian is working up a display. We’ve heard for years that the post office runs annual deficits in the billions of dollars. It raises rates occasionally. Still, compared to inflation, the increase over the past few decades in the price of a first-class stamp seems like a bargain—unless you compare it to free instant delivery of email anywhere in the world. A way to address the operating deficit would be to change residential mail delivery to three days per week. Half the homes get mail Monday, Wednesday and Friday, while the other half get it Tuesday, Thursday and Saturday. Would anyone notice? This wouldn’t cut expenses in half because presumably commercial businesses would still need to get their mail six days a week. Or would they be okay with five? Are there any…
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Save the Savers

Howard Rohleder   |  Sep 25, 2022

I LEARNED IN COLLEGE economics classes that there’s a time value to money. A dollar today is worth more than the promise of a dollar a year from now. Result? If you’re going to promise me a future dollar, you have to make it worth my while by paying me some interest. This was certainly true in 1980, when I graduated with an economics and management major. Admittedly, inflation was even higher back then. Still, one-year Treasury bills were paying almost 11% and the newly popular money market mutual funds were yielding more than 12%. Today, after rates hovering near zero for years, one-year Treasury bills are yielding over 4% for the first time since 2007, while my money market fund is paying more than 2%. The years of low interest rates have been perpetuated by one financial crisis after another: the dot-com bust, the Great Recession and the COVID-19 economic shutdown. Just as one crisis abated and rates started to rise, another crisis came along. One consequence is we have an entire generation who think that near zero interest rates are “normal.” There are also powerful economic players who relish this situation. Stock investors see share prices propelled higher as folks seek an alternative to the tiny return on their cash. Businesses can borrow to make capital investments at a low cost. Real estate investors and developers can also borrow cheaply to launch their projects. Perhaps most significant, governments can run larger deficits because their borrowing costs are low. Who loses? One answer is responsible individual savers. This was true of my mother. She had diligently saved all her life, shopping carefully and preparing for retirement. When she retired, she had no debt of any kind, while keeping a lot of cash in certificates of deposit and money market…
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The Number

Howard Rohleder   |  Nov 20, 2021

WHEN I WAS IN MY early 30s, I decided to determine “the number.” What would be enough money to allow me to retire, and what was the path to get there? Personal computers were newly available, so I decided to work this out in Lotus 1-2-3. There was no internet to speak of. Investment companies didn’t have online calculators running Monte Carlo simulations that incorporated hundreds of possible retirement outcomes and spat out a most-likely scenario with a 95% confidence level. Instead, I developed my own rudimentary retirement planner, starting with the premise that my wife and I could live comfortably on $50,000 a year in 1991 dollars. I made several assumptions. Some would, today, make a financial planner cringe: Inflate my $50,000 target income by 8% annually. Keep my savings goal separate from any Social Security or pension income, which I’d treat as cushions. Earn 10% a year on my investments. Withdraw 8% annually in retirement. Increase my retirement plan contributions by 5% a year. I created the spreadsheet and used my investment balance as a base. I plugged in my assumptions and ran it out to age 85. It showed I could achieve my goal, which was to retire in my mid-50s. Compared to the online calculators available today, it wasn’t very sophisticated. Regardless of how “the number” is calculated, however, putting a plan in black and white provided me with some savings discipline. It allowed me to know: My long-term goal. My original calculation said “the number” was just under $1.7 million. A path to get there. I saw that the steps to reach the goal were readily achievable. A way to assess my progress annually. In the years when the market dropped, I didn’t hit my target. But I learned that the up years made up…
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Never Going Back

Howard Rohleder   |  Dec 12, 2022

A FRIEND ONCE explained to me his theory of lifestyle creep—and how there’s a ratchet effect. Let’s say you move to a better neighborhood. A bigger house means larger utility bills. Property taxes will be higher, the lawns bigger and the landscaping more extensive. The neighbor’s cars are nicer, and the shopping and restaurants are more upscale. Like a socket wrench, once the one-way ratchet of lifestyle creep clicks in, it’s nearly impossible to go back. Two years ago, I moved to a metro area from a small town. My expenses are definitely up. Besides substantially higher property taxes, there are several vendors who now have their hands in my pocket. I continue to pay for the services that I’ve always had: trash collection, internet, lawn treatments, cell phone and a security system. Yet the urban prices are much higher than the small-town prices I was accustomed to paying. To reduce outlays, I’ve converted other expenses from pay-as-you-go to annual prepayment. There’s a convenience factor, plus vendors always provide a discount. This includes the pest control company, as well as the folks who service my furnace, air-conditioning and sprinkler systems. We even subscribe annually for dental care. We pay the dentist in advance to get two cleanings and routine X-rays, along with a discount on needed treatments. On the other side of the ledger, I’ve increased my spending with new monthly subscriptions. I’ve replaced our magazine and newspaper subscriptions with online equivalents. I did drop cable TV, but now I pay for several streaming services. Then there’s the satellite radio. We continued the service after a free trial when we bought a new car. Technology has added several new “necessities.” I have taken on software subscriptions that I never had before. I resisted them for as long as I could,…
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College in Retirement

Howard Rohleder   |  Jun 29, 2023

I RECENTLY COMPLETED a course called England: From the Fall of Rome to the Norman Conquest. Before that was Books That Matter: The Federalist Papers. Okay, I’m a nerd, I’ll admit it. Since I retired, I’ve looked for avenues to broaden and deepen my understanding of subjects that I was taught in high school and at the liberal arts college I attended. Back then, there were college courses, like accounting, that I felt I had to take to earn a living. Still, some of my favorite courses were American history, Shakespeare, philosophy and poetry. If I could go back, I might take more of these latter topics—and less accounting. But wait, I can go back. For years, retirees interested in learning needed to find a way to take a class at a local college or build their own curriculum with books they borrowed from the library or bought. Later, books on tape and CDs offered a way to bring courses to your dashboard or den. Now, quality courses can be streamed. While some educational resources are available on a subscription basis, many courses are available free or at a low cost. And those accounting courses taught me that free is good. My go-to source for serious college content is The Great Courses offered by The Teaching Company. I’ve worked my way through dozens of its courses. The company offers a wide variety of subjects. Some I have no interest in, but many others are on my wish list. The marketing material brags that the company seeks out professors known for their teaching ability. No disagreement here. I’ve yet to come across a dud. The courses I’ve taken range in length from six to 36 lectures, each 30 minutes long. The longest I’ve seen in the catalog is a 48-lecture course…
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Free Lunch?

Howard Rohleder   |  Aug 11, 2025

On the Fidelity account page that displays my holdings online, I noticed banners saying I could make extra money by lending my securities. I ignored this on the premise of “too good to be true.”  Then I got an email from Fidelity advertising their Fully Paid Lending Program and read what they had to say. By following a link, I was able to get an assessment of each of my accounts telling me which holdings might be eligible and how much they might yield. The account assessments said I did have eligible securities, all of which were ETFs, and that I could earn interest by loaning them to others, apparently short sellers. The interest estimates ranged from 1% to 10% based on the loan market for each security. This interest rate is security specific and varies from time to time based on the market for each security. Interest accumulates during the month and is paid out after month end. Still skeptical, I did an online search independent of Fidelity and found that other brokerages have substantially identical programs, including Vanguard, Schwab and Interactive Brokers. The primary caution I picked up from my online search was that tax favored qualified dividends paid on a security while it is on loan will be passed on to you, but it will be in the form of ordinary income not as a qualified dividend. Of course, this only matters in taxable accounts. The security does not have SIPC insurance coverage while it is on loan. The program description explains that when a security is loaned out, Fidelity deposits an equivalent dollar amount into a bank account as collateral in the event the borrower fails to return the security. The collateral is adjusted periodically to account for changes in the market value of the loaned…
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