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You could talk to your parents about their retirement finances—or you could skip the awkward discussion and buy a home with a spare bedroom.

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Income taxes on retirees with Social Security

"How naive of you to think that the govt shouldn’t reneg on the contract outlined by its financial regulations that created SS and IRAs. Haven’t you been reading this comment thread? We have a govt program here that is going to be underfunded soon. Gotta make someone lose (the consensus seems to be us)."
- MiddleAmerican
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Frozen 2025 1040 refund and the IRS CP53E notice

"I think that is a good thought and practice for many high income taxpayers. Back when I was working that pattern of applying the overpayment was often a usual occurrence. Many taxpayers with K-1's from their pass-though entities, like partnership income or S-Corp income, do not get their prior year K-1 until well after the unextended 1040 due date (April 15) so there may be some prior year taxable income surprises when the K-1 is finalized and received. In such cases where estimated taxes will be due the next year many taxpayers will choose to lump the estimated balance due for the prior year with the following first quarter amount and pay the combined amount as the extension payment due 4/15 which just happens to be the same date as the first quarter ES payment for the next year. If the prior year tax ends up being more than expected when the 1040 was extended then they have more paid in for the prior year to lower or eliminate potential underpayment penalty and if the final return for the prior year does have a overpayment you can choose the amount of the overpayment to be applied to the next year estimated tax which is effectively paid 4/15 regardless of when the prior year return is filed and what part, if any, of the overpayment you want to to be refunded. Another reason for making a combined payment is the owner of a closely held business they control which is organized as a pass through entity has some flexibility to control the taxable income of the business income from the prior year such as by choosing an accelerated depreciation method for those assets bought in and placed in service in the prior year."
- William Perry
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1,800 data breaches in the first six months of 2026

"The jail sentence should be for the CEO, not some obscure underling."
- Jerry Pinkard
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If Retirement  is Getting Close

"If you are at Fidelity, they will only allow you to have 99% of a distribution withheld. I have no idea why. I do withhold 99% of both of my inherited IRA distributions for Federal and state taxes. One of them is a Roth, but you can still withhold taxes from it."
- Ormode
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COBRA insurance: No need to fear the bite

"In some cases COBRA can be extended to 36 months for a spouse or dependent . One example of a qualifying event would be if the policyholder became eligible for Medicare- a younger spouse could have COBRA extended."
- Julie C
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Federal debt

"To me the most important number is not the ones discussed below it is these two: 1) 1 trillion dollars- which spent annually just on financing the debt last year- think of the programs that could finance, ah like Social Security and Medicare, no future cuts would be necessary 2) 14%- the percentage of the Federal government's “budget” that is the debt"
- DavidHLancaster
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The Federal Debt and Social Security Payments

"What you describe is what I call general revenue, i.e. taxes and borrowing."
- Adam Starry
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TreasuryDirect changing login procedure to mandate ID.me later in 2026

"I wonder if your money will eventually go to an unclaimed funds account? And if so, where as these are in states as far as I know."
- Linda Grady
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The Lottery of Birth

"Thank you for the comment, its good to hear from you. You make a good point that the lottery of birth isn't simply about which country has the cheapest healthcare. Every system comes with trade-offs. Higher taxes may help fund healthcare in one country, while higher take-home income and greater personal responsibility for healthcare may be part of the equation in another. I hadn't thought about healthcare affecting the timing of retirement quite that way, but you're right that for many Americans, access to employer-provided health insurance can influence when they're comfortable retiring. It reinforces my larger point: the system we're born into shapes not only what we pay for healthcare, but some of the financial choices we're able to make throughout our lives."
- Andrew Clements
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Tax Complications – How SS Benefits interact with Other Income

""Clear as mud" is how a new client described the worksheet, after he made mistakes while doing his own taxes, and later getting a dreaded notice from the IRS."
- Dan Smith
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Preparing for SS at Age 70….. How Do I Transition to Monthly Part B Premium Deduction?

"I am not taking SS yet, but am in year 3 on Medicare A&B. When that began, I was on the automatic quarterly billing cycle. I prefer as much stability from month to month for expenses, so requested monthly billing and that was granted. In the online conversation with the Medicare representative, I was assured the monthly billing cycle would continue when I began receiving SS benefits."
- Dave Melick
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Income taxes on retirees with Social Security

"How naive of you to think that the govt shouldn’t reneg on the contract outlined by its financial regulations that created SS and IRAs. Haven’t you been reading this comment thread? We have a govt program here that is going to be underfunded soon. Gotta make someone lose (the consensus seems to be us)."
- MiddleAmerican
Read more »

Frozen 2025 1040 refund and the IRS CP53E notice

"I think that is a good thought and practice for many high income taxpayers. Back when I was working that pattern of applying the overpayment was often a usual occurrence. Many taxpayers with K-1's from their pass-though entities, like partnership income or S-Corp income, do not get their prior year K-1 until well after the unextended 1040 due date (April 15) so there may be some prior year taxable income surprises when the K-1 is finalized and received. In such cases where estimated taxes will be due the next year many taxpayers will choose to lump the estimated balance due for the prior year with the following first quarter amount and pay the combined amount as the extension payment due 4/15 which just happens to be the same date as the first quarter ES payment for the next year. If the prior year tax ends up being more than expected when the 1040 was extended then they have more paid in for the prior year to lower or eliminate potential underpayment penalty and if the final return for the prior year does have a overpayment you can choose the amount of the overpayment to be applied to the next year estimated tax which is effectively paid 4/15 regardless of when the prior year return is filed and what part, if any, of the overpayment you want to to be refunded. Another reason for making a combined payment is the owner of a closely held business they control which is organized as a pass through entity has some flexibility to control the taxable income of the business income from the prior year such as by choosing an accelerated depreciation method for those assets bought in and placed in service in the prior year."
- William Perry
Read more »

1,800 data breaches in the first six months of 2026

"The jail sentence should be for the CEO, not some obscure underling."
- Jerry Pinkard
Read more »

If Retirement  is Getting Close

"If you are at Fidelity, they will only allow you to have 99% of a distribution withheld. I have no idea why. I do withhold 99% of both of my inherited IRA distributions for Federal and state taxes. One of them is a Roth, but you can still withhold taxes from it."
- Ormode
Read more »

COBRA insurance: No need to fear the bite

"In some cases COBRA can be extended to 36 months for a spouse or dependent . One example of a qualifying event would be if the policyholder became eligible for Medicare- a younger spouse could have COBRA extended."
- Julie C
Read more »

Federal debt

"To me the most important number is not the ones discussed below it is these two: 1) 1 trillion dollars- which spent annually just on financing the debt last year- think of the programs that could finance, ah like Social Security and Medicare, no future cuts would be necessary 2) 14%- the percentage of the Federal government's “budget” that is the debt"
- DavidHLancaster
Read more »

The Federal Debt and Social Security Payments

"What you describe is what I call general revenue, i.e. taxes and borrowing."
- Adam Starry
Read more »

TreasuryDirect changing login procedure to mandate ID.me later in 2026

"I wonder if your money will eventually go to an unclaimed funds account? And if so, where as these are in states as far as I know."
- Linda Grady
Read more »

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Get Educated

Manifesto

NO. 43: IF OUR GOAL is investment growth, we should almost never buy insurance products. That means no cash-value life insurance, costly variable annuities or indexed annuities.

Truths

NO. 45: THIS YEAR’S winners often continue to shine next year. This momentum may reflect an initial underreaction to good news, followed by a catch-up period. Trading costs make it hard to profit from the momentum effect. Still, if you own an investment that’s lately started outperforming, maybe you shouldn’t rush to sell.

humans

NO. 39: WE LATCH on to information that confirms what we already believe. Instead of dispassionately reviewing the evidence, bullish investors spot reasons for optimism wherever they look, while naysayers see just the opposite. The risk: Such confirmation bias convinces folks they know the market’s direction, prompting them to make big bets they later regret.

think

BETA AND ALPHA. Beta measures an investment’s volatility relative to a benchmark index. If the investment has a positive alpha, it means it beat the index on a risk-adjusted basis, with that risk measured by beta. For instance, a mutual fund could trail the market averages, but still have a positive alpha if its performance wasn’t especially volatile.

Safety net

Manifesto

NO. 43: IF OUR GOAL is investment growth, we should almost never buy insurance products. That means no cash-value life insurance, costly variable annuities or indexed annuities.

Spotlight: Life Events

Turned Upside Down

FOUR MONTHS AGO, I was told I might have just a year to live. It’s been a whirlwind ever since.
I’ve been inundated with messages from acquaintances and readers, gone to countless medical appointments, my diagnosis has received a surprising amount of media attention, I’ve been hustling to organize my financial affairs, and Elaine and I have taken two trips.
Where do things stand today? Here’s what’s been going on.
Medical update. After three radiation treatments to zap the 10 cancerous lesions on my brain and an intense opening round of infusion sessions,

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Tempus Fugit

I’m back in the Philadelphia suburbs today, heading to a funeral later this morning. My best friend’s Mother passed away at 91. She’s the last of my friend’s parents to go.  Of my in-laws, two mothers are still alive – one healthy and super-sharp, one quite infirm.  We attended a neighbor’s funeral last Friday at the Jersey Shore. She made it 85, and lived an active life almost to the end. An acquaintance recently died suddenly at 80.

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70 years old

I just turned 69 and I feel that there isn’t something quite right with that! The feeling has more to do with where I am in my life than feeling 69. I don’t know what it will be like when I turn 70.
To get prepared I read an article about being 70 and found a list, of all things, that I liked so much that wanted to share it.  Do you have anything to add to this list?

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Conserving Cash

A couple weeks ago, the team I was part of was eliminated.  My boss- and his boss-were also laid off, along with about 10 of us.  The industry is facing significant headwinds, and our organization was no exception.
This is the first time in my life I’ve been laid off, and I never imagined finding myself in this situation. I’ve always believed in strong work ethic in creating and delivering value to both the organization and the customer.

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What will you do with $5,000?

DOGE is considering sending all Americans $5,000 as a dividend on all the savings that have been achieved by firing, slashing and burning various government agencies.  My question is what will you do with your $5,000?
If it sounds too good to be true, see:https://finance.yahoo.com/news/elon-musk-mulls-giving-americans-165329483.html

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DST Transitioning

This has nothing to do with HD finances, but much to do with HD living.
Every six months or so we see newspaper or online articles questioning the value of Daylight Saving Time (DST). Some argue that it should never be implemented, while others say it should be permanent, with no changes. Others like it the way it is.
Before I retired, DST really had a minimal impact on me. Except for a short stint on a construction site,

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Spotlight: Goodell

Average Is Great

I RECENTLY DISCUSSED retirement plans with my old college roommate, Joe, who now runs his own business. As we wrapped up the conversation, Joe asked if I had any book recommendations. I told him I was about to start Good to Great, the management book by Jim Collins. It’s been a huge bestseller, with four million copies sold. Joe immediately shot back, “John, that book demonstrates precisely why low-cost index funds have to be the answer for most retirement plans. Read it and you’ll see what I mean.” Initially, I thought Joe was talking about fees, but he wasn’t. Instead, he was referring to the other major reason to own low-cost index funds: diversification. In seeking to find the best companies—those that go from good to great—Collins had uncovered some general truths about what constitutes the best leaders for a business organization. Collins posits that these leaders end up leaving their companies enduringly better. Did they? Here are some of the great companies that Collins identified: Circuit City, which went bankrupt in 2008, in part because of the rise of Amazon and online shopping. Fannie Mae, which effectively imploded during the Great Recession, thanks to bad lending. Wells Fargo, which has been mired in the fallout from its creation of millions of sham customer accounts. Clearly, time has proved how difficult it is for the great to stay great—or even good in some cases. To be fair, Collins profiles some companies that haven’t performed nearly so poorly, such as Nucor, Abbott Labs, Kimberly-Clark, Kroger and Walgreens (though the last two have also struggled because of online shopping and the behemoth that is Amazon). Changes in business models, and disruption caused by low-cost competitors and new technology, happen to the best of companies. Everyday investors can’t reliably predict these things. Even professional money…
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Renting Problems

I’M REASONABLY certain that Dante Alighieri’s Divine Comedy has a long-lost section where he details the 10th Ring of Hell: being a landlord. I’ve done so twice and, despite the glorification seen on HGTV and heard on BiggerPockets podcasts, I found no joy in either experience. Selling those properties felt better than I can possibly describe. Being a remote landlord may be the worst of all worlds. Getting an 8 p.m. phone call to fix a broken toilet is annoying. But getting that call for the same issue at 4 a.m., because you moved and there’s now a time difference, means existing in a special kind of purgatory. Sure, you can pay a property manager to handle maintenance and upkeep, but that often eats up most—if not all—of the profit. Instead, I favor owning a real estate investment trust (REIT) index fund. REITs are included in total market index funds, but their weighting is tiny relative to their role in the broader economy. REITs offer significant advantages over owning rental properties. A REIT index fund, such as Vanguard Real Estate ETF (symbol: VNQ), offers wide diversification. When the pandemic dealt a blow to shopping malls, commercial office space and college housing, those hits were offset by gains in sectors like data storage and single-family homes. REITs are run by experienced real-estate operators who understand the cyclicality of their market far better than you or me. They’re able to take advantage of growth opportunities in ways that individual investors simply can’t. For instance, during the COVID-induced capitulation in the mall space, Simon Property Group pivoted from pure landlord to business owner by astutely picking up several iconic but bankrupt brands like Brooks Brothers and JCPenney for, err, pennies on the dollar. REITs also operate with much less debt and are therefore…
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Don’t Be Deceived

AT FIRST GLANCE, personal finance might appear to have nothing in common with the world of personal fitness. I’d argue otherwise. Perhaps the clearest parallel is between the gains from diligent investing in low-cost index funds and the gains from proper diet and exercise. Both are hardly noticeable at first and, as a result, there’s a temptation to stray. But if we continue the process of saving and investing—or eating correctly and exercising—we can see tremendous gains over time. There is, however, another analogy—one I recently came across in an article discussing the rampant use of steroids in the fitness industry. The use of anabolic steroids among bodybuilders is widely known. But did you know that many famous fitness social media influencers, and even some of our favorite Hollywood stars, have likely bulked up using performance-enhancing drugs? The short-term gains are remarkable, though they mask significant longer-term health costs. Many fans don’t realize that these fitness gurus are effectively lying and cheating their way to profits. For average folks, the consequence is severe disappointment when they don’t enjoy results similar to those they emulate. As a 40-year-old who has worked out regularly since he was 16, I can attest that the first decade in the gym produced little result, and it was discouraging. If the Army didn’t force me to exercise continuously, I probably would have quit and never have realized some of my best fitness gains—many of which have only become obvious in my third decade working out. This same integrity issue afflicts the financial services industry. What we see online and on TV is rarely indicative of reality. The amount of investor assets that some CNBC pundit manages is akin to the number of followers a fitness guru attracts. Neither metric actually measures performance. No one should confuse…
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Stay Positive

AMONG THE AREAS of law that have made me miserable over 16 years of practice, it’s the adversarial roles that have made me most miserable. My experience in labor and employment law has been particularly difficult because the interaction with opposing counsel is usually contentious, each side compelled to zealously advocate for their position. Almost any type of litigation is a zero-sum game. One side wins, the other loses. Because the outcome is never guaranteed, those involved often engage in cut-throat, zero-sum behavior. I’ve slowly come to realize that the financial world has a similar dynamic. Short-term trading usually delivers zero-sum outcomes, while longer-term investing offers positive-sum results. The game that investors choose to play determines the outcome they receive. In a zero-sum game, rational actors seeking the greatest gain for themselves will necessarily do so at the expense of other actors. Trading amounts to a zero-sum game. Buyers hope to get a better deal at the expense of sellers, and vice versa. By contrast, in positive-sum games, the overall pie is growing, so there are more spoils for everyone to share. Positive-sum games can be win-win situations. Investing for the long term in a broad market index fund, and thereby avoiding the risks inherent in individual stocks, is a positive-sum game because markets move up over time—and all investors can potentially win. Moreover, the longer investors hold a diverse basket of stocks, the greater the likelihood that the engine of capitalism will produce a happy outcome. An added bonus: Investors can avoid the nasty “winner takes all” mentality that many short-term traders consciously or subconsciously have. For my own mental health, I prefer to play positive-sum games—whether it’s in my professional life or when investing.
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Bye-Bye I-Buy

ZILLOW ANNOUNCED recently that it would cease its algorithm-driven home buying program. Thus ends its three-year experiment to disrupt the real-estate brokerage business with what’s known as “i-buying.” Zillow had purchased homes without significant involvement by real-estate agents. Instead, it used its proprietary algorithm—which it calls the Zestimate—to determine a property’s value. It then offered homeowners a percentage of this value, in cash, to buy their houses. This offer proved appealing to many home sellers. They didn’t have to stage their homes and could be certain of the price they’d get. It also gave them a definitive closing date. To generate a profit on each home sale, Zillow would keep the commissions usually paid to the seller’s and buyer’s brokers. They would also update the properties cosmetically, when needed. Ultimately, Zillow erred grossly in anticipating how difficult it would be to turn a profit in the residential real-estate market. There were several problems with its model. Zillow likely discovered what the rest of us already knew—that getting a contractor to show up on time and do a good job is incredibly difficult, and that it’s hard to know whether a house is good value unless you take the time to carefully inspect the property. Of the 1,000 homes Zillow recently listed for sale in its five biggest markets, 64% were being offered for less than the company paid for them. I wouldn’t fault any company for realizing the error of its ways and pivoting accordingly. What Zillow did, however, was irksome. How so? It announced it was pausing its i-buying program on Oct. 18. But it turned out to be more than a pause. Just two weeks later, on Nov. 2, Zillow admitted defeat and shut down its home buying program, shedding roughly 25% of its workforce in the process. Zillow stock…
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Standing Down

AFTER 14 YEARS ON active duty with the U.S. Army, I recently walked away from being a fulltime soldier. At age 39, it’s the only professional life I’ve known. I plan to complete my 20 years of service in the U.S. Army Reserve, which will earn me a reduced pension. It would be hard to argue this was a smart financial decision. While defined benefit plans have mostly been replaced by defined contribution plans such as 401(k), 403(b) and 457 plans, the military still offers a pension. In fact, it’s arguably the gold standard of pensions, one that’s indexed to inflation and backed by Uncle Sam. If you remain in military service for 20 years, your pension will amount to 50% of your highest 36 months of base pay. For each additional year of service beyond 20 years, that percentage increases by 2.5 percentage points. The plan is so good that Congress recently tweaked it to save costs. Those who join now only have access to the hybrid Blended Retirement System, which shifts some of the burden to save for retirement onto the individual. The size of a military pension varies substantially, depending on rank and years of service. Given my active-duty career path, I estimate a 50% pension would have equaled roughly $58,000 per year in today’s dollars, plus I could have drawn that amount starting at age 45. Pensions for Reserve and National Guard servicemembers are far less generous, and hinge on the amount of time spent in uniform working on weekends, mobilized to assist during natural disasters, fighting in combat zones and so on. My pension will depend on how actively I participate in the Reserves, but I conservatively estimate I’ll draw roughly 39% of my salary. That means I’ll receive some $42,300 a year once I turn…
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