FREE NEWSLETTER

Want to improve your chances of a comfortable retirement? Find a job you’ll never want to quit.

Trust but Verify

WHEN I WAS in my 20s, I joined a large aerospace company. It was my first job out of college. I was an employee who thought all my colleagues were team players working toward the best interest of the company.
Back then, I’d never heard of the term “office politics.” But Ron, my boss, took it to a whole new level. He was an expert at manipulating people.
Ron joined the company a year after I did.

Read more »

Raw Deal

THE MID-2000s were my introduction to the investment world—and even today my thinking is heavily influenced by what was happening then.
Take a moment to recall the 2004-07 period. Stock prices were marching higher, foreign shares were crushing U.S. stocks, small caps were doing all right and you could get a decent interest rate on your savings account. Good times. Another feature of the mid-2000s market: a big bull run in commodities.
Back then,

Read more »

About That 4%

IT’S SCARY TO RETIRE with a pool of money, knowing how you handle it determines your financial security for the next 25 years or so. It must seem even scarier to everyday Americans who don’t think they can count on Social Security.
A recent Tweet caught my eye. It linked to an article about the problems with the so-called 4% rule. As you might recall, the 4% rule states that, if you withdraw 4% of your portfolio’s value in the first year of retirement and thereafter step up the dollar amount withdrawn with inflation,

Read more »

Working the Numbers

THIS YEAR’S TAX DAY was the strangest I can remember. Amid the pandemic, the filing deadline had been pushed back to July 15, three months later than usual. And for me, it was our most complicated tax year ever. I had both retirement income and income from various in-state and out-of-state consulting gigs.
But the biggest complication stemmed from last year’s sale of our second home. This was a vacation home that we rented part-time and also used ourselves.

Read more »

July’s Hits

THERE’S SO MUCH more to managing money than just picking investments. Indeed, we can likely add far more value to our financial life by focusing on topics like buying the right home and when to claim Social Security—which may help explain last month’s most popular articles:

“My son-in-law—who’s a financial advisor to high net worth families—casually said to me, ‘You’re wealthy’,” recalls Dick Quinn. “What? Me wealthy? I’m not even close to qualifying as one of his clients.”

Read more »

Don’t Be That Person

THE TRICKY THING about investing is that there’s no single “right” approach. In an earlier article, I described the approach I favor—what I call the five minds of the investor, which involves being part optimist, pessimist, analyst, economist and psychologist.
But there are many other ways to be successful: You might invest in real estate, or follow a quantitative investment strategy, or invest in private companies. There are plenty of people who do very well with these approaches.

Read more »

Money Guide

What to Bequeath

YOUR HEIRS WILL likely appreciate what you bequeath them. But some bequests may be appreciated more than others. At the top of the list would probably be a Roth IRA. Yes, estate taxes could be owed if your overall estate is large enough and, yes, your heirs will have to empty the account within 10 years. But there will be no income taxes owed on those withdrawals, and the money in the account could enjoy 10 additional years of tax-free growth after your death. Life insurance can also make an attractive inheritance, especially if you are subject to estate taxes. Why? The proceeds will be income-tax-free to your beneficiaries and, if properly structured, the policy won’t be part of your taxable estate. Still, given how expensive life insurance becomes as you age, you probably shouldn’t buy it solely to ensure an inheritance, unless estate taxes are an issue. You might keep highly appreciated investments held in a regular taxable account and bequeath those. That way, you’ll avoid the embedded capital gains tax bill, thanks to the step-up in basis upon death, and that will leave more money for your heirs. In 2015, President Obama proposed eliminating the step-up. Even though the proposal didn’t become law, it’s an idea that may be revived at some point. Keep in mind that you should sell underwater investments, not bequeath them. You can use the tax losses to reduce your income tax bill while you’re alive, but those losses have no tax value after your death. What if you are faced with a choice between bequeathing a traditional retirement account and bequeathing money in a taxable account? Now that the stretch IRA has disappeared, you might look to bequeath investments in a regular taxable account, which will mean more after-tax dollars for your heirs. Finally, your heirs will probably be less happy to inherit assets that are difficult to sell. At issue here are not only illiquid investments, but also time shares, antique cars and second homes. Clearly, if you’re making full use of these assets while you’re alive, you should keep them. But your heirs would probably prefer to receive cash. Next: Trusts Previous: End of the Stretch Article: Stepping Up
Read more »

Manifesto

NO. 4: GOOD SAVINGS habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Think

INTRINSIC VALUE. It’s easy to get caught up in the stock market’s wild price swings. Feeling unnerved? Never forget that behind those price swings are companies of great value. While we can’t put a precise figure on their intrinsic value, we can get a sense by examining the profits they earn, the dividends they pay and the value of the assets they own.

Second Look

Retirement

Breaking Even

IT’S THE NEVER-ending debate: When should retirees claim Social Security? This piece, I hope, will at least serve to clarify the basic math involved.
Let’s dispense with a few preliminaries. If you have young children, it may be worth claiming at age 62, so your kids can receive family benefits. Meanwhile, if you’re married and you were the main breadwinner, it’s probably worth delaying benefits to age 70 to get the larger monthly check.

Read more »

Family Finance

The Office

AFTER NEARLY 50 years in the employee benefits profession, there are a few conversations that stand out—and they all relate to money. What people do, or don’t do, when it comes to money never ceases to amaze me. All the stories below are true.
I received a call from a recently deceased employee’s wife, followed by a call from the same employee’s other wife, both named Mary. One was in New Jersey and the other in South Carolina,

Read more »

Investing

School’s in Session

ALTHOUGH THE 2020 market plunge isn’t even six weeks old, there are already lessons we can learn from this financial crisis that can help us better manage our investment portfolio. Here are six takeaways from the current downturn, which has left the S&P 500 off 25% from its Feb. 19 high:
1. During a financial crisis, you often hear the phrase, “Stay the course.” It’s meant to encourage investors to stick with their financial plan during difficult times.

Read more »

Lists

Our To-Do List

I HAVE NEVER broken a New Year’s resolution—because, until this year, I’ve never made one. But now that I’m retired, with time on my hands, I figure my wife and I ought to challenge ourselves with 10 financial resolutions for 2020:

We’ll continually monitor routine spending with the goal of reducing or eliminating at least half-a-dozen expenses this year. That’s one every two months. Phone companies, internet providers and insurers, be warned: Here we come.

Read more »
Home Call to Action

Mindset

The S Word

SOCIALISM. It’s a word that can make people on the far left swoon, as they imagine an egalitarian utopia, even while inciting those on the far right to mumble protective oaths like a medieval citizen seeing a sign of the devil. It’s also a word that Google Trends reports has had a surge in search-related interest since last December.
As competing visions of how to protect and enhance the American economic system vie for political popularity,

Read more »

Trust but Verify

WHEN I WAS in my 20s, I joined a large aerospace company. It was my first job out of college. I was an employee who thought all my colleagues were team players working toward the best interest of the company.
Back then, I’d never heard of the term “office politics.” But Ron, my boss, took it to a whole new level. He was an expert at manipulating people.
Ron joined the company a year after I did.

Read more »

Raw Deal

THE MID-2000s were my introduction to the investment world—and even today my thinking is heavily influenced by what was happening then.
Take a moment to recall the 2004-07 period. Stock prices were marching higher, foreign shares were crushing U.S. stocks, small caps were doing all right and you could get a decent interest rate on your savings account. Good times. Another feature of the mid-2000s market: a big bull run in commodities.
Back then,

Read more »

About That 4%

IT’S SCARY TO RETIRE with a pool of money, knowing how you handle it determines your financial security for the next 25 years or so. It must seem even scarier to everyday Americans who don’t think they can count on Social Security.
A recent Tweet caught my eye. It linked to an article about the problems with the so-called 4% rule. As you might recall, the 4% rule states that, if you withdraw 4% of your portfolio’s value in the first year of retirement and thereafter step up the dollar amount withdrawn with inflation,

Read more »

Working the Numbers

THIS YEAR’S TAX DAY was the strangest I can remember. Amid the pandemic, the filing deadline had been pushed back to July 15, three months later than usual. And for me, it was our most complicated tax year ever. I had both retirement income and income from various in-state and out-of-state consulting gigs.
But the biggest complication stemmed from last year’s sale of our second home. This was a vacation home that we rented part-time and also used ourselves.

Read more »

July’s Hits

THERE’S SO MUCH more to managing money than just picking investments. Indeed, we can likely add far more value to our financial life by focusing on topics like buying the right home and when to claim Social Security—which may help explain last month’s most popular articles:

“My son-in-law—who’s a financial advisor to high net worth families—casually said to me, ‘You’re wealthy’,” recalls Dick Quinn. “What? Me wealthy? I’m not even close to qualifying as one of his clients.”

Read more »

Don’t Be That Person

THE TRICKY THING about investing is that there’s no single “right” approach. In an earlier article, I described the approach I favor—what I call the five minds of the investor, which involves being part optimist, pessimist, analyst, economist and psychologist.
But there are many other ways to be successful: You might invest in real estate, or follow a quantitative investment strategy, or invest in private companies. There are plenty of people who do very well with these approaches.

Read more »

Free Newsletter

Home Call to Action

Manifesto

NO. 4: GOOD SAVINGS habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.

Act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Think

INTRINSIC VALUE. It’s easy to get caught up in the stock market’s wild price swings. Feeling unnerved? Never forget that behind those price swings are companies of great value. While we can’t put a precise figure on their intrinsic value, we can get a sense by examining the profits they earn, the dividends they pay and the value of the assets they own.

Money Guide

Start Here

What to Bequeath

YOUR HEIRS WILL likely appreciate what you bequeath them. But some bequests may be appreciated more than others. At the top of the list would probably be a Roth IRA. Yes, estate taxes could be owed if your overall estate is large enough and, yes, your heirs will have to empty the account within 10 years. But there will be no income taxes owed on those withdrawals, and the money in the account could enjoy 10 additional years of tax-free growth after your death. Life insurance can also make an attractive inheritance, especially if you are subject to estate taxes. Why? The proceeds will be income-tax-free to your beneficiaries and, if properly structured, the policy won’t be part of your taxable estate. Still, given how expensive life insurance becomes as you age, you probably shouldn’t buy it solely to ensure an inheritance, unless estate taxes are an issue. You might keep highly appreciated investments held in a regular taxable account and bequeath those. That way, you’ll avoid the embedded capital gains tax bill, thanks to the step-up in basis upon death, and that will leave more money for your heirs. In 2015, President Obama proposed eliminating the step-up. Even though the proposal didn’t become law, it’s an idea that may be revived at some point. Keep in mind that you should sell underwater investments, not bequeath them. You can use the tax losses to reduce your income tax bill while you’re alive, but those losses have no tax value after your death. What if you are faced with a choice between bequeathing a traditional retirement account and bequeathing money in a taxable account? Now that the stretch IRA has disappeared, you might look to bequeath investments in a regular taxable account, which will mean more after-tax dollars for your heirs. Finally, your heirs will probably be less happy to inherit assets that are difficult to sell. At issue here are not only illiquid investments, but also time shares, antique cars and second homes. Clearly, if you’re making full use of these assets while you’re alive, you should keep them. But your heirs would probably prefer to receive cash. Next: Trusts Previous: End of the Stretch Article: Stepping Up
Read more »

Second Look

Retirement

Breaking Even

IT’S THE NEVER-ending debate: When should retirees claim Social Security? This piece, I hope, will at least serve to clarify the basic math involved.
Let’s dispense with a few preliminaries. If you have young children, it may be worth claiming at age 62, so your kids can receive family benefits. Meanwhile, if you’re married and you were the main breadwinner, it’s probably worth delaying benefits to age 70 to get the larger monthly check.

Read more »

Family Finance

The Office

AFTER NEARLY 50 years in the employee benefits profession, there are a few conversations that stand out—and they all relate to money. What people do, or don’t do, when it comes to money never ceases to amaze me. All the stories below are true.
I received a call from a recently deceased employee’s wife, followed by a call from the same employee’s other wife, both named Mary. One was in New Jersey and the other in South Carolina,

Read more »

Investing

School’s in Session

ALTHOUGH THE 2020 market plunge isn’t even six weeks old, there are already lessons we can learn from this financial crisis that can help us better manage our investment portfolio. Here are six takeaways from the current downturn, which has left the S&P 500 off 25% from its Feb. 19 high:
1. During a financial crisis, you often hear the phrase, “Stay the course.” It’s meant to encourage investors to stick with their financial plan during difficult times.

Read more »

Lists

Our To-Do List

I HAVE NEVER broken a New Year’s resolution—because, until this year, I’ve never made one. But now that I’m retired, with time on my hands, I figure my wife and I ought to challenge ourselves with 10 financial resolutions for 2020:

We’ll continually monitor routine spending with the goal of reducing or eliminating at least half-a-dozen expenses this year. That’s one every two months. Phone companies, internet providers and insurers, be warned: Here we come.

Read more »

Mindset

The S Word

SOCIALISM. It’s a word that can make people on the far left swoon, as they imagine an egalitarian utopia, even while inciting those on the far right to mumble protective oaths like a medieval citizen seeing a sign of the devil. It’s also a word that Google Trends reports has had a surge in search-related interest since last December.
As competing visions of how to protect and enhance the American economic system vie for political popularity,

Read more »