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Interesting insight

"I wonder about this, too. I find I can live on my Social Security income alone (admittedly, it would be a spartan lifestyle), but I've reached the age of RMDs. I spend part of my RMD and save/invest the balance. At the same time, the boom you've described is growing both my investment and retirement accounts - in spite of all the bad news we're pounded with each day. One of my two kids is doing very well for himself. The other was doing fine until all the wheels fell off - job loss, divorce, kid expenses, etc. I can be a financial backstop as needed and within reason, but not forever. In your second to last paragraph you refer to Boomers not being immortal. That's all well-and-good, the end comes to us all. But I intend to keep living as well and as long as possible - so the Boomer wealth transfer will need to wait!"
- Jeff Bond
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What Addiction Couldn’t Take: My Sister’s Story

"My condolences. Keep the memory alive. My sister and I still reminisce about our brother, who died of alcoholism 8-1/2 years ago. I have spoken to my kids about their Uncle Roger, and his inventive/unusual Christmas or birthday gifts, and his sense of humor. Roger's issues with alcohol were never a secret. The real secret was how much and the ways he managed to hide it from the people who cared about him."
- Jeff Bond
Read more »

HD Reader’s Demographics

"These would be easy questions to answer, so here goes — I'll kick things off. Age: revised down to 12 last week, after my wife Suzie caught my grandson and me in a competition to see who could leave the longer bike skid mark. Male/Female: everyone's identifying as something else these days, so I'm going with a fridge — big and cool. Occupation: pain in the *ss. Net Worth: surprisingly healthy, for someone in the above line of work. Can the editor help? Possibly — though I suspect he's too busy working."
- Mark Crothers
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Fixing Social Security is not that hard, here’s how

"There is a difference. With Medicare? All recipients pay a premium. With SS, there are spousal beneficiaries who never contributed."
- Marilyn Lavin
Read more »

A Sunday Thought About Money

"I am so jealous...my kids haven't had kids, so my best grandparents' years are going to waste. I thought your grandparents might enjoy this comedy from Kathleen Madigan. https://www.youtube.com/watch?v=8LeOMMqvwLI&t=8s. The grandparents' part starts at 1:45."
- Mike Lynch
Read more »

Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t

"Dan: I asked Claude AI this question: If I had taken my FICA taxes plus my employer's contributions from my age 16, in 1967 and invested it outside the Social Security system, until I retired, in January 2024, what would it have grown to? Then the answer, using the average US wage each year, was $5,134,682, based on FICA taxes of $237,017. That would produce an income of $17,116 monthly. Interestingly, my records show that I contributed $199,051 and my employers contributed $210,336 over my 58-year career...for a total of $358,765. My 2026 SS benefit is $4,821.90 per month. Now, obviously, that isn't the real world, and it doesn't account for life events that may have altered the numbers, but the idea is interesting. There is no doubt that a person COULD do better on their own, in the market...BUT would they have the discipline to follow through? Behavioral Science tells us the answer...ABSOLUTELY, POSITIVELY NO WAY! I also shared this factoid with my kids... 59,95% ($2,538,484) of my lifetime earnings ($ 4,233,830) were earned over 15 years of the 58-year period. 14 of those 15 years were at the end of my working career."
- Mike Lynch
Read more »

Bonds vs. Bond Funds

"Thank you all for the comments. Mark's line — "the main issue here is a misalignment of timeline and purpose" — really does get at the heart of it. When you put money into a bond fund without ever looking at the index it's managed against, you're not choosing a risk profile, you're inheriting whatever risk profile that index happens to carry at that moment, and that profile isn't fixed. As the Hartford chart shows, the Agg's duration has swung meaningfully over time, drifting higher as rates fell and issuance patterns shifted, then snapping back as rates rose again. An investor who bought in with a rough mental model of "this is a five-year-ish bond fund" could easily find themselves several years later holding something with a noticeably different interest-rate sensitivity, without ever having made an active decision to change it. That's the randomness I'm pointing to: not that the fund is mismanaged, but that its risk level is set by the bond market's borrowing patterns and the benchmark's construction rules, not by your goals. That's exactly why a bond ladder, or a CD ladder, is a useful alternative for some investors: you pick the duration profile that matches your own timeline and risk tolerance, and it stays matched to that purpose rather than drifting with the index. And the CD ladder point is well taken too. For someone who wants that certainty without dealing with the secondary-market mechanics of individual bonds, a CD ladder is often the simplest way to get there. Matt"
- Matt Halperin
Read more »

SpaceX IPO: Is Margin Optional?

"A good article from Morningstar explaining the Space X impact on index funds. The SpaceX IPO: How Index Funds Are Adapting | Morningstar"
- Harold Tynes
Read more »

How well off are Americans compared to the rest of the world? Fun facts.

"I should modify my comment. Living P to P is always real, just not always necessary and surely not always or mostly associated with low income as generally assumed."
- R Quinn
Read more »

What’s in your portfolio ?

"We used to hold Fidelity Floating Rate High Income. Still think it’s a good choice, just decided to keep things simple. Managers of our biggest bond holding Fidelity Total Bond can invest in these issues if they want."
- Michael1
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Defining Enough

"For me, "enough" is both a portfolio number and a spending mindset. I have a target portfolio value that I believe can support our desired lifestyle, but I also recognize that retirement won't unfold exactly as planned. That's why I plan to use a simple Green-Yellow-Red system. If markets perform well, we spend as planned. If they don't, we're willing to reduce discretionary spending until things recover. In other words, "enough" isn't just having enough assets—it's also having the flexibility to adapt when necessary."
- Fred Miller
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Gold and Diamonds

"Agreed Mark, I was just trying to be "diplomatic" with my words!"
- greg_j_tomamichel
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Interesting insight

"I wonder about this, too. I find I can live on my Social Security income alone (admittedly, it would be a spartan lifestyle), but I've reached the age of RMDs. I spend part of my RMD and save/invest the balance. At the same time, the boom you've described is growing both my investment and retirement accounts - in spite of all the bad news we're pounded with each day. One of my two kids is doing very well for himself. The other was doing fine until all the wheels fell off - job loss, divorce, kid expenses, etc. I can be a financial backstop as needed and within reason, but not forever. In your second to last paragraph you refer to Boomers not being immortal. That's all well-and-good, the end comes to us all. But I intend to keep living as well and as long as possible - so the Boomer wealth transfer will need to wait!"
- Jeff Bond
Read more »

What Addiction Couldn’t Take: My Sister’s Story

"My condolences. Keep the memory alive. My sister and I still reminisce about our brother, who died of alcoholism 8-1/2 years ago. I have spoken to my kids about their Uncle Roger, and his inventive/unusual Christmas or birthday gifts, and his sense of humor. Roger's issues with alcohol were never a secret. The real secret was how much and the ways he managed to hide it from the people who cared about him."
- Jeff Bond
Read more »

HD Reader’s Demographics

"These would be easy questions to answer, so here goes — I'll kick things off. Age: revised down to 12 last week, after my wife Suzie caught my grandson and me in a competition to see who could leave the longer bike skid mark. Male/Female: everyone's identifying as something else these days, so I'm going with a fridge — big and cool. Occupation: pain in the *ss. Net Worth: surprisingly healthy, for someone in the above line of work. Can the editor help? Possibly — though I suspect he's too busy working."
- Mark Crothers
Read more »

Fixing Social Security is not that hard, here’s how

"There is a difference. With Medicare? All recipients pay a premium. With SS, there are spousal beneficiaries who never contributed."
- Marilyn Lavin
Read more »

A Sunday Thought About Money

"I am so jealous...my kids haven't had kids, so my best grandparents' years are going to waste. I thought your grandparents might enjoy this comedy from Kathleen Madigan. https://www.youtube.com/watch?v=8LeOMMqvwLI&t=8s. The grandparents' part starts at 1:45."
- Mike Lynch
Read more »

Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t

"Dan: I asked Claude AI this question: If I had taken my FICA taxes plus my employer's contributions from my age 16, in 1967 and invested it outside the Social Security system, until I retired, in January 2024, what would it have grown to? Then the answer, using the average US wage each year, was $5,134,682, based on FICA taxes of $237,017. That would produce an income of $17,116 monthly. Interestingly, my records show that I contributed $199,051 and my employers contributed $210,336 over my 58-year career...for a total of $358,765. My 2026 SS benefit is $4,821.90 per month. Now, obviously, that isn't the real world, and it doesn't account for life events that may have altered the numbers, but the idea is interesting. There is no doubt that a person COULD do better on their own, in the market...BUT would they have the discipline to follow through? Behavioral Science tells us the answer...ABSOLUTELY, POSITIVELY NO WAY! I also shared this factoid with my kids... 59,95% ($2,538,484) of my lifetime earnings ($ 4,233,830) were earned over 15 years of the 58-year period. 14 of those 15 years were at the end of my working career."
- Mike Lynch
Read more »

Bonds vs. Bond Funds

"Thank you all for the comments. Mark's line — "the main issue here is a misalignment of timeline and purpose" — really does get at the heart of it. When you put money into a bond fund without ever looking at the index it's managed against, you're not choosing a risk profile, you're inheriting whatever risk profile that index happens to carry at that moment, and that profile isn't fixed. As the Hartford chart shows, the Agg's duration has swung meaningfully over time, drifting higher as rates fell and issuance patterns shifted, then snapping back as rates rose again. An investor who bought in with a rough mental model of "this is a five-year-ish bond fund" could easily find themselves several years later holding something with a noticeably different interest-rate sensitivity, without ever having made an active decision to change it. That's the randomness I'm pointing to: not that the fund is mismanaged, but that its risk level is set by the bond market's borrowing patterns and the benchmark's construction rules, not by your goals. That's exactly why a bond ladder, or a CD ladder, is a useful alternative for some investors: you pick the duration profile that matches your own timeline and risk tolerance, and it stays matched to that purpose rather than drifting with the index. And the CD ladder point is well taken too. For someone who wants that certainty without dealing with the secondary-market mechanics of individual bonds, a CD ladder is often the simplest way to get there. Matt"
- Matt Halperin
Read more »

SpaceX IPO: Is Margin Optional?

"A good article from Morningstar explaining the Space X impact on index funds. The SpaceX IPO: How Index Funds Are Adapting | Morningstar"
- Harold Tynes
Read more »

How well off are Americans compared to the rest of the world? Fun facts.

"I should modify my comment. Living P to P is always real, just not always necessary and surely not always or mostly associated with low income as generally assumed."
- R Quinn
Read more »

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Manifesto

NO. 38: AS STOCK prices fall, our enthusiasm should climb. The decline raises expected returns and offers the chance to buy at lower prices, both with new money and through rebalancing.

act

DROP UNNECESSARY insurance. If you no longer work or have enough saved for retirement, you can likely ditch your disability insurance. If the kids have left home or you have a sizable nest egg, you might drop your life insurance. If your car is old and doesn’t have much value, you might get rid of your auto policy's collision and comprehensive coverage.

Truths

NO. 52: WE CAN’T forecast returns, but we can manage risk. Will stocks plunge? As the saying goes, “If you ask a stupid question, you’ll get a stupid answer.” Forget trying to guess whether stocks will nosedive. Instead, ponder the consequences: Would a sharp market drop imperil upcoming goals—or could you shrug off the short-term financial hit?

think

FLOW. We imagine what we want most is time to relax. But in truth, we get great satisfaction from work—provided it’s work we find challenging and interesting, and feel we’re good at. All this is captured by psychology professor Mihaly Csikszentmihalyi’s notion of flow. During moments of flow, we can become completely absorbed and lose all sense of time.

Two-minute checkup

Manifesto

NO. 38: AS STOCK prices fall, our enthusiasm should climb. The decline raises expected returns and offers the chance to buy at lower prices, both with new money and through rebalancing.

Spotlight: Careers

Spotlight on Success

Have you ever known someone who has succeeded in something quite remarkable? This could be starting a highly successful business, writing a blockbuster selling book or similar achievement.  Did you ever wonder how they pulled it off?  They may not appear to have as much talent as you, be as smart as you, or be as attractive as you.
If you have abilities that come at least as close to those of the average person, you are undoubtedly right about the accomplished person not having more talent,

Read more »

Asking the Editor

NINE MONTHS AGO, Jonathan Clements shared with readers that he’d been diagnosed with an incurable form of cancer. It was devastating news, especially for longtime readers, many of whom regard Jonathan not only as a journalist but also a friend. I count myself among them, so I was grateful that Jonathan agreed to sit for an interview to share more about his background, his early years and his current thinking. 
You’ve joked that,

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Going Back to Work (Briefly)

I’ve read with interest posts such as Jonathan’s Taking Center Stage and Those Who Follow, both which touched on the pluses and minuses of taking on a part-time job in retirement. The conversation in the comments for both of those posts was great, too. Below, I share my own recent experience of re-entering the job world at age 64.
In my past HD posts I have written how, in our mid-60s, my husband and I appeared to be gliding into retirement.

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The Hard Way

I RECENTLY MENTIONED to my wife’s cousin that I’m taking required minimum distributions from my IRA. He won’t have to—because he doesn’t have an IRA. Instead, he keeps his car trunk full of cash.
He’s in the car business. He buys and fixes cars, all out of his mother’s two-car garage. He keeps cash to buy used cars at rock-bottom prices. People are willing to sell a car cheaper if they can get the cash immediately.

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Clumsy With People

SOME PEOPLE ARE BORN clumsy. Tools never seem to fit their hands. Their hammer finds a thumb more often than a nail. For them, running looks and feels like an ungainly, uphill battle—even on level ground.
I don’t claim to be physically gifted. But my clumsiness shows up in a different way. I have a notable social deficiency: I’m naturally clumsy with people. Why is this important? It defined the first quarter-century of my life,

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Summer School

RETURNING TO NEW YORK for the summer was out of the question. It was spring of my freshman year, and I wasn’t about to acquiesce to my parents’ wishes, not after the whirlwind of college life that included an introduction to pot and dating non-Jewish girls from small Midwestern towns. I didn’t give much thought to what I’d actually do. Maybe meeting girls taking summer school in The Grill or driving all the way to Miami and party,

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Spotlight: Crothers

A Personal Encounter with the Psychology of Money

I've been in a bit of a financial funk these last three months, and I've finally managed to overcome my heart and listen to my head. I'm really surprised how difficult I've found it, especially with my business and financial background. I mean, truly difficult. It all started when I was setting up a 10-year fixed-term annuity before retirement. I had initially decided on a purchase amount and, to fund it, liquidated some of my developed world index tracker. I moved the cash into my Vanguard money market fund to keep the money safe prior to the annuity purchase. After more research and some analysis, I decided to purchase a smaller annuity, leaving me with approximately $120,000 still sitting in my money market fund. Because of market behaviour this last while, I kept putting off reinvesting the money back into the original fund it came from. I've looked at it nearly every other day for the last three months, and I couldn't pluck up the nerve to simply reinvest. It's absolutely ridiculous, and the annoying thing is I knew I was being pretty dumb and needed to get a grip, but man, was it hard! I got a severe case of status quo bias with a large helping of loss aversion, all wrapped in a blanket of analysis paralysis, and I'm here to tell you it's as real as a brick wall and nearly as hard to knock down. I was literally mentally stuck and couldn't execute a simple financial transaction for three months—unbelievable. I think this experience has really hit home that financial decision-making isn't purely rational, even with my strong business and financial background. Emotions, biases, and an irrational fear of making a "wrong" move overrode my logical understanding. I guess this is why personal finance is often…
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Well That’s A Bummer!

I find it rather annoying to waste my time. Unfortunately, it seems I have to tag that handle onto my threshold rebalancing strategy over the last ten year period. A quick recap: I follow a once and done rebalance strategy anytime my equity holdings drift 15% from their normal allocation. The idea is to capture upside during a rebound. After a recent post about my experience doing a rebalance during the April '25 "liberation day" tariff announcement, a comment from a fellow HD reader mentioned she used a 10% threshold. I speculated about which strategy would have generated better alpha but pointed out I was too lazy to try the comparison. The idea stayed in my mind unresolved until I had the simple epiphany to ask my friendly AI Claude to have a stab at crunching the numbers for a side by side comparison of the two rebalance points over the last ten years. I duly received the results which proved interesting. Essentially they are neck and neck — 108.2% return vs 108.8% in favour of the 10% trigger point. The fly in the ointment occurred when Claude pointed out that a 60:40 portfolio with an annual rebalance beat both, with a ten year return of 111%. It seems I've done a bit of faffing about for no good reason over the last ten years — all a bit of a bummer if you ask me! I have to admit, it's a bit of a black box situation. I truly have no idea of the maths methodology Claude used but I'm taking a leap of faith and assuming the results have some basis in reality. If nothing else, it might show the power the average investor now has to run complex calculations using AI on their investment portfolio. Only five…
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Financial AI: Benefit or Danger? I Don’t Know

There's a debate ongoing in the UK at the moment around a cash-only tax-advantaged account, and if the benefit should be reduced from a yearly £20,000 deposit allowance to £4,000. This is with the aim of making people favor equity-based, tax-advantaged accounts to enhance returns. Very UK specific, but it got me thinking once again about the general idea of holding cash as a defensive asset in your portfolio for sequence of returns (SOR) risk when in retirement. Truthfully, the maths was beyond me for a quick article, but I thought this was maybe something I could test with one of the shiny new LLMs that are popping up everywhere. I chose Google's Gemini, and after politely introducing myself, I posed a question: "Can you quantify the difference on a standard 60:40 $1,000,000 portfolio of holding a five-year cash buffer during a three-year 20% market drawdown, and project out to two years after the recovery at average market returns?" Here's the LLM's condensed summary: "For retirees with a $1,000,000 60:40 portfolio, a $200,000 (5-year) cash buffer significantly mitigates 'sequence of returns risk.' Our analysis shows that during a hypothetical 3-year, 20% market drawdown, the buffered portfolio avoids forced selling of depressed assets. After the drawdown and two subsequent years of average returns, the portfolio with the cash buffer would be worth $916,649. The unbuffered portfolio, forced to sell assets at a loss, would stand at $886,906. This $29,743 difference highlights the cash buffer's crucial role in preserving capital and enhancing long-term portfolio resilience, especially when regular withdrawals are necessary. It demonstrates how avoiding sales during downturns allows the invested portion to recover on a larger base, ensuring greater financial stability." This seems a reasonable outcome to me and highlights a possible benefit of holding cash if you are of the…
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What If You Don’t Want to See the World?

From my readings on this site, I seem to be in the minority on a particularly popular and expensive retirement pastime: foreign travel. Over the years, I've traveled a fair part of the world, from wide-ranging business travel throughout Europe and extensive global leisure travel on every continent other than, strangely enough, the Americas (except for the Caribbean). I still travel. For instance, I was in the Canary Islands just off the coast of North Africa for a 60th birthday celebration in February, and I'm meeting a friend from London in Spain for a week in late September. Suzie and I are currently organizing a trip for next August to see a total solar eclipse. But my enthusiasm for foreign travel has waned these last few years. Part of it, I think, is a subtle shift from the thrill of novelty to a deeper appreciation for more settled pursuits. After years of navigating airports, packing suitcases, and adjusting to new time zones, the sheer hassle of foreign travel has started to feel less like an adventure and more like a task. With so many popular destinations becoming increasingly crowded, the quiet, more peaceful moments seem harder to find. It strikes me that most would think this is a most inconvenient time to be losing interest in travel. After all, I'm only 58 and just recently retired. This is supposed to be the time! Get to it! Travel through the go-go years, the world's your oyster! But my travel now seems to have evolved alongside myself, tied to more purposeful and personal reasons. I have no real enthusiasm for destination travel. It has to have a meaningful reason now. Another example to illustrate my point, I'm thinking of visiting my cousin in Australia who recently lost her husband. I think it's…
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I Don’t Like to Judge…But.

I'm pretty much a non-judgmental person, though this isn't a virtue I've cultivated or a moral position I strive toward. As my wife Suzie has pointed out on many occasions, normally in an exasperated tone, I tend to wander through life in a state of "fuzzdom." Suzie's phrase, not mine. Case in point: last week my opinion was asked about the dress sense of the weird guy with the high heels, lime green miniskirt, and shocking pink topknot hairstyle we passed while crossing the road. My reply was honest—I couldn't even remember crossing the road. I wouldn't make a good detective. I find the occasional marital tension this causes to be gloriously amusing, but sometimes my unintentional "fuzzdom" is penetrated by what I consider the unusual behaviors of people around me. The other day I held open the door to a convenience store to let two young women pushing prams and trailing children enter ahead of me. They must have been regulars, as the clerk greeted the tattoo-covered and unconventionally dressed young women by name. The children, as they all do, kept picking up candy bars and asking for them, only to receive sharp rebukes and have them roughly removed from their hands. The two women then proceeded to purchase their "usual" $50 of lotto and $30 of instant win tickets, two packs of cigarettes, and a four-pack of energy drinks. They kindly conceded to the household budget and purchased $5 of electricity and $5 on a prepaid gas card, and with an exasperated tone reluctantly let the kids each have a 10-cent candy lolly before leaving the shop. I paid the clerk for my selection, wished her a good day, and left. The whole incident left me feeling sad and a little unsettled and uncomfortable. On the drive home…
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Make My Day Punk, Harvest the Bubble.

The normal thinking would have us believing that a bubble is a dangerous situation for our retirement accounts. What if I told you that I believe a market bubble makes your portfolio more resilient? Would you believe me? Everyone fears bubbles. You should harvest them. Don't worry, I haven't lost the plot, let me be clear: I'm being deliberately provocative to make a point about something some investors neglect when things are going splendidly well, disciplined rebalancing. In reality, bubbles are only devastating if you lack a system. With the right approach, they can actually strengthen your portfolio. I have some caveats to qualify my contention, although they are actions you should, as a responsible investor, already be practicing. Rule one. Don't be greedy and lose track of your investment statement. Rule two. Rebalance your inflated equity position back to your proper asset allocation. Rule three. When the bubble bursts, draw from your cash and bond positions. That's all you need to do. Rule one forces you to rebalance, rule two forces your allocation back to your statement allocation and indirectly increases the size of your safe assets. Rule three stops you from selling distressed equities. Let me show you what this looks like in practice. Say you start with a $1,000,000 portfolio split 60/40 between stocks and bonds. This means you have $600,000 in stocks and $400,000 in bonds.A bubble inflates your equities by 50%, growing your stocks to $900,000 while your bonds stay stable at $400,000. Your total portfolio is now $1,300,000. You now have a risky 69/31 split.Most investors, your neighbor, for instance, ride this wave, convinced they're geniuses. You rebalance.You sell $120,000 in stocks at bubble prices and use that cash to buy bonds. Your portfolio is now back to a 60/40 split, with $780,000 in…
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