FREE NEWSLETTER

When irrational investors meet unpredictable markets, there’s only one recourse: Grab the popcorn and enjoy the show.

Latest PostsAll Discussions »

Taking It With You

ArticleJeffrey K. Actor  |  Sep 5, 2026

DEEP DOWN INSIDE, I want to be the richest person in the graveyard.  I retired at age 62, confident in our financial plan to survive market fluctuations. We saved over 25% of our income for nearly three decades. Perhaps a bit too much, but we lived well and always had sufficient funds to raise a family, maintain our household, and put our children through postgraduate education. If anything, our retirement spending level is conservative, based on a 40 year time frame for both my wife and I. We have a slightly nuanced financial plan. Suffice to say it is reassuring to know that we are beyond financial security if we simply maintain an inflation adjusted 4% withdrawal rate. Indeed, calculations suggested we could double our pre-retirement budget, with no worries or loss of sleep. Risk be damned! Slowly, we made a conscious decision to spend more. At first it was tough to break old habits. I mean, frugality runs deep in my immediate family. You could use my brother and I as chromosomal templates in a genetic search to discover the frugality gene.  My wife and I now go out for coffee without blinking an eye at paying nearly 6 bucks for a cup of Joe (plus tip). We don’t hesitate to escape the Houston heat by scarfing 5 dollar a scoop ice cream. We no longer plan our restaurant outings according to Happy Hour schedules or local senior discounts.  Even so, three years into retirement, our annual spending remains well below what our financial plan says we can safely afford.  Time to up the ante. We bought season tickets to the symphony and added a dinner date before the performance. We took international vacations twice a year, exploring new countries and cultures. We drove to national parks and treated ourselves to overnights in hotels instead of motels. We gifted our children, with hopes they would bolster their own long-term savings. Gosh, we even made significant charitable gifts to institutions we only previously dreamed of supporting.  Spending is easy. Spending wisely is a challenge. Ironically, the strong stock market since our retirement has made it remarkably difficult to spend our money as initially planned. It sounds counter intuitive, but let me explain.  Our retirement portfolio allocation has a stock to bond ratio of 75:25.  The stock component primarily matches total market returns. Specifically, our stock component has grown more than 65% since we retired. Because of this, we put aside 10 years of safer funds (bonds and cash equivalents) to weather any potential market storm. We successfully navigated the immediate sequence of return risk (SORR) hurdle, that pesky danger of facing a poor investment market performance in earliest years of retirement.  We feel both blessed and safe. We sleep well at night. Our financial calculators now indicate that we can spend even more than original predictions. Yet that realization is causing me angst. After all, we spent a lifetime saving, scrimping and sacrificing to reach this point. Indeed, we value the concepts of avoiding excess, of seeking value and purpose in purchases. Our goals were never to impress the neighbors, but rather be content and grateful with what we have.   I want people to know I had a choice about how I spent my accumulated dollars. I chose a life of frugality, questioning everything I purchased. Do I really need that new phone? My current one makes calls, surfs the web, and navigates when I need directions.  Do I need a new car? My dented 11 year old Honda gets me safely to my destinations. Shall I purchase the kayak I’ve been eyeing, or simply rent one for the two times a year I brave the waters?  Perhaps the real measure of a successful retirement is not how much money remains at the end, but whether those resources were used in ways that enriched the lives of others and brought meaning to our own. Financial independence now gives us choices, and a freedom after decades of disciplined saving. It is okay if I leave this world with more than enough funds still in the bank. There are values I learned along the way; those of prudence, generosity, gratitude, and the quiet confidence that comes from living well below one's means. In the end, wealth is simply a tool; character is the true legacy. Perhaps the goal isn't to die with the largest portfolio, but to know that every dollar reflected the values by which we chose to live. Therefore, if I can’t spend it all according to my values, I guess I’m okay with being the one of the richest men in the graveyard.  Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
Read more »

The Economy of Expectations

W.D. Housley  |  Sep 5, 2026

"Or perhaps follow social media that sets a better example. Anyone got any suggestions?"
- DAN SMITH
Read more »

Locking it in

greg_j_tomamichel  |  Sep 5, 2026

"….there are lots of ways to achieve a good financial base, and following the textbook probably isn’t required if you find something else that works for you. General George Patton once said “A good plan, violently executed now, is better than a perfect plan next week." Leave out the violently executed part and I think his quote supports your point. My take away is that a good plan implemented now is usually better than a perfect one later. Sometimes later never comes. "
- DAN SMITH
Read more »

The Intentional Spendthrift

Mark Crothers  |  Aug 21, 2026

"Mark, I spent a week and a half in Portugal in May. Spent time in Lisbon and Porto and Braga (for a wedding). Fantastic time! Most time was spent in larger cities including 5 prepaid excursions. My wife and I definitely followed the “spend freely and enjoy the trip” mind set. Did you happen to visit the westernmost point on the European continent?"
- Andy Morrison
Read more »

Behind The Finery

Mark Crothers  |  Sep 3, 2026

"Thanks Mark. I had a slightly different take. If I go out for some form of entertainment, I would usually expect the whole event to be less than $100. But when just the deposit is $100, that's well out of my league!"
- greg_j_tomamichel
Read more »

State Farm Dividend

Bogdan Sheremeta  |  Sep 2, 2026

"Lucky for you that StF provides good service. After they challenged a simple $275 auto glass claim on a rental car, I wholly disagree. For anyone living in CA, they will not write any new home, renters, or umbrella policies. Note that StF has significantly changed their sales rep compensation model, favoring those reps who grow their biz and punishing reps who do not. Expect a shaking out period by longtime reps."
- Scott Dailey
Read more »

Make the Attic Great Again

Dan Smith  |  Sep 1, 2026

"Nearing your 80s and a new Z in the garage; you rock, John!"
- DAN SMITH
Read more »

Traditional or Roth

ArticleRichard Connor  |  Aug 29, 2026

THE CHOICE BETWEEN a traditional retirement account or a Roth is a frequent topic on HumbleDollar. The choice is generally framed as a choice between paying taxes up front (a Roth), or deferring taxes until withdrawal (traditional). I thought it would be interesting to evaluate a real-life example of how this choice might work out. In December of 2016 my wife and I had an opportunity to each open a Roth IRA. My wife took a partial sabbatical that year, and that, combined with maxing out our 401k accounts, gave us a chance to each open a $4,500 Roth IRA. The maximum allowable contribution that year was $6,500 for those 50 and over. Up until then we had assumed that our marginal tax bracket would likely be lower in retirement, and focused on contributing to our employer’s traditional 401k plans. Despite that, we decided to move forward with opening a Roth IRA. I thought it would give us some tax diversity, and the opportunity to do Roth conversions when, and if, it made sense in the future.  In December of 2016 we opened Roth IRAs at Vanguard and invested the $4,500 in their S&P 500 Index Fund. Those initial funds have been invested for almost 10 years. Over that decade we have added some additional funds, and have done a few conversions. I recently did a quick analysis to see how my Roth experience would have compared to investing in a traditional IRA.   In 2016, our marginal tax bracket was 28%.  To contribute the $4,500 required $6,250 of pre-tax income. Due to some financial engineering over the last year, including selling our second home in late 2025, I expect our 2026 marginal tax bracket to stay within the 12% bracket. I’ve been looking at this closely because I’m considering doing a Roth conversion later this year. The table below shows the comparison between the Roth performance, and what a traditional IRA would have produced. The annual rate of return was determined using Nick Maggiulli’s S&P 500 Historical Return Calculator. Roth vs Traditional The table shows that the Traditional IRA would have been the better choice, producing about $3,500 more in available funds, or about 22% more. This demonstrates that the primary driver in choosing between a Roth and a traditional qualified account is a consideration of the tax rates at the time of contribution and at the time of distribution. There have been a number of changes to the tax code in the last decade that have contributed to the result, but I certainly didn’t predict any of them.  If you guess wrong, you pay the price in a higher tax bill. In the example above, the extra $1,750 invested in the traditional account produced an additional $6,143.31 in earnings. The lower tax rate at the distribution of the traditional IRA results in the $3,500 in extra funds. Even though the Roth IRA had tax free earnings growth, the initial larger tax rate overcame that advantage, when compared to the traditional IRA.   Because of my pension and my wife’s social security benefit, 85% of her social security benefit is taxable income, so that is not a consideration in our tax calculation. I used Dinkytown’s 1040 Calculator to run a series of estimates of our 2026 tax return to assess if we want to execute a Roth Conversion this year. We are still 4 years from taking RMDs, and I will start my Social Security in a year when I turn 70. My current thinking is a conversion of about $40,000 will keep us in the 12% bracket. There would also be a small NJ state tax impact. My simple analysis reinforces what I’ve been taught. Roth contributions make the most sense when you think your current tax bracket is lower than when you expect to withdrawal the funds. There are secondary considerations, like no tax diversification, no RMDs, and uncertainty about future tax rates. If you intend to pass the funds to heirs, it might make sense to perform Roth conversions today at the 22% tax bracket if you intend to pass these accounts to heirs who may be in their peak earnings years. Not sure? I believe I recall several HumbleDollar contributors write something about splitting the difference?   Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.
Read more »

Financial Fraud

ArticleAdam M. Grossman  |  Sep 5, 2026

RECENTLY, A FELLOW—let’s call him Tom—contacted me with a distressing story of financial fraud. I’ll describe what happened then review steps you might take to prevent this same sort of thing. Tom first noticed there might be a problem when he spotted a larger-than-average withdrawal from his checking account. The payee was a 529 college savings plan. But because Tom and his wife—let’s call her Jane—have 529 accounts for their children, the transaction almost went unnoticed. Tom assumed it was a transfer into his own family’s account. But when he mentioned it to Jane, she noted that they had stopped contributing to their 529. That prompted them to investigate further. What they found was that scammers had set up a new 529 account in Tom’s name. They then initiated an electronic funds transfer to move more than $2,000 from Tom and Jane’s checking account into the new 529 set up by the thieves. The intention presumably was to then withdraw the funds from the 529, at which point the theft would become unrecoverable. How were the thieves able to initiate the transfer from Tom and Jane’s bank? This is the part that’s distressing: They took advantage of the widely-used Automated Clearing House (ACH) system. Unfortunately, this system has key weaknesses that make it susceptible to fraud like this. First, it allows funds to be “pulled” out of an account. That’s in contrast to a wire transfer, which can only be “pushed” out by someone with access to the account. So a thief would only need your name, account number and bank routing number to siphon funds from that account. And unfortunately, that information is printed on the front of every check, making it accessible to someone looking to perpetrate this type of scheme. Once the thief had the new 529 account set up in Tom’s name, it was just one simple step to initiate a transfer from Tom and Jane’s bank since the accountholder’s name was the same on both accounts. It was so seamless that if Tom hadn’t been reviewing the transactions in his account, he might never have noticed the theft. According to the FBI, losses due to cybercrime have increased from $1 billion per year to $21 billion over the past 10 years, and ACH theft is a tactic thieves are using more frequently, so it’s worth looking at strategies to help keep your accounts secure. Here are six recommendations.
  1. Secure the login to your bank account by setting up two-factor authentication. And if your bank supports it, use an authenticator app, rather than text messages, for the authentication codes. Ideally, if your bank supports it, switch to a passkey. This is a newer technology that represents a significant advance over traditional passwords. Most importantly, they aren’t vulnerable to phishing attacks. They’re also easier to use, providing one-click logins, and you can store passkeys in a password manager. For those reasons, more websites are beginning to support passkeys. I’d make the switch as soon as your bank makes them available.
  2. Set up alerts through your bank to monitor activity in your checking account. Every bank is different, but most allow you to set up email- or text-based alerts to let you know when transactions above a specified threshold are processed, or when other types of activity occur.
  3. Monitor your transactions. These days, it can be hard to keep an eye on every account. Households often have one or more bank accounts plus credit cards and electronic payment services like Venmo or Zelle. Most people realistically don’t have the time to review every account in real time. That’s why I recommend a service like Monarch or YNAB, which are web-based versions of traditional budgeting tools like Quicken. These services can pull in transactions from all your accounts and present them in a consolidated list, making review much easier. If you kept Monarch or YNAB open in a browser window on your home computer, you could scroll through recent transactions whenever you have a spare minute.
  4. To narrow the circle of people who have access to your account information, try limiting the number of paper checks you write. Especially with Zelle and Venmo as alternatives for making payments, this is getting easier. If you do write paper checks, be sure to use a gel pen and to avoid freestanding mailboxes. Those steps can help prevent a related type of fraud, as Jonathan Clements explained a few years back.
  5. Pay attention to notifications of data breaches. Unfortunately, breach announcements seem to occur so frequently that we’ve become immune to them. It’s worth paying attention, though, to understand which particular pieces of information have been stolen. If it looks like your banking information is included in a breach, it might be worth opening a new account, inconvenient as that would be.
  6. Have your guard up against unsolicited phone calls, emails or text messages. If someone is contacting you about an “account security issue,” or claims to be calling from your bank or from the IRS, be especially wary. Those are common tactics for creating a sense of urgency that can cause people to let their guard down.
What if, like Tom and Jane, you spot a fraudulent transaction in your account? Then it’s important to report it as quickly as possible. Regulation E can limit your liability, but the faster you report a suspicious transaction, the more protection it provides. Liability is limited to just $50 if a theft is reported within two business days, but that exposure increases to $500 if it’s reported later. And after 60 days, there are no guarantees. Thieves, unfortunately, don’t seem to sleep, which means that we need to be more vigilant than in the past, and need to be continuously vigilant. As personal finance author Mike Piper wrote recently, “Cybersecurity should be considered another core area of personal finance—no different from insurance planning, for instance.” 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.
Read more »

A bleak picture for retirement in the future?

R Quinn  |  Sep 2, 2026

"To me, it is only bleak, if you do not prepare. You make choices, and most people live for today, not when they are 65 to 90 years old in retirement. That may work for some, but for most not so much."
- William Dorner
Read more »

The best state to retire? Take a close look.

R Quinn  |  Sep 3, 2026

"Iowa has no tax on any retirement income, social security, pension, IRA, 401k, etc. That's great, but then comes the post RMD years and those withdrawals I don't spend begin to earn funds subject to Iowa income taxes, a flat rate of 3.8%. They more than make up for the retiree income with a higher property tax, 1.33% versus the US median of 0.99%."
- Mark Eckman
Read more »

Percentage that “age in place”

Keith Pleas  |  May 24, 2026

"As you mentioned, we had to provide a lot of financials for our CCRC. Besides our IRA’s, I have a pension with survivor benefits and we each have social security. Besides that, we each have Long Term Care insurance. Outside of our monthly fees, the insurance , since we are in our mid-70’s, is our largest monthly expense. Our CCRC is non profit and the contract states their intention to provide lifelong care. We decided to do a non refundable entrance fee. But we do get a discount on our charges if we need the medical services of the CCRC"
- BillWCP
Read more »

Taking It With You

ArticleJeffrey K. Actor  |  Sep 5, 2026

DEEP DOWN INSIDE, I want to be the richest person in the graveyard.  I retired at age 62, confident in our financial plan to survive market fluctuations. We saved over 25% of our income for nearly three decades. Perhaps a bit too much, but we lived well and always had sufficient funds to raise a family, maintain our household, and put our children through postgraduate education. If anything, our retirement spending level is conservative, based on a 40 year time frame for both my wife and I. We have a slightly nuanced financial plan. Suffice to say it is reassuring to know that we are beyond financial security if we simply maintain an inflation adjusted 4% withdrawal rate. Indeed, calculations suggested we could double our pre-retirement budget, with no worries or loss of sleep. Risk be damned! Slowly, we made a conscious decision to spend more. At first it was tough to break old habits. I mean, frugality runs deep in my immediate family. You could use my brother and I as chromosomal templates in a genetic search to discover the frugality gene.  My wife and I now go out for coffee without blinking an eye at paying nearly 6 bucks for a cup of Joe (plus tip). We don’t hesitate to escape the Houston heat by scarfing 5 dollar a scoop ice cream. We no longer plan our restaurant outings according to Happy Hour schedules or local senior discounts.  Even so, three years into retirement, our annual spending remains well below what our financial plan says we can safely afford.  Time to up the ante. We bought season tickets to the symphony and added a dinner date before the performance. We took international vacations twice a year, exploring new countries and cultures. We drove to national parks and treated ourselves to overnights in hotels instead of motels. We gifted our children, with hopes they would bolster their own long-term savings. Gosh, we even made significant charitable gifts to institutions we only previously dreamed of supporting.  Spending is easy. Spending wisely is a challenge. Ironically, the strong stock market since our retirement has made it remarkably difficult to spend our money as initially planned. It sounds counter intuitive, but let me explain.  Our retirement portfolio allocation has a stock to bond ratio of 75:25.  The stock component primarily matches total market returns. Specifically, our stock component has grown more than 65% since we retired. Because of this, we put aside 10 years of safer funds (bonds and cash equivalents) to weather any potential market storm. We successfully navigated the immediate sequence of return risk (SORR) hurdle, that pesky danger of facing a poor investment market performance in earliest years of retirement.  We feel both blessed and safe. We sleep well at night. Our financial calculators now indicate that we can spend even more than original predictions. Yet that realization is causing me angst. After all, we spent a lifetime saving, scrimping and sacrificing to reach this point. Indeed, we value the concepts of avoiding excess, of seeking value and purpose in purchases. Our goals were never to impress the neighbors, but rather be content and grateful with what we have.   I want people to know I had a choice about how I spent my accumulated dollars. I chose a life of frugality, questioning everything I purchased. Do I really need that new phone? My current one makes calls, surfs the web, and navigates when I need directions.  Do I need a new car? My dented 11 year old Honda gets me safely to my destinations. Shall I purchase the kayak I’ve been eyeing, or simply rent one for the two times a year I brave the waters?  Perhaps the real measure of a successful retirement is not how much money remains at the end, but whether those resources were used in ways that enriched the lives of others and brought meaning to our own. Financial independence now gives us choices, and a freedom after decades of disciplined saving. It is okay if I leave this world with more than enough funds still in the bank. There are values I learned along the way; those of prudence, generosity, gratitude, and the quiet confidence that comes from living well below one's means. In the end, wealth is simply a tool; character is the true legacy. Perhaps the goal isn't to die with the largest portfolio, but to know that every dollar reflected the values by which we chose to live. Therefore, if I can’t spend it all according to my values, I guess I’m okay with being the one of the richest men in the graveyard.  Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
Read more »

The Economy of Expectations

W.D. Housley  |  Sep 5, 2026

"Or perhaps follow social media that sets a better example. Anyone got any suggestions?"
- DAN SMITH
Read more »

Locking it in

greg_j_tomamichel  |  Sep 5, 2026

"….there are lots of ways to achieve a good financial base, and following the textbook probably isn’t required if you find something else that works for you. General George Patton once said “A good plan, violently executed now, is better than a perfect plan next week." Leave out the violently executed part and I think his quote supports your point. My take away is that a good plan implemented now is usually better than a perfect one later. Sometimes later never comes. "
- DAN SMITH
Read more »

The Intentional Spendthrift

Mark Crothers  |  Aug 21, 2026

"Mark, I spent a week and a half in Portugal in May. Spent time in Lisbon and Porto and Braga (for a wedding). Fantastic time! Most time was spent in larger cities including 5 prepaid excursions. My wife and I definitely followed the “spend freely and enjoy the trip” mind set. Did you happen to visit the westernmost point on the European continent?"
- Andy Morrison
Read more »

Behind The Finery

Mark Crothers  |  Sep 3, 2026

"Thanks Mark. I had a slightly different take. If I go out for some form of entertainment, I would usually expect the whole event to be less than $100. But when just the deposit is $100, that's well out of my league!"
- greg_j_tomamichel
Read more »

State Farm Dividend

Bogdan Sheremeta  |  Sep 2, 2026

"Lucky for you that StF provides good service. After they challenged a simple $275 auto glass claim on a rental car, I wholly disagree. For anyone living in CA, they will not write any new home, renters, or umbrella policies. Note that StF has significantly changed their sales rep compensation model, favoring those reps who grow their biz and punishing reps who do not. Expect a shaking out period by longtime reps."
- Scott Dailey
Read more »

Make the Attic Great Again

Dan Smith  |  Sep 1, 2026

"Nearing your 80s and a new Z in the garage; you rock, John!"
- DAN SMITH
Read more »

Traditional or Roth

ArticleRichard Connor  |  Aug 29, 2026

THE CHOICE BETWEEN a traditional retirement account or a Roth is a frequent topic on HumbleDollar. The choice is generally framed as a choice between paying taxes up front (a Roth), or deferring taxes until withdrawal (traditional). I thought it would be interesting to evaluate a real-life example of how this choice might work out. In December of 2016 my wife and I had an opportunity to each open a Roth IRA. My wife took a partial sabbatical that year, and that, combined with maxing out our 401k accounts, gave us a chance to each open a $4,500 Roth IRA. The maximum allowable contribution that year was $6,500 for those 50 and over. Up until then we had assumed that our marginal tax bracket would likely be lower in retirement, and focused on contributing to our employer’s traditional 401k plans. Despite that, we decided to move forward with opening a Roth IRA. I thought it would give us some tax diversity, and the opportunity to do Roth conversions when, and if, it made sense in the future.  In December of 2016 we opened Roth IRAs at Vanguard and invested the $4,500 in their S&P 500 Index Fund. Those initial funds have been invested for almost 10 years. Over that decade we have added some additional funds, and have done a few conversions. I recently did a quick analysis to see how my Roth experience would have compared to investing in a traditional IRA.   In 2016, our marginal tax bracket was 28%.  To contribute the $4,500 required $6,250 of pre-tax income. Due to some financial engineering over the last year, including selling our second home in late 2025, I expect our 2026 marginal tax bracket to stay within the 12% bracket. I’ve been looking at this closely because I’m considering doing a Roth conversion later this year. The table below shows the comparison between the Roth performance, and what a traditional IRA would have produced. The annual rate of return was determined using Nick Maggiulli’s S&P 500 Historical Return Calculator. Roth vs Traditional The table shows that the Traditional IRA would have been the better choice, producing about $3,500 more in available funds, or about 22% more. This demonstrates that the primary driver in choosing between a Roth and a traditional qualified account is a consideration of the tax rates at the time of contribution and at the time of distribution. There have been a number of changes to the tax code in the last decade that have contributed to the result, but I certainly didn’t predict any of them.  If you guess wrong, you pay the price in a higher tax bill. In the example above, the extra $1,750 invested in the traditional account produced an additional $6,143.31 in earnings. The lower tax rate at the distribution of the traditional IRA results in the $3,500 in extra funds. Even though the Roth IRA had tax free earnings growth, the initial larger tax rate overcame that advantage, when compared to the traditional IRA.   Because of my pension and my wife’s social security benefit, 85% of her social security benefit is taxable income, so that is not a consideration in our tax calculation. I used Dinkytown’s 1040 Calculator to run a series of estimates of our 2026 tax return to assess if we want to execute a Roth Conversion this year. We are still 4 years from taking RMDs, and I will start my Social Security in a year when I turn 70. My current thinking is a conversion of about $40,000 will keep us in the 12% bracket. There would also be a small NJ state tax impact. My simple analysis reinforces what I’ve been taught. Roth contributions make the most sense when you think your current tax bracket is lower than when you expect to withdrawal the funds. There are secondary considerations, like no tax diversification, no RMDs, and uncertainty about future tax rates. If you intend to pass the funds to heirs, it might make sense to perform Roth conversions today at the 22% tax bracket if you intend to pass these accounts to heirs who may be in their peak earnings years. Not sure? I believe I recall several HumbleDollar contributors write something about splitting the difference?   Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.
Read more »

Financial Fraud

ArticleAdam M. Grossman  |  Sep 5, 2026

RECENTLY, A FELLOW—let’s call him Tom—contacted me with a distressing story of financial fraud. I’ll describe what happened then review steps you might take to prevent this same sort of thing. Tom first noticed there might be a problem when he spotted a larger-than-average withdrawal from his checking account. The payee was a 529 college savings plan. But because Tom and his wife—let’s call her Jane—have 529 accounts for their children, the transaction almost went unnoticed. Tom assumed it was a transfer into his own family’s account. But when he mentioned it to Jane, she noted that they had stopped contributing to their 529. That prompted them to investigate further. What they found was that scammers had set up a new 529 account in Tom’s name. They then initiated an electronic funds transfer to move more than $2,000 from Tom and Jane’s checking account into the new 529 set up by the thieves. The intention presumably was to then withdraw the funds from the 529, at which point the theft would become unrecoverable. How were the thieves able to initiate the transfer from Tom and Jane’s bank? This is the part that’s distressing: They took advantage of the widely-used Automated Clearing House (ACH) system. Unfortunately, this system has key weaknesses that make it susceptible to fraud like this. First, it allows funds to be “pulled” out of an account. That’s in contrast to a wire transfer, which can only be “pushed” out by someone with access to the account. So a thief would only need your name, account number and bank routing number to siphon funds from that account. And unfortunately, that information is printed on the front of every check, making it accessible to someone looking to perpetrate this type of scheme. Once the thief had the new 529 account set up in Tom’s name, it was just one simple step to initiate a transfer from Tom and Jane’s bank since the accountholder’s name was the same on both accounts. It was so seamless that if Tom hadn’t been reviewing the transactions in his account, he might never have noticed the theft. According to the FBI, losses due to cybercrime have increased from $1 billion per year to $21 billion over the past 10 years, and ACH theft is a tactic thieves are using more frequently, so it’s worth looking at strategies to help keep your accounts secure. Here are six recommendations.
  1. Secure the login to your bank account by setting up two-factor authentication. And if your bank supports it, use an authenticator app, rather than text messages, for the authentication codes. Ideally, if your bank supports it, switch to a passkey. This is a newer technology that represents a significant advance over traditional passwords. Most importantly, they aren’t vulnerable to phishing attacks. They’re also easier to use, providing one-click logins, and you can store passkeys in a password manager. For those reasons, more websites are beginning to support passkeys. I’d make the switch as soon as your bank makes them available.
  2. Set up alerts through your bank to monitor activity in your checking account. Every bank is different, but most allow you to set up email- or text-based alerts to let you know when transactions above a specified threshold are processed, or when other types of activity occur.
  3. Monitor your transactions. These days, it can be hard to keep an eye on every account. Households often have one or more bank accounts plus credit cards and electronic payment services like Venmo or Zelle. Most people realistically don’t have the time to review every account in real time. That’s why I recommend a service like Monarch or YNAB, which are web-based versions of traditional budgeting tools like Quicken. These services can pull in transactions from all your accounts and present them in a consolidated list, making review much easier. If you kept Monarch or YNAB open in a browser window on your home computer, you could scroll through recent transactions whenever you have a spare minute.
  4. To narrow the circle of people who have access to your account information, try limiting the number of paper checks you write. Especially with Zelle and Venmo as alternatives for making payments, this is getting easier. If you do write paper checks, be sure to use a gel pen and to avoid freestanding mailboxes. Those steps can help prevent a related type of fraud, as Jonathan Clements explained a few years back.
  5. Pay attention to notifications of data breaches. Unfortunately, breach announcements seem to occur so frequently that we’ve become immune to them. It’s worth paying attention, though, to understand which particular pieces of information have been stolen. If it looks like your banking information is included in a breach, it might be worth opening a new account, inconvenient as that would be.
  6. Have your guard up against unsolicited phone calls, emails or text messages. If someone is contacting you about an “account security issue,” or claims to be calling from your bank or from the IRS, be especially wary. Those are common tactics for creating a sense of urgency that can cause people to let their guard down.
What if, like Tom and Jane, you spot a fraudulent transaction in your account? Then it’s important to report it as quickly as possible. Regulation E can limit your liability, but the faster you report a suspicious transaction, the more protection it provides. Liability is limited to just $50 if a theft is reported within two business days, but that exposure increases to $500 if it’s reported later. And after 60 days, there are no guarantees. Thieves, unfortunately, don’t seem to sleep, which means that we need to be more vigilant than in the past, and need to be continuously vigilant. As personal finance author Mike Piper wrote recently, “Cybersecurity should be considered another core area of personal finance—no different from insurance planning, for instance.” 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.
Read more »

Free Newsletter

Get Educated

Manifesto

Sep 6, 2026

NO. 55: THE BEST PART of spending is often the anticipation, while the purchase itself usually disappoints. Buying a new car? Plan far ahead, so you enjoy a long period of eager anticipation.

humans

Sep 6, 2026

NO. 61: WE'RE anxious to help family and friends—but that desire can blind us to the risks involved. Think about things like lending money to a family member who doesn’t pay us back or investing in a friend’s business that fails. In such situations, we can not only lose significant money, but also the relationship involved is often irreparably damaged.

Truths

Sep 6, 2026

NO. 140: TENACITY trumps financial savvy. Even if we know how to build a great investment portfolio, our financial results will be miserable—if we make foolish decisions at times of market turbulence. Instead, the best results go to those who show great discipline, saving diligently and sticking with their investment mix when financial markets turn rough.

act

Sep 5, 2026

HAVE A FAMILY talk about college. How much financial help can you give your children? If they’ll need to shoulder part of the cost, tell them long before they start eyeing colleges. What career do your teenagers plan to pursue? If they’ll likely end up with a modest income, counsel them against colleges that will require taking on hefty student loans.

Money Guide

Start Here
Planner
Portfolio
Retire
Invest
Financial life planner

Manifesto

Sep 6, 2026

NO. 55: THE BEST PART of spending is often the anticipation, while the purchase itself usually disappoints. Buying a new car? Plan far ahead, so you enjoy a long period of eager anticipation.

Spotlight: Life Events

My Inheritance

Marjorie Kondrack   |  Sep 26, 2024

WE’VE ALL HEARD of the obscure relative—often a long-forgotten uncle or aunt—who leaves behind a surprise inheritance. This usually only happens in fairy tales, trashy novels and screwball comedy movies. I certainly never expected it to happen to me, especially at this late stage. But happen it did—from my lifelong friend Katie, who bequeathed me a generous sum.
I learned I was a beneficiary from the will’s executor and from a subsequent letter from the attorney handling the estate.

Read more »

Around the Obstacles

Dan Smith   |  Apr 25, 2026

I WAS 48 years old when the judgement was final and the papers were signed. My former wife and I split our net worth 50/50. There were no arguments over household items like furniture; I didn’t care about that stuff. Pam gladly accepted my proposal that she keep the house, and all its equity, in exchange for me keeping an offsetting amount of the IRAs and my 401(k), a very good move for my future self.

Read more »

After It’s Over

DAN SMITH   |  Nov 21, 2024

One of HD’s newer authors, Alina Fisch has a great article about Bucket Lists, but it was something in her bio that really caught my attention. Alina is a fee only financial advisor focused on helping single and divorced women.
My experience with the subject comes from my own divorce, as well as a handful of my income tax clients who found themselves in that situation.
These women were all good people and loving moms whose marriages ended for a variety of reasons.

Read more »

Financial Trauma

Mark Crothers   |  Feb 14, 2026

SOMETIMES WORLD events beyond your control create a hard reset point in your financial life. A before and after. For me, that point was the 2007 Great Financial Crisis (GFC). The psychological scars still reverberate into my current life.
 
Looking back, I was aware of something rumbling about in the financial landscape but didn’t take much notice due to being deeply involved in running my business. Little did I realize the impact heading my way.

Read more »

How Will You Know When It’s Time?

Rick Connor   |  Apr 13, 2025

A number of events over the past few months have me thinking about aging, mortality, legacy, frailty, and – of course – financial planning. These events included attending funerals, preparing tax returns (ours and dozens of others), visiting old friends and distant family, minor traffic accidents, winter doldrums, and the recent discussions on HumbleDollar on the unique estate planning needs of childless retirees. Recent market volatility may have played a small role.
My wife and I have a lot of real-world experience caring for aging and infirm parents,

Read more »

Farewell Friends

Jonathan Clements   |  Sep 22, 2025

If this post is appearing, it means I’ve succumbed to cancer or one of its side effects. Please don’t feel sad for me. I’ve had a life filled with love, great experiences and wonderful career opportunities. Despite my demise at a relatively young age, I consider myself beyond fortunate.
I’m hoping that, under the tree in front of our little Philadelphia rowhome, my wife Elaine will place a stone tablet inscribed with my name, and the year I was born and died.

Read more »

Spotlight: Grossman

Reality Check

Adam M. Grossman   |  Jan 19, 2025

A QUOTE OFTEN attributed to Mark Twain goes as follows: “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” This certainly applies to personal finance, and it’s why it can be helpful to take a step back sometimes to revisit widely held notions—including these six. 1. Social Security. You may have heard of Social Security’s “earnings test,” which can reduce the size of monthly checks for those who continue working after claiming benefits. It’s often perceived as a penalty, and indeed it can be substantial. Benefits are generally reduced by one dollar for every two dollars earned. For that reason, some people stop working just to avoid having their benefits cut. What is often overlooked, however, is that the earnings test only reduces a worker’s benefits temporarily, until he or she reaches full retirement age (FRA) of 66 or 67. Once a worker reaches FRA, his or her benefit is increased by an amount that makes up for the earlier cut. Despite its reputation, the test shouldn’t be a disincentive for those who want to continue working after starting Social Security. 2. Portfolio withdrawals. You may be familiar with the 4% rule for taking withdrawals from a portfolio in retirement. This 4% figure came out of research first conducted in 1994 by financial planner William Bengen, and it’s come to be seen as the gold standard for a safe retirement withdrawal rate. But in all his presentations and writings over the years, Bengen has emphasized a key point: that we really shouldn’t be so wedded to 4% that we treat it as a rule. Bengen notes that, in his own practice, he always used 4.5%, and he argues that a withdrawal rate of 5% or higher might be…
Read more »

Spend the Time

Adam M. Grossman   |  Oct 2, 2022

A FAVORITE QUOTE in the world of personal finance comes from Ernest Hemingway’s 1926 novel The Sun Also Rises. “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually, then suddenly.” Money troubles are a common theme throughout literature. Charles Dickens probably summed it up best. In David Copperfield, a fellow named Micawber laments: “Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” The message: Overspending is probably the quickest route to financial unhappiness. That’s hardly new information. A new study, however, sheds further light on this topic. Titled “Understanding and Neutralizing the Expense Prediction Bias,” the research explores a question that’s often overlooked: Why do people overspend? The study uncovered an interesting explanation. In their experiment, the authors asked people to estimate what their spending would be over the coming week. At the end of the week, participants reported their actual spending. The result, as you might guess: The subjects regularly underestimated their spending—by 12% to 25%, on average. They repeated this for four weeks, and each week the results were about the same. Then, for the fifth and final week, the subjects were split into two groups. The first group was asked to estimate their spending just as they had in prior weeks. The second group was given an additional prompt: They were told to think of three reasons why their spending in the fifth week might end up higher. They were given examples, such as an unexpected car repair or a medical bill. That made all the difference. At the end of the fifth week, the first group continued to underestimate its spending. But the second group—the one that received the additional prompt—ended up with much more accurate estimates. They actually overestimated their expenses by a hair. The conclusion: In estimating…
Read more »

What to Worry About

Adam M. Grossman   |  Jul 19, 2020

IN RECENT WEEKS, I’ve focused on some of the growing risks in the financial system. In the stock market, there are day trading enthusiasts and their obliging brokers. In Washington, there’s a Federal Reserve that has served up a seemingly bottomless punch bowl of new money. Result: Despite the current recession and 11% unemployment, the stock market is close to its pre-coronavirus all-time high, fueled in part by the Fed’s policies, which have driven income-starved investors to take greater risk. Meanwhile, the federal budget deficit has gone into the stratosphere—in June alone the deficit was $863 billion, up from $8 billion last year—and the Fed has printed about three trillion new dollars. A reader asked which posed a bigger risk, an overeager stock market or an overspending government. My response: These risks aren’t the only risks. In fact, the worst risks are the ones we aren’t currently paying attention to. Risks that catch us by surprise are, by definition, the ones we’re least prepared for. Below are just a few examples. Some of these represent risks to the entire system, while others may impact us individually. Cybersecurity. Talk to folks who work for financial institutions, and they'll tell you that their computer systems are attacked every day. Fortunately, most attacks are unsuccessful. But I worry about a situation where a major bank's systems are compromised. The result would be chaos, even if the problems were eventually sorted out. Identity theft and other types of fraud. In the past, I’ve mentioned Peter Willmott, the former chief executive of Federal Express, whose own bookkeeper stole nearly $10 million from him. Ulysses S. Grant, a former president, found himself bankrupted by a Ponzi scheme late in life. Fortunately, these are the exception rather than the rule, but they illustrate that fraud can affect anyone. Litigation. Travel down a highway in many…
Read more »

Six Figures Tiny Taxes

Adam M. Grossman   |  Mar 7, 2018

“IN THIS WORLD,” Ben Franklin famously once wrote, “nothing can be said to be certain, except death and taxes.” But I would also argue that neither is completely out of our hands. When it comes to our health, we all know that we should exercise, eat right and go for regular checkups. And when it comes to our tax bill, there’s quite a bit we can do to minimize it, especially in retirement. Below, I’ll illustrate how you might achieve an effective tax rate of less than 3% in retirement—even if your income is $100,000. How is that possible? The main thing to understand: When it comes to your income, the government doesn’t tax every dollar equally. In fact, some dollars don't get taxed at all. If you know the rules and are able to structure your income wisely, you could find yourself enjoying a high standard of living in retirement—without paying much tax at all. Think of this strategy as a three-legged stool. There are three major components, and you'll need to use them together: 1. The standard deduction. In the tax code, everyone receives a “free pass” known as the standard deduction. For married couples in 2018, $24,000 of income is tax-free, no matter how high their total income. In fact, once you turn 65, you're eligible for an even higher standard deduction. That's the first leg of the stool. 2. Social Security and Roth conversions. The second leg of this strategy requires careful timing, but isn’t overly complicated. For starters, you'll want to delay collecting your Social Security benefits until the latest possible date, which is age 70. That accomplishes two things: First, in exchange for waiting, the government will send you checks that are dramatically larger when they begin at age 70. Second, delaying Social Security will allow…
Read more »

Ignore the Rule

Adam M. Grossman   |  Aug 11, 2024

MARKET OBSERVERS have been predicting a recession for the past two years. Why? They’ve pointed to what’s known as an inverted yield curve, when short-term interest rates are higher than long-term rates. Historically, this has been a bad omen for the economy. The yield curve has been inverted since 2022—and yet, despite that, the economy has remained strong and stock markets have continued to hit new highs. That all changed on Aug. 2, when a little-known indicator known as the Sahm rule began flashing red. In general terms, this rule says that when the unemployment rate begins to increase at a particular rate, a recession is likely. Among economic indicators, the Sahm rule is relatively new, but back-testing has shown it to be remarkably accurate. Since 1959, it would have generated just two false positives. That’s why it caused alarm when the government released employment figures for July. The unemployment rate rose unexpectedly, exceeding the Sahm rule’s threshold. The result was an immediate selloff in stock markets around the world. In the U.S., share prices dropped 1.8% on Friday, Aug. 2, and another 3% the following Monday. International markets fared worse. In Japan, the Nikkei index dropped more than 12% on Monday, Aug. 5, its worst single-day loss since 1987. But despite the Sahm rule’s nearly unblemished track record, its creator, Claudia Sahm, was quick to step in with a cautionary word. “We are not in a recession now—contrary to the historical signal from the Sahm rule.... A recession is not inevitable.” What can we conclude from this? For starters, economists tell us that—alarming as they are—we should actually worry less about sudden market crashes than about conditions that deteriorate slowly. That’s because sudden crashes tend to be overreactions. One bad data point, such as the latest jobs report, is…
Read more »

What Drives Us

Adam M. Grossman   |  Jul 16, 2023

HARRY MARKOWITZ, the Nobel Prize-winning economist who passed away recently, invented a new approach to investing. Known as modern portfolio theory, it offered investors, for the first time, a logical approach to building portfolios. How much should you hold in stocks vs. bonds? Markowitz could tell you precisely. But Markowitz also knew math wasn’t the only driver of investment decisions. In a frequently cited interview, Markowitz recalled how he decided what to hold in his own retirement plan early in his career. “I visualized my grief if the stock market went way up and I wasn’t in it—or if it went way down and I was completely in it,” he said. “So, I split my contributions 50-50 between bonds and equities.” In other words, Markowitz set aside the formulas and opted for a solution that simply felt right. In later years, Markowitz said he did take a more rigorous approach. But he nonetheless found common ground quite often with behavioral economists—those who take a distinctly non-quantitative approach to investing. Markowitz happily collaborated, for example, with fellow economist Meir Statman on a 2010 paper. In it, they worked to reconcile modern portfolio theory with popular behavioral theories. Their conclusion: Consumers try to be rational, but only after deciding on their personal goals—which are rarely driven strictly by the numbers. In other words, the desire to maximize returns or to minimize risk, which are the two pillars of modern portfolio theory, aren’t the only factors that motivate investors. What does motivate investors? James O’Shaughnessy is the founder of a quantitative investment firm. In a recent write-up, he reflected on what he’s learned about investors through a long and successful career. One paper he found particularly valuable: “Why Do Individuals Exhibit Investment Biases?” To answer this question, the authors identified two factors. One…
Read more »
FREE NEWSLETTER
How To
Follow Us