FREE NEWSLETTER

Homo economicus may always behave rationally. But the rest of us try not to keep too much chocolate in the house.

Latest PostsAll Discussions »

“Gerontocracy” in America

"About 35% of all federal spending goes to seniors. We all know the state of national debt, current deficits and that costs us $1 trillion annually in interest payments. And yet social media is inundated with posts allegedly from seniors claiming how adequate SS and its COLAs are and that seniors need to be treated better, they can’t pay the bills. SS is neither going to remain solvent or be sustainable as it is today. At the same time some politicians are seeking increased benefits. One wants another $200 a month tax free immediately and another to increase future benefits by $2400. There is something seriously wrong with this picture. One demographic in the population simply can’t take disproportionately from the others for long without adverse consequences. We had 40 plus years to prepare for old age consistent with our life long income. Young people must deal with their current needs and saving for their futures."
- R Quinn
Read more »

Taxing Social Security benefits

"An aside - Note the 1983 form, page 2, required the preparer to include their full SSN on every return you signed for a client. Not everything old was good."
- William Perry
Read more »

Short term and long term Social Security planning

"My statement,”If there are going to be further cuts in benefits and raises in taxation let younger people who have time to adapt their financial plans be the people to sacrifice to ensure their future beyond, just like we were asked to do in the past.”, is that the above changes would secure our promised benefits and those of younger generations. We had to sacrifice a significant amount from when we first started, so why not younger generations?"
- DavidHLancaster
Read more »

Yet-Another Social Security Spreadsheet Analysis on what Age to Start taking Benefits

"When the most important value in the equation is unknowable, any decision is simply a roll of the dice."
- Mike A
Read more »

Beware the CFP Designation?

"I wouldn’t count on any three letters behind a name to ensure moral or ethical behavior."
- Mike A
Read more »

One Piece Of Paper

"Thanks, Winston. I really like your phrase, “the birth lottery.” We all begin life’s journey from different starting points, and it’s easy to underestimate how much that shapes the opportunities available to us. I also smiled at your comment about computers. It’s wonderful when something that begins as simple curiosity or enjoyment turns into a rewarding career. Like you, the older I get, the more I find myself focusing less on achievement and more on gratitude for family, opportunities, and the unexpected turns that made life richer than I ever imagined."
- Andrew Clements
Read more »

Before Someone Else Decides

"Thank you! I’m glad you found both helpful. I hope that the e-Booklet makes this daunting decision feel a little more manageable—one conversation and one step at a time."
- Kathleen Rehl
Read more »

When your 401(k) excludes target date funds

"Switching record keeper does not mean you have to change investment funds. Nor does it mean you have to use funds from the record keeper like Vanguard or Fidelity."
- R Quinn
Read more »

How Did You Find Paid Work After Retiring from Your Primary Career?

"Thank you for the very timely article and helpful responses. Per my “Fear of the unknown” post a few weeks ago, I find myself in the exact situation as Jeffrey. Over the past several weeks I have been exploring various lower paying, but potentially rewarding roles to pursue once my severance runs out. This includes visiting local places like the bank, library, supermarket, hardware store, Town Hall, etc. and observing the people at work. How old are they? Do they look happy? Could I see myself doing this? I have also been asking if there are any licenses or specific qualifications required so that I can pursue them while still receiving severance. This research has given me purpose and revealed some interesting results. At 59, I do not think that I am ready to veer too far away from the finance/investment field that I spent my career in, at least not yet. But there are plenty of ways to leverage my experience and help people, provided I get properly licensed. Yesterday I picked up Securities Industry Essentials (SIE) for Dummies at the library and based on my initial review of sample questions, I have my work cut out for me!"
- gnussen623
Read more »

Inflation, prices, COLAs, retirement and the last 16 years

"This from a quick search, Thank you for correcting me Sir! =========================================== Yes—Members of Congress are covered by Social Security for their work as members of Congress (they pay Social Security taxes and receive Social Security benefits based on their covered earnings). Their eligibility for Social Security is separate from their pension plan: they also participate in the Civil Service Retirement System (CSRS) or the Federal Employees’ Retirement System (FERS) for federal retirement, which is not Social Security."
- Donny Hrubes
Read more »

Taking a Loss?

"Rob - What you are describing is interesting. Would you describe how your ladder was originally structured in 2017?"
- S Sevcik
Read more »

“Gerontocracy” in America

"About 35% of all federal spending goes to seniors. We all know the state of national debt, current deficits and that costs us $1 trillion annually in interest payments. And yet social media is inundated with posts allegedly from seniors claiming how adequate SS and its COLAs are and that seniors need to be treated better, they can’t pay the bills. SS is neither going to remain solvent or be sustainable as it is today. At the same time some politicians are seeking increased benefits. One wants another $200 a month tax free immediately and another to increase future benefits by $2400. There is something seriously wrong with this picture. One demographic in the population simply can’t take disproportionately from the others for long without adverse consequences. We had 40 plus years to prepare for old age consistent with our life long income. Young people must deal with their current needs and saving for their futures."
- R Quinn
Read more »

Taxing Social Security benefits

"An aside - Note the 1983 form, page 2, required the preparer to include their full SSN on every return you signed for a client. Not everything old was good."
- William Perry
Read more »

Short term and long term Social Security planning

"My statement,”If there are going to be further cuts in benefits and raises in taxation let younger people who have time to adapt their financial plans be the people to sacrifice to ensure their future beyond, just like we were asked to do in the past.”, is that the above changes would secure our promised benefits and those of younger generations. We had to sacrifice a significant amount from when we first started, so why not younger generations?"
- DavidHLancaster
Read more »

Yet-Another Social Security Spreadsheet Analysis on what Age to Start taking Benefits

"When the most important value in the equation is unknowable, any decision is simply a roll of the dice."
- Mike A
Read more »

Beware the CFP Designation?

"I wouldn’t count on any three letters behind a name to ensure moral or ethical behavior."
- Mike A
Read more »

One Piece Of Paper

"Thanks, Winston. I really like your phrase, “the birth lottery.” We all begin life’s journey from different starting points, and it’s easy to underestimate how much that shapes the opportunities available to us. I also smiled at your comment about computers. It’s wonderful when something that begins as simple curiosity or enjoyment turns into a rewarding career. Like you, the older I get, the more I find myself focusing less on achievement and more on gratitude for family, opportunities, and the unexpected turns that made life richer than I ever imagined."
- Andrew Clements
Read more »

Before Someone Else Decides

"Thank you! I’m glad you found both helpful. I hope that the e-Booklet makes this daunting decision feel a little more manageable—one conversation and one step at a time."
- Kathleen Rehl
Read more »

When your 401(k) excludes target date funds

"Switching record keeper does not mean you have to change investment funds. Nor does it mean you have to use funds from the record keeper like Vanguard or Fidelity."
- R Quinn
Read more »

Free Newsletter

Get Educated

Manifesto

NO. 41: VERY FEW of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.

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.

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. 49: YOU CAN have stability of principal and stability of income but, in a liquid investment, you can't have both. Money-market funds and savings accounts offer stability of principal, but the rate paid can quickly rise and fall. Most bonds, by contrast, pay the same amount of interest each year until maturity, but they can fluctuate sharply in price.

How to think about money

Manifesto

NO. 41: VERY FEW of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.

Spotlight: Life Events

Hitting Repeat

Earlier this week, I asked readers, “If you could go anywhere in the world on your next trip, where would it be? If you could savor any experience, what would it be?”
I didn’t offer my own response—because I didn’t have one. At this point, I don’t have a strong urge to go to some exotic locale or try some new experience. On the other hand, there are places and experiences from my past that call to me.

Read more »

Times Like These

I really feel for people  who are unexpectedly losing their jobs late career because of the DOGE cuts.
I experienced something similar when I was pushed out of my 36 year banking job at age 59. I was a good performer, but when they want to get you they get you.
I struggled for a couple of years but the good news is that I finally figured things out and at age 70 I’m the happiest I’ve ever been.

Read more »

Close to Everything I Need

I DON’T HAVE MANY regrets in life. But there is one conversation with my mother that I wish I had never had. It was about moving her into an assisted living facility. She was in her 90s, and I thought it would be best for both of us.
My mother would receive better care, and I could take much-needed breaks. She could even keep her house and spend time there when I was with her.
It seemed like a middle-of-the-road approach to providing care.

Read more »

When should one give up control over finances?

Living in a 55+ community, I have heard about some elderly residents who have issues regarding unpaid bills, delayed payments, losing money in scams, and investing in high risk stocks. These residents were financially very savvy a few years ago and now they have difficulty keeping up. In some cases, their children have started handling their finances.
 
An article ( ” Dollars and Dementia – An early warning system” in AARP Bulletin, December 2025 issue) points out this could be an early warning sign that their cognitive abilities are declining.

Read more »

Financial Trauma

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 »

DST Transitioning

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

Read more »

Spotlight: Powell

Phoning It In

THOSE PAPER COVID-19 vaccination cards weren’t designed for heavy use. Yet many jurisdictions require proof of vaccination to enter a restaurant, theater, museum or sports event. How do we avoid wearing out the card when we’re constantly pulling it out of our purse, pocket or wallet? Simple. Provide digital proof of your vaccine status. There are some state-specific mobile apps that do this, like New York’s Excelsior Pass, as well as proprietary apps like Clear and Azova. But there wasn’t one likely winner to become a widely used system—until now. It’s called the SMART Health Card. The SMART Health Card is a verifiable health record from the CommonTrust Network, a non-profit registry of data sources that encompasses health systems, testing sites, vaccination providers and public health registries. A growing number of U.S. states, international governments and retail pharmacies—including Walmart, CVS, Rite Aid and Sam’s Club—have joined the network and become SMART Health Card issuers for vaccinations. All use SMART Health IT, an open standards program now supported in software platforms from Microsoft, Google, Apple, Amazon and others. Apple’s latest iOS 15.1 release, and Google Android 5 or later, also both use it. Here’s how two states, California and Washington State, both of which adopted SMART Health Cards, have made it easy to add proof of vaccination to your Apple wallet: Head to the state’s vaccine digital record site, which is here for California and here for Washington. Fill in your name, date of birth and cellphone number, and then choose a four-digit PIN and hit submit. The site will text you a link to its site that’s uniquely yours. Tap on the link texted to you. In the web page that opens, enter your PIN. The web page will load a QR code and more. Screenshot or print the QR code, then…
Read more »

Money for Later

IF A SALESPERSON had tried to get me to sink my hard-earned money into an investment that’s illiquid or issued by an insurance company, I would have shut down in a New York minute—until now. My spouse and I recently became owners of a deferred income annuity (DIA), with plans to put perhaps 15% of our savings into these products. Also known as longevity insurance, a DIA involves plunking down money today in return for regular monthly income starting at a future date. What convinced us to buy DIAs? Income hedge. We want income we can’t outlive. The DIAs will provide us with a safety net if the withdrawals from our 401(k), IRA and taxable savings fall short of what we expect or if our Social Security benefits get cut. Shrinking yields. Treasury bonds—both the conventional type and those that are indexed to inflation—are mainstay riskless assets in our portfolio. But today, they yield less than inflation. Yields on municipal and higher-quality corporate bonds are also disappointing, especially when you factor in the added risk involved. By contrast, with a DIA, we can collect handsome income, in part because the insurance company will be effectively returning part of our initial investment to us each month. Longevity risk. Some of us will live much longer than our birth year cohort. It’s impossible to know how life will go, but my spouse and I are keen to stay independent to the end. Simplicity. Our plan is to collect income from annuities and Social Security, while also taking required minimum distributions from our retirement accounts. Put these three together, and we have a simple plan for turning our savings into retirement income. That simplicity will be useful as we age. My first concern with buying an annuity was the usual—that our chosen insurer…
Read more »

Staying Wealthy

A CLOSE FRIEND'S LONG career in the motion picture business recently came to an end when the studio eliminated her job. Even before the pandemic, the industry was changing, so she wasn’t surprised or, for that matter, especially sad about getting laid off. She was lucky to receive a good severance package and is now ready to do something different. But finding the right job will likely take time, so carefully managing her cash through the transition period is crucial. That’s why alarm bells sounded when she asked me for advice about a product she’d been pitched by a wealth management vice president at her bank. “You have all this cash sitting in savings earning little,” he said. “Why not invest it with us? I designed something for you that’s liquid, conservative and pays monthly tax-exempt income.” Wow, specially designed just for my friend. How nice. Did the VP ask about her cash needs in the months ahead? Did she share her risk tolerance before he pitched this? “Nope,” she told me. “I just said I’d like to earn more on my savings.” “What if you put your cash in this investment—and it disappears when you need it most?” I asked. I wouldn’t have been so worried if the product really was low risk and liquid, with a return better than a savings account or certificate of deposit. But I couldn’t think of any investment like that today, so I was curious to read the VP’s proposal. What was this thing that he had “designed”? It turned out to be a portfolio of individual bonds and a bond fund actively managed by an outside investment advisor. The money would be held in a separately managed account, with a big chunk of the portfolio in municipal junk bonds. Thanks to its…
Read more »

Making a Mesh

THERE ARE AREAS in my life where I’ve spent too much money and time trying to be cheap. My reward: steady aggravation—until I spent a bit more to get the right solution. Which brings me to home networking technology. Most of us spend some $500 a year or more for internet broadband service. The problem: Many families are still living with old networking gear that’s slower than it should be, sometimes unreliable or provides poor wi-fi coverage in parts of their house. Networking technology can get complicated pretty fast, so internet service providers try to simplify their customers’ lives by integrating four separate networking functions into a single internet gateway device (IGD) that they give you upon installation—and for which you pay each month: Broadband modem. Usually cable or DSL, this is your main pipe to the internet. Firewall/router. This keeps unwanted internet traffic from your local network and routes traffic from your home to the internet. Ethernet switch. This connects less-common devices that use Ethernet cabling. Wi-fi access point. This provides wi-fi connectivity on your local network using either 2.4 GHz or 5 GHz channels. The integrated approach worked pretty well in the old days, when customers had just a few devices that needed internet access—and those devices weren’t constantly moving around the house, but instead could be placed near the IGD, where wi-fi signals are strong. For readers who live in a condo or a tiny house, the single IGD approach may still meet your needs, especially if your IGD is five years old or less. But if you’re living in a typical 2,400-square-foot house or bigger, one wi-fi access point may not give you usable wi-fi throughout your home. Wi-fi signal strength grows weaker with distance, and dramatically drops off when signals pass through each wall, door, ceiling…
Read more »

Get Me a Margarita

I HAVE LONG ADMIRED my good friend Nick for his generosity with friends—but also for his inspiring ability to pinch a penny. The man can pinch so hard he makes Lincoln cry, so I knew the world was changing fast when he installed a Ring video doorbell. Really? Pinch me. A decade ago, new technologies inspired fantasies of living in a Jetsons-style “smart home.” There was a nascent market for internet-connected products, such as the original Nest Learning Thermostat. Since then, the number of players and products has exploded. Smart assistants like Siri and Alexa also came along, further stoking growth, and sending companies scrambling to connect smart home products with assistants, so customers can control things with their voice. “Hey Rosie, get me a margarita on the rocks, no salt.” Okay, we’re not there yet. What is the state of smart home products? Some promise to save you time or money. Others offer improved home security, comfort or peace of mind when you’re out of the house. How much of it is currently worth sinking money into? In my own home, I’ve deployed a handful of the new technologies, some with good results and some mixed. Before you even consider any of this, be sure your family has a wi-fi network which reliably covers your whole home. My first project was “smart-for-dumb” device replacement. I swapped three of our seven old smoke-and-carbon-monoxide detectors for Nest Protect devices. Why not all seven at once? Smart devices are often two-to-four times the cost of “dumb” ones: $120 for Nest Protect vs. around $40 for a basic detector. I started with units in our foyer and hallways, leaving the bedrooms for later years. Installation was easy enough. I simply added the Nest units to our wi-fi network and they’ve been working reliably ever since.…
Read more »

Cloudy with Scattered Bubbles

Each year in Seattle, our exquisite summer weather exits stage left in September, pursued by a bear worthy of Shakespeare: pervasive gloomy clouds and steady rain persist until next July. More rain accumulates in other cities, but we have more gray, cloudy days (usually 226/year). Those many days of non-stop summer sunshine lead even the most careful to grow forgetful, leaving home without a rain shell, driving with joyous abandon on newly slick and dark roads. So it can be too, in our financial markets, after so much sunshine. We’ve lately lived through mostly sunny market prices. Except for April’s brief tariff tantrum, prices have risen, some rising even faster of late. Much ink has been spilled on the topic of market bubbles. Jonathan wrote this piece in 2021, before a big decline in both stock and bond prices during 2022 from a post-pandemic inflation spike. It’s impossible to predict the future, including highs and lows of stock prices over any period. But as Warren Buffett noted in one famous speech at Sun Valley in 1999, valuing is not the same as predicting. By several measures, U.S. stocks are expensive as of market close on Sep. 30: Warren Buffett’s metric, which divides total market cap of all U.S. stocks by current U.S. GDP is +2.43 standard deviations (SD) over its average since 1950, a new high. Schiller’s PE, aka CAPE or CAPE10, is now +2.2 SD over its average since 1950, but below its most recent high of +3.0 SD in Dec. 1999. Price/Sales metric, which tracks the ratio of the total price of the U.S. stock market versus total sales revenue from U.S. companies, is at +2.6 SD over average since 2000. S&P 500 mean reversion quantifies how far market prices are off the index’s long-term average growth rate;…
Read more »