"Andy, I agree. If I were drawing down my own portfolio, I’d use a total return approach. That said, I’m not dogmatic about it. The dividend approach may be suboptimal, but I understand its appeal. Long-standing dividend payers tend to be less volatile, and when you pair that with fairly steady cash flow, it’s a compelling proposition for many people drawing on retirement accounts. Optimization only works if you can also sleep at night. During a prolonged downturn, focusing on dependable cash flow rather than net worth probably makes for better sleep among those with a dividend-first mindset."
""With $5 million net worth would everyone feel wealthy? That’s a big maybe. Why?"The answer is in the Millionaire Next Door. We compare ourselves to our neighbors. In the neighborhood I live in, $5M looks very wealthy. A few miles away in the Manor in Larchmont, not so much."
YOU MAY BE familiar with a concept known as Pascal’s wager. Named for Blaise Pascal, a devout seventeenth-century French mathematician, it was a thought experiment in which he tried to weigh, in logical terms, the costs and benefits of believing in God. His conclusion: The cost of not believing—a potential eternity of damnation—was so extreme that it far outweighed any other consideration.I mention Pascal’s wager because a common question is whether similar logic might apply to financial decision-making. While not perfectly analogous, I do think the central premise of Pascal’s wager is useful—that we should be attuned to situations where the relative outcomes may be lopsided. Consider the stock market, where two types of risk are, in my opinion, often underappreciated.The first of these risks is, counterintuitively, that market history can be unhelpful and misleading. Look back at the U.S. stock market over the past 100 years, and you’ll find that its average annual return has been right around 10%, thus doubling about every seven years. Through that lens, the stock market has been a powerful and reliable way to build wealth.The problem, though, is that this 10% figure is a long-term average return. Look at the market’s actual returns from year to year, and they’re anything but average. Some years are better than average, but some are much worse. As I noted last week, there have been a handful of years in which a worker entering retirement would have faced severe headwinds. These include 1929, of course, as well as 1969 and 2000. Most other years wouldn’t have posed as much of a challenge. But since there’s no way to know which sequence of returns any of us will encounter in our own retirements, we can’t rely on the market’s long-term average. In fact, we almost need to ignore that number and instead insulate our portfolios against those worst case scenarios. Long-term averages, unfortunately, don’t apply to any one individual.That’s the risk in looking at market history. The market’s current conditions can be equally misleading. That’s because, when the market is strong, as it is today, investors tend to draw one of two equally problematic conclusions.Some look at recent performance and conclude that it’s likely to continue. This is known as recency bias, but it’s a way of thinking that’s entirely understandable. After all, it’s totally rational to expect and assume that tomorrow won’t look dramatically different from today, because most of the time that’s the way things turn out. But from time to time, things do really change. Because those changes are the exception rather than the norm, though, and because they often arrive without warning, recency bias continues to be a powerful force that can lull investors into a false sense of security.Other investors look at a highflying market and draw an entirely different conclusion. They focus on metrics like the market’s price-to-earnings ratio (P/E)—which is undeniably elevated—and conclude that the market is skating on thin ice and thus likely to drop. That seems rational. The problem with this conclusion, though, is that valuation tools like the P/E ratio aren’t perfectly predictive; they only look predictive. This has been known for a long time, but this week, a new paper by researcher Cullen Roche provided additional perspective to support this point. The paper is titled, “Valuations Matter. Just Not the Way Wall Street Says.” The central premise: The market’s P/E ratio has almost zero predictive power in the near term. Statistically, it tells us virtually nothing about returns over the coming 12-month period. When are valuation metrics helpful? In Roche’s research, he finds that metrics like the P/E are only roughly indicative of future returns and only over a 10-year period. The bottom line: Whether one is an optimist or a pessimist, the data tell us that we should be careful to avoid bets that go too far out on a limb in any one direction.That presents a problem, though: If we shouldn’t look at market history and shouldn’t put too much stock in where the market is today, then how should we think about our finances? Here are three suggestions:
Set an asset allocation target for your portfolio and then manage to that target. In general, the result will be that you’ll sell stocks when they’re high and buy when they’re low, which is exactly the right result. And by taking this approach, you’ll avoid the generally unhelpful advice of market commentators claiming to be able to read the economic tea leaves.
Put most of your focus on your own financial plan. I suggest tracking what I call the big four: your income and expenses, assets and liabilities. If you can get these numbers on one sheet of paper and track them over time, I see that as maybe the most productive financial exercise.
Avoid “exciting” investments. It would be easy to look at a company like Nvidia, which has seen its stock gain 14,000% over the past 10 years, and feel motivated to search for the next market leader. Intuitively, we know this is harder than it looks, and the data confirm that stock-picking is extraordinarily difficult. But according to some studies, it’s even harder than that. Research by Hendrik Bessembinder has found that the median lifetime return of all of the stocks that have traded on U.S. exchanges historically is actually negative. Just 4% of all stocks have accounted for all of the market’s returns in excess of Treasury bills.
As Pascal might have suggested, look for ways to tilt the odds in your favor even when the future is, ultimately, unknowable.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 @AdamMGrossmanand check out his earlier articles.
"If we're blessed, our work brings both satisfaction and money, and we need both, though it's often hard to find them living together. But remove the need for money, and we're free to hone in on what truly brings satisfaction. It might still be work, but maybe not. Let's enjoy retirement, but keep it fresh."
YEARS AGO, while practicing law, I was a frequent contributor to Humble Dollar. I loved Jonathan Clements’s vision for the site - a corner of the financial universe built on clarity, frugality, and the quiet dignity of living within one’s means.Then my life took a sharp pivot. I left legal practice to teach gifted-and-talented students and coach varsity athletics at a public magnet high school. Almost immediately, my submissions here dried up. I was consuming entire days guiding brilliant teenagers through complex history, breaking down match film, and grading papers long past sunset and on weekends.I wrote to Jonathan with genuine regret, apologizing for going dark on such a wonderful enterprise. His reply was quintessential Jonathan: he explained to me with characteristic, succinct warmth that his own adult child was a teacher, adding that he wasn’t sure there was a higher calling on Earth.He was right about the calling. But what nobody warns you about a calling is its capacity to consume you whole if you let it.The Cliff EdgeThis past year, the math simply broke. Between high-load AP teaching, head coaching, and the relentless calendar of high school athletics, I was regularly clocking 17- to 18-hour days during soccer season. My central nervous system finally redlined badly. Worse, I realized with a gut punch that I had missed nearly the entire senior year of my oldest son while running on that treadmill. This realization hit me at his graduation when I felt physically exhausted and unable to enjoy what should have been one of the proudest moments of my life. I was determined to make it up to him in whatever way I could (for example, we are visiting him today at college, and we go often to see him in San Antonio - a 90-minute drive from Austin). Moreover, I will not repeat this mistake and will enjoy the years I have left with my two high-school-aged daughters.With teenagers preparing to leave the nest and a close family member facing severe illness, I stepped away. I took a sabbatical. Maybe it will delay our retirement slightly, but as I will express further below, I am not sure I will ever really retire.The VoidFinancial planners love to reduce retirement to a single milestone: "The Number." The spreadsheets run 10,000 Monte Carlo simulations, the house is paid off, the withdrawal rates are dialed in, and the industry assures you: You have arrived. You are safe.At 45, I had not retired in the traditional sense, but I had stepped off the cliff of full-time professional identity because my body told me I needed to. And what I discovered in the sudden, unanticipated quiet is something many retirees spend years agonizing over without having the vocabulary to describe: The number is not the answer.When you abruptly remove the machinery of a demanding daily routine, you don't instantly find nirvana. You find a void.In a recent discussion on non-financial retirement readiness, former financial adviser Tyler Gardner framed this dilemma in his video on non-financial retirement needs around Self-Determination Theory, pioneered by psychologists Edward Deci and Richard Ryan. Deci and Ryan posited that human well-being rests on three basic psychological nutrients: competence, relatedness, and autonomy.For all its stress and bureaucratic friction, a demanding career supplies all three automatically. When you walk away from work, those three nutrients can vanish before your celebratory cake is even eaten.If you don't deliberately rebuild them, the fallout can be physiological.The Trap of "Mental Retirement"In aging literature, researchers study a sobering phenomenon bluntly termed "mental retirement" - the cognitive softening that occurs when a person ceases to be intellectually stretched.A decade-long study from Binghamton University examining China’s rural pension expansion revealed that early retirement significantly accelerated cognitive decline. Crucially, the researchers noted that the negative impact of reduced social and mental engagement outweighed the physical benefits of improved nutrition and sleep that the pension provided.Work forced us to solve problems under pressure. Sabbaticals and retirements do not.To counteract that loss, I had to create self-imposed challenges. During my grueling years in the classroom, exercise was the first thing pushed off the ledge. On leave, I reclaimed the time. I started chasing benchmarks for physical competence.Recently, I set out to regain a grueling standard: 10 continuous minutes on the Jacob’s Ladder. It was a benchmark an elite special operator had given me when I served as an Army JAG supporting special operations in Afghanistan in my late twenties. My first time back on the ladder? I barely completed one minute and staggered off it trembling and nauseous. But every week, I kept working at it - sometimes adding a few seconds and other times several minutes until I got to 10 minutes again this week. Crossing that threshold didn't merely burn calories; it restored a measurable gradient of physical competence and, with it, confidence.Whether it is conquering a brutal conditioning standard, learning a language, or mastering an instrument, we need something where we can objectively say: I am better at this today than I was last month. I will now find a new physical benchmark to pursue, while coming back occasionally to that masochistic Jacob's Ladder.The 40 Invisible PeopleThe second nutrient, relatedness, is where most folks get ambushed.When people contemplate retirement, they assume their social health depends on their spouse or a handful of close friends. But work provides something entirely different: a vast scaffolding of "weak ties."In a landmark 2014 study published in Social Psychological and Personality Science, researchers Gillian Sandstrom and Elizabeth Dunn found that daily subjective happiness and feelings of belonging rose noticeably on days when people had more peripheral interactions - even something as fleeting as a 20-second genuine exchange with a coffee barista.Broader public health research reinforces this with astonishing gravity. A massive meta-analysis led by Julianne Holt-Lunstad spanning over 300,000 individuals found that strong social integration increased survival likelihood by 50%. Remarkably, the mortality benefit was strongest for complex, varied social networks (the diverse web of people you bump into) rather than simple binary measures like living with someone.When I taught, I had hundreds of involuntary interactions before lunch: hallway greetings, banter with the front desk, coaching video sessions, cafeteria check-ins. On my sabbatical, I plunged into writing a historical thriller called The Blood Money Ledger set during the Vietnam War - a passion project rooted in my love of history and informed by my own military service.I was thrilled to find that the fiction flowed with unexpected ease. In fact, I am now leaning toward turning my main character, Tom Calder, into a series of books about morality, the law, and institutional rot. But writing is, by definition, solitary confinement.Left entirely unmanaged, isolation is insidious. To survive it, I had to engineer artificial friction:
I go to the gym at the exact same hour every day to see the familiar faces of regulars.
Once a week, a close friend and I meet at a local coffee shop; he reads while I hammer out words for the book. It’s quiet, parallel work, but the ambient presence makes the solitary act of writing sustainable.
I signed up for an evening furniture-making class to work with my hands alongside people I wouldn't otherwise meet - a skill I am going to start out terrible at and eventually become... less terrible at.
I took on a volunteer docent shift at the Austin History Center, trading archival stories with curious strangers.
None of these people are lifelong confidants - except my close friend who joins me for coffee. But together, they rebuild the 40 casual touchpoints work used to gift me for free.Anticipation Over AccumulationThe final hazard is structural: time without seams.When we dream of retirement, we picture unstructured calendars and checking off items on an expansive bucket list. But behavioral psychology shows we often misunderstand how human satisfaction works.In a well-known 2010 study by Dutch researcher Jeroen Nawijn tracking over 1,500 adults, vacationers exhibited significantly higher happiness before their trips than non-vacationers. The post-trip happiness bump, however, was negligible and evaporated rapidly. Even though I haven't written for Humble Dollar much in the past several years, I have been a frequent lurker, and know that this is a topic we all understand well.The engine of joy is almost entirely anticipation, not completion.A bucket list should never be treated like a grocery list where the goal is an empty page. If you clear out your list with no new ambitions behind it, life goes flat. The real art is maintaining a continuous horizon of things you are eagerly anticipating: an upcoming course, a seasonal trip, an archival project, or a fresh manuscript draft. We are in the midst of using high school and college graduation presents as family adventures we take. For my son's graduation gift - he loves soccer - I took him and his soccer-obsessed sister to the World Cup. My other daughter, who is very much not soccer-obsessed, and my wife visited a spa together for significantly less money. Win-win.The Real LedgerThe Monday morning after your final Friday, your spreadsheet will not ask how you are doing, provide an intellectual hill to climb, or hand you an unexpected laugh across a desk.The number is just the admission ticket that we too often obsess over. The actual show begins when you decide what will make your days count.John Goodell was a deputy director of policy and general counsel at the Texas Pension Review Board. Currently an Army Reservist, he previously served 14 years on active duty before leaving to become the general counsel at the Texas Veterans Commission. John has spent much of his career working with public sector employees on tax, investment, estate planning and retirement issues. His biggest passion is spending time with his wife and kids. Check out John's earlier articles.
"I have a cousin who is divorced, 65 plus, retired two years ago and has constantly been traveling to every part of the world. Africa, Asia, Europe. She is determined to do everything she wanted to and is working hard at it. I even wrote a HD article about her a couple of years ago. More power to her. I envy her."
"Very true. The accommodations didn't impact our enjoyment at all. We actually got a chuckle out of it. Much of our family travel with our children was in a Sears cabin tent. Those memories are the best."
FINANCIAL EMERGENCIES have a way of compounding when least expected. This is often coined as a correlated risk. I call it running out of clean underwear. My father used to profess, in emergencies, that turning pairs inside out was a legitimate way to extend undergarment use under duress. Financially, this is merely extending the life of a depreciating asset. I am sure my mother would have refuted this concept. Nevertheless, before you judge me too harshly, allow me to share the situational details.Three weeks ago our 7 year old washing machine, an example of aging capital equipment, began exhibiting signs of being possessed. Wash cycles were accompanied with grinding noises and violent walks across the floor. Spin cycles initiated poltergeist-like behavior, with heavy banging and metallic thuds made by nether-world demons.An internet search revealed the probable cause of the machine’s paranormal behavior, which was likely broken suspension rods or damaged shock absorbers holding the inner tub in place. After watching 8 or 9 YouTube videos, I decided that I had the inner fortitude to de-demonize our beloved washing machine. And being thrifty, I wished to avoid the major capital expenditure of replacing the washer.I consider myself handy and even pride myself on the 65% success rate for fixing household appliances. Yes, I freely admit that past performance is no guarantee of success. However, since I was attempting to maintain my existing emergency fund, I ordered new drum springs; at 7 years old it seemed financially responsible to repair rather than replace the machine. Upon arrival of the rods, I subsequently installed them in a mere 3 hours (I like to think of myself as methodical, rather than speedy). With a screwdriver in hand, one bruised elbow, and my pride on the line, I separated the whites from the darks and ran a load. Success!Unfortunately, the clean clothes ran up against another obstacle. Our 10 year old dryer must have been jealous of the attention its utility counterpart received. What are the odds that both a washer and a dryer would malfunction in the same week? Call it correlated asset failure. In my house, in hindsight, the odds were pretty darn high. One appliance repair was manageable. Two was beginning to feel like collusion between utilities.To make matters worse, the washing machine was only functional for two loads. Just because you can purchase parts on the internet does not guarantee long term utility after installment, in essence rendering my original repair invalid. Sunken costs for a depreciating asset. In this case, I probably broke a plastic piece holding the inner tub while replacing the springs.Unfortunately, I was lulled into a false sense of security, and was outside the house when those diabolical mechanical fiends struck again. When I returned, the washer was in full demonic dance, this time mischievously thumping our 17 year old water heater. The water tank wanted no part of the dance, and promptly sprung a supply line leak. Great.In hindsight, advocating for a larger emergency fund balance would have been prudent for someone like me with a known 35% failure rate.I ran to the big box store to purchase a new pipe and some sealing tape, but silly me, I forgot to take measurements of the tank and valves. I called my wife in the parking lot to assist. My mistake was to ask her to check if the tank’s intake valve was functional. It was not, evident by her high pitched scream and the clear sound of water gushing. Note to self: remember to shut off the main water supply before asking the wife to help with water tank issues. Did I mention that our daughter’s future in-laws were coming to dinner the next day? In the end, we purchased a new water heater and were only without water for two days. We also purchased a washing machine, but it took roughly three weeks for delivery, as we required a difficult footprint size to fill the space occupied by the previous device. Our emergency fund survived, albeit at a lower level than anticipated. As a side note, I was able to fix the dryer, for the most part, so that a full replacement was not necessary. The experience taught me a few lessons. First, household financial risks may appear independent, yet often this is not the case. It was easy to fathom we had our unexpected events covered with our existing emergency fund. Yet compounding systemic appliance failures pushed the unexpected expenses towards our theoretical limits. Second, my father was only partially correct. Underwear is not a renewable asset.I should also think about establishing a separate Fruit of the Loom reserve account to accompany our current emergency fund. A decision my mother would have approved.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.
"Andy, I agree. If I were drawing down my own portfolio, I’d use a total return approach. That said, I’m not dogmatic about it. The dividend approach may be suboptimal, but I understand its appeal. Long-standing dividend payers tend to be less volatile, and when you pair that with fairly steady cash flow, it’s a compelling proposition for many people drawing on retirement accounts. Optimization only works if you can also sleep at night. During a prolonged downturn, focusing on dependable cash flow rather than net worth probably makes for better sleep among those with a dividend-first mindset."
In Retirement
Strategic Retirement Income
Gordy Vytlacil | Oct 3, 2026
Investing
Rich or Wealthy?
R Quinn | Oct 5, 2026
Investing
Market Risks
ArticleAdam M. Grossman | Oct 10, 2026
- Set an asset allocation target for your portfolio and then manage to that target. In general, the result will be that you’ll sell stocks when they’re high and buy when they’re low, which is exactly the right result. And by taking this approach, you’ll avoid the generally unhelpful advice of market commentators claiming to be able to read the economic tea leaves.
- Put most of your focus on your own financial plan. I suggest tracking what I call the big four: your income and expenses, assets and liabilities. If you can get these numbers on one sheet of paper and track them over time, I see that as maybe the most productive financial exercise.
- Avoid “exciting” investments. It would be easy to look at a company like Nvidia, which has seen its stock gain 14,000% over the past 10 years, and feel motivated to search for the next market leader. Intuitively, we know this is harder than it looks, and the data confirm that stock-picking is extraordinarily difficult. But according to some studies, it’s even harder than that. Research by Hendrik Bessembinder has found that the median lifetime return of all of the stocks that have traded on U.S. exchanges historically is actually negative. Just 4% of all stocks have accounted for all of the market’s returns in excess of Treasury bills.
As Pascal might have suggested, look for ways to tilt the odds in your favor even when the future is, ultimately, unknowable.Saving
FINANCIAL MISTAKES
Kenneth Tobin | Oct 7, 2026
From HumbleDollar Founder Jonathan Clements
Investing
Behaving Badly
In Retirement
Momentarily Embarrassed by “Not Much”
Mark Crothers | Oct 9, 2026
Happiness
The Number Is Not The Answer
ArticleJohn Goodell | Oct 10, 2026
- I go to the gym at the exact same hour every day to see the familiar faces of regulars.
- Once a week, a close friend and I meet at a local coffee shop; he reads while I hammer out words for the book. It’s quiet, parallel work, but the ambient presence makes the solitary act of writing sustainable.
- I signed up for an evening furniture-making class to work with my hands alongside people I wouldn't otherwise meet - a skill I am going to start out terrible at and eventually become... less terrible at.
- I took on a volunteer docent shift at the Austin History Center, trading archival stories with curious strangers.
None of these people are lifelong confidants - except my close friend who joins me for coffee. But together, they rebuild the 40 casual touchpoints work used to gift me for free. Anticipation Over Accumulation The final hazard is structural: time without seams. When we dream of retirement, we picture unstructured calendars and checking off items on an expansive bucket list. But behavioral psychology shows we often misunderstand how human satisfaction works. In a well-known 2010 study by Dutch researcher Jeroen Nawijn tracking over 1,500 adults, vacationers exhibited significantly higher happiness before their trips than non-vacationers. The post-trip happiness bump, however, was negligible and evaporated rapidly. Even though I haven't written for Humble Dollar much in the past several years, I have been a frequent lurker, and know that this is a topic we all understand well. The engine of joy is almost entirely anticipation, not completion. A bucket list should never be treated like a grocery list where the goal is an empty page. If you clear out your list with no new ambitions behind it, life goes flat. The real art is maintaining a continuous horizon of things you are eagerly anticipating: an upcoming course, a seasonal trip, an archival project, or a fresh manuscript draft. We are in the midst of using high school and college graduation presents as family adventures we take. For my son's graduation gift - he loves soccer - I took him and his soccer-obsessed sister to the World Cup. My other daughter, who is very much not soccer-obsessed, and my wife visited a spa together for significantly less money. Win-win. The Real Ledger The Monday morning after your final Friday, your spreadsheet will not ask how you are doing, provide an intellectual hill to climb, or hand you an unexpected laugh across a desk. The number is just the admission ticket that we too often obsess over. The actual show begins when you decide what will make your days count.Family
Room For Happiness
Andrew Clements | Oct 7, 2026
Lists
Jonathan’s Parting Thoughts: No. 6
Jonathan Clements | Oct 2, 2026
Life Events
Laundered
ArticleJeffrey K. Actor | Oct 3, 2026
Investing
Financial Ruin for Beginners
Mark Crothers | Oct 6, 2026
In Retirement
Is now the time for an annuity?
R Quinn | Oct 2, 2026