Our To-Do List
John Yeigh | Jan 17, 2020
I HAVE NEVER BROKEN a New Year’s resolution—because, until this year, I’ve never made one. But now that I’m retired, with time on my hands, I figure my wife and I ought to challenge ourselves with 10 financial resolutions for 2020:
- We’ll continually monitor routine spending with the goal of reducing or eliminating at least half-a-dozen expenses this year. That’s one every two months. Phone companies, internet providers and insurers, be warned: Here we come. We already have the first expense reduction in the bag. We finally decided to eliminate the daily newspaper. We increasingly read the news online, so we’re probably a few years late to this particular party.
- Given today’s euphoric stock market, we’ll reconsider our portfolio weightings and perhaps rebalance our stock-heavy position. A pundit saying “back up the truck” and “there is no risk” makes me wonder whether markets might be close to a top.
- We will update our wills. They were written when our adult children were kids. We no longer need to name guardians. Separately, our payable-on-death accounts and tax-deferred accounts could be better organized. If you haven’t updated your will in five or 10 years, it’s probably due for an update.
- I’ll consider the impact of the SECURE Act, including the increase in the starting age for required minimum distributions (RMDs) from age 70½ to 72 and the end of the so-called stretch IRA, replaced by the need for most beneficiaries to empty inherited retirement accounts within 10 years. One implication: We’ll now have 18 more months to convert traditional IRAs to Roths before our taxable income gets a boost from RMDs.
- My wife and I will revisit our decision to delay claiming Social Security. Perhaps as a halfway measure, we’ll start one of the two payments.
- Although we’re fairly apolitical, we will follow 2020’s political developments closely. If one of the more business-unfriendly candidates gains traction, we’ll again consider reducing our overweight position in stocks.
- We both turn age 65 in 2020, so we’ll need to sign up for Medicare well ahead of our birthdays. We have our adult children on our supplemental health insurance, so we’ll need to figure out what to do with that coverage.
- We still have several small positions in relatively high-cost mutual funds held in tax-deferred accounts. We’re committed to getting rid of these funds, despite the annoying administrative headaches.
- I vow to spend more time educating my two children, ages 19 and 25, on financial issues. Happily, they already appear to be climbing the financial knowledge ladder. Now, if I could just get them to read HumbleDollar every day.
- Although we’re conservative, buy-and-hold investors who are mainly invested in index funds, I still follow the markets daily. Since I don’t trade frequently, watching makes no difference. My final resolution: Ignore the markets at least one day a week.
John Yeigh is an engineer with an MBA in finance. He retired in 2017 after 40 years in the oil industry, where he helped negotiate financial details for multi-billion-dollar international projects. His previous articles include Death and Taxes, Take a Break and 7,000 Days.
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Maybe it’s time to include a charitable gift of time, talent and treasure ?
Yep – I volunteer coach kids, mentor college kids, am actively involved in environmental volunteering, and regularly support youth-sports advocacy programs.
I share many of the same demographics and concerns, including a consideration regarding portfolio rebalancing. Yet each time I step back fearing that, by whatever name, I’m dipping a toe into the dreaded “market timing”. I’d welcome feedback and comments on the question, “don’t all buy/sell decisions have some element of timing involved?”
Unless you robotically rebalance at, say, the start of every year, there’s inevitably some judgment call involved. But I wouldn’t fret too much over that. Instead, the danger comes when you aren’t merely rebalancing back to your target asset allocation, but consciously deciding to stray from your targets.
I think #5 is an interesting question on Social Security. If your spouse’s SS benefits are less than half of yours it makes no sense to delay after Full Retirement Age for her as spousal benefits don’t grow after that date. Also actuarially unless you assume you both live past 80+ starting the lower benefit early hedges an early death. And on expense cutting have you culled your credit card annual fees too?
Finally I’m doing something better than one of HD’s writers! re: #10, I ignore the market TWO days a week – Saturday and Sunday.
re: #2 sort of, my favorite article to date on the gambler’s fallacy applied to investing.
#6 and #7 seem a little inconsistent. You take advantage of having your 19 and 25 yr old on your health insurance(#7) passed by the business-unfriendly party. On the other hand, you are concerned that if the business-unfriendly party(#6) wins you might have to pay more taxes. Free lunch?
I have to admit, the guardian thing was tough for us. Doubly so since our oldest has special needs. We didn’t really have anyone suitable, for a variety of reasons, and rotated that designation among two sets of friends as considerations changed. We like our families, but none of them were really ready / able for that kind of responsibility… yet none of them would have liked to hear that. We never found an optimal solution, which explains why I’m so relieved and happy that issue is done with in a few months.