Home - HumbleDollar

What is the right percentage?

R Quinn | Aug 9, 2026

"Okay. It still comes down to maximizing financial security in retirement no matter how long. I like to keep it simple, at a high level. Others like detailed analysis perhaps trying to account for every contingency like the person who posted here once that she tracked every penny they spent. ‘My maths-phobic approach has served us well for 58 years and you still won’t find a budget or spreadsheet on my iPad. As I have said before several times, save first, never have a credit card balance at the end of the month and spend the rest as you like. That’s the way we live in retirement too, except the save part is grandchildren’s 529 and reinvested interest and dividends. "

- R Quinn

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin | Aug 6, 2026

"I understand, thanks, Dunn"

- DAN SMITH

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn | Aug 11, 2026

Be the first to comment.

Can a Value fund also be a Growth fund?

Harold Tynes | Aug 11, 2026

Be the first to comment.

Roth Conversions and Taxes

ArticleJohn Urban | Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.

Risk and Taxes

ArticleAdam M. Grossman | Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site. 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.

“Gerontocracy” in America

Chris Rush | Aug 6, 2026

"I’ll not render an opinion of a book that I have not read, but several age impaired presidents and numerous lawmakers are a fine argument for age limits. Otherwise, like Mark and David write below, it’s no surprise that based on wealth and numbers, we boomers remain a powerful voting bloc."

- DAN SMITH

Looking Back On My Hard Luck Days

DAN SMITH | Aug 7, 2026

"Dick, your 3rd point is so powerful that it overshadows the first two. Connie is going through so much at this time, and she is lucky to have you in her corner. While you strive to take good care of Connie, don’t forget to take care of yourself as well. "

- DAN SMITH

FIFA Financials

R Quinn | Jul 19, 2026

"Me, too. Prices not outlandish."

- Jeff Bond

Before Someone Else Decides

Kathleen Rehl | Aug 2, 2026

"What a difficult and unsettling situation for all of you. You’ve described one of the hardest parts of planning ahead: family members can clearly see that living alone is becoming unsafe, yet the older adult is still entitled to make his own choices—even choices that others find baffling, like adopting a puppy while recovering from surgery. Your words, “we’re living some of it in real time” really struck me. This is precisely the narrow window when candid conversations and acceptable choices may still be possible, before a medical crisis forces the decision. I hope his upcoming surgery goes well and that your family can help him accept some form of support, whether in his home or closer to one of you, while he can still have a meaningful voice in what happens next. Thank you for sharing such a vivid, honest example of why these conversations matter."

- Kathleen Rehl

Short term and long term Social Security planning

William Perry | Aug 4, 2026

"Interesting question Robert that sent me down a rabbit hole. Using the CMS 271 page report with a transmittal letter of June 9, 2026 titled "THE 2026 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE (SMI) TRUST FUNDS" the best answer I can find appears to be that the IRMAA contributions are not broken out from the approximate 22% of total revenues that come from beneficiary premiums. Page 13 reads in part - For SMI, government contributions represent the largest source of income. These contributions covered about 75 percent of program costs in 2025. Also, beneficiaries pay monthly premiums for Parts B and D. Those premiums financed roughly 22 percent of the total cost in 2025... "

- William Perry

Taxing Social Security benefits

R Quinn | Aug 6, 2026

"I am going on a reading strike about Social Security. If the title says Social Security I do not read."

- Nick Politakis

What is the right percentage?

R Quinn | Aug 9, 2026

- R Quinn

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin | Aug 6, 2026

"I understand, thanks, Dunn"

- DAN SMITH

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn | Aug 11, 2026

Be the first to comment.

Can a Value fund also be a Growth fund?

Harold Tynes | Aug 11, 2026

Be the first to comment.

Roth Conversions and Taxes

ArticleJohn Urban | Aug 8, 2026

Risk and Taxes

ArticleAdam M. Grossman | Aug 8, 2026

“Gerontocracy” in America

Chris Rush | Aug 6, 2026

- DAN SMITH

Looking Back On My Hard Luck Days

DAN SMITH | Aug 7, 2026

- DAN SMITH

FIFA Financials

R Quinn | Jul 19, 2026

"Me, too. Prices not outlandish."

- Jeff Bond

Manifesto

Aug 9, 2026

NO. 71: WE SHOULD take a broad view of our bond holdings—and include our paycheck, Social Security and other bond-like income streams. Result? We may find we have too much in bonds.

Truths

Aug 11, 2026

NO. 33: MOST INVESTORS trail the market averages. That’s true whether a market is considered efficient or inefficient. Before investment costs, we collectively earn the results of the market averages. After costs, we must inevitably earn less. In fact, investors—as a group—will trail the market by a sum equal to the investment costs they incur.

act

Aug 10, 2026

KEEP ENOUGH in cash investments to give yourself a sense of security. It’s tempting to invest as much as possible for long-term growth. But research suggests putting perhaps $5,000 in a savings account or a money market fund can greatly improve our sense of financial wellbeing. If your emergency fund isn’t that large, consider stockpiling some cash.

think

Aug 10, 2026

ENDOWMENT EFFECT. We prize the items we own. We might believe our homes are worth more than they really are and our investments have performed better than they have, making us reluctant to sell. We might also hang on to investments we inherited from our parents, because we endow them with meaning beyond their actual value.

Money Guide

Manifesto

Aug 9, 2026

NO. 71: WE SHOULD take a broad view of our bond holdings—and include our paycheck, Social Security and other bond-like income streams. Result? We may find we have too much in bonds.

Spotlight: Careers

Extra Innings

Ken Cutler | Apr 23, 2024

IN MY EARLY 50s, when retirement began looking like a viable option, I started thinking seriously about what my life might look like after I stopped working as an engineer at a nearby nuclear power plant. Earlier in my career, I’d imagined living off my pension and not working at all. But by my 50s, I wasn’t so sure. I felt retirement could be a time to explore other work opportunities.
My favorite hardware store is less than a mile from my house.

Long Remembered: A Fine Recollection

Ken Cutler | Jun 29, 2024

Note: This is the second Forum piece from my ‘shelved articles’ archive. It was written months ago but never submitted to Jonathan.
These days, people often debate the value of a college education, but what about the value of a good high school education? I was fortunate to attend high school in Moorestown, New Jersey, a community that has always valued having an excellent school system.
With the perspective shaped by over 40 years of life post-graduation,

Direct Dealings

Marjorie Kondrack | Apr 4, 2025

You can’t put 10 pounds of potatoes in a 5 pound bag, but all my life I gave it a good try, and had a lot of interesting life experiences. I thought of ideas for a small, part time business venture that might provide a new opportunity to explore my creativity, with a flexible work schedule.
I got my chance— a neighbor invited me to a home demonstration party she hosted for a Beauty Consultant who sold cosmetic products.

Selling our business – contemplating what’s next

greg_j_tomamichel | Jul 4, 2025

So, we have signed the contracts. We have advised all our staff. We are talking to our customers every day about the sale, about the new owners and how it will be “business as usual”, how they can expect the same service that they have been used to.
We have already received lots of really positive and quite humbling feedback from our customers. Even those that could be challenging at times have been really generous in their praise and thanks.

EO 14249 Mandated Electronic Payments

William Perry | May 8, 2025

On March 25, 2025, the President of the United States signed Executive Order #14249 titled Protecting America’s Bank Account Against Fraud, Waste, and Abuse, which was published in the Federal Register on March 28.
The fact sheet states that, effective September 30, 2025, the Federal government will cease issuing paper checks for all disbursements, including intragovernmental payments, benefits, vendor payments, and tax refunds.
The fact sheet also states payments made to the Federal government,

Stored Memories: Friendship and Software

steve abramowitz | Jul 23, 2024

“I’m giving up on your cousin Bernie, Fay.”
“Bill, grow up already and stop acting like a wounded bird. Be a good husband and give him another year.“
“Another year? It’s already been three years and he told me two. Good-bye to our $20,000. I told you it wouldn’t be so easy to go from men’s clothing to shoes. Your family’s in la la land.”
The business lesson. My father looked up from his lamb chop and poked his fork at me.

No Right Answer

Philip Stein | Jul 20, 2023

DURING MY 30s, I worked for a defense contractor. The Berlin Wall fell in November 1989 and the Soviet Union imploded just over two years later. Many at work believed that the end of the Cold War would lead Congress to reduce defense spending. Sure enough, layoffs at my company commenced soon after. I was fortunate to avoid being laid off. I do recall, though, overhearing one coworker in his 50s who, after receiving a pink slip, lamented, “At my age, who will hire me?” I felt sorry for the poor fellow, and decided I had to get serious about investing for my future. I didn’t want my life to fall apart if I received a pink slip in my 50s or 60s. I was saving in the company’s 401(k) plan at the time, but that was about all. Having no investment knowledge, I thought it prudent to engage the services of a financial advisor. Without any experience, I didn’t know how to evaluate and select one. I made a choice based on an ad. I found the experience underwhelming. During my initial meeting, I recall the advisor asking me what I thought the inflation rate would be in a few years. I confessed that I had no idea, but pulled a number out of the air nonetheless. Sometime later, it dawned on me that the advisor was probably gathering inputs for a computer program that would spit out a report he could hand me—along with a bill for his services. I was working fulltime, so I made appointments to see him at 5 p.m. At one such meeting, the advisor cut our visit short because he had to get home to watch the kids, so his wife wouldn’t miss her guitar lesson. That’s when I decided to become a…

Skill or Luck?

Philip Stein | May 26, 2023

NASSIM NICHOLAS TALEB has written a trilogy on the topic of chance: Fooled by Randomness, The Black Swan and Antifragile. I didn’t find these three books to be easy reading, plus Taleb has strong opinions, which may turn off some readers. Still, there’s a host of investment lessons to be culled from his works. Taleb argues that randomness plays a powerful role in financial markets and, indeed, it influences market outcomes far more than most of us realize. One result: We’re often “fooled by randomness.” According to Taleb, most active managers who beat the market over a few years are simply lucky—which may explain why persistent outperformance is so rare. He labels those who ascribe their market-beating results to skill as “lucky fools” since, more often than not, randomness—better known as luck—is the probable reason for their success. Consider this thought experiment: You ask 10 people to flip a coin 10 times. It’s unlikely any one of them will flip, say, eight heads in a row. But if you ask 10,000 people, it’s highly likely that several will achieve this feat. With a large sample size, you should expect there to be several “successful” coin flippers. Such is the nature of randomness. Long streaks of positive and negative events do occur, even though they seem improbable to us. Globally, there are many thousands of individuals, money managers and institutions investing in stocks. Based on randomness alone, there’ll be some managers with market-beating results in any given period. But you can’t conclude that skill explains this short-term outperformance. Instead, most managers likely beat the market because they were lucky—and luck isn’t a “strategy” we should expect to persist. It’s common for investors to favor an actively managed fund if it boasts market-beating three-, five- or 10-year performance. Such results seem to…

Old Money

Philip Stein | Aug 7, 2023

COMMENTARY ABOUT America’s wealth inequality seems to be everywhere. According to Wikipedia, as of 2021’s fourth quarter, Federal Reserve data indicate that the top 1% of households hold 32.3% of the country’s wealth. Meanwhile, Pew Research Center reports that the median wealth of the richest 20% of American families increased by an inflation-adjusted 45% between 1998 and 2007, while the median wealth of middle-income families rose just 16%. And then there’s the Federal Reserve Bank of St. Louis, which reported that in 2019 a family needed a net worth of at least $1.22 million to be in the top 10% of wealthy families. These folks collectively owned 76% of household wealth. By contrast, a family needed at least $122,000 to land in the middle 40%, and this 40% of the population collectively owned 22% of U.S. wealth. Some commentators argue that this skewed wealth distribution is partly the result of tax advantages that aren’t available to the less wealthy. For instance, accumulated wealth is often taxed not at income-tax rates, but rather at lower capital-gains rates. Others point to tech billionaires and complain about them owning a disproportionate share of the country’s wealth. But there may also be a less politically divisive reason for America’s wealth concentration: longevity. Richard McKenzie, a professor emeritus of economics at the University of California, Irvine, has written that advances in medicine and better health care have increased the lifespans of the elderly—a considerable financial advantage, since longer lives mean more time to save and invest. Today’s retirees are able to compound their investments for longer than prior generations. The author offers an example: Consider a healthy 65-year-old retiree with a $1 million portfolio invested in an S&P 500-index fund. If our retiree can leave the portfolio untouched for 10 years and earn an average…

Meet Marcus

Philip Stein | Jun 23, 2024

I have a high-yield savings account and several CDs at Marcus bank, owned by Wall Street powerhouse Goldman Sachs and named after one of its founders, Marcus Goldman. I originally discovered Marcus bank while perusing rankings on bankrate.com. Marcus is an online bank and a member of FDIC. All accounts are insured up to $250,000. Marcus charges no monthly fees. There is no minimum balance to open a high-yield savings account, but a minimum balance of $500 is required to open a CD. Interest is compounded daily and reported monthly. In fact, you begin earning interest as soon as your deposit is received. The yields on my accounts are competitive with the offerings from other banks. For example, as of this writing, both American Express and Capital One offer high-yield savings accounts with an APY of 4.25%. Currently, my Marcus high-yield savings account sports an APY of 4.40%. One drawback: Marcus doesn’t offer checking accounts. You can link your Marcus account to an external bank account to move your money via electronic funds transfer. I linked my Marcus account to my Capital One checking account. I’ve also linked TreasuryDirect to my Marcus savings account to purchase or redeem T-bills. Other potential drawbacks: Marcus does not participate in the Zelle network nor does it have an ATM network. I depend on my Capital One checking account for these features. Because Marcus is not a full service bank, it’s usefulness is limited to anyone wanting to take advantage of its savings products. I’ve found the Marcus web site to have a professional, uncluttered appearance which makes it easy to navigate. If you’re looking for savings products with good yields, you may want to consider Marcus. For more information, simply point your browser at marcus.com.

Cash Ain’t Trash

Philip Stein | Dec 26, 2025

Occasionally, I read a newspaper article or web posting where the author prophesies that digital payment systems will eventually dominate the economy, and cash (currency and coinage) will become obsolete. Not so fast. While the use of digital payment technology is widespread and growing, cash will remain an important backstop in times when digital payment systems fail. And they do fail. Unfortunately, power grids and communication networks aren’t as robust as we’d like to believe. We know that severe weather events can knock out power grids, and software glitches can take down portions of the internet. Electronic payments won’t work when there is no power or no internet communication. Under those circumstances, cash is king. Consider what happened in Texas in February, 2021. Winter storms dealt a blow to the Texas power grid leaving millions of homes and businesses without electricity for over two weeks. During the blackout, people were lined up in freezing temperatures to buy desperately needed groceries, fuel, propane, and other goods. Unfortunately, you couldn’t transact using a credit or debit card because merchant systems were down. But you could purchase whatever you needed with cash. Spain suffered a power outage in June 2025 that caused widespread failures of digital payment systems. Businesses had to rely on cash transactions. A software bug in CrowdStrike’s security software in July 2024 temporarily halted digital payment systems globally. Once again, you could only transact using cash during the outage. During such crises, running to the ATM to get cash won’t help because ATMs are also down. To protect yourself when digital payments are not possible, it behooves you to consider keeping some cash in safe places around the house where it’s readily available during an emergency. We’re not talking about hiding a twenty dollar bill in your sock drawer. You’ll…

How Big Is Your Umbrella, Follow-Up

Philip Stein | May 1, 2025

I recently posted a request for comment about the appropriate amount of umbrella insurance one should have. I was hoping to learn of some formula or rule-of-thumb stating that "if your net worth is $X, you should carry $Y of umbrella coverage." As far as I can tell, there is no such formula or rule. Many thanks to those who responded. Mark Eckman wrote that most insurance companies offer a maximum umbrella of $5 million. Patrick Brennan’s insurance representative regarded $500,000 of liability coverage on his auto policy and a $1 million umbrella as sufficient for his needs. John Yeigh indicated that the most common legal settlements are in the $1-2 million dollar range. He personally has $3 million of umbrella coverage. Rob Jennings and David Lancaster both cover their net worth. Edmund Marsh has coverage a step above his net worth. Adam Grossman, in his post Grab an Umbrella, dated May 2, 2021, doesn’t explicitly call for matching umbrella coverage to your net worth. Instead, he asks how large a legal judgement against you might be. He cites one study reporting that most settlements fall in the $1-5 million dollar range. He therefore recommends that your umbrella coverage falls in that range as well. The website www.ramseysolutions.com (affiliated with radio personality Dave Ramsey) recommends carrying umbrella insurance if your net worth exceeds $500,000. Beyond that, your umbrella policy should cover your net worth according to the site. Ultimately, the extent to which your lifestyle exposes you to potential lawsuits (e.g., you have a pool, you coach youth sports, etc.) will dictate what an appropriate level of umbrella coverage is for your needs. My conclusion: If your net worth falls within the $1-5 million range cited by Adam, match your coverage to your net worth. Beyond that, talk to your…

What is the right percentage?

For most retirees, the greatest fear is not death—it is running out of money before they die.

Medicare Advantage Part C — Not too soon to start planning for 2027

Can a Value fund also be a Growth fund?

Roth Conversions and Taxes

Risk and Taxes

“Gerontocracy” in America

Looking Back On My Hard Luck Days

FIFA Financials

Before Someone Else Decides

Short term and long term Social Security planning

Taxing Social Security benefits

What is the right percentage?

For most retirees, the greatest fear is not death—it is running out of money before they die.

Medicare Advantage Part C — Not too soon to start planning for 2027

Can a Value fund also be a Growth fund?

Roth Conversions and Taxes

Risk and Taxes

“Gerontocracy” in America

Looking Back On My Hard Luck Days

FIFA Financials

Free Newsletter

Get Educated

Manifesto

Truths

act

think

Money Guide

Manifesto

Spotlight: Careers

Extra Innings

Long Remembered: A Fine Recollection

Direct Dealings

Selling our business – contemplating what’s next

EO 14249 Mandated Electronic Payments

Stored Memories: Friendship and Software

Spotlight: Stein

No Right Answer

Skill or Luck?

Old Money

Meet Marcus

Cash Ain’t Trash

How Big Is Your Umbrella, Follow-Up