That’s a fair point regarding the gap between perceived and actual tax rates. However, your effective rate depends heavily on your home state and where you sit on the income spectrum.For high earners in states like Minnesota, California, or New York, the math shifts significantly. When you layer a top federal bracket of 37% with state income taxes that can exceed 9% (and even reach 13% in some jurisdictions), the combined effective rate can quickly climb toward 50%.At those levels, tax planning isn't just about complaining—it’s a matter of stewardship. This is especially true for those who hit these high brackets for only a few years in a decades-long career (like during the sale of a business or a peak-earning window). For them, executing strategies to move an effective rate back toward 30% is a necessary step to protect their family’s long-term financial well-being. While the U.S. may be "low tax" on average, the burden is highly concentrated at the top, which drives the intensity of the debate.
This isn't a new phenomenon; it’s the timeless struggle of managing expectations versus reality. While some today view yearly vacations and modern luxuries as baseline necessities, those with a more clear-eyed view understand the true difference between what we want and what we actually need. We all know how this story ends. The disciplined, who to control their expectations and work hard, tend to end up comfortable and secure. On the other hand, the entitled, who treat luxuries as rights, often find themselves struggling later in life, usually blaming "the system" rather than the decades of vacations and leased cars that came at the expense of their future.
Do others find it disheartening that many people define themselves by their job? While it's undeniable that many colleagues and others will define you by your job title, allowing your job to dictate how you see yourself seems to be self-limiting. I happily retired at age 55, and have found the last three years to be full of fun, family, friends, and engaging activities. My goal is to be a better retiree than worker. Given the abundance of available activities, what's really preventing recent retirees from diving in?
Wow, thanks for sharing! On average, people are of average intelligence. You seem to be confusing a lack of time/resources with a lack of brains. Social Security is complex, and getting advice from a friend or the SSA website is exactly what 'average' people—who are also busy working, raising families, and living—are supposed to do. The best advice is to clarify the path, not insult the travelers.
To be fair, we should also recognize that the time value of money should be considered when making these comparisons. The payroll taxes were paid over an individual's entire working life, sometimes decades before benefits began. If one were to calculate the future value of those early contributions, including a reasonable rate of return, the actual "break-even" point—where the benefits received equal the contributions plus interest—would be significantly longer than the 6-9 years mentioned.
Great points in the article and in many of the comments! Annuities aren't a one-size-fits-all solution and, as you mentioned, they may underperform during a strong bull market. However, a key benefit of annuities that's often overlooked is their potential for downside protection. A portion of a retirement portfolio allocated to annuities could provide a valuable safety net, especially in a prolonged period of stagnant or contracting equity markets. Japan offers a great historical example of this, where their stock market experienced a significant downturn and then stagnated for many years, from around 1990 until the early 2010s. In such a scenario, a fixed annuity's guaranteed income stream could have been a lifesaver for retirees, offering stability when their equity investments were faltering. Ultimately, it comes down to diversification. Combining a growth-oriented equity portfolio with the stability of an annuity can help mitigate risk and create a more resilient retirement plan, no matter what the market does. Perhaps it comes down to the retiree's risk appetite.
Thank you for the terrific article. When I was still working, it seemed as if those who were "so busy" were among those who were least effective. Now in retirement, having nearly complete control of my time has been delightful, allowing me to focus on those activities that give me and those I love joy.
Comments
That’s a fair point regarding the gap between perceived and actual tax rates. However, your effective rate depends heavily on your home state and where you sit on the income spectrum. For high earners in states like Minnesota, California, or New York, the math shifts significantly. When you layer a top federal bracket of 37% with state income taxes that can exceed 9% (and even reach 13% in some jurisdictions), the combined effective rate can quickly climb toward 50%. At those levels, tax planning isn't just about complaining—it’s a matter of stewardship. This is especially true for those who hit these high brackets for only a few years in a decades-long career (like during the sale of a business or a peak-earning window). For them, executing strategies to move an effective rate back toward 30% is a necessary step to protect their family’s long-term financial well-being. While the U.S. may be "low tax" on average, the burden is highly concentrated at the top, which drives the intensity of the debate.
Post: Your effective tax rate
Link to comment from February 1, 2026
This isn't a new phenomenon; it’s the timeless struggle of managing expectations versus reality. While some today view yearly vacations and modern luxuries as baseline necessities, those with a more clear-eyed view understand the true difference between what we want and what we actually need. We all know how this story ends. The disciplined, who to control their expectations and work hard, tend to end up comfortable and secure. On the other hand, the entitled, who treat luxuries as rights, often find themselves struggling later in life, usually blaming "the system" rather than the decades of vacations and leased cars that came at the expense of their future.
Post: The impossibility of defining needs.
Link to comment from January 5, 2026
Do others find it disheartening that many people define themselves by their job? While it's undeniable that many colleagues and others will define you by your job title, allowing your job to dictate how you see yourself seems to be self-limiting. I happily retired at age 55, and have found the last three years to be full of fun, family, friends, and engaging activities. My goal is to be a better retiree than worker. Given the abundance of available activities, what's really preventing recent retirees from diving in?
Post: Happy Hour, or The Panic Button? Why Early Retirement Anxiety Is Real.
Link to comment from December 1, 2025
Wow, thanks for sharing! On average, people are of average intelligence. You seem to be confusing a lack of time/resources with a lack of brains. Social Security is complex, and getting advice from a friend or the SSA website is exactly what 'average' people—who are also busy working, raising families, and living—are supposed to do. The best advice is to clarify the path, not insult the travelers.
Post: Social Security subject beaten to death, but one more time please
Link to comment from October 24, 2025
To be fair, we should also recognize that the time value of money should be considered when making these comparisons. The payroll taxes were paid over an individual's entire working life, sometimes decades before benefits began. If one were to calculate the future value of those early contributions, including a reasonable rate of return, the actual "break-even" point—where the benefits received equal the contributions plus interest—would be significantly longer than the 6-9 years mentioned.
Post: Nope, you didn’t pay for YOUR Social Security benefits
Link to comment from October 5, 2025
Great points in the article and in many of the comments! Annuities aren't a one-size-fits-all solution and, as you mentioned, they may underperform during a strong bull market. However, a key benefit of annuities that's often overlooked is their potential for downside protection. A portion of a retirement portfolio allocated to annuities could provide a valuable safety net, especially in a prolonged period of stagnant or contracting equity markets. Japan offers a great historical example of this, where their stock market experienced a significant downturn and then stagnated for many years, from around 1990 until the early 2010s. In such a scenario, a fixed annuity's guaranteed income stream could have been a lifesaver for retirees, offering stability when their equity investments were faltering. Ultimately, it comes down to diversification. Combining a growth-oriented equity portfolio with the stability of an annuity can help mitigate risk and create a more resilient retirement plan, no matter what the market does. Perhaps it comes down to the retiree's risk appetite.
Post: Outliving Your Money? Let’s Do the Math on Annuities
Link to comment from August 14, 2025
Truly sad, but after all these years you surely can't be surprised by these people, can you?
Post: Get your head out of …. Creating problems that can be avoided.
Link to comment from August 5, 2025
Thank you for the terrific article. When I was still working, it seemed as if those who were "so busy" were among those who were least effective. Now in retirement, having nearly complete control of my time has been delightful, allowing me to focus on those activities that give me and those I love joy.
Post: Choosing Yes by Saying No
Link to comment from August 5, 2025
Terrific article. All I could do while reading it was smile.
Post: Getting Roasted
Link to comment from November 27, 2024
Laura, you wrote a terrific article. Thank you for sharing your experience and including how you put your plan in place.
Post: Laying Down a Floor
Link to comment from September 14, 2024