There would probably be less hesitation to pay higher taxes in the U.S. if there was even a modicum of confidence that the dollars would be used with even some minor degree of efficiency and competence. The decline in these attributes is decades long and continuing down. Same goes for many of the individual state and city governments who embody the same malaise with the added aspect of being able to waste not only state generated revenue but federal dollars as well. Let's see some progress on this first...........meanwhile the avoidance of taxes to the degree legally possible and willingness to "vote with our feet" and at least move between states (if not the next step) is a growing focus for many.
Nice post as usual Mark.
Your experience prompted me to reflect on my ongoing journey to reduce the number of individual stocks in our portfolio each year on the way to an (almost) 100% indexed portfolio.
Each year during my annual rebalance exercise, I target select individual holdings (most held for a decade or more) that I will endeavor to sell in the coming year or two. I always promptly invest the proceeds in one of the indexes that needs a rebalance % "bump up". Let's call the selling side of that exercise that what it is, I am "timing" the sale of the individual equity trying to get that "exit price" I conjure up.
On the plus side, I do not try to time the reinvestment in the indexes and reinvest immediately.
My track record on this annual "timed" portfolio simplification exercise is mixed to be sure and that's without bothering (in most cases) to examine how things would have worked out had I just sold each equity and invested in the indexes in January vs 12-24 months later.
I know better than to try to "time" but allow myself a bit of grace because at least I am sticking to annual progress toward a goal of holding no more than 5 individual stocks within a set % allocation of the overall otherwise indexed portfolio. I will undoubtedly achieve goal within this decade.
Once I have "indexed" reinvested funds I have no problem just reallocating/rebalancing to target % once a year with ruthless, non emotional efficiency.
That said, I don't think I'll cure my self of timing on future sales of the rest of my individual equities.This year waiting paid off handsomely on one energy equity sale and I even added to an existing position on one of my long held equities that is on the "sell" list after it dropped well below its 5 year average.
Oh well, at least I did not add a ticker symbol to the portfolio! Those days are over. Again, it's a journey and "knowing thyself" helps with navigation along the way.
Edmund,
Thanks for a well crafted article.
Your journey is a familiar one in many ways from my perspective.
Your approach is akin to the "Bucket Strategy" which I have found to be a helpful structure in the approach to, transition into and continuation of retirement.....without ever trying to determine a rate of withdrawal or "burn down" of assets.
We determined how much of a "salary" we would pay ourselves from our retirement "Buckets" over 10 years before retirement and then inflation adjusted that figure 3% annually thereafter while also projecting what this inflation adjusted "salary" would be all the way to age 95 (my optimism has limits). This gave us a clear view of our glide slope all the way into retirement to the degree I could see clearly the year I could have retired had I wanted to. I sounds like you are in a similar situation.
Now in retirement; once a year I update the "Bucket" spreadsheet and make sure our "salary" is secure out to at least age 95 and beyond. If appropriate, based on the year's market performance; I realign bucket #1 and 2 based on their time horizon times the annual "salary". I have not yet had to "refill" from equity heavy bucket #3 as the small equity component of bucket #2 has done the refilling thus far. Like you, I do commit myself each year to further simplify the overall portfolio into small number of index based funds/ETFs.
In summary, our goal after years of choosing frugal living and saving was to define and sustain our own desired standard of living in retirement and to sleep well at night. The Bucket Strategy has accomplished this for us without having to worry about "salary cuts" induced by a withdrawal rate % calculation, worrying about what does or does not happen with Social Security or considering buying annuities to make up any gaps between now and when we "kick the bucket".
...or federal taxes either. I suspect my heart will warm even more, (maybe even overheat) in coming years at federal and property tax time to help keep all the public employee defined pension and retiree medical benefit promises. I gave up paying state income taxes over a decade ago so sadly I won't feel the same warm satisfaction from contributing through that channel.
That sounds like a very good guess. Out of necessity I have had a front row seat with an aged relative's state pension and supplemental healthcare coverage. I was particularly impressed with the creativity with which the usual COLA increases-when not able to be publicly supported for a time due to abysmal state finances, were offset by a state income tax credit of sorts for affected pensioners to in effect give the COLA increase anyway- more or less under the radar. Very creative.
It warms my heart to know that a good portion of the population gets such generous retirement benefits and often at a younger age than the general population as well. Nice to see promises kept.
That said, these are expensive promises to keep making.
I agree with everything both you and Dan are saying but the "insurance" analogy only carries so far. For those who make it through life without any of the curve-balls life can throw at a person where a Social Security "Insurance Claim" is warranted; there should be no S.S. payments at all. The program was designed in a different time when the country was reeling from the depression and retirement savings were dubious at best.
The forward looking mindset needs to shift to "I paid into it but I hope I never need it". No different than one would hope to not be in a serious car wreck or a tornado blows down one's home when paying a true insurance premium.
Maybe this approach would also begin to shift some peoples' ill informed mindset and resultant life choices driven by the notion that Social Security will be or should be their sole retirement fund.
It needs to truly become the "safety net" and not part of the tightrope itself that we all walk in life.
The impending deployment of retirement accounts able to be funded soon after birth is a good start and another arrow in the quiver to right size this S.S. albatross that hangs around the neck of the country. I hope some default funding from the government becomes the norm along with auto-investment in an equity index. It will be a far better investment than doling out S.S. funds by default to those who do not need the "insurance" years from now.
One can dream........
My thought is that tools of this nature appeal to people who have not needed or wanted to claim Social Security prior to FRA or age 70. For those in this category, it potentially becomes an exercise of examining how to attempt to get the best return for an "investment" (albeit a forced one) from all the years of Social Security related payroll deductions.
Keying of Dick Quinn's standing view that Social Security is a form of insurance; I believe this view would be shared by Franklin Delano Roosevelt (FDR) if he were able to add comment here. In any case, why not transition the S.S. system into something akin to true insurance? When you take out and pay into a home owner or auto insurance policy you don't get a guaranteed annual payment from these policies (other than small periodic dividend checks from mutual policies). Could you imagine the even higher cost of insurance if we all got some form of regular diluted income from these policies?
a) While I do support "keeping the promise" for those who have already started drawing benefits or at least passed or approaching their their FRA; some phase down or "freeze" of benefits seems in order for those who are years away from retirement and do not need the "insurance" of a monthly check from Uncle Sam in retirement. For those paying into the system already but years away from retirement this would be akin to the "freezing" of pensions many of us (non-government workers) experienced in our careers during the transition to 401Ks. As has been suggested here by other writers, some of the funds after the "freeze" could be invested in he stock market to fill the gap on the "promise" for those who started paying in but are years away from retirement.
b) Thereafter, anyone entering the work force would be truly on an "insurance" basis-only receiving benefits on a needs basis after retirement and or if experiencing a life crisis earlier in life as is customarily covered by the "insurance of S.S. today.
c) To be clear, everyone earning wages would have to pay into the S.S. "insurance" pool as everyone could at some point in their life need the "insurance" plus it's the right thing to do.
d) All that said, instead of continuing to figure out how to grow S.S. and tax more, perhaps the focus should be on paying out less or none to people who will not need it in future years while still providing the "safety net" that FDR envisioned.
e) There also seems to be a psychological issue surrounding S.S. that needs a major shift. Presently it is something people look forward too and tend to lean on /overestimate the future benefit of as they make financial choices in pre- retirement life. Seemingly all too often they are disappointed after starting to collect S.S. then complain it's "not enough". In a true "insurance" paradigm, it really should be thought of as "I sure hope I never need this but it's there if all does not go as planned". The noisy S.S. tax debate will decrease in volume-to some degree at least- when the system is not facing perpetual guaranteed payouts for all.
Comments
There would probably be less hesitation to pay higher taxes in the U.S. if there was even a modicum of confidence that the dollars would be used with even some minor degree of efficiency and competence. The decline in these attributes is decades long and continuing down. Same goes for many of the individual state and city governments who embody the same malaise with the added aspect of being able to waste not only state generated revenue but federal dollars as well. Let's see some progress on this first...........meanwhile the avoidance of taxes to the degree legally possible and willingness to "vote with our feet" and at least move between states (if not the next step) is a growing focus for many.
Post: Billionaires, taxes and you
Link to comment from May 30, 2026
Nice post as usual Mark. Your experience prompted me to reflect on my ongoing journey to reduce the number of individual stocks in our portfolio each year on the way to an (almost) 100% indexed portfolio. Each year during my annual rebalance exercise, I target select individual holdings (most held for a decade or more) that I will endeavor to sell in the coming year or two. I always promptly invest the proceeds in one of the indexes that needs a rebalance % "bump up". Let's call the selling side of that exercise that what it is, I am "timing" the sale of the individual equity trying to get that "exit price" I conjure up. On the plus side, I do not try to time the reinvestment in the indexes and reinvest immediately. My track record on this annual "timed" portfolio simplification exercise is mixed to be sure and that's without bothering (in most cases) to examine how things would have worked out had I just sold each equity and invested in the indexes in January vs 12-24 months later. I know better than to try to "time" but allow myself a bit of grace because at least I am sticking to annual progress toward a goal of holding no more than 5 individual stocks within a set % allocation of the overall otherwise indexed portfolio. I will undoubtedly achieve goal within this decade. Once I have "indexed" reinvested funds I have no problem just reallocating/rebalancing to target % once a year with ruthless, non emotional efficiency. That said, I don't think I'll cure my self of timing on future sales of the rest of my individual equities.This year waiting paid off handsomely on one energy equity sale and I even added to an existing position on one of my long held equities that is on the "sell" list after it dropped well below its 5 year average. Oh well, at least I did not add a ticker symbol to the portfolio! Those days are over. Again, it's a journey and "knowing thyself" helps with navigation along the way.
Post: The World’s Least Useful Financial Adviser
Link to comment from May 29, 2026
Edmund, Thanks for a well crafted article. Your journey is a familiar one in many ways from my perspective. Your approach is akin to the "Bucket Strategy" which I have found to be a helpful structure in the approach to, transition into and continuation of retirement.....without ever trying to determine a rate of withdrawal or "burn down" of assets. We determined how much of a "salary" we would pay ourselves from our retirement "Buckets" over 10 years before retirement and then inflation adjusted that figure 3% annually thereafter while also projecting what this inflation adjusted "salary" would be all the way to age 95 (my optimism has limits). This gave us a clear view of our glide slope all the way into retirement to the degree I could see clearly the year I could have retired had I wanted to. I sounds like you are in a similar situation. Now in retirement; once a year I update the "Bucket" spreadsheet and make sure our "salary" is secure out to at least age 95 and beyond. If appropriate, based on the year's market performance; I realign bucket #1 and 2 based on their time horizon times the annual "salary". I have not yet had to "refill" from equity heavy bucket #3 as the small equity component of bucket #2 has done the refilling thus far. Like you, I do commit myself each year to further simplify the overall portfolio into small number of index based funds/ETFs. In summary, our goal after years of choosing frugal living and saving was to define and sustain our own desired standard of living in retirement and to sleep well at night. The Bucket Strategy has accomplished this for us without having to worry about "salary cuts" induced by a withdrawal rate % calculation, worrying about what does or does not happen with Social Security or considering buying annuities to make up any gaps between now and when we "kick the bucket".
Post: Slow on the Draw
Link to comment from May 9, 2026
...or federal taxes either. I suspect my heart will warm even more, (maybe even overheat) in coming years at federal and property tax time to help keep all the public employee defined pension and retiree medical benefit promises. I gave up paying state income taxes over a decade ago so sadly I won't feel the same warm satisfaction from contributing through that channel.
Post: The reality of Social Security and Medicare- My real life experience.
Link to comment from May 6, 2026
That sounds like a very good guess. Out of necessity I have had a front row seat with an aged relative's state pension and supplemental healthcare coverage. I was particularly impressed with the creativity with which the usual COLA increases-when not able to be publicly supported for a time due to abysmal state finances, were offset by a state income tax credit of sorts for affected pensioners to in effect give the COLA increase anyway- more or less under the radar. Very creative. It warms my heart to know that a good portion of the population gets such generous retirement benefits and often at a younger age than the general population as well. Nice to see promises kept. That said, these are expensive promises to keep making.
Post: The reality of Social Security and Medicare- My real life experience.
Link to comment from May 6, 2026
I agree with everything both you and Dan are saying but the "insurance" analogy only carries so far. For those who make it through life without any of the curve-balls life can throw at a person where a Social Security "Insurance Claim" is warranted; there should be no S.S. payments at all. The program was designed in a different time when the country was reeling from the depression and retirement savings were dubious at best. The forward looking mindset needs to shift to "I paid into it but I hope I never need it". No different than one would hope to not be in a serious car wreck or a tornado blows down one's home when paying a true insurance premium. Maybe this approach would also begin to shift some peoples' ill informed mindset and resultant life choices driven by the notion that Social Security will be or should be their sole retirement fund. It needs to truly become the "safety net" and not part of the tightrope itself that we all walk in life. The impending deployment of retirement accounts able to be funded soon after birth is a good start and another arrow in the quiver to right size this S.S. albatross that hangs around the neck of the country. I hope some default funding from the government becomes the norm along with auto-investment in an equity index. It will be a far better investment than doling out S.S. funds by default to those who do not need the "insurance" years from now. One can dream........
Post: Is saving really that hard? Nope, not for the great majority of Americans.
Link to comment from April 28, 2026
My thought is that tools of this nature appeal to people who have not needed or wanted to claim Social Security prior to FRA or age 70. For those in this category, it potentially becomes an exercise of examining how to attempt to get the best return for an "investment" (albeit a forced one) from all the years of Social Security related payroll deductions.
Post: Rethinking the “Right” Time for Social Security
Link to comment from April 24, 2026
Keying of Dick Quinn's standing view that Social Security is a form of insurance; I believe this view would be shared by Franklin Delano Roosevelt (FDR) if he were able to add comment here. In any case, why not transition the S.S. system into something akin to true insurance? When you take out and pay into a home owner or auto insurance policy you don't get a guaranteed annual payment from these policies (other than small periodic dividend checks from mutual policies). Could you imagine the even higher cost of insurance if we all got some form of regular diluted income from these policies? a) While I do support "keeping the promise" for those who have already started drawing benefits or at least passed or approaching their their FRA; some phase down or "freeze" of benefits seems in order for those who are years away from retirement and do not need the "insurance" of a monthly check from Uncle Sam in retirement. For those paying into the system already but years away from retirement this would be akin to the "freezing" of pensions many of us (non-government workers) experienced in our careers during the transition to 401Ks. As has been suggested here by other writers, some of the funds after the "freeze" could be invested in he stock market to fill the gap on the "promise" for those who started paying in but are years away from retirement. b) Thereafter, anyone entering the work force would be truly on an "insurance" basis-only receiving benefits on a needs basis after retirement and or if experiencing a life crisis earlier in life as is customarily covered by the "insurance of S.S. today. c) To be clear, everyone earning wages would have to pay into the S.S. "insurance" pool as everyone could at some point in their life need the "insurance" plus it's the right thing to do. d) All that said, instead of continuing to figure out how to grow S.S. and tax more, perhaps the focus should be on paying out less or none to people who will not need it in future years while still providing the "safety net" that FDR envisioned. e) There also seems to be a psychological issue surrounding S.S. that needs a major shift. Presently it is something people look forward too and tend to lean on /overestimate the future benefit of as they make financial choices in pre- retirement life. Seemingly all too often they are disappointed after starting to collect S.S. then complain it's "not enough". In a true "insurance" paradigm, it really should be thought of as "I sure hope I never need this but it's there if all does not go as planned". The noisy S.S. tax debate will decrease in volume-to some degree at least- when the system is not facing perpetual guaranteed payouts for all.
Post: Fixing Social Security once and for all
Link to comment from April 19, 2026
Thank you, James.
Post: Social Security Survivor Benefits for Spouses
Link to comment from April 18, 2026
AMEN, Dick. Social Security is not welfare.
Post: Fixing Social Security once and for all
Link to comment from April 18, 2026