Greg Spears

I BOUGHT AN EXPENSIVE new water heater last year for my house in Maine. The old heater had a ring of rust at the bottom, and I was spurred to act by an $800 rebate offered by the state of Maine, which was contingent on buying a heat pump water heater. The new water heater draws its heat from the surrounding air, and is two-to-three times more efficient than my earlier model.
I filled out a rebate form at the appliance store counter.

I WAS HAVING DINNER in Santa Fe, New Mexico, with a new friend, Joseph. He told me of his frustration with his financial advisor. The two might meet for an hour, but afterward Joseph still didn’t know what to do.
“Explain it to me like I’m five,” he said to me. So I did.
Joseph has a PhD from an Ivy League university, so he doesn’t need a kindergarten story. Yet I understand his frustration.

IN THE CENTER OF the Maine village where I spend my summer, a few residents live in a makeshift encampment. It consists of four popup trailers—the kind towed by cars—plus some cars, dilapidated lobster boats and a couple of pup tents, one containing children’s toys.
The residents live without running water, so they bring it to the site in gallon jugs. Their laundry hangs on clotheslines strung between trees and a lobster boat. The site looks forlorn and temporary,

WHEN I WAS YOUNG and unschooled about money, I borrowed thousands of dollars to attend Northwestern University. As I recall, tuition was around $12,000 a year in 1980, and I had only $3,000 to my name. How could I pay?
The dean sent me a letter explaining that the college would lend me the money for my master’s degree in journalism. It would also extend me a work-study job, which would help pay for my spartan off-campus room.

LESS THAN HALF of Americans—46%—have tried to calculate how much they need to save to live comfortably in retirement, according to a 2022 survey by the Employee Benefit Research Institute. I often meet extremely bright people—doctors, residents, PhD students and professors—who say with a sheepish smile that they don’t understand the intricacies of their retirement plans.
For some, this lack of understanding is a choice. People who sense they haven’t saved enough, or any money at all,

AROUND THE TURN of the year, investment experts issue their forecasts for the next 12 months. Bloomberg says it has gathered more than 500 market predictions for 2023, with many forecasting a rough year for the financial markets.
I’ve done my research as well, and I’m now prepared to offer my forecast: There’s an 80% chance that the S&P 500 will return between -10% and 30% in 2023.
I can’t claim this as original work.

JUST IN TIME FOR Christmas, a sweeping new retirement law has passed both houses of Congress, and should be signed into law this weekend. Dubbed the SECURE Act 2.0, it makes dozens of significant changes to the employer-based savings systems that millions of workers depend on for retirement.
Under the new law, some workers will be able to save far larger catch-up contributions during the home stretch of their working years. Meanwhile, retirees can delay taking required minimum distributions until age 73 starting in 2023.

WHEN JANET YELLEN was nominated to be Secretary of the Treasury, the Senate Finance Committee staff went over her tax returns with a magnifying glass. Yellen, an economics PhD who taught at Harvard, always prepared the returns for herself and her husband, economics Nobel laureate George A. Akerlof.
“She discovered to her surprise that she had been doing the family taxes wrong for years,” reports Owen Ullmann in his excellent new biography of Yellen,

YOU KNOW IT’S BEEN a rotten year for investors when it’s time to brush up on the rules for tax-loss harvesting. It’s one way to turn negative returns to your advantage, provided you act before year-end.
If you have taxable investments that have lost value this year—and who doesn’t? —the basic idea is to sell them in 2022 to lower the taxes you owe. Realized losses can be used to offset any investment gains you’ve realized this year.

I LOOKED UP OUR investment account balance recently. It’s something I’d avoided doing for months. My wife, the voice of reason, said we might bounce a check if we didn’t know how much was in the money market fund. Confession: I don’t balance our checkbook manually.
I waited to log on until after the Dow Jones Industrial Average shot up 14% in October, its best month since 1976. I don’t know why the bear lost its grip on the Dow last month,

BONDS ARE ON PACE to have their worst year on record. To be sure, once interest rates stop rising—perhaps early next year—they may win back their place as a worthwhile investment for retired investors. But right now, that feels like wishful thinking.
As the Federal Reserve has hastily raised short-term interest rates in big steps to fight inflation, bond prices have fallen down the cellar stairs. Bloomberg’s broad U.S. aggregate bond index is down 16% in 2022.

ONLY CASH IS SHOWING a positive return this year, while most parts of the stock and bond market have suffered double-digit losses. And with inflation spiking, even cash investments have been a losing proposition in 2022. With nowhere to hide, perhaps it’s time to renounce active management and consider the three-fund portfolio.
Long championed on the Bogleheads forum, the three-fund portfolio is an indexing approach that drives down costs, feasts on diversification and ends investment selection errors by sticking with just three funds:

Total U.S.

A VANGUARD FINANCIAL planner once told me his clients’ biggest problem was that they didn’t want to withdraw money from their accounts during retirement. They lived beneath their means because they just couldn’t overcome their desire to continue seeing their assets grow.
If this describes you, too, you might be pleased to learn that required minimum distributions (RMDs) would be delayed a year or more if legislation, which currently sits before Congress, can slip through the crowded legislative calendar and pass before year-end.

WHEN I WAS A KID, I remember being puzzled by all the newspaper stories devoted to a recession. First, the articles said that one might be ahead. Then they said it had arrived. Immediately afterward, the stories shifted to, “Is the recession lifting?”
The same loop is starting in my newsfeed now, with daily stories asking if a recession is ahead. It’s a definite maybe, according to the experts, but it hasn’t arrived yet.

BEN FRANKLIN WROTE the most popular personal finance text of the 18th century. Originally published in 1758 as an essay in his Poor Richard’s Almanack, it became a perennial bestseller when printed separately under the title The Way to Wealth.
You can read the 1810 version printed in London at no charge, thanks to Project Gutenberg. I assign it to students in my behavioral economics class, and it sparks a discussion about whether thrift and hard work are still the routes to financial security.