I've witnessed the 4% rule in practice. After inheriting a non-spouse IRA in my forties, my required RMDs have averaged 3.75% over the last two decades. Even with the much higher (>5%) required RMDs of recent years, the IRA has grown more than 50% in value since I inherited. Of course, growth depends on investment type, market conditions, etc. Had I realized this and my future tax liability sooner, I would have withdrawn more agressively in the early years -- but taxes are a good problem to have!
Unlike many, I still use cash and have long kept several weeks worth of spending money in my wallet. As for gold and silver coins, I have yet to part with an inherited hoard. And those of us in rural areas prone to long electricity outages and without generators have lots of adaptation skills; I would likely fare as well as anyone with survival in your Level 3 scenario. But lose the internet and try to cope with disruptions to one's financial life, paying bills, access to accounts, etc? I'm not sure I could endure cyber attacks or want to untangle the resulting mess.
I spent the first few decades of my financial journey being risk-adverse and investing in fixed income. I know now that was a contrarian strategy but it benefited me, as having a secure nest egg was important to my well being. In my forties, I began to invest modestly in equities, mostly value stocks, buy and hold. For me, the motivation was diversification and a dividend stream. My timing was right and equities subsequently grew to be the largest portion of my holdings. I largely stopped adding equities to the portfolio in my late fifties. Now in my late sixties, I rarely trade but am still holding. This odd path worked well for me and, had I to do it over again and given a similar interest rate environment, I would still begin with fixed income.
Thanks, Howard, for raising an important topic. For itemizers, the new tax rules are more nuanced than presented above. As I understand and beginning this year, itemizers can only deduct charitable donations above a "disallowed" floor, which is 0.5% of one's AGI. Amounts below this threshhold will no longer be deductible. Also the deductible amount cannot exceed 60% of the AGI (up from 50% previously); donations above that limit may be carried over for up to five years. The tax benefit for donations for those in the 37% tax bracket would be now as if the donors were in the 35% bracket. The rules for QCDs are unchanged and not subject to the new limits, making them comparatively more tax efficient for older itemizers.
In my case, I admit to not paying much attention to the consequences. I bought a few tech stocks in a taxable account with a few thousand dollars in the mid-1990s and the valuations subsequently ballooned. At the time it seemed more like gambling than investing. Back then I just liked how the equities were making the account grow. Plus I was busy with a career and not thinking at all about my tax future. Looking back, of course the purchases should have been in an IRA, and maybe I shouldn't have let the shares languish after the dot com bust of the early 2000s or reach concentrated positions. Now I give some shares each year as highly appreciated donations to charity; otherwise, I still hold a large amount and think that they have room to grow. Not needing the cash now, and I hope, not in the future, I do like that they might all go eventually to charity with the stepped up basis.
Like some other posters, RDQ, I would increase the international exposure. Worrisome to me, though, is the single stock risk, whether the position is 20% of the total account, or 20% of the equities (not clear). From previous posts, I believe your single holding is a utility. No matter how well managed, utilities carry risks from gas pipeline explosions, wildfires, ice storms, nuclear mishaps, etc. One major event could result in years of litigation, dragging down the stock price and potentially suspending the dividend. While selling some stock would be desirable, I say this gently as I too have concentrated (tech) positions in a taxable account. To me, the tax consequences of selling and/or the intricacies of equity exchange funds (partnerships, holding periods, fees) have kept me from doing anything. As you note, heirs will have the stepped up basis. Also like you, I have a large muni position. Investing in munis, besides the tax benefit, in my opinion equates to support of one's community.
I agree, the story carries useful lessons for us all. When I attended the U of C (late 1970s), the cost of attendance including room and board was just under $5000. Adjusted for inflation and not considering tuition discounts or financial aid, that cost now exceeds three times as much. The unofficial description of the college then, "where fun goes to die", resonated with me and others, somewhat like a badge of honor. Endowment growth subsequently provided for many more student amenities, in turn enabling more selective admisssions. I wonder, could a university still be viable without those amenities? Would today's students apply?
For taxable accounts, consider also FDLXX or similar "Treasury Only" money market funds. A high proportion of income is exempt from state tax, yet the yield is virtually identical to SPAXX.
Comments
I've witnessed the 4% rule in practice. After inheriting a non-spouse IRA in my forties, my required RMDs have averaged 3.75% over the last two decades. Even with the much higher (>5%) required RMDs of recent years, the IRA has grown more than 50% in value since I inherited. Of course, growth depends on investment type, market conditions, etc. Had I realized this and my future tax liability sooner, I would have withdrawn more agressively in the early years -- but taxes are a good problem to have!
Post: Forget the 4% rule.
Link to comment from March 19, 2026
Unlike many, I still use cash and have long kept several weeks worth of spending money in my wallet. As for gold and silver coins, I have yet to part with an inherited hoard. And those of us in rural areas prone to long electricity outages and without generators have lots of adaptation skills; I would likely fare as well as anyone with survival in your Level 3 scenario. But lose the internet and try to cope with disruptions to one's financial life, paying bills, access to accounts, etc? I'm not sure I could endure cyber attacks or want to untangle the resulting mess.
Post: Why I Own Gold Bars
Link to comment from March 12, 2026
One heck of a journey, and one heck of a thouughtful reflection. Beautiful, RDQ.
Post: No, it is not a scam
Link to comment from March 11, 2026
I spent the first few decades of my financial journey being risk-adverse and investing in fixed income. I know now that was a contrarian strategy but it benefited me, as having a secure nest egg was important to my well being. In my forties, I began to invest modestly in equities, mostly value stocks, buy and hold. For me, the motivation was diversification and a dividend stream. My timing was right and equities subsequently grew to be the largest portion of my holdings. I largely stopped adding equities to the portfolio in my late fifties. Now in my late sixties, I rarely trade but am still holding. This odd path worked well for me and, had I to do it over again and given a similar interest rate environment, I would still begin with fixed income.
Post: How did you avoid being in the 39%?
Link to comment from March 5, 2026
Thanks, Howard, for raising an important topic. For itemizers, the new tax rules are more nuanced than presented above. As I understand and beginning this year, itemizers can only deduct charitable donations above a "disallowed" floor, which is 0.5% of one's AGI. Amounts below this threshhold will no longer be deductible. Also the deductible amount cannot exceed 60% of the AGI (up from 50% previously); donations above that limit may be carried over for up to five years. The tax benefit for donations for those in the 37% tax bracket would be now as if the donors were in the 35% bracket. The rules for QCDs are unchanged and not subject to the new limits, making them comparatively more tax efficient for older itemizers.
Post: What is the best way to donate to charity in 2026?
Link to comment from March 4, 2026
In my case, I admit to not paying much attention to the consequences. I bought a few tech stocks in a taxable account with a few thousand dollars in the mid-1990s and the valuations subsequently ballooned. At the time it seemed more like gambling than investing. Back then I just liked how the equities were making the account grow. Plus I was busy with a career and not thinking at all about my tax future. Looking back, of course the purchases should have been in an IRA, and maybe I shouldn't have let the shares languish after the dot com bust of the early 2000s or reach concentrated positions. Now I give some shares each year as highly appreciated donations to charity; otherwise, I still hold a large amount and think that they have room to grow. Not needing the cash now, and I hope, not in the future, I do like that they might all go eventually to charity with the stepped up basis.
Post: Critique my investment strategy or lack thereof
Link to comment from February 26, 2026
Like some other posters, RDQ, I would increase the international exposure. Worrisome to me, though, is the single stock risk, whether the position is 20% of the total account, or 20% of the equities (not clear). From previous posts, I believe your single holding is a utility. No matter how well managed, utilities carry risks from gas pipeline explosions, wildfires, ice storms, nuclear mishaps, etc. One major event could result in years of litigation, dragging down the stock price and potentially suspending the dividend. While selling some stock would be desirable, I say this gently as I too have concentrated (tech) positions in a taxable account. To me, the tax consequences of selling and/or the intricacies of equity exchange funds (partnerships, holding periods, fees) have kept me from doing anything. As you note, heirs will have the stepped up basis. Also like you, I have a large muni position. Investing in munis, besides the tax benefit, in my opinion equates to support of one's community.
Post: Critique my investment strategy or lack thereof
Link to comment from February 26, 2026
I agree, the story carries useful lessons for us all. When I attended the U of C (late 1970s), the cost of attendance including room and board was just under $5000. Adjusted for inflation and not considering tuition discounts or financial aid, that cost now exceeds three times as much. The unofficial description of the college then, "where fun goes to die", resonated with me and others, somewhat like a badge of honor. Endowment growth subsequently provided for many more student amenities, in turn enabling more selective admisssions. I wonder, could a university still be viable without those amenities? Would today's students apply?
Post: Endowment Lessons
Link to comment from February 21, 2026
I'm curious if UK tax advantaged accounts are shielded from creditors and liability suits. In the US, protection varies by state.
Post: A Very Sensible Conclusion
Link to comment from February 19, 2026
For taxable accounts, consider also FDLXX or similar "Treasury Only" money market funds. A high proportion of income is exempt from state tax, yet the yield is virtually identical to SPAXX.
Post: High Interest Savings Accounts vs Bond funds
Link to comment from February 8, 2026