AUTHOR: BenefitJack on 8/16/2025 FIRST: Neil Imus on 8/17 | RECENT: Brent Wilson on 8/18
Comments
Thanks Bogdan. Great work. I may be wrong, but I think the main difference between 529 and UGMA and Trump Accounts is the target population. Trump Accounts are targeted for the everyday American child - newborn to age 18. The vast majority of individuals in 529 or UGMA accounts are children of folks like me, guided by experts like you. Here's my take - the Trump Accounts are only a few steps away from what I was pitching for the last five or so years, what I call the Ben Franklin Child Roth IRA. And, as a corporate benefits professional, I see a great employee benefits oppotunity for employers to $1 for $1 match up to $2,500 per employee (or dependent) annually to a Trump Account (payroll deducted, after tax employee contributions) - deducting the cost on the corporate return, but excluding the contribution from the employee’s gross income. Even if the $2,500 is one time and not annual, seems like a great corporate engagement opportunity for every worker who has a child under age 18. The timing is pretty good because of the forthcoming "Silver Tsunami" where Silents and Baby Boomers with accumulated wealth are in a position to make inter-vivos and testamentary gifts to children and grandchildren - to enable super long term investing, a la Ben Franklin. But, unlike Ben, to do long term investing "right", avoid giving the government control over the accounts, decision-making. See: https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/ Myself, I put $1,000 in a tax deferred annuity per the UGMA back in 1984 and 1987 coincident with the birth of each of my children. The investment allocation was 100% in US equities - hoping for an average annual return over the next 60 years of 12% (the S&P 500 return from 1946 to 1984 averaged about 11.3%). Despite the higher than normal fees due to the tax deferred annuity, both children are on track to becoming middle class millionaires, upon reaching age 60 (ignoring sequence of returns risk). Over time, I changed the funds from the UGMA tax deferred annuities into Roth IRAs - substituting what were my Roth 401k deferrals for the taxable monies. Unfortunately, SECURE 2019 interrupted my plans when Congress removed the stretch IRA. Bottom line, if it works, each child will be a tax free middle class millionaires, someday ... all they had to do is put up with dear ol dad's droning on about long term investing and Ben. I encourage you to read the book, Ben Franklin's Last Bet, by Michael Meyer. I met Professor Meyer earlier this year before presenting my long term investing story at the 2025 World at Work Total Rewards Conference. My point is, every parent or grandparent can learn from Ben. Perhaps once President Trump leaves office in 2029, we can rename the accounts for Ben Franklin, and change from Traditional to Roth IRA - applying the same rules as the (renamed) Kay Bailey Hutchinson Spousal IRA, which has been available for over 45 years.
Thanks Adam. 250 analysts? Consistently, achieved a 20%/year return since 1982, over 43 years? I guess I would be more convinced if you could point us to someone he hired in 1982 or 1983, who watched the sausage being made, later went off on her/his own and achieved comparable results. Typically, that's the only way to test theories, investment or science, can you independently duplicate the results. Else it may be a one off, something unique, a Musk, Bezos, Gates. Interesting story. Best to you, Jack
From a British pension blog, from across the pond, following the Executive Order: "... Private markets – have been suffering significant liquidity shortage issues – and valuations are often highly questionable – which have resulted in a plethora of continuation vehicles (better known as extend and pretend) including most recently a spate of ‘evergreen’ funds (that is perpetual funds). Secondary funds buy PE assets at discounts ranging from around 5% to 50% or more of their published NAVs. But when sold to ‘evergreen’ funds these holdings are valued by most funds at NAV. Lovely ‘business’ for the managers of these ‘evergreen’ funds and miraculous gains for the secondary funds. Lambs to the slaughter comes to mind in the case of 401K savers. ..."
After 31 years in the same home, we moved in 2019 from a traditional two-story (bedrooms and full baths upstairs) to a ranch. Turned out to be fortuitous timing, location - we now live within two miles of my brother, my wife's sister, and one of my wife's nieces. Between my ankle injuries and my wife's hip replacement surgeries ... We live only five miles further from church - we are both in the choir and are very active in the Church's life. There is a walking/bicycle path to a close-by park, the bank, the local high school, the library, golf course, even Wendy's and ice cream and doughnuts. In a few more months, we will be able to walk to a brand new grocery store and to a new medical office complex. There's even a vet, if we had a pet. Lots of convenience. That said, in May, we went to Florida to visit our daughter and her husband, and in June, we visited our son in Greece. Both are moving this summer or a year from now. So, don't know where they will end up, but, whenever their location finally looks to be indefinite, we might consider a change.
Hopefully, the new retiree enjoyed her work, and started doing some of those things she always dreamed of long ago ... instead of waiting to do them in retirement, as she is now age 65. What is her marital status? If she is married, does the spouse have comparable financial status - less, more? That is important if only because of the spouse's benefit and surviving spouse's benefit from Social Security. Does she have legacy goals in mind - perhaps gifts she wasn't prepared to make prior to retirement. If so, I would not wait until death to make those gifts, but incorporate them in year after year spending objectives. Unclear what her health status is, or what her anticipated medical spending will be. No mention of Health Savings Accounts. No mention regarding any post-retirement health coverage from her employer - the 401k balance suggests 25 or more years of service/participation (unless there were substantial rollovers into the plan). Even if there isn't an employer-sponsored plan, Medicare Advantage options offer superior value at a modest cost to those who retire in good health. I assert that it is all about replacing 100% of regular, everyday, anticipated spending. No information about liabilities. So, while her take home was $48,031, would need to know whether she was spending all of that, less than that, or limiting her spending to include every dollar that came home. Assuming no debts, and home ownership, the cash savings suggests she may have been spending less than 100% of her take home. Given her savings, I suspect she was effectively managing everything else. I would still ask. So, my guidance would be to ensure that she had sufficient, guaranteed, inflation-indexed income to match 100% of her regular, everyday, anticipated spending. That is, I would bridge to the age 70 Social Security benefit - treating it on the same basis as if it were an annuity purchase. I would encourage her to consider a QLAC, and gap fill by spending 401k assets, first to age 70 (about $225,000), and then to age 85 (another $250,000 or so until QLAC commences). With respect to sequence of returns risk, I would consider a five year bond ladder with TIPS, MYGA, or a HECM to age 70 - unless her 401k, like my 401k, allowes a participant to initiate a plan loan after separation from service. If her 401k allowed such loans, I would leverage that to prepare for sequence of return risks - adjusting investment allocations as necessary so that the plan loan principal becomes part of the fixed income allocation - what plan loan principal actually is. Finally, almost all of us who survive through our 80's, slow down and slow our spending as well - the retirement income "smile".
After you have read that book, you might consider:
S. Pollan, Die Broke: A Radical Four-Part Financial Plan Paperback, 1998, Harper Business "... Your work life should be a journey up and down hills, rather than a climb up a sheer cliff that ends with a jump into the abyss. ..."
My take: https://401kspecialistmag.com/maximize-outcomes-not-incomes-die-with-zero/ And: https://401kspecialistmag.com/most-young-people-should-not-save-for-retirement-in-their-401k/ Gifts today are arguably more valuable than testamentary legacies. We are making annual, inter-vivos gifts to each child - not much difference in those gifts compared to investments we previously made in each child's post-secondary education. And, despite potential long term care expense, there should be plenty left after the second of us dies ... or not.
Late to this discussion. My claiming strategy was in two steps, where I knew I planned to continue full time employment beyond my SS Full Retirement Age:
Use the calculators to determine the claiming age that delivers the maximum present value of Social Security benefits for myself and my spouse, after taxes, based on current rules and taxation, then
Because, combined with pension income, SS (mine and the spousal benefit) would always be less than my regular anticipated spending, defer commencement using accumulated assets such that regular income was sufficient, with a margin, for everyday expenses.
Turns out that ended up with a delay until my age 67 and 3 months (15 months after my full retirement age), and, when my spouse was at her full retirement age. I wanted to delay commencement not only for the additional monthly income, but also to enable me to continue to max out my contributions to the Health Savings Account (Part A would start whenever I commenced Social Security). However, unsurprising, rules changed, taxes changed, the GPO offset for my spouse's pension changed, my earnings from continued employment have varied greatly, etc. And, based on provisions in the "one big beautiful bill", looks like more change to come. Best laid plans ...
For the past four years, I have been pursuing a comparable concept with with members of Congress. Today, trying to get it into the reconciliation bill ("one big beautiful bill") because it requires no taxpayer funding and results in no budget revenue losses. Please contact your members of congress if you agree that Roth IRA is the way to go. It is titled: "The Ben Franklin Child Roth IRA". The concept is simple. You just change the tax code to incorporate for minor children of households with qualifying income by adding the same provisions that have applied to a spouse for spousal IRAs for 45 years - but limited to Roth. This is the low- and middle-income solution that is comparable to the 529 to Roth IRA transfer likely to be used by higher income households - which was incorporated in Section 126 of SECURE. The Ben Franklin Child Roth IRA would be superior to using the 529 account - although, today, anyone can contribute to a 529, and the Roth is only available to a child with qualifying earnings. Chris Carosa and I worked on this about a decade ago. https://fiduciarynews.com/2016/08/exclusive-interview-with-jack-towarnicky-child-iras-will-make-middle-class-millionaires/ I am presenting my own family's experience, 529 to IRA, and the Ben Franklin Child Roth IRA next week at the World at Work Total Rewards Conference in Orlando, Florida. The presentation is titled: Ben Franklin's Last Bet - "Bank for the Future". I've incorporated the recent book written by Michael Meyer ... on why Ben Franklin, based on his testamentary gifts in 1790 to the cities of Philadelphia and Boston. For my children, born in 1984 and 1987, we used the Uniform Gifts to Minor's Act. Here is a related post from 401kSpecialist.com: https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/ If you like the idea, you might contact Ashlea Ebeling at the WSJ who recently wrote extensively on Roth IRAs. Happy to pass along the a white paper summary of the Ben Franklin Child Roth IRA.
Comments
Thanks Bogdan. Great work. I may be wrong, but I think the main difference between 529 and UGMA and Trump Accounts is the target population. Trump Accounts are targeted for the everyday American child - newborn to age 18. The vast majority of individuals in 529 or UGMA accounts are children of folks like me, guided by experts like you. Here's my take - the Trump Accounts are only a few steps away from what I was pitching for the last five or so years, what I call the Ben Franklin Child Roth IRA. And, as a corporate benefits professional, I see a great employee benefits oppotunity for employers to $1 for $1 match up to $2,500 per employee (or dependent) annually to a Trump Account (payroll deducted, after tax employee contributions) - deducting the cost on the corporate return, but excluding the contribution from the employee’s gross income. Even if the $2,500 is one time and not annual, seems like a great corporate engagement opportunity for every worker who has a child under age 18. The timing is pretty good because of the forthcoming "Silver Tsunami" where Silents and Baby Boomers with accumulated wealth are in a position to make inter-vivos and testamentary gifts to children and grandchildren - to enable super long term investing, a la Ben Franklin. But, unlike Ben, to do long term investing "right", avoid giving the government control over the accounts, decision-making. See: https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/ Myself, I put $1,000 in a tax deferred annuity per the UGMA back in 1984 and 1987 coincident with the birth of each of my children. The investment allocation was 100% in US equities - hoping for an average annual return over the next 60 years of 12% (the S&P 500 return from 1946 to 1984 averaged about 11.3%). Despite the higher than normal fees due to the tax deferred annuity, both children are on track to becoming middle class millionaires, upon reaching age 60 (ignoring sequence of returns risk). Over time, I changed the funds from the UGMA tax deferred annuities into Roth IRAs - substituting what were my Roth 401k deferrals for the taxable monies. Unfortunately, SECURE 2019 interrupted my plans when Congress removed the stretch IRA. Bottom line, if it works, each child will be a tax free middle class millionaires, someday ... all they had to do is put up with dear ol dad's droning on about long term investing and Ben. I encourage you to read the book, Ben Franklin's Last Bet, by Michael Meyer. I met Professor Meyer earlier this year before presenting my long term investing story at the 2025 World at Work Total Rewards Conference. My point is, every parent or grandparent can learn from Ben. Perhaps once President Trump leaves office in 2029, we can rename the accounts for Ben Franklin, and change from Traditional to Roth IRA - applying the same rules as the (renamed) Kay Bailey Hutchinson Spousal IRA, which has been available for over 45 years.
Post: Trump Accounts: A Deep Dive into Kids’ Savings
Link to comment from August 23, 2025
Thanks Adam. 250 analysts? Consistently, achieved a 20%/year return since 1982, over 43 years? I guess I would be more convinced if you could point us to someone he hired in 1982 or 1983, who watched the sausage being made, later went off on her/his own and achieved comparable results. Typically, that's the only way to test theories, investment or science, can you independently duplicate the results. Else it may be a one off, something unique, a Musk, Bezos, Gates. Interesting story. Best to you, Jack
Post: How to Beat the Market
Link to comment from August 23, 2025
From a British pension blog, from across the pond, following the Executive Order: "... Private markets – have been suffering significant liquidity shortage issues – and valuations are often highly questionable – which have resulted in a plethora of continuation vehicles (better known as extend and pretend) including most recently a spate of ‘evergreen’ funds (that is perpetual funds). Secondary funds buy PE assets at discounts ranging from around 5% to 50% or more of their published NAVs. But when sold to ‘evergreen’ funds these holdings are valued by most funds at NAV. Lovely ‘business’ for the managers of these ‘evergreen’ funds and miraculous gains for the secondary funds. Lambs to the slaughter comes to mind in the case of 401K savers. ..."
Post: Hedge funds, venture capital. private equity, etc. in a 401k. BAD IDEA!
Link to comment from August 9, 2025
After 31 years in the same home, we moved in 2019 from a traditional two-story (bedrooms and full baths upstairs) to a ranch. Turned out to be fortuitous timing, location - we now live within two miles of my brother, my wife's sister, and one of my wife's nieces. Between my ankle injuries and my wife's hip replacement surgeries ... We live only five miles further from church - we are both in the choir and are very active in the Church's life. There is a walking/bicycle path to a close-by park, the bank, the local high school, the library, golf course, even Wendy's and ice cream and doughnuts. In a few more months, we will be able to walk to a brand new grocery store and to a new medical office complex. There's even a vet, if we had a pet. Lots of convenience. That said, in May, we went to Florida to visit our daughter and her husband, and in June, we visited our son in Greece. Both are moving this summer or a year from now. So, don't know where they will end up, but, whenever their location finally looks to be indefinite, we might consider a change.
Post: Let’s revisit the pros and cons of relocating upon retirement
Link to comment from August 2, 2025
Thanks, Adam. Enjoyed the article. Please keep those "War Stories" coming.
Post: Worth 1,000 Words
Link to comment from August 2, 2025
Hopefully, the new retiree enjoyed her work, and started doing some of those things she always dreamed of long ago ... instead of waiting to do them in retirement, as she is now age 65. What is her marital status? If she is married, does the spouse have comparable financial status - less, more? That is important if only because of the spouse's benefit and surviving spouse's benefit from Social Security. Does she have legacy goals in mind - perhaps gifts she wasn't prepared to make prior to retirement. If so, I would not wait until death to make those gifts, but incorporate them in year after year spending objectives. Unclear what her health status is, or what her anticipated medical spending will be. No mention of Health Savings Accounts. No mention regarding any post-retirement health coverage from her employer - the 401k balance suggests 25 or more years of service/participation (unless there were substantial rollovers into the plan). Even if there isn't an employer-sponsored plan, Medicare Advantage options offer superior value at a modest cost to those who retire in good health. I assert that it is all about replacing 100% of regular, everyday, anticipated spending. No information about liabilities. So, while her take home was $48,031, would need to know whether she was spending all of that, less than that, or limiting her spending to include every dollar that came home. Assuming no debts, and home ownership, the cash savings suggests she may have been spending less than 100% of her take home. Given her savings, I suspect she was effectively managing everything else. I would still ask. So, my guidance would be to ensure that she had sufficient, guaranteed, inflation-indexed income to match 100% of her regular, everyday, anticipated spending. That is, I would bridge to the age 70 Social Security benefit - treating it on the same basis as if it were an annuity purchase. I would encourage her to consider a QLAC, and gap fill by spending 401k assets, first to age 70 (about $225,000), and then to age 85 (another $250,000 or so until QLAC commences). With respect to sequence of returns risk, I would consider a five year bond ladder with TIPS, MYGA, or a HECM to age 70 - unless her 401k, like my 401k, allowes a participant to initiate a plan loan after separation from service. If her 401k allowed such loans, I would leverage that to prepare for sequence of return risks - adjusting investment allocations as necessary so that the plan loan principal becomes part of the fixed income allocation - what plan loan principal actually is. Finally, almost all of us who survive through our 80's, slow down and slow our spending as well - the retirement income "smile".
Post: 100% Base Pay Replacement: What Does It Mean?
Link to comment from July 26, 2025
After you have read that book, you might consider:
- S. Pollan, Die Broke: A Radical Four-Part Financial Plan Paperback, 1998, Harper Business "... Your work life should be a journey up and down hills, rather than a climb up a sheer cliff that ends with a jump into the abyss. ..."
My take: https://401kspecialistmag.com/maximize-outcomes-not-incomes-die-with-zero/ And: https://401kspecialistmag.com/most-young-people-should-not-save-for-retirement-in-their-401k/ Gifts today are arguably more valuable than testamentary legacies. We are making annual, inter-vivos gifts to each child - not much difference in those gifts compared to investments we previously made in each child's post-secondary education. And, despite potential long term care expense, there should be plenty left after the second of us dies ... or not.Post: Die With Zero? Hell No
Link to comment from July 19, 2025
Late to this discussion. My claiming strategy was in two steps, where I knew I planned to continue full time employment beyond my SS Full Retirement Age:
- Use the calculators to determine the claiming age that delivers the maximum present value of Social Security benefits for myself and my spouse, after taxes, based on current rules and taxation, then
- Because, combined with pension income, SS (mine and the spousal benefit) would always be less than my regular anticipated spending, defer commencement using accumulated assets such that regular income was sufficient, with a margin, for everyday expenses.
Turns out that ended up with a delay until my age 67 and 3 months (15 months after my full retirement age), and, when my spouse was at her full retirement age. I wanted to delay commencement not only for the additional monthly income, but also to enable me to continue to max out my contributions to the Health Savings Account (Part A would start whenever I commenced Social Security). However, unsurprising, rules changed, taxes changed, the GPO offset for my spouse's pension changed, my earnings from continued employment have varied greatly, etc. And, based on provisions in the "one big beautiful bill", looks like more change to come. Best laid plans ...Post: Breaking even? Why should anyone care? I don’t
Link to comment from May 17, 2025
Thanks. If you want a copy of the white paper on this topic, you can find my personal gmail address in various 401kspecialist.com articles.
Post: Do It for the Kids
Link to comment from May 12, 2025
For the past four years, I have been pursuing a comparable concept with with members of Congress. Today, trying to get it into the reconciliation bill ("one big beautiful bill") because it requires no taxpayer funding and results in no budget revenue losses. Please contact your members of congress if you agree that Roth IRA is the way to go. It is titled: "The Ben Franklin Child Roth IRA". The concept is simple. You just change the tax code to incorporate for minor children of households with qualifying income by adding the same provisions that have applied to a spouse for spousal IRAs for 45 years - but limited to Roth. This is the low- and middle-income solution that is comparable to the 529 to Roth IRA transfer likely to be used by higher income households - which was incorporated in Section 126 of SECURE. The Ben Franklin Child Roth IRA would be superior to using the 529 account - although, today, anyone can contribute to a 529, and the Roth is only available to a child with qualifying earnings. Chris Carosa and I worked on this about a decade ago. https://fiduciarynews.com/2016/08/exclusive-interview-with-jack-towarnicky-child-iras-will-make-middle-class-millionaires/ I am presenting my own family's experience, 529 to IRA, and the Ben Franklin Child Roth IRA next week at the World at Work Total Rewards Conference in Orlando, Florida. The presentation is titled: Ben Franklin's Last Bet - "Bank for the Future". I've incorporated the recent book written by Michael Meyer ... on why Ben Franklin, based on his testamentary gifts in 1790 to the cities of Philadelphia and Boston. For my children, born in 1984 and 1987, we used the Uniform Gifts to Minor's Act. Here is a related post from 401kSpecialist.com: https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/ If you like the idea, you might contact Ashlea Ebeling at the WSJ who recently wrote extensively on Roth IRAs. Happy to pass along the a white paper summary of the Ben Franklin Child Roth IRA.
Post: Do It for the Kids
Link to comment from May 12, 2025