AUTHOR: BenefitJack on 8/16/2025 FIRST: Neil Imus on 8/17/2025 | RECENT: BenefitJack on 1/31
Comments
"Why have the numbers gotten so much worse? The first factor was Covid." Definitely, COVID was a factor - loosened any limit on spending. However, if you consider the promises of Social Security and Medicare Part A, that would add another $40T or so of liabilities. Trust fund exhaustion was coming, known issue even back in 2001, the last time we balanced the federal budget. I would put the origin on President George W. Bush (as then candidate Obama did when he asserted running deficits was "unpatriotic"). To buy votes in his 2004 reelection, we got the Medicare Modernization Act of 2003 (Medicare Part D) - approved without any new tax or other source of revenue. In FY 2001, we had $1.99 Trillion in revenue (receipts) and $1.86 Trillion in actual spending (outlays) resulting in a budget surplus of $127 Billion. President Obama wasn't better on deficits than Bush. Our national debt had almost doubled during the Obama Administration from ~$10.6T to ~$19.9T Did it get worse, much worse, during the Trump and Biden Administration's? Yes, certainly, actions that increased spending far exceeded the ever increasing tax revenue generated by the American economy. For example, on the day President Obama signed Health Reform into law, our national debt was $10+ Trillion, so, in the last 16 years, in large part because of health care spending without adequate new taxation, we've added $29+ Trillion! In FY 2025, we had $5.23 Trillion in revenue and $7.01 Trillion in spending, resulting in a budget deficit of $1.79 trillion. Today's revenues are 2.6x what they were 25 years ago, but, today's spending is 3.77x what they were 25 years ago! Do we have a taxing or a spending problem? Spending, obviously - both Republicans and Democrats. This is a classic case of Stein's Law: "If Something Cannot Go On Forever, It Will Stop."
"... If they had any amount of Roth income the picture would really change. ..." Of course, with Roth, they already paid taxes before making those contributions. Congress decided to provide a unique tax advantage regarding the investment earnings on Roth monies. So, recognizing that the tax advantage on Roth investment earnings only applies if monies are deferred and not distributed until after the later of 5 years or reaching age 59 1/2, the 1997 Congress, and the 2001 Congress (EGTRRA, for Roth 401k), and the 2006 Congress (PPA 2006, for Roth 401k after 12/31/10) obviously designed this, and reconfirmed the treatment with the expansion to 401k, anticipating these monies would be used after reaching retirement age. As Congress never changes the tax code, those who saved via Roth contributions when in their 20s and 30s and 40s can rest assured that the tax treatment in effect for almost 30 years won't ever change.
CPI measures changes in prices among a market basket of goods. No American buys that market basket of goods. And, of course, the market basket changes over time. Fact of the matter is that inflation is an individualized calculation. Americans whose spending is limited, and frugal Americans who limit their spending, adjust for inflation every time they go shopping. They do it almost unconsciously, if the price of beef looks to be "too much", they buy chicken, or pork, or fish or go meatless. They migrate off of name brands to generic. They look for alternatives and substitutions. They wait until something is on sale. As a result, inflation is an individual calculation, because you and I, most Americans, adjust our individual "market basket" of goods as prices change. So, 45 years ago, when Dan Rather announced on CBS nightly news that inflation was in double digits (change in CPI of 10.3% in 1981), Americans who watched the nighly news (lots of us) and others who read newspapers (lots of us) nodded our heads. We thought our inflation rate was 10+%, but it wasn't. Today, not so sure people even know the change in CPI for the last 12 months - 3.5% (June 2026). And, I am highly confident that they don't know their own inflation rate - just that stuff costs more. My favorite example of deflation in prices comes from my move to Houston Texas. On July 15th, 1982, my first full day there, I stopped at a U-Totem and filled up the gas tank of my 1980 Mazda 626. I paid $1.299 for a gallon. Yesterday, I stopped at Krogers here in Powell Ohio and paid $3.499 a gallon to fill up my 2009 Hyundai Elantra. Looks like I paid more than twice as much. But, once you adjust for changes in average hourly income over that period (360%, per BLS) and the difference in mileage per gallon (a 40% improvement for my cars), I am paying less, much less per mile driven compared to 1982.
In the 70's, it was index funds. In the 2010's - 2020's, in 401k/403b plans, advisors never had a foothold and the battle is being won by target date investments. 60+% of all 401(k) plan participants hold at least some investments in target-date funds (TDFs), For plans administered by Vanguard, that specific participant adoption rate sits even higher at roughly 85% due to automatic enrollment policies. Target Date Investments now represent about 40% of all 401k assets, approaching $4 Trillion! In many (perhaps most) plans, the target date fund is delivered as a separate investment choice, resulting in a "mixed use" outcome within the plan. For most workers, whose only liquid assets are in their employer-sponsored plan, that is suboptimal. For the minority who have assets in multiple plans, in IRAs and taxable accounts, "mixed use" is the natural result - where asset decisions are not effectively coordinated. In the 2030's, assuming ERISA litigation continues at its current pace, expect to see target date investments increasingly limit allocations to index investments. Once target date investment managers and plan sponsors become savvy about transparency and decumulation (they are not there yet), expect to see plan sponsors increase use of asset retention, account consolidation and asset aggregation strategies coupled with target date investment allocations. Today, ~55% of all 401k plans have an asset management service, 80+% among large/jumbo plans. However, only ~8% of participants use that service. Typically, managed account services focus solely on the assets in the plan (it typically isn't a holistic financial planning service, including, for example, social security claiming decisions), and they seldom offer investment advice that is substantially better than a properly designed, low cost, target date investment. In recent litigation, Plaintiffs argue that if a managed account fails to use personalized data like outside assets, salary, or risk tolerance, charging extra fees breaches ERISA prudence rules. Once plan sponsors have 5 - 10 years of usage and cost data regarding managed accounts, the number offering the service and their use will likely decline ... Instead, expect to see plan sponsors adopt target date investments that are hyper-personalized, hyper customized based on:
The participant's date of birth, and sex, and
The participant's selected target date for payout commencement, with
Automatic adjustments to moderate sequence of returns risk, and
Adjustments to asset allocations that both anticipate and adjust for distributions during the decumulation phase.
While service providers increasingly try to merge retirement savings with wealth management, expect managed account/active management to be much more concentrated among only those who have accumulated significant assets/a lifetime of savings.
I was going to make the same comment about needing 6 months. However, I think it more important for you to identify work you want to do, what contribution you want to make, checking in with your spouse regarding her priorities and interests. Then give some thought of what you want to do if the work you want to do never arrives. Some of us continue working because we believe we can make a contribution. I have been at it for 16 years since I "retired" from my last Fortune 100 corporate role. I enjoyed my corporate role so much that my 2010 search was for a similar role with another organization - small, medium, large or jumbo, pretty much regardless of wage, benefit, location, etc. After hundreds of applications over a number of years, I never got the call.
If the Cleveland Browns ever make the Super Bowl, I will likely get my wallet out - that's one reason why I still don't spend as much as I could in my semi-retirement (same for LTC, leaving a legacy, etc.) For comparison, when the Guardians (then Indians) made the World Series and lost in the 10th inning of game 7 to the Cubs in 2016, I was there with my brother. While my brother had paid a couple hundred dollars each for our tickets in the fourth row in the upper deck, up from the 1st base dugout, the row in front of us was full of Cubs fans, as was the row behind us. My brother could have sold our two tickets for $2,000+ each ($4,000+ each today), but we had to be there just in case the Tribe won it all. I still get a chill when, in the bottom of the 8th inning, Rajai Davis hit a two run home run off of Aroldis Chapman - fouling off four times to keep the at bat alive. https://www.youtube.com/watch?v=RFJ3Z76kDc8 We had to be there, just in case, the Tribe won it all for the first time since 1948. Back then, only a couple of folks in my family, my sister (born on 8/14/48) and five in-laws were alive, and all were too young to care (only later becoming ball fans). My mom remembers listening to the Tribe on the radio that year, especially on the day she went into labor with my sister - Sachel Paige was pitching, on August 13, 1948, he threw a 5–0 shutout against the Chicago White Sox. Earlier that season, Sachel came to the Indians in July 1948, at the age of 42! He was famous for a couple of quotes, that make sense for this group:
"Don't look back. Something might be gaining on you," and
"Age is a question of mind over matter. If you don't mind, it don't matter," All of those stories and experiences are "memory dividends" for me. For comparison, the Cubs fans had been waiting 108 years, since 1908, the last time they were a World Series winner (probably no one alive who was around). Hard to begrudge them of their "memory dividends" when they paid a lot to watch the Cubs win in Cleveland in the 10th inning of Game 7, on November 2-3, 2016.
Hope you are enjoying the World Cup as much as the millions of foreigners are enjoying America. Thanks to you and others for your hospitality - confirming some of the best things about America, and Americans, too!
Thanks for the post. I too am a first generation American, whose mom came through Ellis Island just over 100 years ago, July 30, 2025 at the age of 7 months - in the arms of my maternal grandmother - dirt poor, they were sponsored by US relatives to make the trip from Tisinec, Slovakia alone. We still have the blanket my mom was wrapped in when they approached America on the RMS Berengaria - initially out of Hamburg Germany. Some of the descendants of family they left behind in Slovakia maintain connections, and they are in a number of European locations and a few in the states, too - including, Tisinec, as well as Bergen, Norway, Warsaw, Poland, and even Cleveland, Ohio. Last month, we reconnected with the Norway and Warsaw contingent with a trip to Oslo and Bergen, ... in additionto singing Ole Gjeilo's Sunrise Mass with an international choir. https://www.instagram.com/reels/DZm4DT7isPf/ For anyone of Norwegian descent reading this, you have a beautiful country with beautiful people. It was my privilege to visit.
Adam, others, the Trump Accounts are superior for creating wealth compared to most other options - and, you and others can ensure that outcome by pushing your employers to open Trump Accounts and add employer and pre-tax employee contributions (via cafeteria plans, where contributions garner significant tax preferences - pre-tax federal, state, FICA and FICA-Med). Your employers need to reach out to Treasury to have them issue guidance (now, in the 3rd quarter, so action can be taken in 2026) that confirms the option of using IRC 125 cafeteria plan provisions (IRC 128), provisions that appear to be similar to those that apply to Health Savings Accounts (IRC 223), that were part of the One Big Beautiful Bill. See: https://401kspecialistmag.com/trump-is-no-franklin-but/ If you don't like the name "Trump Account", nothing stops you from naming it a 530A Account, or, my suggestion - a "Ben Franklin Account". Jack
Reinstitute one time, 10 year forward averaging of a lump sum distribution. That was possible in the past, after separation, but effectively eliminated for anyone born after 1935 by changes that were part of the Tax Reform Act of 1986. The process was "simple". You must take all taxable monies from the account (this was pre-Roth, but we did have after-tax 401(a) monies), divide taxable amount by ten, calculate the tax using the single filer rate, then multiply the calculated tax by 10. Those with substantial account balances still end up with higher marginal rates, and higher average/effective tax rates. Current 2026 single filer federal tax rates: Tax Rate Taxable Income Bracket
10% $0 to $12,400
12% $12,401 to $50,400
22% $50,401 to $105,700
24% $105,701 to $201,775
32% $201,776 to $256,225
35% $256,226 to $640,600
37% Over $640,600 So, someone with retirement assets of $124,000 would pay $12,400 in income taxes. Someone with $1,000,000, would pay ~$167,118. Someone with $10,000,000, would pay ~$3,261,792 I would require all taxable monies be rolled over to a single IRA. And, I would treat it much the same as a Roth conversion (but not apply the 5 year rule when/once the individual reaches age 59 1/2). I would give individuals the option of using their assets to pay the tax (waiving the 10% penalty tax) or access plan loans equal to the federal and state withholding taxes, per the rules for qualified plans under 72(p), without the $50,000 limit, giving the individual the choice of a 5 year (general) or 15 year (home purchase) repayment period. As Dick suggested earlier, all revenue would go toward retiring national debt.
Comments
"Why have the numbers gotten so much worse? The first factor was Covid." Definitely, COVID was a factor - loosened any limit on spending. However, if you consider the promises of Social Security and Medicare Part A, that would add another $40T or so of liabilities. Trust fund exhaustion was coming, known issue even back in 2001, the last time we balanced the federal budget. I would put the origin on President George W. Bush (as then candidate Obama did when he asserted running deficits was "unpatriotic"). To buy votes in his 2004 reelection, we got the Medicare Modernization Act of 2003 (Medicare Part D) - approved without any new tax or other source of revenue. In FY 2001, we had $1.99 Trillion in revenue (receipts) and $1.86 Trillion in actual spending (outlays) resulting in a budget surplus of $127 Billion. President Obama wasn't better on deficits than Bush. Our national debt had almost doubled during the Obama Administration from ~$10.6T to ~$19.9T Did it get worse, much worse, during the Trump and Biden Administration's? Yes, certainly, actions that increased spending far exceeded the ever increasing tax revenue generated by the American economy. For example, on the day President Obama signed Health Reform into law, our national debt was $10+ Trillion, so, in the last 16 years, in large part because of health care spending without adequate new taxation, we've added $29+ Trillion! In FY 2025, we had $5.23 Trillion in revenue and $7.01 Trillion in spending, resulting in a budget deficit of $1.79 trillion. Today's revenues are 2.6x what they were 25 years ago, but, today's spending is 3.77x what they were 25 years ago! Do we have a taxing or a spending problem? Spending, obviously - both Republicans and Democrats. This is a classic case of Stein's Law: "If Something Cannot Go On Forever, It Will Stop."
Post: $40 Trillion of Debt
Link to comment from August 22, 2026
"... If they had any amount of Roth income the picture would really change. ..." Of course, with Roth, they already paid taxes before making those contributions. Congress decided to provide a unique tax advantage regarding the investment earnings on Roth monies. So, recognizing that the tax advantage on Roth investment earnings only applies if monies are deferred and not distributed until after the later of 5 years or reaching age 59 1/2, the 1997 Congress, and the 2001 Congress (EGTRRA, for Roth 401k), and the 2006 Congress (PPA 2006, for Roth 401k after 12/31/10) obviously designed this, and reconfirmed the treatment with the expansion to 401k, anticipating these monies would be used after reaching retirement age. As Congress never changes the tax code, those who saved via Roth contributions when in their 20s and 30s and 40s can rest assured that the tax treatment in effect for almost 30 years won't ever change.
Post: Income taxes on retirees with Social Security
Link to comment from August 15, 2026
CPI measures changes in prices among a market basket of goods. No American buys that market basket of goods. And, of course, the market basket changes over time. Fact of the matter is that inflation is an individualized calculation. Americans whose spending is limited, and frugal Americans who limit their spending, adjust for inflation every time they go shopping. They do it almost unconsciously, if the price of beef looks to be "too much", they buy chicken, or pork, or fish or go meatless. They migrate off of name brands to generic. They look for alternatives and substitutions. They wait until something is on sale. As a result, inflation is an individual calculation, because you and I, most Americans, adjust our individual "market basket" of goods as prices change. So, 45 years ago, when Dan Rather announced on CBS nightly news that inflation was in double digits (change in CPI of 10.3% in 1981), Americans who watched the nighly news (lots of us) and others who read newspapers (lots of us) nodded our heads. We thought our inflation rate was 10+%, but it wasn't. Today, not so sure people even know the change in CPI for the last 12 months - 3.5% (June 2026). And, I am highly confident that they don't know their own inflation rate - just that stuff costs more. My favorite example of deflation in prices comes from my move to Houston Texas. On July 15th, 1982, my first full day there, I stopped at a U-Totem and filled up the gas tank of my 1980 Mazda 626. I paid $1.299 for a gallon. Yesterday, I stopped at Krogers here in Powell Ohio and paid $3.499 a gallon to fill up my 2009 Hyundai Elantra. Looks like I paid more than twice as much. But, once you adjust for changes in average hourly income over that period (360%, per BLS) and the difference in mileage per gallon (a 40% improvement for my cars), I am paying less, much less per mile driven compared to 1982.
Post: Inflation, prices, COLAs, retirement and the last 16 years
Link to comment from August 1, 2026
In the 70's, it was index funds. In the 2010's - 2020's, in 401k/403b plans, advisors never had a foothold and the battle is being won by target date investments. 60+% of all 401(k) plan participants hold at least some investments in target-date funds (TDFs), For plans administered by Vanguard, that specific participant adoption rate sits even higher at roughly 85% due to automatic enrollment policies. Target Date Investments now represent about 40% of all 401k assets, approaching $4 Trillion! In many (perhaps most) plans, the target date fund is delivered as a separate investment choice, resulting in a "mixed use" outcome within the plan. For most workers, whose only liquid assets are in their employer-sponsored plan, that is suboptimal. For the minority who have assets in multiple plans, in IRAs and taxable accounts, "mixed use" is the natural result - where asset decisions are not effectively coordinated. In the 2030's, assuming ERISA litigation continues at its current pace, expect to see target date investments increasingly limit allocations to index investments. Once target date investment managers and plan sponsors become savvy about transparency and decumulation (they are not there yet), expect to see plan sponsors increase use of asset retention, account consolidation and asset aggregation strategies coupled with target date investment allocations. Today, ~55% of all 401k plans have an asset management service, 80+% among large/jumbo plans. However, only ~8% of participants use that service. Typically, managed account services focus solely on the assets in the plan (it typically isn't a holistic financial planning service, including, for example, social security claiming decisions), and they seldom offer investment advice that is substantially better than a properly designed, low cost, target date investment. In recent litigation, Plaintiffs argue that if a managed account fails to use personalized data like outside assets, salary, or risk tolerance, charging extra fees breaches ERISA prudence rules. Once plan sponsors have 5 - 10 years of usage and cost data regarding managed accounts, the number offering the service and their use will likely decline ... Instead, expect to see plan sponsors adopt target date investments that are hyper-personalized, hyper customized based on:
- The participant's date of birth, and sex, and
- The participant's selected target date for payout commencement, with
- Automatic adjustments to moderate sequence of returns risk, and
- Adjustments to asset allocations that both anticipate and adjust for distributions during the decumulation phase.
While service providers increasingly try to merge retirement savings with wealth management, expect managed account/active management to be much more concentrated among only those who have accumulated significant assets/a lifetime of savings.Post: Today in Financial History
Link to comment from August 1, 2026
I was going to make the same comment about needing 6 months. However, I think it more important for you to identify work you want to do, what contribution you want to make, checking in with your spouse regarding her priorities and interests. Then give some thought of what you want to do if the work you want to do never arrives. Some of us continue working because we believe we can make a contribution. I have been at it for 16 years since I "retired" from my last Fortune 100 corporate role. I enjoyed my corporate role so much that my 2010 search was for a similar role with another organization - small, medium, large or jumbo, pretty much regardless of wage, benefit, location, etc. After hundreds of applications over a number of years, I never got the call.
Post: Fear of the Unknown…
Link to comment from July 25, 2026
If the Cleveland Browns ever make the Super Bowl, I will likely get my wallet out - that's one reason why I still don't spend as much as I could in my semi-retirement (same for LTC, leaving a legacy, etc.) For comparison, when the Guardians (then Indians) made the World Series and lost in the 10th inning of game 7 to the Cubs in 2016, I was there with my brother. While my brother had paid a couple hundred dollars each for our tickets in the fourth row in the upper deck, up from the 1st base dugout, the row in front of us was full of Cubs fans, as was the row behind us. My brother could have sold our two tickets for $2,000+ each ($4,000+ each today), but we had to be there just in case the Tribe won it all. I still get a chill when, in the bottom of the 8th inning, Rajai Davis hit a two run home run off of Aroldis Chapman - fouling off four times to keep the at bat alive. https://www.youtube.com/watch?v=RFJ3Z76kDc8 We had to be there, just in case, the Tribe won it all for the first time since 1948. Back then, only a couple of folks in my family, my sister (born on 8/14/48) and five in-laws were alive, and all were too young to care (only later becoming ball fans). My mom remembers listening to the Tribe on the radio that year, especially on the day she went into labor with my sister - Sachel Paige was pitching, on August 13, 1948, he threw a 5–0 shutout against the Chicago White Sox. Earlier that season, Sachel came to the Indians in July 1948, at the age of 42! He was famous for a couple of quotes, that make sense for this group: "Don't look back. Something might be gaining on you," and "Age is a question of mind over matter. If you don't mind, it don't matter," All of those stories and experiences are "memory dividends" for me. For comparison, the Cubs fans had been waiting 108 years, since 1908, the last time they were a World Series winner (probably no one alive who was around). Hard to begrudge them of their "memory dividends" when they paid a lot to watch the Cubs win in Cleveland in the 10th inning of Game 7, on November 2-3, 2016.
Post: FIFA Financials
Link to comment from July 25, 2026
Hope you are enjoying the World Cup as much as the millions of foreigners are enjoying America. Thanks to you and others for your hospitality - confirming some of the best things about America, and Americans, too!
Post: Happy 250th Birthday America
Link to comment from July 11, 2026
Thanks for the post. I too am a first generation American, whose mom came through Ellis Island just over 100 years ago, July 30, 2025 at the age of 7 months - in the arms of my maternal grandmother - dirt poor, they were sponsored by US relatives to make the trip from Tisinec, Slovakia alone. We still have the blanket my mom was wrapped in when they approached America on the RMS Berengaria - initially out of Hamburg Germany. Some of the descendants of family they left behind in Slovakia maintain connections, and they are in a number of European locations and a few in the states, too - including, Tisinec, as well as Bergen, Norway, Warsaw, Poland, and even Cleveland, Ohio. Last month, we reconnected with the Norway and Warsaw contingent with a trip to Oslo and Bergen, ... in additionto singing Ole Gjeilo's Sunrise Mass with an international choir. https://www.instagram.com/reels/DZm4DT7isPf/ For anyone of Norwegian descent reading this, you have a beautiful country with beautiful people. It was my privilege to visit.
Post: Happy 250th Birthday America
Link to comment from July 11, 2026
Adam, others, the Trump Accounts are superior for creating wealth compared to most other options - and, you and others can ensure that outcome by pushing your employers to open Trump Accounts and add employer and pre-tax employee contributions (via cafeteria plans, where contributions garner significant tax preferences - pre-tax federal, state, FICA and FICA-Med). Your employers need to reach out to Treasury to have them issue guidance (now, in the 3rd quarter, so action can be taken in 2026) that confirms the option of using IRC 125 cafeteria plan provisions (IRC 128), provisions that appear to be similar to those that apply to Health Savings Accounts (IRC 223), that were part of the One Big Beautiful Bill. See: https://401kspecialistmag.com/trump-is-no-franklin-but/ If you don't like the name "Trump Account", nothing stops you from naming it a 530A Account, or, my suggestion - a "Ben Franklin Account". Jack
Post: Trump Accounts
Link to comment from July 11, 2026
Reinstitute one time, 10 year forward averaging of a lump sum distribution. That was possible in the past, after separation, but effectively eliminated for anyone born after 1935 by changes that were part of the Tax Reform Act of 1986. The process was "simple". You must take all taxable monies from the account (this was pre-Roth, but we did have after-tax 401(a) monies), divide taxable amount by ten, calculate the tax using the single filer rate, then multiply the calculated tax by 10. Those with substantial account balances still end up with higher marginal rates, and higher average/effective tax rates. Current 2026 single filer federal tax rates: Tax Rate Taxable Income Bracket 10% $0 to $12,400 12% $12,401 to $50,400 22% $50,401 to $105,700 24% $105,701 to $201,775 32% $201,776 to $256,225 35% $256,226 to $640,600 37% Over $640,600 So, someone with retirement assets of $124,000 would pay $12,400 in income taxes. Someone with $1,000,000, would pay ~$167,118. Someone with $10,000,000, would pay ~$3,261,792 I would require all taxable monies be rolled over to a single IRA. And, I would treat it much the same as a Roth conversion (but not apply the 5 year rule when/once the individual reaches age 59 1/2). I would give individuals the option of using their assets to pay the tax (waiving the 10% penalty tax) or access plan loans equal to the federal and state withholding taxes, per the rules for qualified plans under 72(p), without the $50,000 limit, giving the individual the choice of a 5 year (general) or 15 year (home purchase) repayment period. As Dick suggested earlier, all revenue would go toward retiring national debt.
Post: Should Retirees Get a Temporary Flat Tax Window on IRA and 401(k) Withdrawals?
Link to comment from May 23, 2026