James Mahaney

Comments:

• The advent of the internet changed the trajectory of my career and life. Having information available that you didn't have to search through individual books? Acquiring knowledge was made so much easier! Think of how visiting Humble Dollar has increased your knowledge. AI is going to make the availability of knowledge even quicker to acquire. For those who are hungry to learn, it will be amazing. Yes, the early versions like ChatGPT 3.5 hallucinated at times and wasn't fast. But, here we are just 18 months later and GPT 4o is much more accurate and much,much faster. IMO, Type AI is much better as an editor as it was built to specialize in writing and editing on as it is layered top of GPT 4o or Claude. Count me as highly optimistic of what is to come, and I believe it will level the playing field as knowledge becomes more easily available to access.

  Post: Man vs. Machine

  Link to comment from May 25, 2024

• Casey - I have to push back..Merit Aid typically does not require filing the FAFSA. Is not related to family finances. We didn't file the FAFSA and all three schools that have offered admission to my son this Spring have offered Merit Aid.

  Post: A Real Education

  Link to comment from March 8, 2024

• One of the critical items to consider is the difference between need-based financial aid and merit aid. Many excellent private schools dole out merit-aid. I highly recommend NY Times columnist Ron Leiber's book "The Price You Pay for College" to understand pricing and aid.

  Post: A Real Education

  Link to comment from March 7, 2024

• Jonathan - When you say paying down a 7% mortgage is the best bond you can buy, have you given thought to the expiration date of the TCJA changes? In a little over two years, the standard deduction is cut in roughly half and those high mortgage interest payments will be deductible as more households go back to itemized deductions on their tax returns.

  Post: On Second Thought

  Link to comment from September 9, 2023

• Jonathan - Thanks for the article. You're only a month older than I am so I can relate. To go on a bit of a tangent, if much of your HD work is edit-related, you can use a new tool like Type AI that can do much of the editing work for you. In fact, all writers here should consider using in my opinion. It's $20 a month and the improvement in my writing is significant. I am using it as I work on my second book and it blows my mind. Artificial intelligence applications can enhance and speed up various writing and editing work that was more laborious in the past.

  Post: Wishing My Life Away

  Link to comment from April 8, 2023

• Marjorie - It's so nice to see you used the "File and Suspend" strategy which I created and named back in 2003. Glenn Ruffenach's article you cite was a thrill for me as I was (and still am) just an average Joe trying to pay the bills. I did think I had a good idea at the time. Here's a little background if you are interested. Incidentally, now we have Social Security claiming software such as Mike Piper's and the William Meyer/Bill Reichenstein tool that was sold to T. Rowe Price this week. But back then, nearly everyone in the financial planning community touted taking Social Security as soon as you retire or age 62 if earlier... and that one should delay taking IRA withdrawals. Jonathan was one of the few to clammer that one should delay SS and that the survivor benefit was one big reason. I started running the numbers and was sold on the higher earner delaying SS if they had IRA assets to bridge until a later claiming age. I dug into the weeds of SS rules and found that President Clinton had signed legislation in 2000 that was meant to encourage older workers to keep working as it eliminated the earnings test past Full Retirement Age. When I read it, two things stood out. One: An individual could suspend benefits once they filed if they had reached Full Retirement Age. Two: Any suspension would not affect the eligibility of others to collect on that individual's record. Hence it seemed one could file for benefits at FRA and immediately suspend them. This would trigger the spouse to become "entitled" and this was a good thing because 1) the spousal benefit doesn't earn Delayed Retirement Credits and 2) this lessons the pain of delaying the other spouse's SS as SS income is coming into the household and 3) this would further encourage the higher earning spouse to delay and thus create a future (higher) survivor benefit. Jonathan wrote about it in 2006 and word started spreading. As per your experience, I received many emails that local SSA offices didn't allow it but when I provided the POMs references, it worked. Of course, the strategy was deemed a loophole in 2015. That said, if it encouraged households to delay one spouse's SS, that's a positive and future widows/widowers will benefit. Financial planners and finance journalists look at SS differently these days. My book "How to Craft a Resilient Retirement Income Plan" was self-published on Amazon a couple of months ago and is available for $8 if any fellow retirement income geeks would like to dive in deeper.

  Post: Bewildering Benefits

  Link to comment from April 8, 2023

• One of the ideas I posit in my new book, How to Craft a Resilient Retirement Income Plan, is that you can now access period certain income annuities with traditional commissions stripped out via a Registered Investment Adviser (RIA). This way, you take advantage of the expertise of an insurer to do the asset/liability matching to generate cashflow. Once you get a quote, you can go on Bankrate.com, plug in the numbers, and see what the internal rate of return is.

  Post: Rebuilding My Ladder

  Link to comment from November 14, 2022

• Nice article Greg. Fully a believer in the simple approach you outline. I'll just add that stable value funds are not down this year and are a great investment for many new retirees who keep some assets in their employer's 401(k). Stable value investments are also a good choice to "bridge" to a higher delayed Social Security benefit.

  Post: Own It All

  Link to comment from November 2, 2022

• Great question Nate. I'd be very interested in the views of other HD readers who sacrificed some lifestyle to have the money to save in 529 plans for their children so they wouldn't have to take out student loans. How do you feel about children of parents who didn't sacrifice getting $10k in loan cancellation?

  Post: Think of the Children

  Link to comment from August 24, 2022

• The way I think about Social Security:

  • Most of us have two main piles of wealth on which we will generate retirement income: Social Security and IRA/401(k)
  • Social Security is much more valuable because:
  • It's backed by a government promise that IMO would be nearly impossible to break for current retirees.
  • Provides inflation protection with a COLA which compounds over time. Hence those delaying benefits and those who already claimed will see FUTURE COLAs build off the 5.9% COLA paid in 2022 and potentially a 9%-10% COLA in 2023. If you claim prior to age 70, you must fund that inflation "cost" out of your IRA as opposed to having the government do it for you.
  • Is taxed at a lower rate at the federal and (typically) state level.
  • Benefits from asset/liability matching provided by the government. In other words, if I have essential monthly expenses of $2,500 and I claim early for $2,000 but could have delayed until a later age for $2,500, I have to provide that asset/liability match with my IRA to generate the $500 per month. Maybe I ladder CDs or hold funds in a money market account, but the bottom line is there is an opportunity cost to holding more liquid investments to generate the $500 (especially in a low interest rate environment),
  • Delaying Social Security to age 70 covers a good portion of my tail risk so having more of it allows me to invest remaining assets more aggressively as I know I will always have a high amount of "real" monthly income coming in, whether it's for a nursing home, a home health aide, or living an active life at age 95.
  • It's a joint and survivor annuity for the spouse with the higher SS amount. This means a lot to me because my wife has no interest nor talent at investing when I am gone. I want her taken care of and a higher SS survivor benefit is the best way to do that.
  • For a lot of retirees, delaying SS can be a "gift enhancer" as we will know we will have a higher amount of inflation-protected income coming in throughout retirement, so we can feel more comfortable giving periodic gifts to our children and our future grandchildren's 529 plans (can you imagine how expensive college will be in 20 years?)
  • SS is valuable in a low interest rate environment as the underlying annuity formula is better than we can find currently in the private market and valuable in a higher interest rate environment because that environment is typically accompanied by higher inflation and hence the COLA becomes more valuable to the retiree at that point.
  • Using IRA assets to bridge to SS at 70 is a health enhancer for me. I saw my father - who took SS at 62 - get very stressed during the bear market in the early 00's.....Stress leads to inflammation and this can hurt our physical and cognitive health. Reducing stress can lead to a healthier retirement. (I'm not stressed that I am spending my IRA assets down and could have left more to my kids if my wife and I both die prior to age 80).
  • Delaying SS after FRA doesn't provide a risk-free rate of return of 8% as many think, but rather an 8% real increase in the monthly benefit. The rate of return can't be known until both spouses die. And, like any income annuity, SS recipients who delay claiming will benefit from mortality credits (provided by the government) and in my view, are the optimal way to protect against the risk of outliving our retirement wealth.

  Post: Eyeing the Cake

  Link to comment from August 12, 2022