If I take SS "early", I get to invest it at current compounded Money Market rates around 4.2%. This makes up much of the difference of waiting to age 70 to file. Still get the inflation protection. I am taking out insurance against dying early. I view 60K in SS benefits as a 1.5M dollar bond at 4%. Guaranteed, no default, inflation protected, preferably taxed with survivor benefits. Allows people to take their risks somewhere else.
Dividend payouts are not income. The value of the Stock or NAV decreases in proportion to the payout. No wealth has been created, You now have a taxable event. In addition, high dividend payers tend to be large cap resulting in decreased diversification.
The desire to receive dividends is largely psychological.
Social Security income is like a guaranteed no default bond. State tax exempt (in Ohio anyway). Tax preferred on the Federal level. Inflation adjusted. Spousal and survivor benefits. Best of all, to individuals still working...no FICA on Soc Security. Why buy an annuity when you already have the World's Best? With Money Market rates north of 5%, the whole waiting-to-file argument is flipped.
Great discussion with very intelligent thoughtful people.
I can still invest in Vanguard Federal MMF at 5.32% compounded. I will ride this horse a little longer waiting for the World to go Mad again to re-invest.
Soc Security is the World's best annuity. Tax favored, guaranteed, inflation-indexed. How could I possibly improve on this? Why double down on the Insurance industry? Why do I need to pay up for "guaranteed income" ?
If you are a conscientious , long term saver, the likelihood of becoming wildly extravagant is nil. It is not in your DNA.
Mike Piper's newest book "More Than Enough" is fantastic. Essentially over a certain age you are investing for your heirs. If you die at 90, you will be passing on your Wealth to 60 year old children who may be in retirement themselves. Better to pass it on when they are young and can use it.
I find every year represents new opportunities. Tax laws change, expenses change, Health changes. No way I can predict my situation even 2-3 years out. Review "cash for clunkers" if you don't believe me. Jonathan, thank you so much for your writings and your wisdom.
Dividends are not "yield." Dividends are your own money coming back at you with a decrease in share price and a tax bill. Dividends are a behavioral trick to get you to buy the Stock and then feel good.
I assume you are taking Soc Security (maybe spousal) benefits. If so, you already have a tax preferred, inflation adjusted, no-default bond with survivorship benefits. Why buy TIPS? At age 70, with likely still substantial assets, you have "won the game." Gradually, increase your Stock allocation, remembering it will probably go to your heirs. Read Mike Piper's new book "More Than Enough." My Vanguard Federal MMF is paying over 4.5% and State tax free. Average 5 year CD rate nowadays about 5%. Worth the hassle?
Jonathan, don't ever think you didn't make a difference. You did. I recall your WSJ columns with fondness. Repetition just drove home the points. Investing is simple, but not easy.
Comments
If I take SS "early", I get to invest it at current compounded Money Market rates around 4.2%. This makes up much of the difference of waiting to age 70 to file. Still get the inflation protection. I am taking out insurance against dying early. I view 60K in SS benefits as a 1.5M dollar bond at 4%. Guaranteed, no default, inflation protected, preferably taxed with survivor benefits. Allows people to take their risks somewhere else.
Post: You versus Social Security – Quinn is betting against you.
Link to comment from May 3, 2025
Dividend payouts are not income. The value of the Stock or NAV decreases in proportion to the payout. No wealth has been created, You now have a taxable event. In addition, high dividend payers tend to be large cap resulting in decreased diversification. The desire to receive dividends is largely psychological.
Post: You’ve Come a Long Way, Baby by Marjorie Kondrack
Link to comment from May 3, 2025
Social Security income is like a guaranteed no default bond. State tax exempt (in Ohio anyway). Tax preferred on the Federal level. Inflation adjusted. Spousal and survivor benefits. Best of all, to individuals still working...no FICA on Soc Security. Why buy an annuity when you already have the World's Best? With Money Market rates north of 5%, the whole waiting-to-file argument is flipped.
Post: Should you include SS and pensions in your net worth?
Link to comment from August 3, 2024
Great discussion with very intelligent thoughtful people. I can still invest in Vanguard Federal MMF at 5.32% compounded. I will ride this horse a little longer waiting for the World to go Mad again to re-invest.
Post: An Annuity Instead?
Link to comment from December 30, 2023
Soc Security is the World's best annuity. Tax favored, guaranteed, inflation-indexed. How could I possibly improve on this? Why double down on the Insurance industry? Why do I need to pay up for "guaranteed income" ? If you are a conscientious , long term saver, the likelihood of becoming wildly extravagant is nil. It is not in your DNA. Mike Piper's newest book "More Than Enough" is fantastic. Essentially over a certain age you are investing for your heirs. If you die at 90, you will be passing on your Wealth to 60 year old children who may be in retirement themselves. Better to pass it on when they are young and can use it. I find every year represents new opportunities. Tax laws change, expenses change, Health changes. No way I can predict my situation even 2-3 years out. Review "cash for clunkers" if you don't believe me. Jonathan, thank you so much for your writings and your wisdom.
Post: Happily Ever After
Link to comment from December 24, 2023
Dividends are not "yield." Dividends are your own money coming back at you with a decrease in share price and a tax bill. Dividends are a behavioral trick to get you to buy the Stock and then feel good.
Post: Yielding Results
Link to comment from December 23, 2023
I assume you are taking Soc Security (maybe spousal) benefits. If so, you already have a tax preferred, inflation adjusted, no-default bond with survivorship benefits. Why buy TIPS? At age 70, with likely still substantial assets, you have "won the game." Gradually, increase your Stock allocation, remembering it will probably go to your heirs. Read Mike Piper's new book "More Than Enough." My Vanguard Federal MMF is paying over 4.5% and State tax free. Average 5 year CD rate nowadays about 5%. Worth the hassle?
Post: Time for a Ladder?
Link to comment from March 27, 2023
Jonathan, don't ever think you didn't make a difference. You did. I recall your WSJ columns with fondness. Repetition just drove home the points. Investing is simple, but not easy.
Post: News You Can’t Use
Link to comment from October 30, 2022
I remember reading "48 and Counting" at a pivotal point in my life. Simple and elegant. Thank you for your work.
Post: Now and Then
Link to comment from July 30, 2022