MANY DREAM of retiring to the beach. My wife and I just did it. We recently sold our primary home outside Philadelphia and moved to our vacation home on the New Jersey Shore. The decision wasn’t easy. It was the result of a number of events coming together, including the pandemic, the hot real estate market and an attractive, but unexpected offer on our primary home.
We’d lived in our old home since 1994.
EARLY IN MY CAREER, one of my mentors at work used to talk about “excess paychecks.” He was a single, senior engineer who lived frugally. Back then, the concept seemed ridiculous to me. But I’ve come to realize he was right: Most of us don’t need every dollar we’re paid for living expenses, so we should think carefully about where to stash the excess.
That notion came to mind recently when taking to a friend.
MANY YEARS AGO, when I first developed an interest in financial planning, I read as much as I could on the subject. I distinctly remember being in a bookstore—remember them?—and looking at the myriad of personal finance books. Two stuck out.
The first book purported to show how to maximize your spending throughout retirement and die with nothing. The second book purported to help with the opposite strategy—leaving millions to your children. The stark dichotomy struck me then and it’s stayed with me ever since.
SOCIAL SECURITY is a crucial source of income for many retirees. But unfortunately, there’s also much confusion, because the ways benefits are calculated sure isn’t simple.
Want to learn more? To get started, I’d suggest heading to the Social Security Administration’s website and creating a free “my Social Security” account. For those currently receiving benefits, the website allows you to:
Verify your benefit payment amount
Get a replacement Social Security card
Get a replacement Medicare card
Change your address and phone number
Start or change direct deposit of your benefit payment
Get a replacement SSA-1099 or SSA-1042S for tax purposes
If you aren’t currently receiving benefits,
I RECENTLY WROTE about how, if you claim Social Security benefits before age 66 or 67, your monthly check could be reduced if your earned income is “too high.” Shortly after the article appeared, I ran into a colleague who was struggling with the issue.
My colleague had retired a few years back. He thought there might be some opportunities to do part-time consulting with our old employer. But nothing came of it during the first year he was retired,
WHEN OPPORTUNITY knocks, will you be ready? In the past 15 months, my wife and I have had two attractive but completely unexpected opportunities presented to us.
On Labor Day 2019, a neighbor at our New Jersey Shore house told us they were selling their home. They had bought a lot nearby and were planning to build a larger house to accommodate their growing brood of grandchildren. They knew my wife and I had a third grandson on the way,
THE 4% RULE HAS almost mythic status in the financial planning world. Originally suggested by Bill Bengen in a 1994 article, the rule provides a simple way for retirees to figure out how much they can withdraw from their portfolio without running out of money. In a recent article, Bengen updated his rule.
The rule defines the maximum amount retirees should withdraw from their portfolio in the first year of retirement. Got a $500,000 nest egg?
AS YOU STRIVE to do well, should you also strive to do good?
We’re seeing a boom in environmental, social and governance (ESG) investing. For instance, according to a recent Morningstar report, there are now 534 index mutual funds and exchange-traded funds (ETFs) around the world that screen their holdings using ESG criteria. Together, these funds have almost $250 billion in assets—more than twice the sum they had three years earlier.
ESG investing offers a way to invest in funds that consider issues such as the use of natural resources,
SOCIAL SECURITY is the most important source of income for many retirees. Yet there’s also a lot of confusion, especially when it comes to how benefits are reduced if you continue working and how benefits are taxed. In fact, I’ve heard many folks confuse and conflate these two separate issues.
Want a refresher? Here’s a look at both topics:
Working while collecting. If you start Social Security benefits before you reach your full retirement age (FRA),
MANY FINANCIAL planners say they “stress test” portfolios. That sounds like a good idea, but it isn’t well defined. I decided to do some research to see how I could apply the notion to the investments owned by my wife and me.
I came across a number of useful articles. Investopedia, one of my go-to resources for all things financial, provides this definition: “Stress testing is a computer simulation technique used to test the resilience of institutions and investment portfolios against possible future financial situations.” Forbes,
ONE OF MY FAVORITE things to do is sit on our local beach with a cold beverage on a beautiful day, and talk finance with interested friends and family members. This past Labor Day weekend, I did just that with a soon-to-be retiree.
One of the big issues facing him and his wife: where to live. He had been relocated to New York by his employer. But he and his wife are natives of the Philadelphia region,
BACK IN AUGUST, Adam Grossman wrote a thought-provoking article about regret. He offered six strategies to minimize the chances you’ll end up kicking yourself for a choice you made. That got me thinking about the financial decision I most regret.
I bought a timeshare.
I know this admission will generate strong reactions in the personal finance community. I’d like to claim the ignorance of youth, but I was in my early 50s. I’d like to blame my wife,
WHAT’S YOUR CAPITAL gains tax rate? It’s a crucial number to know—and it could open the door to some big tax savings.
Most investors are aware that there’s a significant difference between the tax rate on short-term capital gains—investments held for a year or less—and that on long-term gains, those held more than a year. Realized short-term gains are dunned as ordinary income, just like your salary or any interest income you earn, while long-term appreciation gets taxed at a lower rate.
SOCIAL SECURITY retirement benefits are one of the most complicated topics in financial planning. As you try to figure out how much you might receive, there are thousands of rules, different types of benefit and numerous scenarios to evaluate.
And then there’s the impact of COVID-19.
It turns out that this year’s economic slump, which caused the economy to shrink by a tenth in the second quarter, may interact with Social Security’s methodology to hurt those who turn age 60 in 2020.
MY WIFE AND I bought our first home in the mid-1980s. We were thrilled to get an 8% mortgage, though we had to pay three points—an upfront fee equal to 3% of the loan amount—to get that rate. Many of our friends had bought a few years earlier and were paying 14%, a common occurrence back then, according to Freddie Mac data.
We kept our eyes open for opportunities to refinance our high rate.