Great post Jonathan - thanks for sharing. I'm not sure I'd consider your daily editing of HD as work, more like passion. One of the best pieces of advice I heard about retirement (related to your "travel while you can" comment) was to think of retirement in 3 phases: Go-Go, Go Slow and No Go. The thoughts you shared reinforced that but also shed some light for me that maybe there's some "shifting" even within those phases. Maybe we need to handle these retirement phases more like driving a manual transmission than just cruising along on an automatic transmission. Either way, just appreciate that you so eloquently, abundantly and thoughtfully share your passion with this group of people. Thanks!
As you think about your strategy, I'd encourage you to consider 2 things. First, the Federal Reserve only controls the short end of the yield curve, while the bond market controls the long end of the curve. And as we saw last week, the bond market wields a great deal of power. Second, while the United States' position as the world's reserve currency has provided our bond market with a risk-free premium, the events of the last week and the last 3 months, have given global investors reason to question whether the U.S will continue to be a "safe" place to invest. A decline in trade will result in a decline in demand for USD's and a decline in demand for USD's will lead to a decline in demand for US Treasuries, which leads to higher bond yields. I'd expect continued volatility as the globe and the bond market sort out this new world order. While that might be good for traders on Wall Street, it's not good for investors making long term investment decisions, including of course, the U.S. housing industry.
When we talk about investing, investments, asset allocation, etc., a longstanding tool of the basis for pricing investments is the Capital Asset Pricing Model (CAPM). And a core tenant of the CAPM is that US Treasuries are "the" risk free investment that the pricing model is based on, which helps derive the risk premium required for other risky assets. While I've come to know that there is risk everyone in this world, I think this week, for the first time in a very long time, the rest of the world was asking, "Is the US risk free?" Not looking for anyone to answer that question for me, just answer that question yourself, and I think that will help inform your personal investment decisions.
I retired in the Summer of 2024 myself, and I wish you luck with your upcoming decisions. My experience with both Social Security and Medicare websites and offices I've visited in person over the last year has been nothing short of exceptional. My personal retirement journey includes my wife who also receives a government pension, and is now able to apply for Social Security with the recent elimination of the WEP and GPO. Compared to the fraud, ineptitude and lack of customer service support that DOGE has highlighted, I've found exactly the opposite with all of my interactions with governmental Social Security and Medicare teams. Hopefully you will experience the same.
Important to note that the "super" catch contributions for workers age 60 to 63 has to be adopted by your employer. If it's not currently available by your employer, interested employees should lobby their HR department to get the feature added. With regards to this feature likely not being something that most workers have the ability to take advantage of, one of the dirty little secrets of 401(k) plans is that they tend to be most advantageous to mostly highly compensated employees, who have the ability to take advantage of the highest savings limits. In most corporate 401(k) plans, 80% of plan assets are held by approximately 20% of company employees, usually the most highly compensated employees of the company.
I agree with your comment that SSA reform is relatively simple and can be done so with minimal impact to current beneficiaries. As a former pension and retirement plan advisor who had the benefit of hanging around a bunch of actuaries who were way smarter than me, there are basically only three levers needed to create real SSA reform and extend the life of the program for a very long time. First, extend the retirement age. Everyone knows life expectancy has increased since the program began almost 100 years ago, so rather than an FRA of 67, extend FRA to something closer to 70. Second, increase or uncap the annual OASDI wage limit, currently at $176,100. Congress already did this with Medicare, why not do the same with OASDI? These first 2 changes would significantly strengthen the program. If needed, a third lever would be to raise the OASDI tax rate currently at 6.20%, either through the current flat rate structure or through a revised income-based rate similar to the current Medicare tax model. The problem is that our political leaders on both sides of the aisle lack the courage to discuss simple reform steps, choosing to focus on political pitches that play to both bases that they "won't touch social security." There HAS to be some sort of change using these 3 levers sometime between now and the early 2030's. Might as well be honest with the general public and do it sooner rather than later.
It's funny that you should mention Cuban's sale of Broadcast.com, because in today's 24-hour instant news cycle, 1999 is ancient history. Two things always stood out to me about Cuban's sale of Broadcast.com. First, the deal closed in January or February of 2000. Cuban's timing of the sale couldn't have come at a more opportune time, with the Nasdaq as well as the broader stock market topping out less than a month later, in early March 2000, the beginning of a brutal 3-year Bear Market. But even more memorable and remarkable was how Cuban handled the sale of the company. Rather than reaping the rewards of his Billion Dollar windfall solely for himself, Mark Cuban made sure that EVERY one of the 1,800 employees of the company, right down to the janitor, was made at least a millionaire as part of the deal. Now that's true LEADERSHIP. A rising tide lifts all boats. Mark Cuban lifted up every one of the Broadcast.com employees that helped make that company a success. Since learning the details of that transaction, I've continued to admire not only Mark Cuban's business acumen, but also his thoughtful leadership.
There's a concept in the accounting and finance world known as a sunk cost. This is a classic example of a sunk cost decision. The prior cost of the 40 gallon tank is irrelevant to the 50 gallon tank decision. Sorry Jon, let's move forward with that larger tank. And Jon, if you're not a fan, I'd also recommend listening to some of The Replacements music as well. A great alt rock band from the 1980's.
Comments
Great post Jonathan - thanks for sharing. I'm not sure I'd consider your daily editing of HD as work, more like passion. One of the best pieces of advice I heard about retirement (related to your "travel while you can" comment) was to think of retirement in 3 phases: Go-Go, Go Slow and No Go. The thoughts you shared reinforced that but also shed some light for me that maybe there's some "shifting" even within those phases. Maybe we need to handle these retirement phases more like driving a manual transmission than just cruising along on an automatic transmission. Either way, just appreciate that you so eloquently, abundantly and thoughtfully share your passion with this group of people. Thanks!
Post: Tasting Retirement
Link to comment from April 25, 2025
As you think about your strategy, I'd encourage you to consider 2 things. First, the Federal Reserve only controls the short end of the yield curve, while the bond market controls the long end of the curve. And as we saw last week, the bond market wields a great deal of power. Second, while the United States' position as the world's reserve currency has provided our bond market with a risk-free premium, the events of the last week and the last 3 months, have given global investors reason to question whether the U.S will continue to be a "safe" place to invest. A decline in trade will result in a decline in demand for USD's and a decline in demand for USD's will lead to a decline in demand for US Treasuries, which leads to higher bond yields. I'd expect continued volatility as the globe and the bond market sort out this new world order. While that might be good for traders on Wall Street, it's not good for investors making long term investment decisions, including of course, the U.S. housing industry.
Post: Trying To Think Through the Bond Situation
Link to comment from April 15, 2025
When we talk about investing, investments, asset allocation, etc., a longstanding tool of the basis for pricing investments is the Capital Asset Pricing Model (CAPM). And a core tenant of the CAPM is that US Treasuries are "the" risk free investment that the pricing model is based on, which helps derive the risk premium required for other risky assets. While I've come to know that there is risk everyone in this world, I think this week, for the first time in a very long time, the rest of the world was asking, "Is the US risk free?" Not looking for anyone to answer that question for me, just answer that question yourself, and I think that will help inform your personal investment decisions.
Post: No financial wisdom here other than ….
Link to comment from April 13, 2025
I retired in the Summer of 2024 myself, and I wish you luck with your upcoming decisions. My experience with both Social Security and Medicare websites and offices I've visited in person over the last year has been nothing short of exceptional. My personal retirement journey includes my wife who also receives a government pension, and is now able to apply for Social Security with the recent elimination of the WEP and GPO. Compared to the fraud, ineptitude and lack of customer service support that DOGE has highlighted, I've found exactly the opposite with all of my interactions with governmental Social Security and Medicare teams. Hopefully you will experience the same.
Post: Today’s the Day!–Well, Sort Of (by Dana/DrLefty)
Link to comment from April 2, 2025
Important to note that the "super" catch contributions for workers age 60 to 63 has to be adopted by your employer. If it's not currently available by your employer, interested employees should lobby their HR department to get the feature added. With regards to this feature likely not being something that most workers have the ability to take advantage of, one of the dirty little secrets of 401(k) plans is that they tend to be most advantageous to mostly highly compensated employees, who have the ability to take advantage of the highest savings limits. In most corporate 401(k) plans, 80% of plan assets are held by approximately 20% of company employees, usually the most highly compensated employees of the company.
Post: 401(k) Savings Limits
Link to comment from March 27, 2025
I agree with your comment that SSA reform is relatively simple and can be done so with minimal impact to current beneficiaries. As a former pension and retirement plan advisor who had the benefit of hanging around a bunch of actuaries who were way smarter than me, there are basically only three levers needed to create real SSA reform and extend the life of the program for a very long time. First, extend the retirement age. Everyone knows life expectancy has increased since the program began almost 100 years ago, so rather than an FRA of 67, extend FRA to something closer to 70. Second, increase or uncap the annual OASDI wage limit, currently at $176,100. Congress already did this with Medicare, why not do the same with OASDI? These first 2 changes would significantly strengthen the program. If needed, a third lever would be to raise the OASDI tax rate currently at 6.20%, either through the current flat rate structure or through a revised income-based rate similar to the current Medicare tax model. The problem is that our political leaders on both sides of the aisle lack the courage to discuss simple reform steps, choosing to focus on political pitches that play to both bases that they "won't touch social security." There HAS to be some sort of change using these 3 levers sometime between now and the early 2030's. Might as well be honest with the general public and do it sooner rather than later.
Post: Worried? Concerned? Confident? About the future of Social Security and Medicare
Link to comment from March 24, 2025
It's funny that you should mention Cuban's sale of Broadcast.com, because in today's 24-hour instant news cycle, 1999 is ancient history. Two things always stood out to me about Cuban's sale of Broadcast.com. First, the deal closed in January or February of 2000. Cuban's timing of the sale couldn't have come at a more opportune time, with the Nasdaq as well as the broader stock market topping out less than a month later, in early March 2000, the beginning of a brutal 3-year Bear Market. But even more memorable and remarkable was how Cuban handled the sale of the company. Rather than reaping the rewards of his Billion Dollar windfall solely for himself, Mark Cuban made sure that EVERY one of the 1,800 employees of the company, right down to the janitor, was made at least a millionaire as part of the deal. Now that's true LEADERSHIP. A rising tide lifts all boats. Mark Cuban lifted up every one of the Broadcast.com employees that helped make that company a success. Since learning the details of that transaction, I've continued to admire not only Mark Cuban's business acumen, but also his thoughtful leadership.
Post: Better Angels
Link to comment from March 12, 2025
There's a concept in the accounting and finance world known as a sunk cost. This is a classic example of a sunk cost decision. The prior cost of the 40 gallon tank is irrelevant to the 50 gallon tank decision. Sorry Jon, let's move forward with that larger tank. And Jon, if you're not a fan, I'd also recommend listening to some of The Replacements music as well. A great alt rock band from the 1980's.
Post: Replacing the Replacement
Link to comment from March 6, 2025