The most difficult thing I’ve come across about “doing the math” on Roth conversions has to do with ACA premiums that occur between retirement and Medicare. In our case, there’s an 8-year age difference, and I just started Medicare last year. The swing in premiums between Roth conversions to just the 12% bracket or not is around $7000/year for us. Multiply that times 7-8 years and the math gets tricky quickly, with assumptions piled on top of assumptions. I actually posed the question to ChatGPT, and it came back with around a 10% advantage over six years in favor of doing the Roth conversions on a total of around $350k. I then asked it what this would amount to with our life expectancy set to 95 each. It came with about $110k - again, around 10% delta on base amount. So while $35k/10% is definitely not nothing, it’s also not wildly compelling given how many unknowable variables are involved. I’ll probably continue to nibble away at it, but stop short of going for broke on getting our IRAs converted all the way.
First off, I would differentiate between budgeting and tracking spending. To me, the first is about estimating spending and/or setting spending limits, while the latter is tracking what actually happens. For the last 10 years or so we tracked spending pretty rigorously, categorizing monthly credit card transactions. Leading up to retirement we used this information to establish our “burn rate” — the combination of fixed and variable expenses — so we could better understand what was discretionary and what was not. For calculating how much we would need to retire, this was necessary — otherwise how would we know how much we would need before pulling the plug on earning? Now that we’re retired, I continue to track spending and compare it to my estimated budget amounts so I can determine whether our spending is within the planning limits I’ve established. This has been necessary since our spending has changed dramatically since we retired. We’re now spending over 50% more than we were when we were working. Our annual travel budget has increased 3x or more — an otherworldly amount to us — so we have no basis for intuiting whether we’re over or under spending. I suspect within the next 2-3 years we’ll have adjusted to our new lifestyle and no longer need to track things quite so closely. OTOH, I’m also aware that we may find ourselves in a position to spend even more if we so choose, allowing for more travel or upgraded travel options that we never would’ve considered while we were working. Or not. We feel very fortunate to have landed where we have, and do not take any of it for granted. It could all go the other way in the blink of an eye, too, so we’re also prepared for that should it occur.
Nor, do we have any societal agreement on how to deal with healthcare, eldercare, or anything else.
I don’t think that’s universally true. While we don’t have a single-payer setup like Oz and many other countries, between ACA (healthcare) and Medicare (elder care) we do offer coverage to a large swath of the population that doesn’t have health insurance coverage through their employer. (and FWIW, when I lived in Oz it was a two-tiered (or more) system for healthcare. Everyone was covered with a basic plan, but you could buy higher level plans to get access to a wider (aka better) selection of providers). As for pensions, many people do have access to some form of DC plan, which admittedly is not as good as Super, but it’s better than nothing. The trouble is many people don’t take full advantage of it while they’re young and working - they’re too busy spending on the next nicer car or next bigger house when they could be plowing as much as possible into some type of DC plan.
How many high-yield savings accounts do you have open? How many credit cards to you have? I used to move chunks of our cash savings around for a couple tenths of a percentage point in interest. I decided it was worth more to me to have all of our cash in one place - the brokerage where we also have our investment portfolio - than it was to get a couple tenths of a point in interest. Fewer emails pitching me on another great deal; fewer statements; fewer 1099s. Simple is good. Same thing with credit cards. No more chasing airline miles (they’re a pain to use anyways). No more buying gas only at this station. One card, cash back on everything. Done. Simple is good.
Lifespan, Healthspan, and, now <drumroll> Joyspan. You probably have already set yourself a spending budget based on some safe withdrawal rate model. That gives you a target to spend to. Yes, spending it is hard (I’ve written extensively about this very thing elsewhere) - much harder than accumulating it. Trust your budget, and work on spending on things that bring you joy. Whether it’s travel or buying yourself a new boat or giving money to the kids, figure out what brings you joy and use your hard-earned savings for that. Harrumphing about [raking leaves, repairing an appliance, changing the oil, etc etc - pick one] is a good place start. Outsource those tasks joyfully, knowing that you can afford it and doing so eliminates your harrumphing. Congrats on achieving financial independence. En-Joy it!
I just asked Google Gemini to run an analysis on our house, which we bought in 2007. For simplicity’s sake I assumed a 30-year fixed mortgage, which we actually didn’t do, so we benefited from several refi’s into 5-year ARM’s along the way, landing on our current 10-year fixed at 2%. Here’s the results: Scenario 1: Option A (Actual)In this scenario, you put a substantial down payment on your home and took on a smaller mortgage. While this is often a safe and conservative approach, the opportunity cost of not investing the extra cash was high.
Initial Down Payment: $650,000
Initial Mortgage: $337,000
Mortgage Rate: 6%
Home Value in 2025: $1,592,256
Remaining Mortgage Principal (2025): $207,048.71
Total Net Worth (2025):$1,385,207.29
Scenario 2: Option B (Hypothetical)In this scenario, you put down a smaller down payment and invested the remaining $450,000. Despite a slightly higher interest rate on the jumbo mortgage and the volatility of the stock market, the returns from the investment portfolio far exceeded the interest payments on the larger loan.
Initial Down Payment: $200,000
Initial Mortgage: $787,000
Mortgage Rate: 6.37%
Initial Investment: $450,000
Home Value in 2025: $1,592,256
Remaining Mortgage Principal (2025): $493,142.17
Total Investment Value (2025): $2,011,200.91
Total Net Worth (2025):$3,110,314.74
Wow - never ran that before.
It’s an interesting analysis, but I’m not going to cry in my beer about it. We were able to do a lot of things while we were working that we may not have felt comfortable doing do to the cost; and also might not have been able to deal with one of us out of work several times over that time and having to live on one income. Nevertheless, this is an important lesson that people just starting out should be aware of - I wish I had been.
Ed - your post reminds me a lot of how I felt when my wife and I were staring down retirement, particularly the part about having frugalista tendencies and a conservative approach to money management and spending. Longevity in both our families, a large enough portfolio to make the math work, and lots of thoughts about things we wanted to do once we had all of our time to ourselves (‘time millionaire’ I call it). Based on what you wrote, I get the sense that you have more than enough saved and invested to see you through a ripe old age without any need to worry about making it. Of course, that depends a lot on how you’re invested and the decisions you make now and in the next 10 years. I’d recommend sitting down with your wife and talking through what you want the next 30-40 years of your life to be like as if money didn’t matter. Do this without putting any limitations on yourselves financially (or otherwise, assuming you’re both in good health). I mean really allow yourselves to go wild with it. See where that takes you and write it all down in whatever format makes sense to you. Then you can go through it and start evaluating what’s on it. Do you really want this or that thing you put on your vision list, or was that just a fantasy wish? Identify what’s important, what would make the first 10-20 years of being retired meaningful to you. Then go back and through and determine how much it would cost to realize that vision. We are now spending a good 50% more than we were when were both working. At first this was not easy. We needed to run the numbers in such a way that we could feel comfortable with spending the level we’re now spending, and know that if needed we could adjust our spending any time we wanted. On a more tactical level, you may want to look into setting up a bond ladder to stave off SORR risk. This is a way of ensuring you have money ‘coming at you’ each year from a secure, stable source that isn’t subject to the market’s buffeting. Remember, retirement is a journey. You can change your mind about your discretionary spending any time you want. Good luck. Enjoy!
This is another example of conflating bitcoin with cryptocurrencies and blockchain. Bitcoin transactions include mining new bitcoin versus just exchanging them for goods and services. Mining new bitcoin is very energy intensive because bitcoin is built on the principle of Proof of Work. Most stablecoin transactions, on the other hand, are based on Proof of Stake. These are much less energy intensive and highly scalable. More info here: https://datadrivenlab.org/climate/blockchain-energy-consumption-debunking-the-misperceptions-of-bitcoins-and-blockchains-climate-impact/
While I think you’re on the right track with your thoughts about stable coin, I wish you wouldn’t have started with the old bitcoin story about the pizza. Conflating bitcoin and cryptocurrency is already a big issue among the general public - most could not tell you the difference between the two. And yet, they are as different as saying you have a car versus saying you have a Ferrari. Bitcoin and stable coins are both types of cryptocurrency, but they are as different as a 1957 Chevy is from a 2025 Tesla. As such, between these two types of crytocurrency, one has nothing to do with the other. I take a long view toward stablecoin, which, btw, is being trialed by a couple of different countries. When a stable coin is issued by a central government, it’s called a Central Bank Digital Currency (CBDC). While there are several digital dollar coins out there (USDC, for example), as of now none are CBDCs backed by the US government. You can view a complete list of coins and their total market capitalization here. At the top of the list is Tether, with over $164B market cap. One of the keys to making a CBDC stablecoin work in the US is to dispel the fear and uncertainty around it, which is why I think it’s important for people to understand how it’s different from meme coins or bitcoin. When I was working as a startup advisor at a San Francisco fintech accelerator I wrote a future scenario about CBDCs and stablecoins and what they might look like in 2048. It’s a quick read here: https://www.nex3.com/blog/2020/06/10/banking-in-2048-story-from-the-future
Right. Issue-Age rating is the one I was referring to. Compared to the other options, which will likely increase a lot between 65 and death, IA plans will only increase at the rate of inflation so long as one stays in the same place (and doesn’t start smoking). Where in I live in Northern California, there are about a dozen MediGap insurer offerings, only one of which was IA. The rest were all AA.
Comments
The most difficult thing I’ve come across about “doing the math” on Roth conversions has to do with ACA premiums that occur between retirement and Medicare. In our case, there’s an 8-year age difference, and I just started Medicare last year. The swing in premiums between Roth conversions to just the 12% bracket or not is around $7000/year for us. Multiply that times 7-8 years and the math gets tricky quickly, with assumptions piled on top of assumptions. I actually posed the question to ChatGPT, and it came back with around a 10% advantage over six years in favor of doing the Roth conversions on a total of around $350k. I then asked it what this would amount to with our life expectancy set to 95 each. It came with about $110k - again, around 10% delta on base amount. So while $35k/10% is definitely not nothing, it’s also not wildly compelling given how many unknowable variables are involved. I’ll probably continue to nibble away at it, but stop short of going for broke on getting our IRAs converted all the way.
Post: Roth Hidden Benefits
Link to comment from November 3, 2025
First off, I would differentiate between budgeting and tracking spending. To me, the first is about estimating spending and/or setting spending limits, while the latter is tracking what actually happens. For the last 10 years or so we tracked spending pretty rigorously, categorizing monthly credit card transactions. Leading up to retirement we used this information to establish our “burn rate” — the combination of fixed and variable expenses — so we could better understand what was discretionary and what was not. For calculating how much we would need to retire, this was necessary — otherwise how would we know how much we would need before pulling the plug on earning? Now that we’re retired, I continue to track spending and compare it to my estimated budget amounts so I can determine whether our spending is within the planning limits I’ve established. This has been necessary since our spending has changed dramatically since we retired. We’re now spending over 50% more than we were when we were working. Our annual travel budget has increased 3x or more — an otherworldly amount to us — so we have no basis for intuiting whether we’re over or under spending. I suspect within the next 2-3 years we’ll have adjusted to our new lifestyle and no longer need to track things quite so closely. OTOH, I’m also aware that we may find ourselves in a position to spend even more if we so choose, allowing for more travel or upgraded travel options that we never would’ve considered while we were working. Or not. We feel very fortunate to have landed where we have, and do not take any of it for granted. It could all go the other way in the blink of an eye, too, so we’re also prepared for that should it occur.
Post: Budget, What Budget? (Know Thyself)
Link to comment from September 20, 2025
Post: The Main Thing … and the scourge of complexity
Link to comment from September 2, 2025
How many high-yield savings accounts do you have open? How many credit cards to you have? I used to move chunks of our cash savings around for a couple tenths of a percentage point in interest. I decided it was worth more to me to have all of our cash in one place - the brokerage where we also have our investment portfolio - than it was to get a couple tenths of a point in interest. Fewer emails pitching me on another great deal; fewer statements; fewer 1099s. Simple is good. Same thing with credit cards. No more chasing airline miles (they’re a pain to use anyways). No more buying gas only at this station. One card, cash back on everything. Done. Simple is good.
Post: The Main Thing … and the scourge of complexity
Link to comment from August 30, 2025
Lifespan, Healthspan, and, now <drumroll> Joyspan. You probably have already set yourself a spending budget based on some safe withdrawal rate model. That gives you a target to spend to. Yes, spending it is hard (I’ve written extensively about this very thing elsewhere) - much harder than accumulating it. Trust your budget, and work on spending on things that bring you joy. Whether it’s travel or buying yourself a new boat or giving money to the kids, figure out what brings you joy and use your hard-earned savings for that. Harrumphing about [raking leaves, repairing an appliance, changing the oil, etc etc - pick one] is a good place start. Outsource those tasks joyfully, knowing that you can afford it and doing so eliminates your harrumphing. Congrats on achieving financial independence. En-Joy it!
Post: On the Downslope of Life?
Link to comment from August 30, 2025
I just asked Google Gemini to run an analysis on our house, which we bought in 2007. For simplicity’s sake I assumed a 30-year fixed mortgage, which we actually didn’t do, so we benefited from several refi’s into 5-year ARM’s along the way, landing on our current 10-year fixed at 2%. Here’s the results: Scenario 1: Option A (Actual)In this scenario, you put a substantial down payment on your home and took on a smaller mortgage. While this is often a safe and conservative approach, the opportunity cost of not investing the extra cash was high.
- Initial Down Payment: $650,000
- Initial Mortgage: $337,000
- Mortgage Rate: 6%
- Home Value in 2025: $1,592,256
- Remaining Mortgage Principal (2025): $207,048.71
- Total Net Worth (2025): $1,385,207.29
Scenario 2: Option B (Hypothetical)In this scenario, you put down a smaller down payment and invested the remaining $450,000. Despite a slightly higher interest rate on the jumbo mortgage and the volatility of the stock market, the returns from the investment portfolio far exceeded the interest payments on the larger loan.- Initial Down Payment: $200,000
- Initial Mortgage: $787,000
- Mortgage Rate: 6.37%
- Initial Investment: $450,000
- Home Value in 2025: $1,592,256
- Remaining Mortgage Principal (2025): $493,142.17
- Total Investment Value (2025): $2,011,200.91
- Total Net Worth (2025): $3,110,314.74
Wow - never ran that before. It’s an interesting analysis, but I’m not going to cry in my beer about it. We were able to do a lot of things while we were working that we may not have felt comfortable doing do to the cost; and also might not have been able to deal with one of us out of work several times over that time and having to live on one income. Nevertheless, this is an important lesson that people just starting out should be aware of - I wish I had been.Post: A Contrarian View of a Mortgage
Link to comment from August 23, 2025
Ed - your post reminds me a lot of how I felt when my wife and I were staring down retirement, particularly the part about having frugalista tendencies and a conservative approach to money management and spending. Longevity in both our families, a large enough portfolio to make the math work, and lots of thoughts about things we wanted to do once we had all of our time to ourselves (‘time millionaire’ I call it). Based on what you wrote, I get the sense that you have more than enough saved and invested to see you through a ripe old age without any need to worry about making it. Of course, that depends a lot on how you’re invested and the decisions you make now and in the next 10 years. I’d recommend sitting down with your wife and talking through what you want the next 30-40 years of your life to be like as if money didn’t matter. Do this without putting any limitations on yourselves financially (or otherwise, assuming you’re both in good health). I mean really allow yourselves to go wild with it. See where that takes you and write it all down in whatever format makes sense to you. Then you can go through it and start evaluating what’s on it. Do you really want this or that thing you put on your vision list, or was that just a fantasy wish? Identify what’s important, what would make the first 10-20 years of being retired meaningful to you. Then go back and through and determine how much it would cost to realize that vision. We are now spending a good 50% more than we were when were both working. At first this was not easy. We needed to run the numbers in such a way that we could feel comfortable with spending the level we’re now spending, and know that if needed we could adjust our spending any time we wanted. On a more tactical level, you may want to look into setting up a bond ladder to stave off SORR risk. This is a way of ensuring you have money ‘coming at you’ each year from a secure, stable source that isn’t subject to the market’s buffeting. Remember, retirement is a journey. You can change your mind about your discretionary spending any time you want. Good luck. Enjoy!
Post: Keeping Calm
Link to comment from August 16, 2025
This is another example of conflating bitcoin with cryptocurrencies and blockchain. Bitcoin transactions include mining new bitcoin versus just exchanging them for goods and services. Mining new bitcoin is very energy intensive because bitcoin is built on the principle of Proof of Work. Most stablecoin transactions, on the other hand, are based on Proof of Stake. These are much less energy intensive and highly scalable. More info here: https://datadrivenlab.org/climate/blockchain-energy-consumption-debunking-the-misperceptions-of-bitcoins-and-blockchains-climate-impact/
Post: Smart Move?
Link to comment from August 10, 2025
While I think you’re on the right track with your thoughts about stable coin, I wish you wouldn’t have started with the old bitcoin story about the pizza. Conflating bitcoin and cryptocurrency is already a big issue among the general public - most could not tell you the difference between the two. And yet, they are as different as saying you have a car versus saying you have a Ferrari. Bitcoin and stable coins are both types of cryptocurrency, but they are as different as a 1957 Chevy is from a 2025 Tesla. As such, between these two types of crytocurrency, one has nothing to do with the other. I take a long view toward stablecoin, which, btw, is being trialed by a couple of different countries. When a stable coin is issued by a central government, it’s called a Central Bank Digital Currency (CBDC). While there are several digital dollar coins out there (USDC, for example), as of now none are CBDCs backed by the US government. You can view a complete list of coins and their total market capitalization here. At the top of the list is Tether, with over $164B market cap. One of the keys to making a CBDC stablecoin work in the US is to dispel the fear and uncertainty around it, which is why I think it’s important for people to understand how it’s different from meme coins or bitcoin. When I was working as a startup advisor at a San Francisco fintech accelerator I wrote a future scenario about CBDCs and stablecoins and what they might look like in 2048. It’s a quick read here: https://www.nex3.com/blog/2020/06/10/banking-in-2048-story-from-the-future
Post: Smart Move?
Link to comment from August 10, 2025
Right. Issue-Age rating is the one I was referring to. Compared to the other options, which will likely increase a lot between 65 and death, IA plans will only increase at the rate of inflation so long as one stays in the same place (and doesn’t start smoking). Where in I live in Northern California, there are about a dozen MediGap insurer offerings, only one of which was IA. The rest were all AA.
Post: Seeking Input on Medicare Supplement Carriers
Link to comment from August 3, 2025