I'm ambivalent about the IRMAA "problem." First, the amount of tax we pay is a reward for our success, not punishment. Second, the amount of Medicare I have used in the 12 years I have been retired far exceeds what I have paid in premiums. My wife and I succeeded in our retirement savings and are grateful that we are financially comfortable and able to give to charity and help our family while we are still alive. We are especially grateful to have good health insurance when so many Americans have too little or none at all.
I agree with all four points you make in your essay. When my son was 15, he got his first job assembling bikes in a bike shop. That job put money in his pocket that was his own and gave him a skill that he could use at other bike shops until he graduated from college. Even better, it allowed his parents to help fund a Roth Ira that has grown considerably over the years. What it didn't do was pay for his college education. When I graduated with a masters degree in 1972, the total cost amounted to about $10,000, much of which I paid for myself. Our son's 4 years of college, on the other hand, cost $150,000 when he graduated in 2001. College today is unfortunately becoming an effort that can only be financed by families with means, or by substantial debt.
The Treasury 10 and 2 year spread peaked in March of 2021 and then rapidly fell and became negative in July of 2022. Many asset managers were similarly moving out of longer bonds into shorter maturities in order to preserve capital as the price of long bonds continued to fall through late 2023. However, preventing a loss is not quite the same thing as making money on your investments. Ultimately, what matters is the long term total return that your manager produces. Having spent my career in the investment business, the expectation is that managers will produce above average returns that will justify the fees they charge. However, it was my experience that we seldom achieved this level of returns, meaning that our clients could likely have done as well or better if they had self invested using low cost index funds. That said, the other services that your manager provides have significant value that you would otherwise have to pay for if you self managed. And, in the event you predecease your wife, adding your assets to hers will be a seamless transition in management. For the record, I self manage my family's assets, but intend to hand off this responsibility to a fee manager as I age, or upon my death.
No one knows what the RE market will do in advance and many will be unlucky when it comes to either buying or selling a home. My experience has been different than yours, but I attribute that to luck and timing, not any skill on my part. What does affect whether or not the purchase of a home will make financial sense is how long you plan to live in it. Owning a home has a fairly long return tail and for many people, renting can be a much safer and less costly alternative than buying a home. There a lot of calculators available on line that can help identify the particular break even point for purchasing a home v. renting, but any solution is at best an estimate and will vary greatly, based on market trends and interest rates. Did I pay any attention to any of this when I bought my first home? Of course not. And, my son was no better when he bought his first house. Instead of being a rational, cold blooded decision, buying a home is often anything but.
No, but it was very expensive and continues to be as we have helped our son to buy a home. There is no single answer to why people are having less children today, but cost has to be a significant factor. AI suggests that the cost to raise a child is $300-$375K per child, but this number seems low. Send your child to a good college, maybe graduate school and help buy their first (and second?) home, and the cost quickly rises. In the 50's, families of 4+ in which only Dad was the breadwinner were common. Today, unless Dad (and Mom) has a very good income, families are much smaller. Why? There are a lot of reasons, but the simplest reason is that family incomes have simply not kept pace with the major costs (day care, education, owning a home, healthcare) that drive the cost of everyday family life.
Thanks. This is a great reminder to all of us to sit on our hands and not do anything foolish in the face of a declining market. I worked in the investment biz and when markets started to fall, we would inevitably get phone calls from clients, asking what we were going to do. The answer was in most cases was "nothing," or "very little," neither of which was much appreciated by our clients as they truly believed that we could somehow avoid losses in their accounts. The worst calls were from panicked clients who insisted that we sell all of their holdings - inevitably at the bottom of the market. Now that I am retired and the shoe is on the other foot, I can better empathize with my former clients as the fear of losing it all is a powerful force, especially as we age. Rather than do nothing, I have raised more cash to meet several years of RMD payouts and have added more to my non-US holdings, but have otherwise remained fully invested using a balanced portfolio strategy. Beyond this, I continue to remind myself almost daily to not panic and do something foolish that I will only live to regret.
Of course. Every economic cycle brings its own particular risks and anxieties, and no matter how many you may have weathered in the past, the next downturn (or current one, as it increasingly appears likely) will likely generate similar fears and concerns. When I was saving for retirement - especially as my retirement date was approaching - my fear was that everything I had saved could be wiped out and I'd be forced to keep working. It didn't happen, and we were able to retire with a nice nest egg and have enjoyed 12 good years of retirement, so far. However, the effects of a dot.com or housing crises-like downturn is never far from our minds. That said, has any of this affected our approach to investing? Only somewhat. I have raised cash to fund our RMD's for several years and have increased our exposure to non-U.S. markets a bit, but not much else. The income generated from our investments, plus SS and a small amount of pension income is enough to live on, albeit with fewer frills. Having good health insurance and no debt is also an advantage at our age.
We have raised cash in anticipation of a market decline and have more than enough to weather the usual market storm. However, the question in the back of our minds always is: is this time different? I am happy to be 10+ years into retirement and am less worried about whether our money would last than when I first retired. For those retiring now, or soon to retire, I expect their answer would be different.
Focusing on bear market dips seems like an invitation to market time. If one had simply remained invested over these time periods, the long term total returns for a 60/40 investor should be in the 8.0%+ range. The "real" return after fees (23 basis pts) and inflation (2-3%), should still provide a reasonable long term rate of return. And, if you can stand the volatility of a higher equity exposure, your comfort margin should be even greater.
Comments
I'm ambivalent about the IRMAA "problem." First, the amount of tax we pay is a reward for our success, not punishment. Second, the amount of Medicare I have used in the 12 years I have been retired far exceeds what I have paid in premiums. My wife and I succeeded in our retirement savings and are grateful that we are financially comfortable and able to give to charity and help our family while we are still alive. We are especially grateful to have good health insurance when so many Americans have too little or none at all.
Post: Time to scrap IRAs, 401k, 403b and all the rest
Link to comment from May 23, 2026
I agree with all four points you make in your essay. When my son was 15, he got his first job assembling bikes in a bike shop. That job put money in his pocket that was his own and gave him a skill that he could use at other bike shops until he graduated from college. Even better, it allowed his parents to help fund a Roth Ira that has grown considerably over the years. What it didn't do was pay for his college education. When I graduated with a masters degree in 1972, the total cost amounted to about $10,000, much of which I paid for myself. Our son's 4 years of college, on the other hand, cost $150,000 when he graduated in 2001. College today is unfortunately becoming an effort that can only be financed by families with means, or by substantial debt.
Post: First Job, Lasting Impact
Link to comment from May 18, 2026
The Treasury 10 and 2 year spread peaked in March of 2021 and then rapidly fell and became negative in July of 2022. Many asset managers were similarly moving out of longer bonds into shorter maturities in order to preserve capital as the price of long bonds continued to fall through late 2023. However, preventing a loss is not quite the same thing as making money on your investments. Ultimately, what matters is the long term total return that your manager produces. Having spent my career in the investment business, the expectation is that managers will produce above average returns that will justify the fees they charge. However, it was my experience that we seldom achieved this level of returns, meaning that our clients could likely have done as well or better if they had self invested using low cost index funds. That said, the other services that your manager provides have significant value that you would otherwise have to pay for if you self managed. And, in the event you predecease your wife, adding your assets to hers will be a seamless transition in management. For the record, I self manage my family's assets, but intend to hand off this responsibility to a fee manager as I age, or upon my death.
Post: One Good Call?
Link to comment from April 18, 2026
No one knows what the RE market will do in advance and many will be unlucky when it comes to either buying or selling a home. My experience has been different than yours, but I attribute that to luck and timing, not any skill on my part. What does affect whether or not the purchase of a home will make financial sense is how long you plan to live in it. Owning a home has a fairly long return tail and for many people, renting can be a much safer and less costly alternative than buying a home. There a lot of calculators available on line that can help identify the particular break even point for purchasing a home v. renting, but any solution is at best an estimate and will vary greatly, based on market trends and interest rates. Did I pay any attention to any of this when I bought my first home? Of course not. And, my son was no better when he bought his first house. Instead of being a rational, cold blooded decision, buying a home is often anything but.
Post: The Home Ownership Gamble
Link to comment from April 11, 2026
No, but it was very expensive and continues to be as we have helped our son to buy a home. There is no single answer to why people are having less children today, but cost has to be a significant factor. AI suggests that the cost to raise a child is $300-$375K per child, but this number seems low. Send your child to a good college, maybe graduate school and help buy their first (and second?) home, and the cost quickly rises. In the 50's, families of 4+ in which only Dad was the breadwinner were common. Today, unless Dad (and Mom) has a very good income, families are much smaller. Why? There are a lot of reasons, but the simplest reason is that family incomes have simply not kept pace with the major costs (day care, education, owning a home, healthcare) that drive the cost of everyday family life.
Post: Financial regrets about parenthood?
Link to comment from April 11, 2026
Thanks. This is a great reminder to all of us to sit on our hands and not do anything foolish in the face of a declining market. I worked in the investment biz and when markets started to fall, we would inevitably get phone calls from clients, asking what we were going to do. The answer was in most cases was "nothing," or "very little," neither of which was much appreciated by our clients as they truly believed that we could somehow avoid losses in their accounts. The worst calls were from panicked clients who insisted that we sell all of their holdings - inevitably at the bottom of the market. Now that I am retired and the shoe is on the other foot, I can better empathize with my former clients as the fear of losing it all is a powerful force, especially as we age. Rather than do nothing, I have raised more cash to meet several years of RMD payouts and have added more to my non-US holdings, but have otherwise remained fully invested using a balanced portfolio strategy. Beyond this, I continue to remind myself almost daily to not panic and do something foolish that I will only live to regret.
Post: Recency Bias (or: You’re Running Buggy Software)
Link to comment from April 7, 2026
Of course. Every economic cycle brings its own particular risks and anxieties, and no matter how many you may have weathered in the past, the next downturn (or current one, as it increasingly appears likely) will likely generate similar fears and concerns. When I was saving for retirement - especially as my retirement date was approaching - my fear was that everything I had saved could be wiped out and I'd be forced to keep working. It didn't happen, and we were able to retire with a nice nest egg and have enjoyed 12 good years of retirement, so far. However, the effects of a dot.com or housing crises-like downturn is never far from our minds. That said, has any of this affected our approach to investing? Only somewhat. I have raised cash to fund our RMD's for several years and have increased our exposure to non-U.S. markets a bit, but not much else. The income generated from our investments, plus SS and a small amount of pension income is enough to live on, albeit with fewer frills. Having good health insurance and no debt is also an advantage at our age.
Post: Any concern?
Link to comment from April 4, 2026
We have raised cash in anticipation of a market decline and have more than enough to weather the usual market storm. However, the question in the back of our minds always is: is this time different? I am happy to be 10+ years into retirement and am less worried about whether our money would last than when I first retired. For those retiring now, or soon to retire, I expect their answer would be different.
Post: Any concern?
Link to comment from March 28, 2026
Focusing on bear market dips seems like an invitation to market time. If one had simply remained invested over these time periods, the long term total returns for a 60/40 investor should be in the 8.0%+ range. The "real" return after fees (23 basis pts) and inflation (2-3%), should still provide a reasonable long term rate of return. And, if you can stand the volatility of a higher equity exposure, your comfort margin should be even greater.
Post: What, Me Worry?
Link to comment from March 14, 2026
My strategy, as well: rebalance with gains, not losses.
Post: The Anatomy of a Threshold Rebalance: April 2025
Link to comment from March 14, 2026