In Retirement

A relative couple of mine is living close to the bone. I’m not sure exactly why as they have two pensions (one military with COLA) plus Social Security and no mortgage. Even their property taxes are cut in half with subsidies. He had a good paying union job with good benefits his entire working life. Nevertheless, they seem to be scraping by. Both are in their 70s.
I recently learned they don’t have any income tax withheld from pensions or Social Security,

Seems like a simple question until you think about it. “Means” as living within ones “means” may mean something different to different people😳.
To me, “means” means no debt other than a mortgage and maybe an auto loan (maybe). Certainly no credit card balance at the end if the month  
What makes up the “means?” I say it’s all earnings that are or could be subject to FICA taxes if there were no limit. That means,

I WAS THINKING ABOUT Jonathan the other day on my morning walk, which happens more often than you might think. It’s hard not to think about him when you have HumbleDollar coasters in your living room and a HumbleDollar shopping bag in your car that you use for groceries. My wife confiscated the HumbleDollar cup I had been using for my morning tea, and it now has a new home in our bathroom holding her toothbrush and toothpaste.

I retired at 58 years young. I feel there’s always been tension in the retirement world around when to actually pull the trigger. The common argument goes like this: your late fifties mark the peak earning decade of your career, so retiring early is basically sabotaging your future self. It’s a valid point, and the numbers usually back it up.
But here’s what I think: while the maths matters—and for some people makes early retirement impossible or genuinely foolish—for others,

I’ve always been interested in retirement account alternative withdrawal strategies. Different strategies provide different outcomes. Some support higher initial spending rates, others leave larger amounts for a legacy. There is a middle ground with higher initial rate, and modest remaining amount.
RMD (Required Minimum Distribution) is an often discussed method of withdrawals from retirement accounts. There are others and Morningstar is publishing a series on nine different approaches. These range from simple to complex. “The best retirement withdrawal method depends on what’s most important to you.” The articles look at differing approaches with can support different withdrawal rates.

I recently received an e-mail survey from the Senior Citizens League, a senior advocacy group. Out of curiosity I completed the survey so I could see all the questions. They are all leading questions all focused on getting more for seniors. 
What is not contained in the e-mail is reference to the financial status of Social Security and Medicare, the need to lower costs or increase FICA taxes or both.  As I read it, it is all about me,

Root canal, kaput refrigerator, major car repairs, expensive prescription, 🤑shopping cart dents your car😎
What do the above have in common? They can legitimately be called a financial emergency, and they can happen to retirees as well as anyone else. 
New research from the Center for Retirement Research (How Much Are Emergency Expenses for Retirees and Are They Prepared?) shows that the typical retired household spends 10 percent of income on unexpected expenses in a normal year.

If you read headlines saying Social Security isn’t going bankrupt or insolvent, they are right, but that doesn’t mean there is nothing to be concerned about.
Social Security is headed toward depleting the retirement benefit trust, but as long has there is incoming tax revenue, reduced benefits will be paid.
However, many retirees with feel the impact of an immediate 19-20% reduction in benefits. That will put some into poverty.
According to the latest projections from the Social Security Trustees Report,

IRR (internal rate of return) was the common term for the percentage rate of return on an investment until the early 1990s, when CAGR (compound annual growth rate) gained popularity. Today, CAGR is typically used for simple annualized returns of regular cash flows, while IRR is reserved for more complex cases involving variable cash flows and irregular compounding periods. CAGR can be considered a simplified subset of IRR. IRR is typically backward-looking (based on present value),

MY COWORKER RECENTLY retired. He is 50 years old and has been with the company for over 25 years.
The company offers a decent 401(k) match (100% match on 6% of your salary) along with other great benefits.
In his case, how can he generate income? How can you retire early if most of your assets are in retirement plans?
Most tax-advantaged accounts have restrictions on withdrawals, but there are a few strategies that many people don’t know of:
 

Unusual events happen from time to time.  Since 2022 the S&P 500 has had some remarkable years.  Recently foreign stocks have also done very well.  This is a boon to retirement portfolios, and particularly welcome for those entering retirement.
The opposite situation is the “lost decade” which I recently posted about.  Some say these are rare and if we are lucky the timing will be such as to have slight impact on retirees.  But fingers crossed is not a strategy.  

The  recent discussion about withdrawal rates – 4% and all  that – got me thinking about the importance and confusion surrounding that decision.  I don’t  personally have to deal with it and gladly so because I’m sure I would not handle it well. My withdrawals are those required by RMDs. 
The current RMD table is based on the 2012 Individual Annuity Mortality (IAM). The table is more generous than a “single life” actuarial table. It is calculated using the Joint Life and Last Survivor expectancy for an individual and a hypothetical beneficiary who is exactly 10 years younger.

The advice I keep seeing says that you can safely withdraw 4% a year (adjusted for inflation) from a 60-40 portfolio over 30 years. This is all well and good, if your portfolio is 60-40 and you start withdrawing at age 70 – or 65 if you are more pessimistic about your longevity. I have always planned based on living to 100, without really hoping to make it that long, so this advice would have worked if I had started drawing on my portfolio at 70.

There are three topics of vital importance to nearly everyone that at the same time are near the top of the list to be criticized and misunderstood by nearly everyone. (taxes are at the top).
Health insurance
Social Security
Electric and Gas utilities 
I spent by whole career working for a utility and at the same time designing and managing health insurance plans. I study Social Security and may be one of five Americans in the US who reads the annual trustee report.

There has been a lot of debate regarding how to fix the impending (2032) shortfall in Social Security benefits.
This morning I was reading one of my financial newsletter emails and found this link:
https://www.ssa.gov/OACT/solvency/index.html?utm_source=substack&utm_medium=email
Happy Reading!