First Quarter 2025

In January, I outlined a host of money moves I’d made in the first 16 months after retiring from full-time work. Financially, things did not slow down in the first three months of 2025. Here are some of my first quarter financial actions and experiences:

Distributed gifts to charity. We cluster charitable contributions so that we can itemize on our Federal tax return every other year. During the year that we take the standard deduction, I “write off” the funds earmarked for charity in my financial spreadsheets. When January of the itemizing year arrives, I distribute the previous year’s accrued charity funds. 2025 is an itemizing year, so I wrote some relatively large checks in January.

Redeemed more U.S. Savings Bonds. I’ve become increasingly uneasy about the complexities that may arise in the future with respect to cashing in paper savings bonds. Marjorie Kondrack’s excellent post about savings bonds and the associated comments kept that concern in my thoughts. I ended up making three trips to the bank this year and have now completed a three-year process of cashing in all my savings bonds with a face value of $1000 or more. I hesitated to sell the last three I Bonds as they had a generous fixed rate of 3%. But as I imagined the frustration if I—or worse, my heirs—were forced to deal directly with the Treasury Department, I felt it was best to just redeem them now, while my bank still offers the service. I’d held those bonds longer than expected anyway, as the original intent was to use them for my kids’ college tuition.

Purchased Certificates of Deposit. It’s so convenient to open a new CD at my credit union. I can make a phone call and within 10 minutes the new account is active. Of course, there are a lot of security questions asked for identity verification, but I’m happy to go through that routine each time. I’ve moved the money from the redeemed savings bonds into CDs paying 4.2%.

Began ramping down my part-time work hours. I often worked 25 hours or more a week between November and March. I wanted to be busy in the winter, and with two simultaneous employers, I was. But it started feeling too much like work and not a retiree’s hobby. I even felt some stress, which was entirely self-imposed. Accordingly, I gave notice that I plan to only work 10-15 hours a week now that the weather is nicer.

Funded and fine-tuned our Roth IRAs. I’ve earned enough income to fully fund both my Roth IRA and my wife’s for 2025. Those of you who read my old article Nothing Odd might recall that I’m a bit quirky about numbers. Accordingly, I made some minor tweaks to our holdings to scratch that itch.

Increased monthly withdrawals from my 401(k). After running numerous Monte Carlo analyses, I decided I was being too conservative with my withdrawals. My initial disbursements were at an amount that would total about 1% of the balance annually. I’ve upped that to just under 3%. The money is automatically deposited into my bank account each month and arrives roughly the same time as my pension payment. I’ll keep an eye on this as the year progresses and reduce the monthly payout if warranted. I’d like to avoid unnecessary IRMAA surcharges when I go on Medicare in 2027. Medicare will be looking at my MAGI from 2025 to make that determination, unless the rules change by then.

Avoided temptation to tinker with my 401(k). As I’ve stated before, I don’t rebalance my 401(k)’s allocation of stocks and bonds. Still, I do sometimes adjust the relative weightings of my holdings within the stock or bond category. Early in the year, I was tempted to move a large percentage of my TIPS fund holdings into an even more conservative investment choice. I decided not to make that change and in retrospect, it seems I made the right decision. The TIPS fund has had the highest return of all my 401(k) funds so far this year.

Experienced an unexpected pension “windfall”.  I knew that I was eventually due a small increase to my monthly pension once it was recalculated to account for my final bonus payment. By my estimation, I was due a bump of less than $10 a month.  When the recalculation was finally performed in January, more than a year after I’d retired, the increase was determined to be over $120 a month. Besides factoring in the bonus, the recalculation made some favorable adjustments based on final IRS code Section 417(e) interest rates applicable to the annuity I’d elected for my cash balance pension. I also received a one-time payment to make me whole for the first 13 or so months of reduced payments. 

How did our investments perform in the first quarter of 2025? Our retirement portfolio (401(k) plus Roth IRAs) lost 0.7% as of April 1. Our net worth ticked up by 0.95% in that same period. I’m now considering my plan to make changes in response to the current crazy market conditions that have characterized the start of the second quarter. Don’t expect another article as there will likely be nothing to write about.