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As best as I can tell, I’ve transitioned into the early stage of my life’s fourth quarter. Certainly, I could be at the tail end of my third quarter and, not to be presumptuous, there’s a chance that I’m closer to the end of the fourth quarter without realizing it.
At this stage, there’s no new financial wisdom for me to share with HumbleDollar readers. The Forum and Article archives are filled with much better advice than I could give. What I can do is provide a wrap up of “My Money Journey” from my current vantage point.
I don’t tinker much with finances these days. I believe I’ve finally assembled what one advisor I respect (an old friend of Jonathan’s) calls “a beautiful, globally diversified portfolio of low-cost mutual index funds.” I’m letting it run on autopilot for the most part. Speaking of advisors, I don’t have one at this point. As HumbleDollar author David Gartland put it a couple years ago, “I feel better finding out I made a mistake with my money, rather than learning someone else made a mistake for me.” I’m sure I make some sub-optimal decisions, but I don’t feel confident that I’d come out ahead by shelling out for the significant annual cost (1% of Assets Under Management or more) of an advisor. At least not yet.
Here in the fourth quarter, tax considerations and complexity loom larger than they used to. I do our relatively simple taxes using TurboTax. A significant percentage of my assets is held in my old company’s 401(k) plan. Although this currently doesn’t present much of a problem, I recognize that a time bomb is ticking…set to go off in a decade when RMDs kick in. At some point, I do expect that engaging a fee-only advisor and a tax expert will be the wise course of action, especially since my wife is not interested in being hands-on in these areas. Having an advisor and tax professional should also make it easier to do Qualified Charitable Distributions. But that’s down the road.
Possibly the most significant marker that I’ve entered life’s fourth quarter is that I’ve applied for Social Security. I’m 63, but with a wife who’s a few years older and only eligible for a spousal benefit, it makes sense for us both to begin receiving benefits at her Full Retirement Age (FRA). I know there have been all kinds of debates regarding timing of Social Security benefits here at HumbleDollar, but this approach works for us.
I’ve been working part-time since retiring from a 38-year engineering career in September of 2023. Taking Social Security now has an impact, since I’m below my FRA. From July to December of this year, I must have monthly earnings of less than $2040 to maintain benefits. I’m not ready to completely give up my part-time work but I’ll reduce my hours to stay under the earnings limit. I work from home and enjoy it well enough, but have more important things to do these days. My wife Lisa and I have been babysitting my 6-month-old grandson 20 or more hours each week.
Last year my wife and I updated our wills, which had sat unchanged for 25 years. The “kids” no longer needed my sister to be their guardian in the event my wife and I both pass. Account beneficiaries have been reviewed and updated as required to directly transfer most assets upon death rather than going through probate. Like many HumbleDollar readers, I maintain an Instructions on My Passing document for my spouse. This year I hope to make significant enhancements to it.
Jonathan’s actions after his cancer diagnosis demonstrated his strong concern that his family would be okay, at least financially, after he passed away. While my timetable doesn’t appear to be as pressing as his was, in a similar vein I want to have things in order as well.
Think at this point of my life, age 76 investing for 50 yrs, MOST would bet best suited for a good conservative fee based advisor. The vast majority of investors are just not smart enough and emotionally strong enough to withstand crashes
Question is: are the vast majority of investors savvy enough to pick a legitimate fee-only advisor and avoid the many others out there that tend to recommend investments or annuities that personally benefit the advisor?
I just followed a link from one of the old posts that took me to a site listing hourly fee advisors. The hourly rates and one-time fees were all over the place, and some alphabet credentials that I’ve never heard of. I sure couldn’t tell which ones were any good by the information provided. Even knowing where and how to check, a bad advisor may not have any complaints or disciplinary action in their history. It’s scary.
Very good post. I tried using CPAs twice and both of them used assistants to do my taxes who made many errors that I was responsible for finding. I do not think the CPAs even reviewed my taxes before delivering them to me for finalizing. I assumed they spent their limited time on business accounts who paid them real money, not my few hundred dollars. Anyway, this forced me to learn about taxes and do them myself using TurboTax which has worked pretty well for Federal and less well for NJ. So far, zero audits, so I guess I will keep it up.
“I feel better finding out I made a mistake with my money, rather than learning someone else made a mistake for me.”
I began doing my own taxes sometime in the 80’s, when I discovered a substantial error made by my CPA. My thinking was, why should I pay a CPA to screw up my taxes, when I can screw them up myself… for free!
I think you have shared a great deal of financial wisdom in this post, Ken.
Thanks Dan. Perfect example. BTW I screwed up on my taxes a bit this year. I didn’t withhold enough throughout the year because I’d put the new $6000 senior deduction in the wrong place on my tax spreadsheet (imagine that). Ended up owing a couple grand more than I’d projected, and I expect I’ll be assessed a small penalty. So much for financial wisdom.
Those darn spreadsheets will get you every time. 😁. Probably no penalty. My sister doesn’t have any withholding from pensions or SS. So far no questions asked 🤷🏻♂️
Great article Ken and glad to hear from you. I, at age 63, with an older spouse, did the same thing with Social Security. No matter how I sliced or diced it, there seemed to be at most a 2% benefit in waiting to maximize our benefits. We’re happy with our decision so far.
Thanks for your kind words, Patrick. While not the only consideration, Mike Piper’s open SS model indicated that taking both benefits at my wife’s FRA should be the best option in almost all cases.
That’s basically what I kept coming up with. I used the mid-level health prediction as we are both non-smokers in good health. But at the end of the day, there are important variables we can never know ultimately making it a personal decision.
Thank you for your article, Ken. It sounds like you are in a good position right now with plans in place. I have to admit I’m a bit envious of the time you get to spend with your grandson and that you have 3 dogs! We made the decision 3 years ago to work with a fiduciary investment company because I was feeling stressed and worried doing it on my own. Throughout the year I track my own hypothetical portfolio of index funds in comparison to our actively managed portfolio. I thought I was headed toward having to make a tough decision this year but it somehow worked out that the portfolios were within a $1000 of each other net of the fees so we will stay the course but remain vigilant. Thankfully, all get to decide what’s best for ourselves — deciding on when to start receiving SS benefits. Thanks again for taking the time to share your “quarterly” update.
Our household equation: # of humans x 2 = number of dogs = Best. Life. Ever.
Thanks for the smile, Kristine! I love your math
You’re welcome! I love my math too!
Hi Jan, thanks for commenting. Don’t feel too envious, though—unless you’re a cat lover as well as a dog lover! It was interesting to read about your experience with the investment firm. Sounds like you have good controls in place.
Ken – this is a great post on how different people have different plans. I worked until I didn’t want to work (at work) ever again. It’s great to hear you were able to manage a post-retirement engineering career that makes you happy. Your social security decisions are different from mine because my wife and I have different conditions to consider.
Thanks for reading and commenting, Jeff. I think relatively few couples have the “design inputs” that led to me taking SS before my FRA.
I’ll reduce my hours to stay under the earnings limit
You could work more if you want, since if you exceed the earnings limit while under FRA, the temporarily withheld benefits on the excess are returned through higher monthly payments once you reach FRA.
As I understand it, for the first (partial) year of benefits below FRA, special rules apply and we would lose the entire benefit for both me and my wife each month I exceed the earnings limit. I’d rather have the full payments this year than have a few more bucks tacked on at FRA. It will give me a chance to test drive a drastically reduced work schedule.
Wow, you are correct! I stopped earning when I retired midway through 2021, so I didn’t bump up against this special case. Apparently SS says in that first partial year if you earn more than the monthly limit ($2,040 in 2026), then you “aren’t retired”(!) so that month’s benefit is indeed lost. So glad you knew that!
Good point. Often overlooked.
Thanks, Ken, for this update. Your article is exactly the kind I previously enjoyed so much on this site, and that I posted about yesterday in RDQ’s “ladies” piece.
Good luck to you on winding down your work life. I am five years older and like you so often aware of those “more important things to do”. That said, I still work a half day each week and look forward to the cognitive and physical demands of the job.
Jo, thanks for reading and commenting; I’m happy you liked this piece. It sounds like you’ve found a work-life balance that…well, works. I can envision continuing to work a bit five years from now, assuming I still enjoy it and a demand remains for my services.
Nice to read your article Ken, please keep writing.
You mention QCD. We have been doing them for a few years. Nothing to it. We use Fidelity and all we do is go online, enter the amount and charity name. The check is mailed to us, but payable to the charity and we either mail it or deliver it to the organization.
Turbotax asks if any part of the RMD was a charitable donation and you enter the amount.
QCDs are a breeze at Fidelity.
we are going to begin QCDs this year so your comment about the process through Fidelity is timely and helpful. Thank you
Thanks for the insight, Dick. Good to hear QCDs have been a breeze for you.
Ken, thank you for your writing. You cover so many important topics that could have an article devoted to them individually. I think you’re smart to take steps now toward simplification of your finances for both you and your wife. In my work, and elsewhere, I’ve met many people who are caught by poor physical or cognitive health before they’ve done the tasks they’ve “been needing to do”. You set a good example, and you sound contented.
Thinking of your musing in your opening paragraph, maybe your reality will be more in line with this statement from Winston Churchill.
Ha, love the quote.
Thanks for reading and your kind comments, Ed. The Churchill quote is great, but let’s be honest…that ship has sailed! 😄
Thanks for this article Ken. It sounds like all is going well for you in your “semi-retirement” years!
Hi Kristine, thanks for reading and taking the time to comment! Hope all is well with you and the pups.
You’re welcome! Yes–all is well here. We started teaching dog training classes in our retirement community and it’s been—crazy! We are up to teaching six classes a week in addition to a bunch of private lessons. Our ‘little’ hobby feels like real work these days.
There is a real sense of pride in seeing people and their dogs develop a better relationship and bond through training. Even though I feel exhausted after four straight hours of teaching, I love seeing the dogs make progress each and every week. And I love seeing the pride the owners have when their dog actually does what they ask of it.
Have a wonderful weekend!
It’s lovely to read about you doing what you love as a paid “hobby”, Kristine. Dogs are are some of my favorite people!
I am honestly living my dream! Thank you!
Danny the Papillon/Chihuahua mix says to tell you that he has no need for training classes. He already has me and my wife behaving perfectly.
Love your post. Sounds like a great life.
It’s a wonderful life–better than I could have imagined.
A Papillon/Chihuahua sounds awesome–and smart!
And yes, dog training is just what we call it. It’s really human training and the dogs are very, very good at it!
Kristine, it sounds like you are really enjoying your encore career, although I got exhausted just reading all you do in a week! I can imagine the satisfaction you must feel seeing the progress of the dogs (and their owners). I loved each of my three shelties and thought I might get another one in retirement, but caring for three cats and a grandson seems like a full plate for now. Enjoy your weekend, hopefully with some canine downtime!
I love shelties! My mom has one now.
No downtime for us–three classes to teach this morning, three private lessons tomorrow and a seminar (where my husband and I are students instead of instructors) on Sunday.
I wouldn’t have it any other way!
So you can teach an old dog new tricks?
Absolutely! We have young dogs, old dogs, big dogs and small dogs. My favorite class so far had both a Great Dane (150 pounds) and a Chihuahua (4 pounds). And they both learned to do everything we taught them!