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Penny Wise, Pound Foolish

DAN SMITH | Apr 12, 2026

"Dan, What kind of audio equipment? That's my spendy hobby as well but I have slowed down since I retired last year. All but one of the pieces in my system was purchased 2nd hand (Aqua/Boulder/Constellation/Magico)."

- John Rocke

Fixing Social Security once and for all

R Quinn | Apr 15, 2026

"Dick, Keep on correcting people about the “stolen” funds! 😁"

- David Lancaster

Staying Rational

ArticleAdam M. Grossman | Apr 18, 2026

IT'S BEEN MORE than six years since Covid first entered our vocabulary. It goes without saying that investors have experienced a lot, and for better or worse, recent market events provide some useful lessons. The first has to do with the nature of the stock market. What drives stock prices? Open a finance textbook, and the answer will be clear: The value of a stock should equal the sum of the company’s future profits. This idea is known as intrinsic value, and it’s the textbook explanation of how stock prices work. But there’s clearly a disconnect, since stock prices bounce around far more than the math suggests they should. How can we square this circle? Over the long term, the data tell us that intrinsic value is a valid idea. Chart the price of any given stock, then overlay the company’s profits, and there will often be a reasonably close relationship. But only if you’re Rip Van Winkle. Over shorter periods of time, anything can happen. Stocks often move far above or far below their intrinsic values in response to the news of the day. Especially during times of economic uncertainty, intrinsic value analysis is typically cast aside and replaced by some combination of emotion, conjecture, speculation and storytelling. That’s what we saw in the early months of 2020. Stores were closed, employees had been sent home and the economy went into recession. And since no one had a crystal ball, that’s when storytellers were able to step in with their extreme predictions, causing the stock market to drop more than 30% in the space of six weeks. The lesson for investors: No one can predict when the next crisis will roll around or what form it will take. But there is one very reasonable way to be able to keep it in perspective: by remembering that, at the end of the day, intrinsic value is what matters, and ultimately that’s what drives stock prices. Basic arithmetic illustrates how this can help us manage through the next crisis. Consider that the price-to-earnings ratio of the U.S. stock market has historically averaged around 16. The average company’s total stock market value, in other words, has been equal to about 16 times its annual profits. Now let’s imagine that the next crisis results in every company in America losing an entire year of earnings. That’s extreme and hasn’t happened since the Depression, but it’s useful as a thought experiment. In that scenario, what would be the impact to those companies’ intrinsic value? In simple terms, it would be just one-sixteenth, or a modest 6%. What if a crisis were so severe that a company lost two years of earnings? Using this simple model, the impact would be about 12%. This is meaningful, I believe, because crises typically result in stock price declines that are far more severe than just 6% or 12%. In 2000 and in 2008, the market dropped more than 50%. While every crisis is different, I think it’s useful to keep these numbers in mind whenever the next geopolitical event causes stocks to drop. When that occurs, storytellers will inevitably take over, and the news will be downbeat. But if stocks drop to an extreme degree, as they have in the past, we can probably view it as an overreaction. That won’t help anyone’s portfolio recover any faster, but it should help us tune out the worst of the forecasters and maintain our equanimity. How else can you maintain an even keel during a market crisis? It’s important to understand the impact of recency bias. This bias is the tendency to extrapolate from current conditions, to assume that the future will look like the present, and to downplay the possibility that things might change. That tendency is what contributed to the cycle of negative news during the depths of 2020, and this is why I think it’s so important for investors to be aware of market history. Again, extensive analysis isn’t required. We need only look back across some of the crises the country has weathered, from the Civil War to the Depression to World War II. In each case, the economy recovered and went on to become larger and stronger than before. The lesson for investors: In the depths of a crisis, it’s very difficult to know when or how it will end. But a sense of history can help carry us through. Those are ways to manage through a crisis. Covid also provided a lesson on how to prepare—specifically, how to prepare our portfolios—for a future downturn. In 2022, investors were caught flat-footed when popular total-bond market funds delivered surprising losses. These funds are one pillar of the well-known three-fund portfolio and have traditionally been viewed as the default choice for a set-it-and-forget-it bond allocation. But in 2022, when the Federal Reserve hiked interest rates, these funds dropped a surprising 13%. That was during the same year that the U.S. stock market dropped nearly 20%, creating a very difficult situation for those in retirement and needing to withdraw from their portfolios. The lesson for investors: Total-bond market funds may be well diversified, but they carry risk along another very important dimension known as duration. This is a bond metric that measures, in simple terms, how long it will take for bondholders to be repaid, and it’s a key determinant of risk. The longer the duration, the greater the risk of loss when rates rise. While total-bond market funds have holdings across a broad range of durations, they average out to nearly six years. That’s why they lost so much value in 2022. What’s the alternative? Short-term bond funds tend to have a duration in the neighborhood of just two years. As a result, in 2022, short-term government bond funds like Vanguard’s Short-Term Treasury ETF (ticker: VGSH) lost a far more manageable 4% of their value. To be sure, every crisis is different, and it’s easy to rationalize about the past once it’s in the past. But these lessons, I think, can help us better prepare both our emotions and our portfolios for whatever comes next. Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.

A Bit More Humble

ArticleEdmund Marsh | Apr 18, 2026

I LOVE TO PLAN. My wife, Sharon, often catches me nestled in my chair, gazing out a window at a distant object as my mind wanders even farther afield. My musings become scribbles on a scrap of paper, destined for discussion with Sharon at length over coffee and long walks. Eventually, we hammer out the settled strategies we think will best bring us happiness in adventures ranging from our next hike to the next few decades of life. Of course, I know our intended track, or even the final destination, may change over time. I'm just a little boat on a big sea, blown about by winds and carried along by deep currents that may push me far off my charted course. Still, though it may be somewhat of an illusion, I cling to the comfort of control. Smooth sailing. And for most of 2025, life was comfortable. In April, I shifted to part-time work as a physical therapist. I termed my new lifestyle “semi-retirement”. My reduced salary, added to Sharon’s contribution from a few hours’ work each month, still gave us enough income from our jobs to cover expenses, with leftovers for a little investing and so forth. Along with that, we gained enough new-found, free time to pursue a bit more fun while catching up on projects around the house. As an added bonus, I expected delaying full retirement a couple of years might lead to more happiness in the decades ahead. How so? Because my post-retirement plan was still a work-in-progress. “I studied and planned for two years before I retired,” Mike told me at a large family gathering. In his mid-70s, his excitement was evident as he recounted his active lifestyle. At home, his schedule includes participation in our state’s Master Gardener program and regular trips to the gym. Abroad, he organizes groups to walk the Camino de Santiago in Spain. I had a yen for a fulfilling retirement like Mike’s. My roster of reasons to jump out of bed each morning might have a different twist or two, but I wanted the same zest for living. My unique recipe for retirement happiness still needed time to cook, however. Oh, I knew I had plenty to keep my hands active. Even so, I wasn’t yet convinced I could substitute the mental stimulation provided by my patients and colleagues. According to a decades-long study from Harvard University, some folks discover that work supplies satisfaction not found elsewhere. I have a nagging suspicion I’m one of those restless souls, and I dreaded the thought of finding myself adrift, with little sense of purpose beyond indulging my own selfish needs. And let’s face it: I still get a thrill from watching my money grow. Earning an income delays the need to plunge my fingers into my pile of savings to pay the grocery bill. All told, I figured my best move was to stay put until a clear exit appeared. Unexpected storm. Meanwhile, my employer was moving in its own interest. In December, I learned that with the new year came new management for our outpatient physical therapy clinics. Our hospital system opted to outsource operations with the hope of securing guaranteed revenue. After the revamping, my boss would keep some new iteration of her job, but the outpatient clinics would report to the new administration, rather than her. The news was a blow to my ordered life. No longer was I sailing through calm waters toward the sunset of my choosing. Instead, I faced the probability of turbulence as our clinic transitioned to the new system. And we were already struggling to implement a comprehensive computer software replacement that would take many more months to fashion into a serviceable tool. I sensed danger ahead. Or, at the very least, a year or two of starts, sputters and stops before the clinic machine was humming again. I decided to bail, and on February 18th clocked my last day with my former employer, four days after Sharon. It turns out my radar was right. The details are dirty, but the gist is the transition is stalled and leadership of the affected clinics in limbo. New direction. On the face of the situation, it seems my “clear exit” did indeed appear, and that I acted with autonomy to choose the course of my life. After all, I had exercised the option of jumping out of a job headed south and into the retirement I had dreamed of for decades. On top of that, I landed in a new, part-time job with Miranda, an old friend. Back in December, Miranda called to ask if I could help cover patients in her clinic while she was out on extended leave. I wasn’t seeking more work, but she needed help. I couldn’t refuse. So, starting with one half-day per week in January, I’m now up to two or three half-days. Miranda’s made it clear I’m welcome to work more, but I’m satisfied for now. And the atmosphere in the clinic is great. It’s staffed by easy-going folks who are serious about patient care. Still, it’s hard to shake the sense I’ve been scrambling to right myself after getting shoved off balance. During the last few weeks with my former employer, I had the feeling I was getting pushed out of a satisfying job before I was ready to leave. My usual optimism suffered, as did my sleep habits and typical interests, like gardening and writing. Why? Perhaps the answer is the sudden, unplanned departure from my job. Research indicates forced retirement can lead to negative feelings about health and to depression. I have to admit I found my new temperament described in the pages of a research paper. Other studies on job loss, found here, here and here, examine and compare the emotions experienced by losing a job to that of other types of loss, such as grief after the death of a loved one. Considered in this light, the Kubler-Ross model of the five stages of grief might help someone--like me–understand and deal with the psychological aftermath of job loss. Peering ahead. Back to my reality, I know I’m painting a grim picture of a life that’s actually very blessed. Others have experienced far worse with fewer complaints. My perceived suffering pales beside that of a person who’s lost a loved one, or an income needed for survival. Also, as I get used to the shift in my lifestyle, I’m beginning to find my groove again. Last spring, I started the season thinking I was at life’s helm, confident I could steer in any direction and choose my pace. I was thankful, but a little smug as I laid plans for my vision of retirement. One year later, I’m still planning and still thankful–but a bit more humble. Ed is a semi-retired physical therapist who lives and works in a small community near Atlanta. When he's not spending time with his church, family or friends, you may find him tending his garden and wondering if he will ever fully retire. Check out Ed’s earlier articles.

What Bangladesh Taught Me About Enough

Andrew Clements | Apr 16, 2026

"Thank you Sundar for sharing your experiences and your encouragement to keep writing. I appreciate it."

- Andrew Clements

One Good Call?

Mark Crothers | Apr 14, 2026

"Thanks Mark for sharing this. Since the advisor seems to believe in shifting asset allocation based on market conditions, did you analyze the portfolio to see whether they had made timing calls like this that did worse than doing nothing? The advisor made the argument that he only had to make one right call like this to justify the fees. That seems right - as long as they don’t make any other wrong ones?"

- Jeremy Hockenstein

Navigating a Turbulent Career

ArticleRichard Connor | Apr 18, 2026

A RECENT article by Adam Grossman relayed an interesting story of the 2015 merger of Kraft and Heinz. One of the aspects that made this merger unique was the involvement of Warren Buffet. Adam’s story is a cautionary tale for investors – research shows that, more often than not, the hoped-for corporate synergies and growth are elusive. The story provides more evidence for the benefits of indexing to investors. There is, however, another side to this story that is very important to an individual’s personal financial life. In addition to being investors, most of us are, or were, employees of a corporation. What if you are an employee of a company that is acquiring another company, being acquired by another company, or part of a merger? How do you navigate the challenges of this significant career event? In late November 1985, I interviewed with RCA’s Astro Space division in East Windsor, NJ. Several weeks later I interviewed with GE Aerospace in King of Prussia, PA. In between those 2 interviews it was announced that GE was acquiring RCA. I received an offer for a position in the thermal engineering group of both companies. The GE offer was for $32,000, $4,000 more than the RCA offer. The GE plant was about 8 miles from our home; the RCA plant was 62 miles from our home. I accepted the GE offer. When I called the RCA manager to tell him my decision, he was professional and understanding. He remarked that “who knows, we may end up working together and you got a better deal out of it”. Four months later that RCA manager became the senior manager of the merged thermal engineering organization – my new boss’s boss. Seven years later my division was sold to Martin Marietta, whose space operations were based in Denver, CO. Two years later Martin Marietta merged with Lockheed, in Sunnyvale, CA, to form Lockheed Martin. Later that year it was announced that the company was closing its 2 east coast plants and moving the work to Sunnyvale and Denver. Over the 31 years starting in 1986, I was part of numerous acquisitions, mergers, two plant shut-downs, and being sold to a private equity company. Somehow, I managed to stay employed, and grow my career. I wasn’t special – hundreds of colleagues trod the same path. When I look back I can identify some of the attributes that helped me navigate a turbulent career. Build your Reputation: Be someone that people want to hire. If you move up, be someone that people want to work for. My first senior manager position came about because the hiring team remembered me from 4 years previous Maintain Flexibility: Are you willing to travel or relocate? Would you take a lateral position, or even a step down, if it meant keeping a job? During my career I traveled extensively, commuted 62 miles for four years, and took new positions that challenged me and my family. Focus on your Skills: What are the skills and behaviors that are valued by your company, and differentiate successful employees? These include technical, leadership, managerial, and interpersonal skills. My first GE manager provided a sound technical base, but also taught me just as much about work ethic, and professionalism. Focus on the Culture: Combing organizations means combining cultures, just as much as products or processes. This may require you to be open to a different way of doing things. It requires a willingness to learn and grow. It will also likely require some diplomacy skills. Change is hard for employees, and nobody enjoys being told their processes or products are inferior. When we merged with RCA, we found there was a significant difference in the way that managers and senior technical leaders challenged their employees in public forums, in front of customers. GE preferred to work out technical differences and approaches in-house, and present a united front to customers. This took some time to resolve into a shared approach. Focus on the People: When my first GE manager retired, we held a group luncheon. He was universally liked and respected. Someone described him as the best “BTU chaser” he’d ever seen, which was high praise. He gave a short speech at his retirement, where he discussed the exciting space programs he had supported. He ended that the thing that made his career special wasn’t the projects and technology, it was the people. I was also fortunate to work on some exciting, ground-breaking projects. It wasn’t always easy, and the path certainly wasn’t straight. Looking back, it is the people I think of most, and I miss the most. Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.

Scent of a Cheapskate: Frugality Gone Wrong

Mark Crothers | Apr 17, 2026

"Finally, I've one upped you!!!!!"

- DAN SMITH

Financial Tension

William Housley | Apr 17, 2026

"It is likely none of us on Humble Dollar have enormous wealth 🤔 Some, likely many, like you do what we can."

- William Housley

Do retirees really struggle financially? Why and what to do?

R Quinn | Apr 17, 2026

"When we first retired 2 years ago, I wasn’t sure how things would be, but it has turned out like the middle income class that you mentioned in the studies. I also agree with what you wrote about location: high vs low cost areas. And so many people don’t have pensions now. One thing I thought of while I was reading your article and the comments was if multi-generational living will become more popular. We have friends who built a home in the late 1990s for this purpose so that one of the mothers could live with them. Chris"

- baldscreen

The IRA Decision That Affects Your Kids

David Lancaster | Apr 17, 2026

"It looks like, since children over age 18 are not an "eligible designated beneficiary," the distribution is 10 years until 12-31 of the 10th year after death. BUT the difference is if a person has not started RMDs, the 10 years has no minimum, but if RMDs have started, the beneficiary must use the single life expectancy table (for themself), until the last year when the account must be emptied. This is for when the surviving spouse rolls the other spouse's traditional IRA into their own. Just make sure you've named beneficiaries and that they are the ones you want named."

- JeffreyK

Social Security Survivor Benefits for Spouses

James McGlynn CFA RICP® | Apr 16, 2026

"Thank you, James."

- Dunn Werking

Penny Wise, Pound Foolish

DAN SMITH | Apr 12, 2026

- John Rocke

Fixing Social Security once and for all

R Quinn | Apr 15, 2026

"Dick, Keep on correcting people about the “stolen” funds! 😁"

- David Lancaster

Staying Rational

ArticleAdam M. Grossman | Apr 18, 2026

A Bit More Humble

ArticleEdmund Marsh | Apr 18, 2026

What Bangladesh Taught Me About Enough

Andrew Clements | Apr 16, 2026

"Thank you Sundar for sharing your experiences and your encouragement to keep writing. I appreciate it."

- Andrew Clements

One Good Call?

Mark Crothers | Apr 14, 2026

- Jeremy Hockenstein

Navigating a Turbulent Career

ArticleRichard Connor | Apr 18, 2026

Scent of a Cheapskate: Frugality Gone Wrong

Mark Crothers | Apr 17, 2026

"Finally, I've one upped you!!!!!"

- DAN SMITH

Financial Tension

William Housley | Apr 17, 2026

"It is likely none of us on Humble Dollar have enormous wealth 🤔 Some, likely many, like you do what we can."

- William Housley

Manifesto

Apr 19, 2026

NO. 59: MOST FOLKS should avoid alternative investments. Yes, they promise returns uncorrelated with the stock market and gains when shares are tumbling. But isn’t that why we own bonds?

humans

Apr 19, 2026

NO. 64: WE MAY feel stuck—but often others can point the way forward. We’ve all struggled with seemingly intractable problems, mulling them over and over, trying to figure out the answer. But sometimes, the solution isn’t to think harder. Instead, it’s to ask others, who will have a different perspective—and may suggest solutions that hadn’t occurred to us.

Truths

Apr 19, 2026

NO. 21: WE’RE HARDWIRED to search for patterns. We might convince ourselves that markets are sure to rise or fall, that individual stocks will soar or sink, or that certain mutual fund managers are destined to be market beaters. This can lead us to make large, costly investment bets—and yet often we’re seeing things that simply aren’t there.

act

Apr 18, 2026

CHECK YOUR FUND expenses. If you own index funds, aim for weighted average annual expenses below 0.15%. If you own active funds, you’ll pay more—but allocate enough to index funds to push your portfolio average below 0.4%. By holding down costs, you’ll keep more of what you make, plus low-cost funds typically beat high-cost competitors.

Money Guide

Manifesto

Apr 19, 2026

NO. 59: MOST FOLKS should avoid alternative investments. Yes, they promise returns uncorrelated with the stock market and gains when shares are tumbling. But isn’t that why we own bonds?

Spotlight: Life Events

Sweet Bird of Youth

Marjorie Kondrack | Mar 7, 2025

Connecting with younger people is like a rejuvenating fountain of life for me. Since many of us are fortunate to have children and grandchildren nearby, we can enjoy being a part of their everyday life, allowing us to share a special bond with them.
But some of us are restricted by the confines of chronology, and cut off from interaction with younger people. Small wonder that so many seniors retire to college towns. Being around younger people reminds me how thrilling it was when I was young—when the future was bright,

What Would You Take?

Dennis Friedman | Mar 13, 2025

In 2020, the Silverado fire broke out near our city. At the time, I couldn’t imagine that fire would threaten our home because it would have to burn a large part of our town to get to us. Surely, the firefighters would have it under control before there was mass destruction. Then, the Palisades and Eaton fires this year destroyed thousands of structures fueled by low humidity and strong winds. I now realize we might not have been as safe as I thought we were.

How Will You Know When It’s Time?

Rick Connor | Apr 13, 2025

A number of events over the past few months have me thinking about aging, mortality, legacy, frailty, and – of course – financial planning. These events included attending funerals, preparing tax returns (ours and dozens of others), visiting old friends and distant family, minor traffic accidents, winter doldrums, and the recent discussions on HumbleDollar on the unique estate planning needs of childless retirees. Recent market volatility may have played a small role.
My wife and I have a lot of real-world experience caring for aging and infirm parents,

Feeling Lucky

Jonathan Clements | Jul 26, 2024

How much of our success is due to luck?
As HumbleDollar’s U.S. readers have occasionally noted, we’ve all been lucky in one crucial way: We live in 2024 in what’s arguably the most economically successful nation ever. That’s meant large swaths of the population have enjoyed financial success, even if they weren’t the best students, or the hardest workers, or the most talented employees.
But our luck doesn’t end there. Before we persuade ourselves that our success was solely due to our own talents and efforts,

A Bit More Humble

Edmund Marsh | Apr 18, 2026

At the End

Dennis Friedman | Dec 5, 2024

AFTER WATCHING MY wife bake a loaf of wheat bread, I thought I’d try making my mother’s cornbread. Luckily, I kept her recipe, along with those for some of her other delicious dishes.
My mother’s recipes can bring back cherished memories—like the time I visited my parents when they still had their dog. Brandy would always greet me when I walked in the front door. She’d jump up and down knowing I would give her a treat.

Roth While You Can

James McGlynn | Sep 30, 2021

NEWS OF ENTREPRENEUR Peter Thiel’s $5 billion Roth account, which was funded with PayPal stock, has motivated Congress to look at restricting the growth and size of Roth accounts. There’s talk of limiting Roth account balances to $5 million or $10 million. There are also proposals to limit both backdoor IRA conversions and so-called mega-backdoor conversions. The latter involves funding a nondeductible 401(k) and then immediately converting the money to a Roth. There’s even discussion of not allowing high-income workers to convert traditional IRAs to Roth accounts. In recent years, Congress has nixed Social Security’s file-and-suspend option and compelled beneficiaries to empty inherited IRAs within 10 years, rather than over their lifetime. But both changes were grandfathered, meaning those already using the file-and-suspend strategy and those who already had inherited IRAs weren’t affected. Presumably, it would be a similar situation with existing Roth accounts. The upshot: If Congress limits the ability to take advantage of Roth accounts in future, it makes even more sense to convert to a Roth today, while the door is still open.

Four Opportunities

James McGlynn | Mar 9, 2020

I FIRST STARTED managing mutual funds a few months before the 1987 stock market crash, and I’ve had to navigate a fair number of market declines since then. My advice: Instead of worrying about how far share prices will fall or how widely the coronavirus will spread, think about the opportunities. I spy four of them. 1. Buy the dip. If you have cash, you might slowly dollar-cost average into the market, so you take advantage of today’s lower share prices. Alternatively, you could rebalance your portfolio from bonds to stocks and take advantage that way. I don’t think you need to rush to buy—but I also don’t think you should be scared to do so. Unlike 2008-09, it doesn’t appear that the financial system is on the verge of a meltdown. Back then, the housing market helped drag down the economy. This time around, real estate might help prop up the economy, as falling interest rates bring down mortgage rates and make housing more affordable. 2. Refinance. Mortgage rates are usually pegged to the interest rate on 10-year Treasury notes, which ended Friday below 0.8%. That brings me to the second opportunity: With this sudden drop in interest rates, I’ve started the process of refinancing my mortgage. Interest rates have fallen enough that I can swap from a 30-year mortgage to a 15-year mortgage without substantially increasing my monthly payment. There’s also an opportunity here for retirees. Instead of doing a complicated reverse mortgage, retirees who need cash from their homes might refinance and take out money that way. Why should the U.S. Treasury be the only one to lock in today’s low interest rates? 3. Take tax losses. Before this market correction, your regular, taxable investment account might have only contained gains. But let’s say you own some energy…

Where to Begin

James McGlynn | Sep 17, 2019

WHEN I STARTED working fulltime in 1980, there were very few retirement savings vehicles available to the average worker. I remember setting up my IRA and contributing the $2,000 annual maximum—at the time the only retirement account I could fund. Today, by contrast, there’s a slew of retirement choices on offer. Where should those new to the workforce focus their dollars? If you have access to a 401(k) or similar retirement plan with an employer matching contribution, that’s the first place to stash your retirement savings. The match is free money and you don’t want to miss out. If the company offers a Roth 401(k) account, put your money there—up to the level of the match—so you get the Roth’s tax-free growth. The company’s match, meanwhile, will go into the traditional 401(k), which means the money will be taxable when withdrawn. By saving in the Roth 401(k) and getting matched in the traditional 401(k), you’ll be diversifying across tax-free and tax-deferred accounts. In 2019, the maximum you can save in a 401(k) is $19,000 if you’re younger than age 50. The employer match doesn’t count toward this limit. There are no income restrictions on contributing to a 401(k). If there’s no employer match in your employer’s plan, instead make funding a Roth IRA your top priority. You’ll have to set up the Roth IRA at a brokerage firm or mutual fund company. There are income limits that could potentially prevent you from funding a Roth IRA. But you can sidestep those limits with the so-called backdoor Roth: You establish a traditional IRA and then immediately convert it to a Roth. In 2019, you can contribute $6,000 to all IRAs combined if you’re younger than age 50. Any contribution to a Roth IRA can be removed at any time, with no…

Six Tips on Term Life

James McGlynn | Oct 26, 2022

I RECENTLY LISTENED to a podcast during which the speakers lamented the death of a colleague who was in his 30s. They mentioned a GoFundMe campaign to assist his family, so I assume the deceased had no life insurance. According to LIMRA, which collects data on the life insurance industry, less than 50% of millennials have individual life insurance. There are two major types of life insurance: term and whole life. Term insurance is intended to cover a specific period, such as 10 or 20 years. Whole life insurance is more expensive because it’s designed to cover the insured’s “whole life” and part of each premium goes to fund an investment account. Want the maximum death benefit for minimal cost? Term insurance is the way to go. Here are six pointers: Life insurance is least expensive when the applicant is younger, healthier and a non-smoker. It’s more expensive for men, thanks to their shorter life expectancy. Both husband and wife should usually get coverage—even if one doesn’t earn an income. Why? The spouse who doesn’t work outside the home typically performs tasks—cleaning, cooking, child care—that would be costly to replace if he or she died. The death benefit from life insurance is usually tax-free. If a beneficiary is named, there’s no need for the policy’s payout to go through probate. When buying term insurance, a good rule of thumb is to structure the insurance so it’ll be in place at least until the children graduate college. The amount of coverage might include enough to pay for college and pay off the mortgage.

Don’t Get an F

James McGlynn | Nov 25, 2019

MEDICAL EXPENSES ARE a big worry for retirees—leading many to purchase supplemental insurance. But you need to think carefully about which Medigap policy you buy. What does this insurance get you? Medicare Part B, which covers doctor’s visits and other outpatient care, typically only pays 80% of the expenses that retirees incur. To plug this and other coverage gaps, many folks buy a Medigap insurance plan. Want to keep your current doctors and not be restricted to the network of medical professionals offered in a Medicare Advantage plan, otherwise known as Medicare Part C? You’ll want to stick with Medicare Part B and supplement it with a Medigap insurance plan sold by a private insurer. After signing up for Medicare Part B, most people have just six months during which they’re “guaranteed issue” for Medigap. “Guaranteed issue” means there’s no medical underwriting when choosing a Medigap plan. After those six months, you could be denied for health reasons. One potential pitfall: If you opt for a Part C Medicare Advantage plan when you’re first eligible for Medicare, you may forever be locked out of the Medigap market if you later want to switch out of Medicare Advantage. The reason: Your health may have deteriorated and you can’t pass the medical underwriting. How do you decide which Medigap plan is best for you? There are 10 different varieties of Medigap plan. In 2018, Medigap Plan F was chosen by 54% of all enrollees. While Medigap plans are standardized in terms of the coverage they provide, costs can vary significantly. Even though Plan F is the most popular, Plan G is the fastest growing—for good reason. Plan G is less expensive than Plan F. The only difference between the two is that Plan F pays the Part B deductible of $185, whereas…

Refinancing—Again

James McGlynn | Nov 9, 2021

I HAD A NEW HOME built in 2017. I financed it with a 30-year mortgage at a 3.875% interest rate. Early last year, when interest rates dropped due to the pandemic, I suggested that readers refinance. I took my own advice, replacing my 30-year loan with a 15-year mortgage at 2.99%. The cost of refinancing seemed well worth the reduction in my loan interest rate. Two months ago, I saw that mortgage rates had continued to decline, so I refinanced again. My existing mortgage company gave me a new, 15-year loan at 2.375%. I didn’t want to pay the upfront costs to refinance, but I didn’t have to: My current lender waived them because I was already a customer. For those keeping score at home, the interest rate I pay has fallen 39% over the past four years. I started with a low-rate mortgage—and wound up with one that’s rock-bottom. Readers may wonder whether I should pay off my mortgage entirely. I’ve decided I’d rather have more liquidity—by keeping more money in cash. True, my cash account pays just 1.35%, a lower rate than I owe on the mortgage. But I see my savings as insurance against an emergency. On top of that, with a healthy cash balance, I won’t be tempted to draw on the equity in my home for some big expense. No one knows if and when interest rates will rise again. But I’ve locked in low rates for the duration. If short-term rates do rise, my mortgage payment won’t change. My cash account, however, may pay me more money.

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Refinancing—Again