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AN ARTICLE PUBLISHED in The Wall Street Journal told the story of Americans in their 30s who are spending heavily and piling on debt as we leave the pandemic behind.
One family with an income of $80,000 in Lincoln, Nebraska—where the cost of living is low, with housing costs 22% below the national average—had $20,000 in credit card debt and $160,000 in student loans.
They used stimulus checks to work down their credit card debt.
THIS IS MY FIFTH year providing income-tax preparation as part of the IRS’s Volunteer Income Tax Assistance program. This year, my colleagues and I have seen something new. We’ve had numerous retired taxpayers who have received IRS Form 1099-K for the sale of personal property. They’d never received one before and found it confusing.
What triggered these 1099-Ks? Many retirees find ways to supplement their income—including selling items on the internet. This is the modern version of yard sales and flea markets.
IF YOU HAVE READ enough HumbleDollar articles, you’ve probably noticed that frugality has played a major role in the financial success of many of the site’s writers. Peruse the article comments and the site’s “Voices” section, and you’ll find that readers often share the same thriftiness. Frugality is also a key theme running through many of the 30 financial life stories in the forthcoming book, My Money Journey. Sure enough,
WHAT SHOULD I DO with the required minimum distributions from my rollover IRAs?
I’m age 65, which means that—under last year’s tax law—I must begin taking taxable distributions in 2030, the year I turn 73. I’ve been looking at my retirement cash flow, and it appears that my wife and I won’t need the money for our living expenses.
I’m investigating using the money to help fund my grandkids’ college education. I built a spreadsheet that maps my age against the age of each grandchild and determined the years they’re expected to attend college.
RETIREMENT IS LIFE’S most daunting financial puzzle, not least because many of the decisions we make are difficult or impossible to reverse. To make matters worse, we’re often making decisions we’ve never made before, so we have no real expertise.
What sort of decisions am I talking about? Here are 10 examples.
1. When should I quit work? Needless to say, this is the most important retirement decision. Once you quit the workforce,
IN MY ONGOING EFFORT to reduce our accumulated stuff, I was trolling through our collection of old thumb drives to see what I should download, save or toss. Among them, I discovered the 258-page presentation from a two-day retirement course that my old employer sponsored in 2006.
I wondered how the advice had—17 years on—stood the test of time. As I reviewed it, I found some excellent suggestions and some that were lacking, though I hesitate to fault the presentation’s authors.
“HOW MUCH CAN I withdraw from my portfolio each year?” It’s one of the most common questions that retirees ask.
In the past, I’ve talked about the 4% rule, a popular tool for addressing this question. Among the reasons it’s so popular is its simplicity: In the first year of retirement, a retiree withdraws 4% of his or her portfolio, and then that amount increases each year with inflation. If you have a $1 million portfolio,
IN FORT LAUDERDALE, an unusual property sits wedged in among a row of waterfront mansions. It’s a 35-acre patch of wooded wilderness with just a single home, called Bonnet House. It was for many decades the winter residence of a woman named Evelyn Bartlett.
She first began spending winters at Bonnet House in the 1930s, and she continued to live there following her husband’s death in the 1950s. By the 1980s, however, the property’s assessed value had reached $30 million,
I MESSED UP MY retirement planning—but I have few regrets.
I don’t know if or when I’ll fully retire. Arguably, I’ve been at least semi-retired for the past nine years. That’s how long I’ve gone without a fulltime job. On the other hand, during those nine years, I’ve continued to earn enough to cover my living costs and I’ve worked longer hours than at any time in my life, thanks mostly to that insatiable mistress known as HumbleDollar.
IN THE WANING DAYS of 2019, Congress passed the SECURE Act, a law that delivered a mixed bag of changes for retirement savers. Well, Congress has been busy again. At the tail end of 2022, a follow-up law—known as SECURE 2.0—was signed into law.
The good news: There’s a whole lot included in this new law. The bad news? There’s a whole lot included in this new law. SECURE 2.0 presents a number of new planning opportunities but,
WE TRIMMED THE TAXES we owed on investment gains in 2021 by using losses we’d realized during 2020’s stock market swoon. Now, 2022’s market decline has allowed us to repeat this process, once again offsetting capital gains with tax losses that we’d earlier harvested.
My wife and I haven’t just saved on taxes, however. The sales have also allowed us to reposition our taxable portfolio away from active management and toward more of an indexing bent.
RUNNING OUT OF MONEY is retirement’s biggest financial risk—though this, of course, never actually happens. Thanks to Social Security, almost all retirees will have some monthly income, no matter how long they live.
Still, Social Security alone probably won’t make for a comfortable retirement, though it is the financial cornerstone for many. In fact, Social Security accounts for at least 50% of income for half of retirees. That includes a quarter of those age 65 and up for whom their monthly benefit is at least 90% of their income—a statistic I find shocking.
AS A REGULAR READER of HumbleDollar, The Wall Street Journal and Bloomberg, I pick up all kinds of pointers on investing. And the more I read, the more I think I may have been doing it wrong all these years. My approach to picking investments is more aligned with a dartboard than a spreadsheet.
I’ve never owned an exchange-traded fund. I don’t know what the VIX is,
I’M NOT ONE TO DIVE into the mysteries of the tax code in an effort to avoid paying Uncle Sam. But I’ve lately stumbled onto something that many others are already well-versed in and which has been around since 2006: qualified charitable distributions.
If I make a contribution from my traditional IRA directly to a charity, the withdrawal is excluded from the taxable income reported by my wife and me and, indeed, it counts toward my required minimum distribution.
PRESIDENT BARACK OBAMA told Vanity Fair, “You’ll see I wear only gray or blue suits. I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.”
He believed that spending mental energy to make an inconsequential decision about clothes early in the day might lead to a bad decision on a consequential matter for the country later in the day.
