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WHEN POLITICAL parties set aside partisan bickering and agree on an issue, it’s worth taking note. Such was the case last week when the House of Representatives voted 417–3 in favor of a bill known as the SECURE Act. This legislation would represent the most significant set of changes to retirement rules in more than a decade.
Why the sudden bipartisan cooperation? For better or worse, both parties recognize that a growing number of Americans face a retirement crisis.
FOLKS USED TO SAY, “You can’t go wrong with real estate.” They sure don’t say that anymore. It’s been a rollercoaster dozen years for home prices—and some experts think another rough patch is in the offing.
Since mid-2006, the S&P CoreLogic Case-Shiller U.S. National Home Price Index first tumbled 27.4% and then bounced back 53.6%, for a cumulative 12-plus year gain of 11.5%, equal to 0.9% a year. Could we be facing another dip?
JORDAN PETERSON, a Canadian clinical psychologist and professor at the University of Toronto, has thundered onto the cultural scene, thanks in large part to his book 12 Rules for Life: An Antidote to Chaos. I began reading with healthy skepticism, but quickly became a fan.
Not that the doctor and I agree on all points. But the book immediately confronted my intellectual laziness in a careful but unavoidable way.
LOOKING TO IMPROVE your money management? Here are 31 rules for the financial road ahead:
1. Check your retirement progress by taking your nest egg and applying a 4% annual portfolio withdrawal rate, equal to $4,000 a year for every $100,000 saved. Will you have enough retirement income—or should you be saving more?
2. Don’t automatically claim Social Security at age 62. It often makes sense to delay benefits so you get a larger monthly check,
IF YOU OWN A STOCK in a taxable account that falls in value, you can take some of the sting out of that loss by selling your shares, realizing a capital loss and then using that loss to reduce your annual tax bill. A good idea? Problem is, selling means giving up any chance of making back the loss.
Many folks aren’t keen to do that, so they often look to buy back the shares.
IF YOU MAKE REGULAR annual contributions to a Roth IRA, you can withdraw those contributions at any time with no taxes or penalties owed. It’s a different story, however, with the account’s investment gains.
Those gains will be subject to both income taxes and tax penalties if you withdraw them within the first five years and if you are under age 59½ (or, to put it another way, you need to wait five years and until after age 59½ for the account’s growth to be totally tax-free).
BY THE LATE 1990s, with almost two decades of robust investment returns under their belts, investors would talk about 6%, 8% and even 10% as a reasonable rate at which to draw down a retirement portfolio. But researchers begged to disagree—and the financial markets provided brutal confirmation, hitting stock investors with back-to-back bear markets in 2000–02 and 2007–09.
Today, 4% is considered a safe withdrawal rate (though even that number has been called into question).
ONE RULE OF THUMB suggests that, to retire in comfort, you need 80% of your preretirement income. Why the 20% drop? You are no longer saving 10% or so every year toward retirement and you’re no longer making an employee’s 7.65% payroll-tax contribution to Social Security and Medicare. In addition, you won’t have to buy work clothes or pay commuting costs. Your income tax bill should also go down, in part because a portion of your retirement income will likely come from Social Security benefits,
HOW LONG WILL IT take to double your money, given a particular rate of return? You can get a rough answer by dividing 72 by the annual return. For instance, if you expect to earn 7% a year, it would take just over 10 years to double your money. But at a 3% annual return, the compounding process is much slower, with your money doubling every 24 years.
Obviously, the higher the return you earn,
31 Rules of the Road
Below is a modestly revised version of the Jonathan Clements Money Guide 2015‘s final chapter.
Looking to improve your money management? Here are 31 rules for the financial road ahead:
1. Check your retirement progress by taking your nest egg and applying a 4 percent annual portfolio withdrawal rate, equal to $4,000 a year for every $100,000 saved. Will you have enough retirement income—or should you be saving more?
MOST OF US STRUGGLE with self-control. We eat too much, exercise too little and spend excessively. One solution: Adopt rigid rules of behavior.
For instance, I make it a rule to exercise every morning for at least 40 minutes, always buy whole wheat bread, avoid caffeine after 9 a.m. and eat fruit as a midmorning snack. I’ve followed these rules for so long that they’re no longer rules, but rather ingrained, unquestioned habits.
Not surprisingly,
According to the 2025 Trustee Report, the actuarial deficit for the combined Social Security trust funds under the intermediate assumptions is 3.82 percent of taxable payroll for the 75-year period 2025-99.
We could discuss endlessly how and why we got to this point, but I hope we can agree there is no excuse having had thirty plus years to deal with a coming crisis.
I have a suggestion to get on the right track- take a concept from private pensions.
TAX EFFICIENT FUND placement is an often underrated topic. The goal of the tax efficient fund placement is to minimize taxes within your investments, and select the right account for those investments.
But how much does that actually matter?
Vanguard’s research finds that a thoughtful asset location strategy can add significantly more value than an equal location strategy. The value added typically ranges from 5 to 30 basis points of after-tax return, depending on circumstances (e.g.,
It was not a wise thing to do—and it’s not an example I’d want my kids or grandkids to follow. But I’ll tell you a tale anyway. It’s a story of loss and comeback, of fear… and, truthfully, more fear. I guess confession is good for the soul.
Quite a few years ago, I noticed something simple: the price of gasoline was falling. From that observation, I made a leap. I began buying oil companies and energy ETFs.
While many retirees know that waiting until age 70 can maximize their own retirement check, applying that same logic to Spousal Benefits is a costly mistake. If you are eligible for a spousal claim, waiting too long could mean losing three years of benefits for no gain.
Why Age 70 doesn’t work A worker’s personal retirement benefit increases by roughly 8% per year for every year they delay filing past their Full Retirement Age (FRA)> However spousal benefits stop increasing once you hit your own FRA.
