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Search results for: 4% rule

Bashing the 401k scam – looking for a better idea. RDQ says it’s misunderstood

Forum by R Quinn | Nov 26, 2024

I recently read – again – that 401k plans are a scam. You can’t save enough, you can lose money, etc.
Consider these words of wisdom. “It is a scam. When I worked in corporate America I contributed the max amount each year. At the time it was $19k per year. It took 5+ years to hit $100k. When I stopped contributing it barely grew.”
We don’t know the years involved, but nevertheless it’s nonsense. Investing the $19,000 a year even in a GIC would get you over $100,000 in less than five years. 

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Misleading Indicators

Article by Adam M. Grossman  |  Nov 24, 2024

BENJAMIN GRAHAM, the father of investment analysis, made this observation: “The investor’s chief problem—even his worst enemy—is likely to be himself.”
Why? One reason is our intuition can sometimes lead us astray. Things that seem like they make sense, and seem like they ought to be true, often turn out not to be supported by the data.
Perhaps the best-known example is the divergence between growth and value stocks. Intuition suggests that growth stocks—companies like Apple and Amazon—would deliver better performance than their more pedestrian peers on the value side of the market.

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Stuck at Home

Article by Jonathan Clements  |  Nov 23, 2024

IT’S AN ARGUMENT I’ll never win. But perhaps I can sow a few seeds of doubt.
The anti-foreign-stock drumbeat has grown louder with each additional year that international markets underperform U.S. shares. Indeed, even though foreign stocks beat U.S. shares in the 1970s, 1980s and 2000s, there are folks today who argue there’s no reason to own foreign shares.
Really? Before you throw in the towel, ask yourself six questions:
1. If U.S.

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Danger: Taxes Ahead

Article by Adam M. Grossman  |  Nov 17, 2024

THE JUNE 16, 2021, edition of The Washington Post carried this headline: “Cristiano Ronaldo snubbed Coca-Cola. The company’s market value fell $4 billion.”
The incident in question had occurred a few days earlier, at a press conference in Budapest, where the soccer star was set to play in a high-profile championship game. Coca-Cola was a sponsor of the tournament, so when Ronaldo sat down at the microphone, he found two bottles of Coke positioned in front of him.

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A Taxing Retirement

Article by Jonathan Clements  |  Nov 16, 2024

THE TOUGH PART COMES last.
Saving for retirement is pretty straightforward: You sock away as much as you can, favor stock funds, diversify broadly, keep investment costs low and make the most of tax-advantaged retirement accounts. By contrast, paying for retirement can involve mind-boggling complexity—and a big reason is the tax code.
The good news: Once you quit the workforce, you have a fair amount of control over your annual tax bill, especially if you aren’t yet taking required minimum distributions (RMDs) from your traditional retirement accounts,

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Budgets deserve a little respect.

Forum by Rick Connor | Nov 15, 2024

Somehow the word budget has gotten a bad name.  An innocent financial tool has been equated with penury, and excessive frugality.  Some people think budgeting is synonymous with obsessively tracking every penny spent. But it doesn’t have to be. 
In Personal Financial Planning, budgeting is a tool to help us manage our finances, make better decisions, and achieve our financial goals. It can be tailored to fit your situation. If you find there is “too much month at the end of your money”,

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A clear demonstration that not knowing what you are doing and taking risk may not always lead to financial disaster, but not recommended

Forum by R Quinn | Nov 13, 2024

I have been pondering for a week whether or not to post this out of concern it will be misinterpreted – I have experience with that. 
As Jonathan once told me,  “those who are financially prudent will most likely enjoy success, even if events don’t always go their way.” That’s it for me, mostly prudent and very patient. 
Is it always necessary to follow all the “rules,” to be precise with every financial decision you make,

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The Luxury of Choosing Tax-Free Cash from a Roth IRA or HSA….but Which One?

Forum by Bill Minter | Nov 12, 2024

As a recent retiree who is using my cash reserves to cross my two-year “bridge” to my SS claiming date, I need to decide from which of my tax-free accounts I should withdraw to supplement our living expenses as I move into 2025. I will have used up my taxable account funds by the end of 2024.
Given our household’s low taxable income during this period I have been doing strategic (fill up the tax bracket,

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T Rowe Frequent Trading Policy

Forum by David Lancaster | Nov 11, 2024

I’m wondering if any other HD readers have run into this policy at TRowe Price?
Here’s what happened:
I am trying to get my year end portfolio in alignment. I am trying to generate cash to fund my taxable withdrawals from two inherited IRAs for the next two years.
On 1/29 I sold a balanced fund in an account in mother’s name and transferred the proceeds into a money market fund in the same account.
Today I tried to do the same trade in my father’s account and a T Rowe supervisor said I could not do that due to their frequent trading policy as the first sale was >

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That Final Payment

Article by Brian White  |  Oct 30, 2024

IT’S IMPORTANT TO BE familiar with what happens with Social Security benefits when someone dies. Otherwise, you may find yourself in a long, painstaking battle to get the payment to which your loved one was entitled. I found this out the hard way.
My father-in-law Bernard died in September 2015. My wife was his executor and the agent under his power of attorney (POA). But I’d earlier served as POA and executor for my mother,

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Built for Success

Article by Adam M. Grossman  |  Oct 27, 2024

THE NEIGHBORING TOWNS of Nogales, Arizona, and Nogales, Mexico, figure prominently in the work of Daron Acemoglu and James Robinson, who—together with a colleague—won this year’s Nobel Prize in economics.
In their book Why Nations Fail, Acemoglu and Robinson explain that these two border towns are identical in almost every way—from demographics to geography to climate. But they differ in one key respect: Nogales on the American side of the border is prosperous, while its southern neighbor is not.

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Before You Quit

Article by Jonathan Clements  |  Oct 26, 2024

I MAY NOT BE THE best source of retirement advice. After all, I’ve called myself semi-retired for a decade and yet, faced with a grim medical diagnosis, I continue to work far too hard. Moreover, even if I opt to fully retire—which is doubtful—cancer will likely ensure my retirement will be all too brief.
On the other hand, I do run a website devoted to retirement issues, and that means I spend a lot of time reading and thinking about the topic.

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Prefer the Original

Article by Richard Quinn  |  Oct 24, 2024

MEDICARE GETS A LOT of criticism these days. Some view it as socialized medicine. Others fret over the hospital trust fund, which covers Medicare Part A and is expected to run out of money by 2036.
Meanwhile, some policymakers want to cut back on traditional Medicare and promote privatization through Medicare Advantage plans, otherwise known as Part C. That reflects the philosophy that health care costs, access and quality will be improved if we obtain health care as we do other goods,

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Let’s do the math on Social Security- my simplistic math not guaranteed and possibly flawed, but with a good end result for us – I hope. RDQ

Forum by R Quinn | Oct 21, 2024

I make no recommendations, no suggestions, no nothing, but ask what people conclude for themselves. Does the following make any sense under any scenario?
I used the SSA Quick Calculator and the SSA life expectancy table
Worker with Social Security average earnings of $75,000 
Starting worker only benefits at age 70: $2578 per month 
Starting worker only benefits at age 66: $1923 per month
Monthly additional benefit starting at age 70: $665
Accumulated benefits not claimed from age 66 to 70: $91,824 
Estimated value of age 66 monthly benefit if invested monthly to age 70 at 7% per year: $108,751.03
Estimated monthly income from accumulated assets using 4% rule: $362.50
Life expectancy at age 70: Male 13.69 years.

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Death Benefits

Article by Jonathan Clements  |  Oct 19, 2024

I TURN AGE 62 IN January—which means I could claim Social Security retirement benefits and perhaps collect at least a few monthly checks before I succumb to cancer.
But is that the smartest strategy? One of my top priorities is ensuring Elaine is financially comfortable after I’m gone, so I want to make sure she gets as much from Social Security as possible.
We got married in late May, a few days after I was told I had lung cancer that had metastasized to my brain and elsewhere.

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