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The Letter of Final Instructions
In many households, one spouse or partner will handle most of the financial and business matters. The other person often has little or no involvement in these matters. This issue has been exacerbated over the past thirty years as many of these matters are now handled digitally which makes it even more difficult to pick up these duties without good documentation and an up-to-date status of all accounts.
I have done a zoom presentation to North Carolina government retirees numerous times in the past year about The Letter of Final Instructions.
While I am not too worried about arranging a maximally productive schedule in retirement, I am curious about what readers’ daily schedule looks like in retirement.
Mine so far is wake up when I wake up, sit outside with a hot cup of coffee as I run through my gratitudes, respond to emails, blog and do research for fun, eat lunch, do any household chores/projects, hike a few miles with my wife, read, eat supper, and then read/watch British mysteries on TV.
I am attempting to gift a Wall Street Journal article. I hope it works, but if not, all you really need is the headline: “The Average Cost of a Family Health Insurance Plan Is Now $27,000”. Think about that. Then consider that US health care is generally considered to be twice as expensive as health care in other, comparable, countries for worse results. Think what corporations, never mind employees, could do with an additional $6,750/year per person.
WHEN MOST PEOPLE think of Roth IRAs or Roth 401(k)s, they just think “tax-free withdrawals.” But that’s only part of the story.
Roth accounts can protect you from financial traps that catch many retirees off guard. Here are five key advantages to keep in mind:
1. Tax Rate Protection
One thing we can’t control is future tax rates.
Did you know that in the 1980s, the highest federal tax rate was 50%?
I would like to dedicate this post to Jonathan.
My spouse and I started with nothing. We left college with debt and moved to a HCOL area in the mid 1980s. We knew nothing about money other than “if you can’t pay your credit card off each month, quit charging until it is paid off”.
We are Christians and felt called to tithe our income, so we worked up to the full 10% of gross income that is traditional.
ROTH IRA IS A powerful account. It grows tax-free and withdrawals are tax-free during retirement. Roth IRA also has income limits.
For 2025, if you are filing your taxes as single and make less than $150,000 ($236,000 if married filing jointly) of modified adjusted gross income, you can contribute a maximum amount of $7,000.
But if you make $165,000 (single) or $246,000 (married jointly), you are ineligible to contribute to a Roth IRA directly.
Hello, Humble Dollar community!! This is my first post, please excuse me in advance if not as articulate as so many of you who contribute to this site.
I am wondering if any of you have recommendations or thoughts on simple DAF platforms for charitable contributions
I have some highly appreciated stock (APPL at ~$250/share with a very low basis) and use this for most of my larger charitable gifts. I am a devoted Vanguard customer and make direct donations thru Vanguard but tend to find the process a bit tedious –
With Roth conversions touted as a savvy move—pay taxes now, enjoy tax-free withdrawals later—it’s tempting to jump in. But what if the U.S. tax system shifts from income taxes to leaning heavily on tariffs? This idea, gaining traction in 2025 policy debates, challenges conventional wisdom and suggests a contrarian take: maybe we should limit Roth conversions.
Here’s why. Converting a traditional IRA to a Roth means paying income tax upfront at today’s rates. The payoff is tax-free growth and withdrawals,
Last month, the IRS issued final regulations related to several provisions of the SECURE 2.0 Act relating to employer sponsored retirement plan catch-up contributions. Some plans allow additional, or catch-up, contributions for employees 50 and over. For 2025, the regular limit is $23,500. The catch-up limit for those aged 50 and over is $7,500. Starting in 2025, there is a higher “super catch-up” limit of $11,250 or those turning age 60, 61, 62, or 63 during the year.
The normal thinking would have us believing that a bubble is a dangerous situation for our retirement accounts. What if I told you that I believe a market bubble makes your portfolio more resilient? Would you believe me?
Everyone fears bubbles. You should harvest them.
Don’t worry, I haven’t lost the plot, let me be clear: I’m being deliberately provocative to make a point about something some investors neglect when things are going splendidly well, disciplined rebalancing.
IMAGINE YOU ARE already doing all things possible to minimize your taxes:
You are maxing out your pre-tax 401k
You do tax loss harvesting
You did tax efficient placement
You are maximizing Roth IRA through Backdoor Roth
But what other strategies can you use to minimize taxes? You also might not want to start a business or buy real estate.
Another option that many people aren’t aware of is the cash balance plan (CBP).
In a prior post I explained that we were in the process of doing account transfers into Fidelity. As good fortune would have it, nearly all of our money was sitting in cash when Liberation Day caused the market to tank.
My quandary was how to get back into the market. I asked what would you do; dollar cost average (DCA), or take the plunge. Replies were mixed.
I bet on import taxes creating havoc for the balance of the year,
I realize we touched this topic before, but I just watched a YouTube video where the “expert” debunked the 4% rule. His criticism was simply that is not how people spend money. He said nobody lives on the percent they withdraw giving the example that if a person had $1,000,000 and took $40,000 they may need more money for unexpected spending. Thus they will take extra from the $1,000,000
That’s like saying nobody can live on a pension or salary for that matter because they may need more money.
The rule of 72 is a convenient mental math tool to quickly estimate the future value of today’s investments, extrapolated some years forward. It’s quite handy, as Jonathan noted in the Math section of HumbleDollar’s Guide. Expecting a 7.2% return from your stock funds? Your holdings should double in value over 10 years (72 divided by 7.2). Of course, the rule assumes a magical world where your returns are always the same and markets are perfectly linear (ha!),
THE MOST FAMOUS expression at Vanguard is to ‘stay the course.’ It’s meant to suggest that investors should remain steadfast and not sell stocks in a downturn.
This has proven great advice over the decades, but I’ve not been staying the course lately. I’ve been selling stock funds and buying bond funds this summer. Yet I think my actions would have the blessings of Vanguard founder Jack Bogle, who made the phrase ‘stay the course’ famous.
