Search results for: 4% rule

Your 35 years of earnings is what determines you social security benefit, not the taxes paid. Here is why.
✔️ Your benefits are paid for life and perhaps to a survivor. Your benefits don’t stop when you have received all you paid in FICA taxes – roughly after collecting benefits for 6 years.
✔️ The SSA averages your highest 35-years of earnings and then adjusts them to reflect the growth in wages using the AWI – average wage index.

I OPENED MY FIRST bank account in the US at a local credit union (CU) close to my workplace. The CU had several convenient offers for employees of our company. With minimal effort, I opened checking and savings accounts, got free checkbooks and a credit card despite having no credit history in the US.
I was so pleased with the convenience that I handled all my banking needs through this CU for many years.

I WAS RECENTLY asked about strategies that high earners can use to reduce their tax bill.
Most people know the usual options. They contribute to a 401(k), fund a health savings account or make a Roth IRA contribution through the backdoor method. Business owners may have additional opportunities through retirement plans and business structures.
But there’s another strategy worth knowing about: the Mega Backdoor Roth (MBDR).
The MBDR allows some workers to put far more money into Roth accounts than the usual contribution limits permit.

I mentioned this in a recent HD comment, but I think it deserves more discussion.
It’s time to scrap all tax-advantaged defined contribution retirement plans and replace them with one plan, one set of rules, uniform limits. No IRAs of any kind, no 403b,  no 401k, no nothing else.
Just a Universal Retirement Plan- Individual or employer sponsored. All contributions on an after-tax basis and tax and distribution rules following the Roth model. Everyone could contribute up to one (generous) limit. 

A friend shared an interesting idea from David Bach’s “IRA Flat Tax” proposal, and it got me to thinking.
Here is the white paper if you haven’t read it:
IRA Flat Tax White Paper – David Bach.pdf – Google Drive
The basic idea is simple: for a limited window, maybe 2026–2033, retirees could voluntarily withdraw money from traditional IRAs, 401(k)s, and similar retirement accounts at a flat federal tax rate — possibly around 12%.
The goal would be to make it easier for retirees to use the money they spent decades saving,

I WAS SCROLLING through social media recently and saw somebody dismiss retirement accounts as “paper wealth.” The argument was familiar: Your money is locked away and you’re waiting for permission to access it.

There’s a grain of truth here. Retirement accounts do come with rules. But much of the discussion online ignores how flexible these accounts actually are. More important, it ignores the enormous tax advantages.
Most people today will likely live well beyond age 59½.

OUR FIRST GRANDCHILD recently arrived, which naturally has us thinking about the smartest ways to build a strong financial foundation for her future. In 2019, I wrote Take a Break, which outlined saving strategies on behalf of children. Since then, the landscape has changed with the introduction of Trump accounts and Roth-conversion pathways for 529 accounts. 
Families have four tax-advantaged savings approaches on behalf of young children plus the Roth IRA option once the child has earned income – 529 education savings account,

IN THE INVESTMENT world, May 1st is a notable day. It was on May 1, 1975 that the Securities and Exchange Commission deregulated the brokerage industry. For the 183 years prior to that, trading commissions on the New York Stock Exchange had been fixed at uniformly high rates. But when deregulation arrived, competition got going. That’s when discount brokers like Charles Schwab got rolling, and over time, May Day, as it’s now referred to,

IN 2020, ELECTRIC car maker Lucid Motors brought in revenue of $4 million. Five years later, sales had risen impressively, to more than $1 billion. In 2025 alone, sales grew 68%. That sounds like a success story, and through that lens, it is. And yet, over that same period, the company’s stock dropped more than 89%.
What happened?
A better question is: What didn’t happen? Despite growing sales, the company has struggled to turn a profit.

How your spouse handles an inherited IRA can shorten—or extend—your children’s tax-deferred growth.
I read, but did not comprehend the article (link below) which I received from Morningstar this morning, but think it may be of value to others.
Bottom line for me is I will inform my wife this morning that after my death she should not do anything with my traditional IRA until she discusses this issue with our estate attorney.
PS Does anyone else despise the term Kids as my wife and I do?

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.

Prices are not coming down, inflation is rising, mortgage rates are rising, the stock market is near bear territory.
Given all the planning and various strategies that have been discussed on HD, do those retired have any concerns about weathering this storm?
How about those within a few years of retirement? Anything happening that may change your plans.