Early and Often
James McGlynn | Dec 26, 2019
FUNDING A ROTH—and enjoying tax-free growth—may not have been an option for many high-income baby boomers when they were working. But these folks can still get money into a Roth IRA by converting their traditional retirement accounts—and often there’s a great opportunity to do so if they retire early and find themselves in a lower tax bracket. The first thing to know: Converting from traditional tax-deferred accounts to a Roth IRA will generate ordinary income equal to the taxable sum converted. The second thing to know: Partial conversions are typically the way to go, so you minimize the tax hit in any given year. For instance, instead of converting $100,000 in a single year, you might be better off doing four $25,000 annual conversions, so you stay in a lower tax bracket. Partial conversions can be a great strategy if you’ve just retired, but income hasn’t yet kicked in from pensions, Social Security and income annuities. Suppose you retired early and plan to delay collecting Social Security until age 70. Soon after, you’ll also need to start taking required minimum distributions. Those RMDs will not only boost your taxable income, but also the money involved can’t be rolled into a Roth IRA. Yes, you can take your RMD and then convert an additional sum to a Roth. But the tax bills will usually be smaller if you do Roth conversions before your 70s, plus that means you start benefiting sooner from the Roth’s tax-free growth. As you ponder if and when to convert, there are two additional considerations. First, if you want to use retirement account money to purchase longevity insurance—also known as a qualified longevity annuity contract or QLAC—you’re only allowed to use 25% of your IRA balance, with a lifetime maximum of $135,000 as of 2020. Result: Before…
Read more » Refinancing—Again
James McGlynn | Nov 9, 2021
I HAD A NEW HOME built in 2017. I financed it with a 30-year mortgage at a 3.875% interest rate. Early last year, when interest rates dropped due to the pandemic, I suggested that readers refinance. I took my own advice, replacing my 30-year loan with a 15-year mortgage at 2.99%. The cost of refinancing seemed well worth the reduction in my loan interest rate. Two months ago, I saw that mortgage rates had continued to decline, so I refinanced again. My existing mortgage company gave me a new, 15-year loan at 2.375%. I didn’t want to pay the upfront costs to refinance, but I didn’t have to: My current lender waived them because I was already a customer. For those keeping score at home, the interest rate I pay has fallen 39% over the past four years. I started with a low-rate mortgage—and wound up with one that’s rock-bottom. Readers may wonder whether I should pay off my mortgage entirely. I’ve decided I’d rather have more liquidity—by keeping more money in cash. True, my cash account pays just 1.35%, a lower rate than I owe on the mortgage. But I see my savings as insurance against an emergency. On top of that, with a healthy cash balance, I won’t be tempted to draw on the equity in my home for some big expense. No one knows if and when interest rates will rise again. But I’ve locked in low rates for the duration. If short-term rates do rise, my mortgage payment won’t change. My cash account, however, may pay me more money.
Read more » Danger: Cliff Ahead
James McGlynn | Jan 29, 2020
MEET IRMAA. YOU WON'T like her. IRMAA is short for income-related monthly adjustment amount. It’s a premium surcharge levied on those covered by Medicare Part B and Part D—and who have income above certain thresholds. In 2020, the standard premium for Part B, which covers outpatient care, is $144.60 a month. That’s what you pay if you file taxes as a single individual and your modified adjusted gross income is $87,000 or less, or if you’re married filing jointly with annual income of $174,000 and below. What if your income, including tax-free municipal bond interest, exceeds these levels? You may be subject to the IRMAA surcharge. The Part B premium is set so that it pays for 25% of Medicare’s actual cost. The remaining 75% is effectively subsidized by the federal government’s general revenue. The IRMAA surcharge is designed to remove this subsidy for those able to pay—those whose income is above the $87,000 and $174,000 thresholds. The IRMAA surcharge only affects 5% of Medicare recipients, but—depending on what happens with the inflation adjustments to the IRMAA income brackets—this 5% could increase over time. In 2020, there are five different IRMAA income tiers. The Part B surcharge starts at $57.80 per month, equal to $693.60 annually, and gets as high up as $347 per month, or $4,164 annually. Keep in mind that the IRMAA surcharge is per person, so couples pay double these amounts. If your income bumps you into the next income tier, you trigger the new tier’s full surcharge. For instance, income that moves you into the second tier—which starts at $109,000, versus $87,000 for the first tier—will trigger the second tier’s higher rate, even if you exceed the threshold by just $1. This so-called cliff penalty means that $1 of extra income triggers an additional IRMAA surcharge…
Read more » Four Simple Tips
James McGlynn | Jun 2, 2020
FORCED TO SHELTER in place, I’ve used the time at home to organize my finances. I’d already read Marie Kondo’s Tidying Up. But I needed her new book, Joy at Work, to motivate me to organize my digital life. Sometimes, it helps to have a step-by-step guide to prod you to deal with such drudgery. Here are four tips I used to get myself organized: 1. Consolidate fixed costs. One way to simplify your finances is to put all fixed expenses on one credit card. True, not every bill can be put on a credit card. But I was able to charge a majority of my monthly bills to a single card, including electric and water utilities, phone, Netflix, internet, cable, electronic toll road pass, gym membership, auto insurance and home security. Result: I have one bill monthly that’s easy to pay, plus it allows me to track my fixed monthly expenses, so I can gauge how much income I need to cover those costs. Earning credit card rewards is a nice bonus. I leave my “essentials” credit card out of my wallet, so it only gets used for this one category of expenses. Meanwhile, I use a different credit card for discretionary expenses, where I also earn rewards. 2. Simplify investment accounts. For the past few years, I’ve had multiple brokerage accounts, so I can compare their research and ease of us, and also to diversify financial institutions, just in case 2008 returned. But the elimination of stock trading commissions has triggered a consolidation among brokerage firms, leaving us with a handful of stronger financial entities that aren’t dependent on commissions. That’s prompted me to move my holdings to one firm. By consolidating, I even received a discount when I recently refinanced my mortgage through that firm—and it means…
Read more » Fourth Time Lucky
James McGlynn | Aug 6, 2021
I HAD PLANNED a trip to Vietnam for 2020—which coincided with the start of the pandemic and got scratched. I naively rescheduled the trip for this summer. Unfortunately, countries that lack vaccines have been forced to lock down and keep out even vaccinated tourists like me, so that trip also got nixed. Ever the optimist, I rescheduled for Europe in July. This time, it was the delta variant and changing travel restrictions that ended my third international trip before it even began. I asked my tour group what my options were. The folks there mentioned four countries: Iceland, Croatia, Costa Rica and Egypt. I chose Egypt. The positive: There were very few tourists at the pyramids and the temples. The negatives, however, were numerous: wearing a mask on 10-hour flights, the risk of frequent flight cancellations, and COVID testing when both entering and leaving airports, even though I’m fully vaccinated. This last requirement was the hardest to understand. For my flights, I had to have a negative COVID result within 72 hours. I also learned that there are two types of test—the rapid antigen test and the less rapid but more accurate PCR test. The PCR test was required to fly through London on the way to Egypt. I paid $220 for same-day PCR test results to ensure I could board the plane. My daughter, who was accompanying me, was able to get her PCR test at no charge from her university. The testing went smoothly for us. But others in our tour group were forced to take more tests at the airport because their results needed to be within 48 hours of departure. Just before returning from Egypt, our tour group provided us with another COVID test for $150. The results were delivered to our hotel just three hours…
Read more » The Taxman Cometh
James McGlynn | Oct 23, 2020
LATE LAST YEAR, Congress voted to kill off the so-called stretch IRA, which had allowed those who inherited retirement accounts to draw them down slowly over their lifetime. Many folks were surprised by the stretch IRA’s demise, but they shouldn’t have been. When a tax break or some other government provision benefits only a few folks, Congress often changes the law. Think back to 2015. That year, Congress eliminated the ability to “file and suspend” Social Security—another strategy that tended to be exploited only by a privileged few. I suspect we’ll see similar Congressional action in the years ahead. This election season, there’s been talk of reversing the tax rate reductions in 2017’s Tax Cuts and Jobs Act (TCJA), especially for those who’ve benefited the most from those cuts. In any case, after year-end 2025, many of the TCJA changes sunset. The upshot: If Congress doesn’t act in the next five years, taxes will automatically increase. But it isn’t just the TCJA that’s in the political crosshairs. Here are five other key areas where we might see changes to the tax code: There’s discussion of eliminating the preferential long-term capital gains and qualified dividend tax rates for those with incomes above $1 million. Warren Buffett has often complained that he pays a lower tax rate than his secretary. This change would ease his conscience by boosting the capital gains and dividend tax rate from 20% to potentially 39.6%, but only for those with seven-figure incomes. The TCJA reduced corporate tax rates from 35% to 21%. There are proposals to increase that rate to 28% and to ensure all corporations pay a 15% minimum tax. I predict that, at some point between now and 2034, there’ll be changes to the payroll tax that funds Social Security or, alternatively, that other federal…
Read more »
Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
On Being a “Healthy” Person
DrLefty | Sep 8, 2026
Remembering Jonathan
Andrew Clements | Sep 9, 2026
A Wedding Too Far
Mark Crothers | Sep 7, 2026
Locking it in
greg_j_tomamichel | Sep 5, 2026
Wedding Cost is just the beginning
luvtoride44afe9eb1e | Sep 8, 2026
Taking It With You
ArticleJeffrey K. Actor | Sep 5, 2026
Financial Fraud
ArticleAdam M. Grossman | Sep 5, 2026
- Secure the login to your bank account by setting up two-factor authentication. And if your bank supports it, use an authenticator app, rather than text messages, for the authentication codes. Ideally, if your bank supports it, switch to a passkey. This is a newer technology that represents a significant advance over traditional passwords. Most importantly, they aren’t vulnerable to phishing attacks. They’re also easier to use, providing one-click logins, and you can store passkeys in a password manager. For those reasons, more websites are beginning to support passkeys. I’d make the switch as soon as your bank makes them available.
- Set up alerts through your bank to monitor activity in your checking account. Every bank is different, but most allow you to set up email- or text-based alerts to let you know when transactions above a specified threshold are processed, or when other types of activity occur.
- Monitor your transactions. These days, it can be hard to keep an eye on every account. Households often have one or more bank accounts plus credit cards and electronic payment services like Venmo or Zelle. Most people realistically don’t have the time to review every account in real time. That’s why I recommend a service like Monarch or YNAB, which are web-based versions of traditional budgeting tools like Quicken. These services can pull in transactions from all your accounts and present them in a consolidated list, making review much easier. If you kept Monarch or YNAB open in a browser window on your home computer, you could scroll through recent transactions whenever you have a spare minute.
- To narrow the circle of people who have access to your account information, try limiting the number of paper checks you write. Especially with Zelle and Venmo as alternatives for making payments, this is getting easier. If you do write paper checks, be sure to use a gel pen and to avoid freestanding mailboxes. Those steps can help prevent a related type of fraud, as Jonathan Clements explained a few years back.
- Pay attention to notifications of data breaches. Unfortunately, breach announcements seem to occur so frequently that we’ve become immune to them. It’s worth paying attention, though, to understand which particular pieces of information have been stolen. If it looks like your banking information is included in a breach, it might be worth opening a new account, inconvenient as that would be.
- Have your guard up against unsolicited phone calls, emails or text messages. If someone is contacting you about an “account security issue,” or claims to be calling from your bank or from the IRS, be especially wary. Those are common tactics for creating a sense of urgency that can cause people to let their guard down.
What if, like Tom and Jane, you spot a fraudulent transaction in your account? Then it’s important to report it as quickly as possible. Regulation E can limit your liability, but the faster you report a suspicious transaction, the more protection it provides. Liability is limited to just $50 if a theft is reported within two business days, but that exposure increases to $500 if it’s reported later. And after 60 days, there are no guarantees. Thieves, unfortunately, don’t seem to sleep, which means that we need to be more vigilant than in the past, and need to be continuously vigilant. As personal finance author Mike Piper wrote recently, “Cybersecurity should be considered another core area of personal finance—no different from insurance planning, for instance.”A bleak picture for retirement in the future?
R Quinn | Sep 2, 2026
Behind The Finery
Mark Crothers | Sep 3, 2026
The Economy of Expectations
W.D. Housley | Sep 5, 2026
State Farm Dividend
Bogdan Sheremeta | Sep 2, 2026
The best state to retire? Take a close look.
R Quinn | Sep 3, 2026