I see this new Forum as akin to the Bogleheads forum.  I have some problems with that site, and I (obviously) like this one better.  But one very interesting post I saw related to retirees from 2000. The idea is that, theoretically, 2000 was just about the "worst time" someone could retire because it was shortly before the 9/11/2001 drop in stocks, followed by the 2008-09 plunge. As a mid-career investor, I'd be interested to hear how retirees from that time period fared.

WHEN I WROTE ABOUT the Dow Jones Industrial Average reaching 35,000 in 2021, it’ll surprise few to hear that I—like the stock market—was euphoric. I’ll confess that in 2022, as stocks plunged, I felt silly for having written the article. But here I am again, writing about the latest milestone for our old friend. After flirting with the number in mid-March, the Dow hit an intraday high topping 40,000 on May 16 for the first time in its history. The next day, it closed above that level for an all-time high. I agree with a recent Wall Street Journal article that the Dow is a “terrible” index. That’s mostly because it’s a price-weighted index, as opposed to its cousin, the Standard & Poor's 500, which weights companies according to their total stock market value. Nevertheless, I—perhaps like many of you—have followed the Dow almost my entire life, even when I didn’t really know what it was. The reason for my Dow 35,000 article: I was trying to gauge at what Dow level I’d have enough to retire. I was using an admittedly unscientific approach to come up with that figure. Three years ago, I mentioned that my wife and I wanted to retire in 10 to 15 years. We’re still on track for that goal, which is now nine to 12 years’ away. I postulated that at Dow 50,000 we might have reached our goal. Our magic Dow number is still a bit tricky and unclear. Let’s assume our investment nest egg is half of what I’d like it to be at retirement. In other words, I need it to double to retire. Using the rule of 72, if the Dow notched 7.2% a year, including dividends, the nest egg would double in 10 years. At 10%, it would double in 7.2 years. Reinvested dividends, of course, aren’t reflected in the headline Dow number. What if folks don’t think market returns will be so high, and want to use less rosy projections? And what about dividends? With the Dow companies’ dividend yield at roughly 2%, if the Dow’s index level increased by 4% a year, that would result in a 6% compound growth rate. What then? At that rate, a nest egg would double in roughly 12 years, right on track for yours truly. Because dividends accounted for a third of that growth, we know that the Dow won’t have gained another 40,000 points, landing at 80,000. So, if we discount the 40,000-point gain by one-third—the amount that dividends would account for—that would leave us at Dow 66,667. What this analysis doesn’t reflect is any additional savings added along the way. The last time I was roughing out this math, I guessed that Dow 50,000 might be the magic number for my wife and me. Given that we continue to invest considerable sums each month, that 50,000 figure is still probably about right. Much of this, of course, will depend on how quickly the Dow reaches 50,000. If it happens in 20 years, that will not be very satisfying for me or many investors. If it happens in 10 years, I’ll likely be celebrating. But again, the Dow number is not really the key to our investment success. Rather, it’s the annual compound growth rate. Because our youngest child won’t graduate high school for 12 years, my wife and I will likely continue working at least through then before enjoying an “early” retirement starting in our mid-50s. While Mr. Dow and I still have a little way to go before we reach that magic number, I can’t help feeling a little excitement at the most recent milestone. And even if the market takes a hit after this record high, I’m confident that we’ll continue with our investment plan of steadily buying into the market every month. If the Dow does plummet over the next year or so, I’ll try not to feel too sheepish this time—and at least I’ll have the comfort of knowing our new savings are buying at cheaper prices. Licensed in both Ohio and Kentucky, Ben Rodriguez practices real estate law in Cincinnati, where he lives with his wife and daughters. Since 2009, Ben's made a hobby out of personal finance by reading books and articles on the subject, and also listening to podcasts. Check out his earlier articles.

Jonathan was interviewed by Christine Benz on The Long View podcast produced by Morningstar which can be found anywhere podcast are found or here: Jonathan Clements: 'Life Is Full of Small Pleasures' | Morningstar

RDQ's recent post about seniors paying taxes reminded me that presently only 53% of Americans pay federal income tax.  Many of the remaining 47% are net recipients of money from the treasury.  We all know that everyone working pays payroll taxes, but should everyone pay income tax? On the Yea side, having all citizens paying income tax would give everyone "skin in the game" when it comes to voting on tax policy and expenditures.  As it is, it is very easy to see why the 53% would ask why the 47% gets to vote on how much the 53% is taxed and where those funds go.  If the percentages flip just a little more there will be more non-payors than payors, creating a potentially perverse situation. On the Nea side, one must wonder if we're asking for blood from a turnip?  As it is, if the 47% are net zero or net takers and are barely making ends meet as it is, where does this tax money come from?

MY WIFE AND I ARE super-savers. For us, that means we save as much as permitted each year in the retirement plans available to us. Once we’ve done that, we invest in our regular taxable accounts, where there’s no limit on the amount we can contribute. We’re under age 50. That meant that, in 2022, the maximum contribution was $6,000 each to our IRAs and $20,500 each to our 401(k)s. Because the contribution limits increase with inflation, the 2023 limits are $6,500 for IRAs and $22,500 for 401(k)s. My wife is considered a highly compensated employee—I know, a nice problem to have—so her company reduces the amount she can contribute to her 401(k). That makes me even more motivated to contribute all that I can. I also have a high-deductible health insurance plan with an accompanying health savings account, which allowed me to sock away $3,650 in 2022, then the maximum allowed. This year’s max is $3,850. In recent years, it’s become fashionable to bash 401(k)s for reasons I don’t entirely understand. While I enjoy contributing to all my accounts, I view the 401(k) as the primary vehicle for ordinary Americans to build wealth. I still believe it’s possible for regular people to get rich in this country, and to do so they should contribute to their retirement plans—even if they don’t or can’t save the maximum allowed. Which, surprisingly, recently happened to me. In March 2022, I was enjoying both my job and my journey toward maxing out my firm’s 401(k). Quite unexpectedly, I received a job offer from another firm, one that was too good to refuse. My new employer also has a 401(k). But the firm’s policy is that new employees couldn’t begin contributing until they worked there for six months. Because I started the new job on April 11, that would mean that I, Mr. Super Saver, would have to cool my jets until October, when I could then resume my 401(k) contributions and max out that year’s contribution limit. No problem, I thought. I dutifully calculated the difference between the maximum contribution for 2022 and the amount I had contributed at my previous employer. I then plotted the exact percentage of my income I’d need to have deducted each pay period to hit the maximum for the year with my new 401(k). When the pay period following Oct. 11 arrived, I eagerly checked my paystub for confirmation of my 401(k) contribution. Nothing was deducted. Obviously, there was a mistake in the processing, either with my firm or its 401(k) provider. I immediately contacted human resources. HR informed me that there was no mistake. The firm’s policy, it turns out, states that a new employee can begin making 401(k) contributions on the first day of the next quarter that follows his or her six-month anniversary. Because I began work on April 11, that date was Jan. 1, 2023. In other words, I was 11 days too late to contribute anything more for 2022. Acting as my own counsel, I objected to the rule. I begged that an exception be made so that I could super-save. The objection was overruled, and no exception was granted for little old me. In addition to fine print like this, there’s another important point for employees to understand: The individual annual 401(k) contribution limit applies, no matter how many jobs or 401(k) plans they may have. If you’re under 50, you may not under any circumstances contribute more than $22,500 to all of your 401(k)s in 2023. Workers 50 or older can contribute another $7,500 in catch-up contributions, or $30,000 maximum from all jobs they have. Because I only had one job at a time in 2022—which was enough for me, thank you very much—that meant I was effectively unable to contribute anything further to my 401(k), beyond what I’d already saved in my previous employer’s plan. Although disappointed, I made extra contributions to taxable brokerage accounts and also saved some cash. As it happens, that extra cash came in handy—when our home was damaged by a tornado. But that’s another story. Licensed in both Ohio and Kentucky, Ben Rodriguez practices real estate law in Cincinnati, where he lives with his wife and daughters. Since 2009, Ben's made a hobby out of personal finance by reading books and articles on the subject, and also listening to podcasts. Check out his earlier articles. [xyz-ihs snippet="Donate"]

I'm betting that a large number of fellow HumbleDollarians have never heard of a podcast called Down the Middle (Down the Middle Archives | Creative Planning).  It is a pod hosted by our fearless founder Jonathan Clements and co-hosted by Peter Mallouk of Creative Planning. You can find it on Apple or anywhere podcasts are found. It's released only once a month at the beginning of the month. It's one of the pods I most look forward to.  Each episode is only about 10 or 15 minutes long, so the good news is if you've never heard of it, you can catch up on a year's worth of episodes in little time. In the past, Jonathan has been reluctant to promote (or allow promotion) of this pod, but I'm hoping he'll let this one through. I find the content very edifying, and I think it's great to hear his voice.  If you're into podcasts, check it out.