FREE NEWSLETTER

It doesn’t matter how our net worth compares to others. Instead, what matters is how it compares to where it ought to be.

Latest PostsAll Discussions »

Inflation, prices, COLAs, retirement and the last 16 years

R Quinn  |  Jul 27, 2026

"Thanks for sharing the article, Jack, it was easy to read and helpful to me. Chris"
- baldscreen
Read more »

Treasury Inflation Protected Securities (TIPS) are a Generational Bargain Right Now

Howard Schwartz  |  Jul 27, 2026

"S -- I agree that reading about TIPS or a TIPS ladder is not always clear or straightforward. TIPS are a specific subset of the bond market. I had experience with CD ladders and treasury ladders but still didn't understand TIPS until recently. There is a YouTube video titled "How and Why To Build a TIPS Ladder In Retirement" by a guy names Rod Berger. I found it to be a good reference that explains how the bonds function and how to go about setting up a bond ladder. It does not address the current market or any specific situation. Just content for learning that I found helpful. I do not know who your broker is, but executing the trades to build a ladder at Schwab is very simple and straightforward. Disclaimer -- no endorsement on Rod Berger or any other content he has created. I just thought this video was well done and I learned more about the bonds and he addressed the process for setting up a bond ladder."
- glenntp
Read more »

Widow Tax

ArticleJohn Urban  |  Jul 25, 2026

THE WIDOW TAX is sold to the wrong households. It gets pitched to affluent couples as the reason to convert to a Roth or buy life insurance. The pitch says that when one spouse dies, the survivor files single, lands in a higher bracket, and gets clobbered. I ran the numbers for three couples at three incomes, and at the comfortable end the widow tax often costs nothing, or even less than nothing. The real cost lands lower down, on households nobody is selling anything to. What follows uses 2026 federal figures to show what the widow tax actually does in dollars, not in scary percentage points. The pattern runs opposite to the marketing. The higher your income, the smaller the hit, and the lower you go, the more it bites. Three Things Move When the first spouse dies, three things change, and they get bundled under one frightening label. One Social Security check stops, and a pension may shrink or end. That is lost income, and it is usually the largest of the three. It is not a tax. Spending shifts as well. The survivor pays one Medicare premium instead of two, but the mortgage still comes out of the same account. The third change is the only one the tax code causes: narrower single brackets, a smaller standard deduction and lower thresholds for the Medicare surcharge. The widow tax is that third piece alone, and the three households below measure how big it really is. The Affluent Couple Both spouses are over 65. Their income is about $360,000: $80,000 from Social Security, $210,000 from a pension and required minimum distributions, plus $30,000 in qualified dividends and $40,000 in long-term gains. They sit in the 24% bracket, and both already pay the Medicare surcharge. One spouse dies. The survivor keeps the larger Social Security check and most of the other income, landing at roughly $308,000. As a couple, they paid about $53,900 in federal income tax and a Medicare surcharge of about $9,240. As a single filer, the survivor pays about $55,000 in federal tax and a surcharge of about $6,355. The effective rate rises from 15.7% to 18.7%, which is the headline people remember. But the federal tax barely moves, up only about $1,100, because the survivor has less income to tax. The Medicare surcharge actually falls about $2,900, because two enrollees in the couple's joint tier cost more than one survivor a tier above. Net it all out, and the survivor pays about $1,800 a year less than the couple did. The rate went up, and the dollars went down. At the high end, the widow tax measured in money hands back a small refund. This is why the Roth conversion pitch aimed at comfortable couples misfires. If converting to Roth would cut the survivor's future taxable income without cutting the couple's lifestyle, the converted money was surplus. Surplus is money the survivor never needed to replace. Edward McQuarrie, a finance professor emeritus at Santa Clara University, made a version of this argument in a 2023 paper. He found the dollar hit inconsequential for affluent couples, and located any real cost lower down, where the Social Security torpedo bites. Where It Actually Bites Drop down to a couple with $180,000 of income: $60,000 from Social Security and $120,000 from a pension and required minimum distributions, all ordinary income. Both are over 65. The couple files jointly at $180,000; the survivor files single at about $150,000. As a couple, they paid about $17,148 in federal tax and no Medicare surcharge. The survivor pays about $22,737 in federal tax and a new surcharge of about $2,885. The federal tax rises about $5,600, and a surprising chunk of that comes from the collapse of the new $6,000 senior deduction, which phases out against a lower income threshold for singles. Then the survivor crosses into a Medicare surcharge tier the couple never paid. The total cost of widowhood here is roughly $8,500 a year, set against a $30,000 income loss. This is the one band where both the dollars and the rate move the wrong way. Now take a couple with $90,000 of income: $38,500 from Social Security, about the national average for two retired spouses, plus $51,500 from a pension and distributions. The survivor keeps the larger Social Security check and the full pension, landing at $73,500. As a couple, they paid about $3,433 in federal tax, at an effective rate of 3.8%. The survivor pays about $5,278, at an effective rate of 7.2%. There's no Medicare surcharge at this income, and there never will be. But the survivor's effective rate nearly doubles, because more of the Social Security benefit becomes taxable, up to the 85% ceiling, when the single thresholds replace the joint ones. The added tax is about $1,845, and the lost income is $16,500. Real money for a household least able to absorb it. It doubles the effective rate, and it hurts.  Read the three together and the widow tax points the wrong way from the marketing. At $360,000 it costs less than nothing, roughly a $1,800 annual saving. At $180,000 it costs about $8,500. At $90,000 it costs about $1,850, but the effective rate doubles. The affluent couples being sold protection don't need it. The middle couples who feel the sting are not being sold anything, and they're the ones for whom a few thousand dollars a year actually constrains a life. The tax code has three different mechanisms, and which one finds you depends almost entirely on your income. At the top, the Medicare surcharge does the work, and it falls. In the middle, the surcharge appears from zero. At the bottom, the Social Security torpedo raises the taxability of the benefit from 75% to 85%. The mechanism changes with the income, and so does the household's ability to absorb the hit. Plan Ahead This is where the widow tax conversation usually stops, and where I think it should start. The moves most likely to leave a survivor better off are the ones you make years before, and they help whether or not the widow tax ever bites. Converting traditional IRA money to Roth over several years before retirement smooths your taxable income. It lowers the required minimum distributions that will later push a single filer into higher brackets. It can also keep a survivor under a Medicare surcharge tier the couple never worried about. Drawing accounts in a sensible order, spending down the right buckets first, reduces the future tax base that a single bracket structure will tax more steeply. Managing required distributions as they grow, rather than letting them balloon off a rising balance, limits the single bracket exposure that builds across a long widowhood. A more tax-efficient bequest helps the people who inherit what is left. None of that is widow rescue. It is good multi-year planning that happens to compound in the survivor's favor. The widow tax is one input to that planning, not the reason for it. The reason is that the year your spouse dies is the worst possible year to be making financial decisions, and the more of those decisions you have already made, the fewer you hand to someone who is grieving. You can do a rough version of this at your own kitchen table, and you should, ideally long before you need to. Estimate the survivor's income after the smaller Social Security check and any pension change, then estimate the survivor's spending from your actual budget, not a generic rule of thumb. Subtract. If reliable after-tax income still supports the life the survivor wants, with margin, the tax rate was never the thing to worry about. Then project the survivor's federal tax, the net investment income tax where it applies and the Medicare surcharge as a single filer, and compare it to the couple. Keep the tax separate from the lost income, so you can see what the tax code actually did. Sometimes, as the affluent couple shows, it does you a small favor. Only then does a planning move earn a look, and only if you can answer what it costs today, what it might save later, who benefits and what has to come true for it to work. The widow tax is real, but it isn't the catastrophe it's sold as. At higher incomes it's not a cost at all. Lower down it is a real cost, and the lower you go, the more it's worth measuring, because the households it constrains have the least margin to spare. The planning that matters most is the kind you do years ahead, smoothing income, holding down future distributions, managing the surcharge tiers and putting the estate in order. Do that, and you've done right by your survivor, for reasons that have little to do with fear and a great deal to do with care. You'll have done it in the years when you still had the time, and the clarity, to do it well. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

FIFA Financials

R Quinn  |  Jul 19, 2026

"I’m thinking that many of the 80,000 in MetLife stadium for the final game were not in the “if one can afford it.” group."
- R Quinn
Read more »

Fear of the Unknown…

gnussen623  |  Jul 22, 2026

"exercise, keep moving. enjoy liberation. theoretically all the saving of money is so's we can have time. it's like buying time. it does and can compound."
- John Kaczka
Read more »

Market Indicators

ArticleAdam M. Grossman  |  Jul 25, 2026

WHEN IT COMES to financial decisions, many investors subscribe to an approach known as evidence-based investing. The idea, as the name suggests, is to base decisions, whenever possible, on data rather than on intuition or other informal methods. This sounds logical. It isn’t perfect, though. Economic and financial indicators have weaknesses which are important to be aware of.  Consider, for example, the Cyclically-Adjusted Price-to-Earnings, or CAPE, ratio, developed by Robert Shiller, a Yale professor and Nobel laureate, along with a colleague. Owing to its pedigree, the CAPE is highly respected. And a study by the Vanguard Group found that the CAPE had the strongest ability to predict market returns among fifteen different metrics it tested. For these reasons, many view it as the gold standard for stock market valuation. But how accurate has it been?  For years, the CAPE ratio has been flashing red. Since 2018, in fact, it’s been more elevated than it was at the peak in 1929, just before the crash. It seems to be indicating extreme risk. And yet, the market has continued to move higher with only temporary setbacks, defying the CAPE’s warnings. Even Shiller himself has acknowledged that the CAPE’s predictive abilities can fall short. In 2021, he made this seemingly contradictory statement in an opinion piece: “The stock market is already quite expensive,” he wrote, “But it is also true that stock prices are fairly reasonable right now.” Here’s how he explained this seeming contradiction: While the stock market at the time was expensive by historical standards, he noted that investors should never look at any one metric in a vacuum. Investments need to be considered in comparison to other available options. On that basis, he said, stocks were not expensive, because bonds at the time were also expensive. Recognizing how the CAPE can register misleading readings under certain conditions, Shiller and a colleague have since developed a modified version of the CAPE called the Excess CAPE Yield. This new metric helps investors compare the prospective relative returns of stocks and bonds. Shiller’s message, in other words: The original CAPE ratio on its own shouldn’t be seen as conclusive. Another well-respected metric that’s stumbled in recent years is the Sahm rule. In general terms, this rule says that when the unemployment rate begins to increase at a particular rate, a recession is likely. In back-testing, it’s been shown to be remarkably accurate. Since 1959, it would have generated just two false positives. A few years ago, however, the Sahm rule threshold was breached, theoretically indicating a recession. But Claudia Sahm, the rule’s creator, was quick to explain why investors shouldn’t be nervous. “The Sahm rule is likely overstating the labor market's weakening due to unusual shifts in labor supply caused by the pandemic and immigration,” she wrote. And in the years since, as Sahm guessed, the economy and the stock market have indeed avoided recession. The upshot: Economic indicators may work—and even work reliably—for a period of time, but then break down when something about the economy changes in a fundamental or unique way, as occurred in the wake of Covid.  Economic indicators carry another fundamental flaw: In some cases, an indicator might be correct in its prediction but less than accurate in its timing. It might tell us what’s likely to happen, in other words, but won’t tell us when that event is expected to occur. Probably the most famous occurrence along these lines was in 1996, when Alan Greenspan, then the chair of the Federal Reserve, proclaimed that the stock market was exhibiting “irrational exuberance.” Greenspan turned out to be absolutely right: A bubble was forming in the market, valuations were irrational and a crash was coming. But he didn’t get the timing right. The crash that ultimately occurred didn’t arrive until early 2000—more than three years after he issued his warning. And in those intervening three years, the market more than doubled. Investors who got more cautious in response to the initial warning would have missed out on significant gains. Along the same lines, consider what occurred with the pandemic. When Covid appeared in 2020, it seemed to arrive completely out of left field with no warning. The reality, though, is that certain experts did have pandemic risk on their radar. A 2019 risk assessment by the Federal Emergency Management Agency (FEMA) highlighted the risk of a pandemic among a short list of concerns. The problem, though, was that the report was vague, describing a risk but without any indication when it might occur. It was like a clock with no hands. It was because of examples like this that the fund manager Peter Lynch has said, “It’s futile to predict the economy, interest rates, and the stock market...If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.” That’s humorous, but where does that leave us? On the one hand, we know better than to consult storefront psychics. But economic indicators aren’t terribly reliable either. Investor Howard Marks offers a helpful answer. In his book Mastering the Market Cycle, Marks offers this suggestion: Imagine, he says, a jar filled with a mix of balls of various different colors. No one can tell with the naked eye how many there are of each. But if you can at least have a sense of the mix, that can be helpful. By the same token, no economic indicator should be seen as conclusive, but taken together, they may provide a sense of where things stand. What does this mean in practical terms? Suppose, for example, you’re considering rebalancing your portfolio and wondering how aggressive to be in reducing risk. You could use Marks’s guideline in this case. If the market seems high, you might be a little quicker to reduce risk. But at the same time, we should always keep in mind the “irrational exuberance” episode as a cautionary tale. It’s a reminder to never veer too far in any one direction. As I’ve suggested before, a center-lane approach often represents the best path forward.   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.  
Read more »

Degrees of Doubt: When Higher Education Misses the Mark

Mark Crothers  |  Jul 16, 2025

"As a retired career-long educator from the early 1980's to 2020, I observed the American education system transition to a focus on ever-increasing testing, largely coming from federal initiatives such as "A Nation at Risk" and "No Child Left Behind". As a result, increased amounts of time that students spend in a classroom are devoted to preparing to do well on the next standardized test and significantly less time is available for teachers to work with students to develop critical thinking and problem-solving skills. Preparing for a test is not the same as learning new concepts. Our state commissioner of education, commenting probably 25 years ago about increased testing, said something to the effect of: "I grew up on a farm. We didn't weigh our cattle more to see if they were gaining weight; we fed them more". I believe that is a very fitting analogy."
- Dave Melick
Read more »

One Person’s Luxury, Another’s Necessity

Mark Crothers  |  Jul 21, 2026

"Wendy, sorry to hear of your loss. Sport, and the social side that comes with it, has been a constant thread through my life since childhood. I'd say the social aspect matters as much for the mind as the exercise does for the body. And as you say, it doesn't happen on its own — we have to make the effort. My sporting journey has evolved with age: rough contact sports like rugby and football when I was young, faster competitive sports like tennis and badminton as I moved on from contact, and now easing into gentler ones like pickleball and padel. Through it all, the constant has been the social connection."
- Mark Crothers
Read more »

Can we be completely safe?

Ben Rodriguez  |  Dec 17, 2025

"The main problem would be picking out the millionaire next door, and distinguishing him from the guy who really is a couple hundred dollars away from being a homeless vagrant. Criminals don't even think this way; if they had money, they would flaunt it, so they are looking for people who are flaunting money."
- Ormode
Read more »

Jonathan’s Parting Thoughts: No. 9

Jonathan Clements  |  Jul 3, 2026

"May you rest in Peace Jonathan. Right on with that advice, pretty much what Buffett says also. And for me, I am 85% Index Stocks, and 15% cash, no bonds needed."
- William Dorner
Read more »

Buying a car in retirement

Julie C  |  Jul 11, 2026

"Julie, what happened was this: I was actually shopping for an SUV and was at the dealership test driving yet another one when my husband suggested I test drive the Camry. I relented and liked it. The next day after research, the salesperson wrote up the numbers and I signed and talked to Finance and was good to go. When I got home, I did an online search to send a link to a family member and lo and behold, the online price was $3000 less. I called and they (amazingly) apologized and rewrote the agreement - claiming an error was made by the internet team. If I had searched on line while I was originally sitting in front of the salesperson, I would've have found it. I was just lucky I wanted to share my purchase with my sister!"
- joanm114
Read more »

IRMAA & late filing of tax returns

Danbo  |  Jul 15, 2026

"William, your analysis is helpful."
- Danbo
Read more »

Inflation, prices, COLAs, retirement and the last 16 years

R Quinn  |  Jul 27, 2026

"Thanks for sharing the article, Jack, it was easy to read and helpful to me. Chris"
- baldscreen
Read more »

Treasury Inflation Protected Securities (TIPS) are a Generational Bargain Right Now

Howard Schwartz  |  Jul 27, 2026

"S -- I agree that reading about TIPS or a TIPS ladder is not always clear or straightforward. TIPS are a specific subset of the bond market. I had experience with CD ladders and treasury ladders but still didn't understand TIPS until recently. There is a YouTube video titled "How and Why To Build a TIPS Ladder In Retirement" by a guy names Rod Berger. I found it to be a good reference that explains how the bonds function and how to go about setting up a bond ladder. It does not address the current market or any specific situation. Just content for learning that I found helpful. I do not know who your broker is, but executing the trades to build a ladder at Schwab is very simple and straightforward. Disclaimer -- no endorsement on Rod Berger or any other content he has created. I just thought this video was well done and I learned more about the bonds and he addressed the process for setting up a bond ladder."
- glenntp
Read more »

Widow Tax

ArticleJohn Urban  |  Jul 25, 2026

THE WIDOW TAX is sold to the wrong households. It gets pitched to affluent couples as the reason to convert to a Roth or buy life insurance. The pitch says that when one spouse dies, the survivor files single, lands in a higher bracket, and gets clobbered. I ran the numbers for three couples at three incomes, and at the comfortable end the widow tax often costs nothing, or even less than nothing. The real cost lands lower down, on households nobody is selling anything to. What follows uses 2026 federal figures to show what the widow tax actually does in dollars, not in scary percentage points. The pattern runs opposite to the marketing. The higher your income, the smaller the hit, and the lower you go, the more it bites. Three Things Move When the first spouse dies, three things change, and they get bundled under one frightening label. One Social Security check stops, and a pension may shrink or end. That is lost income, and it is usually the largest of the three. It is not a tax. Spending shifts as well. The survivor pays one Medicare premium instead of two, but the mortgage still comes out of the same account. The third change is the only one the tax code causes: narrower single brackets, a smaller standard deduction and lower thresholds for the Medicare surcharge. The widow tax is that third piece alone, and the three households below measure how big it really is. The Affluent Couple Both spouses are over 65. Their income is about $360,000: $80,000 from Social Security, $210,000 from a pension and required minimum distributions, plus $30,000 in qualified dividends and $40,000 in long-term gains. They sit in the 24% bracket, and both already pay the Medicare surcharge. One spouse dies. The survivor keeps the larger Social Security check and most of the other income, landing at roughly $308,000. As a couple, they paid about $53,900 in federal income tax and a Medicare surcharge of about $9,240. As a single filer, the survivor pays about $55,000 in federal tax and a surcharge of about $6,355. The effective rate rises from 15.7% to 18.7%, which is the headline people remember. But the federal tax barely moves, up only about $1,100, because the survivor has less income to tax. The Medicare surcharge actually falls about $2,900, because two enrollees in the couple's joint tier cost more than one survivor a tier above. Net it all out, and the survivor pays about $1,800 a year less than the couple did. The rate went up, and the dollars went down. At the high end, the widow tax measured in money hands back a small refund. This is why the Roth conversion pitch aimed at comfortable couples misfires. If converting to Roth would cut the survivor's future taxable income without cutting the couple's lifestyle, the converted money was surplus. Surplus is money the survivor never needed to replace. Edward McQuarrie, a finance professor emeritus at Santa Clara University, made a version of this argument in a 2023 paper. He found the dollar hit inconsequential for affluent couples, and located any real cost lower down, where the Social Security torpedo bites. Where It Actually Bites Drop down to a couple with $180,000 of income: $60,000 from Social Security and $120,000 from a pension and required minimum distributions, all ordinary income. Both are over 65. The couple files jointly at $180,000; the survivor files single at about $150,000. As a couple, they paid about $17,148 in federal tax and no Medicare surcharge. The survivor pays about $22,737 in federal tax and a new surcharge of about $2,885. The federal tax rises about $5,600, and a surprising chunk of that comes from the collapse of the new $6,000 senior deduction, which phases out against a lower income threshold for singles. Then the survivor crosses into a Medicare surcharge tier the couple never paid. The total cost of widowhood here is roughly $8,500 a year, set against a $30,000 income loss. This is the one band where both the dollars and the rate move the wrong way. Now take a couple with $90,000 of income: $38,500 from Social Security, about the national average for two retired spouses, plus $51,500 from a pension and distributions. The survivor keeps the larger Social Security check and the full pension, landing at $73,500. As a couple, they paid about $3,433 in federal tax, at an effective rate of 3.8%. The survivor pays about $5,278, at an effective rate of 7.2%. There's no Medicare surcharge at this income, and there never will be. But the survivor's effective rate nearly doubles, because more of the Social Security benefit becomes taxable, up to the 85% ceiling, when the single thresholds replace the joint ones. The added tax is about $1,845, and the lost income is $16,500. Real money for a household least able to absorb it. It doubles the effective rate, and it hurts.  Read the three together and the widow tax points the wrong way from the marketing. At $360,000 it costs less than nothing, roughly a $1,800 annual saving. At $180,000 it costs about $8,500. At $90,000 it costs about $1,850, but the effective rate doubles. The affluent couples being sold protection don't need it. The middle couples who feel the sting are not being sold anything, and they're the ones for whom a few thousand dollars a year actually constrains a life. The tax code has three different mechanisms, and which one finds you depends almost entirely on your income. At the top, the Medicare surcharge does the work, and it falls. In the middle, the surcharge appears from zero. At the bottom, the Social Security torpedo raises the taxability of the benefit from 75% to 85%. The mechanism changes with the income, and so does the household's ability to absorb the hit. Plan Ahead This is where the widow tax conversation usually stops, and where I think it should start. The moves most likely to leave a survivor better off are the ones you make years before, and they help whether or not the widow tax ever bites. Converting traditional IRA money to Roth over several years before retirement smooths your taxable income. It lowers the required minimum distributions that will later push a single filer into higher brackets. It can also keep a survivor under a Medicare surcharge tier the couple never worried about. Drawing accounts in a sensible order, spending down the right buckets first, reduces the future tax base that a single bracket structure will tax more steeply. Managing required distributions as they grow, rather than letting them balloon off a rising balance, limits the single bracket exposure that builds across a long widowhood. A more tax-efficient bequest helps the people who inherit what is left. None of that is widow rescue. It is good multi-year planning that happens to compound in the survivor's favor. The widow tax is one input to that planning, not the reason for it. The reason is that the year your spouse dies is the worst possible year to be making financial decisions, and the more of those decisions you have already made, the fewer you hand to someone who is grieving. You can do a rough version of this at your own kitchen table, and you should, ideally long before you need to. Estimate the survivor's income after the smaller Social Security check and any pension change, then estimate the survivor's spending from your actual budget, not a generic rule of thumb. Subtract. If reliable after-tax income still supports the life the survivor wants, with margin, the tax rate was never the thing to worry about. Then project the survivor's federal tax, the net investment income tax where it applies and the Medicare surcharge as a single filer, and compare it to the couple. Keep the tax separate from the lost income, so you can see what the tax code actually did. Sometimes, as the affluent couple shows, it does you a small favor. Only then does a planning move earn a look, and only if you can answer what it costs today, what it might save later, who benefits and what has to come true for it to work. The widow tax is real, but it isn't the catastrophe it's sold as. At higher incomes it's not a cost at all. Lower down it is a real cost, and the lower you go, the more it's worth measuring, because the households it constrains have the least margin to spare. The planning that matters most is the kind you do years ahead, smoothing income, holding down future distributions, managing the surcharge tiers and putting the estate in order. Do that, and you've done right by your survivor, for reasons that have little to do with fear and a great deal to do with care. You'll have done it in the years when you still had the time, and the clarity, to do it well. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

FIFA Financials

R Quinn  |  Jul 19, 2026

"I’m thinking that many of the 80,000 in MetLife stadium for the final game were not in the “if one can afford it.” group."
- R Quinn
Read more »

Fear of the Unknown…

gnussen623  |  Jul 22, 2026

"exercise, keep moving. enjoy liberation. theoretically all the saving of money is so's we can have time. it's like buying time. it does and can compound."
- John Kaczka
Read more »

Market Indicators

ArticleAdam M. Grossman  |  Jul 25, 2026

WHEN IT COMES to financial decisions, many investors subscribe to an approach known as evidence-based investing. The idea, as the name suggests, is to base decisions, whenever possible, on data rather than on intuition or other informal methods. This sounds logical. It isn’t perfect, though. Economic and financial indicators have weaknesses which are important to be aware of.  Consider, for example, the Cyclically-Adjusted Price-to-Earnings, or CAPE, ratio, developed by Robert Shiller, a Yale professor and Nobel laureate, along with a colleague. Owing to its pedigree, the CAPE is highly respected. And a study by the Vanguard Group found that the CAPE had the strongest ability to predict market returns among fifteen different metrics it tested. For these reasons, many view it as the gold standard for stock market valuation. But how accurate has it been?  For years, the CAPE ratio has been flashing red. Since 2018, in fact, it’s been more elevated than it was at the peak in 1929, just before the crash. It seems to be indicating extreme risk. And yet, the market has continued to move higher with only temporary setbacks, defying the CAPE’s warnings. Even Shiller himself has acknowledged that the CAPE’s predictive abilities can fall short. In 2021, he made this seemingly contradictory statement in an opinion piece: “The stock market is already quite expensive,” he wrote, “But it is also true that stock prices are fairly reasonable right now.” Here’s how he explained this seeming contradiction: While the stock market at the time was expensive by historical standards, he noted that investors should never look at any one metric in a vacuum. Investments need to be considered in comparison to other available options. On that basis, he said, stocks were not expensive, because bonds at the time were also expensive. Recognizing how the CAPE can register misleading readings under certain conditions, Shiller and a colleague have since developed a modified version of the CAPE called the Excess CAPE Yield. This new metric helps investors compare the prospective relative returns of stocks and bonds. Shiller’s message, in other words: The original CAPE ratio on its own shouldn’t be seen as conclusive. Another well-respected metric that’s stumbled in recent years is the Sahm rule. In general terms, this rule says that when the unemployment rate begins to increase at a particular rate, a recession is likely. In back-testing, it’s been shown to be remarkably accurate. Since 1959, it would have generated just two false positives. A few years ago, however, the Sahm rule threshold was breached, theoretically indicating a recession. But Claudia Sahm, the rule’s creator, was quick to explain why investors shouldn’t be nervous. “The Sahm rule is likely overstating the labor market's weakening due to unusual shifts in labor supply caused by the pandemic and immigration,” she wrote. And in the years since, as Sahm guessed, the economy and the stock market have indeed avoided recession. The upshot: Economic indicators may work—and even work reliably—for a period of time, but then break down when something about the economy changes in a fundamental or unique way, as occurred in the wake of Covid.  Economic indicators carry another fundamental flaw: In some cases, an indicator might be correct in its prediction but less than accurate in its timing. It might tell us what’s likely to happen, in other words, but won’t tell us when that event is expected to occur. Probably the most famous occurrence along these lines was in 1996, when Alan Greenspan, then the chair of the Federal Reserve, proclaimed that the stock market was exhibiting “irrational exuberance.” Greenspan turned out to be absolutely right: A bubble was forming in the market, valuations were irrational and a crash was coming. But he didn’t get the timing right. The crash that ultimately occurred didn’t arrive until early 2000—more than three years after he issued his warning. And in those intervening three years, the market more than doubled. Investors who got more cautious in response to the initial warning would have missed out on significant gains. Along the same lines, consider what occurred with the pandemic. When Covid appeared in 2020, it seemed to arrive completely out of left field with no warning. The reality, though, is that certain experts did have pandemic risk on their radar. A 2019 risk assessment by the Federal Emergency Management Agency (FEMA) highlighted the risk of a pandemic among a short list of concerns. The problem, though, was that the report was vague, describing a risk but without any indication when it might occur. It was like a clock with no hands. It was because of examples like this that the fund manager Peter Lynch has said, “It’s futile to predict the economy, interest rates, and the stock market...If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.” That’s humorous, but where does that leave us? On the one hand, we know better than to consult storefront psychics. But economic indicators aren’t terribly reliable either. Investor Howard Marks offers a helpful answer. In his book Mastering the Market Cycle, Marks offers this suggestion: Imagine, he says, a jar filled with a mix of balls of various different colors. No one can tell with the naked eye how many there are of each. But if you can at least have a sense of the mix, that can be helpful. By the same token, no economic indicator should be seen as conclusive, but taken together, they may provide a sense of where things stand. What does this mean in practical terms? Suppose, for example, you’re considering rebalancing your portfolio and wondering how aggressive to be in reducing risk. You could use Marks’s guideline in this case. If the market seems high, you might be a little quicker to reduce risk. But at the same time, we should always keep in mind the “irrational exuberance” episode as a cautionary tale. It’s a reminder to never veer too far in any one direction. As I’ve suggested before, a center-lane approach often represents the best path forward.   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.  
Read more »

Degrees of Doubt: When Higher Education Misses the Mark

Mark Crothers  |  Jul 16, 2025

"As a retired career-long educator from the early 1980's to 2020, I observed the American education system transition to a focus on ever-increasing testing, largely coming from federal initiatives such as "A Nation at Risk" and "No Child Left Behind". As a result, increased amounts of time that students spend in a classroom are devoted to preparing to do well on the next standardized test and significantly less time is available for teachers to work with students to develop critical thinking and problem-solving skills. Preparing for a test is not the same as learning new concepts. Our state commissioner of education, commenting probably 25 years ago about increased testing, said something to the effect of: "I grew up on a farm. We didn't weigh our cattle more to see if they were gaining weight; we fed them more". I believe that is a very fitting analogy."
- Dave Melick
Read more »

One Person’s Luxury, Another’s Necessity

Mark Crothers  |  Jul 21, 2026

"Wendy, sorry to hear of your loss. Sport, and the social side that comes with it, has been a constant thread through my life since childhood. I'd say the social aspect matters as much for the mind as the exercise does for the body. And as you say, it doesn't happen on its own — we have to make the effort. My sporting journey has evolved with age: rough contact sports like rugby and football when I was young, faster competitive sports like tennis and badminton as I moved on from contact, and now easing into gentler ones like pickleball and padel. Through it all, the constant has been the social connection."
- Mark Crothers
Read more »

Can we be completely safe?

Ben Rodriguez  |  Dec 17, 2025

"The main problem would be picking out the millionaire next door, and distinguishing him from the guy who really is a couple hundred dollars away from being a homeless vagrant. Criminals don't even think this way; if they had money, they would flaunt it, so they are looking for people who are flaunting money."
- Ormode
Read more »

Free Newsletter

Get Educated

Manifesto

Jul 26, 2026

NO. 22: IF WE’RE saving enough each month for retirement and other goals, it doesn’t much matter how we spend our remaining money—and there’s likely no need to budget.

Truths

Jul 28, 2026

NO. 44: GOOD companies can be bad stocks. Why? Investors bid up the share prices of widely admired, fast-growing companies—but the stocks often falter when the companies fall short of investors' lofty expectations. Meanwhile, investors shun troubled, slower-growing companies, so even so-so corporate performance can result in strong market returns.

humans

Jul 27, 2026

NO. 19: WE GET great pleasure from anticipation. The best part of any event—vacation, buying a car, the family reunion—is often the period beforehand. As we look forward to such events, we can daydream about how much fun we’ll have. Want to get the most out of anticipation? Ponder purchases far in advance—and consider all manner of possibilities.

think

Jul 27, 2026

HOUSE MONEY effect. In a rising stock market, we may attribute gains to our own brilliance, bolstering our self-confidence and leading us to make even riskier bets. This is further aggravated by the “house money” effect. Like casino gamblers who get lucky early in the evening, we may feel we’re ahead of the game—and can afford to take yet more risk.

Money Guide

Start Here
Planner
Portfolio
Retire
Invest
College-bound kids?

Manifesto

Jul 26, 2026

NO. 22: IF WE’RE saving enough each month for retirement and other goals, it doesn’t much matter how we spend our remaining money—and there’s likely no need to budget.

Spotlight: Taxes

Business and Side Hustle Tax Tips

Bogdan Sheremeta   |  Dec 20, 2025

BUSINESS OWNERS HAVE far more control over their tax bill than W-2 employees. But only if you know how the rules actually work. 
The tax code is structured to reward self employment, business investment, and retirement saving, yet many business owners leave significant money on the table simply because they are unaware of all the strategies.
If you are eligible, a Solo 401(k) plan can be an effective way to lower your taxes or shield your investments from future taxation.

Read more »

ID.me

William Perry   |  Jul 16, 2025

I still help prepare tax returns for pay. As such I am required, among other things, to annually renew my preparer pin number.
I recently received the  following from the IRS in a email –
We have updated the Tax Professional PTIN System sign-in process for tax return preparers who have a Social Security number (SSN). You will now sign in using ID.me, a technology provider that conducts identity verification and credential management for access to IRS online services. 

Read more »

Cash Balance Plan Explained

Bogdan Sheremeta   |  Oct 4, 2025

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).

Read more »

Quinn rants about taxes-but maybe not what you think. 

R Quinn   |  Jul 8, 2025

Like most Americans I pay taxes, income taxes both federal and state, sales taxes, property taxes and for fifty years, payroll taxes and I’m still, at age 81, paying income, sales and property taxes – plus assorted other miner taxes and fees on goods and services.
Like any normal person, I think it would be nice not to pay taxes and keep all my money. But unlike too many of the uninformed people ranting on social media these days,

Read more »

Roth Hidden Benefits

Bogdan Sheremeta   |  Oct 25, 2025

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%?

Read more »

Treasury Tax Reporting

Bogdan Sheremeta   |  Mar 28, 2026

IF YOU HAVE a Money Market Fund (e.g. VUSXX, VMFXX), Treasury fund (e.g. SGOV), or any other Treasury ETF (e.g. VBIL), you need to know how to report it on your taxes correctly. If you don’t, you are overpaying on your state taxes unknowingly. 
How and why?
These funds hold U.S. Treasury Bills. Treasuries are exempt from state and local taxes. Of course, this only matters if you hold these funds in a taxable brokerage account,

Read more »

Spotlight: Perry

The 2024 Bogleheads Conference videos are now available online

William Perry   |  Dec 4, 2024

I have been checking the Bogle Center looking for the release of the 2024 conference videos. I have enjoyed and learned from the prior year conference videos. The 2024 conference videos are now available. https://boglecenter.net/2024conference/
Read more »

Deducting Medical Expenses of a Decedent

William Perry   |  Apr 28, 2025

Often when a person dies the surviving spouse or executor receives huge medical bills from the last illness or accident of the decedent. Hopefully most of such final medical expenses are covered by medical insurance but as anyone who has been tasked with dealing with the after death financial matters knows this is a long, complex and time consuming process. Any medical expenses of the decedent not paid before death are by default liabilities of the decedent's estate. If a federal estate tax return, form 706, is required those unpaid medical expenses are a liability of the estate. However, the estate personal representative (PR) or surviving spouse if there is no PR may elect to treat such eligible medical expenses as paid by the decedent at the time the medical services were provided. Such medical expenses must be paid within the one year period beginning with the day after the date of death (DOD) to be eligible to deduct by itemizing. Assuming such deduction provides an income tax benefit on the final 1040 of the decedent, regardless of their tax filing status (MFJ, single, etc.), then the personal representative or surviving spouse must attach a separate statement, in duplicate, to the decedent's final form 1040 in addition to schedule A itemizing deductions and stating such medical expenses were paid post death in the one year following the DOD and have not been and will not be claimed on the decedent's estate (form 706) tax return. I will not go into the reporting needed on form 706 as it is infrequently filed because of the high exemption amount we each have that eliminates the requirement to file a 706 for most of us and because such reporting is beyond the scope of this article. Note, just because no 706 will be…
Read more »

Tips, not TIPS

William Perry   |  Sep 11, 2025

Humble Dollar frequently posts articles about TIPS - Treasury Inflation-Protected Securities. This post is not about inflation protected bonds. The OBBBA includes new code 224, a deduction for tax years 2025-2028, for up to $25,000 in qualified tips received during the year for cash tips received by an individual in an occupation that customarily and regularly received tips before 2024. That code section also includes subsection 224(d)(2)(B) which provides that tips do not qualify for the deduction if they are received in the course of certain specified trades or businesses -- including the fields of health, performing arts, and athletics. The Treasury Department posted on its website in early September 2025 a preliminary list of occupations that customarily and regularly received tips on or before December 31, 2024. Expect to see a final list posted to the federal register in the future. Cornell Law School LII has published the new law which you can read for other requirements and limitations. Be advised that the deduction is for income taxes and will not reduce the payroll taxes on the qualified tips.  
Read more »

David Enna’s Tipswatch.com tribute to Bob Brinker

William Perry   |  Sep 4, 2024

Bob Brinker's idea of financial asset critical mass was reaching a level of financial security where your money is working for you. Included in the tribute is a list of recommended investment books that Mr. Brinker had included in his newsletter and radio show over the years. Those recommended books, including those that I have already read, mirror humble wisdom that I find here every day. I have a lot of reading to do.  
Read more »

Do you know about community property trusts?

William Perry   |  Sep 24, 2024

Five non community property states - Alaska, Florida, Kentucky, South Dakota and Tennessee, currently allow married couples to create community property trusts (CPT). The benefit of a CPT is the potential income tax savings to a surviving spouse via the full 'step-up' in basis of a home or other trust assets that occurs when the first spouse dies when assets held in the CPT are later sold. There are likely a lot of negatives to establishing a CPT including complexity, cost and limited asset protection. My financial situation leads me to conclude that I do not require a CPT  for my wife to avoid capital gains on our JWROS appreciated home should I predecease her due to the home gain exclusion available under IRC 121. I was at a continuing education course regarding probate earlier this month and the attorney speakers briefly spoke about the availability of community property trusts. If you want to know more about CPTs just google "What is a community property trust". After reading the comments on a few law firm websites you will then know as much (or as little) as I do about community property trusts. Best, Bill    
Read more »

Final Secure 2.0 regulations regarding catch up contributions

William Perry   |  Sep 15, 2025

This morning the IRS in IR-2025-91 announced that the pending Secure 2.0 final regulations regarding catch-up contributions to qualified retirement plans will be published tomorrow, 9/16/2025, in the federal register. My initial reading of a summary has two key takeaways for me. A requirement that catch-up contributions that will require such catch-up contributions to be ROTH for certain taxpayers based their on earned income ($145K indexed) of the prior tax year. The effective date of the new catch-up provision will now be for tax years after 12/31/2026, so starting in 2027 for plans using calendar years. I am certain there will be matters in final regulations that will be of concern to others.  An advanced copy of the 94 pages of final regulations are here. A more readable early read summary from the National Association of Plan Advisors (NAPA) is what I am currently reading. The NAPA comment "Under SECURE 2.0, the deadline for compliance was initially for tax years beginning after Dec. 31, 2023, but it was postponed to 2026 by the IRS due to its administrative complexity." is a understatement of the tax complexity these regulations require. Ultimately the cost of such tax complexity will be absorbed by the plan participants regardless if they make catch-up contributions or not.  
Read more »
FREE NEWSLETTER
How To
Follow Us