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One Person’s Luxury, Another’s Necessity

Mark Crothers | Jul 21, 2026

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FIFA Financials

R Quinn | Jul 19, 2026

"Been to Super Bowls / World Series / major golf tourneys ... that was as a young man. At this point I would not deal with the crowds and rowdy behavior. Crowds at major sporting events are not the same."

- George Counihan

Lessons on the Ground

ArticleDennis Friedman | Jul 18, 2026

THE OTHER DAY, WHILE walking to my mailbox, I noticed a summer class schedule for a private gifted youth academy lying on the ground. I assumed it belonged to one of my neighbors, who has elementary-aged children. Their interest in extra academics didn't surprise me. Many families move to this area because of its excellent schools. Parents here clearly value education. On any given day, it's common to hear children practicing the piano or violin as you walk through the neighborhood. I admire parents who encourage their children to excel in school. But as I looked over that schedule, I found myself wondering about the lessons that aren't taught in a classroom. Coincidentally, another neighbor's son had just graduated from college and was preparing to begin his career. If he were my son, what advice would I give him as he stepped into adulthood? After some thought, I settled on five ideas. Invest to Build Wealth. The most reliable way for ordinary people to build wealth is to become owners instead of just consumers. Buying shares of businesses allows you to participate in the growth of the global economy rather than relying solely on a paycheck. The good news is that you don't need much money to begin. What matters most is time. Starting early allows compounding to work its magic, with investment returns generating returns of their own over many years. Be a Long-Term Investor. If I could offer only one piece of investing advice, it would be to keep things simple. Invest regularly in low-cost index funds and stay invested. Trying to pick winning stocks or predict market swings is tempting, but history suggests that patience usually beats prediction. I recently read a New York Times column by Jeff Sommer that made this point well. Long-term market returns are driven by a surprisingly small number of extraordinary companies. The problem, of course, is knowing in advance which companies those will be. Broad diversification through index funds allows investors to own tomorrow's winners without having to guess who they are. Even if you think you're smart enough to spot those superstar companies, holding onto them for the long haul is a rollercoaster. They can be incredibly volatile. I've learned that lesson firsthand. A few years ago, my wife and I bought a small position in Nvidia (NVDA). It represented only a tiny fraction of our portfolio, but the stock's wild price swings made us uncomfortable. We eventually sold our shares too early for about $112, and the last time I checked, it was trading at $204. Do I regret selling? Not really. The vast majority of our stock holdings remain in Vanguard's Total Stock Market Index Fund (VTI), which owns Nvidia along with thousands of other companies. That approach has allowed us to sleep well at night while still benefiting from the market's long-term growth. Cultivate Friendships. Money matters, but people matter even more. Looking back, some of the biggest turning points in my life came because of friends. One college friend, Chuck, helped me get my foot in the door at an aerospace company when I was a history graduate struggling to find work. That opportunity led to a rewarding career. Another friend, Steve, introduced me to the woman who became my wife. That single introduction changed the course of my life far more than any investment decision ever could. But those special bonds don’t happen by accident; they require making time for them despite a busy career. Good friends encourage us, open doors we never expected, and help us through life's inevitable setbacks. Those relationships are among the greatest investments anyone can make. Give Every Job Your Best. I learned the value of hard work from my parents. When I was growing up, my father routinely left for work before sunrise and often didn't return until evening, six days a week. At the same time, he and my mother managed a 36-unit apartment building. My mother prepared dinner for our family before leaving for her own job each morning, returning home in the evening with just enough time to spend a few quiet hours with my father before doing it all again. Watching them taught me that meaningful accomplishments usually require persistence more than brilliance. There will be phases in your life when long hours are unavoidable. During those times, give your work your best effort. A reputation for reliability and diligence has a way of creating opportunities that talent alone cannot. Protect Your Greatest Asset. For someone just beginning a career, the greatest financial asset isn't an investment account. It's the ability to earn a living. Poor health can quietly undermine that ability. Regular exercise may not seem like a financial strategy, but it helps protect the income that makes every other financial goal possible. I recently came across a quote from a doctor in the comment section of an article in The New York Times that captured this idea perfectly: "Exercise, by its effect on skeletal muscle, can in part preserve cognition, prevent depression, prevent cardiovascular disease, prevent diabetes, prevent some cancers, prevent osteoporosis, and preserve independence. And the list goes on. There isn't a single pill on earth that delivers all of those benefits." Taking care of your health isn't simply about living longer. It's about preserving your independence and giving yourself the opportunity to enjoy the life you've worked so hard to build. As I walked back from the mailbox, I hoped the child whose summer schedule I'd found would do well in every class. Academic success opens many doors. But I also hope someone teaches lessons like these along the way. Years from now, I doubt anyone will remember a report card or a test score. They'll remember the habits that shaped a life: investing patiently, working hard, nurturing friendships, and taking care of their health. Those lessons may never appear on a syllabus, but they can make all the difference. Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. Follow Dennis on X @DMFrie and check out his earlier articles

A Can of Worms

Dan Smith | Jul 17, 2026

"David, I sure think that's true most of the time, still, I've seen some exceptions that just leave me scratching my head."

- DAN SMITH

Buying a car in retirement

Julie C | Jul 11, 2026

"I brought through USAA several times, but unfortunately they ended the program a few years ago."

- S Phillips

K-shaped Economy

ArticleAdam M. Grossman | Jul 18, 2026

A TOPIC THAT'S been in the news recently is the so-called K-shaped economy. Imagine a chart plotting the relative standing over time of those with higher incomes and those with lower incomes. Owing to a strong stock market and rising home values, the shape of the chart for those with higher incomes would extend up and to the right and has been moving increasingly in that direction since Covid. Folks with lower incomes, on the other hand, haven’t benefited as much from rising markets. Instead, they’ve had to contend with higher prices on key budget items, including housing, tuition and healthcare. For this group, unfortunately, a chart of their financial progress would extend down and to the right. Put these two charts together, and they form a K—hence, the K-shaped economy. Because this divide has been especially pronounced for young people, more parents are asking how they can help their children. But they aren’t always sure of the best way to approach this. You may have heard the story about the late Charlie Munger. Some years ago, a friend asked Charlie if he planned to leave his considerable fortune to his children. Specifically, his friend wondered whether too much wealth would impact his children’s work ethic. “Of course it will,” Munger replied. “But you still have to do it.” “Why?” his friend asked. “Because if you don’t give them the money, they’ll hate you.” On the one hand, this is funny, but it also gets at why this topic can be so difficult. In fact, I’ve often referred to it as the hardest question in personal finance. But it isn’t impossible. If you’d like to help your children—either today or as part of your estate—here are four questions I suggest considering as you develop your plan. 1. What problem are you most trying to solve? Some families are clear that they just want to help their children as much as they can today, to combat the challenges of the K-shaped economy. Other families are focused on the long term and just want to see their assets pass to their children tax-efficiently at the end of their lives. Both are reasonable objectives, but it’s important to have clarity on what’s most important to you as the first step. 2. To what degree do you value simplicity over tax savings? With the federal estate tax at 40%—and many states levying their own taxes on top of that—folks with assets above the lifetime exclusion often conclude that it’s worth spending virtually any amount on legal fees in an effort to defray that tax. But not everyone agrees. Other families see it this way: While estate planning strategies can be effective in reducing taxes, they can be costly to set up and to maintain. For that reason, other families decide to spend little or nothing on estate tax strategies. They accept that their estates might—and likely will—end up facing a larger tab at the end of the day. But, they argue, if their estate is large enough for the estate tax to apply, then by definition, their heirs will nonetheless still receive a significant sum. 3. Do you worry about the problem Munger’s friend highlighted? If you’re worried about impacting your children’s work ethic, then counterintuitively, it may make sense to start making gifts sooner rather than later. The key is to make modest gifts and to make them incrementally. When you start making gifts like this sooner, it can serve two purposes. As a parent, it gives you the opportunity to see how your children handle these smaller sums. Do they immediately head to Bora Bora, or do they save and invest the dollars they receive? Making gifts incrementally can also help the recipient. To the extent that the first—or the second—gift is spent frivolously, modest gifts provide children the opportunity to acclimate and hopefully to adjust. 4. To what degree would you like to control your children’s use of assets down the road? If you go the route of an irrevocable trust and plan to leave assets to your children as a bequest, you won’t have the opportunity to iterate in the way I described above. That said, you may still prefer to leave assets to your children in this way. The key challenge with trusts is how to structure the distribution provisions. Put too many restrictions in place, and you risk causing your children a lifetime of stress or, worse yet, resentment. But put too few restrictions in, and the trust assets could be spent unwisely and deplete too quickly. How can you thread the needle? There’s no single right approach, but here are four distribution strategies you might consider. Based on age or stage: You might stipulate, for example, that a child reach age 30 before receiving any funds. Or you might require that a child have finished college or be married before receiving funds. The benefit of this approach is that it doesn’t leave room for debate between your children and the trustee. The downside is that this sort of structure can be too rigid, because children’s needs don’t always align with specific ages or stages. The reality is that everyone takes different paths through life in ways that no formula can fully contemplate. I often reference the movie The Bachelor, which is a comedy but illustrates how an overly rigid structure can have unintended consequences. Annual percentage with no discretion: This structure also has the benefit of being straightforward, with no room for debate between beneficiaries and the trustee. In addition, a fixed percentage can help preserve a trust’s assets for many years. The downside is that children’s needs typically vary from year to year. They’ll want to buy homes and may have tuition expenses for their own children. For those reasons, a fixed percentage, while attractive in theory, runs the risk of being an obstacle to your children’s most important goals. Annual percentage with an override for specific needs: The benefit of this structure is that it provides flexibility if a child wants to buy a home or has other higher-than-normal expenses in a particular year. The downside is that it opens the door to debate between beneficiary and trustee. The trustee might deem a proposed home purchase too expensive, for example. Trustee’s discretion: A final approach is to leave distributions entirely up to the trustee. That’s the most flexible but also the most potentially fraught. If a trustee and a beneficiary don’t get along, this setup would give the trustee wide latitude to make the beneficiary’s life miserable for decades. No distribution structure is perfect, but it’s for this reason that I tend to recommend against this approach, common as it is. 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.

Will Your Death Double Your Spouse’s Tax Bill?

achnk53 | Jul 15, 2026

"Thanks for the reference. Very nice perspective by Sean. Don't lose the forest for the trees!"

- V Saraf

Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t

R Quinn | Jun 15, 2026

"It wouldn’t even have to be eliminated. Given data analytics today, it would be possible to track via tax returns spouses, young children, disabled children household income etc. SS tax could be modified to account for various life circumstances. There’s no need for one size fits all these days."

- Marilyn Lavin

Danger, Junk Mail

Sonja Haggert | Jul 16, 2026

"I hope you'll be as pleased with the shredder as I have been with mine: When I retired and thus no longer had free access to a shredder at work, one of the best purchases I made as soon as I moved to my CCRC was an Aurora compact micro-cut shredder. Convenient, small, easy to use, and no way could someone piece together the shreds. With simplicity and security being my priority in retirement, this is one less thing to worry about."

- 1PF

The Paradox of Wealth

Mark Crothers | Jul 15, 2026

"Mark, with time being our most valuable resource, it's unfortunate that most people don't put as much effort into managing it as they do their financial portfolio."

- Mark Crothers

A Letter 40 Years Later: What Mrs. Dolezal Remembered

Andrew Clements | Jul 1, 2026

"Jeff, thank you so much. I couldn’t agree more. Kindness has a remarkable ripple effect, often reaching far beyond the moment itself. Mrs. Dolezdal’s kindness touched my family all those years ago, and through her letter, it continues to touch others today. I think that’s a wonderful reminder of the difference even the smallest acts can make."

- Andrew Clements

IRMAA & late filing of tax returns

Danbo | Jul 15, 2026

"you are correct, Luigi."

- DAN SMITH

One Person’s Luxury, Another’s Necessity

Mark Crothers | Jul 21, 2026

Be the first to comment.

FIFA Financials

R Quinn | Jul 19, 2026

- George Counihan

Lessons on the Ground

ArticleDennis Friedman | Jul 18, 2026

A Can of Worms

Dan Smith | Jul 17, 2026

"David, I sure think that's true most of the time, still, I've seen some exceptions that just leave me scratching my head."

- DAN SMITH

Buying a car in retirement

Julie C | Jul 11, 2026

"I brought through USAA several times, but unfortunately they ended the program a few years ago."

- S Phillips

K-shaped Economy

ArticleAdam M. Grossman | Jul 18, 2026

Will Your Death Double Your Spouse’s Tax Bill?

achnk53 | Jul 15, 2026

"Thanks for the reference. Very nice perspective by Sean. Don't lose the forest for the trees!"

- V Saraf

Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t

R Quinn | Jun 15, 2026

- Marilyn Lavin

Danger, Junk Mail

Sonja Haggert | Jul 16, 2026

- 1PF

Manifesto

Jul 19, 2026

NO. 30: INVESTING is best when it is simplest. If we own costly, complicated products, we’re filling Wall Street’s coffers—at our own expense. Don’t understand an investment? Don’t buy it.

Truths

Jul 21, 2026

NO. 9: BIG SALARY increases, especially late in your career, can make it harder to retire. As your paycheck grows, you’ll likely raise your standard of living. That means you now need a larger nest egg to sustain that lifestyle in retirement. The problem: You were likely previously saving as though you were looking to replicate a more modest lifestyle.

humans

Jul 20, 2026

NO. 72: WE ENJOY working hard. We tell ourselves, “I just want time to relax,” and yet relaxation doesn’t satisfy us for long and we quickly grow restless. We should keep this in mind as we ponder retirement. Contrary to what we imagine, we get great pleasure from working, especially work we’re passionate about and that gives us a sense of purpose.

think

Jul 20, 2026

HYPERBOLIC discounting. Suppose we’re choosing between a smaller reward today and a larger reward at some future date. To get us to wait, the later reward typically has to be far bigger, perhaps giving us a 100% return for delaying just a few days or weeks. Such hyperbolic discounting highlights how we favor today and shortchange our future self.

Money Guide

Manifesto

Jul 19, 2026

Spotlight: Health

Husband will still be working at 65, delay taking Medicare?

Muhlyssa | Feb 9, 2025

In my analysis it will be less expensive for him to stay on employer sponsored coverage than going on Medicare. My understanding is that he could sign up for Part A but if he does he cannot contribute to his HSA.
Anyone have any insight on this, in general?

Prefer the Original

Richard Quinn | Oct 24, 2024

MEDICARE GETS A LOT of criticism these days. Some view it as socialized medicine. Others fret over the hospital trust fund, which covers Medicare Part A and is expected to run out of money by 2036.
Meanwhile, some policymakers want to cut back on traditional Medicare and promote privatization through Medicare Advantage plans, otherwise known as Part C. That reflects the philosophy that health care costs, access and quality will be improved if we obtain health care as we do other goods,

HSA Tips

Bogdan Sheremeta | Feb 28, 2026

HEALTH SAVINGS ACCOUNT (HSA) is the most efficient tax-advantaged investment account because it offers a triple tax advantage:

Contributions are tax-deductible
Earnings grow tax-free
Withdrawals are tax-free if used for medical expenses

One of the best uses of an HSA is to actually invest the balance.
For example, I keep $500 (the minimum required balance) in cash. The rest, I invest in low-cost index funds. This allows me to maximize compounding inside the HSA account.

The Oldest Daughter Dilemma

Cathleen Toomey | Dec 14, 2024

One of the most well known advocates for elder care, who worked for a prominent national health center, was talking with me about a year ago. When I asked him what his plan was for he and his wife, as they aged, he replied “ I have four daughters”.
This was pretty shocking to me, given that he worked in this industry, and specialized in helping adult children and their parents to talk about future health care planning.

Adult Autism

Dan Smith | Oct 30, 2024

The other day I listened to a discussion about undiagnosed adult autism on National Public Radio (NPR). Autism often went undiscovered in older generations, making life challenging for afflicted adults who knew there was something wrong, but no idea what it was or how to deal with it. There are millions living with this condition and likely someone in your life as well. There may have been one in mine.
A few years back my daughter told me that she thought it possible that her mom,

Senior Care Crisis – Are we prepared?

smr1082 | Mar 4, 2025

The signs of this looming crisis are everywhere. Expensive home care, long term care and end of life care are going to be the biggest challenges facing baby boomers.
There are over 69 million baby boomers, 21% of the US population, holding 50% of wealth. Unfortunately, most are unprepared to face this crisis. I find that in my retirement community, most have not investigated options to provide for such care and have shown little interest. They say they will handle it if and when they need it.

Outliving Your Money? Let’s Do the Math on Annuities

W.D. Housley | Aug 13, 2025

When you sit down with an annuity salesperson, they’ll probably start with a question that cuts straight to your fears: “What if you live to 100? Wouldn’t you rather have a guaranteed check every month?” It sounds comforting — but the truth is, most annuity checks are just your own money coming back to you, with a little interest, minus their cut. Let’s run some numbers. Imagine you’re 65 years old with $500,000 in retirement savings. You have two options: Buy an immediate fixed annuity with a 5.5% payout rate. That means you’ll get $27,500 a year for life, no matter how long you live. Invest in a self-managed portfolio of low-cost ETFs like VOO (S&P 500) or VYM (high-dividend stocks), withdraw 4% in the first year, and adjust withdrawals for inflation. Assume a 6% average annual return. We’ll run both options over 20 years. The First 5 Years Year Annuity Payment “Balance”* Portfolio Withdrawal Portfolio Balance 1 $27,500 $472,500 $20,000 $508,800 2 $27,500 $445,000 $20,600 $517,492 3 $27,500 $417,500 $21,218 $526,050 4 $27,500 $390,000 $21,855 $534,448 5 $27,500 $362,500 $22,510 $542,654 *Annuities don’t actually give you a running balance, but this shows how much of your original $500k is left if you think of the payments as coming from your own principal. Already you can see the difference — the annuity “balance” steadily drops, while the portfolio balance is growing, even though you’re taking withdrawals. By Year 20: Annuity: Still pays $27,500/year, but inflation has eaten away a big chunk of its buying power — that check now feels like only about $15,200 in today’s dollars. Portfolio: You’re taking out over $36,000/year (inflation-adjusted) and still have about $670,000 left in your account. While a self-managed portfolio often outperforms, annuities do have a place for certain people: No desire (or…

Does My Sister Need a Financial Advisor?

W.D. Housley | Nov 4, 2025

My sister called and asked if she should get a financial advisor. Her question made me pause, because I’ve wondered the same thing myself. How “right” do you have to be when you invest? How much better does an advisor need to be to make up for their fee? Is it more important to pick the right investments or to be tax-efficient? And if I’ve managed to stay the course through market storms, do I even need an advisor at all? So, I asked AI — and here’s what came back, along with what I learned as I compared its logic to real life. How Right Is Right Enough? AI: You don’t have to be perfect to succeed at investing — just disciplined. If you’ve stayed the course through market downturns and used broad-based index funds, you’ve already solved the hardest part. Markets reward patience more than cleverness. But be honest: when markets fell 20%, did you feel a strong urge to sell before things got worse? If you truly stayed the course, you may not need an advisor. But if you felt panic rising, that’s a sign you should probably find one before the next downturn. Me: My sister never looks at her investments, so she’s never tempted to sell. I look more often than I should, but I tend to buy on dips. Between the two of us, we’ve both stayed steady—one by ignoring the noise, the other by leaning into it. The point goes to self-directed investing for both of us. Sometimes doing nothing—or calmly doing the opposite of the crowd—is the best financial advice of all. The 1% Question AI: Most advisors charge around 1% of assets under management. Over 25 years, that fee can reduce your ending balance by about 20%. To earn that back,…

Sleeves or Buckets?

W.D. Housley | Feb 3, 2026

Like most investors, I learned early about the elegance of the 60/40 portfolio. Sixty percent stocks for growth. Forty percent bonds for stability. I studied why it worked. Stocks historically delivered long-term returns, bonds reduced volatility, and periodic rebalancing enforced discipline. 60/40 has proved itself as a durable framework. It wasn’t exciting, but it was resilient. I understood its importance. It shaped how I thought about diversification, risk, and balance—and it still does. For many investors, 60/40 remains a perfectly reasonable default, particularly for those saving steadily, reinvesting dividends, and not yet drawing on their portfolios. When 60/40 feels incomplete The issue wasn’t whether 60/40 worked. It clearly had. The issue was what happens when a portfolio shifts from accumulating wealth to supporting spending. When markets fall, the textbook advice is straightforward: rebalance. Sell bonds. Buy stocks. That’s sound in theory. It’s harder in practice when: Stocks and bonds fall together Interest rates are rising Withdrawals are funding real expenses At that point, the central question isn’t about expected returns. It’s more basic: Where does my spending money come from when markets misbehave? That question led me to buckets. Buckets: a spending framework The bucket approach organizes money by time. Short-term bucket: cash for near-term expenses Intermediate bucket: bonds for the next several years Long-term bucket: stocks for long-term growth Buckets made immediate sense. By separating spending from growth, they reduce the risk of selling stocks at the wrong time and provide emotional comfort during market declines. Buckets work—and they work well—especially for managing sequence-of-returns risk early in retirement. But over time, I noticed a limitation. Buckets answered when money would be spent. They didn’t fully explain why I owned each investment. That realization pushed me toward sleeves. Sleeves: a portfolio framework At first, sleeves sounded like semantics. Aren’t sleeves…

Time to Be Fearful

W.D. Housley | Mar 27, 2026

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. At first, I eased in. Then, one day, I didn’t. I committed a large chunk of my portfolio—far more than any reasonable person should—to this single idea. And then the drop accelerated. To keep things simple, let’s say I started with 100% of my investment. After the decline, I was staring at 50%. Just like that, half vanished—at least on paper. I remember thinking, “Oh crap.” (One of my favorite semi-offensive phrases.) Then I reached for a well-known investing rule: “The first rule is don’t lose money.” I told myself that if I didn’t sell, I hadn’t really lost anything. My account statement suggested otherwise. Still, I held on. Eventually, the tide turned. Energy prices recovered. My battered position began to heal—and then to grow. For some time now, I’ve been selling, little by little. I don’t know when the rise will end, so I trim in small amounts. But as prices climb and buyers seem eager, a new thought creeps in: “Oh crap… am I selling too soon? Too cheap?” That’s the strange thing. I’ve made a substantial profit, yet the fear hasn’t gone away. It’s just changed shape. When I was down 50%, I feared losing more. Now that I’m up, I fear missing out. Here’s what I’ve come to believe: unless you are absolutely certain—borderline hubristic—you will feel fear…

Our Special Relationship

W.D. Housley | Sep 18, 2025

A Family Correspondence. Letter from the Son… Dear Mom and Dad, When I stormed out of your house, I was furious. It just didn’t seem fair that you taxed me for my morning tea—especially when it wasn’t even that good. In hindsight, it was probably a blessing. I switched to coffee, which at least wakes me up before my workday rather than lulling me back to sleep. Of course, it didn’t help that a few years later you burned down my house. It was such a nice, pretty White House, too. Took me ages to rebuild. Did you hear we’ve rebuilt it and we’re adding a ballroom? You should come visit when it’s finished—though please leave the matches at home this time. Looking back, the events we endured together were not easy. We bled, we argued, we made mistakes—but we also stood shoulder to shoulder when it mattered most. Those sacrifices still ache in our bones, though they’ve done much for the rest of the neighborhood. Time has a way of softening grudges. At Thanksgiving dinner this year, we raised our glasses to our “special relationship.” We were grateful that we still speak the same language—mostly. I confess, I once worried you might be forced to swap Shakespeare, but thanks to our teamwork, Hamlet still soliloquizes in English. These days, I have my own house, my own family, and my own bills. You taught me well: I not only charge my kids rent, I’ve introduced them to the fine tradition of “taxation without representation.” They grumble, of course—but I remind them that’s how I was raised. And yes, I still visit. We bicker, we reminisce, and then we go back to saving the world together—because let’s face it, no one else will do it properly. Love, Your sometimes-rebellious but always…

THE REAL RETURN ON DELAYING SOCIAL SECURITY

W.D. Housley | Nov 12, 2025

EVERY FEW MONTHS, I come across yet another article claiming that delaying Social Security is like earning an 8% guaranteed return. It’s a comforting phrase—clean, simple, and easy to repeat. Unfortunately, it isn’t true. Yes, the Social Security Administration awards an 8% delayed retirement credit for each year you postpone benefits beyond full retirement age. But that 8% is simple interest, not compound. And no matter how attractive the credit looks on the surface, it ignores an uncomfortable fact: You’re giving up three full years of monthly checks to earn it. When we account for the actual cash flows—what we give up and what we get back—the real return looks very different. A REAL-WORLD EXAMPLE Take someone born in 1960 or later. Their full retirement age is 67. If they delay benefits to age 70, here’s what happens: They skip 36 monthly payments. They earn 24% more in monthly benefits for the rest of their life. Suppose the age-67 benefit is $1,000 a month. Delaying means turning down $36,000 over three years (36 × $1,000). At age 70, the monthly benefit jumps to $1,240—a $240 increase. So what’s the rate of return on the $36,000 “investment” needed to earn an extra $240 a month for life? This is where the math tells a much quieter story than the 8% billboard slogan. THE TRUE RATE OF RETURN Using a basic internal rate of return (IRR) calculation—treating the skipped payments as an upfront cost and the extra income as a lifetime annuity—the result comes out to: Approximately 5.3% to 5.5% per year, inflation-adjusted. That’s the conclusion reached by: The Social Security Administration (~5.3%) Mike Piper’s Open Social Security calculator (~5.25%) Research from Kitces, Wade Pfau, and Bogleheads contributors (5.0%–5.6%) My own spreadsheet calculation (5.48%) Why isn’t it 8%? Because: The 8% credit…

One Person’s Luxury, Another’s Necessity

FIFA Financials

Lessons on the Ground

A Can of Worms

Buying a car in retirement

K-shaped Economy

Will Your Death Double Your Spouse’s Tax Bill?

Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t

Danger, Junk Mail

The Paradox of Wealth

A Letter 40 Years Later: What Mrs. Dolezal Remembered

IRMAA & late filing of tax returns

One Person’s Luxury, Another’s Necessity

FIFA Financials

Lessons on the Ground

A Can of Worms

Buying a car in retirement

K-shaped Economy

Will Your Death Double Your Spouse’s Tax Bill?

Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t

Danger, Junk Mail

Free Newsletter

Get Educated

Manifesto

Truths

humans

think

Money Guide

Manifesto

Spotlight: Health

Husband will still be working at 65, delay taking Medicare?

Prefer the Original

HSA Tips

The Oldest Daughter Dilemma

Adult Autism

Senior Care Crisis – Are we prepared?

Spotlight: Housley

Outliving Your Money? Let’s Do the Math on Annuities

Does My Sister Need a Financial Advisor?

Sleeves or Buckets?

Time to Be Fearful

Our Special Relationship

THE REAL RETURN ON DELAYING SOCIAL SECURITY