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Inflation Hedge

ArticleAdam M. Grossman | Aug 29, 2026

THE OPEN KITCHEN restaurant has been a fixture in Charlotte, North Carolina for 75 years. The restaurant has an old-time feel, with memorabilia, including menus from years gone by, lining its walls. Those old menus provided David Enna, a financial journalist, with a laboratory for examining the effects of inflation. What did Enna find? The oldest menu on display is from 1963. To state the obvious, today’s prices make those from the 1960s look quaint. Back then, spaghetti and meatballs cost just $1.10. Today, it’s $15.50. But, as Enna points out, that was more than 60 years ago, so increases are to be expected. Over the past 60 years, the Consumer Price Index (CPI) has averaged 3.8% per year. That isn’t unreasonable, especially since that average includes the 1970s, when inflation sometimes topped 10%. What’s of more concern, though, is what consumers have experienced more recently. Since 2020, prices across the economy have risen 29%. And though those increases have slowed, the Fed is still struggling to ratchet inflation back to its preferred 2% level. This has given investors renewed interest in strategies to defend against inflation. At first glance, this doesn’t seem like it should be such a difficult problem. The U.S. Treasury offers an investment specifically designed for this purpose: Treasury Inflation-Protected Securities (TIPS). These are bonds that are guaranteed by the federal government to increase in value with inflation. And though I hesitate to use the words “bond” and “exciting” in the same sentence, today many investors are finding the return on TIPS compelling. The 30-year TIPS is now paying close to 3% on top of inflation. If inflation averages 2.5%, for example, over the next 30 years, this bond will end up returning a total of 5.5% per year, and with minimal risk. That sounds good in theory, but do these bonds make sense for your portfolio? It’s worth taking a closer look. The first thing to note is that this seemingly attractive 3% yield only applies to 30-year TIPS. Yields on shorter-term bonds are lower. So unless your investment horizon happens to be exactly 30 years, these bonds may be of limited practical value. Putting aside the yield question, though, a more fundamental challenge with individual TIPS—and individual bonds in general—is that they’re a cumbersome way to build a portfolio. Even if you didn’t mind the process of buying bonds one by one, which can be tedious, there’s the fact that it’s hard for most people to be able to forecast their cash flow needs each year into the future. That’s a problem because choosing maturity dates is the foundation on which bond portfolios are built. Ideally, if you can align the maturity dates of the bonds in your portfolio with your future cash needs, then you can hold bonds to maturity, which is when the issuer would promise to pay you back in full. But that redemption value is guaranteed only at maturity. Buy a 20-year bond and sell it after just 10 years, and there are no guarantees. A bondholder could easily lose money selling an individual bond before maturity. Given these challenges, would a TIPS fund be a better choice? To be sure, bond funds are much simpler to purchase and to manage, but they typically offer even less protection from losses than individual bonds. Most recently, shareholders in TIPS funds were disappointed by how they performed in 2022, when inflation spiked to 9%. Investors expected that to be the year when TIPS rewarded investors, but instead, diversified TIPS funds such as the Vanguard Inflation-Protected Securities Fund (ticker: VAIPX) lost nearly 12%. Why did funds like this fare so poorly when inflation was running so high? The problem is that, at the end of the day, TIPS are still bonds. And though they receive a bump in value when inflation rises, a countervailing force is that they lose value when interest rates rise. In 2022, the Federal Reserve raised interest rates aggressively to fight inflation. The negative impact from those rate increases far outweighed the benefit TIPS received from inflation being higher. That puts investors in a difficult position. If TIPS provide inflation protection in theory, but both individual TIPS and TIPS funds carry limitations, what other options are there? The good news is that not all TIPS funds are the same. Some hold only short-term bonds, and they have historically held up much better than more broadly diversified TIPS funds because short-term bonds are more resilient when interest rates rise. Over the past five years, a fund like Vanguard’s Short-Term Inflation-Protected Securities ETF (ticker: VTIP) has outperformed a comparable fund (ticker: VGSH) holding standard short-term Treasury bonds every year, as well as this year to-date. It’s important to note, though, that this is relative performance. In 2022, when the entire bond market was under pressure, even short-term TIPS funds like VTIP did still lose money. They just lost less than funds holding conventional bonds. The bottom line: We should never become too wedded to any one strategy. No investment can promise reliable and complete protection against inflation in every market scenario. That said, I do still recommend TIPS and would specifically recommend a short-term fund like VTIP. But I also suggest taking a diversified approach to inflation protection. Here are other steps to consider. If you’re in your 60s and considering when to claim Social Security, that decision offers a powerful lever. Because Social Security benefits increase with inflation and also increase with each year you delay claiming, it’s maybe the most effective way to build additional inflation protection into your plan. What else can you do? Fortunately, you may already own one of the most effective—and underappreciated—inflation-fighting instruments: stocks. While rising prices in recent years have been frustrating for consumers, the result has been that companies have been able to maintain their profit margins. That, in turn, has helped to support their stock prices through this period of inflation. To be sure, some companies have more of an ability to raise prices than others, but overall, stocks are, in my view, a good way to keep pace with inflation. The one thing I wouldn’t do is to buy gold. Despite its reputation, various studies have confirmed that gold really isn’t a reliable inflation hedge. In a paper titled “The Golden Dilemma,” researchers wrote: “Over practical investment horizons, gold is an unreliable inflation hedge,” though they acknowledge that it may be more reliable over longer timeframes—“if the investment horizon is measured in centuries.” 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.

Traditional or Roth

ArticleRichard Connor | Aug 29, 2026

THE CHOICE BETWEEN a traditional retirement account or a Roth is a frequent topic on HumbleDollar. The choice is generally framed as a choice between paying taxes up front (a Roth), or deferring taxes until withdrawal (traditional). I thought it would be interesting to evaluate a real-life example of how this choice might work out. In December of 2016 my wife and I had an opportunity to each open a Roth IRA. My wife took a partial sabbatical that year, and that, combined with maxing out our 401k accounts, gave us a chance to each open a $4,500 Roth IRA. The maximum allowable contribution that year was $6,500 for those 50 and over. Up until then we had assumed that our marginal tax bracket would likely be lower in retirement, and focused on contributing to our employer’s traditional 401k plans. Despite that, we decided to move forward with opening a Roth IRA. I thought it would give us some tax diversity, and the opportunity to do Roth conversions when, and if, it made sense in the future. In December of 2016 we opened Roth IRAs at Vanguard and invested the $4,500 in their S&P 500 Index Fund. Those initial funds have been invested for almost 10 years. Over that decade we have added some additional funds, and have done a few conversions. I recently did a quick analysis to see how my Roth experience would have compared to investing in a traditional IRA. In 2016, our marginal tax bracket was 28%. To contribute the $4,500 required $6,250 of pre-tax income. Due to some financial engineering over the last year, including selling our second home in late 2025, I expect our 2026 marginal tax bracket to stay within the 12% bracket. I’ve been looking at this closely because I’m considering doing a Roth conversion later this year. The table below shows the comparison between the Roth performance, and what a traditional IRA would have produced. The annual rate of return was determined using Nick Maggiulli’s S&P 500 Historical Return Calculator. Roth vs Traditional

The table shows that the Traditional IRA would have been the better choice, producing about $3,500 more in available funds, or about 22% more. This demonstrates that the primary driver in choosing between a Roth and a traditional qualified account is a consideration of the tax rates at the time of contribution and at the time of distribution. There have been a number of changes to the tax code in the last decade that have contributed to the result, but I certainly didn’t predict any of them. If you guess wrong, you pay the price in a higher tax bill. In the example above, the extra $1,750 invested in the traditional account produced an additional $6,143.31 in earnings. The lower tax rate at the distribution of the traditional IRA results in the $3,500 in extra funds. Even though the Roth IRA had tax free earnings growth, the initial larger tax rate overcame that advantage, when compared to the traditional IRA. Because of my pension and my wife’s social security benefit, 85% of her social security benefit is taxable income, so that is not a consideration in our tax calculation. I used Dinkytown’s 1040 Calculator to run a series of estimates of our 2026 tax return to assess if we want to execute a Roth Conversion this year. We are still 4 years from taking RMDs, and I will start my Social Security in a year when I turn 70. My current thinking is a conversion of about $40,000 will keep us in the 12% bracket. There would also be a small NJ state tax impact. My simple analysis reinforces what I’ve been taught. Roth contributions make the most sense when you think your current tax bracket is lower than when you expect to withdrawal the funds. There are secondary considerations, like no tax diversification, no RMDs, and uncertainty about future tax rates. If you intend to pass the funds to heirs, it might make sense to perform Roth conversions today at the 22% tax bracket if you intend to pass these accounts to heirs who may be in their peak earnings years. Not sure? I believe I recall several HumbleDollar contributors write something about splitting the difference? Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.

The Intentional Spendthrift

Mark Crothers | Aug 21, 2026

"A few years back, we visited the Greek island of Crete in July. We took a local bus (no air conditioning) to the Minoan ruins at Knossos, and it was so intensely hot walking around the site that people were passing out from heat exhaustion. With that in mind, I fully endorse your plan to visit Greece earlier in the summer."

- Mark Crothers

Americans and their credit cards

R Quinn | Aug 24, 2026

"David, did you check the source data for the AI’s figures? My first thought is that it's mixing up nominal and real wage increases. A 28.2% real growth figure already has inflation subtracted out. That means wages actually outpaced inflation by 28.2% over those four decades, rather than lagging behind it."

- Mark Crothers

How Did You Find Paid Work After Retiring from Your Primary Career?

Jeffrey Chan | Jul 31, 2026

"Good for you."

- Patrick Brennan

Bad Maths, Good Fire.

Mark Crothers | Aug 28, 2026

"Dunn, working on that felled tree I mentioned was really satisfying. Though I have to say, splitting the rounds with an axe is one hell of an upper body workout!"

- Mark Crothers

The Wrong-Sided Man

Dennis Friedman | May 8, 2025

"I too walk early in the morning and now I carry a small can of pepper spray. It might be a vicious dog, wrong-way man as you describe, or a wayward hobo looking for an easy roll."

- art winslow

This would be a great posting on a web site with the name “HaughtyDollar.”

R Quinn | Aug 28, 2026

"t"

- Mick

You Heel!

Michael Flack | Aug 24, 2026

"Counterpoint- I purchased a brand new pair of Bostonian oxfords, maroon in color for about $20, about 25 years ago. I liked them so much I bought a black pair, but they were only reduced to $35. The black ones were go to shoes for my work environment for a couple decades. I spent ~$150 combined to replace the leather soles and rubber heels multiple times. I wondered if it was a prudent decision to keep spending so much more than the original cost. Then I shopped for equal quality and comfort in new shoes, and I found they were around $250 and could not be re-soled due to the rubber soles. I therefore succeeded in exercising my frugal muscle and got the maximum value out of a relatively paltry investment. And I supported small local businesses, making a modest living for their family. I call that a win-win. I've trashed the black shoes as I felt they were no longer worth repairing, or needed for work. I'll be wearing the maroon ones (original heel/sole) later this year in my son's wedding."

- John Verlautz

A Place At The Table

Andrew Clements | Aug 26, 2026

"Thank you, William. I’m glad you enjoyed it. The Philippines has taught me quite a bit, and often it’s the small, everyday experiences that have left the biggest impression on me."

- Andrew Clements

Blood Money

Michael Flack | Mar 28, 2026

"I agree with you about KO but XOM is involved in climate deception since it knew about global warming risks 60 years ago and ranks as one of the top global greenhouse gas polluters."

- Nick Politakis

Feeling TIPSy?

ArticleSanjib Saha | Aug 22, 2026

NOT TOO LONG ago, Treasury Inflation Protected Security (TIPS) was a relatively obscure investment for safe long-term fixed-income investments. For the first twenty years of the new century, consumer prices were mostly stable or rising at a too-slow-to-notice rate. Why bother with anything related to inflation? Sadly, persistently low inflation made us complacent on the biggest long-term risk of bond investments -- the insidious unexpected inflation that robs us of the purchasing power of our “safe” investments. Yes, let’s not forget that the biggest risk of bond or bond-like investments is unexpected inflation. Any bond or CD with a maturity beyond a few years must either offer a sufficiently high interest rate to compensate for sudden bouts of inflation, or have its principal adjusted for the inflation actually realized. The former is nearly impossible to find without sacrificing safety. The latter is what TIPS is for. To be clear, the market and investors always expect some level of inflation. Therefore, a bond’s effective interest rate - measured by its YTM (Yield to Maturity) - must be high enough to not only compensate for “expected” inflation and the uncertainties around it but also provide a meaningful increase in the purchasing power of the original principal. A concrete example might help. Consider a 10-year US Treasury nominal bond with a face value of $1,000, selling at $1,000 and paying 5% annual interest. The interest rate reflects the expectations about inflation and other factors over the next 10 years. The rate would be lower if market expected lower inflation, and higher if market expected the opposite. The omnipresence of inflation means we’re likely to lose some purchasing power when we get our $1,000 in 10 years. It won’t buy what $1,000 buys today. By how much? That’s the thousand dollars question (pun intended). There isn’t a readily available number that explains why that 10-year Treasury Bond yields 5% instead of 3% or 7%. Investors essentially take a leap of faith that annual inflation stays low enough over the 10-year period for the interim interests to compensate for the purchasing power loss, plus some changes. Most of us are perfectly comfortable assuming that inflation won’t be as high as 5% for 10 years. But are we fooling ourselves? I suggest using an inflation calculator to see for ourselves. Spoiler alert: Late 1960s through early 1980s can be an eye-opening period. How’d we feel if the next 10 years turn out to be something similar? Think about how you might feel when you safekeep your money in a so-called secure investment, give up higher returns available from risky investments, and then encounter an inflationary regime. Your minimum expectation was that your purchasing power would remain intact and perhaps improve a little by the time your bond matures. Instead, unforeseen inflation erodes your purchasing power and compromises the financial goal the fund was supposed to cover. Your “safe” investment fails you completely. You realize that it wasn’t safe at all. If unexpected inflation is so devastating, why are we so lax about it? I can think of two reasons. First, our minds haven’t adapted to the reality that, unlike to a “real” asset like a bag of rice or a gallon of gasoline, money in its current form is inherently self-eroding. It slowly loses its worth over time. A hundred dollars sitting around will still be a hundred dollars next year, but it won’t buy the same amount. We don’t intuitively perceive the continuous loss of purchasing power. Even when we do internalize it with some effort, we get used to the “pace” of the loss. In other words, we view inflation as steady and unexpected inflation as highly unlikely. Alas, all it takes is a single prolonged inflationary period to change that perception. By then, however, the damage to existing fixed income investments may already be done. Frankly, I’d be very wary of keeping my long-term “safe” money -- fund that I need to preserve beyond a three-year horizon - in any form that isn’t protected against unexpected inflation. For bond investments, the most meaningful option would be TIPS. Why? Because, in addition to being secured by the full faith and credit of the US Government just like any other Treasury securities, TIPS provides three important assurances upfront. First, it provides protection against unexpected inflation, which is a realized inflation that differs from what we expected when purchasing it. If the actual inflation averages 12% instead of the expected 2%, the principal is automatically adjusted to reflect the actual inflation. No guesswork or unexpected risk involved. Second, it provides a “real interest rate” upfront that tells us how much the purchasing power of the investment will increase over time, regardless of what the actual inflation turns out to be. Buying a 10-year TIPS with real 2% annual interest means the investment’s purchasing power will grow 2% per year over the holding period, before considering taxes and other factors. The third aspect is more nuanced. It involves the possibility of inflation being lower than expected, or even negative inflation (aka deflation). Let me elaborate. If a regular nominal 10-year Treasury Bond offers 5% annual yield and an equivalent TIPS offers a real annual interest rate of 2.75%, the market-implied inflation, the breakeven inflation rate, is roughly 2.25% (5% minus 2.75%). Actual inflation, of course, will be known only after 10 years when the bond matures. Suppose the actual inflation turns out to be only 1.25%. The nominal Bond investor would end up with more purchasing power than the TIPS investor because the TIPS principle would be adjusted by only the actual 1.25% inflation rate. The primary objective of the TIPS investor would still have been met: preserving and improving purchasing power by about 2.75% annually. But there would be a “missed opportunity”. The nominal Treasury investor would end up with even greater purchasing power. Does it mean that a TIPS investor can face an unlimited opportunity cost if inflation turns out to be negative? What happens if the actual inflation is, hypothetically speaking, negative 5%, in a severely deflationary period? Does the TIPS investor get back proportionately reduced principal at maturity? Thanks to the third assurance of TIPS, the answer is NO. TIPS guarantees that the principal returned at maturity will never fall below the original face value. During periods of deflation, the inflation-adjusted principal can fall below its face value and the interim interest payments will decline accordingly. But at maturity, the principal is floored at the original principal amount. Therefore, the breakeven inflation rate, the difference between the yield of a nominal Treasury bond and the real yield of an equivalent TIPS, represents the maximum annual yield advantage that the nominal bond can have over TIPS in an unexpectedly low inflation regime. To summarize, a TIPS investor gets unlimited protection against unexpectedly high inflation, while accepting a limited opportunity cost should the actual inflation be low or even negative. The magnitude of that trade-off is reflected in the breakeven inflation rate at the time of the TIPS purchase. An aside: given the destructive impact of deflation on economy and society, policy makers are generally more concerned about preventing prolonged deflation than about preventing modest inflation. Therefore, prolonged deflation is usually considered less likely. Still, we cannot ignore deflation risk altogether and should be prepared for the possibility that TIPS can underperform a nominal bond if inflation runs low. Therefore, the decision to favor TIPS over an equivalent nominal Bond hinges in part on the current breakeven inflation rate. If it’s low enough, favoring TIPS can be an easy decision. Getting unlimited protection against unexpectedly high inflation is worth accepting the relatively small opportunity cost if inflation comes below the breakeven rate. There is, however, a cautionary note about buying TIPS bonds in the secondary market, especially older issues. Consider a 30-year TIPS bond issued 20 years ago and a 10-year TIPS issued within last 6 months. Both might appear to be valid choices if they mature within a few months of each other and offer similar yields. But beneath the surface, one may be more favorable than the other. The older TIPS will likely have a much higher inflation-adjusted principal because it accumulated 20 years of inflation adjustments. But the protection against unexpected deflation applies only to the bond’s original face value, which is typically $1,000. In a prolonged deflationary period, the older bond has much more room for its inflation-adjusted principal to decline before reaching the $1,000 floor. The newer issue, whose adjusted principal is much closer to the $1,000 face value, has less exposure to this risk. Therefore, all else being equal, I’d favor a TIPS with a low inflation-adjusted factor when buying in the secondary market. All things considered, my vote goes to TIPS for long-term “safe” investments, provided the break-even inflation is reasonably low. For secondary market purchases, however, a high inflation-adjustment factor would give me pause. Sanjib Saha retired early from software engineering to dedicate more time to family and friends, pursue personal development and assist others as a money wellness mentor. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is the president and cofounder of Dollar Mentor, a 501(c)(3) nonprofit organization offering free investment and financial education. Follow his nonprofit on LinkedIn, and check out Sanjib’s earlier articles.

Inflation Hedge

ArticleAdam M. Grossman | Aug 29, 2026

Traditional or Roth

ArticleRichard Connor | Aug 29, 2026

The Intentional Spendthrift

Mark Crothers | Aug 21, 2026

- Mark Crothers

Americans and their credit cards

R Quinn | Aug 24, 2026

- Mark Crothers

How Did You Find Paid Work After Retiring from Your Primary Career?

Jeffrey Chan | Jul 31, 2026

"Good for you."

- Patrick Brennan

Bad Maths, Good Fire.

Mark Crothers | Aug 28, 2026

"Dunn, working on that felled tree I mentioned was really satisfying. Though I have to say, splitting the rounds with an axe is one hell of an upper body workout!"

- Mark Crothers

The Wrong-Sided Man

Dennis Friedman | May 8, 2025

"I too walk early in the morning and now I carry a small can of pepper spray. It might be a vicious dog, wrong-way man as you describe, or a wayward hobo looking for an easy roll."

- art winslow

This would be a great posting on a web site with the name “HaughtyDollar.”

R Quinn | Aug 28, 2026

"t"

- Mick

You Heel!

Michael Flack | Aug 24, 2026

- John Verlautz

Manifesto

Aug 30, 2026

NO. 24: OUR ONLY earthly immortality will be the memories of others. We should make sure those memories are good—by spending our wealth on special times with friends and family.

Truths

Aug 30, 2026

NO. 86: CARRYING a mortgage into retirement can cost a heap of taxes. To cover the monthly payment, you might sell winning investments in your taxable account or tap retirement accounts, thus boosting your taxable income. That, in turn, could trigger higher Medicare premiums and taxes on your Social Security benefit. Result: You suffer a double tax hit.

act

Aug 29, 2026

HIRE OTHERS TO do chores you dislike. For each of us, time—not money—is the ultimate limited resource. Research has found that those who use their money to buy time—by, say, hiring others to clean or do yardwork for them—report greater happiness. Why? These folks feel less time stressed, while also freeing up extra hours for activities they love.

Truths

Aug 28, 2026

NO. 97: IT’S HARD to say “no” to our adult children if they get into financial trouble—which is why we should try to raise money-savvy kids. But how? Set a good example. Talk regularly about your own finances. Tell your kids about your lean early adult years. Involve them in family financial decisions. Encourage them to save up for larger purchases.

Money Guide

Manifesto

Aug 30, 2026

NO. 24: OUR ONLY earthly immortality will be the memories of others. We should make sure those memories are good—by spending our wealth on special times with friends and family.

Spotlight: Happiness

Your Answers May Vary

Adam M. Grossman | Aug 13, 2023

IN THE WORLD OF personal finance, there’s no shortage of formulas and frameworks for making financial decisions. But it’s also important, I think, to see these as guidelines rather than as rules. Consider the textbook view of money and happiness.
What the research says is that, all else being equal, we should opt to spend money on experiences rather than things. Let’s say the choice is between spending $1,000 on a new watch or on a weekend away.

Free to Be

Jonathan Clements | May 6, 2023

HOW WOULD YOU DEFINE financial freedom? That’s the intriguing question I’ve been asked twice in recent weeks by journalists curious about the new HumbleDollar book, My Money Journey: How 30 People Found Financial Freedom—And You Can Too.
Financial freedom is something that pretty much everybody wants, and yet there’s no agreed-upon definition. Still, I think most folks would focus on two key elements: time and money. But I don’t think it’s a simple matter of having lots of dollars and lots of free time.

No Satisfaction

Jonathan Clements | Mar 25, 2023

MONEY BUYS HAPPINESS—but it may not buy us very much. Indeed, no matter how much we earn and no matter what other steps we take to boost happiness, we may discover the impact is modest and fleeting.
That brings me to a recent academic debate. In 2010, Princeton University’s Angus Deaton and Daniel Kahneman noted that happiness, on average, didn’t appear to increase beyond an annual income of $75,000 or so—a finding that’s since been widely reported in the mainstream media.

Priceless to Me

Kristine Hayes | Mar 6, 2023

AT AGE 55, I’M PERHAPS a bit young to spend time reflecting on my life. My maternal grandmother died at 101, so I could have many more decades to go. Nevertheless, I find myself more nostalgic now than I was just a few years ago.
I often think back to my childhood and how it shaped who I am today. In 1976, when I was in fourth grade, my parents purchased a two-and-a-half-acre property in a small town outside of Eugene,

Luck Would Have It

Richard Quinn | May 23, 2024

I’VE BEEN WRITING FOR and reading HumbleDollar for more than six years.

I’m struck by the number of articles and comments that talk about things like divorce, job loss, health issues, adverse financial events and caring for elderly parents.

When articles discuss such experiences, the pieces are typically well read, with numerous comments, including many expressing empathy. The amount of personal information shared is amazing. No doubt readers can relate to many of these events.

How Important Is Money?

Jonathan Clements | Jul 17, 2025

I like earning money. I like having it. I like giving it away. Still, it’s worth asking: How important is money?
Yes, money can pay for the necessities we all need—food, shelter, transport—and more of it has the potential to buy us a better life. The necessities are obviously (ahem) necessary. But what about the frills that more money can buy us?
That discretionary spending has the potential to bring big smiles. Still, it’s hard to imagine that these frills would do much to offset,

Look Before Leaping

James Kerr | Apr 27, 2022

WELL, I’M SIX MONTHS into my retirement from the corporate world. How are things going? Any regrets? Any big surprises? No regrets, for sure. I knew that leaving the workplace at age 61 would be a tradeoff of freedom gained versus money forgone. But I had a second-act dream to pursue—becoming an author—and, for me, that tradeoff was worth going for. So far, it has been. I have my first book out and another in the works. While I’m not making much money, having the freedom to pursue my passions without having to ask permission from anyone is, to quote a notable credit card commercial, priceless. But there definitely have been some rough moments along the way. If you’re thinking about retirement, here are six considerations to keep in mind before you jump: 1. You have to create an entirely new identity for yourself. For 30 or 40 years, you had an identity conferred on you by an organization and by the working world in general. You could see that identity on your email signature, your business card, your LinkedIn profile. That identity came with fancy titles that brought certain privileges and power. All of that’s gone now. It was all part of a game and the game is over. Outside the organization, you’re just a person, like anybody else. Who am I now that I’m no longer vice president of global public relations for a Fortune 250 company? I’m just a writer, an unknown one. I’m starting over. Even for someone like me who never put much truck in titles, the void is startling and I’m still getting used to it. What I’m finding is that we’re never really as important as we think we are when we’re working, and that we’re more important in other ways than we ever realized. Those…

The Road Not Taken

James Kerr | Oct 9, 2023

LAST MONTH MARKED two years since I leapt into the unknown and left the security of the corporate world to begin a second act as an independent writer. How’s it gone? Have things panned out as I hoped, financially and otherwise? Let’s be clear upfront that this move was never about making money. It was about taking a shot at my long-held dream of being an author. I’d put that dream on the back burner for three decades as I did what was necessary to support my family. Now, with my kids out of college and some savings in my pocket, I wanted to take a chance on myself before I ran out of time. I didn’t want to get to the end of my life and find I’d never taken a shot at living life on my own terms. Two years later, I’ve achieved things that money can’t buy: Seeing my first book in print and my blog gain a dedicated following Going to book signings and readings, and interacting with readers and followers Spending my days pursuing my passions rather than managing emails and responding to the latest corporate fire drill Having the chance to travel and spend precious time with my kids, including camping for an entire month under the big skies of Colorado, where my middle son lives. It’s safe to say I wouldn’t have been able to do any of these things if I was still running 12 hours a day on the corporate hamster wheel. But I’d be fooling myself if I said that all these things didn’t come at a price. I haven’t made a penny on my book, which is still earning back its upfront costs for the publisher, or on my blog, which is ad- and subscription-free. My current writing project is a multigenerational novel…

Challenging Myself

James Kerr | Nov 17, 2021

I JUST TURNED 62. That’s the milestone age when so much of the magic—and the decision-making—of retirement begins to happen. For the record, although I recently left the workforce early to pursue a long-simmering passion for writing, I won’t be starting Social Security payments early. Nor—unless something changes health-wise—do I intend to begin distributions from my IRAs any time soon. Before I go down those two routes, I plan to live off my taxable-account savings and minimal dividend income for as long as I can. In the meantime, I’m busy pulling together my “challenge list” of things I want to experience and achieve in the years ahead. Note that I call this a challenge list, not a bucket list—a term I find horrid. Do we really want to be counting down a list of to-do items before we kick the bucket? Not me. I want to be stretched in the years ahead. I want to be learning new skills and plumbing unexplored parts of myself, as well as the world. I want to be doing things that demonstrate to me, and maybe to society as well, that age is but a number. People shouldn’t limit what they try just because of the year they were born. After all, we stretched ourselves in our working careers. Why should we stop now that we’re no longer clocking in? Research has consistently shown that seniors who engage in stimulating activities—ones that challenge their bodies and their brains—tend to stay sharp and vital longer. William Shatner just flew into space at age 90. My mother keeps herself mentally sharp at 89 by reading the paper every day and doing 1,000-piece jigsaw puzzles. My own challenge list is a mix of experiences, activities and goals that will push me in new directions, physically and mentally. I’ve already started to…

Puppy Love

James Kerr | Oct 18, 2022

SIX YEARS AGO, I made one of the worst investments of my life. I got a dog. Ignoring the age-old advice to never invest in anything that eats, I signed up for a purebred German shorthair pointer puppy. I thereby locked myself into an indefinite stream of future cash outflows in the form of dog food, treats, supplies, annual checkups, vaccinations, flea and tick treatments, heartworm pills, procedures and other expenses required for keeping man’s best friend healthy and happy. What can I say? We all have our moments of irrational exuberance. For the record, I’m also a holder of AT&T, a stock that I bought for its attractive dividend yield but which, alas, has proven to be a classic value trap. As for the dog, well, I spend a fair bit of time on my own and, as I got older, I wanted a companion that would match my active lifestyle. A neighbor was planning to breed her beautiful, sable-coated dog. I’d never had a pointer before and thought I’d try one. My life, and my pocketbook, have never been the same. Now, let me just say that I love my Cassie dearly and I wouldn’t give her up for the world. She’s sweet, smart, funny and loyal. She and I are stuck together like white on rice, and our bond only grows with each passing day. That doesn’t hide the fact that this dog is expensive, not to mention exhausting. Just feeding her costs me about $20 a week—all that energy of hers burns calories, after all. I knew going into the transaction that pointers were high-strung. But like that AT&T stock, you don’t really know what you’re getting into until you have it in your hand. I don’t think I’ve sat down for more than an hour…

An Arm and a Hip

James Kerr | Aug 25, 2022

I'M THE PROUD OWNER of a shiny new, state-of-the-art left hip. My new hip is made of super-strong titanium and cobalt chrome with a ceramic femoral ball. The doctors tell me that with proper care—alas, no more running—it should last me a good 25 years. The prosthetic was implanted in early June and already this modern medical miracle is changing my life for the better. It’s less than two months since the surgery and all the old arthritic pain that I’ve lived with for so long is gone. I have a range of motion I haven’t had for years. I can bend, I can kneel, I can walk the dog without limping or hurting, I can sit in a lotus position while meditating. Other than some stiffness when I get up from sleeping or sitting, most of the time I forget the new hip is even in there. Amazing, just amazing. Now, all I need to do is pay for it. Including the prosthetic, surgeon’s fees, hospital services, anesthesia, imaging and various other incidentals, the whole elective surgery cost upward of $50,000, according to the explanation of benefits statements I’ve received in the mail. It’s an astronomical amount of money, and all I can say is: thank heaven for medical insurance. When I made an early exit from the corporate world late last year to pursue a second act as an author, I stayed on my former employer’s insurance plan by opting for COBRA coverage. The premiums aren’t cheap. I pay about $650 a month, but it’s a good plan. Between deductibles and out-of-pocket costs, my total financial responsibility for the hip replacement is about $5,000. It’s not easy for anyone, let alone an early retiree living on savings, to come up with $5,000 for elective surgery. Fortunately, I have other tools…

Riding Out the Storm

James Kerr | Dec 14, 2022

THEY SAY TIMING IS everything. That’s something I should know—because I’ve never been very good at it. The motto of Scotland’s Kerr clan is Sero Sed Serio, or Late, but in Earnest. That’s been my reputation since I was young. In high school, my basketball game blossomed at the end of my senior year, just in time to have one good game of double-digit scoring before I graduated. I’ve missed every fashion trend that’s come along. Anybody want an unworn pair of bell-bottom jeans? I didn’t publish my first book until I was age 62. And as for investing? Well, let’s just say I didn’t buy shares of Apple or Amazon before they took off for the moon. So, when it came to saving for retirement during my working career, I automated the process as much as possible. In addition to making monthly pretax payroll contributions to my 401(k) to take advantage of the company match, I had additional money pulled out of my bank account every month and invested in mutual funds held in a taxable account. Over time, the power of dollar-cost averaging made up for my own lack of investing prowess and enabled me to build a decent-sized nest egg. Alas, my miserable sense of timing came back to bite me when picking the date of my "retirement" from the corporate world. I opted for September 2021. Back then, all was blue skies in the financial markets. My portfolio was appropriately diversified for someone of my age, or so said my account advisor at Vanguard Group. As long as I didn’t change my spending levels or long-term income expectations, he was confident I could leave the workforce at 61 and be fine for the next few years, until I started taking Social Security and Medicare. Then came 2022, soaring inflation…

Inflation Hedge

Traditional or Roth

The Intentional Spendthrift

Americans and their credit cards

How Did You Find Paid Work After Retiring from Your Primary Career?

Bad Maths, Good Fire.

The Wrong-Sided Man

This would be a great posting on a web site with the name “HaughtyDollar.”

You Heel!

A Place At The Table

Blood Money

Feeling TIPSy?

Inflation Hedge

Traditional or Roth

The Intentional Spendthrift

Americans and their credit cards

How Did You Find Paid Work After Retiring from Your Primary Career?

Bad Maths, Good Fire.

The Wrong-Sided Man

This would be a great posting on a web site with the name “HaughtyDollar.”

You Heel!

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Puppy Love

An Arm and a Hip

Riding Out the Storm