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Financial Choices

ArticleAdam M. Grossman  |  Sep 12, 2026

FOR MUCH OF THE seventeenth and eighteenth centuries, European monarchs used a financial instrument known as a tontine to help finance their governments.  Tontines were first developed in the 1650s by an Italian government worker named Lorenzo Tonti and were similar to annuities: In exchange for a single, lump-sum purchase, tontines offered guaranteed payments for life. But tontines also offered some unique features. Unlike an annuity, where payments end with the death of the owner, tontine holders had the option of tying the payments to another person. A parent, for example, could name their son or daughter on a tontine, thus extending the payments over a much longer period. In the 1750s, however, a Swiss banker named Jacob Beaumont had a realization: While the owners of tontines typically named their children, a quirk in the rules permitted a tontine owner to name any individual. To Beaumont, this presented an opportunity: Why not name the youngest possible person, thus extending the stream of payments even further?  In his home town of Geneva, Beaumont identified ideal candidates for this role: young children who came from well-heeled backgrounds and were thus likely to have access to good healthcare. He then began loading up on tontines tied to the very long life expectancies of these children. The strategy worked exactly as expected and delivered Beaumont enormous profits. Other investors then piled in, mimicking Beaumont’s strategy, which, for a time, offered a virtually no-lose opportunity for profit. This went on until the French government, in frustration, discontinued its tontine program. When it comes to financial decisions, it’s the rare situation that’s as obvious as the one that Beaumont identified. Instead, most financial decisions entail some amount of uncertainty and are subject to judgment. Some choices, though, are closer than others to being obvious decisions. Here are six that I see frequently. 
  1. Certain Social Security claiming decisions are without question. For example, if you’re married and plan to claim the spousal benefit, it’s important to know that this benefit hits a maximum at full retirement age (FRA), which is now age 67 for most people. Unlike workers’ own benefits, which can continue to increase all the way to age 70, spousal benefits are subject to a different rule, so there’s no benefit for anyone to wait beyond FRA.
  2. You may be familiar with umbrella insurance. This provides additional liability coverage on top of auto and homeowner’s (or renter’s) insurance. Because it covers low-likelihood situations, such as someone slipping and falling on your front walk, umbrella coverage is extremely cost effective—sometimes as low as a few hundred dollars per year. I see it as an obvious benefit because the situations it covers, however unlikely, are also the ones that could be the most expensive. And because it would be the insurance company that would face exposure, insurers provide legal defense, at their expense, if there is ever a claim. How much coverage should you have? I generally recommend between $1 million and $5 million, but the key point is that almost any coverage is better than none. 
  3. In choosing an asset allocation for your portfolio, I think it’s best to avoid rules of thumb, because everyone is different. At the same time, a recommendation that I see as universal is to avoid extremes. I wouldn’t get too close to 100% bonds because of the corrosive impact of inflation. And I don’t like getting too close to 100% stocks because of the volatility and risk of loss. That’s always been my view, but recent research can help investors narrow the range further. William Bengen, creator of the “4% rule,” published a book last year in which, for the first time, he looked at the question of portfolio longevity through the lens of asset allocation. What he found was that portfolios with stock allocations between 45% and 75% offered the highest sustainable withdrawal rates over multiple decades.
  1. If you’ve recently retired, you may be considering a Roth conversion, whereby you’d move dollars from your pre-tax IRA to a Roth IRA. This is a popular strategy, but the catch is that a tax must be paid when a conversion is completed, and your tax bracket can increase as you convert more. Convert too much, and you can negate the benefit of a conversion. For that reason, it isn’t always obvious whether a conversion is advisable. There is one situation, though, where a conversion offers an almost obvious benefit: If your income, even with a conversion, would be in one of the two lowest tax brackets (10% or 12%), then it’s unlikely you’d ever find yourself in a lower bracket than that in the future. In that case, especially because of special deductions provided by the new tax rules, I’d view it as an almost obvious choice to proceed with a conversion up to the top of the 12% bracket.
  1. Looking to make charitable gifts? Because the standard deduction is now so high, fewer taxpayers are able to itemize deductions, and that can limit the tax benefit of donations. But there’s still a way to gain a tax benefit: If you have appreciated stocks in a taxable account, you can donate them to a donor-advised fund. That would allow you to sidestep the capital gains tax that would otherwise be due if you sold those stocks. Many donor-advised funds have no minimums, making this an easy choice, in my view.
  2. If you believe your estate will top the estate tax threshold (about $15 million per person at the federal level, but much lower in certain states), then I would be sure to use the annual exclusion (currently $19,000 per donor and per recipient) to make incremental gifts to your heirs. That's because this annual exclusion is in addition to the lifetime exclusion and doesn’t carry over from year to year.
Note that these gifts don't have to be made in cash if the recipients aren't yet in a position to receive them. As alternatives, you could make contributions to a 529 account or to a trust for their benefit, and these contributions would count toward the annual exclusion. 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 »

Growing Up In A Big House

DAN SMITH  |  Sep 9, 2026

"I think Morgan Housel is correct; going back into the 50s would almost feel like living off the grid to me."
- DAN SMITH
Read more »

Widow’s IRA Choice

ArticleJohn Urban  |  Sep 12, 2026

WHEN A HUSBAND dies, his widow inherits his IRA. Somewhere in the paperwork of the months that follow there is a decision to make, and nobody presents it to her as one. She can take the account as her own, or she can leave it titled as inherited. Taking it as her own means filling something in. Leaving it means doing nothing, and the IRS tells custodians they may assume that is what she wants. So the account sits where it is, at the same firm, holding money the household always treated as joint, and the decision gets made by nobody. It is the more expensive of the two. Not by a little. Two Tables Every year, a required minimum distribution, or RMD, has to come out of the account. The amount is the balance divided by a number from an IRS table, and there are two tables in play here. Beneficiaries use the Single Life Expectancy table. Owners use the Uniform Lifetime table, which spreads the money over a longer period and therefore asks for less each year. That is the whole mechanism, and it is worth about a third of the annual bill. Take a widow of 76 with $480,000. Left titled as an inherited account, she must take $34,043 that year. Had she taken the same account into her own name, she would have to take $20,253. Same money, same woman, same birthday. The difference is which box got ticked in the months after the funeral. It Does Not Happen Once That gap is not a one-year event. Run both versions forward 10 years, same account, same growth, taking exactly what is required and nothing more. The inherited schedule forces out $374,306 over the decade. As owner, $246,281. She pays about $30,600 more in federal income tax getting there, and reaches 85 with roughly $171,000 less still inside the IRA. She has not lost that money. She has been made to take it out early, pay tax on it sooner, and hold it somewhere less sheltered for the rest of her life. That is a slower kind of damage than a penalty, and a larger one, because it renews every January for as long as she lives. A Floor, Not a Ceiling The usual objection to taking the account as your own is that it locks the money up. It does the opposite. A required distribution is a floor, not a ceiling. She can take more in any year she wants it, for any reason, and nobody asks why. What she leaves alone stays sheltered and keeps compounding. The lower figure buys her the choice. The higher one makes it for her, every year, whether the money is needed or not. One Case Runs the Other Way There is a real exception, and it matters enough to state plainly. Money paid out of an inherited IRA escapes the 10% early-withdrawal penalty at any age, because the IRS exempts what is paid to a beneficiary on account of the owner's death. Take the account as your own and you are back under the ordinary rules. So a survivor who is young enough that an early withdrawal would be penalized, and who expects to need the money, has a genuine reason to leave the account exactly where it is. That threshold is 59 and a half. For most couples already retired this will not apply, and the rest of the article governs. Where it does apply, it outranks everything above. Nobody Will Prompt You I wrote recently about the letter that never comes. A custodian has to tell an IRA owner what must be withdrawn each year, and owes an inherited account nothing at all. So the choice decides more than the size of the bill. Take the account as your own and the letter starts arriving, every January, for the rest of your life. Leave it as inherited and you are on your own to remember the RMD. The branch that requires no paperwork is therefore both the more expensive one and the quiet one, and those two facts feed each other. The option that costs more is also the one that removes the annual nudge that might have made you reconsider it. Decide It Before You Have To None of this is hard to work out. It is hard to work out in the eight weeks after a funeral, which is exactly when it gets decided, usually by default. If you are married and you both hold IRAs, settle it now, while it is hypothetical for both of you. Talk through which of you would be likely to need the money soon after the other died. That is what the 59-and-a-half question really asks, and it is a conversation about your circumstances rather than about tax tables. Then decide which way the survivor should go, write it down, and put it with your trust, your will and the beneficiary designations, where a survivor or an executor will actually come across it. Tell whoever else needs to know that it exists. Look at it again as either of you nears the age your own distributions must begin. That is 70 and a half if you were born before July 1949, 72 if you were born between then and the end of 1950, 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later. It is the birthday that makes the whole question live. The paperwork will not choose for you. It will simply do nothing, which is a choice, and on these numbers it is the wrong one for most people who make it by accident. ________________________________________________________________________________ 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 »

Being terminated…

gnussen623  |  Sep 12, 2026

"The only advice I will is to try and NOT take it personally. My field was information technology and it happened often to me. Companies were poorly managed and went belly up. I was out of a job. Companies got sold and the buyer thought our IT department was redundant. I was out of a job. Companies decided to “change direction” and didn’t need so many IT workers. I was out of a job. Stay positive! Don’t burn your bridges to old coworkers. One of them might go somewhere that needs your skillset. Good luck! And thanks for sharing this difficult episode in your life."
- Winston Smith
Read more »

A Wedding Too Far

Mark Crothers  |  Sep 7, 2026

"Ah, the dreaded 'Wedding Industrial Complex'."
- Michael Roth
Read more »

I will still take the dividends

R Quinn  |  Sep 12, 2026

"Some folks feel better getting dividends. I do not in my taxable account because it forces me to pay taxes rather than me deciding to sell for a capital gain at the time of my choosing."
- Randy Dobkin
Read more »

On Being a “Healthy” Person

DrLefty  |  Sep 8, 2026

"I assume you refer to APOE4 as the marker for Alzheimer's. There are actual blood markers for it such as beta amyloid 42 & 40, p-tau217, neurofilament light chain (NFL), and glial fibrillary acid protein (GFAP). Well worth the cost with insurance."
- Randy Dobkin
Read more »

What’s your Domicile?

William Perry  |  Sep 1, 2026

"Correct"
- John Goodell
Read more »

Free Breakfast

D.J.  |  Sep 9, 2026

"With a family, free breakfast is a massive bonus unless we are abroad, then you give up the learned experience for the kids of trying a local bakery etc. Like everything in life - tradeoffs"
- John Goodell
Read more »

Jonathan’s Parting Thoughts: No. 7

Jonathan Clements  |  Sep 4, 2026

"God Bless Jonathan and his wonderful Family. For sure Jonathan helped so many people. Thank you."
- William Dorner
Read more »

The $5,000 Thought Experiment

Mark Crothers  |  Sep 10, 2026

"I plan to fill out deposit slips for my $5000 DOGE check, my $2000 tariff refund check, and my $5000 inflation stimulus check. Winner, winner, chicken dinner."
- luigi767
Read more »

Americans are rushing to collect Social Security. The reason is disturbing

R Quinn  |  Sep 12, 2026

"I plan on using the years after retirement to do Roth conversions. Once that's done we may claim my wife's SS at age 67 and mine at 70, or just wait until we both hit 70. We'll see what makes sense as we get closer."
- David Mulligan
Read more »

Financial Choices

ArticleAdam M. Grossman  |  Sep 12, 2026

FOR MUCH OF THE seventeenth and eighteenth centuries, European monarchs used a financial instrument known as a tontine to help finance their governments.  Tontines were first developed in the 1650s by an Italian government worker named Lorenzo Tonti and were similar to annuities: In exchange for a single, lump-sum purchase, tontines offered guaranteed payments for life. But tontines also offered some unique features. Unlike an annuity, where payments end with the death of the owner, tontine holders had the option of tying the payments to another person. A parent, for example, could name their son or daughter on a tontine, thus extending the payments over a much longer period. In the 1750s, however, a Swiss banker named Jacob Beaumont had a realization: While the owners of tontines typically named their children, a quirk in the rules permitted a tontine owner to name any individual. To Beaumont, this presented an opportunity: Why not name the youngest possible person, thus extending the stream of payments even further?  In his home town of Geneva, Beaumont identified ideal candidates for this role: young children who came from well-heeled backgrounds and were thus likely to have access to good healthcare. He then began loading up on tontines tied to the very long life expectancies of these children. The strategy worked exactly as expected and delivered Beaumont enormous profits. Other investors then piled in, mimicking Beaumont’s strategy, which, for a time, offered a virtually no-lose opportunity for profit. This went on until the French government, in frustration, discontinued its tontine program. When it comes to financial decisions, it’s the rare situation that’s as obvious as the one that Beaumont identified. Instead, most financial decisions entail some amount of uncertainty and are subject to judgment. Some choices, though, are closer than others to being obvious decisions. Here are six that I see frequently. 
  1. Certain Social Security claiming decisions are without question. For example, if you’re married and plan to claim the spousal benefit, it’s important to know that this benefit hits a maximum at full retirement age (FRA), which is now age 67 for most people. Unlike workers’ own benefits, which can continue to increase all the way to age 70, spousal benefits are subject to a different rule, so there’s no benefit for anyone to wait beyond FRA.
  2. You may be familiar with umbrella insurance. This provides additional liability coverage on top of auto and homeowner’s (or renter’s) insurance. Because it covers low-likelihood situations, such as someone slipping and falling on your front walk, umbrella coverage is extremely cost effective—sometimes as low as a few hundred dollars per year. I see it as an obvious benefit because the situations it covers, however unlikely, are also the ones that could be the most expensive. And because it would be the insurance company that would face exposure, insurers provide legal defense, at their expense, if there is ever a claim. How much coverage should you have? I generally recommend between $1 million and $5 million, but the key point is that almost any coverage is better than none. 
  3. In choosing an asset allocation for your portfolio, I think it’s best to avoid rules of thumb, because everyone is different. At the same time, a recommendation that I see as universal is to avoid extremes. I wouldn’t get too close to 100% bonds because of the corrosive impact of inflation. And I don’t like getting too close to 100% stocks because of the volatility and risk of loss. That’s always been my view, but recent research can help investors narrow the range further. William Bengen, creator of the “4% rule,” published a book last year in which, for the first time, he looked at the question of portfolio longevity through the lens of asset allocation. What he found was that portfolios with stock allocations between 45% and 75% offered the highest sustainable withdrawal rates over multiple decades.
  1. If you’ve recently retired, you may be considering a Roth conversion, whereby you’d move dollars from your pre-tax IRA to a Roth IRA. This is a popular strategy, but the catch is that a tax must be paid when a conversion is completed, and your tax bracket can increase as you convert more. Convert too much, and you can negate the benefit of a conversion. For that reason, it isn’t always obvious whether a conversion is advisable. There is one situation, though, where a conversion offers an almost obvious benefit: If your income, even with a conversion, would be in one of the two lowest tax brackets (10% or 12%), then it’s unlikely you’d ever find yourself in a lower bracket than that in the future. In that case, especially because of special deductions provided by the new tax rules, I’d view it as an almost obvious choice to proceed with a conversion up to the top of the 12% bracket.
  1. Looking to make charitable gifts? Because the standard deduction is now so high, fewer taxpayers are able to itemize deductions, and that can limit the tax benefit of donations. But there’s still a way to gain a tax benefit: If you have appreciated stocks in a taxable account, you can donate them to a donor-advised fund. That would allow you to sidestep the capital gains tax that would otherwise be due if you sold those stocks. Many donor-advised funds have no minimums, making this an easy choice, in my view.
  2. If you believe your estate will top the estate tax threshold (about $15 million per person at the federal level, but much lower in certain states), then I would be sure to use the annual exclusion (currently $19,000 per donor and per recipient) to make incremental gifts to your heirs. That's because this annual exclusion is in addition to the lifetime exclusion and doesn’t carry over from year to year.
Note that these gifts don't have to be made in cash if the recipients aren't yet in a position to receive them. As alternatives, you could make contributions to a 529 account or to a trust for their benefit, and these contributions would count toward the annual exclusion. 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 »

Growing Up In A Big House

DAN SMITH  |  Sep 9, 2026

"I think Morgan Housel is correct; going back into the 50s would almost feel like living off the grid to me."
- DAN SMITH
Read more »

Widow’s IRA Choice

ArticleJohn Urban  |  Sep 12, 2026

WHEN A HUSBAND dies, his widow inherits his IRA. Somewhere in the paperwork of the months that follow there is a decision to make, and nobody presents it to her as one. She can take the account as her own, or she can leave it titled as inherited. Taking it as her own means filling something in. Leaving it means doing nothing, and the IRS tells custodians they may assume that is what she wants. So the account sits where it is, at the same firm, holding money the household always treated as joint, and the decision gets made by nobody. It is the more expensive of the two. Not by a little. Two Tables Every year, a required minimum distribution, or RMD, has to come out of the account. The amount is the balance divided by a number from an IRS table, and there are two tables in play here. Beneficiaries use the Single Life Expectancy table. Owners use the Uniform Lifetime table, which spreads the money over a longer period and therefore asks for less each year. That is the whole mechanism, and it is worth about a third of the annual bill. Take a widow of 76 with $480,000. Left titled as an inherited account, she must take $34,043 that year. Had she taken the same account into her own name, she would have to take $20,253. Same money, same woman, same birthday. The difference is which box got ticked in the months after the funeral. It Does Not Happen Once That gap is not a one-year event. Run both versions forward 10 years, same account, same growth, taking exactly what is required and nothing more. The inherited schedule forces out $374,306 over the decade. As owner, $246,281. She pays about $30,600 more in federal income tax getting there, and reaches 85 with roughly $171,000 less still inside the IRA. She has not lost that money. She has been made to take it out early, pay tax on it sooner, and hold it somewhere less sheltered for the rest of her life. That is a slower kind of damage than a penalty, and a larger one, because it renews every January for as long as she lives. A Floor, Not a Ceiling The usual objection to taking the account as your own is that it locks the money up. It does the opposite. A required distribution is a floor, not a ceiling. She can take more in any year she wants it, for any reason, and nobody asks why. What she leaves alone stays sheltered and keeps compounding. The lower figure buys her the choice. The higher one makes it for her, every year, whether the money is needed or not. One Case Runs the Other Way There is a real exception, and it matters enough to state plainly. Money paid out of an inherited IRA escapes the 10% early-withdrawal penalty at any age, because the IRS exempts what is paid to a beneficiary on account of the owner's death. Take the account as your own and you are back under the ordinary rules. So a survivor who is young enough that an early withdrawal would be penalized, and who expects to need the money, has a genuine reason to leave the account exactly where it is. That threshold is 59 and a half. For most couples already retired this will not apply, and the rest of the article governs. Where it does apply, it outranks everything above. Nobody Will Prompt You I wrote recently about the letter that never comes. A custodian has to tell an IRA owner what must be withdrawn each year, and owes an inherited account nothing at all. So the choice decides more than the size of the bill. Take the account as your own and the letter starts arriving, every January, for the rest of your life. Leave it as inherited and you are on your own to remember the RMD. The branch that requires no paperwork is therefore both the more expensive one and the quiet one, and those two facts feed each other. The option that costs more is also the one that removes the annual nudge that might have made you reconsider it. Decide It Before You Have To None of this is hard to work out. It is hard to work out in the eight weeks after a funeral, which is exactly when it gets decided, usually by default. If you are married and you both hold IRAs, settle it now, while it is hypothetical for both of you. Talk through which of you would be likely to need the money soon after the other died. That is what the 59-and-a-half question really asks, and it is a conversation about your circumstances rather than about tax tables. Then decide which way the survivor should go, write it down, and put it with your trust, your will and the beneficiary designations, where a survivor or an executor will actually come across it. Tell whoever else needs to know that it exists. Look at it again as either of you nears the age your own distributions must begin. That is 70 and a half if you were born before July 1949, 72 if you were born between then and the end of 1950, 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later. It is the birthday that makes the whole question live. The paperwork will not choose for you. It will simply do nothing, which is a choice, and on these numbers it is the wrong one for most people who make it by accident. ________________________________________________________________________________ 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 »

Being terminated…

gnussen623  |  Sep 12, 2026

"The only advice I will is to try and NOT take it personally. My field was information technology and it happened often to me. Companies were poorly managed and went belly up. I was out of a job. Companies got sold and the buyer thought our IT department was redundant. I was out of a job. Companies decided to “change direction” and didn’t need so many IT workers. I was out of a job. Stay positive! Don’t burn your bridges to old coworkers. One of them might go somewhere that needs your skillset. Good luck! And thanks for sharing this difficult episode in your life."
- Winston Smith
Read more »

A Wedding Too Far

Mark Crothers  |  Sep 7, 2026

"Ah, the dreaded 'Wedding Industrial Complex'."
- Michael Roth
Read more »

I will still take the dividends

R Quinn  |  Sep 12, 2026

"Some folks feel better getting dividends. I do not in my taxable account because it forces me to pay taxes rather than me deciding to sell for a capital gain at the time of my choosing."
- Randy Dobkin
Read more »

On Being a “Healthy” Person

DrLefty  |  Sep 8, 2026

"I assume you refer to APOE4 as the marker for Alzheimer's. There are actual blood markers for it such as beta amyloid 42 & 40, p-tau217, neurofilament light chain (NFL), and glial fibrillary acid protein (GFAP). Well worth the cost with insurance."
- Randy Dobkin
Read more »

What’s your Domicile?

William Perry  |  Sep 1, 2026

"Correct"
- John Goodell
Read more »

Free Breakfast

D.J.  |  Sep 9, 2026

"With a family, free breakfast is a massive bonus unless we are abroad, then you give up the learned experience for the kids of trying a local bakery etc. Like everything in life - tradeoffs"
- John Goodell
Read more »

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Get Educated

Manifesto

Sep 11, 2026

NO. 45: PAYING down debt may not be our best investment, but it’s almost never a bad idea. It reduces our life’s financial risk—and earns us a rate of return equal to the debt’s interest rate.

humans

Sep 12, 2026

NO. 5: WE'RE IMPULSIVE. Our brain has two parts: an instinctive side and a contemplative side. Much of the time, we operate on instinct. But with money, our instincts can lead us astray, prompting us to make impulsive spending and investing choices. To reduce the risk of subsequent regret, stop and pause, especially before big financial decisions.

act

Sep 12, 2026

TRY THE BACKDOOR. Is your income too high to fund a Roth IRA? Consider making nondeductible contributions to a traditional IRA and then converting it to a Roth. This can allow you to get money into a Roth at little or no tax cost—provided your nondeductible IRA is your only IRA. If it isn't, the so-called backdoor Roth could trigger a big income tax bill.

Truths

Sep 11, 2026

NO. 114: WHO INHERITS most of your assets likely won’t be governed by your will. Instead, property owned jointly with right of survivorship will go to the other owners. Trust assets, retirement accounts and life insurance will go to the named beneficiaries. Ditto for bank and investment accounts that are titled as “payable on death” or “transfer on death.”

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Humans

Manifesto

Sep 11, 2026

NO. 45: PAYING down debt may not be our best investment, but it’s almost never a bad idea. It reduces our life’s financial risk—and earns us a rate of return equal to the debt’s interest rate.

Spotlight: College

No Name No Problem

Tony Isola   |  Dec 17, 2021

IS A DEGREE FROM AN elite school the golden ticket? I recently read Jeffrey Selingo’s excellent book Who Gets In and Why—and came away with some fascinating insights.
Selingo says experience and skills often trump where someone went to college. Each year, 1.8 million students graduate from four-year colleges, with 54,000 leaving with a degree from an elite institution. Simple math confirms employers must fill jobs with more than just graduates from elite schools.

Read more »

The Places You’ll Go

Catherine Horiuchi   |  May 19, 2021

MY TWIN DAUGHTERS just finished sorting through college offers and making their decision ahead of the May 1 acceptance deadline. With nearly 3,000 four-year colleges to choose from, how did they decide?
It wasn’t easy. The pandemic didn’t just close our local public schools. It also ended visits from universities and limited school-based college counseling. Counselors compensated with lunchtime workshops, links to webinars, and lots of robocalls and emails urging students to fill out and submit the Free Application for Federal Student Aid (FAFSA).

Read more »

Saved by Borrowing

Morgen Henderson   |  May 12, 2020

IN HIGH SCHOOL, I worked at a local roller-skating rink to save money for college. I calculated that, if I kept working at the same rate once I was in college, I could make it through my four-year degree without taking on any student loans.
I was determined to make it work.
In my freshman year, my plan started with a budget—and that budget included this simple edict: Spend the least amount possible on everything.

Read more »

College Crapshoot

Catherine Horiuchi   |  Feb 8, 2021

A LIFE OF FRUGALITY might mean your children graduate college debt-free, which is a major accomplishment. But what about your happy-go-lucky neighbors, who spent every dime they earned and never saved for college?
At issue here is the Free Application for Federal Student Aid (FAFSA), which is the basis for the all-important expected family contribution (EFC). The whole thing can seem like one big crapshoot, as I can now attest.
The EFC may determine that your spendthrift neighbors’ kids also get to graduate debt-free.

Read more »

Games Colleges Play

Greg Spears   |  Sep 13, 2022

WHEN OUR KIDS applied to colleges, the smallest detail of each campus visit mattered a lot. If our daughter admired the student leading our tour, the school skyrocketed in her estimation. If the class our son attended to “get a feel for the place” turned out to be a test period, Grandpa’s alma mater was forever struck from consideration.
In economic terms, the college decision features asymmetric information. Colleges know a lot about us from our detailed personal and financial applications.

Read more »

A Real Education

Casey Campbell   |  Mar 7, 2024

WE’RE A SINGLE-INCOME family with five children, so the prospect of paying for college for all our kids is daunting, to say the least. Yes, our oldest is now in her second year of college. But we still have a long way to go before they’ve all crossed the finish line.
Our kids are ages 19, 17, 12, nine and six. We’ve been homeschooling them since the beginning, with a few brief exceptions, including one daughter in a Department of Defense high school in Korea for a year and another daughter in a private high school for two years.

Read more »

Spotlight: Clements

Hits 2017-20

Jonathan Clements   |  Dec 29, 2020

OVER THE PAST FOUR years, readers have a cast an eye on almost 8.8 million of HumbleDollar's pages. But which have they looked at most often? Below are the 20 most widely read articles since HumbleDollar's launch at year-end 2016: Terms of the Trade (2019) by Jim Wasserman Nobody Told Me (2020) by Jonathan Clements Farewell Money (2019) by Richard Quinn He Gets, She Gets (2020) by James McGlynn Don't Delay (2020) by Dennis Friedman The Taxman Cometh (2020) by James McGlynn Still Learning (2019) by Richard Quinn Don't Get an F (2019) by James McGlynn My Four Goals (2020) by Jonathan Clements 27 Things to Do Now (2020) by Jonathan Clements Farewell Yield (2020) by Jonathan Clements Ten Commandments (2018) by Richard Quinn Enough Already (2017) by Jonathan Clements Flunking the Test (2020) by Richard Connor The Tipping Point (2018) by Jonathan Clements 12 Investment Sins (2020) by John Lim This Too Shall Pass (2020) by Richard Connor Unanswered (2018) by Jonathan Clements 45 Steps to Success (2019) by Jonathan Clements The $121,500 Room (2018) by Joel M. Schofer Among other pages, the three most visited have been—no surprise here—the home page, the main articles page and the main money guide page. Within the money guide, readers have headed most often to the start of the chapters devoted to retirement, the portfolio builder, the financial life planner and investing. Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook. Jonathan's most recent articles include What Money Can Buy, Time Limited and Long Time Coming. [xyz-ihs snippet="Donate"]
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Running in Place

Jonathan Clements   |  Mar 31, 2017

OUR STANDARD OF living has more than doubled over the past four decades. Has all that extra money bought happiness? Not a chance. In 1972, 30% of Americans described themselves as "very happy." As of 2016, we're still at 30%, according to the latest General Social Survey. Over the 44 years, there was a slight uptick in those describing themselves as "pretty happy" and a tiny decline in those who said they were "not too happy," but neither change was significant. Meanwhile, over this 44-year stretch, inflation-adjusted per capita disposable income rose 120%. Why hasn't our improved lifestyle made us happier? There are three key explanations. First, and most important, we tend to adapt to improvements in our standard of living. Our initial delight at, say, a new purchase or a pay raise quickly gives way to dissatisfaction. Second, we focus not just on our absolute standard of living, but also on how we compare to others—and, for most of us, there will always be plenty of folks who have more. Third, we simply aren't very smart in how we use our money. What to do? Check out HumbleDollar's advice on how to squeeze more happiness out of our dollars, as well as our lists of nine simple strategies for a happier life and five takeaways from happiness research. [xyz-ihs snippet="Donate"]
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The Morning After

Jonathan Clements   |  Feb 6, 2018

WHEN MARKETS GO crazy, financial writers feel compelled to dust off the keyboard and cook up profound insights. But I am writing this at 5 a.m., while still ingesting my first cup of coffee, so I’m setting the bar a little lower. Here are 12 modest observations following yesterday’s 4.1% plunge by the S&P 500: 1.  I don’t know. You don’t know. Nobody knows. The market turmoil of the past six trading days feels like a sea change after 2017’s remarkable calm. Our instinct is to try to divine what it means for the months ahead. But the reality is, nobody can forecast the stock market’s short-term direction. 2. Keep it in perspective. What we’ve suffered so far is a minor 7.8% dip after an astonishing run that saw the share prices of the S&P 500 companies climb 292% from March 9, 2009, through their collective all-time high, set just six trading days ago, on Jan. 26. Losing almost 2,300 points on the Dow Jones Industrial Average over six trading days may feel like a big deal, but it isn’t a big percentage. 3. There isn’t one strategy for everybody. We’re all at different stages of our lives, have different goals and different personal tolerances for risk, and we have different portfolios—some of us underweighted in stocks and wanting to own more, others over-weighted and wondering whether to sell. 4. Instead of fretting about where stocks are headed, focus on risk—with a particular focus on two questions. First, do you have money in stocks that you’ll need to spend in the next five years? For instance, do you have dollars in stocks earmarked for your teenager’s college education or for the next five years of your own retirement? Seriously consider moving those dollars to a money-market fund or a high-quality short-term…
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The Long Game

Jonathan Clements   |  Feb 4, 2023

RUNNING OUT OF MONEY is retirement’s biggest financial risk—though this, of course, never actually happens. Thanks to Social Security, almost all retirees will have some monthly income, no matter how long they live. Still, Social Security alone probably won’t make for a comfortable retirement, though it is the financial cornerstone for many. In fact, Social Security accounts for at least 50% of income for half of retirees. That includes a quarter of those age 65 and up for whom their monthly benefit is at least 90% of their income—a statistic I find shocking. Want to do better? You need to not only save diligently during your working years, but also figure out how to draw down those savings over a retirement of uncertain length. That brings me to three sets of statistics that prompted me today to tackle the topic of longevity. A recently released survey found that 48% of respondents believe they’ll outlive their retirement savings. To state the obvious, we should make it a priority to save enough during our working years so we’re financially comfortable for as long as we live—and yet half of folks think they’ll fall short. I received an email from a correspondent who cited life expectancy as of birth as a guide for retirement planning. It’s not the first time I’ve seen this error made. When today’s 65-year-olds were born, life expectancy was age 67 for men and 73 for women. But life expectancies as of birth include those unlucky folks who die before reaching age 65. What if you make it that far? Today’s 65-year-olds can, on average, expect to live to 82 if they’re a man and 85 if they’re a woman. In 2021, U.S. life expectancy declined for the second year in a row, driven largely by COVID-19, though drug…
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Just What I Wanted

Jonathan Clements   |  Dec 17, 2022

'TIS THE SEASON WHEN many of us open our wallets and spend with reckless abandon. Along the way, we often end up buying a gift or two for that special person in our life—ourselves. I don’t put too much stock in the accuracy of quick consumer surveys, but it seems the percentage of folks who self-gift might be 22% or 57% or even 77%. Whatever the right number is, I’m not inclined to be too judgmental, provided a reasonable amount of thought goes into the purchase. What do I mean by that? Here are six bad reasons to buy something: To send a message. With our spending, we’re often purchasing a vision of ourselves that we want the rest of the world to buy into. The Honda Fit says we’re thrifty, the Jeep says we’re fun-loving, the Prius says we’re concerned about the environment and the Mercedes says we’re well-heeled. While I find such signaling silly, I also realize it’s hard to separate signaling from carefully considered desire. Perhaps you really do love German engineering and you don’t give a hoot what the neighbors think of your BMW. But probably not. To imitate others. There’s a reason marketers hire celebrities to endorse products. Clearly, it works. But to state the obvious, if you buy a celebrity-endorsed product, you don’t achieve celebrity status and, in fact, the celebrity may not even use the product. Meanwhile, who’s paying for that celebrity endorsement? If you buy the product or service, you’re footing part of the bill. Because it’s on sale. This is a weakness of mine. I’m always drawn to products that are deeply discounted. Exhibit A: More than a decade ago, at an outlet shopping mall in Flemington, New Jersey, I bought a pair of black leather Cole Haan shoes that were…
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Staying Put

Jonathan Clements   |  Aug 20, 2016

TEN YEARS AGO, the real estate market peaked. Today, prices remain 2.1% below their mid-2006 high—though they’re also 34.8% above their 2012 low, as measured by the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. As property prices have recovered, homes have become less affordable. The impact, however, has been softened somewhat by modestly rising incomes and slightly lower mortgage rates, according to data from the National Association of Realtors. The upshot: If you have the U.S. median family income of $68,897 and you bought the typical single-family home, which costs $249,800, the resulting monthly mortgage payment shouldn’t be any great financial strain. But before you rush to buy that first home, consider three other factors. First, give some thought to how secure your job is. If there’s a significant risk you could be laid off, taking on the extra cost of homeownership probably isn’t smart. Second, consider whether you might be forced to move in the near future for career, family or other reasons. Given the hefty cost of buying and selling real estate, you want to own your new home for at least five years, and preferably seven years or longer. That brings us to a third and final consideration: Can you afford a place that you’ll be content with for the long haul? Ideally, you’ll buy a place that you will happily occupy for decades. If that’s not the case today—but could be if you spent a few more years saving for a bigger down payment and perhaps collecting a few pay raises—it might make sense to rent for a little longer. [xyz-ihs snippet="Donate"]
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