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At some point, the key isn’t to save more but, rather, to be content with what we have.

Why We Go Wrong

I’VE LONG BEEN flummoxed by the difficulty people have managing money. It all seems so intuitive: Save, invest, repeat. Buy more when the market falls and a lot more when it crashes. Rebalance by adding more to losing asset classes—which today means buying value and international stocks.
Now, don’t get me wrong: I’m no financial genius. I’ve made my share of blunders. But I also know that being a do-it-yourself investor has saved me boatloads of money.

Read more »

Lost Abroad

ONE OF THE GREATEST business books I’ve ever read is Antifragile by Nassim Nicholas Taleb. In it, he postulates the idea that, while things that become damaged by stress are considered fragile and things that resist stress are considered resilient, “there is no word for the exact opposite of fragile,” things that become stronger due to stress. So, he coined the word “antifragile” and then wrote an entire book about the subject.

Read more »

My Social Security

SOCIAL SECURITY is a crucial source of income for many retirees. But unfortunately, there’s also much confusion, because the ways benefits are calculated sure isn’t simple.
Want to learn more? To get started, I’d suggest heading to the Social Security Administration’s website and creating a free “my Social Security” account. For those currently receiving benefits, the website allows you to:

Verify your benefit payment amount
Get a replacement Social Security card
Get a replacement Medicare card
Change your address and phone number
Start or change direct deposit of your benefit payment
Get a replacement SSA-1099 or SSA-1042S for tax purposes

If you aren’t currently receiving benefits,

Read more »

Retirement Gambit

INSPIRED BY THE TV series The Queen’s Gambit, many people suddenly want to master the game of chess. But I’m more interested in mastering the practical world of retirement gambits—and that means matching wits with Congress and the IRS.
During my working career, I saved money in taxable brokerage accounts, IRAs and 401(k)s, but never focused on Roth accounts. At age 55, having left my last employer, I had two things that compelled me to begin—time and reduced income.

Read more »

Goodbye Assets

MY TWINS ARE SENIORS in high school. That means, pandemic or no pandemic, we spent the fall applying to colleges.
Here in California, the pandemic closed public schools in March and most did not reopen for in-person teaching with the start of the current academic year. That forced parents to stand in for college counselors. The preparations high school juniors usually engage in, such as visiting colleges and taking standardized tests, didn’t occur this past spring or summer.

Read more »

Drawing It Down

BUILDING A NEST EGG is relatively easy: Save as much as you can starting as early as you can. Invest in a diversified mix of low-cost mutual funds. Rebalance periodically. And tune out the noise.
By contrast, determining how much you can safely spend in retirement is far trickier. Consider three strategies.
First, there’s the much-discussed 4% withdrawal rate. In the first year of retirement, you spend 4% of your portfolio’s beginning-of-year value. In subsequent years,

Read more »

Money Guide

Traditional vs. Roth

YOU MAY QUALIFY to fund both a tax-deductible and Roth IRA. Alternatively, perhaps your employer offers the chance to fund either a tax-deductible or Roth 401(k). Which should you go for? A key factor is whether you think your tax bracket in retirement will be higher or lower than it is today. If you expect your tax rate in retirement to be the same or higher, you should favor the Roth, giving up today’s tax deduction in return for tax-free growth. Conversely, if you think you’ll be in a lower bracket, you should opt for the traditional IRA, taking a tax deduction at your high tax rate today while knowing you’ll pull those dollars out of your IRA at a lower tax rate once you’re retired. Many folks will be in this camp. The reason: You can deduct today’s retirement account contributions at your marginal tax rate, which could be 22% or higher, but in retirement your withdrawals might be your only income—and thus you’ll probably pay taxes at an average rate that’s well below 22%. What if you’re unsure what your retirement tax rate will be? You might hedge your bets, dividing your money between traditional and Roth accounts. While tax considerations often favor traditional IRAs, a Roth IRA might still be appealing, thanks to some unique advantages. Unlike with a traditional IRA, you can withdraw your regular annual contributions from a Roth IRA at any time for any reason. Just put $6,000 in a Roth? You can pull that money out tomorrow with no taxes or penalties owed. Under current law, you also don’t have to take required minimum distributions from a Roth IRA once you turn age 72. That means you can leave the account to continue growing tax-free, and you might even bequeath the account to your children or other beneficiaries. A Roth IRA can make a fine inheritance, giving your beneficiaries a pool of tax-free money that they can draw down over 10 years. Like the idea of sidestepping required minimum distributions with a Roth IRA? If you fund a Roth 401(k), be sure to transfer it to a Roth IRA before you reach your 70s, because minimum distributions are required from a Roth 401(k). Avoiding required minimum distributions is also a reason to convert a traditional IRA to a Roth IRA. Next: Paying for Itself Previous: Funding a Roth Articles: Making the Call and Pain Postponed
Read more »

Manifesto

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

Truths

NO. 48: RISING interest rates hurt your bond portfolio’s value—and raise its long-run return. As interest rates climb, existing bonds drop in price. But thanks to the rise in rates, you can reinvest your interest payments at higher yields, boosting long-run performance. This reinvestment is easy with bond funds—a reason to favor them over individual bonds.

Act

REVIEW LAST YEAR’S spending. Which expenditures do you remember with a smile—and which prompt a shrug of the shoulders and maybe even a wince? To jog your memory, look back through your checking account and credit card statements. Lavishing money on stuff you don’t especially enjoy? Maybe it’s time to rethink how you spend your dollars.

Think

FEAR OF MISSING OUT. We’re heavily influenced by how others act. If we hear “everybody’s doing it,” it can create a fear of missing out—otherwise known as FOMO—and lead us to join in. The resulting bandwagon effect may help a bestselling book to sell even more copies. It could also cause a hot stock to rocket even higher—only to later come crashing down.

Second Look

Retirement

In Withdrawal

RETIREMENT ISN’T just about reaching some magic savings number. You also need a strategy for turning that pile of savings into a reliable stream of retirement income that’ll last for the rest of your life.
In academic lingo, it’s about changing from accumulation to decumulation—and it’s a topic that my husband Jim and I grapple with, as we figure out how best to cover our retirement expenses. There are three common strategies:
Systematic withdrawals.

Read more »

Family Finance

For Your Benefit

ONE OF MY SONS has to choose health insurance for the year ahead—and his employer provided a 95-page pamphlet. Let’s face it: If you need that amount of information to make a choice, something is wrong.
The pamphlet describes three medical options, plus dental options and vision coverage. Two options get you an employer health savings account contribution—or it is a health reimbursement account? There are three levels of deductibles and coinsurance and, of course,

Read more »

Investing

Ready or Not

THE PAST FEW WEEKS have brought back memories of the 2008 financial crisis. Back then, stocks were at bargain prices, but I had little money to invest. Today, my financial house is much stronger—and I want to be ready to buy if stocks get dirt cheap.
I’ve already made some portfolio adjustments. But from here, my plan is to keep an eye on stock market valuations. A large percentage drop by the market averages might—by itself—create the false impression that stocks are cheap,

Read more »

Lists

12 Financial Sins

THE FINANCIAL markets are often quick to punish investment sins. By contrast, if we err with our borrowing, spending and other personal-finance issues, problems might not show up until years later—but the damage can be just as great. Here, to complement last week’s list of 12 deadly investment sins, are 12 deadly personal-finance sins:
1. Pride: Keeping up with the Jones by buying luxury cars and fancy clothes.
Antidote: Realize the folly of buying depreciating assets you don’t need,

Read more »
Home Call to Action

Mindset

When in Rome

WE DON’T NORMALLY think of classical philosophy as relevant to modern money management. Perhaps it’s the perception that philosophers live humble, financially insecure lives ruminating on ethereal matters. Or, as my businessman father said when he saw I was taking a philosophy course, “That will make you interesting at parties, but how will you eat with it?”
Meet Marcus Aurelius.
If you aren’t a classics person, Marcus was born to a powerful and rich Roman family,

Read more »

Why We Go Wrong

I’VE LONG BEEN flummoxed by the difficulty people have managing money. It all seems so intuitive: Save, invest, repeat. Buy more when the market falls and a lot more when it crashes. Rebalance by adding more to losing asset classes—which today means buying value and international stocks.
Now, don’t get me wrong: I’m no financial genius. I’ve made my share of blunders. But I also know that being a do-it-yourself investor has saved me boatloads of money.

Read more »

Lost Abroad

ONE OF THE GREATEST business books I’ve ever read is Antifragile by Nassim Nicholas Taleb. In it, he postulates the idea that, while things that become damaged by stress are considered fragile and things that resist stress are considered resilient, “there is no word for the exact opposite of fragile,” things that become stronger due to stress. So, he coined the word “antifragile” and then wrote an entire book about the subject.

Read more »

My Social Security

SOCIAL SECURITY is a crucial source of income for many retirees. But unfortunately, there’s also much confusion, because the ways benefits are calculated sure isn’t simple.
Want to learn more? To get started, I’d suggest heading to the Social Security Administration’s website and creating a free “my Social Security” account. For those currently receiving benefits, the website allows you to:

Verify your benefit payment amount
Get a replacement Social Security card
Get a replacement Medicare card
Change your address and phone number
Start or change direct deposit of your benefit payment
Get a replacement SSA-1099 or SSA-1042S for tax purposes

If you aren’t currently receiving benefits,

Read more »

Retirement Gambit

INSPIRED BY THE TV series The Queen’s Gambit, many people suddenly want to master the game of chess. But I’m more interested in mastering the practical world of retirement gambits—and that means matching wits with Congress and the IRS.
During my working career, I saved money in taxable brokerage accounts, IRAs and 401(k)s, but never focused on Roth accounts. At age 55, having left my last employer, I had two things that compelled me to begin—time and reduced income.

Read more »

Goodbye Assets

MY TWINS ARE SENIORS in high school. That means, pandemic or no pandemic, we spent the fall applying to colleges.
Here in California, the pandemic closed public schools in March and most did not reopen for in-person teaching with the start of the current academic year. That forced parents to stand in for college counselors. The preparations high school juniors usually engage in, such as visiting colleges and taking standardized tests, didn’t occur this past spring or summer.

Read more »

Drawing It Down

BUILDING A NEST EGG is relatively easy: Save as much as you can starting as early as you can. Invest in a diversified mix of low-cost mutual funds. Rebalance periodically. And tune out the noise.
By contrast, determining how much you can safely spend in retirement is far trickier. Consider three strategies.
First, there’s the much-discussed 4% withdrawal rate. In the first year of retirement, you spend 4% of your portfolio’s beginning-of-year value. In subsequent years,

Read more »

Free Newsletter

Home Call to Action

Manifesto

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

Act

REVIEW LAST YEAR’S spending. Which expenditures do you remember with a smile—and which prompt a shrug of the shoulders and maybe even a wince? To jog your memory, look back through your checking account and credit card statements. Lavishing money on stuff you don’t especially enjoy? Maybe it’s time to rethink how you spend your dollars.

Truths

NO. 48: RISING interest rates hurt your bond portfolio’s value—and raise its long-run return. As interest rates climb, existing bonds drop in price. But thanks to the rise in rates, you can reinvest your interest payments at higher yields, boosting long-run performance. This reinvestment is easy with bond funds—a reason to favor them over individual bonds.

Think

FEAR OF MISSING OUT. We’re heavily influenced by how others act. If we hear “everybody’s doing it,” it can create a fear of missing out—otherwise known as FOMO—and lead us to join in. The resulting bandwagon effect may help a bestselling book to sell even more copies. It could also cause a hot stock to rocket even higher—only to later come crashing down.

Money Guide

Start Exploring

Traditional vs. Roth

YOU MAY QUALIFY to fund both a tax-deductible and Roth IRA. Alternatively, perhaps your employer offers the chance to fund either a tax-deductible or Roth 401(k). Which should you go for? A key factor is whether you think your tax bracket in retirement will be higher or lower than it is today. If you expect your tax rate in retirement to be the same or higher, you should favor the Roth, giving up today’s tax deduction in return for tax-free growth. Conversely, if you think you’ll be in a lower bracket, you should opt for the traditional IRA, taking a tax deduction at your high tax rate today while knowing you’ll pull those dollars out of your IRA at a lower tax rate once you’re retired. Many folks will be in this camp. The reason: You can deduct today’s retirement account contributions at your marginal tax rate, which could be 22% or higher, but in retirement your withdrawals might be your only income—and thus you’ll probably pay taxes at an average rate that’s well below 22%. What if you’re unsure what your retirement tax rate will be? You might hedge your bets, dividing your money between traditional and Roth accounts. While tax considerations often favor traditional IRAs, a Roth IRA might still be appealing, thanks to some unique advantages. Unlike with a traditional IRA, you can withdraw your regular annual contributions from a Roth IRA at any time for any reason. Just put $6,000 in a Roth? You can pull that money out tomorrow with no taxes or penalties owed. Under current law, you also don’t have to take required minimum distributions from a Roth IRA once you turn age 72. That means you can leave the account to continue growing tax-free, and you might even bequeath the account to your children or other beneficiaries. A Roth IRA can make a fine inheritance, giving your beneficiaries a pool of tax-free money that they can draw down over 10 years. Like the idea of sidestepping required minimum distributions with a Roth IRA? If you fund a Roth 401(k), be sure to transfer it to a Roth IRA before you reach your 70s, because minimum distributions are required from a Roth 401(k). Avoiding required minimum distributions is also a reason to convert a traditional IRA to a Roth IRA. Next: Paying for Itself Previous: Funding a Roth Articles: Making the Call and Pain Postponed
Read more »

Second Look

Retirement

In Withdrawal

RETIREMENT ISN’T just about reaching some magic savings number. You also need a strategy for turning that pile of savings into a reliable stream of retirement income that’ll last for the rest of your life.
In academic lingo, it’s about changing from accumulation to decumulation—and it’s a topic that my husband Jim and I grapple with, as we figure out how best to cover our retirement expenses. There are three common strategies:
Systematic withdrawals.

Read more »

Family Finance

For Your Benefit

ONE OF MY SONS has to choose health insurance for the year ahead—and his employer provided a 95-page pamphlet. Let’s face it: If you need that amount of information to make a choice, something is wrong.
The pamphlet describes three medical options, plus dental options and vision coverage. Two options get you an employer health savings account contribution—or it is a health reimbursement account? There are three levels of deductibles and coinsurance and, of course,

Read more »

Investing

Ready or Not

THE PAST FEW WEEKS have brought back memories of the 2008 financial crisis. Back then, stocks were at bargain prices, but I had little money to invest. Today, my financial house is much stronger—and I want to be ready to buy if stocks get dirt cheap.
I’ve already made some portfolio adjustments. But from here, my plan is to keep an eye on stock market valuations. A large percentage drop by the market averages might—by itself—create the false impression that stocks are cheap,

Read more »

Lists

12 Financial Sins

THE FINANCIAL markets are often quick to punish investment sins. By contrast, if we err with our borrowing, spending and other personal-finance issues, problems might not show up until years later—but the damage can be just as great. Here, to complement last week’s list of 12 deadly investment sins, are 12 deadly personal-finance sins:
1. Pride: Keeping up with the Jones by buying luxury cars and fancy clothes.
Antidote: Realize the folly of buying depreciating assets you don’t need,

Read more »

Mindset

When in Rome

WE DON’T NORMALLY think of classical philosophy as relevant to modern money management. Perhaps it’s the perception that philosophers live humble, financially insecure lives ruminating on ethereal matters. Or, as my businessman father said when he saw I was taking a philosophy course, “That will make you interesting at parties, but how will you eat with it?”
Meet Marcus Aurelius.
If you aren’t a classics person, Marcus was born to a powerful and rich Roman family,

Read more »