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Homo economicus may always behave rationally. But the rest of us try not to keep too much chocolate in the house.

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For most retirees, the greatest fear is not death—it is running out of money before they die.

"A steady income stream that cannot be outlived is the only practical answer. Social Security is the core and in the absence of a pension (which is rare in the private sector now) an annuity is the key in my opinion, an immediate annuity upon retirement. Back that all up with interest and dividend income which can be used or reinvested (turned on or off) as necessary over time."
- R Quinn
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Taxing Social Security benefits

"They sure could if they want to. I use that tool all the time. And note that eliminating the wage cap does not make SS sustainable."
- R Quinn
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When your 401(k) excludes target date funds

"What are the lowest fee funds? Maybe there's actually a good one."
- Randy Dobkin
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“Gerontocracy” in America

"Largely the same in UK. It's not that the elderly dominate politics here in the same way as the US seems to like electing geriatrics but more that old folks vote so no party wants to risk pissing them off too much. At least recent changes in inheritance tax rules (which kicks in at a much lower band than the US anyway) which prevent DC pension pots (401k equivalent) being used as an IHT avoidance vehicle should encourage the seriously wealthy to gift before their demise as heirs could easily be facing a double whammy of an effective 64% tax rate on anything they draw from an inherited pension."
- bbbobbins
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Short term and long term Social Security planning

"My statement,”If there are going to be further cuts in benefits and raises in taxation let younger people who have time to adapt their financial plans be the people to sacrifice to ensure their future beyond, just like we were asked to do in the past.”, is that the above changes would secure our promised benefits and those of younger generations. We had to sacrifice a significant amount from when we first started, so why not younger generations?"
- DavidHLancaster
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Yet-Another Social Security Spreadsheet Analysis on what Age to Start taking Benefits

"When the most important value in the equation is unknowable, any decision is simply a roll of the dice."
- Mike A
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Beware the CFP Designation?

"I wouldn’t count on any three letters behind a name to ensure moral or ethical behavior."
- Mike A
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One Piece Of Paper

"Thanks, Winston. I really like your phrase, “the birth lottery.” We all begin life’s journey from different starting points, and it’s easy to underestimate how much that shapes the opportunities available to us. I also smiled at your comment about computers. It’s wonderful when something that begins as simple curiosity or enjoyment turns into a rewarding career. Like you, the older I get, the more I find myself focusing less on achievement and more on gratitude for family, opportunities, and the unexpected turns that made life richer than I ever imagined."
- Andrew Clements
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Before Someone Else Decides

"Thank you! I’m glad you found both helpful. I hope that the e-Booklet makes this daunting decision feel a little more manageable—one conversation and one step at a time."
- Kathleen Rehl
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How Did You Find Paid Work After Retiring from Your Primary Career?

"Thank you for the very timely article and helpful responses. Per my “Fear of the unknown” post a few weeks ago, I find myself in the exact situation as Jeffrey. Over the past several weeks I have been exploring various lower paying, but potentially rewarding roles to pursue once my severance runs out. This includes visiting local places like the bank, library, supermarket, hardware store, Town Hall, etc. and observing the people at work. How old are they? Do they look happy? Could I see myself doing this? I have also been asking if there are any licenses or specific qualifications required so that I can pursue them while still receiving severance. This research has given me purpose and revealed some interesting results. At 59, I do not think that I am ready to veer too far away from the finance/investment field that I spent my career in, at least not yet. But there are plenty of ways to leverage my experience and help people, provided I get properly licensed. Yesterday I picked up Securities Industry Essentials (SIE) for Dummies at the library and based on my initial review of sample questions, I have my work cut out for me!"
- gnussen623
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Inflation, prices, COLAs, retirement and the last 16 years

"This from a quick search, Thank you for correcting me Sir! =========================================== Yes—Members of Congress are covered by Social Security for their work as members of Congress (they pay Social Security taxes and receive Social Security benefits based on their covered earnings). Their eligibility for Social Security is separate from their pension plan: they also participate in the Civil Service Retirement System (CSRS) or the Federal Employees’ Retirement System (FERS) for federal retirement, which is not Social Security."
- Donny Hrubes
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Taking a Loss?

"Rob - What you are describing is interesting. Would you describe how your ladder was originally structured in 2017?"
- S Sevcik
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For most retirees, the greatest fear is not death—it is running out of money before they die.

"A steady income stream that cannot be outlived is the only practical answer. Social Security is the core and in the absence of a pension (which is rare in the private sector now) an annuity is the key in my opinion, an immediate annuity upon retirement. Back that all up with interest and dividend income which can be used or reinvested (turned on or off) as necessary over time."
- R Quinn
Read more »

Taxing Social Security benefits

"They sure could if they want to. I use that tool all the time. And note that eliminating the wage cap does not make SS sustainable."
- R Quinn
Read more »

When your 401(k) excludes target date funds

"What are the lowest fee funds? Maybe there's actually a good one."
- Randy Dobkin
Read more »

“Gerontocracy” in America

"Largely the same in UK. It's not that the elderly dominate politics here in the same way as the US seems to like electing geriatrics but more that old folks vote so no party wants to risk pissing them off too much. At least recent changes in inheritance tax rules (which kicks in at a much lower band than the US anyway) which prevent DC pension pots (401k equivalent) being used as an IHT avoidance vehicle should encourage the seriously wealthy to gift before their demise as heirs could easily be facing a double whammy of an effective 64% tax rate on anything they draw from an inherited pension."
- bbbobbins
Read more »

Short term and long term Social Security planning

"My statement,”If there are going to be further cuts in benefits and raises in taxation let younger people who have time to adapt their financial plans be the people to sacrifice to ensure their future beyond, just like we were asked to do in the past.”, is that the above changes would secure our promised benefits and those of younger generations. We had to sacrifice a significant amount from when we first started, so why not younger generations?"
- DavidHLancaster
Read more »

Yet-Another Social Security Spreadsheet Analysis on what Age to Start taking Benefits

"When the most important value in the equation is unknowable, any decision is simply a roll of the dice."
- Mike A
Read more »

Beware the CFP Designation?

"I wouldn’t count on any three letters behind a name to ensure moral or ethical behavior."
- Mike A
Read more »

One Piece Of Paper

"Thanks, Winston. I really like your phrase, “the birth lottery.” We all begin life’s journey from different starting points, and it’s easy to underestimate how much that shapes the opportunities available to us. I also smiled at your comment about computers. It’s wonderful when something that begins as simple curiosity or enjoyment turns into a rewarding career. Like you, the older I get, the more I find myself focusing less on achievement and more on gratitude for family, opportunities, and the unexpected turns that made life richer than I ever imagined."
- Andrew Clements
Read more »

Before Someone Else Decides

"Thank you! I’m glad you found both helpful. I hope that the e-Booklet makes this daunting decision feel a little more manageable—one conversation and one step at a time."
- Kathleen Rehl
Read more »

Free Newsletter

Get Educated

Manifesto

NO. 41: VERY FEW of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.

think

INTRINSIC VALUE. It’s easy to get caught up in the stock market’s wild price swings. Feeling unnerved? Never forget that behind those price swings are companies of great value. While we can’t put a precise figure on their intrinsic value, we can get a sense by examining the profits they earn, the dividends they pay and the value of the assets they own.

act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Truths

NO. 49: YOU CAN have stability of principal and stability of income but, in a liquid investment, you can't have both. Money-market funds and savings accounts offer stability of principal, but the rate paid can quickly rise and fall. Most bonds, by contrast, pay the same amount of interest each year until maturity, but they can fluctuate sharply in price.

How to think about money

Manifesto

NO. 41: VERY FEW of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.

Spotlight: Cars

Getting Used

OKINAWA IS A JAPANESE island that is southeast of mainland Japan and about two hours and 40 minutes from Tokyo by plane. It is famous for fierce Second World War battles and currently houses about 26,000 U.S. military personnel. From 2006 to 2008, I was one of these military personnel, working as an emergency physician in the naval hospital.
Okinawa, my new dream come true. Going to Okinawa was not my first choice.

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13 Rental Car Rules

IN SEPTEMBER 2017, my wife and I sold our home, car and almost all our earthly possessions. We spent the next four years driving across four continents. Along the way, I learned a great deal about renting a car that, in this rental-car-challenged world, could make your travels less costly and more reliable.
1. I use Expedia, Kayak and Hotwire to compare rental car rates. When you book, pay attention to whether your reservation is free cancellation or pay now (noncancellable).

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Conflicting and Confusing Economic Indicators

Although I feel I have at least an average level of intelligence, I truly cannot understand many financial issues, that I read and hear, from everyday people, politicians and more.
For example, gasoline prices seem to be a favorite topic, and I wonder why consumers are so concerned as they rise, while the prices of the vehicles have risen so much and why many those same people keep leasing and buying very expensive SUVs, Huge pick up trucks ,etc.

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Another HD Post About Cars

Here’s another car-themed Forum post. Last June I wrote a Humble Dollar article about vehicle ownership and longevity. I ended that article with a description of the most recent major repair required for my 2011 Subaru Forester when the clutch assembly failed and required replacement. Those of you wishing to revisit that article can view it here.
I mentioned at the end of that article it might be time to search for another Subaru. At the end of 2024 I read about the introduction of a Subaru Forester option in the new model year –

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My Big Brother

AUTO INSURANCE HAS been getting more and more expensive in recent years. There are many reasons: New cars cost more, extreme weather, folks seem to be suing more often, and so on.
Our daughter Brenda called me, asking if I could look over her auto policy to see if there was a way to lower her premiums. We have our car insurance with the same company. On the company’s website, I came across something called “Safe Pilot.” Many insurers have similar programs.

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They’ve Gone Soft

MY WIFE AND I BOUGHT a used hybrid Toyota RAV4 recently. We saw it at a dealership and bought it that day.
This wasn’t an impulse purchase. We knew it was time to replace my 10-year-old Subaru Forester, and we’d done research on hybrids and electric vehicles. Because the new car would be our distance traveling vehicle, and my occasional work transportation, we wanted the flexibility of a hybrid. In time, we’ll replace our second car with an electric vehicle for local driving.

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Spotlight: Rohleder

Helping Mom and Dad

LIKE MANY BABY boomers, my wife and I have watched our parents go from total independence to assisted living to death. We’ve been thankful that, at key moments, they made the difficult decisions themselves, without our prompting. These decisions included when to give up the family home in favor of moving to a continuing care retirement community, when to give up their car and driver’s license, and when to move to assisted living. Our parents were organized and realistic people who trusted us to act for them in increasingly significant ways as they moved from one stage to the next. Because of their recognition of what they could and couldn’t do, they were able to ease these transitions. Below are five categories of steps they took, sometimes with our help. These steps protected their assets while they were alive and ensured that their assets were all accounted for after they died. Also, their actions ensured that, after their death, complications and potential family squabbles were minimized. They each put in place key estate planning documents: a will, a revocable living trust with one of us as trustee, a financial durable power of attorney designating one of us to act on their behalf in business matters, and a living will and durable power of attorney for health care. With these as a foundation, they made sure that their accounts were titled properly, so they were held within the trust. A word about revocable trusts: For most people, the main purpose of these trusts is to avoid the need for assets to go through probate. I haven’t been through the probate process, but attorneys say to avoid it as much as possible. I’ve been through the process of closing three parents’ estates with a trust in place and it went very smoothly.…
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Save the Savers

I LEARNED IN COLLEGE economics classes that there’s a time value to money. A dollar today is worth more than the promise of a dollar a year from now. Result? If you’re going to promise me a future dollar, you have to make it worth my while by paying me some interest. This was certainly true in 1980, when I graduated with an economics and management major. Admittedly, inflation was even higher back then. Still, one-year Treasury bills were paying almost 11% and the newly popular money market mutual funds were yielding more than 12%. Today, after rates hovering near zero for years, one-year Treasury bills are yielding over 4% for the first time since 2007, while my money market fund is paying more than 2%. The years of low interest rates have been perpetuated by one financial crisis after another: the dot-com bust, the Great Recession and the COVID-19 economic shutdown. Just as one crisis abated and rates started to rise, another crisis came along. One consequence is we have an entire generation who think that near zero interest rates are “normal.” There are also powerful economic players who relish this situation. Stock investors see share prices propelled higher as folks seek an alternative to the tiny return on their cash. Businesses can borrow to make capital investments at a low cost. Real estate investors and developers can also borrow cheaply to launch their projects. Perhaps most significant, governments can run larger deficits because their borrowing costs are low. Who loses? One answer is responsible individual savers. This was true of my mother. She had diligently saved all her life, shopping carefully and preparing for retirement. When she retired, she had no debt of any kind, while keeping a lot of cash in certificates of deposit and money market…
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Final Act

DESPITE WHAT’S SHOWN on TV medical shows, cardiopulmonary resuscitation (CPR) can be a traumatic procedure that has a low likelihood of success. Even if successful in immediately restarting the heart, the fact that it was necessary doesn’t bode well for long-term survival. Some injuries or illnesses happen so suddenly that there’s little time to consider options. But for many, old age creeps up slowly or a serious illness drags on and worsens. This is the point where it’s helpful to have not just a living will and a health care power of attorney, but also a third document to assist those with illnesses such as terminal cancer, advanced heart or lung disease, or dementia. The “do not resuscitate,” or DNR, order tells health professionals not to undertake CPR if your heart stops. Some states also recognize “physician orders for life sustaining treatment,” or POLST. Think of it as a super DNR. Where a DNR deals specifically with the resuscitation of a patient who has stopped breathing, a POLST gives orders about other advanced treatments, such as mechanical ventilation, antibiotics and feeding tubes, as shown in this video. POLST orders can only be completed by a physician. Even if your state doesn’t legally recognize POLST, the national form can still be used as a basis for a conversation about your wishes with your physician and family. The challenge for patients and families at the end-stage of cancer or any disease is deciding when further treatment runs counter to the patient’s desired quality of life. Making this decision requires an understanding of the possible treatments, their probability of success and the complications or side effects, as well as the likely costs. Cost of care is a real concern, even if it’s uncomfortable to discuss. “Do everything” encompasses some very expensive interventions including…
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Big Beautiful Bill Response

I keep a spreadsheet that helps me estimate my current year taxes. As a result of tax changes from the Big Beautiful Bill and further tax changes resulting from the recent Ohio budget bill, I expect tax savings in 2025 in the neighborhood of $1800 on the Federal side and $300 on the State side. And, I expect further savings in 2026. Political discussions are forbidden on the Humble Dollar site and this post is not political commentary.  All of us probably have opinions about how reductions in Federal funding have been implemented this year. But no matter our opinions, the fact is they reflect real reductions to some organizations that are doing good work. And, while I always appreciate lowering my cash outflows, I must admit that I did not need either the Federal or State tax cut. I was getting along fine at the prior rate of taxation. I have concerns about the people impacted by these cuts. Reasonable people can disagree about the role of government in funding any number of programs. That doesn’t mean they are all worthless. And, maybe some should be funded to a greater degree by private individuals who believe in their work. With my trusty spreadsheet calculations, I have mapped out a plan to donate my tax savings to organizations that saw cuts. First, I’m planning on upping donations I was already making to the local food bank, a voluntary health organization, and the local PBS station. I also used Bing Co-Pilot to ask targeted questions about regional organizations that are likely to be hard hit by funding cuts. I learned of a charity, highly rated by Charity Navigator, that provides a wide range of services to underserved populations in my area. They expect to see a significant reduction in Federal monies.…
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Taxing Situations

As an AARP volunteer Tax Aide for a second tax season, I completed about 100 returns and reviewed many others prepared by other volunteers. I volunteer two days a week from February 1 to April 14 at two different senior centers and continue to make observations based my clients’ tax situations. The Tax Aide program is free and not limited to seniors or AARP members. Even though most clients are retired seniors, we can serve all ages and incomes. Only more complex returns are out of scope. It is not unusual to be helping someone whose spouse has recently passed away. I had a couple of situations where the death was in 2023 which had allowed them to continue to file “married filing jointly” last year. As I prepared the 2024 return, they were hit with the implications of now filing “single.” Their standard deduction is essentially cut in half. If their income and withholding stayed the same, this meant a big tax bill. This led to difficult conversations where I explained that: 1) they had to come up with the money to pay this year’s taxes; 2) they were potentially on the hook for penalties associated with under withholding because they owed more than $1000; and 3) they had to consider increasing withholding for the current year to avoid a penalty next year. As many of our clients have low incomes, these prospects were daunting. If I saw someone where the spouse died in 2024, I was able to counsel them to increase their withholding now so they did not get caught short next year. I saw a smattering of W-2G forms. These represent gambling winnings, usually from one of our local casinos. Not surprisingly, the state and city have taken their cut and this is disclosed on the…
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Once Burned, Twice Shy

Return with me now to the year 1990. George H. W. Bush was President. The Buffalo Bills had a heartbreaking loss to the NY Giants in the Super Bowl. The Cold War ended with the dissolution of the Soviet Union. The Gulf War started when Iraq invaded Kuwait. In the investment world, Peter Lynch, the long-time mutual fund manager of Fidelity’s Magellan Fund, retired to be replaced by Morris Smith. In my chapter of Jonanthan Clement’s book My Money Journey, I tell how my mother and I made a leap of faith in 1981 to make our first foray into stock investing by purchasing the Magellan Fund. By 1990, my mother’s retirement plans were much more secure, Peter Lynch was my hero and the Magellan Fund was Fidelity’s flagship. My logic in 1990 was “Surely Fidelity will not let its flagship fund founder… they will place it carefully in the hands of the next Peter Lynch.”  So, we continued to hold Magellan for what would become a disappointing decade. To refresh my memory, I asked CoPilot to summarize Magellan’s performance for ten years after Lynch’s retirement. Morris Smith had a two-year tenure with similarly strong results. According to AI, from 1992 to 1996 “Jeff Vinik produced strong absolute performance but made a famous defensive shift into bonds and cash in 1995, causing the fund to lag the S&P 500 during a major rally.”  Then came Robert Stansky in 1996. Magellan had over $100 million in assets by then. “The fund is specifically remembered for underperformance in his tenure.”  Further, “With that size, Magellan became more index‑like and diversified, making it very hard to keep up with a narrow, momentum‑driven tech rally. The S&P 500 concentrated gains in a few mega‑cap growth names; Magellan, by design and scale, couldn’t mirror that…
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