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The Art of Making Do

Mark Crothers | Sep 25, 2026

"I remember my mum using a little dab of nail polish to stop a run in her nylons... although that's one frugal tip I've never had to use!"

- Mark Crothers

Widow’s Penalty Redux

ArticleRichard Connor | Sep 26, 2026

A RECENT post by achnk53 about the impact of a spouse’s death on the survivor’s taxes piqued my interest. The post referenced an interesting Kiplinger article about the “Widow’s Penalty”, or the negative tax implications on a surviving spouse after the death of a spouse. A surviving spouse can file Married Filing Jointly (MFJ) in the year of their spouse’s death. In the full year following the spouse’s death you must file Single. There are some beneficial filing rules for surviving spouses who have dependent children, but that is beyond this post. Nine days later John Urban published an article running the tax numbers for 3 different retiree scenarios, and using the data to provide some excellent suggestions for readers. In between these two articles I had run some similar case studies to understand the impacts. I ran some case studies using the 2026 Dinkytown 1040 Calculator. I considered a “lower" income retired couple. The impact of one spouse passing is very dependent on the sources of income. Assume the retired couple were each receiving $36,000 in annual SS benefits. They have no other sources of income. The couple filing jointly would have no taxable income, and no tax for 2026. Had the husband died in 2025, the surviving widow would have seen her income reduced to $36,000. If she needed the lost income, and found a job that paid $36,000, her income would match the original $72,000. But $21,500 of her SS benefit would be taxable, her taxable income would be $33,350, and her annual tax bill would be $3,757. The table below shows the details of this analysis: Tax Calculation

After accounting for the reduction in Medicare related spending, she has similar spending power. But she had to go back to work to achieve that. This, and the previous examples, reinforce the importance of understanding a couple’s financial details before and after the passing of a spouse. Income will likely be reduced, but expenses may also be reduced. Lower income retirees who depend primarily on both partners SS benefits may see the biggest impact. I also ran a comparison of our tax return for 2026, for both MFJ and if my wife filed single. I assumed our income consisted of my pension, my wife’s SS benefit, and my SS benefit had I claimed it on January 1, 2026. When I die my wife will receive 75% of my pension, and my higher SS benefit. The results were not surprising.

Her total income would be 68% of our combined pre-death income.
Her annual tax bill would be $1,250 more than our joint tax bill.
Her effective tax rate would increase by 4.2%.
85% of her SS benefits would be taxable
Her spendable income after taxes would be about 65% of the joint amount.
She would lose about 20% of the new Senior Deduction
She would have no NJ State Tax liability

I then ran an additional scenario with the same assumptions, but also assuming we were 4 years older and would both have to take initial RMDs in 2026. This scenario reflects one of the concerns frequently expressed when discussing this topic – what happens when the surviving spouse is responsible for reporting the income from both RMDs on her Single tax return. The results changed to reflect the scenario.

Her total income would be about 79% of our combined pre-death income.
Her annual tax would be $708 more than the joint tax filing.
Her effective tax rate would increase by 3.8%.
Her spendable income after taxes would be about 80% of the joint amount.
She would lose all of the new Senior Deduction.
Her NJ State Income tax would be $540 more than the joint tax filing.
She would be pushed up one IRMAA bracket in 2028.

These results are a simplified look at our finances today. My pension and my wife’s SS benefit cover our non-discretionary, and a decent portion of our discretionary, expenses. The wild card is travel – how much we spend in any year is our choice and may require additional income. I’m about 11 months from claiming my SS benefit, at which point virtually all of our expenses will be covered in a fairly tax-efficient way. RMDs are still 4 years away. This was a good exercise to get a feel of how my demise would impact my wife’s finances. It would have some financial impacts, but I believe our plan can handle them. I’m considering running some more detailed projections varying the age at death to assess the impacts, but a quick look made me reasonably confident our retirement savings will be adequate, even considering long term care. I will also continue to look at Roth conversions each year. 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.

Keep an eye on Medigap policies

R Quinn | Sep 26, 2026

"Keep up the good work keeping us informed Dick. We’re all better off because of your knowledge and diligence in this arena."

- DavidHLancaster

From HumbleDollar Founder Jonathan Clements

Lists

Why HumbleDollar?

IN OUR 20s, WE TEND to be a confident lot: We figure we know what we want from our life, that the goal is…

Time Is Priceless

Andrew Clements | Sep 23, 2026

"Jeff, thank you for the kind words. I think giving our time to help and encourage others is one of the most meaningful ways we can spend it. We may never fully know the difference we make in someone else’s life, but that time and kindness can stay with them long after the moment has passed. I hope we both have many years ahead to keep doing just that"

- Andrew Clements

Spending

Anyone For S.K.I.ing?

Mark Crothers | Sep 22, 2026

"John, maybe you're short-changing yourself. It's always possible you'll put enough extra miles on yourself — and on that nice car — that your kids will end up having to make do with just the house and land."

- Mark Crothers

Life Events

It’s been one year

Elaine M. Clements | Sep 21, 2026

"Thank you for this. Jonathan was the BEST, and one of a kind."

- William Dorner

Structuring Bonds

ArticleAdam M. Grossman | Sep 19, 2026

IT'S BEEN AN UNUSUAL week in the bond market, and not necessarily in a good way. This has many investors questioning the value of bonds, which is understandable. Bonds are supposed to be the “safe” side of a portfolio, but they’ve struggled in recent years. Arguably, the drama we’re seeing in the bond market today began more than 50 years ago. To put today’s situation in perspective, I’ll briefly summarize that long history. Then we can look at what steps you might take to better protect your portfolio from here. Back in the 1970s, as you’re probably aware, inflation rose above 10%. Policymakers struggled for years to bring it under control, but in the early 1980s a Fed chair named Paul Volcker finally succeeded. He accomplished that by raising the Fed’s benchmark rate to nearly 20%. With this step, Volcker succeeded in calming inflation, and that allowed the Fed to begin lowering rates, a gradual process that continued for most of the following 40 years. Because bond prices move inversely to interest rates, that entire stretch was extremely beneficial for bonds. As rates fell, bonds rose. Between 1980 and 2020, intermediate-term U.S. government bonds returned 7% per year, on average. That multi-decade run helped seal the reputation of bonds as an easy and reliable way to offset the risk of stocks. But then the other shoe dropped. Due to pandemic-related government spending and tangled supply chains, inflation began rising around 2021. Well aware of what the economy experienced in the 1970s, the Fed responded by raising rates aggressively. For a time, that appeared to bring inflation under control, and the government had even started to lower rates again last year. But then the war with Iran started. That caused energy prices to jump higher, and that, worryingly, has caused inflation to start creeping back up again. In response, the Fed this week was forced to take action, raising rates in an effort to contain inflation before it gains steam. Interest rates on long-term bonds are now at 20-year highs. And because bond prices move inversely to interest rates, bonds are having another difficult year. Total-bond market funds like Vanguard’s BND are now negative year-to-date. Where the bond market goes from here is anyone’s guess, but this history is important, in my view, because bonds are unlikely to see another long, positive stretch like the one investors enjoyed a generation ago. Instead, I believe investors need to be more cautious. What steps might you take? Since we don’t know whether rates will go higher or lower over any given timeframe, the approach I recommend is to own bonds in each of several categories. That way, you’ll benefit, in part, if rates go up, and you’ll benefit, in part, if rates go down. Here’s how I’d structure a bond portfolio today: For me, the most important thing is to own mostly short-term bonds. Specifically, you might allocate 60% of your bond portfolio to short-term Treasurys, using a fund like Vanguard’s VGSH. This fund should be among the most stable investments available because it’s backed by the U.S. government, which, for better or worse, has the ability to print money to meet its obligations. And its short duration means that, all things being equal, it will be less susceptible to rising interest rates if rates do continue to rise. As a point of reference, in 2022, when rates rose quickly, this fund lost less than 4% of its value. That’s in contrast to total-bond market funds, which lost an extremely unpleasant 13% that year. If you’re in a high tax bracket (over 30%), you could split your short-term holdings between Treasurys, which are taxable at the federal level, and municipal bonds, which are exempt from federal tax. You might consider a short-term municipal fund like Vanguard’s VTES or VWSUX. Next, I’d allocate 20% to intermediate-term bonds. While these will be more susceptible to losses when rates rise, they’ll also gain more when rates fall. Last year, for example, when rates fell, intermediate-term government bond funds like Vanguard’s VGIT gained more than 7%. So I see them as worth the additional risk. That said, if this risk concerns you, there’s a relatively easy alternative: For this part of your portfolio, you could purchase a ladder of individual bonds covering maturities between five and 10 years. While it requires additional effort to purchase individual bonds, what you’ll receive in return is greater certainty. At the moment that you purchase an individual bond, you’ll know the yield to maturity. Barring a default—which is unlikely with a government bond—that’s precisely the return you will earn. For the final 20% of a bond portfolio, I recommend inflation-protected Treasury bonds, known as TIPS. Here again, you could purchase individual bonds or a bond fund, and there’s a lot of debate on this topic. But according to research I find convincing, the best way to protect against inflation is with short-term TIPS. So to keep things simple, I would opt for a fund rather than a ladder of individual bonds, which would require frequent trading. One good fund in this category is Vanguard’s VTIP. At the end of the day, the most important thing, in my view, is to build a bond portfolio that’s diversified enough that you could reliably draw on it in years when stocks are down. And recognizing that even short-term bonds carry some amount of risk, it’s worth also holding a “floor” of cash, using a government money market fund, as an additional element in your portfolio. These won’t gain in value when interest rates fall, but they’re designed not to lose any value if rates rise. Put it all together, and I see this as an effective sleep-at-night structure no matter where things go next. 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.

The Security Money Can’t Buy

Dennis Friedman | Sep 25, 2026

"I'm an introvert, but when I moved to a CCRC I made an effort to meet new people and to get involved in some of the (many!!) activities. I now have valued new friends, so I definitely endorse your plan."

- mytimetotravel

Taxes

Does the new-for-2026 $1000/$2000 charitable deduction for non-itemizers reduce AGI?

Andrew Forsythe | Sep 22, 2026

"William, you might want to check the comments below, including Bill Perry's link to the draft 2026 1040. It has line 12f showing this deduction is anticipated to be below-the-line (after AGI is calculated)."

- Andrew Forsythe

Financial Lessons

ArticleAdam M. Grossman | Sep 26, 2026

WHAT'S THE MOST important idea in personal finance? It’s hard to single out just one, but over the years, I’ve found the following dozen ideas to be among the most useful.

Whether it’s on TV or online, there’s never any shortage of market prognosticators. Especially during a bull market, everyone seems to have an opinion on where things are headed. The reality, though, is that people can only guess about how the economy, the market or any individual investment will perform. Convincing as they might sound, no one has a crystal ball. That’s why, when it comes to investing, I suggest taking an evidence-based approach, one that relies as much as possible on data and research rather than on the simple stories, anecdotes and sayings that are so prevalent among market commentators.
What does the data tell us? Among the most significant research in recent years is the work of Hendrik Bessembinder. In looking at the historical returns of stocks, he found that just a tiny fraction—only 4%—have accounted for the vast majority of the market’s gains over and above what Treasury bills paid, and the median stock actually delivered a negative return. This is one of the key reasons I recommend index funds rather than picking individual stocks or investing in an actively-managed fund. Identifying that 4% is almost impossibly difficult. But if you invest in a broad-based index fund, you’ll have a high likelihood of owning the next Apple or Nvidia.
Be careful not to miss the forest for the trees. The most important driver of investment risk and return for most people, most of the time, is asset allocation. In other words, the dollars you have in stocks vs. in bonds or in cash will almost always be the most consequential decision. It’s easy to lose sight of that, though, because so much of the investment commentary from day to day focuses on details like small differences in fund expenses or small differences in bond yields. To be sure, details can be important, but only after considering the big picture.
Another challenge in investing is that certain rules of thumb gain so much popularity that they end up being seen as rules rather than just guidelines. For example, some say that the percentage of a portfolio allocated to bonds should be equal to an investor’s age. To me, that’s illogical. Consider Bill Gates. He’s 70 years old, but it stands to reason that he shouldn’t have the same asset allocation as any other 70-year-old. Rules of thumb are useful as points of reference, but we shouldn’t lose sight of the fact that everyone’s situation is different, and our investments should reflect that. More to the point, don’t worry if you’re doing something different from the next person.
Buy insurance, but only to protect against losses you couldn’t absorb on your own. What does this mean in practice? In many cases, it’s possible to significantly cut insurance premiums by increasing deductibles. For example, if you have a seven-figure net worth, you might consider raising the deductible on your homeowner’s insurance to $5,000 or $10,000 or even more. Similarly, you might re-evaluate your life insurance as your net worth grows. You’ll likely become “self-insured” at some point, and then you could reduce or drop that coverage.
Personal finance is quantitative, but we should never make decisions based only on the numbers. For example, a common question is how much cash to keep on hand. While we could work out an optimal number on a calculator, that shouldn’t be the final answer. You should also consider what would provide you with peace of mind. That is equally important.
Be wary of the psychological pitfall known as recency bias. This is the tendency to extrapolate from recent experience and to downplay the possibility that things might change. The most famous example? In the late-1920s, when the stock market was booming, Yale University economist Irving Fisher declared that the stock market had reached a “permanently high plateau.” Just nine days later, the market crashed, ultimately dropping 89% from its peak.
Avoid high fees. The research firm Morningstar once wrote, “If there’s anything in the whole world of mutual funds that you can take to the bank, it’s that expense ratios help you make better decisions. In every single time period and data point tested, low-cost funds beat high-cost funds.”
Keep things simple. Most importantly, I would be wary of investments that aren’t easily understood. Not only can this help keep investment costs down, but it also makes it much easier to monitor your financial picture. Legendary fund manager Peter Lynch said it best: “Never invest in any idea you can't illustrate with a crayon.”
Avoid “interesting” investments. So far this year, Wall Street has introduced more than 1,000 new exchange-traded funds (ETFs). How many of these are worth your attention? My guess is you could probably count them on one hand. More than 80% of these new funds are actively-managed, and more than 30% employ leverage. And there are more to come. Fund companies recently filed paperwork to create ETFs that will track the performance of major league sports teams. They won’t actually own shares in the teams; instead, they’re expected to rise and fall in response to each team’s wins and losses.
For years, I’ve argued that bitcoin isn’t a valid investment. Even though it’s gone way up since I first made that argument, I still feel the same way, and for the same reason: because it lacks intrinsic value. Unlike stocks or bonds, it doesn’t generate any dividends or interest. Bitcoin’s price is not anchored to anything measurable or tangible, and that’s why, in my opinion, its price is so volatile.
When it comes to investment risk, investors’ attention usually turns to the stock market. That makes sense, but as we’ve seen this year, bonds are not without risk. And unfortunately, the total-bond market index, which is often seen as the simplest, set-it-and-forget-it option, is one that carries quite a bit of risk. If you’re choosing bond investments, my recommendation is to pay attention to a metric known as duration. This tells you how sensitive a bond, or bond fund, will be to interest rate changes. In my view, investors should hold a sizable portion of their bond investments in a fund, or in individual bonds, with a duration of less than two years.

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.

Taxes

Shouldn’t property taxes be a realistic part of retirement planning? Sorry, I think this is a major financial and social issue.

R Quinn | Sep 23, 2026

- Bruce Trimble

The Art of Making Do

Mark Crothers | Sep 25, 2026

"I remember my mum using a little dab of nail polish to stop a run in her nylons... although that's one frugal tip I've never had to use!"

- Mark Crothers

Widow’s Penalty Redux

ArticleRichard Connor | Sep 26, 2026

Her total income would be 68% of our combined pre-death income.
Her annual tax bill would be $1,250 more than our joint tax bill.
Her effective tax rate would increase by 4.2%.
85% of her SS benefits would be taxable
Her spendable income after taxes would be about 65% of the joint amount.
She would lose about 20% of the new Senior Deduction
She would have no NJ State Tax liability

Her total income would be about 79% of our combined pre-death income.
Her annual tax would be $708 more than the joint tax filing.
Her effective tax rate would increase by 3.8%.
Her spendable income after taxes would be about 80% of the joint amount.
She would lose all of the new Senior Deduction.
Her NJ State Income tax would be $540 more than the joint tax filing.
She would be pushed up one IRMAA bracket in 2028.

Keep an eye on Medigap policies

R Quinn | Sep 26, 2026

"Keep up the good work keeping us informed Dick. We’re all better off because of your knowledge and diligence in this arena."

- DavidHLancaster

From HumbleDollar Founder Jonathan Clements

Lists

Why HumbleDollar?

IN OUR 20s, WE TEND to be a confident lot: We figure we know what we want from our life, that the goal is…

Time Is Priceless

Andrew Clements | Sep 23, 2026

- Andrew Clements

Spending

Anyone For S.K.I.ing?

Mark Crothers | Sep 22, 2026

- Mark Crothers

Life Events

It’s been one year

Elaine M. Clements | Sep 21, 2026

"Thank you for this. Jonathan was the BEST, and one of a kind."

- William Dorner

Structuring Bonds

ArticleAdam M. Grossman | Sep 19, 2026