"AI just uses the information that is available online. Without anonymity there can be no privacy. A few of my rules about online privacy: Have no social media accounts. Browse anomalously. Shop anomalously, especially when comparison shopping. Read news sites anomalously. Logging in and then reading news provides way too much information about you. Log in only when and as needed for a specific purpose (such as a purchase); then log out as soon as finished (and close browser which is set to automatically clear browsing history and cookies at exit). Do not switch sites while logged in, especially financial account sites. Log out and close browser in-between checking each account. Use multiple email accounts for different purposes. Assume your email will be read by someone or something you did not send it to. Do not trust the account privacy statements (especially at sites like ID.me) since these are not legally binding and can be changed at any time. Use a privacy friendly browser, such as Firefox. Check browser’s privacy and security settings.
"
"It’s not a scam, it’s social insurance. I don’t see it as regressive. The taxes are based on earnings and so are the benefits plus the benefit formula is skewed to give a higher benefit to lower income workers. The percentage bend points decline with higher average wage of the individual. Virtually all beneficiaries receive more than they pay in taxes within six years of starting to collect. That’s why taxing SS benefits make sense. And also another reason why it isn’t regressive. I collected in benefits all I paid in taxes ten years ago and all my employer paid as well at this point. Disabled children, some spouses and ex-spouses and surviving spouses all may collect without paying taxes on their own work earnings. That’s why it is insurance. It’s worked fine for over 80 years, cry’s of scam are misplaced. As far a Medicare goes that is pure insurance. Taxes fund Part A and premiums and out of pocket costs and general revenue fund part B. All insurance transfers someone’s money to someone else. That is the very concept, collective protection. Hardly a scam at all and to call it that is irresponsible. If there was no such transfer, what is the alternative for everyone regardless of means. Frankly, I wish all I paid into and now pay for Medicare went to someone else instead of the hundreds of thousands in medical bills my wife and I have incurred in the last few years. You may want to consider dropping all forms of insurance if you view the concept as a scam and if you feel comfortable with accepting all the risk on your own."
"Andy, do you have any idea how your classmates dealt with the aftermath of being at that boarding school? I can only imagine that some didn’t have the wherewithal to get past the trauma."
AMERICA’S HAPPINESS plunged during the pandemic. I’d assumed that survey result was an aberration, and perhaps that’ll still prove to be the case. But…
"Is it really worth the time and effort? I would think that can only work if your prescriptions stay the same and you don’t run into formulary issues. When you say Net price, I assume you are not just talking premiums, but total out of pocket costs."
"Bob,
Thank you so much for sharing your heartfelt words and experience. I’m so glad you have good friends, family, and fond memories to lean on. Wishing you the very best."
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 @AdamMGrossmanand check out his earlier articles.
A RECENTpost 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: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.
"AI just uses the information that is available online. Without anonymity there can be no privacy. A few of my rules about online privacy: Have no social media accounts. Browse anomalously. Shop anomalously, especially when comparison shopping. Read news sites anomalously. Logging in and then reading news provides way too much information about you. Log in only when and as needed for a specific purpose (such as a purchase); then log out as soon as finished (and close browser which is set to automatically clear browsing history and cookies at exit). Do not switch sites while logged in, especially financial account sites. Log out and close browser in-between checking each account. Use multiple email accounts for different purposes. Assume your email will be read by someone or something you did not send it to. Do not trust the account privacy statements (especially at sites like ID.me) since these are not legally binding and can be changed at any time. Use a privacy friendly browser, such as Firefox. Check browser’s privacy and security settings.
"
"It’s not a scam, it’s social insurance. I don’t see it as regressive. The taxes are based on earnings and so are the benefits plus the benefit formula is skewed to give a higher benefit to lower income workers. The percentage bend points decline with higher average wage of the individual. Virtually all beneficiaries receive more than they pay in taxes within six years of starting to collect. That’s why taxing SS benefits make sense. And also another reason why it isn’t regressive. I collected in benefits all I paid in taxes ten years ago and all my employer paid as well at this point. Disabled children, some spouses and ex-spouses and surviving spouses all may collect without paying taxes on their own work earnings. That’s why it is insurance. It’s worked fine for over 80 years, cry’s of scam are misplaced. As far a Medicare goes that is pure insurance. Taxes fund Part A and premiums and out of pocket costs and general revenue fund part B. All insurance transfers someone’s money to someone else. That is the very concept, collective protection. Hardly a scam at all and to call it that is irresponsible. If there was no such transfer, what is the alternative for everyone regardless of means. Frankly, I wish all I paid into and now pay for Medicare went to someone else instead of the hundreds of thousands in medical bills my wife and I have incurred in the last few years. You may want to consider dropping all forms of insurance if you view the concept as a scam and if you feel comfortable with accepting all the risk on your own."
"Andy, do you have any idea how your classmates dealt with the aftermath of being at that boarding school? I can only imagine that some didn’t have the wherewithal to get past the trauma."
AMERICA’S HAPPINESS plunged during the pandemic. I’d assumed that survey result was an aberration, and perhaps that’ll still prove to be the case. But…
"Is it really worth the time and effort? I would think that can only work if your prescriptions stay the same and you don’t run into formulary issues. When you say Net price, I assume you are not just talking premiums, but total out of pocket costs."
"Bob,
Thank you so much for sharing your heartfelt words and experience. I’m so glad you have good friends, family, and fond memories to lean on. Wishing you the very best."
Abuse
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- 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.