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Jonathan’s Parting Thoughts: No. 6

Jonathan Clements | Oct 2, 2026

"Just no red eyes, middle seats or adjacent to the bathroom! 🚽 Please!"

- S Sevcik

Saving

A Very Humble Saving

Mark Crothers | Oct 1, 2026

"I agree with your observation: LEDs often don't last as long as the advertised 10,000 to 15,000 hours. In my case, though, that may be because I tend to buy the cheapest bulbs available."

- Mark Crothers

Life Events

FINANCIAL EMERGENCIES have a way of compounding when least expected. This is often coined as a correlated risk. I call it running out of clean underwear. My father used to profess, in emergencies, that turning pairs inside out was a legitimate way to extend undergarment use under duress. Financially, this is merely extending the life of a depreciating asset. I am sure my mother would have refuted this concept. Nevertheless, before you judge me too harshly, allow me to share the situational details. Three weeks ago our 7 year old washing machine, an example of aging capital equipment, began exhibiting signs of being possessed. Wash cycles were accompanied with grinding noises and violent walks across the floor. Spin cycles initiated poltergeist-like behavior, with heavy banging and metallic thuds made by nether-world demons. An internet search revealed the probable cause of the machine’s paranormal behavior, which was likely broken suspension rods or damaged shock absorbers holding the inner tub in place. After watching 8 or 9 YouTube videos, I decided that I had the inner fortitude to de-demonize our beloved washing machine. And being thrifty, I wished to avoid the major capital expenditure of replacing the washer. I consider myself handy and even pride myself on the 65% success rate for fixing household appliances. Yes, I freely admit that past performance is no guarantee of success. However, since I was attempting to maintain my existing emergency fund, I ordered new drum springs; at 7 years old it seemed financially responsible to repair rather than replace the machine. Upon arrival of the rods, I subsequently installed them in a mere 3 hours (I like to think of myself as methodical, rather than speedy). With a screwdriver in hand, one bruised elbow, and my pride on the line, I separated the whites from the darks and ran a load. Success! Unfortunately, the clean clothes ran up against another obstacle. Our 10 year old dryer must have been jealous of the attention its utility counterpart received. What are the odds that both a washer and a dryer would malfunction in the same week? Call it correlated asset failure. In my house, in hindsight, the odds were pretty darn high. One appliance repair was manageable. Two was beginning to feel like collusion between utilities. To make matters worse, the washing machine was only functional for two loads. Just because you can purchase parts on the internet does not guarantee long term utility after installment, in essence rendering my original repair invalid. Sunken costs for a depreciating asset. In this case, I probably broke a plastic piece holding the inner tub while replacing the springs. Unfortunately, I was lulled into a false sense of security, and was outside the house when those diabolical mechanical fiends struck again. When I returned, the washer was in full demonic dance, this time mischievously thumping our 17 year old water heater. The water tank wanted no part of the dance, and promptly sprung a supply line leak. Great. In hindsight, advocating for a larger emergency fund balance would have been prudent for someone like me with a known 35% failure rate. I ran to the big box store to purchase a new pipe and some sealing tape, but silly me, I forgot to take measurements of the tank and valves. I called my wife in the parking lot to assist. My mistake was to ask her to check if the tank’s intake valve was functional. It was not, evident by her high pitched scream and the clear sound of water gushing. Note to self: remember to shut off the main water supply before asking the wife to help with water tank issues. Did I mention that our daughter’s future in-laws were coming to dinner the next day? In the end, we purchased a new water heater and were only without water for two days. We also purchased a washing machine, but it took roughly three weeks for delivery, as we required a difficult footprint size to fill the space occupied by the previous device. Our emergency fund survived, albeit at a lower level than anticipated. As a side note, I was able to fix the dryer, for the most part, so that a full replacement was not necessary. The experience taught me a few lessons. First, household financial risks may appear independent, yet often this is not the case. It was easy to fathom we had our unexpected events covered with our existing emergency fund. Yet compounding systemic appliance failures pushed the unexpected expenses towards our theoretical limits. Second, my father was only partially correct. Underwear is not a renewable asset. I should also think about establishing a separate Fruit of the Loom reserve account to accompany our current emergency fund. A decision my mother would have approved. Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.

Investing

Why Bonds Matter

ArticleAdam M. Grossman | Oct 3, 2026

RECENTLY, A READER—let’s call him Tom—posed this question: If stocks historically have delivered far better returns than bonds, then why should an investor own any bonds at all? Even with the stock market's unpredictable ups and downs, wouldn't you end up way ahead by betting only on stocks over the long term? It's a fair question. Over the past 100 years, stocks have delivered returns of roughly 10% per year, while bonds have returned just 5%. More recently, that gap has been even wider. Between 2016 and 2025, the S&P 500 gained nearly 15% per year, on average, while bonds gained less than 2%. And as we've experienced in recent years, bonds aren’t without risk, so why not just go all in with a 100% stock portfolio? The most common answer to this question involves a phenomenon known as sequence-of-returns risk. That’s the risk posed to retirees by an unpredictable stock market. Suppose, for example, you retire on a Friday, and stocks drop the following Monday. This would, of course, be unnerving, but it could become a real problem if you’re forced to sell stocks while they’re depressed. Too many forced sales can cause a portfolio to deplete too quickly. Tom, the reader who posed this question, is an experienced investor and well aware of sequence-of-returns risk. His view, though, is that it’s a fear that’s overblown. Even if stocks drop from time to time, he argued, the impact should be modest. That’s because the loss an investor actually experiences in any given year would be limited by the amount withdrawn in that year. Suppose, for example, a retiree is taking withdrawals at a 4% annual rate. Even if the market were to drop 50%, that 50% loss would only be applied to the 4% withdrawal, resulting in a loss of just 2%. And since the stock market has delivered such superior performance overall, Tom asked, shouldn’t that more than offset single-digit losses like this, especially if they occur only every once in a while? It was a good question, so I ran the numbers, starting with a period that was particularly punishing for stock market investors: In 2000, the U.S. market dropped 9%. In 2001, it dropped a further 12%, and in 2002, it dropped yet another 22%. What would’ve happened if you’d retired at the beginning of 2000 with an all-stock portfolio and started taking withdrawals at a rate of 4% per year? In that case, the funds would have run down nearly to zero within 25 years. And if the withdrawal rate had been even just a little higher—4.5% instead of 4%—the funds would’ve been fully depleted within 20 years. Does that mean Tom’s 100%-stock strategy would be inadvisable? The answer is nuanced. Here are some key points to consider: First, it’s important to recognize that a retirement in 2000 was close to a worst-case scenario. Looking at retirement dates over the past 100 years, there were just two other cases in which a portfolio would have deteriorated so quickly over the course of a 25-year retirement. The first, not surprisingly, was 1929. The second was 1969, just before the malaise of the 1970s, when market returns stagnated while inflation accelerated. Aside from those limited cases, an all-stock portfolio would have been a winning strategy in nearly every other time period. In 91% of rolling 25-year periods between 1926 and 2025, a retiree would’ve ended up with more money after 25 years of withdrawals than on the first day of retirement. In about half of 25-year periods, the amount of money in the bank after 25 years would have been five times more than at the beginning of the period. Tom’s all-stock strategy, in other words, would have been the right choice in nearly every case over the past 100 years. Still, I wouldn’t recommend it to anyone approaching retirement, for these five reasons. First, and probably most important, is the fact that we each have only one chance at retirement. If we happen to end up with an unlucky sequence like in 1929, 1969 or 2000, it would be cold comfort to know that we were simply unlucky. As Bill Bernstein likes to point out, the odds of losing at Russian roulette are just one-in-six, but it goes without saying that still none of us would take that risk. Similarly, we can’t know what the future holds, so that’s why I’d recommend an asset allocation that, statistically speaking, might be more conservative than necessary. Another reality is that history is an imperfect guide to the future. In the past, there have been just three very tough periods for new retirees, but there’s no guarantee what path the market will follow in the future. Look no further than Japan, which only recently emerged from a 34-year bear market. Another risk is inflation, which was a key reason why the late-1960s were such a difficult time to retire. The government’s difficulty in reining in inflation since the pandemic is a reminder of this risk. Another consideration: I assumed in my simulation that a retiree’s portfolio withdrawals would follow the popular 4% rule, starting at 4% in the first year of retirement, then increasing in lockstep with inflation. Those assumptions are useful for financial modeling but don’t reflect the way real people spend money, which varies much more from year to year. If I had assumed spending that was even modestly higher than 4%, the failure rate would have been much higher. The last reason I’d be wary of an all-stock portfolio isn’t mathematical at all. It’s the reality that stock market declines can be enormously upsetting. So even if you can theoretically afford to take more risk, that doesn’t mean you’ll be happy when the market inevitably declines at some point—or at multiple points—during retirement. A final note: So far, this discussion has been limited to retirees. If you’re early in your working years or building a portfolio for a young person, then sequence-of-returns risk should be much less of a concern, and a portfolio like Tom’s might make sense. In fact, if you’re more than 10 or so years away from needing to draw on your funds and have some dollars set aside for whatever might come up in the meantime, then in that case, I would absolutely consider an all-stock portfolio. 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.

From HumbleDollar Founder Jonathan Clements

Happiness

Let’s Get Happy

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…

Taxes

Is a Roth conversion an optimal strategy in my situation?

batperson | Sep 12, 2026

"Topping off the 24% tax bracket does not take a meaningful bite; under $200K for several years Is it worth the effort for even a million dollar balance?"

- Severly Independent

In Retirement

Is now the time for an annuity?

R Quinn | Oct 2, 2026

"You are correct, I should have been clearer. Per the IRS the life expectancy for an 82 year old male is about 9.1 years, so the exclusion ratio is 99.6%. But I specified a J&S, so I should have looked at that table. The exclusion ratio is more like 11.6 years, or 78%. Once past the exclusion period, the entire amount is taxable. Thanks for picking that up."

- Rick Connor

Retirement

Will Congress Wait Until the Last Minute on Social Security?

Jeff Peck | Sep 27, 2026

"Only 6% of Americans earn over the current cap and it’s been that percentage for decades. I have no problem raising the cap provided SS benefits are also earned based on the additional earnings taxed, even if a new bend point is added at say 10%. But to do otherwise changes the entire concept of Social Security which I believe is risky."

- R Quinn

Login Enhancements

Elaine M. Clements | Oct 2, 2026

"Thanks! I will check that."

- Dave Melick

Abuse

Microcosm

Dan Smith | Oct 2, 2026

"Paul, I really enjoyed writing this post, but struggled with its suitability for HumbleDollar. Your comment makes me happy that I went forward with it. Wow, your wife would have lived a stone's throw away from St. James Catholic church that I mentioned, and possibly have known the Hunter brothers who worked at the church and bowled at Lido! "

- Dan Smith

Health

Medicare Part D premium shock 2027

R Quinn | Sep 29, 2026

"Although I am in a group plan so I don't shop, I have played around with the Part D Medicare plan finder out of curiousity . The differences (Massachusetts) I could see were worth doing . Friends have told me the same thing. I don't think the Medigap differs much though"

- Julie C