Jonathan Clements's Blog, page 133

For Richer or Broker

I'VE SEEN FINANCIAL advisors do great work and I’ve seen them do poor work. Which brings me to my late father’s experience.

Dad was a heck of a small businessman. Starting in 1956, he and his partner sold and serviced radios, televisions, appliances and furniture. Forty years later, he sold the business to four of my brothers.

By the mid-1960s, Dad had accumulated what was for him a small fortune. This was the time of the stock market’s so-called go-go years. Dad said the market seemed to go crazy for any stock that had “tronic”—as in electronic—at the end of its name. He signed on with a young broker—today, the broker would no doubt call himself a financial advisor—and it was off to the races.

Dad’s stocks just kept climbing and climbing. The broker was obviously a genius. Things seem to go up and up based on his wise recommendations. Dad told me that at that point, if his business had gone bust, he thought he’d just play the market for a living. All was right with the world. That is, until it wasn’t.

The Dow Jones Industrial Average peaked at 995 in 1966. Then the bottom fell out. It was so bad that it wasn’t until 1982 that it finally broke permanently above that 995 mark and headed higher. That’s a “long haul,” as we say here in rural Kentucky. Years later, Dad would laugh at the optimistic notion that he could make a living playing the market.

Dad told me, “I thought it hit the bottom several times. But it turned out to be a straw-bottom and everything just kept going down.” He took a beating like a bad boy and came to doubt his broker. He went looking for a new broker in the late 1960s.

He ended up finding a fellow named Lucien O. Hooper. His new broker was a kindly old man who started on Wall Street around 1919. I think he felt sorry for Dad when he took him on as a client. But apparently, Hooper was as smart as he was kind.

He told Dad to send him a list of his portfolio’s holdings, and Hooper promptly told him to sell most everything and take his losses. Dad couldn’t bring himself to do it at first. Mentally, it’s one thing to have paper losses. It’s another to confirm your bad decisions by realizing your losses.

Hooper then had to read Dad the riot act. He told Dad that, if he wanted him to be his broker, he had to do what he told him to do. Hooper informed my father that all he had in his portfolio was junk, and that he needed to clear it out and buy real stocks that had a real future. Hooper didn’t need Dad to make a living. I think he just wanted to help out this then-young businessman.

My father complied.

Hooper then guided Dad to the most profitable period of investing he ever had. It lasted until around the time of Hooper’s death in 1988. Dad never found another broker that he trusted or who was as profitable.

Afterward, I think Dad mistook Hooper’s financial ability for his own. He fell in and out of love with numerous financial advisors, but came to believe his own financial skills were superior. He died just a few years back, at age 92. I was the executor of his estate and the power of attorney for my mother. I talked with his broker about how odd his portfolio looked to even a novice like myself. The broker said it looked that way because, “It’s insane. It makes no sense at all. Your father listened to nobody.” It really was awful.

My dad was an incredible businessman. He started from nothing, worked like a dog and made a lot of money. I will never equal what he did on his own. But he was not a good investor. Dad was a great candidate for a financial advisor. But after losing Hooper, he never really trusted or respected anyone again, except himself.

Still, he ended his life in very good financial shape because of his ability to make and save money—and not because of his investment abilities. He was no genius in investing. Most of us aren’t.

What do you do when you don’t have a financial advisor you trust and respect, but you don’t trust your abilities, either? I think that’s what target-date mutual funds from low-cost financial institutions are made for. You can get a well-diversified portfolio, preferably filled with index funds, with an asset allocation that’s appropriate for your age.

I’m increasingly moving in that direction myself, and I tell my children to do the same with their retirement plans. It requires no thought or financial ability of your own. You could do a lot worse. I know I have.

Ken Begley has worked for the IRS and as an accountant, a college director of student financial aid and a newspaper columnist, and he also spent 42 years on active and reserve service with the U.S. Navy and Army. Now retired, Ken likes to spend his time with his family, especially his grandchildren, and as a volunteer with Kentucky's Marion County Veterans Honor Guard performing last rites at military funerals, including more than 350 during the past three years. Check out Ken's earlier articles.

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Getting Squeezed

MY CONTENTION: ONE of the most egregious parts of the tax code is the stealth tax on Social Security benefits.

To be sure, if your income is low enough, your benefits won’t be taxed. But around 56% of retired Americans pay taxes on up to 85% of their Social Security benefits. And the number grows each year. Incomes rise, if only because of inflation-driven increases, and yet the thresholds for taxing benefits have never been adjusted for inflation or wage growth. Adding insult to injury, 11 states currently tax Social Security benefits.

Today, if you’re an individual filer with a combined income between $25,000 and $34,000, up to half of your Social Security benefit will be taxable on your federal tax return. If your combined income is above $34,000, up to 85% of your benefits may be taxed.

Meanwhile, if you’re married filing jointly and have a combined income of $32,000 to $44,000, up to half of your benefits will be taxable. If your combined income is above $44,000, up to 85% will be taxed. Combined income includes your adjusted gross income, municipal bond interest and half of your Social Security benefit. Who came up with that cockamamie definition of income?

When the tax on benefits was introduced in 1984, it only applied to 50% of benefits. Because of further tax hikes introduced in 1993, up to 85% of benefits can now be taxable. So, let me get this right: No tax was fair before 1984, taxing 50% was fair for the next decade and now 85% is justified. Makes total sense, right?

Apparently, ignoring inflation is also fair. The $25,000 threshold for individuals and $32,000 for joint filers would rise to $73,000 and $93,200, respectively, if they were adjusted for the inflation since 1984, according to a USA Today article. Result: A tax, which once hit just 10% of retirees, now affects more than half of seniors. When you consider that other tax items—such as federal tax brackets, contributions to retirement accounts and the standard deduction—are adjusted annually, it all seems ridiculous.

Currently, there are bills in Congress called You Earned it, You Keep It and The Senior Citizens Tax Elimination Act, written by a Democrat and a Republican, respectively. Both would remove Social Security benefits from the calculation of gross earnings for income tax purposes.

But don’t expect either bill to be acted upon, given Social Security’s looming funding crisis. Remember, we’re looking at potential Social Security cuts of 25% in the early 2030s if Congress doesn’t take action. Overhauling Social Security would require bipartisan support. With a divided Congress, there seems little hope.

Meanwhile, seniors are getting squeezed by inflation. Yes, Social Security’s cost-of-living adjustment (COLA) for 2023 was the highest since 1981. Problem is, there’s a weakness in the COLA, which is measured by a version of the Consumer Price Index known as CPI-W. It doesn’t accurately reflect the different spending habits of seniors. A study by The Senior Citizens League, a nonpartisan advocacy group, found sharp cost increases for seniors since early 2000:

Out-of-pocket prescription drug costs climbed an average 311%, from $1,102 to $4,524.
Out-of-pocket dental care costs rose an average 275%, from $286 to $1,073.
Monthly Medicare Part B premiums increased 262%, from $45.50 to $164.90.

The Senior Citizens League found that the goods and services bought by the typical retiree rose 141% over this period, while Social Security benefits climbed just 78%. And don’t expect relief anytime soon. Social Security’s COLA adjustment for 2024 won’t be anywhere near this year’s 8.7%. In fact, the COLA for 2024 could be below 3%.

Inflation hit a 40-year high in June 2022, but it’s now easing in some categories. Still, groceries are continuing to see rapid price increases. Middle- and lower-income retirees—whose budgets are already stretched—will be hit hard, spending more on necessities while losing more of their Social Security benefits to taxes. The bottom line: Even without actual cuts, benefits are shrinking.

Marjorie Kondrack loves music, dancing and the arts, and is a former amateur ice dancer accredited by the United States Figure Skating Association. In retirement, she worked for eight years as a tax preparer for the IRS’s VITA and TCE programs. Check out Marjorie's earlier articles.

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Your Answers May Vary

IN THE WORLD OF personal finance, there’s no shortage of formulas and frameworks for making financial decisions. But it’s also important, I think, to see these as guidelines rather than as rules. Consider the textbook view of money and happiness.

What the research says is that, all else being equal, we should opt to spend money on experiences rather than things. Let’s say the choice is between spending $1,000 on a new watch or on a weekend away. The research is clear: Take the trip.

While there’s validity to this, I’m not sure it’s so clearcut. In my experience, people’s approaches to money and happiness vary along several dimensions. For starters, the distinction between “experiences” and “things” isn’t always as simple as the difference between a gold watch and a weekend away. To illustrate this point, HumbleDollar’s editor Jonathan Clements points to the purchase of a car.

A car might seem like it fits in the “things” category, just like a fancy watch. But Jonathan points out that a car “isn’t simply an object sitting in the garage.” Rather, it can be used to facilitate experiences. “You can get in the car and go somewhere,” he says. You can also share that experience with others. And the car might simply be fun to drive, even if you aren’t heading anywhere in particular.

Similarly, a house might seem like it fits in the “things” category. But again, the line between things and experiences can be blurry. Many families place great value on their homes, especially vacation homes, because they facilitate experiences.

There are many variations on this theme. I know a fellow who was once part owner of a minor league baseball team. From an investment perspective, he said, it wasn’t great. He might have even lost money on it. But being an owner of a team was a lot of fun and, for that reason, he’s glad he did it, and he doesn’t worry at all about how the numbers worked out.

This gets at another reason the happiness research should be taken with a grain of salt: Each of us has different preferences. Spending time on the ballfield or in other social situations might sound ideal to some folks, but not to others.

The reality: Happiness defies a simple definition. Over the years, I’ve observed that people define happiness in very different ways. For some, happiness fits the stereotypical image. It’s the freedom to do anything they wish—to retire early, to travel, to live the “good life.” It’s all the things that people imagine they’d do if they won the lottery. But that life isn’t for everyone.

Others think about happiness more in terms of contentment or peace of mind. Along those lines, many people say their definition of happiness would simply be freedom from any financial stress. They don’t need to spend the summer in Saint-Tropez. If they can pay their bills with ease, that’s enough.

Another fly in the happiness-research ointment is that we change over time. For a five-year-old, a new Matchbox car might be the definition of a great day. But at age 15 or 50, those preferences will change. Happiness, in other words, means different things to different people and at different times. Because of that, the route to financial happiness is not universal.

Another reality: Financial choices don’t need to be viewed in all-or-nothing terms. A fellow in my town lives in a home so large that it used to be a school building. But where does he go for his coffee each morning? Dunkin’.

Financial author Ramit Sethi refers to “money dials,” which is the idea that we should feel free to spend more on the things that are important to us and to economize in areas that aren’t. This probably seems like common sense, but it’s another way in which we shouldn’t be overly influenced by textbook prescriptions for happiness. In Sethi’s terms, we can turn the dials as we see fit.

Indeed, frugality can be a source of happiness in and of itself. That might seem counterintuitive, but there’s logic to it. For some people, it affirms their self-image to wear well-worn clothing or to drive a vehicle that’s more downscale than they can afford. That’s what makes them happy. Others pursue frugality because having less debt and more in the bank allows them to sleep better, and that’s their definition of happiness. In other words, for these folks, happiness is derived from neither things nor experiences.

A foundation of economics 101 is homo economicus—“economic man.” According to this theory, every individual is perfectly rational, with the goal of “maximizing utility” for his or her own benefit. Economics textbooks, however, leave out any precise definition of the term “utility,” and that’s where behavioral economists have stepped in, with recommendations like choosing experiences over things. In general, I find the ideas offered by behavioral economists to be helpful. In this case, though, it may be the traditional economists who had it right.

In the end, as long as you can afford to make a particular financial decision, my sense is you don’t need to worry too much about others’ definition of what’s right for you. Because we’re all different, we should each be free to define “utility” in the ways that make sense to us.

That said, there’s probably one rule that everyone can agree on: Don’t spend money just to keep up with the Joneses. In the words of investment advisor Peter Mallouk, “That’s the path to total misery.”

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 Twitter @AdamMGrossman and check out his earlier articles.

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Don’t Mess Around

THERE ARE CERTAIN things I did right during my financial journey, notably saving like crazy, tilting heavily toward stocks and favoring index funds. But if only all my doing had stopped there.

Looking back over almost four decades of investing, what I see is far too much tinkering. At various times, I've owned funds devoted to precious metals, global real estate, commodities, emerging market bonds and more. I know this tinkering devoured precious time—and I strongly suspect it hurt my investment results. To be sure, there was pleasure in the tinkering or, at least, I used to think so. I enjoyed pondering my portfolio and I liked the “fresh start” that came with buying new investments.

Some of the tinkering was also necessary because the universe of investment options has changed so much over the past four decades. When I moved to the New York area from London in 1986, Vanguard Group’s S&P 500-index fund was its only index offering. Today, my largest fund holding is Vanguard Total World Stock Index Fund, which wasn’t even launched until 2008.

How can we avoid tinkering too much? A few years ago, I would have suggested purchasing a target-date retirement index fund, which means buying one of those offered by Charles Schwab, Fidelity Investments or Vanguard Group. And I still like these funds for younger investors looking for a sensible one-fund investment for their retirement account.

But my enthusiasm for target-date funds has waned. Even if we ignore the 2021 tax debacle triggered by Vanguard’s move to allow investors to shift into a lower-cost share class of its target funds, these funds can generate significant tax bills each year. The reason: Target-date funds own bonds, and they may need to do some selling to rebalance or cash out departing shareholders. That means the funds can make large income and capital gains distributions, and hence they aren’t suitable for a taxable account.

But forget the question of tax efficiency. Of greater concern to me is how conservative these funds become as they approach and pass their target retirement date. Check out the so-called glide paths for the target funds offered by Fidelity, Schwab and Vanguard. In all three cases, the funds are at roughly 50% stocks as of their target retirement date—Schwab is notably conservative at just 44%—and retirees eventually end up with some 20% to 30% in stocks.

I get it. Many investors are much more jittery than me, and fund companies have an incentive to err on the side of caution, so investors are less likely to complain during down markets. Still, with the threat from inflation and the prospect of living 30 years or more in retirement, such a conservative portfolio strikes me as far from prudent.

So, how can you minimize the sort of dangerous tinkering that can harm your portfolio’s performance? If you’re looking for a one-fund solution for your retirement account, I’d consider one of Vanguard’s four LifeStrategy funds, each of which holds a static mix of stocks and bonds. I'd lean toward either the growth fund with its fixed 80% stock allocation or the moderate growth fund with its fixed 60% stock weighting. Alternatively, you might buy Fidelity Multi-Asset Index Fund (symbol: FFNOX), which has some 85% in stocks. Sound too aggressive? You could twin the Fidelity fund with a bond fund if you favor a more conservative asset allocation.

But my favored strategy for retirement account investors is to buy Vanguard Total World Stock Index Fund, which is available as both a mutual fund (VTWAX) and an exchange-traded fund (VT), and then combine it with short-term government bonds to get the risk profile you want. Vanguard Total World offers the broadest possible stock market diversification. Whatever part of the global stock market is shining, the fund’s shareholders will get a piece of the action.

What if you’re investing through a regular taxable account? Vanguard Total World Stock Index Fund, like target-date and other multi-asset funds, wouldn’t be quite as good a choice—again for tax reasons. If a fund has less than half its portfolio in foreign securities, which is currently the case with Vanguard Total World Stock, shareholders can’t claim the foreign tax credit.

What to do? When investing through a taxable account, it’s important to pick wisely from the get-go—because you’ll soon be locked in by capital gains and, if you sell, you’ll lose the impressive tax benefits that come with buying and holding stock index funds in a taxable account over a decade and preferably far longer. With that in mind, I’d favor purchasing two total market index funds, one focused on U.S. stocks and the other on international shares.

Other than the need to raise cash, there shouldn’t ever be a reason to sell these funds, though that may reflect a failure of imagination on my part. Will Wall Street come up with an even better way to index, similar to the way exchange-traded index funds have edged out index-mutual funds? It could happen. Still, even if today’s total market index funds turn out to be a less-than-ideal choice down the road, I suspect you could do a whole lot worse—and the benefits of switching funds wouldn't be justified by the tax bill involved.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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Worth a Read

DURING THE 1990s, I subscribed for several years to Worth, a financial magazine that targets high-net-worth individuals. I enjoyed reading articles that were, for the most part, geared toward folks in a far loftier tax bracket.

One article, in particular, stayed with me: “The Rise and Fall of Retirement” by Stephen M. Pollan and Mark Levine, which appeared in the December-January 1995 edition. Pollan died in 2018. His daughter is Tracy Pollan, the wife of actor Michael J. Fox. But I digress.

I’ve read the article probably a dozen times over the years. I actually tore it out of the magazine and have it filed away. Its premises and arguments became part of the fabric of my financial thinking. The summary blurb under the headline reads: “Scared you won’t be able to retire? Give thanks instead. Retirement is a weird social experiment, a historical blip. Its collapse will be a triumph of common sense.”

After an interesting review of the history of retirement—a quite recent development in the course of human history—the article goes on to argue that retirement is not only obsolete, but also unaffordable. It examined the future of five income streams that the average retiree lives on: government assistance, personal wealth, pension income, wage earnings, and other sources such as inheritances.

The first three sources of retirement income are headed downward, the article contended. We all know about the funding challenges facing Social Security and Medicare. The article’s argument regarding personal wealth is a bit dated, but it was based on the premise that the outsized investment and real estate gains that the Greatest Generation enjoyed would not continue for the baby boomers. Meanwhile, as the authors predicted, pensions—at least in the private sector—have become significantly less common than they were at the time the article was written.

With respect to inheritances, the authors said that even if boomers were to receive bigger inheritances, it would not be a silver bullet. The average inheritance was a bit over $70,000 at the time of the article, not nearly enough to guarantee a comfortable retirement. And so, wage earnings were left as the final source of retiree income, and the one that must be embraced for most older folks to stay afloat.

The authors’ conclusion: “Add up the numbers. The top three sources of retirement income are headed downward; only the smallest source (inheritances) has any chance of rising. For many people, that leaves a big gap to be closed by wages. Short of something unforeseen—the dawn of fusion power, huge mineral discoveries—there will be only two options. Work longer. Or live on less. That’s the end of retirement as we know it. It’s not bad news, though. Just the passing of a bad idea.”

Why a bad idea? Doesn’t everyone dream of a leisure-filled, stress-free retirement? Here’s some more from the authors: “More broadly, the idea of a discrete move from work to leisure must change. Work is not a cliff we scale and then get tossed off at age 65. Rather, it’s a hill over which we should plot our own course. Most people will begin descending the hill at some stage, but they’ll likely choose a gently sloping path. Many won’t reach the valley of complete leisure before they die—they won’t want to. What’s needed is a return to the kind of environment that predated industrialization, one in which older people are seen a resource rather than a drain.”

The authors advocated for flexible work schedules, telecommuting, job-sharing, more opportunities for part-time work for retirees, and eliminating the ultimatum of retirement, “the false choice between fulltime and no time.” In the years since the article was written, these formerly rare options have indeed proliferated, making it considerably easier for older folks to continue making workplace contributions.

Another thought-provoking quote: “The marketing of retirement has produced a society that’s ill at ease and full of contradictions. Think about it. Isn’t there something wrong when we kvetch that people with limited skills collect welfare rather than work—but ask our most valuable contributors to spend their days on a golf course?”

Many of my retired friends, most in their early 60s, seem quite content with their lives and have no desire to return to the workforce. Been there, done that. Yet, as the article states, “However it is defined, work is an integral part of human life.” Even after retiring from our primary career, we need activities that provide meaning and, for many of us, I suspect fulltime leisure doesn’t cut it.

Some of the happiest retirees I know are those who are actively involved in the lives of their grandchildren. Others are finding meaning doing significant work in their churches, volunteering in the community or working part-time in jobs where they can truly serve people. What about me? As my career winds down, I’ve been identifying meaningful activities for my retirement years.

Ken Cutler lives in Lancaster, Pennsylvania, and has worked as an electrical engineer in the nuclear power industry for more than 38 years. There, he has become an informal financial advisor for many of his coworkers. Ken is involved in his church, enjoys traveling and hiking with his wife Lisa, is a shortwave radio hobbyist, and has a soft spot for cats and dogs. Check out Ken's earlier articles.

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Escape to What?

A TIDAL WAVE OF workers quit the corporate world in recent years, starting an earlier-than-planned retirement. I can relate—because I did the same thing.

One reason these people left: Their psychological needs and values weren’t being met at work. We all want a sense that we’re accomplishing something important. We want to feel valued and respected by the company we work for, and we want a sense of autonomy and control.

What we don’t want is to work for bad bosses in a toxic environment. We don’t want to be micromanaged, and we don’t want to do work that isn’t interesting and meaningful.

Still, knowing we need to leave is one thing—and actually leaving is another. Believe me, leaving a well-paying job late in your career is hard, and you need a pretty big “why” to make the move.

Even though older workers may know they’re wasting their lives in unenjoyable dead-end jobs, most default to staying. They compromise their health and well-being, and grind it out to the bitter end, dying a little bit each day.

But sometimes, a trigger event like COVID-19 will occur, and that’s how we got the so-called Great Resignation. The pandemic made people realize how precious life is and how short it can be, and they didn’t want to waste any more time doing work they didn’t enjoy. Still, we can only hope that, for these folks, their retirement plan was financially feasible—and they knew what they were retiring to.

My own trigger event wasn’t the pandemic, but rather learning about the concept of financial independence. I happily discovered, after running the numbers, that I had achieved FIRE (financial independence-retire early) status.

Being financially free changed everything for me. It gave me back control over my life, and it made the decision to leave my stressful banking job—which was compromising my health and happiness—a no-brainer. But unlike others who use their financial independence to retire to a comfortable life of leisure, I felt the need to use it to do something significant with my life.

My own initial failure at retirement ignited a passion in me to help others with the transition to a meaningful retirement. I wanted to help them avoid suffering the sort of retirement shock that I suffered.

This led to my first book, Victory Lap Retirement, which isn’t for everyone, because it’s a retirement book about not retiring. My editor is still scratching her head over that one. The book challenges the idea of the traditional full-stop retirement, and it rejects the notion of retirement as an end goal in and of itself.

The book was written for growth-oriented people who are looking to escape doing bad work in a bad environment, but don’t want to slow down and take it easy. Rather, they want to do something significant with their lives now that they have the freedom to do so—folks who want to make a difference by doing work they’re proud of.

If you want a good example of folks living like this, look no further than all the people who write for HumbleDollar and offer their wisdom in the comments section. They’re doing it not for money, but for the sense of contribution and significance derived from doing work that matters. Contributing to this site gives folks respect, relevancy, visibility and a sense of identity, all fundamental needs that—when satisfied—lead to a joyous life.

For some people, retirement success is not about sitting around and taking it easy for the rest of their life. It’s about finding significance and connectedness through what they can give. It’s about finding fulfillment through some purposeful activity—though what that means will differ for each of us.

Mike Drak is a 38-year veteran of the financial services industry. He’s the co-author of Longevity Lifestyle by Design, Retirement Heaven or Hell  and  Victory Lap Retirement . Mike works with his wife, an investment advisor, to help clients design a fulfilling retirement. For more on Mike, head to  BoomingEncore.com . Check out his earlier articles.

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Getting an Earful

I DON’T REMEMBER when my hearing started deteriorating. I suppose it came on gradually. I definitely remember when I developed tinnitus—ringing in the ears—and it was tinnitus that sent me to an audiologist in 2012.

She confirmed the information I’d already found on the internet: There’s no cure for tinnitus. While I would always miss the complete silence I’d previously enjoyed, at least mine was a tolerable background hum, unlike some horror stories I’d read.

After running the usual battery of tests, the audiologist told me something I didn't know: I have reverse slope hearing loss. This rare condition means that I don't hear low frequencies well. My high-frequency hearing, which is what often diminishes as you age, was still pretty good.

This made sense. A little research told me that people with this kind of hearing loss—affecting maybe 3,000 total in the U.S. and Canada—are often tone-deaf, and I have always been hopelessly tone-deaf. It also explained why I used to keep cranking up the bass on stereo speakers.

My research turned up some more facts—annoying ones. Medicare will pay for hearing tests and eye exams once every 12 months. But if the tests say you need hearing aids or glasses, it won't pay a dime toward the cost. My retiree supplemental insurance would pay $200, but that was a fraction of the likely cost.

Audiologists and the hearing-aid manufacturers turned out to have a cozy relationship that allowed them to keep prices high. If I wanted hearing aids, I had to buy them from an audiologist. I decided to wait a year and get them from a university medical center.

I wound up buying mid-range Phonaks for $4,000, but they were never very satisfactory. If the audiologist programmed them to where I could hear speech well, my voice echoed. Still, they were better than nothing. While I didn't wear them at home, and instead just turned the TV’s closed captions on and my speakers up, they did help somewhat when I was around other people. Getting my ears periodically de-waxed also helped.

I was thrilled when the law changed in 2017, allowing people to buy hearing aids over-the-counter starting in 2022. Although I really needed new ones, I waited. When COVID-19 hit, I stopped seeing people in person, so it wasn't until 2022 that I realized I couldn't wait any longer. Even with my hearing aids, I could only understand people in real life if they were sitting right next to me.

Sadly, I soon realized that over-the-counter hearing aids, which were less innovative than I’d expected, weren't going to work for me. They're intended for people with mild-to-moderate hearing loss and, I believe, work only for those with normal high-frequency loss.

My hearing loss as of 2013 was already moderate to moderately severe in the lower ranges. It wasn't clear that I would be able to program OTC aids to compensate. I was also surprised that a lot of these new hearing aids weren't all that cheap—compared to Costco’s, that is.

I had been getting my prescriptions filled at Costco for years, but you don't have to get a Costco membership to use the pharmacy. Living alone, membership never seemed worthwhile. But in early 2023, I accompanied a friend to sign up. He got a bonus for introducing me.

When I saw the audiologist, she told me that newer research had shown that higher frequencies were required to understand speech clearly, and she could fit me with aids that would be a revelation. I'm happy to report that she was right.

I’d worn my existing hearing aids into the store. On my way to her sound-proof office, it seemed fairly quiet. When I wore a test pair back into the store, I was astonished by the cascade of sound that surrounded me. Voices seemed clearer, too. Costco appears to specialize in in-ear aids. I had found my behind-the-ear Phonaks a bit claustrophobic but I thought in-ear aids would be even worse, so I wound up buying behind-the-ear Philips for $1,600.

It took the audiologist a long time to program the hearing aids to where I could hear other people clearly and my speech didn’t sound like I was at the bottom of a cave. It turned out that the sound level had been set too high, but when I went back for my first checkup, it was clear it would take time to reprogram them to the right overall volume.

Instead, I’ve taken to turning the volume down two notches for normal wear and raise it back up for meetings. I use the “sound in noise” setting for restaurants, which helps eliminate background noise, but also turn the volume down four notches. I make those changes using an app on my phone.

The hearing aids have Bluetooth, and I love it. In-coming calls and text notifications come through my hearing aids, as do radio programs and podcasts from my iPad or phone. If my TV was just a little younger, I’d also be able to connect using Bluetooth. For now, I'm still using closed captions on TV, but I have the sound level set in the 50s or 60s, instead of the 80s, which is where it used to be. Even with aids, my hearing isn't great. Some noises, like barking dogs and falling water, sound odd. I still struggle a bit in meetings and restaurants, but it’s a whole lot better than it was.

If you notice that your friends and family seem to be speaking too softly, do seek help. Various studies link hearing loss to social isolation, and social isolation to earlier death. I'd recommend starting by getting your ears de-waxed. But if that doesn't help, see an audiologist. You can probably self-diagnose on the web, but the audiologist will be more thorough, may notice things you don't, and the consultation is likely free.

Kathy Wilhelm, who comments on HumbleDollar as mytimetotravel, is a former software engineer. She took early retirement so she could travel extensively. Some of Kathy's trips are chronicled on her blog. Born and educated in England, she has lived in North Carolina since 1975. Check out Kathy's previous articles.

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Cash Is Back

MANY OF US ENJOY chasing discounts at grocery stores and other businesses. For instance, one of my favorite local wine shops gives discounts to club members. To sign up, all you have to do is provide your contact information.

Lately, the store has stopped requiring me to give my name when I make a purchase. Instead, employees automatically give me the discounted price. Maybe I’m buying too much wine and they recognize me.

In my area, discounts for paying cash are also becoming increasingly popular. In the past few weeks, I’ve been offered cash discounts at a local pizza shop, a mom-and-pop grocery store and a local restaurant.

It’s not always a cash discount, though. Instead, some businesses are imposing an additional fee for using a credit card. Last night, I noticed that a brand-new high-end burger joint had a 2.75% credit card convenience fee hiding in the fine print at the bottom of the menu.

Professionals are also getting in on the trend. My wife had some recent oral surgery. Her total charges were $1,815. The bill said that a 3.99% “convenience fee” would be applied to all credit and debit card charges. That means a $72.42 inconvenience charge if we’d used the debit card attached to our health savings account.

Earlier this year, I saved 3% by paying for a hot water heater installation with a check. The bill was around $2,400, so this amounted to a $72 savings. On the other hand, my credit card would have given me a 1.5% rebate, so the net savings was $36.

I can understand a merchant’s frustration with the cost of accepting credit card payments. Credit card processing fees typically range from 1.5% to 3.5% of each transaction. This can be a significant hit to a small business’s profit margin. The fees vary depending on the type of card, the bank that issued the card and the payment card network. Those high-reward credit cards, which many of us use, cost the merchant a higher fee. I was also surprised to learn that transactions that don’t involve a physical card involve higher fees, to protect against the enhanced fraud risk.

The Durbin Amendment, part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, made significant changes to the way merchants interact with payment card networks, or PCNs. Prior to the law’s enactment, PCNs—think VISA or Mastercard—had more power to restrict what a merchant could do regarding discounts. The 2010 law set limits on transaction fees, codified a merchant’s right to offer certain discounts and allowed merchants to set a minimum amount for card transactions.

The Federal Trade Commission’s website states the following: “A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously. For example, you can offer your customers a discount or a coupon if they pay with cash or a debit card rather than a credit card.”

Cash discounts should be clearly displayed and explained. But you need to make sure you understand the retailer’s policy. My wife frequents a local nail salon. Vicky’s understanding was the salon gave a 3% discount for cash payments. Since she rarely carries cash, this meant me forking over cash each time she went. Recently, I asked her to check the salon’s policy. It turns out the salon “encourages” patrons to pay cash to save the business from incurring credit card fees. The salon doesn’t offer a discount, even though that was implied by its signs. After Vicky asked about the policy, the signs disappeared.

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Dying at Home

MANY OF US SAY THAT, if we have to die, we’d like to die comfortably in our home. Luckily, hospice—a Medicare-covered model of gentle, holistic end-of-life care—is ready to help with that goal.

Maybe.

At age 78, my divorced father was diagnosed with Stage 4 colon cancer. He later admitted that he’d skipped getting any colonoscopies. He was a savvy health-care researcher and, via drug trials, controlled the spread of his cancer for four long years. Then came the day his doctor said, “There are no more treatments left, Larry. Call your kids and sign up for hospice. Today.”

If you’re hazy about what hospice is, as my family was, check out Medicare’s hospice page that details the conditions that qualify you for hospice care and what costs Medicare will cover. You might also check out a 2023 New York Times article that sheds light on how hospice functions today. The industry has traveled far from its grassroots, volunteer origins of 40 years ago.

For my father, the shift from living pretty well with cancer to being told he had “about a week to live” was head-spinning, although it shouldn’t have been. My dad’s fallacy—and that of his four kids—had been thinking he could delay death forever. While I’d convinced him to fill out his advance directives before he had undergone a surgery a few years previously, he had engaged in little other planning or discussions.

By the time I was flying from New York to Michigan to “help out,” my busy brother David had made the executive decision to move my father from his cluttered condo to David’s larger family home across town. My brother’s wife, nine-year-old daughter and three large dogs were no doubt a bit flummoxed when David deposited my hospice-unready father into the ground-floor master bedroom. But my father and everyone else were united in wanting the proverbial “good death” in the comfort of a home, even if it wasn’t his.

What happened during that home hospice experience surprised me. After it was over, I compared notes with friends. It seems that what my family went through might not be typical. Still, it could be a portent of what’s to come as the baby boomer bulge meets the realities of understaffed hospice care. Here are five takeaways if you’re ever considering home hospice for a loved one—or yourself.

1. Research hospice options before you need them.

As my father and family found out, the very end is much too late to think about hospice—both for taking advantage of hospice’s full psychosocial benefits and for finding out what you’re getting into.

The hospice provider, which had been suggested to my father by his doctor’s office, turned out to be severely overstretched. We had only four short visits from a hospice nurse—a different person each time—during the 11 fraught days of my father’s end-of-life passage. It was also impossible to get the hospice doctor on the phone to answer our ongoing questions. Even so, we could never find the time to research and switch to another organization.

Since events can overtake you at the end of life, spend an hour today learning which hospice providers operate in your area. AARP keeps an excellent updated page with facts about hospice, including questions to ask when you interview organizations. Your future self will thank you.

2. Know what equipment and services to ask for.

Beyond the electric hospital bed, rolling bedside table and plastic commode that the hospice group delivered, my brother’s home was not equipped for a dying person. Side note: At the intake meeting where we met with hospice nurse No. 1 and a social worker, we all agreed that the bed was much too short for my six-foot, four-inch father. He requested a replacement, but one never arrived. We should have kept asking.

We quickly found ourselves making daily runs to a nearby Target for more towels, more large and small pillows for propping up, more pajamas, cooling patches, ice packs, a small table fan that my father could angle, sheets, blankets, sippy cups and dry-mouth swabs, plus an intercom because my father’s voice weakened too much to call for us in another room. My credit card got a workout.

3. Be prepared to hire help.

As much as we tried to make my father comfortable, it seemed impossible. He was plagued by restlessness and couldn’t sleep or be convinced to stay in bed. Someone had to be near him around the clock to prevent a fall in his weakened state.

After six sleepless nights, we called the hospice phone line yet again with questions about the situation, and a nurse on the line finally filled us in on “terminal agitation,” a not-uncommon occurrence at end of life for cancer patients, even though no one in our family had heard of it. She told us that this kind of metabolic restlessness was worse than pain because it could not be soothed by painkillers. “Call us again if you need to,” she wrapped up.

By then, we realized that our home hospice team was mostly voices on the phone, not the onsite caretakers we’d expected. A concerned long-distance relative emailed me: “Get yourself some nighttime help so you can sleep.”

I had no idea how to find good health aides at short notice, but it turned out that “good” wasn’t the issue. We just needed someone to sit near my sleepless father, so we caretakers could get some rest. I also needed time to coordinate events outside of hospice, such as lining up a funeral home to call when my father died. In the end, I pretty much handed over my credit card to three different aide services to help us patch together 24/7 coverage until the end.

Will you need expensive additional aides for home hospice? Maybe, so be prepared by getting the names of aide services and interviewing them at the beginning of the hospice process, so they’re just a phone call away if needed.

4. Confusion may reign unless someone is in charge.

Continuity of care was a big problem for us and my father. There was a revolving stream of new hospice personnel and eight different aides, along with a churn of visits from nearby relatives and phone calls from folks farther afield. Meanwhile, every day brought changes and challenges as the end of life approached.

It took me far too long to realize that neither my father nor the home hospice team were running the show; I was. In unfortunate timing, during these hospice days, my brother had been pulled away to manage an ongoing crisis at his company. Still, every night, David remained on call to help me or an aide. He was the only one who could support my tall father as he restlessly moved from bed to nearby chair to commode.

Needless to say, my brother was exhausted. After another of these nights, I emailed my two sisters what came to be known as “the bossy note,” telling them exactly what was needed from them beyond the occasional visits bearing baked goods. It was all-hands-on-deck time.

I suggest that, upon hospice enrollment or before, everyone should agree on a point person. This coordinator would have the overview of the home hospice situation, be given the latitude to set the ground rules and make decisions, and be allowed to delegate whatever to whomever, as needed.

5. Doing hospice at home may mean a non-professional will be in charge of the medicating.

One of the hallmarks of hospice is the comfort care provided. On the first day, as I followed the intake hospice nurse on her way out the door with my list of anxious questions, she stopped me by handing over what she called a “comfort box.”

I pried open the white cardboard box and saw a confusing array of vials, syringes and suppositories. I thrust the box back towards her. “This is all for you to use, right?”

“No, they’re for you,” she said. “If your father needs them, you can call us. Put the box in the refrigerator where you can find it fast.” Then she left.

I immediately regretted that I didn’t ask her to go over each and every medication and how to use it, recording her explanation using my cellphone.

Later on, when I hired the aide services to help us through the final days and nights, I found out the aides weren’t allowed by their companies to prepare the needed anti-anxiety and sedative medications, and they could only give them to the patient when directed by someone in charge, meaning me. If I wasn’t awake to direct them, my father wouldn’t get his comfort meds.

As my shaking hands prepared morphine syringes and crushed Ativan pills in the middle of the night, I thought, “I would never expect or want someone like me to do this for me.”

My advice: When you’re doing those early interviews with prospective home hospice providers, ask who will actually dispense the medications. Maybe you’ll find out the home hospice nurses will be there to do it. But in our case, they weren’t.

My father died on Oct. 25, 2015, after his 11 days of home hospice care.

Was it the good death my dad had hoped for? I’ve never shared this with my siblings, but I don’t entirely think it was. My father had always prided himself on being the problem solver, not the problem maker. While we tried to hide our distress, he couldn’t help but notice how unprepared his kids were to supervise this 24/7 medical undertaking.

One late night, as I lay awake on the king bed beside my restless father in his little hospital bed, he told me he was sorry about “all the trouble I’m causing,” as he put it.

“I didn’t imagine it would go like this,” he said quietly. “No help. No sleep. Not knowing what’s coming next. Thank you for everything you’re doing.”

I reached over and touched his hand. “Dad, I am so grateful to be here helping you through this after all you’ve done for us. Please don’t apologize. You’re no trouble at all.”

Later, I heard friends’ stories of their supported and peaceful experiences in dedicated hospice facilities. There, they could quietly share smiles and good memories, listen to music, even be served meals. A facility can perhaps more easily arrange quality-of-life options for the patient, such as expert bathing and therapeutic massages with oils. Most important, a facility would presumably be staffed with professionals who could administer the proper palliative medication. A place that’s designed and intended for end-of-life care clearly has some advantages.

If, however, you’re with the majority who would prefer using hospice in a familiar home setting, look into what’s entailed well ahead of time. Ensure that family or friends are willing and able to coordinate all the activities and decisions. Have a credit card ready for all the purchases and extra help you may need. And don’t make hopeful assumptions, as I did. Be proactive and ask the necessary questions, so you or your loved one gets the quality end-of-life care all of us deserve.

Laura E. Kelly is a web designer and book editor living in Mount Kisco, New York, with her husband, author Warren Berger. As Laura contemplates retirement and relocating, all of those things could change (well, probably not the husband).

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Dance of Coordination

MY WIFE AND I DROVE back from Arizona in June, so we could spend the summer months here in Minnesota. We took a longer but more scenic route through Utah and Colorado, and saw many natural wonders, including several national parks and the Rocky Mountains.

How did we spend our “windshield time”? Knowing we had an upcoming meeting with our financial planner, we discussed our work and our finances, along with when it might make sense for each of us to retire.

During the winter months in Arizona, we’d heard many couples having similar conversations. We both currently have rewarding careers, but we’re both also planners. Starting a phased approach to retirement, or retiring outright, is a substantial change in a couple’s life, one that can upend our routine and our identity. Combine that with the complexity of two people navigating retirement at roughly the same time, and the "dance of coordination" gets even more complicated.

We quickly realized that this should be something we navigate together, rather than making two independent decisions. We’ve heard from others that the failure to communicate and to jointly prepare can lead to misunderstanding and even resentment. Looking ahead to retirement? Here are five questions you might want to tackle.

First, will you opt for a slow, phased retirement or for full retirement on a specific date? Perhaps your employer would allow you to reduce your hours and phase down over time. Perhaps your career, like my wife’s career as a real estate professional, gives you the freedom to ratchet back the time you put in. Adopting a phased approach to retirement would let both of you adjust to your new routine together.

Second, what’s your overall financial situation? You’d want to consider income from your current positions, including any bonuses or other incentives, and your investments, along with your debts and other financial commitments. Both of you—or one of you—working longer means more opportunities to save and to collect investment returns, as well as the ability to delay spending down your savings and postpone claiming Social Security.

Third, what are your retirement lifestyle goals? If your plans include extended travel together, those trips may have to wait until both of you are retired.

Fourth, how healthy are both of you? Good health may affect your ability to continue working. But you also need to consider how long you’ll be healthy enough to do all that you want to do during your retirement. As a couple, remember that you’re forecasting health and longevity for two people.

Finally, should you get professional help—the financial kind? With so many variables in play, you might benefit from someone who can help you connect all the dots to create a holistic plan. Those dots include when to claim Social Security, health insurance benefits from an employer versus Medicare, long-term-care insurance, income from investments, where to live and more.

While you probably can’t get through all these topics over coffee, you also don’t need to drive 2,000 miles to have a fruitful discussion with your life partner. Still, that sort of captive time together does help you to have an in-depth conversation, rather than skirting topics that need to be discussed.

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