Jonathan Clements's Blog, page 16
July 23, 2025
Help! Why is the total lifetime accumulated Social Security benefit more important than the monthly amount?
It’s been mentioned on HD many times. Rick Connor mentioned it today. I even asked Gemini what was most important, monthly income or total lifetime benefits. Apparently Pipers calculator uses accumulated lifetime benefit as a decision guide.
My monthly pension is most important. I care less what the accumulated amount may be - unless I can become a significant actuarial loss in good health, but it’s financially irrelevant. The fact my pension and SS are both lifetime benefits is important, but that is not the question
The Gemini answer was lifetime benefits are most important for the following reasons which to me have nothing to do with the question. Doesn't this answer support the idea that monthly income amount is most important?
Why Total Lifetime Benefits are More Important:
Longevity Risk: The biggest fear in retirement is running out of money. Social Security provides a guaranteed, inflation-adjusted income stream for the rest of your life. If you live a long life (which is increasingly common), a higher monthly benefit that lasts for more years will result in a significantly larger total amount collected.
Inflation Protection: Social Security benefits receive Cost-of-Living Adjustments (COLAs). A higher starting monthly benefit means your COLAs will be applied to a larger base, leading to even more significant increases in dollar terms over time, further boosting your total lifetime income.
Spousal and Survivor Benefits: Your claiming decision can impact the benefits of your spouse and/or survivors. If you are the higher earner, delaying your own benefit can mean a substantially larger survivor benefit for your spouse if you pass away first. This contributes to the household's total lifetime benefits.
Irreversibility (Mostly): While there are some limited circumstances where you can change your claiming decision (like withdrawing an application within 12 months), generally, once you start collecting, that decision largely locks in your benefit amount for life. You can't easily go back and "undo" claiming early to get a higher future monthly payment.
My monthly pension is most important. I care less what the accumulated amount may be - unless I can become a significant actuarial loss in good health, but it’s financially irrelevant. The fact my pension and SS are both lifetime benefits is important, but that is not the question
The Gemini answer was lifetime benefits are most important for the following reasons which to me have nothing to do with the question. Doesn't this answer support the idea that monthly income amount is most important?
Why Total Lifetime Benefits are More Important:
Longevity Risk: The biggest fear in retirement is running out of money. Social Security provides a guaranteed, inflation-adjusted income stream for the rest of your life. If you live a long life (which is increasingly common), a higher monthly benefit that lasts for more years will result in a significantly larger total amount collected.
Inflation Protection: Social Security benefits receive Cost-of-Living Adjustments (COLAs). A higher starting monthly benefit means your COLAs will be applied to a larger base, leading to even more significant increases in dollar terms over time, further boosting your total lifetime income.
Spousal and Survivor Benefits: Your claiming decision can impact the benefits of your spouse and/or survivors. If you are the higher earner, delaying your own benefit can mean a substantially larger survivor benefit for your spouse if you pass away first. This contributes to the household's total lifetime benefits.
Irreversibility (Mostly): While there are some limited circumstances where you can change your claiming decision (like withdrawing an application within 12 months), generally, once you start collecting, that decision largely locks in your benefit amount for life. You can't easily go back and "undo" claiming early to get a higher future monthly payment.
The post Help! Why is the total lifetime accumulated Social Security benefit more important than the monthly amount? appeared first on HumbleDollar.
In Short-Term Limbo
As I shared a few weeks ago, I’m in the process of moving the money from my workplace retirement accounts at Fidelity to my rollover IRA at Schwab.
This, like other aspects of my retirement transition, has had its bumps in the road. Fidelity will only mail a check to your home, no electronic or direct transfers, so I called them a couple of days before we left San Diego last week to begin the process. The phone call went smoothly, and we had already completed the process of transferring my 403B account, when the agent said, “Oh. You can’t roll over your 457 or DCP accounts until you’ve been separated (he actually said “terminated,” which I balked at) for 31 days.” So now I have to call again next week to do the other half of the transfer.
So I paid $25 to have my check from the 403B expedited and got a UPS notification that it would be delivered on Monday (7/21). I (wrongly) thought someone would have to sign for it, so I made sure someone was home all day, though it didn’t arrive until 8:40 p.m.—and then was just tossed on our doorstep with a doorbell ring. The envelope made it clear that it was financial papers. I hate the idea that such a large check could have been sitting in front of our condo if we hadn’t been there (or worse, in front of our building—some UPS drivers don’t bother looking up the code to get in).
On advice of the Schwab rollover specialist, I hand-delivered the check to the local Schwab branch yesterday rather than putting it back into the mail. The guy there told me it should get deposited into my IRA by this afternoon and then I’d have to decide how to invest it. We talked for a couple of minutes about the upcoming August 1 tariff “deadline” and whether it might be prudent to hedge my bets for a couple of weeks by just putting the funds into a money market account for now. He said that’s what he would do if he were in my shoes. His argument is that the market has already corrected upwards, assuming Trump will again not go through with the tariffs, and it’s not likely to make another big jump if Aug 1 comes and goes without much drama. It could go down if Trump actually follows through this time, though. My husband, who keeps up with this stuff way more than I do, agrees with this analysis.
Any thoughts?
This, like other aspects of my retirement transition, has had its bumps in the road. Fidelity will only mail a check to your home, no electronic or direct transfers, so I called them a couple of days before we left San Diego last week to begin the process. The phone call went smoothly, and we had already completed the process of transferring my 403B account, when the agent said, “Oh. You can’t roll over your 457 or DCP accounts until you’ve been separated (he actually said “terminated,” which I balked at) for 31 days.” So now I have to call again next week to do the other half of the transfer.
So I paid $25 to have my check from the 403B expedited and got a UPS notification that it would be delivered on Monday (7/21). I (wrongly) thought someone would have to sign for it, so I made sure someone was home all day, though it didn’t arrive until 8:40 p.m.—and then was just tossed on our doorstep with a doorbell ring. The envelope made it clear that it was financial papers. I hate the idea that such a large check could have been sitting in front of our condo if we hadn’t been there (or worse, in front of our building—some UPS drivers don’t bother looking up the code to get in).
On advice of the Schwab rollover specialist, I hand-delivered the check to the local Schwab branch yesterday rather than putting it back into the mail. The guy there told me it should get deposited into my IRA by this afternoon and then I’d have to decide how to invest it. We talked for a couple of minutes about the upcoming August 1 tariff “deadline” and whether it might be prudent to hedge my bets for a couple of weeks by just putting the funds into a money market account for now. He said that’s what he would do if he were in my shoes. His argument is that the market has already corrected upwards, assuming Trump will again not go through with the tariffs, and it’s not likely to make another big jump if Aug 1 comes and goes without much drama. It could go down if Trump actually follows through this time, though. My husband, who keeps up with this stuff way more than I do, agrees with this analysis.
Any thoughts?
The post In Short-Term Limbo appeared first on HumbleDollar.
How Was I to Know?
In January 2020, I invested 150K I had inherited from my parents from the sale of their house. I knew it would be years before I would tap this money, so I invested in Vanguard’s intermediate bond fund in my brokerage account. I had learned that bonds were a safer investment than stocks and I could earn a somewhat higher return than in CDs that were paying next to nothing in interest. By September of ‘21 I was looking like a genius as I had earned 10K. But then came the bond crash and by April of ‘24 I had lost 6K. Now, after 5 1/2 years of investing these funds, I have gained a whopping 4K, a 0.5% gain.
I just read in a Morningstar that, in the past 150 years, there have been only 3 bond bear markets, and of course we know the last one was THE worst in history of the bond markets.
I was trying to be a responsible investor with the cash portion of my inheritance, but how was I to know we would face the worst bond market in history?
Oh well, c’est la vie!
At least overall I haven’t lost any of the money.
P.S. This year I “cut my losses” and took a 21K capital loss and reinvested the money in a short term bond fund as we are hoping to spend some on a new porch. However if the tariffs on Canadian lumber go through that dream may become a financial nightmare.
I just read in a Morningstar that, in the past 150 years, there have been only 3 bond bear markets, and of course we know the last one was THE worst in history of the bond markets.
I was trying to be a responsible investor with the cash portion of my inheritance, but how was I to know we would face the worst bond market in history?
Oh well, c’est la vie!
At least overall I haven’t lost any of the money.
P.S. This year I “cut my losses” and took a 21K capital loss and reinvested the money in a short term bond fund as we are hoping to spend some on a new porch. However if the tariffs on Canadian lumber go through that dream may become a financial nightmare.
The post How Was I to Know? appeared first on HumbleDollar.
Our Homes, Our Wealth: A Tale of Two Property Paths
I'm booking flights at the moment. Suzie and I are heading to the South of England to visit my brother-in-law and family in a couple of weeks' time. They've just recently hit a major life milestone by purchasing their first home together, and we're looking forward to getting a tour by the proud owners. I'm very happy for them; I'm also very happy for myself because I'm getting free accommodation by staying with them.
My brother-in-law is in his mid-forties with a wife ten years younger and has expressed nervousness at taking on such a large debt at his age, although he accepts it's in the long-term best interest for his family.
This got me thinking about property prices and the random nature of where we happen to rest our hat and set down roots to raise our families, and how it interacts with portfolio size and retirement outcomes.
In my brother-in-law's case, the property is on the south coast of England, which is a very high-cost property area to purchase. Contrast this with my neck of the woods, where property prices are generally considerably lower, and you have an interesting financial interplay between property wealth and portfolio size and retirement planning.
My situation, living in an area with lower property prices, translated into a smaller mortgage and lower housing costs. This, in turn, freed up extra cash to invest into my portfolio and participate in market growth. It also offered the extra benefit of lowering my wealth concentration in more illiquid asset classes like property, ultimately enhancing my financial flexibility and retirement planning.
For my brother-in-law in a high-cost area, acquiring a home involved a larger mortgage and higher debt, meaning a significant portion of his income is committed to housing for many years. This financial commitment will reduce available cash for other investments, potentially slowing the growth of their portfolio. Consequently, a large percentage of their total wealth may become concentrated in a single, illiquid asset—their home—offering less portfolio diversification compared to a more varied financial investment strategy
Often, career opportunities, family ties, or personal preferences dictate where we live, and these decisions have profound financial consequences. It's like many areas of life, a bit messy and a trade-off between lifestyle, community, and financial strategy. This shows that our decisions are more often than not driven by personal human factors over the cold face of finance, and I personally believe that's just how it should be. Particularly when it gets me free accommodation!
My brother-in-law is in his mid-forties with a wife ten years younger and has expressed nervousness at taking on such a large debt at his age, although he accepts it's in the long-term best interest for his family.
This got me thinking about property prices and the random nature of where we happen to rest our hat and set down roots to raise our families, and how it interacts with portfolio size and retirement outcomes.
In my brother-in-law's case, the property is on the south coast of England, which is a very high-cost property area to purchase. Contrast this with my neck of the woods, where property prices are generally considerably lower, and you have an interesting financial interplay between property wealth and portfolio size and retirement planning.
My situation, living in an area with lower property prices, translated into a smaller mortgage and lower housing costs. This, in turn, freed up extra cash to invest into my portfolio and participate in market growth. It also offered the extra benefit of lowering my wealth concentration in more illiquid asset classes like property, ultimately enhancing my financial flexibility and retirement planning.
For my brother-in-law in a high-cost area, acquiring a home involved a larger mortgage and higher debt, meaning a significant portion of his income is committed to housing for many years. This financial commitment will reduce available cash for other investments, potentially slowing the growth of their portfolio. Consequently, a large percentage of their total wealth may become concentrated in a single, illiquid asset—their home—offering less portfolio diversification compared to a more varied financial investment strategy
Often, career opportunities, family ties, or personal preferences dictate where we live, and these decisions have profound financial consequences. It's like many areas of life, a bit messy and a trade-off between lifestyle, community, and financial strategy. This shows that our decisions are more often than not driven by personal human factors over the cold face of finance, and I personally believe that's just how it should be. Particularly when it gets me free accommodation!
The post Our Homes, Our Wealth: A Tale of Two Property Paths appeared first on HumbleDollar.
July 22, 2025
Family Dynamics, Part 2: Supporting Adult Children
As I mentioned in my last post, I've been thinking about various ways that complex family dynamics can affect one's own finances, especially when we're in or headed toward the retirement years. Today's topic is about having adult children on the "family payroll," long after one might have assumed they'd be completely independent.
A 2024 study published by the Pew Research Center reported that about one-third of young adults (ages 18-34) still live with their parents and that about 55% of American parents provide varying degrees of financial assistance or support to their young adult children. There are a lot of factors that contribute to this finding, such as the high cost of housing and education as well as setbacks caused by the 2008-09 recession (for Millennials in particular) and the pandemic (for Gen Z).
For the sake of narrowing this discussion, let's exclude the following fact patterns:
The young adult is in college and the parents are paying all or some of their expenses.
The young adult is physically or mentally disabled and for that reason will never be financially independent.
The family has cultural or religious beliefs that lead young adult children to continue living with their parents, until or sometimes even after they're married.
Instead, let's focus on young adults who are not still in college, who are seemingly capable of earning a living, and whose family/cultural norms do not dictate their continuing to live at home.
Obviously, those of us who are parents want our adult children to be independent, self-sufficient, thriving, and happy. We want that for their best interests and we want it for our own financial well-being. Few of us signed up to support our children for a lifetime, and most of us can't afford to do so. But what happens when those adult children can't or won't become independent?
It's easy enough to talk about boundaries or "tough love," but some situations are not as obvious as they might seem to outsiders. In observing my own family and those of my friends, there can be a long continuum between someone who truly has special needs and must be cared for and someone who is "adulting" with competence and excellence. Many young adults struggle with mental and emotional health issues that can sap their energy for getting an education, earning a living, and being completely self-supporting. Especially if they perceive that their parents have the means to help them, it can be hard for them to accept that they can or should take complete responsibility for themselves, especially in a world with high costs and a challenging employment landscape.
Two of my acquaintances, both younger than I am, have young adult (20s) sons who were not able (in one case) or willing (in the other) to complete college. Both moms have allowed their sons to continue living at home but require them to work to pay their own personal expenses. One of them actually charges her son a modest rent--but (unbeknownst to the son) is putting that rent money into a high-interest savings account to give him a boost once he finally does move out. That is one way to handle things.
If the young adult living at home with their parents isn't a good option for the family, parents might choose to help with specific expenses--keeping the child's cell phone on the family plan, or paying their health insurance premium, to give a couple of examples--but only on the condition that the child is making a good faith effort to work and earn money. And if the parents are financially involved in the adult child's life, they should, in my opinion, be able to demand that the young adult "open the books" or share their budget, for accountability. But I'm here to tell you that these conversations can be very, very fraught.
As I've shared in my writing here before, one of my adult daughters went through a very rough period starting in 2022 that included her being seriously injured twice in car accidents just 14 months apart. This set her financial independence back a great deal as she recovered physically and emotionally from the accidents. Thankfully, she didn't sustain any permanent or life-altering injuries, but it took her awhile to get back on her feet (literally, in the case of the second accident--she had a badly broken ankle and was not allowed to be weight-bearing for five months and was in a boot for seven--but also mentally). Now she has a new job and things are stabilizing financially for her.
We provided a lot of financial support during this period. Both of us were working and had disposable income, and we could afford to do so, though our long-term savings goals took a hit. Over the past year or so, as she's been (mostly) physically recovered but slow to return to work, we've struggled with when and how hard we should push her, especially given my imminent retirement date. On the one hand, yes, of course we should expect her to be mostly independent by now, but on the other--she has been through a tough patch. So, at least for us, it hasn't always been obvious how to proceed through this.
I suspect that such issues tend to be very case-specific: It depends on the adult child and their circumstances, on the parents' ability and willingness to help out, and on the larger family dynamics--for example, would it work for the family for the adult child to live at home, and if so, for how long, how do other siblings (if applicable) feel about the situation, and so forth. I've found that it's easy for people outside the immediate family to judge without knowing all of the ins and outs. And this issue touches on a lot of tender spots, for both parents and adult children, about the larger relationship.
It all affects one's own financial well-being. But it's not always easy to navigate.
A 2024 study published by the Pew Research Center reported that about one-third of young adults (ages 18-34) still live with their parents and that about 55% of American parents provide varying degrees of financial assistance or support to their young adult children. There are a lot of factors that contribute to this finding, such as the high cost of housing and education as well as setbacks caused by the 2008-09 recession (for Millennials in particular) and the pandemic (for Gen Z).
For the sake of narrowing this discussion, let's exclude the following fact patterns:
The young adult is in college and the parents are paying all or some of their expenses.
The young adult is physically or mentally disabled and for that reason will never be financially independent.
The family has cultural or religious beliefs that lead young adult children to continue living with their parents, until or sometimes even after they're married.
Instead, let's focus on young adults who are not still in college, who are seemingly capable of earning a living, and whose family/cultural norms do not dictate their continuing to live at home.
Obviously, those of us who are parents want our adult children to be independent, self-sufficient, thriving, and happy. We want that for their best interests and we want it for our own financial well-being. Few of us signed up to support our children for a lifetime, and most of us can't afford to do so. But what happens when those adult children can't or won't become independent?
It's easy enough to talk about boundaries or "tough love," but some situations are not as obvious as they might seem to outsiders. In observing my own family and those of my friends, there can be a long continuum between someone who truly has special needs and must be cared for and someone who is "adulting" with competence and excellence. Many young adults struggle with mental and emotional health issues that can sap their energy for getting an education, earning a living, and being completely self-supporting. Especially if they perceive that their parents have the means to help them, it can be hard for them to accept that they can or should take complete responsibility for themselves, especially in a world with high costs and a challenging employment landscape.
Two of my acquaintances, both younger than I am, have young adult (20s) sons who were not able (in one case) or willing (in the other) to complete college. Both moms have allowed their sons to continue living at home but require them to work to pay their own personal expenses. One of them actually charges her son a modest rent--but (unbeknownst to the son) is putting that rent money into a high-interest savings account to give him a boost once he finally does move out. That is one way to handle things.
If the young adult living at home with their parents isn't a good option for the family, parents might choose to help with specific expenses--keeping the child's cell phone on the family plan, or paying their health insurance premium, to give a couple of examples--but only on the condition that the child is making a good faith effort to work and earn money. And if the parents are financially involved in the adult child's life, they should, in my opinion, be able to demand that the young adult "open the books" or share their budget, for accountability. But I'm here to tell you that these conversations can be very, very fraught.
As I've shared in my writing here before, one of my adult daughters went through a very rough period starting in 2022 that included her being seriously injured twice in car accidents just 14 months apart. This set her financial independence back a great deal as she recovered physically and emotionally from the accidents. Thankfully, she didn't sustain any permanent or life-altering injuries, but it took her awhile to get back on her feet (literally, in the case of the second accident--she had a badly broken ankle and was not allowed to be weight-bearing for five months and was in a boot for seven--but also mentally). Now she has a new job and things are stabilizing financially for her.
We provided a lot of financial support during this period. Both of us were working and had disposable income, and we could afford to do so, though our long-term savings goals took a hit. Over the past year or so, as she's been (mostly) physically recovered but slow to return to work, we've struggled with when and how hard we should push her, especially given my imminent retirement date. On the one hand, yes, of course we should expect her to be mostly independent by now, but on the other--she has been through a tough patch. So, at least for us, it hasn't always been obvious how to proceed through this.
I suspect that such issues tend to be very case-specific: It depends on the adult child and their circumstances, on the parents' ability and willingness to help out, and on the larger family dynamics--for example, would it work for the family for the adult child to live at home, and if so, for how long, how do other siblings (if applicable) feel about the situation, and so forth. I've found that it's easy for people outside the immediate family to judge without knowing all of the ins and outs. And this issue touches on a lot of tender spots, for both parents and adult children, about the larger relationship.
It all affects one's own financial well-being. But it's not always easy to navigate.
The post Family Dynamics, Part 2: Supporting Adult Children appeared first on HumbleDollar.
VG Portfolio Suggestions for Taxable Account
Trying to guide some "30 somethings" on appropriate holdings for a taxable account. I'm a little out of my element as almost all my personal investment experience has been in some type of qualified account where taxes don't matter. Christine Benz recently did a piece that suggested 3 exhange-traded funds - Vanguard Total US Stock (VTI), the Total International (VXUS) and a Tax Free Municipal Bond (VTEB) in varying asset allocations depending on risk. I'm just wondering if this is "too simple" and adding a small cap ETF, a small cap value ETF or something I haven't even considered adds some diversification away from the mega cap VTI. Looking for simple and tax efficient but don't want to sacrifice performance if adding a bit more complexity is worth the effort. Or if someone wants to talk me into mutual funds, I'm open to suggestions though it seems the tax advantages of ETFs are fairly compelling.
The post VG Portfolio Suggestions for Taxable Account appeared first on HumbleDollar.
A Very Politically Incorrect Ramble With a Potentially Real Point: Is Your Retirement Calculator Sexist?
I'm seriously sticking my neck out with this speculative, non politically correct observation and expect to get it chopped off by someone. And deservedly so!
Last week, my wife, Suzie, spent a considerable sum of money on hair care, nail salons, and other female-focused purchases. Certainly enough to make my right eyebrow twitch slightly. I only highlight this for the sake of my speculation, not as a manly moan about female spending choices. But the spending got me thinking about retirement calculators. I know I really need to get a life!
Is there an argument to be made that single females need a bigger portfolio size upon entering retirement due to nuanced societal differences around discretionary spending between the sexes than a male looking for the same lifestyle? It's an interesting, if not too serious, point to consider. And if so, what does that say about general financial advice aimed at everyone?
When you consider this possible spending pattern and then combine it with the statistical probability of a longer female lifespan, we start getting to the point that generic financial advice might give misleading answers. This is because I'm reasonably sure these calculators don't take these factors into account and don't question the stated age of the person. To keep the thought slightly balanced, I admit to knowing a few male friends—actually, a lot—who possibly spend more on their tech gadgets and latest hobby obsessions... and they all lie about their age.
So, where was I... This touches on broader societal expectations. Women are often implicitly encouraged to invest in their appearance in ways men aren't. These discretionary expenses, while seemingly minor, can really add up, especially in retirement. A woman might genuinely feel these expenditures are essential for her well-being, whereas a man with a similar lifestyle might not have comparable costs (generally because they are slobs). Although this is very much a broad overgeneralization, I'm using it for the sake of the muse. My wife, Suzie, will hit me on your behalf... you only need to ask.
Now, if we put all this totally unacceptable gender stereotyping, brought on by a raised eyebrow, together, the cumulative effect of these factors—potentially higher discretionary spending over a longer lifespan—could significantly impact how long a retirement portfolio actually lasts. If a standard calculator suggests a person needs "X" amount to retire comfortably, that figure might be an underestimation for a female. This could be a potential oversight in generic financial planning tools that could inadvertently disadvantage single women.
Perhaps future financial models could incorporate adjustable "lifestyle multipliers" that account for gender spending norms, allowing for more personalized and accurate projections for everyone.
And perhaps you should just ignore all the above, considering it was the result of a slightly raised eyebrow and a lot of rambling speculation over the cost of, according to my wife, Suzie, "a few essential 'make me happy' items." My sample size of one person is dubious at best. I promise to keep my thoughts under better control in the future and try to provide evidence for my musings.
Last week, my wife, Suzie, spent a considerable sum of money on hair care, nail salons, and other female-focused purchases. Certainly enough to make my right eyebrow twitch slightly. I only highlight this for the sake of my speculation, not as a manly moan about female spending choices. But the spending got me thinking about retirement calculators. I know I really need to get a life!
Is there an argument to be made that single females need a bigger portfolio size upon entering retirement due to nuanced societal differences around discretionary spending between the sexes than a male looking for the same lifestyle? It's an interesting, if not too serious, point to consider. And if so, what does that say about general financial advice aimed at everyone?
When you consider this possible spending pattern and then combine it with the statistical probability of a longer female lifespan, we start getting to the point that generic financial advice might give misleading answers. This is because I'm reasonably sure these calculators don't take these factors into account and don't question the stated age of the person. To keep the thought slightly balanced, I admit to knowing a few male friends—actually, a lot—who possibly spend more on their tech gadgets and latest hobby obsessions... and they all lie about their age.
So, where was I... This touches on broader societal expectations. Women are often implicitly encouraged to invest in their appearance in ways men aren't. These discretionary expenses, while seemingly minor, can really add up, especially in retirement. A woman might genuinely feel these expenditures are essential for her well-being, whereas a man with a similar lifestyle might not have comparable costs (generally because they are slobs). Although this is very much a broad overgeneralization, I'm using it for the sake of the muse. My wife, Suzie, will hit me on your behalf... you only need to ask.
Now, if we put all this totally unacceptable gender stereotyping, brought on by a raised eyebrow, together, the cumulative effect of these factors—potentially higher discretionary spending over a longer lifespan—could significantly impact how long a retirement portfolio actually lasts. If a standard calculator suggests a person needs "X" amount to retire comfortably, that figure might be an underestimation for a female. This could be a potential oversight in generic financial planning tools that could inadvertently disadvantage single women.
Perhaps future financial models could incorporate adjustable "lifestyle multipliers" that account for gender spending norms, allowing for more personalized and accurate projections for everyone.
And perhaps you should just ignore all the above, considering it was the result of a slightly raised eyebrow and a lot of rambling speculation over the cost of, according to my wife, Suzie, "a few essential 'make me happy' items." My sample size of one person is dubious at best. I promise to keep my thoughts under better control in the future and try to provide evidence for my musings.
The post A Very Politically Incorrect Ramble With a Potentially Real Point: Is Your Retirement Calculator Sexist? appeared first on HumbleDollar.
July 21, 2025
Double FOMOitis
I have an exasperating and ever-increasing case of double FOMOitis. Today’s stretched stock market valuations have given me a case of fear of missing out (FOMO) for not selling and locking in assured gains – sensible rebalancing theory suggests that we should all be selling on the way up. On the other hand, I have FOMO even considering selling because of the potential opportunity cost of not capturing further gains in a market with clear upward momentum – sensible investing theory (and Jonathan recently) suggests that we should ride the winners while they are hot.
In reality, many of HumbleDollar’s financial debates mainly matter on the margin – Social Security claiming, taxes, tariffs, interest rates, Medicare premiums, Roth conversions, annuities, diversification, dividends, specific fund selections, etc. We seniors have experienced the most amazing 15 years of stock market appreciation ever, and having a healthy asset allocation to stocks has been hugely beneficial. At this point, only a Japan-like decades of market pull-back could devastate the comfortable financial position of those (like most HD readers) with invested assets – FOMO for not selling. Yet, the economy, earnings, technology development, consumer spending, employment, GDP, and stock valuations all continue to grow nicely, and it is always best to stay invested for the long-term – FOMO to sell.
Anyone else likewise suffering a case of double FOMOitis?
In reality, many of HumbleDollar’s financial debates mainly matter on the margin – Social Security claiming, taxes, tariffs, interest rates, Medicare premiums, Roth conversions, annuities, diversification, dividends, specific fund selections, etc. We seniors have experienced the most amazing 15 years of stock market appreciation ever, and having a healthy asset allocation to stocks has been hugely beneficial. At this point, only a Japan-like decades of market pull-back could devastate the comfortable financial position of those (like most HD readers) with invested assets – FOMO for not selling. Yet, the economy, earnings, technology development, consumer spending, employment, GDP, and stock valuations all continue to grow nicely, and it is always best to stay invested for the long-term – FOMO to sell.
Anyone else likewise suffering a case of double FOMOitis?
The post Double FOMOitis appeared first on HumbleDollar.
100% Base Pay Replacement: What Does It Mean?
Generating a reliable source of income is one of the most important, and often challenging, parts of a successful retirement. Those of us fortunate enough to have a decent defined benefit pension have a leg up on this. Combine this with an inflation protected social security benefit, and some savings, and a retiree has a chance at a modest, yet comfortable retirement. I’ve seen this firsthand. My in-laws were a truck driver and a part-time registered nurse. They combined a teamster’s pension, a small nursing pension, and 2 social security benefits, along with a 403b plan, and lived a comfortable retirement.
One of HD’s most esteemed authors frequently advocates for a retirement income goal of 100% base pay replacement in retirement. This was repeated recently in this post. There have been lively discussions on this site about this in the past. I’ve wondered if one of the sources of disagreement in the past was the use of the term “base pay”, but I’ve never seen it discussed. Today’s post resurrected that thought, and I think it may be worth exploring. Here are a few questions that I have.
In my working career, most professional’s salary was the same as their base pay. At one point I managed more than 500 engineers and scientists, and had access to the payroll data for 1000s of employees. The vast majority worked for a salary, with occasional bonuses or awards. But they were small in comparison to the salary. In my experience, base pay and pay are the same thing. I’m aware of industries – finance, tech start-ups, sales – where pay is tied to business performance. In my companies that was limited to the executive level. What is the experience of others? RDQ has told us he worked for a large utility. Were bonuses a significant part of the compensation for the majority of employees?
How do you define base pay for a couple with both working? My wife was able to work part-time as a nurse while our children were growing, and transitioned to full-time as they finished high school and went to college. She progressed well in her career and her last 15 years she developed and managed multiple surgery centers. Her salary increased with her added responsibility, and helped us pay for college, purchase a beach home, and save significantly towards retirement. In the last decade of work, we were able to max out retirement account contributions and save beyond that. Should you replace the income amounts that were directed to qualified retirement savings accounts while working?
Consider the new retiree in the table below. She retired form her position on 12/31/2024. She has no pension, but saved diligently in her employer’s 401k, an after-tax savings account, and a Roth IRA. How should she set up her income plan starting Jan 1, 2025?
Item
Data
Facts
Personal
Female, single
DOB
Jan 15, 1960
Retire
Dec 31, 2024
Residence
PA
2024 Income
Salary
$100,000
401k Savings
$30,500
HSA Savings
$5,150
Payroll Tax
$7,650
Federal Tax
$5,669
State Tax
$3,000
Net Pay
$48,031
Assets
401k Balance
$1,200,000
After-tax Cash
$100,000
Roth IRA
$200,000
SS Benefits
Monthly Benefit
65 (1/15/25)
$2,115
67 (1/15/27)
$2,558
70 (1/15/30)
$3,038
The post 100% Base Pay Replacement: What Does It Mean? appeared first on HumbleDollar.
100% Base Pay Replacement – What does it mean?
Generating a reliable source of income is one of the most important, and often challenging, parts of a successful retirement. Those of us fortunate enough to have a decent defined benefit pension have a leg up on this. Combine this with an inflation protected social security benefit, and some savings, and a retiree has a chance at a modest, yet comfortable retirement. I’ve seen this firsthand. My in-laws were a truck driver and a part-time registered nurse. They combined a teamster’s pension, a small nursing pension, and 2 social security benefits, along with a 403b plan, and lived a comfortable retirement.
One of HD’s most esteemed authors frequently advocates for a retirement income goal of 100% base pay replacement in retirement. This was repeated recently in this post. There have been lively discussions on this site about this in the past. I’ve wondered if one of the sources of disagreement in the past was the use of the term “base pay”, but I’ve never seen it discussed. Today’s post resurrected that thought, and I think it may be worth exploring. Here are a few questions that I have.
In my working career, most professional’s salary was the same as their base pay. At one point I managed more than 500 engineers and scientists, and had access to the payroll data for 1000s of employees. The vast majority worked for a salary, with occasional bonuses or awards. But they were small in comparison to the salary. In my experience, base pay and pay are the same thing. I’m aware of industries – finance, tech start-ups, sales – where pay is tied to business performance. In my companies that was limited to the executive level. What is the experience of others? RDQ has told us he worked for a large utility. Were bonuses a significant part of the compensation for the majority of employees?How do you define base pay for a couple with both working? My wife was able to work part-time as a nurse while our children were growing, and transitioned to full-time as they finished high school and went to college. She progressed well in her career and her last 15 years she developed and managed multiple surgery centers. Her salary increased with her added responsibility, and helped us pay for college, purchase a beach home, and save significantly towards retirement. In the last decade of work, we were able to max out retirement account contributions and save beyond that. Should you replace the income amounts that were directed to qualified retirement savings accounts while working?Consider the new retiree in the table below. She retired form her position on 12/31/2024. She has no pension, but saved diligently in her employer’s 401k, an after-tax savings account, and a Roth IRA. How should she set up her income plan starting Jan 1, 2025?ItemDataFacts PersonalFemale, singleDOBJan 15, 1960RetireDec 31, 2024ResidencePA2024 Income Salary$100,000401k Savings$30,500HSA Savings$5,150Payroll Tax$7,650Federal Tax$5,669State Tax$3,000Net Pay$48,031 Assets 401k Balance$1,200,000After-tax Cash$100,000Roth IRA$200,000 SS Benefits Monthly Benefit 65 (1/15/25)$2,11567 (1/15/27)$2,55870 (1/15/30)$3,038The post 100% Base Pay Replacement – What does it mean? appeared first on HumbleDollar.
