Jonathan Clements's Blog, page 2

What They Don’t Tell You About Retirement: Part 1 – Everything Breaks

As I struggled out of the electrical retailer with an enormous box, a thought crossed my mind. I was grateful I had taken a pessimistic view of life in one particular area. The box contained a new flat-screen TV to replace our old one, which had recently given up the good fight. My pessimistic thoughts had led me to create a large emergency fund on my retirement spreadsheet specifically for replacing items that wear out.

I suspect, though I have no data to back me up, that some approach retirement spending with too much optimism regarding the longevity of their possessions. If life has taught me anything, it's that this lumpy spending can come fast and often. Not giving it due consideration can be unwise.

Taking my recent past as a good example, my wife Suzie and I have had to replace a tumble dryer and a cooker extractor fan. We also had storm damage on our roof repaired and replaced seven Velux skylights that had reached the end of their lives. Other things come to mind, like an iPad my granddaughter dropped, breaking the screen, and a full exterior repaint of our home.

Sudden, significant expenses force a choice: dip into your emergency fund or sell a portion of your investments. If you haven't planned for these "lumpy" costs, you might be forced to sell assets during a market downturn, locking in losses and eroding your future growth potential. This series of unplanned withdrawals can seriously derail even the most carefully crafted financial plan.

These costs can mount quickly and become substantial. This is an area where you need to be realistic, not optimistic. My personal advice is to think back over the past few years to get a feeling for costs. Also, consider the end-of-life components of your house's structure and research repair and replacement costs. While this won't give you an exact amount, it will provide a better-informed guess. Whatever figures you arrive at, double the amount and then sleep soundly at night.

Back to reality with my new TV, I was pleased with my purchase. More importantly, I was very happy that Suzie didn't come with me. But the only cloud in my immediate future is explaining why I thought a 70-inch, all-singing, all-dancing flat screen was a direct replacement for the much smaller, recently deceased one it's replacing. I'm sure the drive home will bring some inspiration. But it just shows even a sound plan can be derailed by "necessary" upgrade costs.

 

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Our road from high school to retirement- one of many routes

Regular readers of HumbleDollar may recall some of this as it has been mentioned by me in various articles over the years.  In essence it is a summery of my adult life. 

There were no moments of financial brilliance. It was mostly just plugging along with an absence of misfortune while trying to avoid doing anything exceptionally stupid. 

I don’t recommend any similar actions for anyone. In fact, if I had to do it over, I suspect I would not recommend all of it for me either. 

The only message here is to illustrate that there are different highways, roads even trails to reach one’s goals. It is possible to be successful if you choose to put great effort into every detail, to utilize the planning tools available to achieve your goals. 

But if you are not a detail person, shy away from numbers or just like to keep things simple, success is also possible. 

The way I see it, lifelong financial prudence, exercising personal responsibility, avoiding unnecessary risk and patience are key to winning. A bit of good life luck helps as well.  

——————

I didn’t go to college after high school in 1961, but finally obtained a degree in 1978. 

My first job was a union position at near minimum wage.

I stayed with one employer nearly fifty years while many of my colleagues moved on to bigger and better things throughout the years. I was a clerk for the first 15 years and a low level manager for the next 25 years. 

Connie and I married ten months after our first date, eight of which I was in the army in Alabama plus nine more months after we married. 

We had four children in five years. 

We lived on one income our entire marriage. 

I started a very small business from home to help pay college bills. It lasted about six years. 

We bought a vacation home with a mortgage (at 9-1/2 %) a year before our oldest child started college. We rented it most of each summer to afford it.

From 1988 on we had 1,2 or 3 children in college for ten years in a row. We paid 95% or more of the cost. 

I had a pension, but we didn’t actually start saving and investing for retirement until 1982 when I was 39 and first had access to a 401k. I’m glad we did.

My investing is more like hoping for the best, I never had a real plan or paid much attention to the details of my choices. I am diversified, but my fund selection is more like throwing darts. And I have a too large concentration in employer stock. 

My best earning years, including equity compensation, started when I was age 63. I retired the year I was age 67.

Three years after I retired I was informed the non-qualified portion of my pension was calculated incorrectly and as a result my income was cut retroactively by 10%.

We took our Social Security at FRA while still working. 

In retirement we still save for emergencies and in 529 plans. We help our children financially from time to time. 

That’s it, my (our) road from high school to retirement, but I suspect today that road is not as well paved as it used to be. 

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Current status of diversification

Here are the 1-year trailing returns for various asset classes according to Morningstar:

Bloomberg Commodity 9.16%

LBMA Gold Price PM 34.59%

Morningstar Global Core Bond GR 2.17%

Morningstar US 5-10 Year Treasury Bond 3.09%

Morningstar US 10+ Year Treasury Bond -5.85%

Morningstar US Cash T-Bill 4.63%

Morningstar US Core Bond 2.61%

Morningstar US HY Bond 8.18%

Morningstar US Market 16.79%

Morningstar US REIT -1.17%

Morningstar US Small Cap 10.85%

A portfolio which contained an equally weighted amount of each of the above would show a gain of 7.7%. Without gold it would be 4.6%.

According to the article “gold now ranks as the top-performing major asset class over the trailing 20-year period through Aug. 27, 2025, with annualized returns of 10.7%. It also ranks at the top over most other trailing periods….. Academic researchers Campbell Harvey and Claude Erb have found that, over time, gold prices tend to revert to the mean….  it’s probably not the ideal time to buy gold when it’s already trading near an all-time high.  ”

The above from the article “Can the Gold Rush Continue” dated 9/2/2025

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When My Car Broke Down, Our One-Car Plan Passed the Test

I had just dropped my grandson off at soccer practice and was heading home when my car's overheating warning light began flashing, accompanied by a piercing "ping ping" noise. I quickly pulled over and turned the engine off. Shrugging my shoulders, and since I was in my normal uniform of shorts and a t-shirt, I decided to jog the two miles home.

The next morning, the mechanic called to let me know it was a coolant system failure. Because they were busy, it was going to be four days before the car was returned. This would normally be a problem, but in our case, it was just a minor annoyance. A few months beforehand, we had decided to embrace frugality and sold our second car, which had only been driven 326 miles the previous year, mostly by me to stop the battery going flat.

The reason that a car-free four days was no issue was because we'd made a plan before selling our second car. We discussed it and decided that since our town is compact and easily walkable, we could always manage with our feet and our bikes. It also helps that we live within a 25-minute walk of the town center, and there's an hourly public transport bus halt right across the street from our home.

Four days was right on the edge of what we had agreed was acceptable, any longer we would have rented a small car. So how did our car free days pan out? Honestly, it was hardly any bother at all. My wife Suzie and I nearly always walk everywhere within our town anyway, and I'm out on my bike almost every day.

Our main annoyance was one of the days when it reminded everyone why Ireland is emerald green—with lots of heavy rain. But I always go by the maxim, "There's no such thing as bad weather, just bad clothing choices." Suzie reminded me of this as she dispatched me to the shops by myself!

Four days passed quickly and we once again became a one car household, but there wasn't much celebration. The bill was paid and a small sigh left my mouth, but that afternoon, we walked down the driveway past our repaired car and headed on down the sidewalk and into town. It's what we do, why change because the car is back?

I guess I'm fortunate to live in such a walkable community, which makes having a car optional. Our one-car lifestyle has been tested and found to be perfectly acceptable. The financial benefits aren't massive, around $2000 a year, but the savings on tax, insurance, and breakdown cover certainly help. If you combine with the proceeds of the car sale and the reduced admin hassle of one car we think it was a good choice.

The most encouraging takeaway is that if we ever get to a point where we can't drive, our current location is a standout, future-proofed small town to live in. This is a nice realisation that makes thinking long-term that bit easier.

 

 

 

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This post contains a secret and words I used in a few forum posts ago. Why is it not encouraging.

The secret is revealed at the end.


TIME VALUE OF MONEY, asset class, diversification, dollar-cost averaging: This is the language of investment professionals. But it isn’t the language of everyday Americans, including those saving for retirement in their employer’s 401(k) plan.

Trust me, I know. During my nearly 30 years overseeing 401(k) plans, including providing financial education to participants, it became clear to me that using such plans as intended wasn’t easy for most people.

For diversification, employees would often invest in several different mutual funds all focused on a similar collection of U.S. stocks—with no thought of adding bonds or foreign shares. In many cases, workers couldn’t be dissuaded from putting all their money in their employer’s stock. When target-date funds were added to a plan’s menu of investment options, many participants bought them as one of several investments, thereby negating the intended purpose.

During the 2008-09 financial crisis, employees often panicked, even if retirement was decades away. Needless to say, this locked in losses and meant they missed out on the subsequent recovery. Even worse, some workers were turned off investing in stocks and instead retreated to bond funds and other-fixed income options, in the process likely making their retirement-income goal impossible to achieve.

Participants consistently displayed a tendency to be ultra-conservative or dangerously risky with their investments. In either case, they put their retirement in jeopardy. It was rare that employees adjusted their investment mix as retirement approached. Many focused on their retirement date as if, on that date, they would use all the money in their account, thereby missing the vital point of allocating their investments to maximize an income stream over what could be 20 years or more. All these missteps were common, despite extensive and ongoing efforts to educate plan participants.

The reality: Workers can be overwhelmed by the choices they’re required to make—and by the consequences of making wrong choices. This is often compounded by employers adding too many investment options, which leads to indecision or throwing a dart at several funds with nice sounding names. One plan I reviewed for a friend offered 42 different mutual funds. That friend, not understanding the differences among the funds, chose none and instead defaulted to a fixed-income fund. Result? He retired with $45,000 in his account.

For most Americans, 401(k) plans are the most important retirement savings vehicle available to them, especially so when there’s an employer match. And yet these plans won’t provide a secure retirement if used incorrectly. Getting workers to save is the first step. Teaching them to invest is the second.

We have a long way to go.

This was my first article for HumbleDollar in 2018. 

The post This post contains a secret and words I used in a few forum posts ago. Why is it not encouraging. appeared first on HumbleDollar.

This post contains a secret. At the end, I use “we have a long way to go,” as I did a few forum posts ago. Why is not encouraging.

The secret is revealed at the end.


TIME VALUE OF MONEY, asset class, diversification, dollar-cost averaging: This is the language of investment professionals. But it isn’t the language of everyday Americans, including those saving for retirement in their employer’s 401(k) plan.

Trust me, I know. During my nearly 30 years overseeing 401(k) plans, including providing financial education to participants, it became clear to me that using such plans as intended wasn’t easy for most people.

For diversification, employees would often invest in several different mutual funds all focused on a similar collection of U.S. stocks—with no thought of adding bonds or foreign shares. In many cases, workers couldn’t be dissuaded from putting all their money in their employer’s stock. When target-date funds were added to a plan’s menu of investment options, many participants bought them as one of several investments, thereby negating the intended purpose.

During the 2008-09 financial crisis, employees often panicked, even if retirement was decades away. Needless to say, this locked in losses and meant they missed out on the subsequent recovery. Even worse, some workers were turned off investing in stocks and instead retreated to bond funds and other-fixed income options, in the process likely making their retirement-income goal impossible to achieve.

Participants consistently displayed a tendency to be ultra-conservative or dangerously risky with their investments. In either case, they put their retirement in jeopardy. It was rare that employees adjusted their investment mix as retirement approached. Many focused on their retirement date as if, on that date, they would use all the money in their account, thereby missing the vital point of allocating their investments to maximize an income stream over what could be 20 years or more. All these missteps were common, despite extensive and ongoing efforts to educate plan participants.

The reality: Workers can be overwhelmed by the choices they’re required to make—and by the consequences of making wrong choices. This is often compounded by employers adding too many investment options, which leads to indecision or throwing a dart at several funds with nice sounding names. One plan I reviewed for a friend offered 42 different mutual funds. That friend, not understanding the differences among the funds, chose none and instead defaulted to a fixed-income fund. Result? He retired with $45,000 in his account.

For most Americans, 401(k) plans are the most important retirement savings vehicle available to them, especially so when there’s an employer match. And yet these plans won’t provide a secure retirement if used incorrectly. Getting workers to save is the first step. Teaching them to invest is the second.

We have a long way to go.

This was my first article for HumbleDollar in 2018. 

The post This post contains a secret. At the end, I use “we have a long way to go,” as I did a few forum posts ago. Why is not encouraging. appeared first on HumbleDollar.

How to win at FIRE from the Wall Street Journal

I'm gifting a WSJ opinion piece on how to achieve FIRE (Financial Independence, Retire Early) by 30. It's not about podcasts and side gigs, but about ignoring work-life balance and front loading earning. I wouldn't want to live that way, and was happy to retire at 53, but looks like the author may well achieve his goal. He suggests that others his age are following the same path.

 

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What Could Possibly Go Wrong?

"U.S. Stocks Are Now Pricier Than They Were in the Dot-Com Era
The S&P 500 has never been this expensive, or more concentrated in fewer companies" - WSJ 9/1/2025

==

Summary 200 Day Simple Moving Average:As of today (September 1, 2025), SPX index 200-day simple moving average is 5959.47, with the most recent change of +2.32 (+0.04%) on August 29, 2025.Over the past year, SPX index 200-day SMA has increased by +837.72 (+16.36%).SPX index 200-day SMA is now at all-time high.

Furthermore, all of the components of Faber’s ‘Ivy-5’ portfolio are above their 10-month Simple Moving Average.

 

 

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My New Zero-Wage CEO Role

This morning, as I was drinking my coffee, I realized it was September 1st. Today, with the kids returning to school in Ireland, grandparents across the country will be taking on after-school care duties.

This got me thinking. Just after I retired and before heading to my vacation home, I had an eight-week window into one aspect of my retirement future: helping out a couple of days per week minding the grandkids.

This was a new and unique adventure that I'm looking forward to resuming in late September. My initial impressions of this new responsibility have been enlightening. Although my grandson spent part of the summer with us, entertaining him one-on-one is a different kettle of fish.

I've discovered that school drop-off is a dog-eat-dog world, where you jostle for the perfect parking space. It’s highly exciting when you spot a place right at the school gate, with envious "yummy mummies" looking on in anger. Very satisfying, and worth missing that second coffee.

Then there's soccer at the local park after school. I’m positioned in the goal while my grandson kicks the ball at me as hard as he can, seeking the perfect goal. It hurts when the ball hits me right in the leg! I've had ball-shaped bruises to prove it.

Quickly moving on from this indignity, we come to his favorite Xbox video game, Fortnite. I've mastered the basics but keep getting killed within minutes. I’m going to need a refresher course in September. My grandson thinks I'm a bit rubbish at it, but my goal is to last a bit longer before getting laughed at.

Then we have my younger granddaughter. She’s not yet experienced the joys of school but loves trying to shove plastic cups into my mouth while making me dinner with her toy kitchen. That's slightly better than having to scold her naughty doll for jumping off the couch. That gets tiring after the first 20 minutes, but I'm sure I can adapt and continue showing the correct amount of enthusiasm.

Sometimes they even quietly play together without needing my immediate attention. They seem to have a built-in radar to find me just as I'm about to read a book or listen to the news. I've tried a few distraction techniques but have been unsuccessful in finding a surefire winner. My best hope was sending them to find my wife, Suzie, but her distraction technique is much better developed and generally involves finding their "Pops"—i.e., me.

As pickup time approaches, my eyes develop a fascination with the clocks around the house. That last half-hour seems to take an age before the door opens and the call of “it's only me” announces my duty is over for the day.

Strangely enough, I look forward to the next time it's our turn to be the caregivers. It's a rewarding experience that gives structure to the day. But now that I have my own space and quiet to relax, I'm looking at that discarded Xbox, wondering if I should do my Fortnite homework and get a little bit better at staying alive. Maybe I'll have the last laugh the next time we play.

So, what do I think of it all? I'm a recently retired business owner who now has a demanding zero-wage job that actually costs me money to perform. It comes with zero career development prospects, a steep learning curve, and exhausting hours. But the rate of return on investment for satisfaction and enjoyment is off the scale. I get to help my daughter and spend two days a week bossing my grandkids around—or maybe it's the other way around? What's not to like about that, roll in mid September, I've got this covered…I think!

 

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Health Update

Numerous readers have asked about my health, and the answer is "not good." I'm not in any pain, but I suffer a lot of fatigue and brain fog, a product of two rounds of radiation, one of my brain and the other of my back. I also had a "brain incident" in August that caused me to lose the ability to read and write for a few days.

All this has made it taxing to run HumbleDollar and to correspond with readers. That complicated tax question? No, you shouldn't expect an answer. And, no, sending it along twice doesn't help.

What about all the recent nonsense over upvotes and downvotes? For goodness sake, children, let's move on. If you keep belaboring the same point, expect to be berated by your fellow readers, and a few downvotes are in order. End of  story.

How will things play out from here? I'm hoping my energy level will return. But I could also see things spiraling down, and perhaps I'll just slip away, hardly a terrible fate. If that happens, readers will be the first to know. Elaine will make sure of that.

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