Jonathan Clements's Blog, page 31
June 13, 2025
Let’s Stir Up the Bee’s Nest Again- Another Way of Calculating Net Worth
Here is an interesting article I just read on my weekly Boldin (previously New Retirement) newsletter:
https://www.boldin.com/retirement/exp...
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When You Love What You Do. Definitely NOT a rant. By Kristine
Regular HumbleDollar readers are likely familiar with my passion for dogs. I adore dogs and find I generally prefer their company to that of many humans.
Three years ago I retired. I had spent thirty years working in laboratories. I generally enjoyed the work but I was never particularly passionate about it. I spent my weekdays working in order to support my dog hobby on the weekends.
Right after I retired, my husband and I toyed with the idea of starting a dog training business. When we looked into the cost of leasing a building and paying for the various associated expenses, we decided against it. It seemed to me like I’d need to work at least forty hours a week just to make a small profit.
Two years ago I met another dog trainer in the Phoenix area who leased her own space. I started teaching a couple of classes for her and found it really sparked my love of helping people train their dogs. It was a nice way to bring home a little bit of money and I looked forward to teaching more classes at her facility. Unfortunately she decided owning a dog training business was too much work and not enough fun and closed the business down a year after I began teaching there.
In February of this year, I was ready to give up on my dog training business dreams. I’d already decided not to renew my website domain and my business insurance policy when they came due in April. I was disappointed, but figured it just wasn’t meant to be.
In March I happened to be on Facebook when a page for a local dog club popped up in my feed. The 55+ community we live in has over 100 chartered clubs, but I wasn’t aware there was one devoted to dog owners. I wrote a quick introduction–mentioning I loved to teach dog training classes–and walked away from my computer. Within an hour, I had a message from one of the club members saying they needed to talk to me.
As it turns out, the club had recently decided they wanted to begin to offer dog training classes. The only problem was that they didn’t have anyone to instruct them. They agreed to let my husband and I teach two classes in April and see what the response was. As it turns out, it was overwhelmingly positive.
I’m happy to say we will be teaching at least five classes this coming fall. It’s a three minute commute from our house to the training location. We get to keep all of the money the classes bring in. Most importantly, we get to share our love of dogs and dog training with other residents. It did my heart good to see our first class participants–dogs and humans alike–having fun while learning a variety of useful skills.
When you love what you do, it truly doesn’t seem like work.
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Medicare Signup Goes Awry
Some people’s recent experience with the Social Security and Medicare sign-up process has been smooth. Mine for Medicare? Not so much.
I turned 65 in November 2024 and wanted Medicare Part B to start January 1, 2025. Medicare.gov says that if you apply in the month after your birthday, Part B will start the following month. Perfect! I filed for Medicare on the Social Security site on December 2nd and even included a note that I wanted Part B coverage to start January 1. My application was processed on December 4th (very timely!) but with Part B starting December 1.
I called SS on December 6th and was told I needed to file a form to terminate Medicare and was given the wording to put in the form to indicate I actually wanted the start date changed from December 1 to January 1. I filed this form on December 9th. Two weeks later, I received a letter stating that my Part B coverage would be terminated effective January 31!
I called SS on December 26th and was told to file a “Request for Reconsideration” (basically, an appeal). I filed it on December 27th. The SS site says appeals are generally handled within 60 days. On multiple calls during and after the 60 days, I was told the appeal would be approved and SS would fix their mistake.
By mid March, no action had been taken, so I made an appointment at the local SS office for April 2nd. At the appointment, a kind employee told me the appeal would be approved within two weeks and gave me her and her boss’s phone numbers encouraging me to call if it wasn’t approved.
You might be able to guess what happened, or didn’t happen. The appeal was not approved (and not denied either) and multiple calls to both numbers went to voicemail with never a callback. In late April, I gave up and re-applied for Part B coverage.
SS’s error cost me about $1,000 - an extra Part B premium, tier 3 IRMAA charges for December (since I did significant Roth conversions in 2022, anticipating I would not start Medicare until 2025), and unplanned medical costs incurred in February and March when I didn’t have coverage, net of the premiums I “saved” while I did not have coverage.
My advice if you want Part B coverage to start the following month is to wait until at least the 10th of the month to file and don’t file for SS benefits at the same time as that could delay the whole process. Good luck!
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In Defence of Work
In the personal finance corner of the internet, the conventional wisdom seems to be to work hard, save as much as you can, invest wisely and retire as soon as you can. The FIRE movement takes that further, to an extent that I think many of us find difficult to truly grasp.
And I get it. Retirement, or at least semi-retirement, has lots of attractions. Feeling tired? Sleep a little longer. Find something new and interesting? You’ve got the freedom to devote as much time to it as you like. There are lots of positives that come with not being tied to a set working schedule, and that provide the opportunity to pursue so much that would otherwise not be possible.
But sometimes this message makes me feel like “if you don’t retire as soon as possible, you’re wasting your life”. That if you haven’t developed a fantastic range of hobbies and don’t have a travel bucket list that you are somehow boring and narrow.
I know that isn’t how it is intended, but it’s how it feels sometimes. And I have come to think that’s just not necessarily true.
For some context, I spent the first 20 years of my working life in engineering and project management. Nearly everyone I worked with was in their prime working age. So unless someone was having a bad day and muttered something like “Man, I can’t wait to retire so I don’t have to put up with this”, the subject of retirement really never arose. And I certainly didn’t deal with the general public.
Then I took a shift in my career, working with my Dad as co-owners of an automotive workshop in a rural town in Victoria, Australia. We employ 8 staff and it’s a great small business.
The average age in our town is 10 years older than the rest of the state, so we have lots of people either retired or close to it. And many of those people have retired very happily, enjoying their freedom and the chance to rest after a busy and often tiring working life. But I also observe those who take genuine satisfaction from their work. They really want to work as long as their body and mind will allow. If they need to slow down a bit, maybe work a few less days, then so be it. But they most certainly do not want to stop.
I think in rural towns it might be a lot easier to find a sense of satisfaction in your work. Our local dairy farmers see a truck full of milk leave their farm each day. Our local timber manufacturing plant sees green logs roll in, and finished timber products roll out, ready for their role in a huge range of homes and buildings throughout Australia. Our local forest management crews work outdoors, often fighting bushfires to protect both natural and man-made resources. Our automotive workshop helps people reliably get to where they need to be.
We don’t have large corporate offices with middle managers and hierarchies full of administrative staff. I imagine that in a vast office space, stuck in cubicle 378, it can be really tough to find meaning in a job, and that retirement must be a very attractive proposition.
In our little corner of the world, there is a strong and quite direct link between what we do each day and how that helps the society around us. Viewed through that lens, work feels important and valuable. So whilst we can all see the tremendous benefits that come with retirement, I think we can also recognise that for many people, the work we do can be energizing and vital to remaining active and engaged as we grow older.
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“A Complex Portfolio, a Modest Account”
If someone has a relatively small IRA—say, around $54,000—do they need to be as diversified as someone managing a much larger retirement portfolio?
Here’s what prompted the question.
My neighbor recently lost his wife. She had taken the lead on their finances, working closely with an advisor at a national investment firm. Now he’s on his own, trying to navigate retirement decisions without much guidance.
I tried to help by simply asking questions—not giving advice.
Me: “What are you invested in?”
Him: “Morgan Stanley.”
Me: “Right—but what are the actual investments? Stocks, mutual funds, ETFs?”
Him: “What’s an ETF?”
That opened the door to a good conversation. We looked through his IRA together. It’s worth about $54,000, and is split between 4 individual stocks, 3 ETFs, and 3 mutual funds, plus a little cash.
At first glance, it looked diversified. But as we went through the holdings, I noticed something: a lot of overlap. Several of the funds and stocks owned similar large-cap, dividend-paying companies. He was holding different wrappers of essentially the same thing.
To me, it seemed unnecessarily complex for a portfolio of that size. It didn’t add much diversification, and it made the portfolio harder for him to understand—especially now that he’s managing things alone.
So here’s my question to the HumbleDollar community:
Does a small IRA really benefit from that level of diversification—or is it more helpful to keep things simple and clear?
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A Rant about the Price of Gas, Part II: Live Experiment
1) Israel attacked Iran last night.
2) Refineries were NOT hit.
3) The Strait of Hormuz remains open
4) according to Google, it takes about 5-7 weeks for oil from the Middle East to arrive in the US
5) as I write this, the price of oil has gone up 8.67 % since yesterday.
How long will it take, and by how much, for the price of gas at the pump go up near you ?
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The aging appetite, dealing with leftovers and buying for two seasoned citizens: Rant by RDQ
I take the occasional nap-unintentionally though. I bother people by engaging in conversation and telling stories, my grandchildren call me Pa. Actually nowadays my children do as well.
But the most obvious sign - as long as I don’t look in the mirror- is a decline in my appetite. It’s not a clinical thing or extreme which can happen, I just fill up with less. Actually it's common for older people to eat less, a phenomenon sometimes referred to as "anorexia of aging." That sounds rather dire, but the fact is as people age, their metabolism slows down and they often become less physically active - note nap reference, meaning they require fewer calories to maintain their weight.
The only things about me that are as physically active as in my younger years are my typing fingers - both of them.
All this has resulted in a fridge full of leftovers, much from restaurants. Tonight my dining choices include leftover Chinese or leftover eggplant parmigiana. It’s been a busy week. I’m going with the Chinese as it’s a day older than the Italian.
Unless we are in a fine dining establishment we have taken to asking for take away boxes before being served. We put the soon to be leftovers in the boxes before we eat. It’s neater that way. I haven’t figured out how to successfully and discreetly unbox if we miscalculated and want to eat more.
We have not and will not split an entree although we do order one desert on occasion often at the urging of the server - better one than none. Last week we went to dinner with cousins. Connie and I each ordered a meal and cousins split a salad. I was embarrassed- yeah, I know, why? It made me feel like a glutton with my chicken gumbo meal. If you are going out to dinner, have dinner.
Have you noticed there is very little food you can buy just sufficient for two? I understand why, but it’s still annoying and it helps to add to leftovers. We like cranberry sauce with chicken dishes, but you can only get a 15 oz can. They used to make a can half that size, but no more. So now after a chicken dinner, the plastic wrapped dish with cranberries sits in the fridge until we figure out what to eat it with - or throw it out.
I was looking for Cheerios the other day. All they had were the family size box. I’ll be eating honey nut Cheerios for six months, long past the “Best By” date - an estimate of declining taste quality, not safety.
The cohort life expectancy, which attempts to account for improvements in mortality over a person's lifetime, says for people born in 1943 it is 71.7 years. Good thing those “use by” and “best by” dates are bad guesses.
Getting old can be frustrating.
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June 12, 2025
Social Security Personal Update
I posted on May 21 that my spouse was going to schedule an appointment with the nearby social security office and file. (There are 14 in this state, and our area population is about 1.2 million). Here is how it went.
1. Wait times on the phone can be long, but the Social Security (SS) office will schedule a call-back. G used that service.
2. She was able to schedule an appointment about 5 business days in the future.
3. She did some preliminary work on the SS website and began the registration process there.
4. She brought documents with her, including two government issued photo IDs and the checking account so she could schedule ACH (automatic monthly deposit).
5. She changed her Medicare payment from ACH withdrawal from a checking account to debit from her SS monthly payment.
6. She completed the necessary documents for a spousal benefit. One issue was she didn’t have a “certified” marriage license with her. Copies will not do. She contacted the County office in which we were married and the necessary document was Fedexed (at cost to us).
7. She decided to back-file to November 2024. This resulted in a significant lump-sum amount as a one-time payment.
8. She selected her percentage automatic withholding for IRS federal tax payment. We had pre-discussed this. There are several options, ranging from 7% to 22% withholding.
9. She switched from monthly Medicare ACH withdrawal from checking to debit the SS benefit.
So, how did it turn out?
1. The online calculator we had used when discussing when to file was very close to the actual amount. That calculator has been discussed in previous HD articles.
2. Upon receiving the marriage certificate she scheduled an appointment to submit it as evidence to SS and complete the spousal benefit forms. She got an appointment two days hence. She presented the certificate, SS made a copy and she was done.
3. Five days after the meeting her lump sum payment of benefits on her own record arrived in the checking account.
4. There was no chaos, near trauma, wringing of hands, etc. as predicted by some.
5. Overall, it was a very positive experience for G. Because of her public pension she never expected to get a stipend even though she exceeded the SS rules. SS income is a bonus for her.
6. G has been shuttling back and forth across the country for about 7 years to care for her father and now her mother who is in an Alzheimer’s facility. Ro also has a care giver 6 days a week. The travel is expensive; each trip is about $5,000 for 10-14 days of travel, and there are multiple trips each year. I’ve taken the position with my spouse that she can spend any amount necessary and I’ll deal with it in the budget. Her SS benefit will reduce any financial pressure because of this travel. Funny how things sometimes work out.
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If I Didn’t Index by Jonathan Clements
I’d allocate less to stocks. With broad market stock-index funds, I know I’ll get whatever the market delivers. If the alternative was actively managed funds or individual stocks, there would be far more uncertainty—and I’m not sure I’d have the confidence to allocate as big a portion of my portfolio to stocks. Result: My long-run returns would have been lower.
I’d spend more time on my portfolio. Picking a few low-cost, broadly diversified stock-index funds is a cinch. By contrast, trying to identify winning individual stocks and actively managed funds is a ton of work—and history tells us it’s a loser’s game.
My financial life would be more complicated. Because the performance of individual stocks and active funds is so uncertain, I’d want to hedge my bets—and that would mean owning far more investments.
I’d pay more in taxes each year. Because of their low portfolio turnover, broad stock-market index funds tend to make minimal taxable distributions each year, especially if you buy exchange-traded index funds. Buying and holding individual stocks can also be a tax-efficient strategy. What about actively managed stock funds? They’re notorious for making large taxable distributions each year, which is why these funds are best held in a retirement account.
I’d almost certainly pocket lower long-run returns. Heaps of data tell us that the vast majority of actively managed stock funds lag behind the market averages over the long haul, thanks to their fund expenses and trading costs. What about individual stocks? If folks are careful, the costs can be minimal.
Still, most investors who favor individual stocks are likely to lag behind the market averages, thanks to a phenomenon known as skewness. In any given year, the market averages are skewed higher by a minority of stocks with huge gains, so most stocks—and their owners—end up with below-average returns. What if you happen to own the year’s big winners? Count yourself among the lucky few.
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June 11, 2025
Commodities versus Gold
“Which Is the Better Inflation Hedge? Both have some merit, but one is better than the other.”
Over at Morningstar Amy Arnott posted a short article to answer the question.
Here’s a part of her analysis:
“As shown in the table below, commodities were more consistent as an inflation hedge. They outpaced inflation in all five of the periods shown, while gold fell behind in two of the five periods. Gold did excel during the two separate inflationary periods in the early and late 1970s….. It also posted strong gains during the more muted inflationary environment from September 2007 through July 2008……However, it fell behind in the late 1980s….. During the most recent inflationary spike from mid-2021 through March 2023, gold prices rose, but cumulative returns lagged the broader commodity index by about 13 percentage points.”
She delves into the reasons for this and provides a look at some of the issues.
Each of those who own the precious metal, its surrogate GLD (SPDR® Gold Shares) or other commodities has a reason. Disclaimer: I don’t old GLD, preferring the miners. I do own an energy ETF. These provide dividends and I hold them as a part of what I consider a balanced portfolio. Combined they are about 3.5% of my personal portfolio.
Since April 16 GLD seems to have settled within a range, which is about 43% higher than it was a year ago
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