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Jonathan Clements's Blog, page 35
May 29, 2025
Cryptocurrency in a 401(k)?
The 2022 guidance directed plan fiduciaries to exercise “extreme care” before adding cryptocurrency to investment menus. That caution has now been removed.
I’m thinking removing urging “extreme care” for 401k plans is not such a good idea. Is the 401k the place for such an investment?
How many people actually understand cryptocurrency? Not me
I can just see some employees (like the ones taking the financial literacy test) jumping on the bandwagon if they have the opportunity.
The post Cryptocurrency in a 401(k)? appeared first on HumbleDollar.
Cryptocurrency in a 401k?
MarketWatch posted that The Trump administration is rescinding Biden administration guidance that discouraged cryptocurrency investing by 401(k) plans.
The 2022 guidance directed plan fiduciaries to exercise “extreme care” before adding cryptocurrency to investment menus. That caution has now been removed.
I’m thinking removing urging “extreme care” for 401k plans is not such a good idea. Is the 401k the place for such an investment?
How many people actually understand cryptocurrency? Not me
I can just see some employees (like the ones taking the financial literacy test) jumping on the bandwagon if they have the opportunity.
The post Cryptocurrency in a 401k? appeared first on HumbleDollar.
May 28, 2025
Getting Others Going
The post Getting Others Going appeared first on HumbleDollar.
AARP tax calculator changed to 2025
AARP updated their 1040 free Tax Estimator for 2025 today. The calculator is before any changes in the H.R. 1 bill passed by the House recently.
One easy work around to see how the proposed law change may impact your 2025 taxes is plugging into the AARP calculator itemized deductions - interest the H.R. 1 additional $4K and $2K (if you are filing MFJ status) if you think the additional senior standard amounts will become law in 2025 plus your standard deduction for 2025.
The post AARP tax calculator changed to 2025 appeared first on HumbleDollar.
I’m Guessing Most HD Readers Will Score 100%
I'm guessing most HumbleDollar readers will Score 100%. I did.
Take the quiz.
The post I’m Guessing Most HD Readers Will Score 100% appeared first on HumbleDollar.
Are taxes too high? I don’t think so
There seems a general lack of understanding of what taxes provide. The tax collector has been vilified throughout history. Our Country was founded as the result of taxation.
Paul in Romans 13:1-7, explicitly mentions paying taxes: "This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor."
Making the connection between taxes and what they provide is often misunderstood. Take schools and teacher pay as an example. I’m not criticizing teachers, but I have been criticized because I say teachers are not underpaid all things considered.
Teachers typically receive community support for higher pay and benefits, but no connection is made that typically 50% of the property tax bill goes to schools and 50% of that is pay and benefits. Nor is it mentioned that the retirement benefits teachers typically receive are far better than any received by the taxpayers footing the bill. 90% of teachers have pensions. We simply don’t make such connections.
Taxes come in many forms, some income, some consumption or use based. For my money the most egregious tax is state lotteries because they target the lower income and less educated and thus are very regressive.
Many Europeans, particularly in Northern and Western Europe, tend to accept higher tax rates in exchange for comprehensive public services. These services often include universal healthcare, extensive social security, affordable education, robust public transportation, and generous parental leave.
The concept of a "social contract" is strong, where citizens pay taxes as a contribution to the community, expecting a fair return in public goods and services.
Surveys indicate that while a majority in some European countries (e.g., France, Germany) feel taxes are too high, this sentiment often changes when linked to cuts in government spending or increased public debt.
Do Americans see it that way? Not the most vocal ones anyway. I doubt Americans ever look at their real effective federal income tax rate.
Bottom 50%: Paid an average rate of about 3.7% in 2022.
All Taxpayers (Average): Around 14% - 14.5% in recent years.
Top 1%: Paid an average rate of about 23.1% - 26.1% in 2022.
Divide your taxes by your total income from all sources, taxable or not and multiply by 100 to see your real effective tax rate.
Americans complain loudly about their health insurance premiums. In 2024, the average annual health insurance premium for family coverage was around $25,572. Millions of Americans receive subsidies to help pay those premiums- from taxes or deficits. In other countries it’s all or mostly a community cost via taxes, but it’s still a cost.
Given federal spending is $2 trillion a year more than its income, I find it hard to conclude taxes are too high.
And before jumping on the unnecessary spending train, that ain’t the problem. It’s more like households with a desired lifestyle supported by credit cards.
The post Are taxes too high? I don’t think so appeared first on HumbleDollar.
Are taxes too high? I don’t think so
There seems a general lack of understanding of what taxes provide. The tax collector has been vilified throughout history. Our Country was founded as the result of taxation.
Paul in Romans 13:1-7, explicitly mentions paying taxes: "This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor."
Making the connection between taxes and what they provide is often misunderstood. Take schools and teacher pay as an example. I’m not criticizing teachers, but I have been criticized because I say teachers are not underpaid all things considered.
Teachers typically receive community support for higher pay and benefits, but no connection is made that typically 50% of the property tax bill goes to schools and 50% of that is pay and benefits. Nor is it mentioned that the retirement benefits teachers typically receive are far better than any received by the taxpayers footing the bill. 90% of teachers have pensions. We simply don’t make such connections.
Taxes come in many forms, some income, some consumption or use based. For my money the most egregious tax is state lotteries because they target the lower income and less educated and thus are very regressive.
Many Europeans, particularly in Northern and Western Europe, tend to accept higher tax rates in exchange for comprehensive public services. These services often include universal healthcare, extensive social security, affordable education, robust public transportation, and generous parental leave.
The concept of a "social contract" is strong, where citizens pay taxes as a contribution to the community, expecting a fair return in public goods and services.
Surveys indicate that while a majority in some European countries (e.g., France, Germany) feel taxes are too high, this sentiment often changes when linked to cuts in government spending or increased public debt.
Do Americans see it that way? Not the most vocal ones anyway. I doubt Americans ever look at their real effective federal income tax rate.
Bottom 50%: Paid an average rate of about 3.7% in 2022.
All Taxpayers (Average): Around 14% - 14.5% in recent years.
Top 1%: Paid an average rate of about 23.1% - 26.1% in 2022.
Divide your taxes by your total income from all sources, taxable or not and multiply by 100 to see your real effective tax rate.
Americans complain loudly about their health insurance premiums. In 2024, the average annual health insurance premium for family coverage was around $25,572. Millions of Americans receive subsidies to help pay those premiums- from taxes or deficits. In other countries it’s all or mostly a community cost via taxes, but it’s still a cost.
Given federal spending is $2 trillion a year more than its income, I find it hard to conclude taxes are too high.
And before jumping on the unnecessary spending train, that ain’t the problem. It’s more like households with a desired lifestyle supported by credit cards.
The post Are taxes too high? I don’t think so appeared first on HumbleDollar.
May 27, 2025
Another HD Post About Cars
Here’s another car-themed Forum post. Last June I wrote a Humble Dollar article about vehicle ownership and longevity. I ended that article with a description of the most recent major repair required for my 2011 Subaru Forester when the clutch assembly failed and required replacement. Those of you wishing to revisit that article can view it here.
I mentioned at the end of that article it might be time to search for another Subaru. At the end of 2024 I read about the introduction of a Subaru Forester option in the new model year - a hybrid. I dropped by my closest dealership to test drive a non-hybrid Forester with the features I wanted, explained I wanted a hybrid and they agreed to maintain contact. I wanted the most up-to-date safety features.
In March the salesperson texted with tentative hybrid deliveries and MSRP information. I told them that I would not purchase a vehicle if it was subject to tariffs. In April they texted with information about available colors, features, and availability. Two weeks ago, I bought one.
The biggest surprise of the whole negotiation was that they took my old Subaru in trade for a value I considered acceptable. When I thought about cleaning/detailing it for sale, posting on sale sites, negotiating, simultaneous insurance for two vehicles, purchasing duplicate license tags, and other factors, their offer seemed reasonable. Then we found that the trade-in value reduced the sale price of the new Subaru, which in turn reduced the NC sales tax charged on the transaction. It was worthwhile to accept their offer.
I’m still reading about and experiencing new features. Some things are on by default, while others need to be turned on/off by the driver. I'm still enjoying the new-car smell. I’ve only reached for the nonexistent manual stick shift a couple of times.
This may be my last vehicle. I turn 72 soon. In 2024 I drove less than 7,000 miles in the Forester, and that’s with trips to the mountains, beach, and DC. When I sold the old car in May 2025, I’d added less than 3,000 miles since January 1st. For the prior three years I averaged around 9,000 miles per year. So even if I took Spock’s advice to “live long and prosper” I won’t accumulate a lot of mileage even if I continue to drive well into my 80’s. I’ll note that my Dad was still driving at 91, but he shouldn’t have done so. I’ve promised my wife I won’t be as stubborn as my Dad when the time comes to give up the keys.
The post Another HD Post About Cars appeared first on HumbleDollar.
Changes in Social Security Claiming Age
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May 26, 2025
Stepping In It
I hated those shoes. No matter how many times I wore the darned things—and, trust me, I didn't give up easily—my feet screamed. The stiff leather never got any softer, and the shoes ended up languishing at the back of my closet for years until I finally stuffed them in the charity bin at the local supermarket.
The lesson: Just because something is on sale doesn’t mean it's a bargain.
So, what purchase do you most regret?
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