Jonathan Clements's Blog, page 354

Improving With Age

WHEN IT COMES to retirement planning, many Americans focus primarily on their portfolio���s size. That���s understandable. But there are other issues you should also think about, so you get your retirement on the right track and keep it there. Here are 11 steps to a better retirement:

Housing. As you get older, you become less mobile. Climbing stairs and getting up from a chair become more difficult. Keep this in mind when thinking about what house you���ll live in during retirement. A house with no stairs, and easy access to the living quarters and garage, will be easier to navigate as you age. You should also be aware of the type of car you buy. A car that sits too high or low to the ground makes it difficult to get in and out when your knees and back start to fail you.
Home repairs. Get all needed repairs done before quitting the workforce. You don���t want to retire and face large bills that impact your retirement budget. Also try to avoid major home renovations after you retire. The cost of these projects is hard to control and often run over budget.
Required minimum distributions (RMDs). Delaying Social Security until age 70 increases your monthly benefit���and it could also reduce your tax bill. How so? It can give you additional low-income years to reduce your��RMDs, which start at age 70��, by spending down your tax-deferred money and making Roth conversions during your 60s. A large RMD in your 70s can not only put you in a higher tax bracket, but also might increase your Medicare premiums and the taxes you pay on Social Security.
Taxes. When building your portfolio, focus on how much money you stash in deferred and taxable accounts. Having funds spread among traditional IRAs, Roth IRAs and taxable accounts gives you the ability to control your annual taxable income���and could allow you to avoid a higher tax bracket in retirement.
Dental and vision expenses. Medicare doesn���t cover dental work and routine eye care. If you have insurance through your current employer, try to get all major dental and vision work done before you retire.
Health. Drink in moderation. Don���t smoke. Eat a healthy diet. Exercise daily so you improve your strength and mobility, thus increasing your chances of continuing to live independently. Good health improves your quality of life, while also potentially saving you thousands of dollars in medical expenses. According to the Department of Health and Human Services, the leading causes of death in the U.S. for people age 65 and older include heart disease, cancer and strokes.
Medicare penalties. Unless you���re still working and covered by an employer���s plan, you are required to sign up for Medicare soon after age 65���or face penalties. Those penalties last for as long as you���re enrolled in Medicare.
Your doctor. A geriatric doctor is someone who specializes in the care of people age 65 and older. According to DailyCaring.com, ���They���re doctors of internal or family medicine who have an extra one or two years of training in areas related to elder care. The additional training gives them more experience with conditions like��heart disease,��arthritis, osteoporosis,��mobility issues, or Alzheimer���s and dementia.��� Result: Geriatricians can enhance your quality of life by recommending the right treatment and coordinating care with other health care providers.
No debt. Before you retire, pay off all high-cost debt, such as credit card debt. The goal is to quit the workforce with no debt or, failing that, nothing more than a modest mortgage payment. That���ll give you the flexibility to reduce spending when necessary.
Credit freezes. Seniors are a prime target for fraud because they���re assumed to have large sums in their financial accounts and to be more susceptible to scams. One of the best ways to protect against identity theft is to place a freeze on your credit report. This prevents someone from taking out a credit card or loan in your name.
Companionship. Retirees are often most focused on life experiences and creating memories���things like traveling and enjoyable dinners out. What better way to experience these occasions than with a loved one or a friend?

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include Summer School,����and��Blame Game. ��Follow Dennis on Twitter��@DMFrie.

Do you enjoy the articles by Dennis and HumbleDollar’s other writers? Please support our work with a�� donation .

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Writing Wrongs

���JOURNALISM is printing what someone else does not want printed. Everything else is public relations.��� It���s a quote��that should be framed on the wall of every newsroom.

Of course, every journalist knows this. We call PR���public relations���the dark side. But most of us journalists stray into it far more often than we like to admit.

As a reporter, I cut my teeth at a group of regional newspapers in a prosperous part of England in 1989. One day each week, we worked on a weekly real estate guide. I hated it. I knew next to nothing about property or the property market, nor did I have any interest in it.��

I would arrive at work to find a huge pile of press releases on my desk. My task was to work though the pile and turn it into readable copy by the end of the day.��It was hard work���there were several pages to fill���and sometimes whole sections of a press release would end up in the newspaper.

I didn���t realize it at the time, but what I was doing wasn���t journalism at all. That real estate guide was effectively a mouthpiece for the property industry���homebuilders, mortgage brokers, mortgage lenders, lawyers and, most of all, real estate agents.��

It seemed to keep everyone satisfied. The PR people loved it, and so did the advertisers. Our shareholders welcomed the ad revenue; the property guide was probably the most lucrative title the company published. My colleagues and I who wrote this stuff thought we were providing a public service, and at least we got paid at the end of the month.

The only people who were left shortchanged were the readers. They probably thought they were reading impartial journalism and assumed that the advice our experts offered was given with their interests at heart.��But, of course, the experts weren���t really experts at all. They were people with something to sell. And we, the journalists, were helping them do their job.

I often wonder how many readers were actually persuaded to buy a house or an apartment on the strength of the copy I wrote. I could wax lyrical about quaint villages, the benefits of living near a train station or a good school, the advantages of buying over renting, and the importance of stretching yourself to the limit because prices would only keep going up.

Except they didn���t. Later that year, the housing market crashed. Prices in our area fell 30% or more. Those who bought at the top spent several years with negative home equity. For friends of ours, the strain of it wrecked their marriage.

In short, it���s a period of my career of which I���m not particularly proud. So why am I telling you about it now, three decades later?��

I���ve often thought how closely financial publications today seem to resemble that real estate guide I used to work on. But it was reading an article by a fellow journalist,��Jeff Prestridge��in FT Adviser, that prompted me to write about it. Jeff is personal finance editor of The Mail on Sunday, Britain���s second most popular Sunday paper. He���s a pro, and principled with it.��

Jeff and I have disagreed over the years about the wisdom of using actively managed funds and the responsibility that journalists have to educate their readers about cheaper, more reliable alternatives. My impression is that he���s gradually coming to the same conclusions I have.

In this particular article, he writes about his sadness at losing a friend, a financial advisor, who fell out with him over an article Jeff wrote about the fall from grace of ���Britain���s Warren Buffett,��� Neil Woodford. The advisor is a Woodford fan. Jeff no longer is.

Jeff then goes on to make a telling admission:�����As financial journalists, we all need to strive to do our job better.��Never once have I written investment copy for The [Mail on Sunday]��that has been influenced by commercial interest.��Yet I have made plenty of mistakes. It is��what happens when you are writing about investments with usually only the benefit of hindsight���and the views of experts���as guides.���

I, too, have made mistakes. We all have. But only the wise are willing to admit and learn from them.��If you���re a proper journalist, you���re bound to upset people. You���ll almost certainly make enemies and you may lose a few friends.��But, on balance, isn���t that a small price to pay for retaining your personal and professional integrity and for doing what is still, for me, the best job in the world?

Robin Powell is an award-winning journalist. He’s a campaigner for positive change in global investing,��advocating better investor education and greater transparency. Robin is the editor of�� The Evidence-Based Investor , which is where a version of this article first appeared. His previous articles for HumbleDollar were��Private Matters��and Where’s the Value? Follow Robin on Twitter @RobinJPowell.

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Monthly Affliction

MY ELDERLY mother���s credit card was recently compromised. This required her to move all her automatic payments to a new credit card.

That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package.

As she added the autopay information to her new credit card, my mother noticed another service she no longer needed. She has an Apple watch, which allows her to call for emergency help if she falls. That meant she no longer needed the separate monthly lifeline service to which she subscribed.

Without a doubt, there are many benefits to setting up automatic payments, including ease of use and avoiding late fees. But these autopays can cause problems and waste funds unless properly managed. Companies know that consumers are more lax in reviewing their autopay bills and tend to keep the services for longer. Annual automatic renewals can sneak up on us and���next thing we know���we���re charged for an entire year. My mother, like many of us, pays more attention to bills that require her to write a check.

Want to save money and avoid problems with your autopays? Follow these seven steps:

1. Make a list. Create a comprehensive list of your various autopay charges, along with each company���s contact information. This will help you���and your executor.

2. Review. Look over each autopay on a regular basis. Check to see if the bill has gone up. My health club slipped in a 12% rate increase. When I questioned the increase, it was removed. I wonder if they added this fee to all autopay members and waited to see who���d notice.

3. Get it on paper.��If there���s no additional cost, think about getting a hard copy as a reminder to review these charges.

4. Renegotiate. Consider questioning bills that have gone up. Many times a better deal becomes available if you ask.

5. Reevaluate. Decide if you want to continue the service. One of my financial planning clients automatically paid for a gym membership, which she only used twice last year. She still hopes to work out. But for now, she���s put her membership on hold.

6. Update. Whose bills are you paying? Are you still covering car insurance or cell service for your adult children by choice���or because of inertia?

7. Check funding.��Make sure there���s always enough money in your checking account to cover your autopay charges, or overdraft fees will negate the advantages.

Rand Spero is president of Street Smart Financial, a fee-only financial planning firm in Lexington, Massachusetts. His previous articles include Self-Sabotage,��Human Factor��and��Why Wait. Rand ��has taught personal finance and strategic planning at the Tufts University Osher Institute, Northeastern University’s Graduate School of Management and Massachusetts General Hospital.

Do you enjoy articles by Rand and HumbleDollar’s other contributors? Please support our work with a donation.

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Room to Disagree

IN DECEMBER 1954, 23-year-old John Neff hitchhiked from Ohio to New York in search of work. A Navy veteran, Neff had recently graduated college near the top of his class, with a degree in finance. His hope: to land a job as a stockbroker. But despite these qualifications, Neff was turned down. Why? According to a biographer, the brokerage firm felt ���his voice didn���t carry enough authority.���

It didn���t take long for Neff to recover from this setback. He soon found work at a firm back in Ohio, where he rose quickly through the ranks. From there, he moved to Philadelphia, home of Vanguard Group, where he took over management of its Windsor Fund. Over the course of 31 years, Neff���s track record at the fund was nothing short of��outstanding. Investors poured into Windsor and, by the 1980s, it had become the largest fund of its kind���so large, in fact, that Vanguard feared it might become��too��large and closed its doors to new investors. In the words of Vanguard founder John Bogle, ���It would be impossible to overestimate John’s importance to Vanguard’s survival in the early years.���

But according to that early hiring manager, Neff wasn���t cut out for the investment industry. His voice didn���t sound authoritative enough. Absurd as it sounds, this is the way Wall Street thinks. They want people who look good and sound good���who can get in front of investors and make declarative, authoritative sounding statements.

While this approach might make sense in some industries, I find it especially ill-suited to the world of finance. Investment markets are inherently uncertain. No one can accurately predict where the stock market���or interest rates or taxes or anything else���will head next. The artificial self-confidence of Wall Street pundits isn���t just misplaced; it���s��counterproductive.

The reality is, the world is far less binary than Wall Street acknowledges. While it may not sound ���authoritative,��� the best and only answer to many financial questions is, ���It depends��� or ���I���m not sure.��� Wall Street doesn���t like these kinds of statements, because they don���t motivate people to act���and it���s why they didn���t hire John Neff as a broker. Neff preferred facts, candor and measured statements, an approach that wouldn���t generate nearly enough trading commissions to keep Wall Street going.

As you think about your own finances, I would encourage you to embrace the John Neff way of thinking. Ignore Wall Street���s talking heads, no matter how authoritative or self-assured they sound. Instead, recognize that often there���s no single ���right��� answer to many questions and that the best solution may be to take the middle course, to split the difference, to avoid seeing questions in simplistic black-or-white, yes-or-no terms.

Want some examples? Below are 13 questions that, for many people, have unequivocal answers. In my opinion, however, each is a topic for discussion and there���s room for disagreement. Indeed, if you want to split the difference, that might make the most sense of all:

1. Robert Shiller is a Nobel Prize winner who has accurately predicted past market crashes. His cyclically adjusted price-earnings��ratio��says the stock market is now extremely overpriced. Should you get out of stocks?

2. Whether or not the market is overpriced, it���s near all-time highs. Should you take some profits?

3. If you have a high income, should you save every dollar you can in a retirement account?

4. If you have a high income, is favoring a Roth 401(k) over tax-deductible 401(k) contributions a silly idea?

5. If you have extra cash, should you pay down your mortgage?

6. The federal estate tax exclusion is now $11.4 million��per person. Should you stop worrying about estate taxes?

7. Should you make cash gifts to your adult children?

8.��Warren Buffett��says bonds can��increase��a portfolio���s risk. Should you sell?

9. Indexing theory says you should own a little bit of everything. Does that mean you should own international stocks?

10. How about international bonds?

11. If you have a whole life insurance policy���and you realize how much it���s been costing you���should you liquidate? How about a similarly overpriced annuity? Do either of these much-maligned investments make sense for anyone?

12. You’ve heard you’ll receive the largest possible Social Security check if you delay until age 70. Should you?

13. You���re researching one of the above questions and find an academic article that cites solid evidence. Should you��believe it?

This is Adam M. Grossman���s 100th article for HumbleDollar. His previous pieces��include Never Mind,��Double Checking,��Oddly Effective��and��Fact vs. Fantasy . Adam is the founder of�� Mayport Wealth Management , a fixed-fee financial planning firm in Boston. He���s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter�� @AdamMGrossman .

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Pay It Down

DECIDING WHETHER to buy bonds or pay down the mortgage used to be a tricky decision. Not anymore: Paying extra on your home loan will almost always be the right choice.

This take some explaining���because it involves wrapping your head around the standard vs. itemized deduction, investment taxes, and a mortgage���s shifting mix of principal and interest.

First, let���s dispense with the obvious objection: Yes, if you���re inclined to buy stocks rather than pay down the mortgage, that should indeed deliver a better long-run return. But that isn���t what we���re discussing here. Rather, at issue is whether to buy bonds or pay extra on your home loan.

This is a choice many folks face. Almost everybody should have at least some bonds in their portfolio. Meanwhile, 66% of homeowners carry a mortgage, according to Federal Reserve figures. To understand why paying down that mortgage will usually be better than buying bonds, imagine an elderly aunt just died and generously left you $100,000���and you���re mulling three possibilities.

Option No. 1: Buy $100,000 of high-quality corporate bonds in your taxable account. The bonds yield 3%, so that���ll mean earning $3,000 or so in annual interest. Problem is, you���re in the 22% federal income-tax bracket and a 3% state bracket, so you���ll lose a quarter of the interest to taxes. After that hit, you���d be left with $2,250 in annual interest, equal to a 2.25% after-tax yield. That doesn���t sound so great.

Option No. 2: Buy the 3% bonds in a retirement account. That would allow you to avoid paying taxes each year on the interest. Problem is, there are annual contribution limits on retirement accounts, so it could take years to shovel the $100,000 into a retirement account.

Your cousin, however, suggests a clever alternative: Move $100,000 from stocks to bonds within your retirement account, while simultaneously using your $100,000 inheritance to buy a total U.S. stock market index fund in your taxable account. That would leave your overall stock exposure unchanged, while allowing you to hold your bonds in a tax-sheltered account.

The $100,000 in the total U.S. stock market index fund might pay some 2% in dividends. But those dividends should qualify for the special 15% federal tax rate, so the annual tax bill will be far less than if you���d used your taxable account to buy corporate bonds yielding 3%. Those corporate bonds will, instead, be sitting in your retirement account, where the 3% will compound tax-deferred. Let���s say the bonds sit there for 20 years, at which point you pull the money out.

If it���s a Roth account, there would be no tax bill on the withdrawal, so your 20-year annualized return would be an after-tax 3%. If it���s a traditional retirement account, you���d have to pay tax on the $80,611 in interest you earned over the 20 years. If you���re still in a 25% combined federal and state tax bracket, that would leave you with $60,458���equal to a 2.39% after-tax annualized return over the 20 years. (A nerdy aside: If you figure in the tax deduction from when you first funded the traditional retirement account, the effective after-tax annual gain would be 3%, the same as the Roth. To understand why, click here.)

“Your itemized deductions are only trimming your tax bill to the extent that they exceed your standard deduction. That���s now less likely, thanks to 2017���s tax law.”

Option No. 3: Pay down your mortgage. Let���s assume you have $100,000 still owed on your house, the same amount as the inheritance you just received. The mortgage has a fixed rate of 4% and you claim the standard deduction, so you���re getting no tax benefit from all the mortgage interest you pay.

Result: You���ll pay around $4,000 in mortgage interest over the next year and���because you aren���t getting any deduction for that mortgage interest���you���ll be out of pocket by the full $4,000. On top of that $4,000, you���ll need additional money to pay that portion of each mortgage payment that gets put toward the loan���s principal balance.

The upshot: Paying off the mortgage, and avoiding the $4,000 in interest, looks like a better deal than buying bonds, no matter which investment account you use. Seem reasonable? I can imagine four possible objections to the above analysis:

1. What if you itemize your tax deductions and hence you get some tax benefit from the mortgage interest you pay? In 2019, the standard deduction is $24,400 if you���re married filing jointly, $18,350 if you file as head of household and $12,200 if you���re a single individual. Your itemized deductions are only trimming your tax bill to the extent that they exceed your standard deduction. That���s now less likely, thanks to 2017���s tax law, which boosted the standard deduction while simultaneously capping the itemized deduction for state, local and property taxes at $10,000.

Let���s say you have a 4% mortgage, you���re in a 25% combined federal and state bracket, you pay $12,000 in annual mortgage interest���and your itemized deductions are $6,000 above your standard deduction. Result: Half your mortgage interest is effectively tax-deductible, so your after-tax mortgage rate would be 3.5%. (If all the interest was deductible, the after-tax rate would be 3%.) That 3.5%, which is the cost you���d avoid by paying down your mortgage, is still higher than what you could earn on corporate bonds���plus the return from paying down the mortgage is guaranteed, which isn���t the case with the bonds.

2. Is it safe to assume that your mortgage rate will be higher than the yield on corporate bonds? If you���d taken out a mortgage when rates were below today���s level, this won���t necessarily be true���but most of the time it will be. The fact is, you and I are considered less creditworthy than large corporations, so we typically pay a higher interest rate when we borrow.

3. What if you can stash money in an employer���s retirement plan where you get a matching contribution? If you fund a 401(k) or 403(b), you might get a match of, say, 50 cents for every $1 you contribute up to 6% of pay. That���s like an immediate 50% return on your money, so there���s no question you should take advantage. But once you���ve contributed that 6% of pay, you might direct additional dollars toward paying down your mortgage���unless you plan to use those additional retirement account contributions to buy stocks.

4. What if you���re far along with your fixed-rate mortgage and relatively little of each monthly payment is going toward interest? This is a misunderstanding that trips up many folks: Because they���re paying less in total mortgage interest each year as they gradually whittle down the loan balance, they imagine they���re also paying a lower interest rate.

That simply isn���t the case. Suppose you bought bonds yielding 4% and you sold some each year. The annual amount of interest you earn would decline, but the interest rate you���re earning remains the same. It���s the same with a mortgage���which means paying extra on the mortgage continues to make sense, even if the total dollar amount of interest you���re paying is relatively modest.

Follow Jonathan on Twitter�� @ClementsMoney ��and on Facebook .��His most recent articles include Saving Ourselves,��Whither Vanguard��and Thinking Out Loud . Jonathan’s ��latest books:��From Here to��Financial��Happiness��and How to Think About Money.

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Those Millennials

MUCH CRITICISM is leveled against��millennials, often defined as those born between 1981 and 1996. The criticism is frequently directed at their money and career decisions, including their purportedly foolish spending, excessive borrowing, job-hopping, self-absorption and sense of entitlement.

The perception is so pervasive that even millennials buy into this view of themselves.

But I wouldn���t be too quick to criticize millennials or compare them unfavorably to older generations. Each generation confronts its own unique challenges and difficulties, so it���s unfair to judge one generation���s choices based on what the previous generation did. How any generation turns out is largely a byproduct of two influences: the unique set of circumstances they face and their upbringing by the generation before.

While baby boomers grew up in a world of relative security and steadily increasing prosperity, millennials grew up with the global uncertainty wrought by the Sept. 11 terrorist attacks. They came of financial age during the Great Recession, the most severe economic downturn since the Great Depression. They saw the impact of a dramatic decline in property values���touted by the previous generation as one of the safest investments. They also saw the collapse of major companies like Enron, Lehman Brothers and Countrywide. Told that the pathway to success was through higher education, they faced explosive increases in tuition, with the cost of attending a university increasing nearly eight times faster than wages between 1989 and 2016.

According to Pew Research Center, millennials suffer higher levels of poverty, student loans and unemployment, along with lower levels of wealth and personal income, than the two prior generations had at the same stage of their lifecycle. The upshot: They are the poorest generation since the Second World War.

A��survey by TD Ameritrade shows that how parents handle money influences their children���s spending habits. If we don���t like millennials��� lifestyle choices, maybe it���s the way we parents raised them. Hiring a limousine to haul seven-year-olds around for a birthday party? Spending thousands of dollars for a coming-of-age party, prom, homecoming or other event ���because they’re only [insert age] once���? Eschewing community pools and public parks for far more expensive entertainment alternatives? These all send powerful messages that contradict parental messages to ���spend wisely.���

So are millennials bad at money? Given these influences and circumstances, one might perhaps excuse millennials for being ���worse��� with money than previous generations. But in fact, the data suggest otherwise.

Despite the general notion that they aren���t good at managing money, at least one survey indicates that millennials are as good as, or even better than, other generations when it comes to managing money, and that they are increasingly getting their financial houses in order. The survey even showed how the savings trend is growing: In 2015, only 33% of millennials had $15,000 or more saved and only 8% had at least $100,000. By 2018, 47% had $15,000 or more saved and 16% had at least $100,000.

These figures are even more impressive when you realize that millennials started adult life with a huge disadvantage: hefty amounts of debt. The greatest sources of millennial debt are student loans and credit cards, a reflection of increased college costs, depressed wages during the Great Recession and higher housing costs. Who got all those credit cards for millennials, when they were na��ve about money and often still in high school? That would be us, the older generation.

As a��result of all this debt, millennials are more likely to delay buying a home, saving for retirement, getting married and having children���this despite outpacing other age groups in taking on extra jobs to��pay off debt.

Another stereotype about millennials is that they have less of a stick-with-it attitude and tend to be job-hoppers. But consider a Pew Research Center��study comparing millennials to the prior generation, Gen-X. The study found millennials aren���t job-hopping any faster than Gen X did. It also found that, among the college-educated, millennials have longer track records with their employers than Gen-X workers did in 2000, when they were the same age as today���s millennials. For less-educated populations, millennial tenure was similar to Gen-X. The report concluded that the ���job-hopping millennial��� characterization doesn���t fit the broad millennial workforce.

Another��survey shows that millennials advocate for themselves at work more than both Gen-Xers and baby boomers. Roughly half of millennials (46%) have asked for a raise in the past two years, versus 36% for Gen-X and 39% of baby boomers. This might reinforce the perception that millennials think too highly of themselves. But 80% of millennials who asked for a raise in the past two years received one, suggesting the requests weren’t unfounded or based on imaginary accomplishments. Their older supervisors apparently agreed.

Throughout history, each generation has been criticized by the prior generation as lazy, entitled, selfish or shallow. But is this a result of generational decline or just a developmental issue of youth? The incidence of narcissistic personality disorder is nearly three times as high for people in their 20s as it is for those age 65 or older, according to the National Institutes of Health. The upshot: Every generation is ���generation me������at least when they���re in their 20s.

Last year, at age 53, Jiab Wasserman left her job as a financial analyst at a large bank. She’s now semi-retired. Her previous articles include Cutting Corners,��Fast Forward��and��Living for Less . ��Jiab and her husband Jim, who also writes for HumbleDollar, currently live in Granada, Spain. They blog about downshifting, personal finance and other aspects of retirement���as well as about their experience relocating to another country���at�� YourThirdLife.com .

Do you enjoy articles by Jiab and HumbleDollar’s other writers? Please support our work with a donation.

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The Right Stuff

IT CAN BE HARD to find time to make healthy meals, plus���with the convenience of fast food restaurants���why bother? It���s way easier to enter the drive-through at the local burger joint than it is to scramble together ingredients at home and make a healthier version.

But these decisions come at a cost, financial and otherwise. Most fast foods are loaded with sodium and calories, while lacking the nutrients you need for optimum health. This can lead to weight gain, high blood pressure and a host of other complications caused by nutrient deficiencies. Want to eat more healthily? Here are seven pointers:

1. Planning is crucial. If you don���t plan, a large number of items will find their way into your shopping cart that you don���t need and may never use. All of us have bought something with full intention of using it, but then it hogs kitchen shelf space, collects dust and expires. Do that enough, and the opportunity cost becomes real.

Start by writing down your meals for breakfast, lunch and dinner for each day of the week. Create meal and snack ideas with nutrient-dense foods, such as fruits, vegetables, nuts and seeds. Try swapping the empty carbs for healthier options, like almond flour crackers and chickpea pasta.

2. Choose recipes that can be made ahead of time, perhaps cooking on Sunday for the rest of the week. That way, you don���t have to think about it during the week, and instead you can simply grab it and go. Once you have finalized your meals, you can then make your grocery list based on what you need, after taking inventory of what you already have. This list is the key to buying everything you need���and preventing you from wasting dollars on things you don���t.

3. Obtain most of your foods from the outside sections of the grocery store. This is where you���ll commonly find meats, vegetables, fruits, yogurts, nuts and seeds. To be sure, there will be foods you���ll need from the middle sections, like olive oil, beans, frozen vegetables, spices and oatmeal.

But these middle sections are also the danger zone: You���ll eventually find yourself in an aisle where there are processed cookies, cakes, candy, chips and more, all calling your name. Let���s be honest: After a long hard day at work, you���re more likely to want sugar-rush cookies than a well-balanced meal. This is perfectly understandable���but it���s crucial that you stick with your plan.

4. Consider the grocery pickup option available at Wal-Mart and other large grocers. This service means you���ll never enter the store and be confronted with unhealthy choices that could derail your nutrition plans and wreck your budget. It also saves time, which may be your most precious resource.

5. Buy organic, free range and grass-fed foods when possible, because you eat what your foods eat. Yes, these foods can be expensive���but you can save money by buying selectively. A great resource is the “dirty dozen��and clean 15” list, which details the foods most commonly sprayed with pesticides, as well as those that are safe.

6. Pick your stores carefully. Trader Joe���s has some of the best prices I���ve seen for produce, nuts, seeds, healthier lunch meats, almond flour, oatmeal and nut butters. Sprouts also has great items on sale from week to week, plus an app that offers a host of coupons. You can find a wide variety of healthy options, including organic meats, almond flour, olive oil and more, at Costco. The prices are great, but the packages are larger. You���ll need to do the math to see if the cost of membership makes sense for you. Another way to save on organic or grass-fed meats is by checking out the clearance section at the grocery store. When they���re available, stock up on good quality meats and store them in the freezer.

7. Go online. Some healthy brands, such as Bob���s Red Mill and Siggi���s Dairy, may send coupons via email when you subscribe to their website. There may also be items that can be ordered for a better price through online providers, such as Thrive Market. Still, use caution with online shopping: Many websites will find a way to tell you what you should buy, rather than leaving you to search for what you need.

Micah Dawson is a senior in the exercise science program at Towson University. She helps patients referred by physicians with their fitness goals. Micah enjoys playing classical piano, as well as baking healthy treats to photograph for her Instagram��page. Micah is the daughter of HumbleDollar contributor Phil Dawson, who also recently wrote about health and money.

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Works If You Can’t

BE HONEST: When was the last time you thought about disability insurance? As co-founder of a website that sells insurance, it���s a topic I think about every day, but I realize most folks have other things on their mind. Yet becoming disabled is one of the biggest financial risks that working people face.

Disability can result from accidents or sickness and can impact people of all ages. According to the Social Security Administration, a 20-year-old entering the workforce has a one-in-four chance of becoming disabled for a year or more before retirement. That���s four times the probability of death, plus the financial consequences are far worse. After all, you���re still alive���which means you still have living expenses. When you become disabled, you not only lose your earning potential, but also you likely face steep medical and other bills.

Long-term disability insurance helps protect workers from this risk. But in the U.S., only a third of workers have coverage. The good news is, if you work at a larger company or have an office job, you���re much more likely to have coverage. The bad news is, your coverage may still not be enough. Most group coverage���that is, coverage you get through work���has percentage and dollar caps on benefits.

For instance, if you become disabled, you might receive 60% of your income up to a maximum $5,000 per month. Let���s say you make more than $100,000 per year. The $5,000 per month cap means you���re protecting less than 60% of your income, plus your group disability benefits would be taxable. If you aren���t careful, you can quickly get into a situation where disability benefits are not enough to cover your living expenses, let alone medical bills, retirement savings, college savings and other important financial goals.

Think Social Security���s disability program will protect you? Unfortunately, that���s unlikely. Social Security requires you not only to have a disability that���s expected to last more than a year, but also the disability must prevent you from all work. If you���re able to work just a few hours a week or you’re expected to recover within 12 months, you don���t qualify. In addition, benefits are limited: $1,170 was the average monthly benefit paid in 2017. Finally, even if you do qualify, it could take a year or more to get approved. More than half of applicants get denied.

So how do you protect yourself? An individual disability policy can help. But you might be surprised that���even though my site sells individual policies���I recommend them as a last resort, because individual policies are relatively expensive and they���re one of the more complicated insurance products. They also take six to eight weeks to get, because insurers must underwrite both your health and financial situation. Before you go down that route, consider the following four steps:

Understand your work coverage.��How is disability defined? What benefits do you receive and for how long? If you were to become disabled, would the benefits be enough to live on, especially after figuring in taxes? If your work coverage is enough, you probably don���t need to look elsewhere.
Explore buying additional group coverage through work.��Some companies pay for 60% income coverage but allow employees to pay a small amount to bump that up to 66.7% or 70%. If this is available, it���s a great option, because it���s relatively affordable and usually doesn���t require medical underwriting.
Explore buying individual coverage through work. Some employers negotiate deals with insurers, so employees can purchase individual disability policies at a discount. Because of group buying power and the fact that insurers can aggregate a potentially large pool of customers, these policies will often be cheaper than buying a policy on your own. In some cases, the insurer even simplifies the underwriting process, so no medical exams are required. The great part about these policies is you can take them with you if you change employers, which is not the case with your group coverage.
Explore affinity group discounts.��If you belong to an affinity group���such as an association for lawyers or accountants���see if your group offers disability insurance at a discount. If not, ask if the group is open to adding a discount program. Many insurers will offer a discount of 5% to 15% on individual disability insurance if you can get the affinity group on the insurance company���s ���approved��� list. The main requirement is that the affinity group needs a couple of years of history and cannot be set up solely for the purpose of buying insurance. You���ll likely need someone from the affinity group to provide information to the insurer, but it should be a simple process.

Assuming you don���t have any long-term disability insurance coverage, or you have insufficient coverage and can���t get more from the above sources, you likely need an individual policy. In a future post, I���ll cover the ins and outs of how these policies work and how to select the right one for you.

Dennis Ho is a life actuary and chief executive of Saturday Insurance, a digital insurance advisor that helps people shop for income annuities, long-term-care insurance and other insurance products. Prior to co-founding Saturday, Dennis spent 20 years in the insurance industry in a variety of actuarial, finance and business roles. His previous article for HumbleDollar was Bet Your Life. Dennis can be reached at dennis@saturdayinsurance.com��or��via LinkedIn.

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Matter of Degree

YES, EDUCATION is invaluable. But should young adults go to college to obtain a piece of paper that may mean little in the real world? Is the student debt we hear so much about really worth it? Could pushing college attendance for all be as misguided as pushing homeownership for all?

I���m not against formal education. I put four children through college. In fact, I believe parents are obligated to cover their children���s college costs, assuming they have the financial wherewithal to do so. That doesn���t mean they should pay college costs at the expense of retirement savings���but it may mean delaying the purchase of a new RV. Parents also have a duty to guide their 18-year-old���s college decision. I don���t see a child turning 18 as the signal that parents are done parenting.

I also believe we need to expand how we define education, which���in my view���doesn���t begin and end in the classroom. I learned a great deal about the Second World War from visiting the Normandy Beaches and Auschwitz, and about the Middle East from seeing the living conditions in the West Bank and listening to residents. I learn every day by reading, usually two or three books at a time.

My contention: We need to question why it takes four years���and often more���to get a bachelor���s degree, why college is priced as it is and perhaps how we fund those degrees considered important to society. Clearly, you need a rigorous course of study for a professional degree. But if you aren���t aiming to become, say, a doctor, dentist, architect or lawyer, it strikes me we need an educational system with greater flexibility.

Many European students finish their degrees in three years by focusing on their majors. General education, like writing skills and critical thinking, are learned in high school.

By contrast, in the U.S., many students enter college unprepared and are placed in remedial classes, thereby paying a steep price for basic education that should have been learned long before college. Why are we surprised that, lacking parental guidance, students often burden themselves with unaffordable debt, in part by taking low value courses which could be considered a luxury? Patients who don���t follow the doctor���s instructions, or fail to take medication, get little value for their money. A student not focused on his or her education likewise gets little value from college.

The U.S. ranks just 16th among developed countries in literacy. The statistics on reading skills are shocking and have a direct impact not only on college, but also on our citizens��� ability to function effectively in today���s society.

I question assumptions like higher cost equals higher quality. That a four-year model fits all. That any degree provides value. That having a degree guarantees a better job, more income, better life decisions and greater success���however that���s defined.

And what about the cost of higher education? I randomly picked the University of the Pacific, a private nonprofit school I���ve never heard of. Tuition��is $49,688. The full cost is $68,784. But 90% of students receive financial aid and the net cost is about half the sticker price. So what���s the true cost? It���s similar to health care. The billed price is unrelated to the real price.

From 2000 to 2019, the average health care inflation rate was 3.4% annually. College tuition increased at an average inflation rate of 5.14%��over the same period. Why do we scream about the former and yet don���t question the latter? Instead of looking at the cost structure of colleges, including the money spent on administration, buildings and so on, we focus only on the debt needed to pay for it.

Rhetoric about student loans looks at symptoms and not causes. Generous loans may even contribute to the high cost and the time spent in school���again, not unlike health care and health insurance. It seems to me that, if college loans are to be made, they need to come with conditions that ensure the money is efficiently and effectively spent, both by the student and the institution.

Following one���s dream is fine. But when it comes to selecting a college major and incurring thousands in debt, there���s a practical aspect as well. The job and income prospects matter. Not all majors are equal. In fact, some are declining in demand.

There are good reasons insurance companies and governments monitor, evaluate and sometimes limit what they pay for health care. Why should college be any different? As with health care, we have been seduced into accepting that cost equals quality and that more is better.

Insurance premiums are not the fundamental problem with health care costs���and student loans are not the fundamental problem with college. In both cases, the issue is what���s charged for what we consume���and the way we consume it.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Lesson Unlearned,��Making It Work��and��Righting Wrongs.��Follow Dick on Twitter��@QuinnsComments.

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Think Bigger

FOR MUCH of my adult life, my view of financial planning was similar to that of many others: Simply put, financial planning equaled investment management.

I spent my career in aerospace engineering, surrounded by highly educated, mathematically competent colleagues. I was lucky enough to span the transition from defined benefit pension plans to defined contribution plans. My colleagues and I closely followed the market���s performance, our own company���s shares and emerging tech stocks. Some of the more mathematically inclined dabbled in options. Outside of work, one of my brothers and I ran an investment club. It was amazing to watch stock prices rise for companies that never made a profit.

Despite all these financial conversations during my early adult life, I don���t remember any substantive discussion of estate planning, insurance, taxes or health care. All that changed in my late 30s. My parents��� health problems turned into financial problems. My brothers and I provided increasing support.

Eventually, my wife and I sold our home, bought my parents’ place and combined families. Declining health required adaptations to the house, fighting with Medicare, and understanding and accommodating hospice. My aging in-laws also compelled us to deal with issues like declining cognition, powers of attorney, taking over financial responsibility, finding lost assets, simplifying portfolios, finding quality and affordable senior living, and settling multiple estates.

All this fired my interest in the broader aspects of financial planning. I wanted to be prepared as my wife and I approached retirement. I became an expert on my company���s defined benefit and defined contribution programs, and even provided counseling to fellow employees. I passed the exam to become a CFP, or certified financial planner, and then completed the RICP���retirement income certified professional���program. I volunteered and trained for the IRS���s Volunteer Income Tax Assistance program, helping diverse clients complete their tax returns. I���ve learned so much from the many practitioners I met along the way���financial planners, estate attorneys, health care professionals, senior care professionals and tax preparers.

This journey has led me to a deeper understanding of the value and real need for financial planning. Most of my friends and colleagues are near or at retirement age. Many are perfect clients for holistic financial planning, but don���t know about it or won���t accept it. When they consult me now, I ask more probing questions about estate planning, tax planning and retirement income plans. Preparing tax returns for people of modest wealth has been eye-opening. The growth of defined contribution plans has led to widespread concerns that the average family is not prepared to manage and draw down what���s often their largest asset.

What have I learned along the way? Here are just six of the lessons:

Regularly saving money creates positive momentum in your financial life. Nothing is more important.
A simple, diversified, high-quality, low-cost portfolio is often all you need.
Spend less time following the market and more time understanding your taxes. Even if someone else prepares your tax returns, be sure to review them and understand your situation.
Check that your estate plan is in good shape, with beneficiaries named, an up-to-date will and powers of attorney. Have a list of financial accounts available for your executor.
If you have parents, talk with them about their finances. Make sure their estate is in order.
Develop a family balance sheet showing your assets and debts, as well as a cash flow statement listing your income sources and where the money goes. Update these annually and review them with your family. Each year, you���ll see the impact of saving and investing���and that���ll spur you to improve your finances even further.

Richard Connor is�� a semi-retired aerospace engineer with a keen interest in finance. Rick enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading.��Follow Rick on Twitter��@RConnor609.

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