Jonathan Clements's Blog, page 363

Crying Poverty

I HAVE BEEN accused of being too critical of America���s spending habits. I���m not in touch with families who live paycheck to paycheck, or so I���m told. I was roundly attacked by folks on Facebook, who claimed I lacked sympathy for the federal workers who ran out of money during the government shutdown���even before they missed a payday.

We all know there are Americans who struggle to get by on very low incomes. But that���s the minority. Let���s talk about the great majority of households���those that spend money unnecessarily. Consider three statistics pulled together by BecomingMinimalist.com:

3.1% of the world���s children live in the U.S. and yet our kids own 40% of the toys purchased worldwide.
Americans��devote more dollars to shoes, jewelry and watches than they do to higher education.
The average U.S. home has almost tripled in size over the past half-century. Yup, walk-in closets and bathrooms the size of small apartments are, it seems, essential. But all the while, the size of the average American family has been declining.

I have eaten in homes in more than 15 European countries. Their homes are very nice, comfortable and, by American standards, quite small. The average size of a new home in the U.S. is 2,204 square feet, while in France it���s 1,228.

I was window shopping in Germany a few years ago and noticed the steep price of men���s shoes. I asked how people could afford the prices, which include a 20% or so sales tax. The reply: Germans don���t own many pairs of shoes.

By contrast, the average American owns 19 pairs, many of them never used. Given that many Americans prefer to sit in their car when ordering fast food or doing their banking, what are all the shoes for? Apparently, those boots aren���t made for walking.

Visit Rome or Amsterdam and your traffic risk is being run over by a scooter or bicycle. Meanwhile, the three top-selling vehicles in the U.S. in 2018 were pickup trucks. ���Americans bought over 17 million vehicles for the fourth year in a row in 2018, and 68% of them were trucks and SUVs, continuing a years-long trend away from cars that���s been driven by increasing choice, low gas prices and improving fuel economy,��� says Fox News. Unless you need a big vehicle to generate income, that���s not transportation. Instead, those are luxury items���and they often cost $40,000 and up.

In 2014, there were 48,500 self-storage facilities in the U.S., almost double the number of McDonald���s and Starbucks combined. We���re talking about places to store stuff that���s largely unnecessary or even forgotten about. Keep in mind that this is in addition to basements, attics and garages. One survey showed that roughly a quarter of homeowners can���t use their garage for their car because it���s so cluttered. I���m guessing another hefty percentage simply can���t get that pickup to fit in the garage.

Public policy is set using survey data and lots of assumptions. I have trouble reconciling much of that research with the reality of America���s spending habits. How can you claim to be living paycheck to paycheck, and yet have more stuff than you can store in your house or afford a vehicle way beyond what you need to get from here to there?

And one final cantankerous thought: Wouldn���t our financial future be a tad brighter if, instead of spending $73 billion each year on state lotteries, we invested the money?

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Shortsighted,��Farewell Money��and��One Last Thing.��Follow Dick on Twitter��@QuinnsComments.

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Not My Priority

SOME YEARS AGO, I had a health scare���and it taught me an important lesson about my relationship with money. My primary care physician wanted me to see a hematologist. ���Your white blood cells have been trending lower for the last five years,��� he opined. ���We need to find out what���s causing it.���

After a number of tests, the hematologist thought I might have a rare blood disease. He said the test results were inconclusive, but I fit the profile. He wanted to confirm his suspicions by performing a bone marrow biopsy. He went on to say that there was no cure for the disease, but there were drugs that could extend a patient���s life.

The doctor���s comments shook me to the core. Suddenly, I faced the possibility that my time on earth might run out far sooner than I expected. I started thinking about the things in my life that are important to me. How do I protect, experience and enjoy them? The following were the first things I did after leaving the doctor���s office that day:

I reviewed the beneficiaries on my retirement accounts to make sure the people who are important to me would be taken care of.
I reviewed my trust to confirm it reflected my current wishes on how my estate would be distributed to family, friends and charitable organizations.
I verified that the powers of attorney for my finances and health care were in order. I wanted someone who could oversee my affairs if I became incapacitated.
I checked my passport to make sure it hadn���t expired. I wanted to visit many countries and landmarks that I hadn���t yet had a chance to experience.

Looking back, I realized the things that were most important in my life during this stressful time���besides my health���were my family, friends and life experiences. What I didn���t care about: buying a new car or how my investment portfolio was performing. Before the health scare, tracking the stock market and my investments were an everyday ritual. I now realized those shouldn���t be my life���s main focus.

Want to spend less time thinking about money? Here are nine investment pointers that may help you fret less about your portfolio���so you can focus on the more important things in life:

Invest in broad-based index funds. You can sleep well at night knowing you���ll never underperform the market. Your portfolio���s return will be tied not to a fund manager���s investment selection, but directly to the stock market���s actual performance.
Buy those broad-based index funds through a target-date fund or a balanced fund. You���ll suffer less volatility during periods of extreme market swings.
Another way of weathering volatility: diversify. Allocate part of your money to bonds, certificates of deposit, stable value funds and high-yield money market accounts.
Hire a fee-based financial advisor to manage your investment portfolio. You���ll not only get investment advice, but also emotional support during turbulent times.
Avoid owning too much of one company���s shares. Limit your exposure to any individual stock to 5% of your stock market portfolio.
Remember that investing for retirement is a long journey. Wealth is built over decades. Bear markets and economic downturns are part of the process. Don���t focus on what���s happening day to day in the market.
Rebalance your portfolio periodically to maintain your desired weighting of each asset class.
Create a written plan listing your investment goals and strategies. During periods of market volatility, this can be a useful reminder of what you settled on in calmer times.
Most important: Don���t look too frequently at your investment portfolio. You���ll be less tempted to make changes���and you���ll experience less emotional stress.

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 Power of Two,��California Dreamin’��and Wrong Approach. ��Follow Dennis on Twitter��@DMFrie.

HumbleDollar makes money in three ways: We accept�� donations, ��run advertisements served up by Google AdSense and participate in�� Amazon ‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Insult to Injury

IN DECEMBER, I fell head first onto the bathroom floor. The doctors agreed I had a mild concussion. These typically heal in four-to-six weeks, but it���s now been five months. In March, I dislocated my left knee cap during an afternoon stroll. I was suddenly unable to put any weight on my left leg.

These two unrelated injuries have required me to see an array of medical professionals and undergo multiple tests, including two magnetic resonance imaging (MRI) scans, one computerized tomography (CT)��scan and an x-ray. My physical therapist also suggested getting a second orthopedist���s opinion, suspecting my first one hadn���t bothered to read the MRI technician���s notes. Meanwhile, during a follow-up visit with my primary care physician, he saw no improvement in the symptoms of my concussion. He asked me to see another neurologist for a second opinion.

I called my health insurance company, Oxford Health Plans, a division of UnitedHealthcare. I asked a service representative to email me two lists of specialists who accepted my insurance plan, so I could get the two second opinions.

The lists from Oxford were riddled with errors. They included doctors who had moved, didn���t take my plan or didn���t practice the specified specialties. Often, the phone numbers were simply wrong. Finding no one on the initial lists who accepted my plan, I called Oxford several more times over the next few days, asking again for lists. Mysteriously, each list included completely different doctors. This wasn���t the first time I���d had trouble with information from Oxford. Based on its faulty lists, I must have made 200 calls to doctors’ offices since December���almost all of them duds.

After Oxford wasted my time with its lists, the medical system found a new way to devour my hours. Through the mail came the first of many ���explanation of benefits��� letters, denying one of my medical claims���and prompting me to call Oxford. A representative informed me that, since my doctor never filed any referrals with Oxford, I would be responsible for paying for all visits to specialists, along with the tests they���d ordered. To add insult to injury, the bills would be for the full amount charged by the specialist, not the discounted fee negotiated by the insurance company. I was in shock. All the bills combined came to roughly $25,000.

I made seven calls that day, over four or five hours, to both Oxford and my primary care physician���s office, asking them to check again and figure out whether there���d been a mistake. Finally, in tears, I talked to a fourth representative at Oxford. He told me I would owe nothing if either party had made a filing mistake.

Two weeks later, after much prodding from me, the secretary at my primary care physician���s office called Oxford to ask what was missing. When I next called her, she sheepishly admitted that they had been filing the paperwork using the wrong identification number. She���s now fixing the referrals.

Fortunately, I���m self-employed, so I can manage my work schedule to deal with all this. But how would anybody with a regular fulltime job cope? Employers should be furious that insurance companies are hurting their employees��� productivity with this nonsense. And insurance companies should be terrified by the ill-will generated by their incompetence. If they don���t want disgruntled Americans to support a total revamping of the health care system, they need to get their house in order���fast.

Lucinda Karter helps to run HumbleDollar. Her previous blogs were Bird in the Hand,��Pillow Talk and��Closet Saver. She’s a big fan of ��Jonathan Clements���but she has to say that, because she’s married to him.��Follow Lucinda on Twitter @LucindaKarter.

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The Happy Employee

OWNING a business comes with a unique opportunity: the chance to better the lives of your employees. The paycheck you provide helps them pay for their daily expenses and supports the local economy. But there���s an opportunity to do even more: By being thoughtful in how you structure employee benefits, you can ensure they have a more prosperous future, while also helping them lead happier lives today.

Remember, money is simply a tool to help you enjoy your life���and one way to do that is to buy time. You might pay someone to do chores you hate, so you have more time for the things you love. An example: You could hire a lawn-mowing service, so you can spend an hour at the park with your spouse and kids.

The problem is, simply knowing this will make you happier isn���t enough. We humans have a difficult time trading money for time. We may feel that outsourcing certain tasks will make others think we���re lazy. Being busy helps us feel more important���and it���s a characteristic we associate with success. On top of that, we believe that we���ll have more time in the future. In short, we sacrifice time now, in hopes of slowing down later.

Where do you���the business owner���come into this story? Here are three ways you can help your employees lead happier lives:

1. Push them to save for retirement.��First and foremost, you should have a retirement plan available to your employees. Once that���s in place, automatically enroll employees and automatically escalate the amount they contribute each year.

By auto-enrolling your employees, you���ll increase participation rates. Meanwhile, auto-escalation will increase their contributions by perhaps 1% per year, without any additional effort on their part���and probably without them even noticing. Your employees can always opt out. But research suggests they���re likely to stick with it.

2. Give the reward of time.��Employers with performance-recognition programs often offer a menu of rewards. These can range from time-saving services like housekeeping to money-saving items like Amazon gift cards.

Even when offered time-saving services, research��shows that employees opt for money. You can help employees by changing the game. Separate the rewards program, so that certain rewards can only be redeemed for time-saving services and other rewards can only be redeemed for money-saving items. This will compel your employees to redeem time-saving rewards���and help them feel less guilty in the process.

3. Market time as money.��Since most people have a money-first mindset, help employees make the most of their benefits package, by associating a dollar amount with each component. When employees understand the financial value of their vacation time and their health insurance, they���re more likely to take advantage. One upside for the company: Time away from the job allows employees to recharge their batteries���and they���ll be more productive when they return.

Ross Menke is a certified financial planner and the founder of Lyndale Financial , a fee-only financial planning firm in Nashville, Tennessee. He strives to provide clear and concise advice, so his clients can achieve their life goals. Ross���s previous articles include Par for the Course,��Not Toast��and��Cash Is King . Follow Ross on Twitter @RossVMenke .

HumbleDollar makes money in three ways: We accept�� donations, ��run advertisements served up by Google AdSense and participate in�� Amazon ‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Know Doubt

ONE SPRING DAY in 1995, McArthur Wheeler walked into two banks near his Pittsburgh home and robbed them at gunpoint.

His plan had one critical flaw: The disguise he chose didn’t hide his face at all. Instead of the usual stocking cap or hat and sunglasses, Wheeler made an unconventional choice. He applied a coating of lemon juice to his face. His reasoning: Lemon juice could be used to make invisible ink, so Wheeler figured it would have the same effect on his face, making it invisible to surveillance cameras.

Because he was so easily��identified, Wheeler was arrested just hours later. As police led him away, Wheeler sighed in disbelief. ���But I wore the juice,��� he said.

Wheeler’s case is so famously absurd that it was later featured in an academic article, Unskilled and Unaware of It, by David Dunning and Justin Kruger. Their insight: People are often poor judges of their own competence. Worse still, we often get it exactly wrong. Incompetent people think they���re��more��competent than they actually are, while highly competent people tend to��underestimate their skill.

While McArthur Wheeler is in a class by himself, Dunning and Kruger’s research carries an important message for the rest of us: Overconfidence can be a big problem, especially when it comes to the world of investments, where there���s as much noise as there is data and where there’s a strong temptation to predict what will happen next. After all, the hard part about financial planning isn’t the math, but rather the uncertainty.

What can you do to navigate this uncertainty? Here are three suggestions:

1. Stay the course.��At its core, financial planning is simple: You have a set of financial goals, and you want to be sure you’re saving enough to reach those goals. But with the stock market’s regular ups and downs, it’s easy to get distracted.

In fact, there are people whose job it is to distract you. From TV to newspapers to social media, Wall Street ���strategists��� are all around us, dissecting and pontificating on the latest financial news. Last week, they were talking about interest rates. This week, they’re talking about China. Next week, they’ll be on to some new topic.

My advice: Tune them out. Remember that those strategists work for brokerage firms, and their goal is to get you to tinker with your portfolio, which generates trading commissions for them. Instead, you want to act like a racehorse wearing blinders. Focus straight ahead on your financial goals, and never let the sideshow of the week distract you from your plan.

2. Avoid big bets.��In promoting index funds, the late Jack Bogle, founder of Vanguard Group, often talked about ���the relentless rules of humble arithmetic.��� Indexing worked, he said, because it kept costs low.

I completely agree with that. But that’s not the only reason indexing has produced better results than active management. Another advantage: Active managers can make risky, outsized bets in ways that index funds cannot. A case in point is former star fund manager Bill Miller, whose flagship fund once beat the S&P 500 for an astounding 15 years in a row.

During the 2008 financial crisis, however, Miller badly miscalculated. He thought people were overreacting and that the crisis would soon pass. This led him to double down on the stocks of AIG, Bear Stearns and other financial firms that lost nearly all their value. His fund was��decimated and Miller was soon out of a job.

When you invest in a broadly diversified index fund, you avoid that risk. While you give up the opportunity to outperform the index, you are simultaneously buying yourself the peace of mind that you won’t dramatically underperform when a fund manager’s overconfidence gets the better of him or her.

3. Plan for a different tomorrow.��As human beings, we have a limited ability to process data, and that biases the way we think about things. In particular, a phenomenon called recency bias leads us to place disproportionate weight on recent events and to discount events that happened longer ago. The result is that we generally assume things will continue tomorrow the way they’ve been going today and don’t consider the possibility of extreme change.

This is a problem because, of course, things do change���another reason it’s important to avoid overconfidence. In recent years, the stock market has delivered steady positive gains while interest rates, inflation and tax rates have all been near historic lows. While that’s all been very positive, it can and probably will change at some point. That’s why I always recommend considering, and planning for, a variety of scenarios other than the status quo. You can’t prepare for everything. But as you formulate your financial plan, it’s worth considering a tomorrow that looks a good bit different from today.

Adam M. Grossman���s previous articles��include Beat the Street,��After the Windfall��and��Out of Bounds . 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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Debtor’s Dozen

THE GREAT Recession highlighted the frightening amount of debt���especially mortgage debt���that had been taken on by many American families.

A decade later, the picture is far brighter, with one exception: student loans. Since 2008���s third quarter, education debt has ballooned 144%, according to data just released by the Federal Reserve Bank of New York. But the total of all other debt���mortgages, car loans and credit card balances���is up less than 1% over the same period.

Trying to figure out whether you have too much debt���and how that debt fits into your larger financial picture? Here are 12 principles:

1. Early in our adult life, borrowing can be a rational strategy. It allows us to buy items for which we don���t currently have the cash, including college educations, homes and cars, thereby jumpstarting our financial life. But we should be careful not to take on more debt than is necessary or more than we can comfortably handle.

2. When we borrow, we borrow not from the bank or some other lender, but from our future self. We���re betting that the benefit we get from that money today will outweigh the loss of that money, plus interest, in the future.

3. We engage in mental accounting, associating the auto loan with the car and the mortgage with the house. But in truth, these loans leverage our entire financial life and increase its riskiness. Imagine we have $300,000 in stocks, a $300,000 home and a $250,000 mortgage. If stocks drop 50%, our total assets fall 25%, from $600,000 to $450,000. But factor in the mortgage and our net worth drops 43%, from $350,000 to $200,000.

4. Inflation is the friend of borrowers. As consumer prices climb, our salary typically keeps pace, but the payments on any fixed-rate loans will stay the same, allowing us to repay those debts with depreciated dollars. By contrast, inflation is the enemy of investors, especially those who own bonds with fixed interest payments. The reason: Inflation represents a permanent reduction in the purchasing power of both a bond���s principal value and the interest it pays.

5. Debt is a negative bond. When we buy a bond, others pay us interest. When we take on debt, we pay interest to others. Suppose we have $100,000 invested in bonds and a $100,000 mortgage. Arguably, our net bond position is zero.

6. Our debts typically charge us a higher interest rate than we can earn by buying bonds. Why? We aren���t considered as creditworthy as, say, the U.S. government or major corporations. Want to invest more money in bonds? Often, we can earn a higher return by paying down debt.

7. Academics talk about the risk-free rate���the investment return we can earn without taking any risk���and they usually point to Treasury bonds. But for you and me, the risk-free rate is often the sum charged by the highest-cost debt we have. Suppose we have credit card debt costing us 18% a year. That���s the risk-free rate we earn by paying down our card balance.

8. Mortgage lenders typically don���t want borrowers to take on monthly mortgage payments that devour more than 28% of pretax income. That includes not just the loan���s principal and interest payment, but also homeowner���s insurance and property taxes. Meanwhile, lenders don���t want mortgage borrowers devoting more than 36% of their income to all loan payments combined. One implication: If your student loans and car payments are snagging more than 8% of income, that could hurt your ability to buy the house you want���and you might look to trim these other debts.

9. Mortgage interest is tax deductible, but the tax savings are often less than we imagine���and there may be no tax savings at all. Suppose we���re married and our itemized deductions���including $13,000 in mortgage interest���total $26,000 in 2019. Sound impressive? Remember, we could always claim the $24,400 standard deduction for a couple filing jointly.

In other words, that $13,000 of mortgage interest is reducing our taxable income by a mere $1,600���and perhaps saving us just $352 in taxes, assuming we���re in the 22% federal income-tax bracket. The standard deduction was claimed by an estimated 88% of tax filers in 2018, which means these folks got no tax benefit from their itemized deductions, including any mortgage interest they paid.

10. We should strive to retire debt-free. That���ll reduce our retirement living expenses���and it could save us a ton in taxes. Once retired, to cover any monthly debt payments, we might need to sell winning investments in our taxable account or draw down our retirement accounts, thus boosting our taxable income. That extra income could, in turn, trigger taxes on our Social Security benefit and increase our Medicare premiums.

11. Most investment advisors have an incentive to dissuade clients from paying down debt. If clients tap their portfolio to pay down debt, that means less money for the advisor to manage���and on which to charge fees. Got an advisor who���s telling you to pay down debt? Chances are, you���ve got yourself a good one.

12. The world���s net debt position is zero. For every dollar someone owes, there���s a dollar owed to someone. In other words, if we could wave a magic wand and eliminate all debt, the world would arguably be no better off���because, for every debtor who is now debt-free, there would be a lender who���s now poorer.

Follow Jonathan on Twitter�� @ClementsMoney ��and on Facebook . ��His most recent articles include Here to Retirement,��Calling the Shots��and��Cover Me. Jonathan’s ��latest books:��From Here to��Financial��Happiness��and How to Think About Money.

HumbleDollar makes money in three ways: We accept�� donations, ��run advertisements served up by Google AdSense and participate in�� Amazon ‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Check’s in the Mail

I HAD TO PAY my credit card bill, so I went online and set up a payment from my credit union a week before the bill was due. Why not, it���s an online transfer, right?

Not always.

The payment was due on the 16th. I went online the day before to check my bank account. It said the credit card payment was ���sorted��� and hadn���t transferred. Same thing the next day and the next.

I called my credit card company and the customer service representative was incredibly understanding���probably because I always pay my entire bill on time.

Then I called my credit union. The representative told me it was the post office���s fault that my check hadn���t reached the credit card company. What does the post office have to do with an online payment? Apparently a lot.

It seems that, in my credit union���s case, if a payment is over a certain dollar amount, it sends an actual paper check. Really?

I then asked the obvious question: At what amount should I allow extra time? The representative couldn���t tell me. I was transferred to another customer service representative and she couldn���t tell me, either. She also got very uncomfortable with my questions.

I entered the payment on the 9th. If the credit union needed to send out a ���real��� check, why didn���t it go out the next day? Then there would have been no question the actual check would have arrived on time. To blame the post office was totally absurd.

Now for the best part: The credit union said it would reimburse any fees and interest up to $50. Given the size of the card balance I was paying off, this was a pittance. It’s a bank. Don���t the folks there know that credit card companies charge interest in the double-digits and steep fees for late payments?

By now, I hope you���re thinking there���s something wrong with this picture. To avoid running into the same problem, call your bank or credit union and find out about its policies. It could save you a lot of headaches���and maybe some money, too.

Sonja Haggert is the author of Invest, Reinvest, Rest. You can learn more at SonjaHaggert.com.

HumbleDollar makes money in three ways: We accept�� donations, ��run advertisements served up by Google AdSense and participate in�� Amazon ‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Shortsighted

IN 1914, Henry Ford approved a new minimum wage of $5 per day for most of his workers. Thousands lined up for jobs. Other businesses were thrown for a loop, as they tried to figure out how to compete for workers.

Ford���s shocking wage wasn���t pure altruism. He wanted to motivate his workers to do a routine, boring job and to reduce employee turnover. The $5 included an advance on profit sharing���another motivating factor. Ford knew the pay would allow his workers to buy the product they made. He also expected high standards of behavior from his workers, including financial prudence.

But those insights have, unfortunately, been forgotten by many of today���s companies. Indeed, over my many years in corporate America, I saw management adopt many shortsighted employee policies, which���in turn���led to new laws and regulations. For instance, failing to fund promised pensions led to the Employee Retirement Income Security Act, often known simply as ERISA, which then contributed to the accelerated demise of traditional pensions.

Even the Affordable Care Act, with its requirement that employers cover employees��� ���children��� through age 26, was an overreaction to a gap created, in part, by the way employers designed health plans. Much of the concern over the affordability of prescription drugs is the result of employers switching to high-deductible health plans and not excluding certain crucial drugs, such as insulin, from the deductible.

Freeze pensions, raise deductibles to catastrophic levels, eliminate retiree medical benefits, cut the 401(k) match. Corporate executives make such decisions, often relying on consultants, but they don���t think long-term or have a broader strategy.

This recently hit close to home. In 2006, I negotiated five union contracts that allowed for retiree medical benefits. To pay for those benefits, employees had to give up other benefits. Fast forward to 2019 and my old employer is dropping medical and dental coverage for retirees, who instead will receive help buying Medigap insurance. The upshot: Retirees are almost certain to incur greater costs.

Why would an employer in good fiscal shape do this? Because it lowers the accounting liability for retiree benefits. But will this change help the company to attract and retain talented employees? Almost certainly not. Does the change help ensure its workers can buy the company���s goods and services, both now and once retired? Quite the opposite.

Business typically doesn���t like any regulation that raises its costs. And yet employers frequently invite such regulation by taking actions designed simply to meet short-term financial goals. For millions of Americans, these narrowly focused changes make their lives harder both now and in retirement. That means business also suffers���because it���s harder for everyday Americans to buy a new Ford.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Farewell Money,��One Last Thing��and��Over Coffee.��Follow Dick on Twitter��@QuinnsComments.

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

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Power of Two

I WENT FOR MY yearly physical. During the exam, my doctor asked me if I was in a relationship.

���Yes, I���m with someone.���

���Is there anything she would want me to know about you?��� he asked.

���Uh, are you asking how things are in bed?���

���No, no, no,��� he answered. ���I meant, has she noticed any changes in your health that I should be aware of? For instance, any skin lesions, forgetfulness or problems with your hearing that she might have brought to your attention.���

I have often heard that people who are happily married live longer than those who are single or divorced. My conversation with my doctor backs that up. When you know someone intimately and see him or her every day, you know when there���s something physically or mentally wrong. Result: Medical problems typically come to light sooner���and treatment can be more successful.

Here are eight examples from my life that illustrate how a close relationship with a spouse or life partner can help you live a longer life:

1. More active.��Married couples are more active, because they tend do new things they wouldn���t do alone. For instance, Rachel and I are taking dancing lessons���something I never would have had the courage to do on my own.

We also have learned to share each other���s interests, which often involve physical activity. We go on weekend outings to find and photograph the wildflowers of Southern California. I had no interest in wildflowers until I saw how excited Rachel was to see them and capture them in full bloom.

Meanwhile, I���ve introduced Rachel to my favorite activities, such as touring historic landmarks and sports stadiums. All these new activities keep us engaged and enrich our lives, while getting us out of the house and moving. The upshot: We���re both in better physical and mental health.

2. More friends.��I���m more socially connected, thanks to Rachel. I don���t think I would visit my married friends as often if I were single. There���s always that feeling of being the odd man out.

By each bringing our old friends���and often their spouses���into our lives, we have a larger support network, with many more friends than when we were single. There are also more opportunities to meet new potential friends, because we go out more than we would have. All this leads to a stronger social support system, which helps us combat loneliness and social isolation.

3. Healthier diet.��When I was single, I ate out a lot with my friends at restaurants and bars. Happy hour after work was a ritual. When you have a significant other to cook with at home, you tend to stay in more. You eat healthier meals because you control the ingredients going into your food.

4. Less alcohol.��We vowed never to have a drink unless the other wants one. When we do drink, we make sure the other isn���t drinking excessively.

5. Medical exams.��I have a friend who went for a physical checkup. The doctor recommended a colonoscopy. He declined initially, because he didn���t want to go through the nasty prep. But his wife pushed him to have the procedure���and it showed he had colon cancer. Today, he says his wife saved his life.

6. Emotional support.��I received a phone call one evening informing me that my mother had fallen and an ambulance was taking her to the emergency room. Rachel helped me cope with the situation���and gave me the emotional support I needed to deal with the emergency.��We���re always there, available to listen to each other���s problems, and that helps reduce the stresses of life.

7. Household chores.��We assist each other with daily chores and unexpected household headaches. A tree fell on Rachel���s house. We couldn���t get someone to come out in a timely manner to remove the tree. I was able to borrow a saw and we cut down the tree, preventing it from further damaging her house.

8. Financial stability.��We always support one another financially. By combining our incomes and savings, we each end up with a greater sense of financial security. Our pooled resources also allow us to travel more and enjoy other entertainment activities: We share hotel rooms, rental cars, taxis and more.

Because of my relationship with Rachel, I���m happier, healthier and more active���and I feel less of life���s pressure. That���s a pretty good foundation for a longer life.

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 California Dreamin’,��Wrong Approach��and��Before You Leave. ��Follow Dennis on Twitter��@DMFrie.

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Last Call

WERE YOU BORN between 1950 and 1953, have been or are currently married, and haven���t yet filed for Social Security benefits? There���s a loophole you may want to take advantage of���before it disappears.

For couples, settling on the right strategy for claiming Social Security benefits is critically important, because it affects the size of each spouse���s benefit or spousal benefit, as well as the survivor benefit. But the payoff can be especially large for the group I���m discussing here���those born between 1950 and 1953.

In 2015, Congress changed some of the Social Security rules affecting couples, including eliminating so-called restricted applications for those born in 1954 and later. But if you were born before 1954, you were grandfathered and can���for a brief time���still take advantage of this filing option.

What���s a restricted application? It���s when a husband or wife files for spousal benefits only. They can do so at their full retirement age���66 for the group we���re discussing���or later. Result: They receive 50% of the other spouse���s full retirement age benefit. For a restricted application to work, the other spouse must have already filed for his or her own benefit.

Sound good? It gets even better: Once the spouse who filed the restricted application turns age 70, that spouse can upgrade from the spousal benefit to a benefit based on his or her own earnings record���and that benefit would have grown eight percentage points a year over the intervening four years, for a total of 32%, thanks to delayed retirement credits.

Whenever folks tell me they were born before 1954 and haven���t filed for their Social Security benefit, I start thinking about whether they should use this strategy. Take my sister and brother-in-law. My brother-in-law was born in December 1953, so he qualifies to file a restricted application, because he was born before 1954.

Here���s how the strategy will play out for them. First, my sister���who had the lower lifetime earnings���files for her benefit. This coming December, my brother-in-law will turn age 66 and can file a ���restricted application for spousal benefits only,��� allowing him to receive 50% of my sister���s full retirement age amount. Then, at age 70, my brother-in-law can file for his own benefit, which would have increased due to delayed retirement credits. He���ll receive this higher benefit for life. If he predeceases my sister, this higher amount will be available to her as a survivor benefit.������

The restricted application is good for married couples���but it can be even better for divorced couples. Take a divorced couple who had been married for 10 years or more���and neither have remarried. They were both born before 1954 and they���ve both reached their full retirement age of 66. They could each file for spousal benefits on the other ex-spouse���s earnings record. Since they���re divorced, neither needs to have first filed for benefits based on their own earnings record. They would each receive 50% of the other���s full retirement age amount. Upon reaching age 70, they then file for their own benefit, which would be 32% larger, due to delayed retirement credits.

Be warned: Social Security���s representatives won���t go out of their way to inform you of the intricacies of restricted applications, because they���re understaffed and, in any case, they aren���t really allowed or trained to give retirement advice. But don���t let that put you off���because a little persistence could be richly rewarded.

James McGlynn CFA, RICP, is chief executive of Next Quarter Century LLC in Fort Worth, Texas, a firm focused on helping clients make smarter decisions about long-term-care insurance, Social Security and other retirement planning issues. He was a mutual fund manager for 30 years. James is the author of Retirement Planning Tips for Baby Boomers.

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