Jonathan Clements's Blog, page 38
May 16, 2025
Lessons for Life
WHEN HUMBLEDOLLAR’S editor was The Wall Street Journal’s longtime personal-finance columnist and his children were little, he often joked that he had a special incentive to see them succeed financially.
“It would be a tad embarrassing,” Jonathan wrote, if his children “grew up to be financial ne’er-do-wells.” For that reason, he used his own home as a laboratory of sorts, testing strategies to help set his children on the right financial path. Ultimately, Jonathan developed a formula that worked well. His children, now in their 30s, are both financially self-sufficient.
It turns out that subsequent academic studies have reached many of the same conclusions Jonathan reached. While nothing is guaranteed, the combination of these four strategies seems to provide an effective formula for raising financially fit kids.
Modeling. What’s the best way to convey money values to children? At first, Jonathan tried explaining key concepts in finance to his children. That, he said, was met with "extravagant yawns.” In the end, Jonathan found it was much more effective to simply model good financial habits, with the hope that his children would learn from his example.
“I’ve spent almost my entire adult life being financially careful,” he has said. “When I worked at The Wall Street Journal and at Citigroup, I brought my breakfast and a Thermos of coffee to the office every day, and occasionally lunch as well.” They also lived in a house “far less expensive” than the family could afford.
The result? Jonathan reports that, “My kids learned from my frugality. They both have very good financial habits. In fact, their financial habits are probably too good.”
This was confirmed in a 2022 academic paper titled “Talk Is Cheap.” The authors found that, “Parent financial modeling was directly associated with financial behaviors and financial satisfaction.” By contrast—just as Jonathan found—lecturing children doesn’t seem to work: “Parent-child financial discussion had zero direct or indirect associations” with children’s financial success.
Experience. Throughout their childhoods, Jonathan looked for opportunities to give his kids hands-on financial experience. At restaurants, he would make this offer: If his children, Hannah and Henry, wanted to order a soda—which might cost $2 or $3—they were welcome to. But if they instead chose water, Jonathan would present them with a dollar bill on the spot.
Another strategy: Jonathan helped his children open savings accounts, into which he then deposited their allowance. “Henry and Hannah got monthly statements in the mail, and they could view their accounts online. And, best of all, the accounts came with a no-fee cash machine card.”
Earlier, Jonathan had tried teaching his children about more sophisticated financial concepts such as mutual funds, even funding small accounts for each child and setting up an investment competition. All that turned out to be too abstract, though. Giving his children the opportunity to manage their own savings account—and to make choices—turned out to be the most effective approach. The result “was astonishing,” Jonathan said, as he witnessed his kids start to make thoughtful spending decisions.
Academic studies have confirmed this finding as well. The “Talk Is Cheap” authors found that the effects of modeling financial behavior were amplified when children were given the opportunity to practice the good habits they were observing.
An even more powerful finding: Good financial habits carry over into other areas of life: “Providing children with their own experiences managing money leads to higher financial self-efficacy throughout their life, which correlates with higher life satisfaction [and] less depression and anxiety....”
Starting early. Surprising as it might sound, Jonathan advocates getting kids started thinking about budgeting as early as five years old. Even when kids are little, he says, give them a “toy-and-candy allowance.” For teenagers, this could take the form of a clothing or an entertainment budget. This is what Jonathan did for his two children, and he found it helped them start thinking about financial choices.
A 2013 University of Cambridge study confirmed that this is the right idea. Children start forming financial habits much earlier than we might expect. “The age window is zero to seven,” according to Guy Shone, one of the researchers associated with the study, adding that, “It’s very hard to reverse those habits later in life.”
Can children this young really develop financial skills? Yes, the authors argue, as long as the strategies aren’t overly complicated. Letting children make some money mistakes at an early age can also be invaluable if it helps them avoid making more costly mistakes later on.
Discipline. The area that Jonathan found most effective? Helping his children to learn about tradeoffs.
“If your kids are always asking you to buy stuff, their desires will be limitless.” Jonathan described what it was like going with his kids to the supermarket: “Henry happily throws his favorite items into the shopping cart.” But, Jonathan says, “If they are constrained by an allowance, spending has a very real cost, and your kids will be forced to make tough financial choices.”
Most effective, Jonathan found, was to give kids the feeling they were spending their own money. When he was nine, Henry went on a school field trip. Instead of just giving him some spending money, Jonathan added a twist. “I told Henry he could keep any money he didn’t spend.” Jonathan tried this same approach with his daughter, Hannah, and was amazed to see how well it worked.
Helping kids develop this kind of financial discipline is the most powerful predictor of financial fitness later in life. In the New Zealand town of Dunedin, researchers in 1972 started following a group of 1,000 children from birth, regularly checking on their progress. While intelligence, work ethic and family background had some influence on the children’s success, none of those was as important as the level of mental discipline they exhibited during childhood.
The good news: According to the Dunedin study, discipline isn’t just an inborn trait. It can be cultivated by parents, using the
strategies Jonathan discovered and which academic research has confirmed.
P.S. These stories from the Clements family home can be found in a recently published anthology of Jonathan’s writing, The Best of Jonathan Clements , which was produced by a small group of fellow authors and longtime friends. Proceeds from the book will help fund the Jonathan Clements Getting Going on Savings Initiative. The initiative’s goal is to help teenagers jump-start their financial lives by educating them about the benefits of Roth IRAs, assisting them in opening accounts and, in some cases, providing $1,000 grants to fund their Roths.
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
“It would be a tad embarrassing,” Jonathan wrote, if his children “grew up to be financial ne’er-do-wells.” For that reason, he used his own home as a laboratory of sorts, testing strategies to help set his children on the right financial path. Ultimately, Jonathan developed a formula that worked well. His children, now in their 30s, are both financially self-sufficient.
It turns out that subsequent academic studies have reached many of the same conclusions Jonathan reached. While nothing is guaranteed, the combination of these four strategies seems to provide an effective formula for raising financially fit kids.
Modeling. What’s the best way to convey money values to children? At first, Jonathan tried explaining key concepts in finance to his children. That, he said, was met with "extravagant yawns.” In the end, Jonathan found it was much more effective to simply model good financial habits, with the hope that his children would learn from his example.
“I’ve spent almost my entire adult life being financially careful,” he has said. “When I worked at The Wall Street Journal and at Citigroup, I brought my breakfast and a Thermos of coffee to the office every day, and occasionally lunch as well.” They also lived in a house “far less expensive” than the family could afford.
The result? Jonathan reports that, “My kids learned from my frugality. They both have very good financial habits. In fact, their financial habits are probably too good.”
This was confirmed in a 2022 academic paper titled “Talk Is Cheap.” The authors found that, “Parent financial modeling was directly associated with financial behaviors and financial satisfaction.” By contrast—just as Jonathan found—lecturing children doesn’t seem to work: “Parent-child financial discussion had zero direct or indirect associations” with children’s financial success.
Experience. Throughout their childhoods, Jonathan looked for opportunities to give his kids hands-on financial experience. At restaurants, he would make this offer: If his children, Hannah and Henry, wanted to order a soda—which might cost $2 or $3—they were welcome to. But if they instead chose water, Jonathan would present them with a dollar bill on the spot.
Another strategy: Jonathan helped his children open savings accounts, into which he then deposited their allowance. “Henry and Hannah got monthly statements in the mail, and they could view their accounts online. And, best of all, the accounts came with a no-fee cash machine card.”
Earlier, Jonathan had tried teaching his children about more sophisticated financial concepts such as mutual funds, even funding small accounts for each child and setting up an investment competition. All that turned out to be too abstract, though. Giving his children the opportunity to manage their own savings account—and to make choices—turned out to be the most effective approach. The result “was astonishing,” Jonathan said, as he witnessed his kids start to make thoughtful spending decisions.
Academic studies have confirmed this finding as well. The “Talk Is Cheap” authors found that the effects of modeling financial behavior were amplified when children were given the opportunity to practice the good habits they were observing.
An even more powerful finding: Good financial habits carry over into other areas of life: “Providing children with their own experiences managing money leads to higher financial self-efficacy throughout their life, which correlates with higher life satisfaction [and] less depression and anxiety....”
Starting early. Surprising as it might sound, Jonathan advocates getting kids started thinking about budgeting as early as five years old. Even when kids are little, he says, give them a “toy-and-candy allowance.” For teenagers, this could take the form of a clothing or an entertainment budget. This is what Jonathan did for his two children, and he found it helped them start thinking about financial choices.
A 2013 University of Cambridge study confirmed that this is the right idea. Children start forming financial habits much earlier than we might expect. “The age window is zero to seven,” according to Guy Shone, one of the researchers associated with the study, adding that, “It’s very hard to reverse those habits later in life.”
Can children this young really develop financial skills? Yes, the authors argue, as long as the strategies aren’t overly complicated. Letting children make some money mistakes at an early age can also be invaluable if it helps them avoid making more costly mistakes later on.
Discipline. The area that Jonathan found most effective? Helping his children to learn about tradeoffs.
“If your kids are always asking you to buy stuff, their desires will be limitless.” Jonathan described what it was like going with his kids to the supermarket: “Henry happily throws his favorite items into the shopping cart.” But, Jonathan says, “If they are constrained by an allowance, spending has a very real cost, and your kids will be forced to make tough financial choices.”
Most effective, Jonathan found, was to give kids the feeling they were spending their own money. When he was nine, Henry went on a school field trip. Instead of just giving him some spending money, Jonathan added a twist. “I told Henry he could keep any money he didn’t spend.” Jonathan tried this same approach with his daughter, Hannah, and was amazed to see how well it worked.
Helping kids develop this kind of financial discipline is the most powerful predictor of financial fitness later in life. In the New Zealand town of Dunedin, researchers in 1972 started following a group of 1,000 children from birth, regularly checking on their progress. While intelligence, work ethic and family background had some influence on the children’s success, none of those was as important as the level of mental discipline they exhibited during childhood.
The good news: According to the Dunedin study, discipline isn’t just an inborn trait. It can be cultivated by parents, using the
strategies Jonathan discovered and which academic research has confirmed.P.S. These stories from the Clements family home can be found in a recently published anthology of Jonathan’s writing, The Best of Jonathan Clements , which was produced by a small group of fellow authors and longtime friends. Proceeds from the book will help fund the Jonathan Clements Getting Going on Savings Initiative. The initiative’s goal is to help teenagers jump-start their financial lives by educating them about the benefits of Roth IRAs, assisting them in opening accounts and, in some cases, providing $1,000 grants to fund their Roths.
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.The post Lessons for Life appeared first on HumbleDollar.
Can’t Figure Out This Darned Insomnia
I woke up this morning at 4, wide awake and couldn't sleep. I laid there reading google news on my phone. Finally I got out of bed and made it out into the living room. It was pitch black outside, yet my path through the house was well illuminated by little, mostly blue lights. About 30 of them. Smoke and carbon monoxide detectors, routers, scanners, label maker, alarm clocks, microwave, coffee maker, toaster oven, range, bathroom nightlights, charging chromebooks… I’m sure I missed a few. I was stuck wondering how the pioneers negotiated their houses at 4AM. Then it hit me, they were able to sleep all night because they didn’t have all these stupid (mostly) blue lights waking them up.
I’m not sure what my point is. Chris says I’m a grumpy old man sometimes. But hey, that’s what makes me happy. My back hurts. I'm gonna take a nap.
I’m not sure what my point is. Chris says I’m a grumpy old man sometimes. But hey, that’s what makes me happy. My back hurts. I'm gonna take a nap.
The post Can’t Figure Out This Darned Insomnia appeared first on HumbleDollar.
When They’re 64
WHEN MY TWO CHILDREN were ages nine and five, I opened Vanguard Group variable annuities for them. No, variable annuities aren’t my favorite investment. Far from it. Indeed, I don’t think they’re anybody’s favorite investment vehicle, unless you happen to be an insurance agent angling for a big commission.
Still, tax-deferred annuities differ from other retirement accounts in one crucial way: You don’t need earned income to fund the account. That means it’s possible to open a tax-deferred annuity for a toddler, thereby setting the kid up for decades of investment compounding.
Children may not have a whole lot of money, unless their parents pitch in, but they have something even more valuable, which is time. The accounts I opened for Hannah and Henry, now both in their 30s, are today comfortably into six figures. Hannah was sufficiently impressed by her account’s growth that she asked me to open variable annuities for her two kids—my grandchildren—who are ages four and one.
Since I set up the accounts for Hannah and Henry, Vanguard has unloaded its variable annuity business to Transamerica. Still, at 0.27% of assets a year, the variable annuity’s contract charge remains reasonable, the funds offered within the variable annuity are low-cost Vanguard offerings, and there’s no commission to buy or sell. But I can’t shake the worry that all this could change now that Transamerica is the administrator.
That’s why, for my two grandkids, I opted instead for Fidelity Investments’ variable annuity. The Fidelity Personal Retirement Annuity’s contract charge is 0.25% a year and, if you pick carefully, the fund expenses can also be fairly low. I settled on a 50-50 split between the total U.S. stock market index fund, which costs 0.11% a year, and the international index fund, which charges 0.16%. The accounts are set up as custodial accounts, with my daughter as the custodian. Custodial accounts count heavily against families in the financial-aid formulas, but I doubt my two grandchildren will be eligible for aid, given their parents’ income.
Is it really worth buying a variable annuity—even a low-cost one—to give a child an early start on a lifetime of investing? Suppose my grandchildren own their variable annuities for 60 years, which is likely because the 10% penalty on withdrawals before age 59½ creates a healthy incentive to leave the money untouched. Let's also suppose their accounts earn an after-inflation 6.6% a year. This assumes the stock market delivers 7% a year, but investment costs snag 0.4 percentage point of that annual return.
At 6.6% a year, the $10,000 that I invested for each grandkid will be worth an after-inflation $463,000 after 60 years. What if I hadn’t bought the variable annuities, and instead they started on retirement saving in their early 20s? At that juncture, they’d be looking at perhaps 40 years of compounding. At 6.6% a year, $10,000 would grow to some $129,000, or 72% less than the $463,000 they’d have with the earlier start.
You could quibble with these numbers, especially the return assumption. Still, it’s clear that snagging an extra 20 years of compounding makes a huge difference.
When I was investing for Hannah and Henry, I didn’t just open variable annuities for them. I also set up taxable accounts where I invested money for a future house down payment. Later, when they had some earned income, I opened Roth IRAs on their behalf.
I would, of course, love to open Roth IRAs for my grandkids. Think about it: decades of stock-market compounding, all of it tax-free. It's a gift I'd love to see given to every young person—and perhaps the savings initiative launched last week will help to make that happen.
Unfortunately, at ages four and one, my grandchildren don’t have the earned income needed to qualify for a Roth. When they do, I hope their parents will remember this article—and open Roth IRAs on their behalf.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier posts.
Still, tax-deferred annuities differ from other retirement accounts in one crucial way: You don’t need earned income to fund the account. That means it’s possible to open a tax-deferred annuity for a toddler, thereby setting the kid up for decades of investment compounding.
Children may not have a whole lot of money, unless their parents pitch in, but they have something even more valuable, which is time. The accounts I opened for Hannah and Henry, now both in their 30s, are today comfortably into six figures. Hannah was sufficiently impressed by her account’s growth that she asked me to open variable annuities for her two kids—my grandchildren—who are ages four and one.
Since I set up the accounts for Hannah and Henry, Vanguard has unloaded its variable annuity business to Transamerica. Still, at 0.27% of assets a year, the variable annuity’s contract charge remains reasonable, the funds offered within the variable annuity are low-cost Vanguard offerings, and there’s no commission to buy or sell. But I can’t shake the worry that all this could change now that Transamerica is the administrator.
That’s why, for my two grandkids, I opted instead for Fidelity Investments’ variable annuity. The Fidelity Personal Retirement Annuity’s contract charge is 0.25% a year and, if you pick carefully, the fund expenses can also be fairly low. I settled on a 50-50 split between the total U.S. stock market index fund, which costs 0.11% a year, and the international index fund, which charges 0.16%. The accounts are set up as custodial accounts, with my daughter as the custodian. Custodial accounts count heavily against families in the financial-aid formulas, but I doubt my two grandchildren will be eligible for aid, given their parents’ income.
Is it really worth buying a variable annuity—even a low-cost one—to give a child an early start on a lifetime of investing? Suppose my grandchildren own their variable annuities for 60 years, which is likely because the 10% penalty on withdrawals before age 59½ creates a healthy incentive to leave the money untouched. Let's also suppose their accounts earn an after-inflation 6.6% a year. This assumes the stock market delivers 7% a year, but investment costs snag 0.4 percentage point of that annual return.
At 6.6% a year, the $10,000 that I invested for each grandkid will be worth an after-inflation $463,000 after 60 years. What if I hadn’t bought the variable annuities, and instead they started on retirement saving in their early 20s? At that juncture, they’d be looking at perhaps 40 years of compounding. At 6.6% a year, $10,000 would grow to some $129,000, or 72% less than the $463,000 they’d have with the earlier start.
You could quibble with these numbers, especially the return assumption. Still, it’s clear that snagging an extra 20 years of compounding makes a huge difference.
When I was investing for Hannah and Henry, I didn’t just open variable annuities for them. I also set up taxable accounts where I invested money for a future house down payment. Later, when they had some earned income, I opened Roth IRAs on their behalf.
I would, of course, love to open Roth IRAs for my grandkids. Think about it: decades of stock-market compounding, all of it tax-free. It's a gift I'd love to see given to every young person—and perhaps the savings initiative launched last week will help to make that happen.
Unfortunately, at ages four and one, my grandchildren don’t have the earned income needed to qualify for a Roth. When they do, I hope their parents will remember this article—and open Roth IRAs on their behalf.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier posts.The post When They’re 64 appeared first on HumbleDollar.
May 15, 2025
Tempus Fugit, Vol II
Last month, I wrote about a spate of funerals my wife and I attended. Since then, I recently found out that a close friend and colleague in his early 60s was diagnosed with a "butterfly glioblastoma," a rare and aggressive form of brain tumor. It's a recent diagnosis, and his treatment plan is being finalized. A few friends and I drove an hour and a half to take him out to lunch earlier in the week, and to offer our support. This friend has a keen interest in investing, and a group if us would frequently talk about stocks and markets. I was always the one to add a cautionary note, and tell them to make sure they took care of the other, highly important parts of their financial lives - namely estate planning, insurance, tax planning, risk management.
That's where my mind went shortly after I first spoke with his wife. I went back and reread much of what Jonathan has written since his diagnosis. I was doubly impressed by the way he approached this challenge, using his time and experience to bravely face the issues at hand, and make sure matters were addressed to the best of his ability. It's a great model for all of us. In the context of my friend, one thing that greatly concerns me is that his diagnosis will likely cause some cognitive decline. Some of it was noticeable at lunch - he complained that he is struggling to keep on top of things at home and work.
At the lunch, I brought up that my wife and I had recently redone our wills and POAs. The two guys who also attended lunch acknowledged that their estate.plans could use a review. But our friend with the diagnosis was quiet on the subject. It concerns me, and I intend to find a time to approach his wife and see if I can help.
That's where my mind went shortly after I first spoke with his wife. I went back and reread much of what Jonathan has written since his diagnosis. I was doubly impressed by the way he approached this challenge, using his time and experience to bravely face the issues at hand, and make sure matters were addressed to the best of his ability. It's a great model for all of us. In the context of my friend, one thing that greatly concerns me is that his diagnosis will likely cause some cognitive decline. Some of it was noticeable at lunch - he complained that he is struggling to keep on top of things at home and work.
At the lunch, I brought up that my wife and I had recently redone our wills and POAs. The two guys who also attended lunch acknowledged that their estate.plans could use a review. But our friend with the diagnosis was quiet on the subject. It concerns me, and I intend to find a time to approach his wife and see if I can help.
The post Tempus Fugit, Vol II appeared first on HumbleDollar.
Allowance for Children: Yes or No?
I want to thank Jonathan Clements for his article on allowances for children many years ago while I was raising my children. After reading the article I decided to give my two children age 13 and 5 at the time a monthly allowance. For this allowance they had to buy their own clothing. My daughter at age 13 was initially appalled at having to buy her own clothes. We did agree that we would buy big clothing items such as a. winter coat or later her prom dress. However, in the interim, she became a bargain clothing hunter and enjoyed showing me her bargain jeans from TJMax etc.! Our son only 5 at the time was elated to have any money but decided to save as much as he could and asked me to take him to thrift stores to buy his T-shirts and shorts or pants. My kids are now 34 and 26 and are still frugal and now very savy investors.
The post Allowance for Children: Yes or No? appeared first on HumbleDollar.
Gifting Confusion
I thought the IRS gifting rules were pretty straight forward and I understood them. Any individual can give $19K (in 2025) to anyone else w neither a gift tax or reporting requirement. Seems pretty clear.
Then I dug a little deeper online which was maybe a mistake and came up w some issues.
One was the IRS reference to "gift splitting" by spouses where one spouse can use the other spouses gift exemption to gift in excess of the $19K. So, if spouse #1 wants to gift $25K to a child, he can use use his $19K exemption and $6K of his spouse's exemption assuming spouse had room remaining in their $19K exemption. But if you do this, it requires filing the IRS Form Gift Tax 709.
My understanding is spouses can freely gift to one another w no reporting requirement and any gift made from a joint account is considered to have equally come from each party so why would anyone want to go through the reporting hassle of "gift splitting"? Is this only applicable where one spouse wants to make a gift to another party from an account that he does not jointly hold with his spouse? If so, wouldn't the spouses want to just transfer $$$ to a jointly held account and gift from there to avoid the 709 reporting? What am I missing?
Also, is there any requirement to make individual $19K distributions from a joint account or is one $38K distribution ok under the assumption that $19K came from 2 joint accountholders thus no gift tax and no reporting requirement?
Finally, are there any "innovative" ways to exceed the reporting limits? I read one scenario where a gift from a parent well in excess of the yearly exemption was structured as a loan with the yearly repayments structured to coincide with the gift tax exemption and would then be forgiven. Does that pass the smell test? The glitch I see is if the "loan" is to assist in a mortgage application, would this not adversely affect the recipient's debt ratios and credit worthiness or does documenting the downstream payment forgiveness make everyone happy?
I could also be overthinking this whole thing and I should just make whatever gift I/we want and fill out the IRS 709. I'm just trying to avoid unnecessary administrative filings while staying administratively pure with Government.
Then I dug a little deeper online which was maybe a mistake and came up w some issues.
One was the IRS reference to "gift splitting" by spouses where one spouse can use the other spouses gift exemption to gift in excess of the $19K. So, if spouse #1 wants to gift $25K to a child, he can use use his $19K exemption and $6K of his spouse's exemption assuming spouse had room remaining in their $19K exemption. But if you do this, it requires filing the IRS Form Gift Tax 709.
My understanding is spouses can freely gift to one another w no reporting requirement and any gift made from a joint account is considered to have equally come from each party so why would anyone want to go through the reporting hassle of "gift splitting"? Is this only applicable where one spouse wants to make a gift to another party from an account that he does not jointly hold with his spouse? If so, wouldn't the spouses want to just transfer $$$ to a jointly held account and gift from there to avoid the 709 reporting? What am I missing?
Also, is there any requirement to make individual $19K distributions from a joint account or is one $38K distribution ok under the assumption that $19K came from 2 joint accountholders thus no gift tax and no reporting requirement?
Finally, are there any "innovative" ways to exceed the reporting limits? I read one scenario where a gift from a parent well in excess of the yearly exemption was structured as a loan with the yearly repayments structured to coincide with the gift tax exemption and would then be forgiven. Does that pass the smell test? The glitch I see is if the "loan" is to assist in a mortgage application, would this not adversely affect the recipient's debt ratios and credit worthiness or does documenting the downstream payment forgiveness make everyone happy?
I could also be overthinking this whole thing and I should just make whatever gift I/we want and fill out the IRS 709. I'm just trying to avoid unnecessary administrative filings while staying administratively pure with Government.
The post Gifting Confusion appeared first on HumbleDollar.
Creature of Habit
Even though I'm retired now, I have certain routines to get me going every day. First, I make the coffee, then I peel an orange, and finally I curl up on my sofa with my coffee, orange and iPhone and read the latest posts that come into my inbox from Humble Dollar.
This week on two occasions, I didn't receive my daily newsletter! I finally went directly to the website and got caught up on all the recent posts that I may have missed. But I actually felt like my day was off kilter without the newsletter, and I marveled how it's become such an important part of my daily routine. I spent the morning thinking about Jonathan and how his work has benefitted me. I wonder how he can manage to keep this thing going while dealing with his profound diagnosis.
I wonder if the rest of you start your day the same way. I really enjoy reading the forum posts, articles and comments every morning. It feels like you all are talking in my living room when you comment on the posts. The varied opinions are thought provoking, and the discussions, sometimes lively, are usually very respectful. I picture you all bantering in my living room, and when the conversations are over and I've read the final post, I picture us all getting on with the rest of our routines.
The post Creature of Habit appeared first on HumbleDollar.
May 14, 2025
Breaking even? Why should anyone care? I don’t
We have discussed many times when to start Social Security and pretty much concluded the decision is personal and need based. I don’t have a problem with any of that, but what bugs me is concern over breaking even considering amount received and years of benefits.
It seems to me the monthly benefit, the income when needed most is all that matters. Since I once again find myself in the minority, I asked a neutral party, Gemini AI. Here’s is the answer I received.
“The Social Security breakeven date is important because it helps individuals understand the long-term financial implications of when they choose to start receiving their Social Security retirement benefits.”
“The Social Security breakeven date is a valuable tool for retirement planning. It provides a financial benchmark to help you decide when to start your benefits to potentially maximize your lifetime income from Social Security based on your individual circumstances and life expectancy.”
What long term implications? Valuable for what? What financial benchmark? How could it possibly matter at all? You receive benefits you need and then somewhere along the journey they stop, breakeven or not.
Are you any better off going past breakeven or worse off missing the mark. Not that I can figure.
What do you say?
The post Breaking even? Why should anyone care? I don’t appeared first on HumbleDollar.
It’s The Little Things That Scare Me Now by Dennis Friedman
I’m going to be 74 next month, and I’m beginning to realize that the little things in life are starting to frighten me more. If I were younger, they probably never would have crossed my mind.
When I walk, I’m constantly scanning the ground for hazards. A raised sidewalk or uneven pavement could send me tumbling—and at my age, I’m not sure my bones would hold up to the fall.
Every night before I lie down, I used to stare at the smoke and carbon monoxide detector that hung nine feet up on our bedroom wall. I’d hope it wouldn’t malfunction in the middle of the night. I knew it was too risky for me to get on a ladder and fix it if it did. It was a relief when the handyman brought it down to a reachable height.
Those lights in our high-ceiling living room have also been on my mind lately, because I’m going to need help with them too when they go out. That’s another thing I could have done on my own when I was younger.
Oddly enough, the bigger things that might worry others don’t bother me as much anymore. When inflation surged to about 9% in June 2022, it didn’t rattle me like it did other folks. My wife and I still did the things we wanted to do.
Years of saving and investing have allowed us to build a nest egg strong enough to weather the storm. I suspect the same will be true even if the president doesn’t back off on tariffs.
If we were younger and trying to build our financial foundation, it would be a different story. Back then, I’d have been worried about the tariffs. But now? It’s the thought of climbing a ladder that gives me pause, especially after an elderly friend fell off one. He now walks with a slight limp.
At this stage in life, we don’t buy much, which is another reason the tariffs won’t affect us as much as they will affect other everyday Americans. In fact, we’re more focused on getting rid of things. My wife keeps telling me I have too many tools that I no longer need. My stepson will be glad to know he’ll have fewer boxes to sort through when we’re gone.
Traveling is now our biggest expense. Even that expenditure is declining as we grow older. Big-ticket items like automobiles are not on our radar. We don’t drive that much in retirement.
Still, I feel for the young couples just starting out. They say tariffs could raise the prices of strollers, cribs, and all the essentials you need when bringing a baby into the world. These days, most of those items are made in China.
Those same couples will have other major expenses to deal with—day care, college, starter home.
Getting older shifts your focus in unexpected ways. The world’s big problems may still matter, but it’s the little things—the smoke detector, the sidewalk crack, the ceiling lights—that take up more space in my mind now.
What little things have started to matter more to you with age?
When I walk, I’m constantly scanning the ground for hazards. A raised sidewalk or uneven pavement could send me tumbling—and at my age, I’m not sure my bones would hold up to the fall.
Every night before I lie down, I used to stare at the smoke and carbon monoxide detector that hung nine feet up on our bedroom wall. I’d hope it wouldn’t malfunction in the middle of the night. I knew it was too risky for me to get on a ladder and fix it if it did. It was a relief when the handyman brought it down to a reachable height.
Those lights in our high-ceiling living room have also been on my mind lately, because I’m going to need help with them too when they go out. That’s another thing I could have done on my own when I was younger.
Oddly enough, the bigger things that might worry others don’t bother me as much anymore. When inflation surged to about 9% in June 2022, it didn’t rattle me like it did other folks. My wife and I still did the things we wanted to do.
Years of saving and investing have allowed us to build a nest egg strong enough to weather the storm. I suspect the same will be true even if the president doesn’t back off on tariffs.
If we were younger and trying to build our financial foundation, it would be a different story. Back then, I’d have been worried about the tariffs. But now? It’s the thought of climbing a ladder that gives me pause, especially after an elderly friend fell off one. He now walks with a slight limp.
At this stage in life, we don’t buy much, which is another reason the tariffs won’t affect us as much as they will affect other everyday Americans. In fact, we’re more focused on getting rid of things. My wife keeps telling me I have too many tools that I no longer need. My stepson will be glad to know he’ll have fewer boxes to sort through when we’re gone.
Traveling is now our biggest expense. Even that expenditure is declining as we grow older. Big-ticket items like automobiles are not on our radar. We don’t drive that much in retirement.
Still, I feel for the young couples just starting out. They say tariffs could raise the prices of strollers, cribs, and all the essentials you need when bringing a baby into the world. These days, most of those items are made in China.
Those same couples will have other major expenses to deal with—day care, college, starter home.
Getting older shifts your focus in unexpected ways. The world’s big problems may still matter, but it’s the little things—the smoke detector, the sidewalk crack, the ceiling lights—that take up more space in my mind now.
What little things have started to matter more to you with age?
The post It’s The Little Things That Scare Me Now by Dennis Friedman appeared first on HumbleDollar.
May 13, 2025
JCX-21-25
The Joint Committee on Taxation today posted their analysis of proposed changes to the current tax code. The 400+ page document is long but certainly easier to read than the tax bill that posted yesterday 5/12/2025.
Nothing final here but I think it will give a flavor to what may be coming in 2026.
https://www.jct.gov/publications/2025/jcx-21-25/
The post JCX-21-25 appeared first on HumbleDollar.
