Jonathan Clements's Blog, page 52

Today’s the Day!–Well, Sort Of (by Dana/DrLefty)

I've had April 1 on my calendar since last July. Today is the day I can apply for a July 1 retirement date from my university. It also happens to be the date I can apply for Medicare because of my 65th birthday on Aug. 1.

I knew how to sign up for Medicare and what to do because we just did so for my husband, who turns 65 in May. Last week, I reviewed the materials from the retirement webinars I attended at the university so that I'd be ready to go on April 1. I woke up early, all excited. Made myself get on the Peloton bike for 10 miles or so before settling down at the computer.

Finally, I poured my second cup of coffee and sat down to get it done. The Medicare sign-up went quickly and easily. (I was feeling a bit nervous about what I've heard about the SSA website with all the staffing and funding cuts, but it was fine.) After reading through the materials from CalPERS (our retirement system that provides our current medical care), we both applied for Medicare Parts A & B but nothing else yet. CalPERS will coordinate our benefits and we'll have the same plan we have now. My husband's already received his Medicare card and his IRMAA statement. We can upload those IRMAA forms to the CalPERS portal to be eligible for partial reimbursement.

I then started the retirement application process but sadly hit a snag. I checked a box saying I had reciprocity with another retirement system (I worked for two different state universities), and that meant that my application was automatically bounced to a manual review process by the local office. I can't proceed any further until they act on it, which should take 5-7 business days. What a letdown!

I have announcements all ready to go--my Facebook friends, the various university offices that need to know...but I'm going to wait until the application is completely submitted. Among other things, on Facebook I'm going to post a clip from the Eagles concert we went to at Sphere last fall. I love the Eagles. "Desperado" is my go-to karaoke song. "Take It to the Limit" is my absolute favorite. But at this particular stage, the third verse of "Already Gone" has been speaking to me, so I made a video of that part of the live performance and will post it along with my retirement announcement:

Well, I know it wasn't you who held me down
Heaven knows, it wasn't you who set me free
So often times it happens that we live our lives in chains
And we never even know we have the key But me, I'm already gone
And I'm feelin' strong
I will sing this vict'ry song
'Cause I'm already gone

Oh, P.S. Today is also my "last first day"--my first day of class for spring quarter, which will be my final one. I'm sure I'll have some nostalgia.

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I don’t feel comfortable being “wealthy”

I have been pondering over this post for several days. I fear it will be misinterpreted, but here goes.

I don’t feel comfortable being wealthy. Like it or not, justified or not, planned or not I meet the typical definition of wealthy. These days that seems a dirty word - even though I’m not near the eight figure mark let alone ten.

I just finished our income taxes and it actually feels like we did pay our fair share. We pay IRMAA premiums and tax on 85% of our Social Security. Don’t get me wrong, I’m not complaining. The good thing as I see it is, wealthy is better than being rich. 

The terms "rich" and "wealthy" are often used interchangeably, but there's a subtle, yet significant difference between them.

A rich person might have a high-paying job and live a lavish lifestyle, but their financial security could be vulnerable if their income suddenly stops.

A wealthy person, on the other hand, possesses assets that generate income, providing them with greater financial independence and stability.

Being rich is about having a lot of money, being wealthy is about having financial independence and security.

How do you know which you may be? I think it’s a feeling of security, but you can always measure yourself against the data. For example from the Federal Reserve on net worth. What their surveys show.

Ages 45-54 median $247,200 average $975,800

Ages 55-64 median $364,500 average $1,566,900

Ages 65-74 median $409,900 average $1,794,600

Age 75 +     median $335,600 average $1,624,100

So, if you exceed these numbers you might be wealthy. 

Investopedia has an article explaining net worth at various ages. Thomas J. Stanley and William D. Danko, authors of "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" offered this formula as rule of thumb:

“Ideal” Net worth = Age X Pretax Income / 10

For example if your income is $60,000 and you are age 55, your ideal net worth according to these guys is $330,000. That seems mighty low to me. 

In many cases home equity will exceed that number. 

On the other hand, it looks reasonable when compared with the Federal Reserve data, but I wouldn’t call it “ideal.”  Actually, I don’t think it’s wealthy either. 

Does it all matter? To someone getting by on $45,000, earning $100,000 may be wealthy and so on. Some people with modest earnings may have accumulated a hefty net worth. 

In any case, there are better ways to be wealthy that don’t involve money. In that regard I feel we are well into ten figures. 

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Where Next? What Next?

Suppose money were no object. If you could go anywhere in the world on your next trip, where would it be? If you could savor any experience, what would it be?

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Will Work For Food, Starting My Diet Soon

Part 1

I sold my tax business 3 seasons ago, the year I turned 70, or as I often refer to it, the 30th anniversary of my 40th birthday. Besides the volunteer tax prep I do with AARP, I still prepare a dozen or so returns for friends and family. I don’t want to take money for my efforts, I will work for food. So far this season I have been compensated with burgers, steaks, chicken, pizza, salad, shish kabob, tacos, beer, wine, and margaritas.

There’s the friend I played with before I could even walk. The guy I used to work for back in the 70s. The girl who’s cut my hair for the past 50 years. My x-wife’s sister and husband; I didn’t divorce the family okay. There’s Chrissy’s siblings, though her brother slipped $160 in the envelope with his tax documents; I got him back by picking up the tab at dinner the other night.

I could go on, but I’m sure you get the picture. More important than the money is the time spent with people I love. But after 4/15…. I’m back on my diet.

Part 2

Some grateful in-laws bought me and Chris lunch at the Longhorn Steak House for doing their taxes. I could have had nice salad, but what the heck, I can go back on my diet tomorrow. Today I had a juicy burger with cheddar cheese and fries, washed down with a couple cold beers.

What else might I do tomorrow?

Design and build those new steps for the back door. (The ones the builder left us suck)Center the wall mounted TV in the guest room.Sort out and dispose of accumulated hardware from past projectsGive the car’s interior a good spring cleaningOrganize the junk stored in the attic.

What important things might someone else consider doing tomorrow?

Enroll in the 401KBuy life and/or disability insuranceCreate a retirement strategyDesignate beneficiariesEstate planningMake a will

Many ask our advice, and we are always happy to help. Sadly, few hear our answers.

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Consumer Advocate by Ken Cutler

When I experience an issue with a food product, I don’t suffer in silence. While eating lunch at work in the late 1980s, I found what I thought to be a bug in my frozen turkey dinner. I mailed the specimen to the manufacturer, along with a cover letter that included a subtle attempt to mimic the comic style of the Lazlo Letters. I received some coupons and a boiler-plate apology, along what I thought was an unsatisfactory reply: “We sent your exhibit to our lab and they have informed us that it was a piece of fatty tissue with dark brown meat fibers adhering to the piece of fat.”

I showed the company’s letter to my co-workers and--goaded on a bit by them--I sent a response that stated in part: “Madam, I can assure you (along with about a dozen of my scientifically trained professional colleagues) that what I sent you was a “’roach or similar bug adhering to a crouton.’” Wisely, the company left the second letter unanswered.

I went through a brief period during which I was hyper-sensitive to anomalies in food items I’d purchased. When one of my Life Savers candies contained a suspicious dark spot, I sent it to the company with a request that they identify which kind of worm egg it was. The apologetic response: “The substance you discovered in your recent purchase of this variety was analyzed to be burnt sugar.”  They also sent me two coupons for free Life Savers.

Another time, I found that the inner bag in my box of Life Cereal had not been sealed properly. Among other things, I told the company, “The cereal tastes okay, I guess, so I’m not demanding my money back or anything. I just thought you’d like to know.” Despite my soft touch, they did send me a replacement coupon or two.

The novelty of being such a stickler must have worn off, or maybe life just got too busy to be concerned about such minor trifles. Recently, however, I’ve been given reason to return to my old practice of holding food companies accountable.

A couple months ago, I found a piece of plastic wrap cooked into a relatively expensive enchilada frozen dinner made by a well-respected company. No longer having to pull out my typewriter to compose a formal letter, I just found the company on the internet and emailed them my complaint, along with a photo of the offending material. True to form, this company took the issue seriously, even sending me a mailer to provide their Quality Control department with the contraband. They also generously provided me with three replacement coupons. I was impressed.

Not long after that, I bought a container of a popular grape juice drink. It was horrible. I couldn’t even describe what the problem was…it was just not drinkable and was unlike any other containers of the juice I’d had before. I sent a quick email, received a follow-up asking for a little more information, and soon received a replacement coupon in the mail.

Since I’m now a “mature” individual, I no longer try to amuse myself by writing colorful or bizarre cover letters to companies when I find a problem. But with the extra time I have as a semi-retiree, doing my part to hold corporate America accountable for providing a safe and high-quality food supply seems like an activity worth engaging in. Especially when I get coupons.

Are there others in the HumbleDollar community who engage in similar activities? I’d love to hear your stories in the comments.

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How’s Your Crystal Ball? By Jonathan Clements

Many folks are unnerved by what's happening in Washington, DC, and predictions of doom are widespread. Are you now in the forecasting game? Let's find out how good you are. Six months from now—as of Wednesday, Oct. 1, 2025—what's your best guess for these eight:

Trailing 12-month inflation? Current reading is 2.8%.
Unemployment? Today's reading is 4.1%.
Whether we're widely considered to be in a recession? Typically, a recession is defined as two consecutive quarters of negative economic growth, so we won't know for sure as of Oct. 1. That means that, if there's no strong consensus, we may need to cut HumbleDollar's pundits a little slack on this one.
The S&P 500's Oct. 1 closing value? We're currently at 5500.
The Nasdaq Composite's closing value? Right now, we're at 17000.
Whether foreign stocks will still be outperforming U.S. stocks in 2025?
Whether value stocks will still be outperforming growth stocks in 2025?
The yield on the 10-year Treasury as of Oct. 1? Today, we're at 4.23%.

Please list your answers below, and then we'll check back in six months.

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I’ll take the “best” thing on the menu says Quinn

I was having breakfast recently in a small cafe when three people were seated at the next table. The server handed out menus and a woman asked her, “Between the pancakes, waffles and French toast, which is the best?”

I felt like saying, what a dumb question, but the quiet, reserved me said nothing. They are three different things and the “best” is highly dependent on personal taste. 

I was waiting for the customer to say, I don’t really like French toast, but if you think it’s the best, I’ll have that. “Should I have it with bacon, sausage or Taylor ham (a NJ thing).”

Coming in second in my book of silly questions is asking a server which item on the menu they like. I intensely dislike coconut so that cream pie is out of the question, but perhaps it’s your favorite. Now you are having chocolate cake instead. 

All this is like asking which hot tip on a stock should I pick. Or maybe asking me what percentage of pre-retirement pay you need to replace in retirement 🤣.

Do I need a million dollars to retire? You tell me. How much income do you want/need and for how long - among other considerations. 

If there is any place you can read about diversity of thought and action, it is on HD. Readers seem to set a goal, do some research, take some advice and take responsibility for their decisions. That is not typical in the real world. More common is asking advice without a plan to reach a stated goal, i.e. pancake or waffle based on no criteria and an irrelevant opinion.

Yes, I’m cynical, but I think most people want to take the easy route and then complain about where it took them. The future state of retirement for many Americans is questionable at best. Maybe asking dumb (or no) questions and no effort at a plan is part of the problem. 

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Any Bonds Today? By Marjorie Kondrack

You can learn a lot about history by studying it but to truly understand it, you had to have lived through it.   This holds true for the popularity of financial instruments as well.  This is a companion piece to Jonathan Clements’s recent post, “Seeking Uncertainty,” in reference to Savings Bonds.

Savings Bond mania was in full swing during World War II.  They were introduced by President Franklin D. Roosevelt in 1935, before I was born.  But I can remember, even at 5 years old, the tremendous push and popularity for buying savings bonds.  Artists made colorful, eye catching  posters encouraging Americans to save 10% of their wages to “buy their share of freedom”.  Movie stars went on bond rally tours to induce their purchase.   The movies had shorts exhorting patrons to buy “freedom”, liberty” and “war bonds”, as they were sometimes called, with a reminder that patrons could even buy them at the movie theatre.  Savings Bonds made you feel patriotic.  You were helping the war effort.

In 1941, Gene Autry, a popular singing cowboy actor made a recording of  catchy upbeat song entitled, “Any Bonds Today”.  Bing  Crosby and others recorded it too.  Irving Berlin wrote the words and music.  A repetitive phrase from the bouncy song is still remembered—“scrape up the most you can, here comes the freedom man, asking you to buy your share of freedom today”

Through June, 1970, You could get a savings stamp book from the post office where you could buy 10, 25, or 50 cent stamps you pasted in the book until you had $18.75–enough stamps to purchase a bond worth $25.00 face value. If you’re thinking 75 times 25 cents you are right.   

The popularity of savings bonds continued after the war, well into the introduction of “I” bonds in the late 1990s.   The benefits of savings bonds were indelibly ingrained in our psyche.   Gifts of savings bonds were given to us by grandparents, aunts and uncles for all occasions, even as wedding gifts.  They were easy to purchase and came with a nice gift folder. Best of all, they were a low risk, solid investment. But their popularity waned when Treasury Direct took over all functions of the Savings Bond Program.  Grandparents and others also gave up on the complexity of purchasing them.

I stopped buying savings bonds years ago.  The final maturity years of 30 years seemed so faraway at the time of purchase, I never gave a thought as to how much of a problem it would prove to be, keeping track of them.  I had a slew of them, and my husband inherited some from his father—some offering 6% interest.  But It was an ongoing chore to figure out the optimum time to cash them without triggering tax complications;  and they were onerous and time consuming to cash in.  Off putting as well, the rules kept constantly changing.

Time is not on my side and Savings Bonds have long since lost their luster for me.   I agree with Jonathan Clements’s wise assessment of them as being a hassle for investors and for those settling estates, but I get nostalgic when I think of the Andrews Sisters singing and jivin’ to “Any Bonds Today.”

Reminiscences of a bona fide,  but perspicacious, Lady Dinosaur.

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Lesson One From Taking Care of a 102 yo in Her Last Year of Life- Be Grateful

Note: This was a late comment to an earlier post that some may have missed. It’s still too early to post other lessons as there are more family gatherings to host.

Here is my take on being grateful: My mother in law is in the hospital now for the last time. When I was riding my stationary bike to relieve some stress the other day (That’s when my mind wanders and I do my best critical thinking/reflecting) I had an epiphany.  I was thinking about what I would say at her memorial service and I came up with this: Why would a son in law put his retirement life on hold for a year to care for a 103 year old? Because she is always grateful. I realized that if you always show gratefulness, good things will come back to you. I didn’t realize until just the other day that that is the life lesson she gave to me knowing her for nearly 45 years.

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Rats !!

Back in the 1960s I processed health insurance claims. Employees came to me with their receipts and I helped them put a claim together and then submit it for payment. 

One day an employee presented a receipt from a hardware store- for rat poison. I thought it was a mistake or a joke. I almost laughed. However, he was quite serious. Rat poison is a blood thinner and it was prescribed by his doctor. Unfortunately, it wasn’t eligible for reimbursement.  Good thing it was only a dollar or so. Heck, an office visit was $5.00. That would be $52 today - good luck with that. 

As crude as that may seem today, apparently it did the job- very affordably. Just imagine getting your health care at Home Depot instead of Walgreens. 

Today we know better. We even have a choice of drugs to accomplish the same thing as rat poison- except kill rats - at a price, of course.

The cost of popular blood thinners like Eliquis and Xarelto can vary significantly, with a 30-day supply potentially costing around $550 to $600. 

Older blood thinners like Warfarin can be significantly cheaper, around $20 to $30 per month. Warfarin was developed in the 1920s as a result of research on cows dying from a blood thinning disease. Just like we do to rats. 

You can get D-Con rat pellets for $8.64 at Walmart, but not Walgreens. 

No, I’m not serious. 

The thing with health care is we tend to want the latest of and perceived best of everything, regardless of cost as long as someone else is paying. 

I recently read a woman’s rant on social media complaining that she incurred a $3,000 expense because the insurance company “refused to pay.” It was her deductible, but she didn’t see it that way. She expected 100% coverage. 

Also, the way we use health care is not driven by demand, but by supply. More competition does not lower prices, it increases utilization. 

Let’s say a new scanning/MRI center opens a mile away from an existing facility. It invests a million or more into equipment. The goal is not to attract with lower prices, but simply to do more MRIs. 

The United States has 37.98 MRI units per million population. The second highest in the world. Everyone has to be paid for. The UK has 8.6 MRI scanners per million people, which is fewer than the average of 12.4 in the EU. 

Your doctor is likely paid by private insurance, Medicare and Medicaid. What each pays for the same service is in that declining order. A practice couldn’t survive on what Medicaid or even Medicare pays. So guess what happens to other prices and utilization? 

A 2017 study found that physicians themselves estimated that around 20.6% of overall medical care was unnecessary. A 2019 study in the Journal of the American Medical Association estimated that roughly 25% of total healthcare spending in the U.S. is wasteful.

Even competition among insurance companies is backwards. Too many competitors doesn’t lower premiums in an area, it dilutes their ability to negotiate lower fee payments because their ability to deliver patients is lessened. 

It seems that all we know about economics doesn’t apply to health care. I chalk that up to the people expectation factor. 

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