Jonathan Clements's Blog, page 82

Fact Finding

JANE IS A SINGLE woman in her 80s, sharp and friendly. She’s a former state employee with a solid retirement income. Unfortunately, she’s suffered some health issues in the past few years that have forced her to make serious changes.

I became aware of her issues when she came into the local AARP TaxAide site where I volunteer. She was the last client of the day, and the other scheduled client had rescheduled, so she got our full attention. It was a good thing, because her tax return required our best effort.

Complicated tax situations usually come down to an evaluation of the facts and circumstances, which are then measured against tax law, so tax-return decisions can be made. In Jane’s case, she’d sold her home in 2023 and moved into an assisted living facility. The move was precipitated by her declining health, including several falls.

From a tax perspective, her case was complicated by two issues. First, Jane had been gifted her home by her parents in 2000. The parents originally bought the home in the early 1970s for $17,000. Jane sold the house in August 2023 for $470,000. As a single individual, she was eligible for the $250,000 capital-gains exclusion on the sale of a primary residence. Even with this exclusion, she was looking at a large taxable gain.

The main challenge was determining the cost basis of the house. She had a list of improvements she’d made since she became the home’s owner. She also had documentation of her closing costs. The big unknown was the adjusted cost basis of the home when it was gifted to her.

The adjusted basis was the original purchase price, closing costs and any improvements her parents made. Jane was able to come up with a list of improvements made by her parents, including a new roof, siding and a new shed. After 20 minutes of questioning, Googling past prices and some informed guessing, we came up with a total of $25,000 in improvements that we felt were fair and reasonable. The additions to her cost basis reduced her capital gain to about $115,000.

The other complicating factor was her move into assisted living. It wasn’t a clean transition from her primary home. It took some time for a room to open up at the facility and for Jane to sell her house. While waiting, Jane had home health aides five days a week. Jane started paying for her place in assisted living in April, even though she hadn’t yet sold her house and wasn’t ready to move. Jane finally moved into the facility in August after she sold her house.

Jane’s documentation consisted of a receipt from the facility for about $80,000 and a 1099-LTC form. Her long-term-care plan was a reimbursement policy; she paid her costs out of pocket and was later reimbursed. The 1099 showed she had been reimbursed for about $27,000 in 2023. The nearly $50,000 discrepancy between her receipt and the reimbursement was confusing, because Jane stated she was sure she had been reimbursed for all her out-of-pocket costs. Figuring out what, if any, of her medical costs were tax-deductible took some doing.

Per IRS publication 502, qualified long-term-care services are considered allowable medical expenses, assuming certain criteria are met. We interviewed Jane to understand the circumstances of her medical needs. She confirmed that her doctor had documented her medical needs and prescribed a plan of care, including occupational and physical therapy. This information allowed us to determine that she met the IRS’s definition of a chronically ill person—someone who needed significant assistance with several activities of daily living.

Because she met the criteria, her room and board are considered to be part of her medical care and the cost is deductible. One confusing factor: how to handle the period of time when she paid for assisted living, but didn’t live there. Her room and board were almost $7,900 a month. We debated whether the three months that she paid for the room, but didn’t live there or receive care, were tax-deductible. During this period, she received care from home health aides, which is deductible. We felt taking a deduction for both the home health aides and the facility costs would be “double dipping.”

I recommended she claim five months of room and board, rather than the full eight. When she moved into the assisted living facility, she also paid for a higher level of care consistent with her medical needs, to the tune of $1,000 extra per month. We included this five months of extra care, along with her earlier seven months of home health care, in her medical deductions.

The deductible amount was those costs minus her reimbursements. We called the insurance broker to understand why the reimbursement was significantly lower than her documented costs. It took a while, but it turned out her reimbursements for the last three months of 2023’s assisted living weren’t paid until early 2024.

In the end, the combination of her home sale capital gain, reduced by her medical deductions, resulted in her paying $11,000 in taxes when she filed her return. She was concerned that her large capital gain could mean a tax bill of $40,000 to $50,000. We were happy we were able to help her sharply lower that amount.

There are several clear lessons for all of us. First, if you’re a homeowner, keep good records of your costs and any improvements. If you have parents who have lived in their home for decades, sit down with them, and start to build a fair and reasonable cost basis.

Second, if you have family or friends who have significant medical challenges that’ll likely result in expensive medical costs, help them put together a strong paper trail. Make sure they have a documented diagnosis and plan of care. Keep good records of costs, timing and reimbursements. These steps may help ease some of the financial pain come tax time.

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

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Never a Debtor

I HATE BEING IN DEBT. It makes me feel anxious and uncertain, as though my finances are out of my control. If I don’t pay all my bills in full every month, I feel trapped, and I’m endlessly restless until I get free.

I understand that other people manage their finances quite differently, and are happy to pay their bills in installments. Not me.

Years ago, I made a small bet on a minor thing. It was during a celebration with friends and family. There was some back and forth with a family member that culminated in me saying, “I’ll bet you a dollar on that.” The bet was accepted, and I lost.

I immediately stood up, pulled out a dollar bill and insisted it be accepted. My gesture came in the middle of dinner, in front of the other guests. It created an awkward moment. I later realized I’d felt compelled to pay my debt right away and in front of others, because I didn’t want to be known as someone who didn’t pay a bet.

I also didn’t want to be like my father.

When I was a child in the 1950s, I learned that my father owed money. He came into the bathroom, and I watched as he used the sink to burn some bills he owed. Not long after, he deserted the family, leaving behind my mother, me, my sister, my brother and a mountain of debt. My story of the bill burning was part of the evidence used in the divorce proceedings that followed.

Unfortunately, the debts didn’t go up in smoke along with the past due notices that my father burned. My mother paid what bills she could, and friends forgave personal loans. I don’t know precisely what happened to the rest. Still, despite our poverty, she paid regular installments for years.

In my desire to differentiate myself from my father, I resolved never to owe money under any circumstances. Small wonder then that I’d rather make a spectacle of myself paying off that silly bet.

While I adhor debt, I make several exceptions. We have a mortgage on the house, but my anxiety about the debt is allayed because I view the mortgage as a contract we’re fulfilling.

I also have “debts” in the form of my annual pledges to charity. Those must be paid in full, but I pay those obligations on my own schedule over the course of the calendar year.

I also make an exception for medical bills. In early January, I had surgery to fuse all my lumbar vertebrae. Now full of rods, screws and bone spacers, I’m progressing through a long and challenging recovery. I don’t fret about the resulting medical bills, including those for post-op therapy, when they arrive in the mail. My health insurance will cover the majority of the costs eventually, and I’ll handle the rest in due time.

I’ve learned not to send money immediately when I receive a bill for medical services. That only confuses matters. Waiting for the final explanation of benefits before sending any payment makes things go more smoothly. This can take quite some time, but I accept the need to wait for the final amount due.

Sadly, millions of people in this country don’t have good health insurance and end up with astronomical medical debt that they can never pay, assuming they’re able to get treatment at all. Debt becomes their prison.

In gratitude for my situation, I contribute to Undue Medical Debt. This group has been buying up medical debt owed by individuals and families. They’re a four-star charity on Charity Navigator. Communities, counties and states are joining the movement.

Contributions to this charity help erase billions of dollars of medical debt for individuals and families. I view my contributions as carrying on the help that my family received when I was a child. With my donations, I help to break the yoke of debt for others, open the door to their debtors’ prison, and allow them to go free.

Tom Scott is a retired Episcopal priest. He and his wife live in Evanston, Illinois. They love retirement because they get to see more of their children and grandchildren, and they can spend more time at concerts, the opera and the Chicago Botanic Garden. Check out Tom's earlier articles.

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Stinking Thinking

ONE OF THE POSITIVE outcomes of my unsuccessful life: I’ve had an incentive to study ways to be successful.

Among the self-improvement materials I’ve looked at, many have titles like “how to become…” or something similar. The good ones are easy to understand and make you feel it’s possible for you to achieve whatever they’re selling.

When the material is delivered in person, you get the advantage of a great presentation from a dynamic public speaker. These folks are the modern equivalent of the old snake oil salesman. They’re all gifted salespeople. I’m not knocking them. I just understand that, like all successful salespeople, they’re good at convincing you that what they’re selling is what you need.

One such presenter was Zig Ziglar. He was a former salesman who grew up poor in Alabama and Mississippi, one of 12 children. He discovered the self-help arena and began presenting his “pitch” in books and in person. He found he could make more money selling self-improvement than he could selling pots and pans door-to-door, which is how he started out.

Self-help gurus often use catch phrases to make their ideas memorable. One of Ziglar’s catch phrases was “stinking thinking.” I liked it because it rhymed, plus I could relate to the idea, because I frequently did and still do this type of thinking. I suspect we all do.

“Stinking thinking” is dwelling on negative thoughts. This sort of thinking doesn’t do us any good, and yet we do it anyway. It usually happens to me when I wake up in the middle of the night to go to the bathroom. I don’t fall back to sleep right away. Instead, I lie in the dark and start thinking. Inevitably, I begin pondering the “what ifs.” You know the sort of thing I’m talking about: “What will happen if this happens?” “Will I get that promotion?” “Will my dad make it through the operation?”

The only thing “stinking thinking” does is cause me to worry and lose sleep.

Knowing that “stinking thinking” is going to happen, I take the “stinking thinking” thought, get out of bed and write it down, along with the possible solutions to the problem. I’ve read that your mind doesn’t know the difference between important and unimportant thoughts. All thoughts are considered equal, and our mind doesn’t want us to forget the thought in question. If I can solve my “stinking thinking” thought or, at least, write it down, my mind is tricked into believing the problem is solved or that it won’t be forgotten, and I can then usually fall back to sleep.

“Stinking thinking” is most detrimental to me in the middle of the night. But these thoughts can come to me at all hours of the day or night. One trick I’ve found is to always carry a scrap of paper and a pen in my pocket. When a thought hits me, and I need to somehow resolve it, I write it down, so I remember to address it later.

What if I don’t write it down? The thought will hijack my brain. Indeed, the sooner the thought is resolved or at least put down on paper, the sooner I can get on with the important things in my life.

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What’s Your Plan?

MICK JAGGER IS AMONG the most successful entertainers of our time. But despite his wealth, Jagger tells his eight children that they’ll need to make their own way. Similarly, Shaquille O’Neal tells his children that they can earn some of his millions, but it won’t necessarily be given to them. Actor Jeff Goldblum puts it more bluntly: “Row your own boat,” he’s said. Other public figures have echoed a similar theme.

Why do these wealthy folks take such a seemingly uncharitable view? One likely reason: They want their children to have the opportunity—and the satisfaction—of succeeding on their own. Counterintuitive as it may seem, by withholding a large inheritance, they may feel they’re doing their children a favor.

Decisions like this aren’t easy and require delicate tradeoffs. Much of estate planning, in fact, is about tradeoffs. If you’re building a plan for your own family, here are five other key tradeoffs to consider.

1. Cost. While estate planning strategies can be effective in reducing estate taxes, they can be costly to set up and maintain. How do you strike the right balance?

With the federal estate tax at 40%—and many states levying their own estate or inheritance tax on top of that—folks with assets above the lifetime exclusion amount often conclude that it’s worth spending virtually any amount on legal fees in an effort to defray that tax.

Suppose you have assets that are $1 million over the threshold. At today’s rates, that would result in a tax of $400,000—a hefty number. While legal fees can be costly, it’s unlikely that an estate planner would charge even one-tenth of that amount to put a new strategy in place. Seeing this likely return on investment, many families are happy to incur significant legal and accounting fees.

That’s one point of view, and it’s certainly logical. But not everyone agrees. Other families look at it this way: If their estate is large enough for the estate tax to apply, then their heirs will receive a healthy sum, regardless of how much estate tax is paid. Through this lens, these families decide to spend little or nothing on estate tax strategies. They accept that their estates might—and likely will—end up facing a larger tab, but still prefer that to spending large sums on legal fees.

2. Complexity. The most effective estate planning strategies also tend to introduce the most complexity. To see why, let’s look at a common structure known as an irrevocable trust.

Suppose Jane and Joe are 50 years old and have a net worth of $10 million. They’re concerned that if their assets continue to grow, their family will face estate taxes down the road. To get in front of this, Joe sets up an irrevocable trust for the benefit of Jane and their children, and moves $500,000 of stock from his brokerage account into this new trust.

At the time Joe makes this gift, the $500,000 is deducted from his lifetime exclusion, so there’s no immediate benefit. But if Joe lives another 40 years, and the stock appreciates at 7% per year, it would be worth $7.5 million at the end of his life. That’s when the benefit would be realized. The $7 million of appreciation above Joe’s original $500,000 would be free of estate tax.

The benefit, in other words, could easily reach into the millions. The downside is that irrevocable trusts introduce complexity. Drafting the documents and making the initial gift is actually the easy part. On an ongoing basis, the trust will require its own tax return each year, and Joe will need to decide on a trustee or trustees, who may also ask to be paid. This all entails additional complexity, and that’s for the most straightforward type of trust.

For even greater potential tax savings, some families move illiquid assets, such as their homes or shares in a family business, into irrevocable trusts. But moves like this dial up the complexity level even further. Suppose a family moves its home into a trust. Over time, this could deliver a tax savings. But in the meantime, the family will no longer own its own home. The trust will. To continue living in the home, the family will need to pay rent to the trust each year, and all of the home’s expenses will need to be paid by the trust. This can take a fair amount of bookkeeping, which is why many high-net-worth families decide that the complexity is more trouble than it’s worth.

3. Flexibility. Let’s continue with the above example, where Joe moves $500,000 into an irrevocable trust. If everything goes according to plan, Joe’s heirs will realize significant tax savings. But suppose Jane and Joe have a change of heart, and would instead like to use that $500,000 toward another goal—perhaps to pay for college or to help their children purchase a home. If a trust is well designed, it’ll allow for distributions during Joe’s lifetime, but it isn’t so simple. Irrevocable trusts aren’t truly irrevocable as long as the donor is still living, but for the most part, they are, and this is another key tradeoff when constructing a plan.

4. Control. Establishing an irrevocable trust requires a few additional leaps of faith. Specifically, the donor needs to feel comfortable with the distribution provisions written into the trust, and also needs to feel comfortable with the trustee. This too requires a delicate tradeoff. On the one hand, establishing a trust sooner rather than later provides more time for the assets to appreciate, as described above, increasing the opportunity for tax savings. But that also means there are more years during which a divergence might emerge between the trust’s provisions and the donor’s current preferences.

5. Equity. Imagine a family with two children, one of whom is a schoolteacher and the other a brain surgeon. If you were the parent, would you leave equal shares to each, or would you leave more to the schoolteacher? There are good arguments for both approaches.

On the one hand, the surgeon is more likely to be self-sufficient and might be happy to see a greater share go to his schoolteacher sibling. On the other hand, as I often say, brain surgeons have feelings, too. Though he might have a higher income, he might feel that it’s a matter of principle for children to be treated equitably by their parents.

There is no “right” or “wrong” on any of these questions—they’re personal decisions—but it can be a valuable exercise to think through them before creating your estate plan.

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 on Threads, and check out his earlier articles.

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Long Odds

SUPPOSE YOU KNEW you’d live until at least age 90. How would that change your thinking about retirement?

It seems most of us focus less on the possibility of a long life and more on the risk of an early death. This grim view is buttressed by endless anecdotal evidence—celebrities who pass away in their 40s and 50s, terrible accidents that take multiple lives, old classmates and colleagues who die at tragically young ages. Still, I’m starting to think that this focus on an early demise is not only a gloomy distraction from life’s daily joys, but also it leads us to make less-than-ideal retirement decisions.

Indeed, as I squint into the future from the not-so-grand age of 61, it occurs to me that there’s a chance I have three decades or more ahead of me, and it would be a shame to spend all that time focusing solely on fun and on short-term investment results. If I do that, I fear there’s a risk I’ll look back and rue the wasted time.

So, humor me, and join me in a thought experiment: If you knew the grim reaper wouldn’t turn up until your 90s, how would that alter your retirement plans? Here are four changes you might make:

Work longer or work part-time. By age 60, many folks are heartily sick of the work world and anxious to call it quits. But let’s face it: If you retire then and live another three-plus decades, you’re looking at an awful lot of years of traveling, volunteering and relaxing—far, far more than earlier generations enjoyed. Would this be a good way to use the final third of your life and more than 40% of your adult years? Perhaps part-time work, or some other activity that gives your days both structure and purpose, wouldn’t be a bad idea.
Delay Social Security and buy immediate annuities. Folks shy away from purchasing income annuities and postponing Social Security because they fear they won’t live long enough for these financial bets to pay off. But if you knew you’d live to your 90s, they become much more compelling.
Invest more in stocks, while also worrying more about inflation. Faced with the prospect of a long life, inflation looms as a much larger threat—3% annual inflation turns a dollar’s purchasing power into 41 cents after 30 years—but there’s an offsetting advantage: You have the time to hang tough through bear markets and potentially earn healthy long-run returns with stocks.
Spend more cautiously in your 60s. I’ve been surprised by how many folks say they’re happy to spend freely in their 60s because they figure they won’t get much joy from spending in their 80s and, in any case, they figure they won’t need as much money. I fear these folks’ future selves might strenuously disagree, especially if they’re hit with long-term-care costs.

Still, on this last one, I think it’s important to strike the right balance. Even if folks knew they’d live to their 90s and hence they might want to spend a tad more cautiously in their 60s, I wouldn’t want to discourage them from ticking off bucket-list items in their 60s and early 70s. While we might live until our 90s, our desire to spend time in the wider world—whether it’s traveling, hiking, attending concerts, visiting friends—might wane in our late 70s or early 80s.

All this raises an obvious question: What are the chances that a 65-year-old will live to his or her 90s? Among the general population, the odds aren’t great: 20% of 65-year-old men and 31% of 65-year-old women will live to age 90. What if you’re married? The chance that one of you will live to 90 rises to 45%.

But what if you’re a 65-year-old who is in good current health, has lived a healthy lifestyle and didn’t have a job that was physically demanding? The odds of making it to 90 rise to 30% for men and 42% for women, with the chances that one member of a couple lives that long at 60%. Suddenly, living to 90 looks like a distinct possibility.

Still, such odds may not be enough to persuade folks to change their behavior. But I’d encourage readers to ponder one more notion: As you plan your retirement, what’s the bigger financial risk, dying early or living to a ripe old age?

Let’s be honest: If you keeled over at 68, it would be a family tragedy—but it wouldn’t be a financial one. At that juncture, all your financial problems would be over, and your family would likely be better off financially because they’d inherit your retirement nest egg, which would probably still be largely intact.

Instead, the real financial risk is living to a ripe old age. That raises the question: As you make your retirement plans, shouldn’t you care more about the live version of your future self, rather than the dead one?

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney, on Facebook and on Threads, and check out his earlier articles.

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Living My Beliefs

I'VE ALWAYS BEEN a saver, and perhaps even pathologically frugal. Growing up, it pained me to spend money, even on food when I was hungry. Today, I have more than enough money, but I still resist paying full price for food.

Perhaps I’m just genetically frugal, or perhaps my feelings about money reflect my parents and my upbringing. My mom once shared that her aunt predicted that she’d make lots of money, but it would be like grains of rice and slip through her fingers. Meanwhile, my dad handled the family finances, but money was never openly discussed. I never knew how well we were doing.

I have one vivid, recurring image of my childhood in the Philippines: I’m still hungry after eating dinner. To quell my hunger, I would ask for a banana. If I was given one, I’d eat it with any remaining rice. I’d eat everything on my plate. Every single grain of rice. Nothing was slipping through my fingers.

There were other memories. After we moved to the U.S., I recall gasoline prices doubling overnight, from 25 cents a gallon to 50 cents. I’d wait in the car with my parents to fill up the tank, sitting in a long line of cars that snaked around the block.

Coming home from school one day, I found my dad at home, repaving the garage floor instead of being at work. He didn’t tell me why he was home. But words like unemployment and recession soon dominated the news. Such memories are the basis of my money beliefs, and I had to untangle them to be financially free.

I consider myself lucky. I haven’t been affected by natural disasters or serious accidents, and I’ve never been a victim of violence. I graduated from college debt-free, thanks to working three summers with Amtrak in a unionized job and thanks to choosing an affordable in-state public university.

I also had the good fortune to marry the right person. She’s a saver, and has the knack and patience to get the best deal on anything, especially airfares. We’ve had health setbacks, but nothing catastrophic. We moved to Silicon Valley in the mid-1990s and bought the worst-looking house in an affordable yet safe neighborhood—just before property prices skyrocketed.

We only needed one income to pay the mortgage and property taxes, which was just as well, since I lost my job right before the closing. I found other work, but we didn’t let that affect our lifestyle. We stayed in the same house, drove the same cars, ate at modest restaurants and travelled on the cheap.

Soon, we had an interesting predicament. After paying our living expenses, the leftover dollars sat in our checking account. The balance eventually grew to six figures, but the money was earning 0% interest. Intellectually, I knew I had to invest this money. Behaviorally, I was stuck.

I was afraid of losing the money. Afraid of losing my job again. No one I trusted invested in the stock market. My wife deferred to me on financial decisions, and she’d literally fall asleep whenever I talked about money.

One day, I read about John Bogle. He explained index investing and that Vanguard Group is like a credit union, run solely for the benefit of customers. The firm’s purpose was to make its customers rich, not the other way around. This was my aha moment.

I finally contacted three certified financial planners, and chose the one who’d create a financial plan for us for a flat fee. Though I didn’t follow most of the planner’s recommendations, I did open a Vanguard account, and bought several Vanguard index-mutual funds and exchange-traded funds, building a 60% stock-40% bond mix.

It didn’t happen overnight, but opening the account, living frugally, staying employed and automatically adding new savings allowed us to become financially independent. The plan I constructed took into account my money beliefs. It was conservative on purpose. When the markets inevitably crashed, my reaction was no action. Stay the course. Nothing to see here.

Going to church regularly, I became aware of time. Fellow parishioners would die, or I’d see their children grow from infants to young adults. During services, I’d think that maybe today is the best day of my life. Tomorrow, I might not be able to tie my own shoes.

I could have continued working and accumulating. But instead of waiting for the next severance package, I voluntarily left the workforce at age 57. My wife is on her own timeline and, for now, she’s still working.

I think about paying it forward using my time, talent and treasure. Perhaps I can do something fun and have an impact. We’re putting a niece through college. We talk about spending more on ourselves. Yes, it’ll be a journey to go from saver to spender. But I need to buy those cherries now, instead of waiting for when they’re on sale.

Venicio Navarro was born in the Philippines but grew up among the cornfields of Illinois, somehow surviving the heavy-metal rock music of his teenage years. He jumped into retirement and currently spends his time being a tourist, golfing and working on his health.

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Way to Go

WHAT WILL BE YOUR legacy? This is something I’ve given a lot of thought to—right down to the funeral instructions.

Something I’ve learned through hard experience: One of the greatest gifts we can give to our families is a well-organized and well-communicated estate plan. They’ll appreciate it when the time comes.

Too many of us wait until an emergency to try to get our affairs in order. A severe illness or death is stressful enough. We shouldn’t compound it by failing to have the right documents in place. A good estate plan can take many forms. At a minimum, it should include:

A will
Powers of attorney
Beneficiary designations
Funeral plans
A letter of last instruction

It’s never too early to work on these. A letter of last instruction should be kept up to date with key details, including financial information, location of important documents, and funeral instructions. None of us wants to think about our funeral, but it helps those left behind to know what we wanted.

I’ve been thinking about an aspect of funeral planning that gets little attention. Do we want to make it easy for friends and family to visit our final resting place? This is a very personal choice. As families move and become more spread out, picking the right location gets harder.

My wife and I have an annual tradition with one of her older brothers and his wife. A few weeks before Christmas, we take a day and visit three cemeteries in the Philadelphia suburbs where a host of family members are buried, including my wife’s parents and grandparents, and my parents and grandparents. We leave a floral arrangement on each grave. When we’re done, we go somewhere festive for lunch, and talk about family and the upcoming holidays.

Others have different traditions. I have a friend who’s an only child. He grew up in Florida, where his parents are now buried. He spent most of his adult life in the Philadelphia suburbs. Each year, he makes a solitary trip to Florida to visit his parents’ gravesite. He told me he felt someone should visit them at least once a year.

When we lived in Pennsylvania, we were about 15 minutes’ drive from my parents' and grandparents’ graves. We used to stop by a few times each year, around Christmas, on birthdays or on Mother’s Day. Since moving last year to Monmouth County, New Jersey, it’s harder to get there, but we’ll make sure we keep up our Christmas tradition.

In the wake of our recent move, I need to work on our estate plan. We should update our wills and powers of attorney. Our letter of last instruction is also out of date.

I’ve been very open about my funeral wishes. I want a modern version of a Viking funeral. All my family and friends will gather at my favorite beach in my favorite South Jersey beach town. I will be laid out in an old-fashioned wooden lifeguard boat. The boat will get pushed out past the breakers, and then my grandsons will shoot flaming arrows into the boat. After the funeral pyre burns down, they’ll all go to one of our favorite hangouts to celebrate. I recommend doing it after Labor Day, when the crowds are smaller.

Truth be told, it’s not clear such funerals were common among the Vikings. It’s also not clear whether any of this is legal in New Jersey.

Maybe I need to do a little more research.

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

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Didn’t Make the List

I'M A SUCKER FOR those “10 best” lists. But are they accurate?

What if you had the best job in a poorly rated company? Would that be better than the worst job in a well-rated company? What if you move to a bad neighborhood in a well-rated city? Would that be better than an excellent neighborhood in a poorly rated community?

You get my point. Even among the worst, you can find some real gems.

Let’s say you’re pondering where to spend your golden years. You might have few connections in the community where you work. Maybe your children have moved far away. Perhaps you simply want to try something different—and maybe warmer. You might start looking at articles and YouTube videos for relocation recommendations, which will be based mainly on facts and figures.

My home state, Kentucky, never appears at the top of anyone’s list of recommended places. It seems to make the top 10 for all the wrong reasons. It shows us ahead on poverty, obesity, cancer and so on. Shoot, if I were looking from the outside, I wouldn’t want to live here, either.

My home is in Springfield, part of Washington County and in the center of the state. Springfield has a population of 2,846, according to the 2020 Census, while the county boasts 12,027 residents. Sounds a little Podunky, doesn’t it? Yet it’s one of those pearls that gets overlooked.

Springfield is 25 miles from Danville and 16 miles from Bardstown, both of which have won numerous national awards for best small towns in America. We’re not too far behind.

Within two miles or so of my house, there are numerous churches, two grocery stores, three dollar stores, several restaurants, a brand-new fire station, a new library, a city park and a new courthouse. A new facility to house our emergency medical technicians (EMTs) is going up as well. As you can tell, government services are good.

My mother is a healthy 96, who chooses to live in the same house that she’s lived in since 1962. She fell recently and couldn’t reach a phone, so she pressed the Life Alert button around her neck. Life Alert contacted the EMTs with information on how to get into the locked house, and then called me.

I was at her house in 10 minutes. The EMTs were there in five, and very gently and sweetly took care of her. She wasn’t hurt, but it felt like they were family, although this was the first time they’d met her.

There are never any traffic jams. It has that small-town vibe and is easily drivable for older folks like me.

My family physician is less than a mile away, and she’s extremely sharp. My eye doctor is less than two miles away. There’s one hospital nine miles from my house and an extremely large regional health center 25 miles away. Lexington and Louisville are within 50 miles. The main roads are excellent and seem to be constantly improving.

I don’t golf. But there’s a course less than four miles from my house. Another is nine miles away and a third is 16 miles away.

We have several factories, but no real pollution that I’m aware of. Jobs are plentiful. Folks are so nice that I know the store cashiers and my barber on a first-name basis.

We have a state-supported community college that was built just a little over a decade ago and is state-of-the-art. Our local Catholic grade school, St. Dominic Elementary, was recognized as a National Blue Ribbon School by the Department of Education in 2019.

Centre College, which is rated one of the best liberal arts colleges in the country, is financially well-endowed and has won numerous awards. It’s within 25 miles of Springfield as well. Two nationally televised vice-presidential debates were held at the college, in 2000 and 2012.

We have a local theater group that puts on plays. You have all the horse events that Kentucky is famous for, plus the popular Bourbon Trail that winds its way around Springfield. We love to buy season tickets to Louisville’s Derby Dinner Theater each year. We see nine plays for a little over $500 for both my wife and me. It’s a great bargain.

Housing is cheap compared to the rest of the country. I live in a 2,300-square-foot home on one-and-a-half acres in one of the county’s nicest neighborhoods. We have four bedrooms and two baths, with a view from the front porch to die for. Yet I’d probably be lucky to get $350,000 for the place. All this and fiber optic internet as well.

Insurance tends to be higher than normal. But with a good credit score, it’s not as bad as it could be—and nothing like Florida. Property taxes are low and there’s a discount for the over-65 crowd.

But don’t take my word for it. A fellow named Leonard M. Spalding Jr. and his wife Susan built a house across the street from me. Leonard Spalding is the former president and CEO of Chase Global Mutual Funds—now J.P. Morgan Chase Mutual Funds. He returned to Springfield, which was his childhood home. His home is a lot bigger and nicer than mine, but it still cost a fraction of what it would cost elsewhere. Heck, even Senator Mitch McConnell comes out to visit Spalding when fundraising.

Another family that moved into the area is big-time movie producer Jerry Bruckheimer and his wife Linda. They have a farm about 19 miles away, in Bloomfield. They bought a lot of the little town of Bloomfield as well.

Linda Bruckheimer restored local buildings to their historical glory and opened some restaurants, as well as other businesses. Sometimes, the couple even bring well-known actors to eat at local rustic restaurants. I know they have more houses than just their Bloomfield residence. But amazingly, a rich couple like that could live anywhere and yet they chose Kentucky.

I think those are two votes you can count on for my area, which is surrounded by working farms, wildlife, beautiful nature, friendly people, low crime and no homeless that I know of, and just enough factories for some economic opportunity in the middle of the Bluegrass region. Finally, and drumroll please, our climate—with global warming—tends to have milder winters and warmer summers.

I’m not doing this to sell you on my area of the state. There are many other Springfields around the country that are also little treasures. If you go by the “10 best” lists and statewide statistics, you’d probably never find them. Every city and state has its own gems where you can live the good life, even if nobody has ranked them among the top 10.

Ken Begley has worked for the IRS and as an accountant, a college director of student financial aid and a newspaper columnist, and he also spent 42 years on active and reserve service with the U.S. Navy and Army. Now retired, Ken likes to spend his time with his family, especially his grandchildren, and as a volunteer with Kentucky's Marion County Veterans Honor Guard performing last rites at military funerals. Check out Ken's earlier articles.

The post Didn’t Make the List appeared first on HumbleDollar.

April’s Hits

WHICH BLOG POSTS and articles were popular with HumbleDollar's readers last month? Here are the 10 pieces that garnered the most pageviews during April:

"We enjoy amazing material advantages simply by virtue of being alive at this time in history," notes Ken Cutler. "We have many phenomenal options not available to the richest man in the U.S. a century ago."
Investors should be careful when the market hits an all-time high. It’s a mistake to claim Social Security before 70. The estate tax won’t be a problem for me. Adam Grossman tackles five popular narratives.
Retirees are often told to delay claiming Social Security until age 70. But as James McGlynn explains, that isn't good advice for spouses whose own benefit is less than their spousal benefit.
Every winter for the past six years, Dick Quinn and his wife have rented a place in Florida for a month. All went well—until 2024.
Looking to cut your income-tax bill? Rick Connor offers a slew of suggestions geared toward the 65-plus crowd.
One tricky aspect of managing money: Some financial "truths" aren't true all the time. Adam Grossman explores five examples.
Kathy Wilhelm's contention: moving into a continuing care retirement community is the best gift you can give to yourself and to your kids. She just made the move.
"While frugality has its place, sometimes we need to let go of our funds and enjoy what life has to offer," says Jeff Actor. "After all, money is simply a tool and not an end in itself."
"It’s impossible to provide answers to every question my wife might have in my absence," says Dennis Friedman. "But I can at least answer her two biggest: Where is all the money? And what bills need to be paid?"
"As a buy-and-hold passive investor, I must have faith that tomorrow will be brighter and that, in the long run, everything will turn out fine," says Jamie Seckington. "Forgive me if I have my doubts."

What about our twice-weekly newsletters? The best-read Wednesday newsletters were Mohan Rao's Aging With Others and Jim Kerr's Back to Work, while the most popular Saturday newsletters were Where It Goes and Not Scared of Bears, both written by me. Don't get our free newsletter? You can sign up here. We also put out a free daily email alert about the site's latest articles, which you can sign up for here.

The post April’s Hits appeared first on HumbleDollar.

A New Kind of Heaven

I'M TYPICALLY FRUGAL and financially cautious. But this past January, I became reckless. No, it wasn’t love, at least not the ordinary kind. Rather, I saw a photograph and made an offer of $48,000 on a “park unit” located 1,000 miles from home.

Park unit, I learned, is a technical term for a variant of what I’d call a mobile home. My first task was to look up the term, so I’d know what I was offering to buy. For those readers who enjoy reading government standards definitions, these constructions are governed by ANSI standard A119.5.

This manmade object is mobile in name only. It has been “parked” inside an age-restricted recreational vehicle resort in Arizona for nearly 40 years. The resort rents space by the day, month or year to vehicles that move (RVs) and those that don’t (park units and manufactured homes). Until I arrived at the beginning of March, I knew its particulars only through pictures and a 33-page report of an inspector I’d hired. I knew little about its construction or its series of prior owners and occupants.

As a result of my impetuousness, I’ve added to my personal possessions an immobile vehicle, with an assessed value of about $25,000 per the Pima County Treasurer’s Office and which sits on a tiny patch of rented land over which I enjoy limited control. In purchasing the park unit, I also acquired an attached porch and laundry, a back patio with landscaped garden, a covered driveway and a large storage shed. The unit came “fully furnished,” meaning a houseful of secondhand appliances and discarded possessions, including a golf cart. This drove the difference between my purchase price and the unit's assessed value.

I have a rough estimate of forward expenses for this and the coming years of ownership, expenses that I’ll be able to cover without trouble. Still, new costs and uncertainty have come my way, despite my focus on financial simplification over the past year. Why take this plunge? It’s a fair question.

My youngest turned age 18 and is off finding his future. My twins are establishing themselves in their young adult lives. Thanks to good cellular coverage and a family phone plan, we’re able to keep tabs on one another. I have few expectations, responsibilities or demands on my time. I’m still in the company of the family dog, so it’s not a complete break with the past.

When my spouse died five years ago, I soldiered on as a single parent and breadwinner, before taking early retirement. Now that those roles have been unwound, I’m reinventing myself. I don’t know the future, though many things are evident:

I’m not as youthful as when I last looked in a mirror.
Adventures transport me beyond the world that defined my working and family years.
Infirmity will eventually find me, fast or slow. If slow, I could need help at home, or my kids might bring me into their homes. I could require services of a care community. Or I might go in a flash. Meanwhile, I have to be somewhere.
I need to grow, learn new things and keep my mind fully engaged.
I want my “decumulation expenditures” to reflect my values and interests.
I remain curious about other people and their life stories. I want to meet new people and tend to longstanding friendships.
Time spent with family and friends brings great joy.
I have more to contribute to the wider community.

I’m redefining an already excellent life, living true to my nature. And I’m finding this involves a new universe, the world of 55-plus housing.

So, it’s not random, my decision to purchase this so-called recreational vehicle. HumbleDollar contributors have already shared stories about second homes, continuing care retirement communities, traveling around the world, retiring near children and relocating to less expensive cities, states or overseas. Threads have discussed long-term-care insurance and the cost of skilled nursing, as anticipated for oneself or as experienced by spouses or parents. I’ve read these and am better informed, thanks to the perspectives offered by others.

I also hold close the insights of Australian hospice nurse Bronnie Ware: “It all comes down to love and relationships in the end.”

My home neighborhood exemplifies “aging in place.” I’ve listened to neighbors’ stories during my 35 years of living here. Two seniors regretted their inability to visit siblings. One had a brother on the opposite coast. The other neighbor’s brother was only 200 miles away, but neither traveled well once they hit their 80s, so that left only phone contact. A third neighbor grew timid about leaving her house after retiring, especially during the pandemic, resulting in crippling seclusion and loneliness.

My brother and sister-in-law, like others residing in northern states, favored mid-winter holidays in warmer climes during their working years. First it was St. Petersburg in Florida, then Arizona, where they visited a friend who’d moved into a 55-plus mobile home in Tucson that was once owned by her father. My brother and his spouse decided to head south for good when they retired. In a thorough search, they considered housing options throughout the Tucson metropolitan area, both age-restricted and typical neighborhoods.

They explored the full range of options at every price point. Some were bare bones, while one development established by retired professors created a community stuffed with aesthetics and amenities, including regular lectures and Pilates classes. In due course, they sold their spacious riverfront Craftsman bungalow in Michigan and acquired a second-hand park unit in a modest age-restricted RV resort.

At the time, I thought they’d gone crazy. Why didn’t they buy a house with a garden like the one they’d left behind, only now in the Sunbelt? If they wanted to live an age-restricted lifestyle, why not select the finest retirement community with every amenity they might enjoy?

They encouraged me to visit them in their secondhand single-wide, so a few years back the kids and I took a holiday trip to Tucson to check it out. It was a mind-blowing week.

If they’d bought into the fanciest community, they would have spent their days with retired professionals similar to themselves. If they’d bought a house in a general neighborhood, they’d be the oldsters home alone while everyone else was off at work and school. They would need a car to do anything, okay for now but maybe not so much as they grow older.

Instead, my brother and sister-in-law became part of a compact and modest community of less than 300 households, the majority seasonal snowbirds and some just passing through. Their resort’s common areas include a small pool, a workout facility and community rooms an easy two-minute walk from their trailer.

They’ve got a small shopping center across a boulevard with restaurants, a salon, a bank, a post office, a hardware store, a mini-mart and an insurance agency. A park abuts the resort on one side, with a traditional single-family home neighborhood beyond that. Multiple county, state and national parks lie within a few miles, drawing visitors from around the world.

Their RV park includes dozens of spaces for Class A, B and C motorhomes. Migratory neighbors drive from as far as Canada to spend the winter in Tucson. As anyone who’s shopped for a motorhome knows, such vehicles range in price from a few thousand dollars to as much as $300,000. Let’s not forget the cost of a smaller car towed behind to get out and about while “camping” at an RV park. When temperatures rise come spring, winter vacationers return to northern homes and extended families, or continue their mobile RV roaming elsewhere.

I’ve learned that approximately 225,000 retirement-age individuals live in the Tucson metropolitan area. For virtually every imaginable malady related to aging, there’s a world-class medical center within the metropolitan area bursting with specialists. Access to good health care is on my checklist of must-haves in retirement.

My home town has grown substantially since I arrived. Doctors, dentists and the you-name-it who I’ve patronized for 35 years are retiring, like me. New restaurants and longstanding stores address the tastes and needs of the current generation of working adults and families with young children. Businesses that didn’t change with the times are gone altogether.

When I retired, I lost my daily contact with work colleagues. A few weeks later, the pandemic arrived and closed campus for a long time, keeping me from establishing the habit of wandering about and staying engaged as an emeritus faculty member. The campus has since reopened, but post-pandemic people seem to have changed their working and socializing habits, and I haven’t felt a strong urge to begin anew there.

I lost a second set of casual friends when the kids grew up, and aged out of school clubs and competitive sports, with their many practices, meets and travel. I spent years warming auditorium seats and gymnasium benches across the state and around the world, endless hours spent with parents of other youngsters. We shared our lives, but not anymore.

I still have friends around town and among local oldsters who hang out at neighborhood bakeries drinking coffee most mornings. But it’s nothing compared to the vibrancy of my brother’s social network. And so I’ve bought a unit in the same park as my brother and sister-in-law.

For now, I’ll be a seasonal resident. When hot weather arrives, I’ll return to where I worked and raised my family. With an extra bedroom available at home, my brother and sister-in-law can spend as much of the summer as they wish with me at my house. I can still enjoy the many wonderful things that make my neighborhood a great place, and I’ll have family nearby in the winters when I travel south.

Here's what’s crucial to this entire venture. My adult children don’t need to be spending time thinking about me growing old, possibly lonely in the old house. Instead, I’m building a more robust circle of family and new friends, where we can take turns both being needy and helping each other.

Maybe I’m not so reckless after all.

Catherine Horiuchi is retired from the University of San Francisco's School of Management, where she was an associate professor teaching graduate courses in public policy, public finance and government technology. Check out Catherine's earlier articles.

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