Second Guessing
I'VE BEEN HAVING DOUBTS about some of the financial decisions I’ve made. I don’t know if it has to do with age. They say you tend to lose confidence as you grow older. Life-altering events, such as the death of loved ones, health issues and retirement, can weigh heavily and sow doubt.
For instance, I’ve been thinking about whether I should have sold my condo in 2020, during the pandemic. If I’d kept it, it would be worth quite a bit today. But what bothers me even more is the missed opportunities to spend more time with my friends in the area. Our new home is about 25 miles from my old neighborhood and the traffic can be brutal.
On the other hand, I never wanted to be a landlord and we wouldn’t get much use out of it as a second home. We were able to use part of the proceeds from the sale to renovate our new home in 2020. We didn’t have to tap our savings. Also, I was able to take advantage of the $250,000 capital-gains tax exclusion on the sale.
Another money issue I’ve been pondering has to do with converting our investment holdings from mutual funds to the exchange-traded fund (ETF) version. Was that a wise move?
We were able to reduce our annual fund expenses. But I feel like we’re locked into our current holdings because of the bid-ask spread, which is a transaction cost we’d incur if we sold our ETFs. We were considering reducing the number of our fund holdings to two or even one. But I’m reluctant to pay the transaction costs on our seven-figure portfolio to make that wholesale change.
I’ve even been having doubts about using Vanguard Group’s Personal Advisor Select to manage our investments. Every time I log into our account and see the amount in advisory fees we paid, I ask myself if we’re getting our money’s worth.
But I do sleep well at night and we’re meeting all our financial goals. I like to think having a trusted advisor would make life easier for the one left behind, whenever Rachel or I die.
For now, I’ll follow a friend’s advice: “If it ain’t broke, don’t fix it.”
Although I have these doubts about my financial life, I’m confident we got it right on two of the most important decisions confronting a retiree: choosing the right Medicare plan and when to take Social Security.
We’re enrolled in federally run Medicare, UnitedHealthcare's Medigap Plan G and Wellcare Value Script's prescription drug plan. Because we have traditional Medicare, we’re allowed to see any doctor who accepts Medicare and there are no preapproval requirements. We pay more in premiums than we would for a Medicare Advantage plan. But I believe having more control over my health care is worth it.
When I was eligible for Medicare, I was a healthy senior who only needed to see my primary physician and ophthalmologist once a year. But after my father’s cancer diagnosis, I knew good health can disappear suddenly. I wanted a health care plan that would provide me with the best medical care.
When I turned age 70, I started experiencing a number of health issues: gross hematuria, leukopenia and melanoma. When I had a CT scan to find what was causing the blood in my urine, they saw atherosclerotic calcifications in the aorta, the main artery from the heart that supplies oxygen-rich blood to the rest of the body.
I was able to assemble a wonderful team of physicians, including a geriatrician, urologist, hematologist, cardiologist and dermatologist to address my medical needs in a timely manner. Having traditional Medicare makes me feel safe knowing I can get the care I need when I need it.
Taking Social Security at age 70 was another decision I never questioned. I knew exactly what I wanted—a larger monthly check. I’ve mentioned before how we want to limit our retirement spending to our Social Security benefits and required minimum distributions, or RMDs. If we’re lucky to avoid major health care expenses, we should never run out of money.
How are we doing? When I took my RMD in 2024, my combined withdrawal rate was 3.7% from my traditional IRAs. But if you add our Roth IRAs and other saving accounts, our total burn rate for our investment portfolio was about 2%, well below the often-recommended 4% rate.
Our expenses for health care were higher this year because we had to pay a premium surcharge, or income-related monthly adjustment amount (IRMAA), for Medicare Part B ($13,416) and Part D ($1,790). After our marriage, Rachel sold her home in 2022, increasing our income for IRMAA purposes two years later, in 2024.
Some other big expenditures we’ve incurred in 2024 include travel ($43,500), estimated federal and state income-tax payments ($20,500), homeowners’ association fees ($6,300), insurance premiums ($6,200) and property taxes ($2,200). Still, our Social Security benefits and my RMD should provide enough income to cover all of our 2024 expenses, including charitable donations.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor's degree in history and an MBA. A self-described "humble investor," he likes reading historical novels and about personal finance. Follow Dennis on X @DMFrie and check out his earlier articles.The post Second Guessing appeared first on HumbleDollar.
