10 Sep 2018

How Much Will Retirement Cost? The WSJ May be Wrong

One of my favorite writers and thinkers is a behavioral economist named Dan Ariely. I heard him speak at a conference years ago, read his first book Predictably Irrational and am about half way through his most recent book, Dollars and Sense. It may be a little hard to tell from the photo, but if you look closely, you can see that his face is disfigured from a third-degree burn… Read More

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6 Feb 2018

Market Summary: Extended Analysis

The S&P 500 lost more than four percent, the largest single day loss for the index since August, 2011.  The losses started out modestly through lunchtime, but accelerated sharply in the early afternoon. At one point, as seen in the Bloomberg screenshot below, the S&P 500 spiked higher, but then lost back everything that was earned in the final hour or so of trading. Although we don’t know exactly what… Read More

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16 Jan 2018

New Tax Law, New Tax Strategies

One of the key elements of the new tax law is that it nearly doubles the standard deduction from $12,700 to $24,000 for joint filers (for simplicity, I’m not addressing individuals or heads of households, although the same concepts apply). Historically, about 70 percent of people used the standard deduction and that number is expected to jump to 90 percent under the new law. For the 20 percent that will… Read More

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20 Nov 2017

The Bucket Approach

In my mind, the word ‘bucket’ should be banned from the investment industry because it brings to mind the ‘bucket shops’ where unlicensed hacks in boiler rooms cajole unwitting investors into pump and dump schemes. Despite my view about this word in this industry, it seems to be what we as a group have settled on for a particular retirement planning strategy (I’m not a fan of smart beta either,… Read More

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25 Sep 2017

Changes to the Missouri Most 529 Plan

I received a package from Missouri Most last week highlighting a change to the college savings plan. For those investors, like me, that use the age-based options, Vanguard is expanding the stock/bond options to make the journey a little smoother for investors. Currently, there are five age categories, starting with zero to five years old, then six to ten years old, 11-15 years old, 16-18 years old and for 19-year… Read More

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29 Aug 2017

Forecasting Expected Returns

“Price is what you pay.  Value is what you get.”  -Warren Buffet How can investors know the value of an investment?  Bond yields remain very low and stocks continue to climb higher across the globe.  Using typical valuation measures, markets everywhere look very expensive.  However, investors continue to pour money into them, so they must see value.  The value of an investment is subject to an uncertain future, so how… Read More

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31 Jul 2017

Could the Inherited IRA Be Eliminated?

While it’s always unclear what will come out of Washington, it appears that the inherited IRA (also known as a ‘stretch’ IRA) may be on the chopping block. To incentivize retirement saving, the government allows people to make pretax contributions to IRAs and allows the funds to grow without annual tax bills. Ultimately, though, IRAs are tax-deferred, as opposed to tax-free and the government taxes the money when it comes… Read More

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17 Jul 2017

Retirement Spending Rules of Thumb

I suspect that, at some point, everyone has heard the old rule of thumb that retirees need to replace 80 percent of their income in retirement to continue to maintain their lifestyle. Although I think that the rule is conceptually reasonable, it’s imperfect and can be improved upon.  At the very least, spending in retirement isn’t fixed – it tends to decline over time as people age (for more on… Read More

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21 Feb 2017

The High Cost of Healthcare for Retirees

A study by the Employee Benefit Research Institute (EBRI) released in January estimates how much savings people need just to cover out of pocket healthcare expenses.  (You can see the entire study here) Like our retirement planning software, the EBRI conducted Monte Carlo simulations to estimate the effect of varying mortality rates and portfolio returns. The EBRI found that for a 65 year old man to have a 50/50 shot… Read More

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31 May 2016

Lessons from Lawn Care

Three or four years ago, I gave up cutting the grass, which I wasn’t too happy about because I really liked seeing a physical change to my yard after a few hours of work. I love my job, but at the end of a year, the numbers on a screen may have changed, but they are still numbers on a screen.  It’s simply not as inherently satisfying. In any case,… Read More

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