Creating a Retirement "Paycheck"

Since retiring in 2007, we typically have withdrawn funds monthly from our taxable accounts to pay for living expenses.   Last year, I decided to automate the process to simplify our lives somewhat.  For reference, I do not have a pension, but I am receiving Social Security payments since 2022, which gave me the idea,

In our brokerage accounts, there is a feature that allows automatic distribution of dividends and interest on a frequency (daily, weekly or monthly) chosen by the owner.  We chose monthly.   Now, we receive a monthly payment in the form of a ACH deposit to our checking account.

Unlike a paycheck, the amount varies month to month since I did not structure the income from CDs, bonds and dividend stocks to be equally distributed on a monthly basis.  That would have been way too much work.   Sometimes the distribution is greater than our expenses and other times, it is lower.   On the lower months, I can adjust by making a withdrawal, but by then I know exactly what is needed, instead of estimating the entire months needs.

For more on  Reaping the Rewards , check back every Friday  for a new segment.

This is not financial nor retirement advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Off Topic - Presidential Election

This year's Presidential election is the toughest one I've ever voted in. My dilemma is that I don't like either of the major party candidates.

I've decided NOT to vote for either of the two major party candidates.  I believe they are both fiscally unsound with their proposed money giveaways and tax cuts.   I've looked at the minor party candidates and I don't agree with the majority of their policies.   So, I've started considering the independent candidates, many of whom are write-candidates.  

My summary after doing a brief review is that many of the independent candidates are too extreme,  fringy, or single issue based.  Fortunately,  I did find a couple moderate write-in Presidential candidates that I did like.  The one I like the best is John Cheng.

According to his Campaign Website, he wants to eliminate deficit spending and reduce the national debt.  That makes sense to a financial blogger like me.   After all, that is what I consider important in personal finances:  spend less that you make and don't go into debt.  I also agree with many of his other policies such as guaranteeing Social Security and Veteran benefits, simplifying the tax code, establishing term limits for Congress and the Supreme court and increasing legal immigration.

At this point, I'm writing in John Cheng for President, even though it is highly unlikely he will be elected.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial nor voting advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Checking College Bills

Over the summer, our daughter received a bill for fall semester in college. She assumed the bill was correct.  As with all bills, I reviewed the bill in detail.   I found two incorrect charges.

1. The school automatically billed us for Health Insurance, despite us having our own health insurance and deleting it last year.  The billing office explained that the college automatically bills for health insurance and expects the student to remove it if not needed.
   
   
2. There was a small surcharge for a room where students are allowed to remain during breaks.  My daughter did not request this service.  Her roommate did, but wasn't charged.

My coaching lesson for my daughter is to check all bills, especially big ones, in detail.  Don't assume the billing organization did it correctly.

For more on Strategies and Plans check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

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Cost of McDonald's Meal in the 60s

First, let me say that eating out, even fast food, was a "special treat" in the 60s.   We rarely had meals away from home and McDonald's was affordable.   I recall that my mom, sister and I went to McDonald's for a meal.  Each of us had a hamburger, French fries and a soft drink.  Cost:  90 cents.   Hamburgers were 15 cents, French fries were 10 cents and a drink was 5 cents. An ice cream cone was 5 cents a scoop.  Those were the days.

Nowadays,  we don't eat at McDonald's much.  However, four subs for our family is about $40.   Sheesh!

Unfortunately, fast food is neither cheap or fast right now.  We chose to spend a little more and eat at sit down made to order meals.  

For more on Crossing Generations  check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Retirement Trap - Investment Advisor Fees

One area that retirees sometimes get over charged on is fees to Financial Advisors for managing investments.    For reference, I am not opposed to fees.    I am opposed to what I consider exorbitant fees for little or no additional service.

IMHO,  a maximum all in fee, mutual fund/ETF expense, commissions and advisor charge, should not exceed 1% for basic investment effort.  I seen cases where the all in fee exceeds 2.5% and sometimes even has a front end load.   

Maybe 10-20 years ago, when brokerage commission were $50 to $100 a trade, a fee over 1% may have been justified.  However, with $0 trading commission and market index ETF expenses of less than 0.15%, it is hard for me to justify and investment advisor all in fee over 1%.

For more on Reaping the Rewards, check back every Friday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

College Aged Daughter Can't Get a Summer Job

My daughter, who will be a 2nd year college student, has been rejected for multiple summer jobs, including Starbucks, Chick-Fil-A, McDonald's, and Target.  Some places don't even bother responding to her application. 

Seems to me the economy isn't as strong as some people propose.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Financialization of Single Family Housing

Single family housing used to be an dwelling acquired by individuals to live in.  Owning a house was a goal of many people in the past.    Nowadays, single family housing has become a commodity and is being used to accumulate wealth versus being primarily a dwelling in which people live.

For example, corporations own about 19,000 single family homes in Atlanta, Georgia, controlling as much as 11% of the housing in some neighborhoods.   In addition, AirBNB also has contributed to the financialization of housing, which people buying homes solely for the purpose of short term rentals.

Financialization is driving up the price of houses and making many single family homes unaffordable for young buyers.  In addition, it is driving up the real estate taxes of many long time homeowners, some of whom are retired and only have fixed income.

Instead of corporate ownership bringing down house prices through scale, it has increased prices by reducing competition and controlling supply.

For more on  Crossing Generations, check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Student Loans - Just Say No

Student Loans are the worst consumer loans.

• Student loan debt is a crisis right now. 
• Student loans are offered to 18 year olds who usually have little financial understanding.  Often loans are used for living expenses in addition to college tuition.
• Many student loan borrowers are unable to pay off their student loans
• Student loans, except in extraordinary hardship, cannot be discharged by bankruptcy.

The Consumer Protection Financial Bureau, CPFB, ought to label student loans as Predatory Loans.

Here's my solution:

• Eliminate the federal funded student loan program.   Data shows that it leaves many borrowers with significant debt that they will not be able to repay. IMHO, this program is a failure.
• Enable future student loans to be easily discharged in bankruptcy.  Let the lenders/banks take the risk.

The result?    Tuition costs at many universities would be reduced without availability of easy money.   More people would consider alternatives to a 4 year degree.   Future graduates would no longer have onerous student loan debt for most of their lives.

For more on Ideas You Can Use, check back every  Tuesday  for a new segment.

This is not financial nor education advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Expecting Federal Taxes to Go Up

Unless Congress passes a new tax law, Federal income taxes will go up for many taxpayers in 2026.   I expect that this will likely happen for two reasons:

• Inaction by Congress.   It continues to be difficult to pass any laws in Congress.  I don't expect it to get any easier in 2025.
• Spend continues to outpace tax revenue.   The U.S. cannot sustainably keep spending at this pace, without increasing tax revenue.

To address this I am taking two actions:

• Convert as much as possible from Traditional IRAs to Roth IRAs.
• Move cash to municipal bonds or municipal money market funds which are exempt from federal taxes.

If I am wrong, no problem.   Roth IRAs are still a good choice for retirement savings since there is no tax on the withdrawals.   I can easily convert investments exempt from federal taxes back to federally taxable interest.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial nor tax advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

The Hardest Part About Retirement

Uncertainty.

Unfortunately, the only thing that is certain is uncertainty.

Here are some examples:

• What will my Social Security Benefit be in the future?
• What will inflation be in the future?
• Will I have health issues in the future?
• What will be inflation for essentials and health care?
• Will I be able to pay me Real Estate Tax in the future?
• Will my investments keep up with inflation?
• Will Congress do anything to help retirees?

As Yogi Berra once said, it's hard to make predictions, especially about the future.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Putting Cash into T-Bills

Rather than put all our cash into Money Market funds, I'm putting a significant portion into T-Bills via our brokerage accounts.    T-Bill have maturities of 1 year or less and are paying around 5%.   T-Bills can be purchased on the secondary markets in increments of $1000.   T-Bills are guaranteed by the U.S. Government.   T-Bills are very liquid, and can be sold quickly if cash is needed.  Finally, the bid/ask spreads are very small, so that selling before maturity doesn't incur a penalty.

For more on Strategies and Plans, check back every Monday for a new segment

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Real Passive Income

I keep reading about "Passive" streams of income ranging from Social Media influencing, to Internet Stores, to Rental properties.    Maybe I'm missing something, but these all seem like "work" but on one's own time.   I can't believe that the majority of these "passive" streams take little or no time.

IMHO, the real passive income is interest and dividends.    CDs and Money Markets are paying around 5%.   Some dividend stocks are paying as much as 8%.   Yeah, they still take some work, but probably a lot less work that producing videos, selling product or maintaining rental properties.

I'll take $1M at 5% interest earning $50,000 per year over the other "passive" income options.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

My Voting Strategy This Year -TOGA

Here's how I will think about voting in the 2024 Election!

Most importantly:

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

End the Tax on Social Security Income

When I was working, I paid a 6.2% tax on my income for Social Security.  Up until 1984, all Social Security income was tax free.  Nowadays, up to 85% of Social Security income is taxable, depending on one's MAGI.

To me, it appears my Social Security Income is taxed twice.  First, when it is deducted, and then when it is paid out. 

That's why I hope the "You Earned It, You Keep It" Act passes in Congress this year.  It would end the taxation of Social Security benefits.

For more on New Beginnings, check back every  Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

What's Next?

I started this blog in 2006, when I was 48, as a way to track our progress towards retirement.   I retired in 2007 at 49.   Unfortunately, the Great Recession happened in 08/09, which tested our capability for me to remain in retirement.   As it turned out, the 50% haircut we took in retirement funds didn't cause us to reverse our retirement plans.  As they say, what doesn't kill you makes you stronger.    

Our retirement funds eventually recovered and non retirement investments covered our living expenses enabling our retirement funds to grow further.   Along the way, we both received a share of inheritances from our parents for which we are stewards and continuing to have them grow.  At age 64, I started taking Social Security which provides a monthly payment and we learned the value of a pension, which neither of us have.

I'd like to say that we've figured out the path to financial success that our children can follow.  Unfortunately, the path we took may not be around any longer to work for them.  Our commitment to our children is to get through undergraduate college debt free.   We have accomplished that by contributing the maximum to a 529 plan from the year we adopted both of them. In fact, we may be able to cover part of their graduate degrees with our contribution.

The other big change is transitioning from being a super saver to a spender.  I have spent most of life minimizing costs, clipping coupons and getting the best deals possible.  I've been extremely frugal to prepare for retirement. Barring any unexpected medical costs, I believe we have sufficient funds to cover until our 90s.  However, as Yogi Berra once said, it's difficult to make predictions, especially about the future.   

For more on  Ideas You Can Use , check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC

Financial Mistakes that People Make

From ChatGPT:

There are many financial mistakes that people make, but some of the most common ones are:

• Not having an emergency fund: This can leave you vulnerable to unexpected expenses or income loss, and force you to rely on high-interest debt1.
• Paying off the wrong debt first: Some people focus on paying off small debts instead of high-interest ones, which can cost them more money in the long run1.
• Missing out on employer matching contributions: If your employer offers a retirement plan with matching contributions, you should take advantage of it as much as possible, otherwise you are leaving free money on the table1.
• Using credit cards for everyday expenses: This can lead to overspending and accumulating debt that is hard to pay off, especially if you only pay the minimum amount each month2.
• Borrowing money from friends or family: This can strain your relationships and create awkward situations if you can’t repay them on time or at all2.

1: CNBC 2: Investopedia

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2024 Achievement Catalyst, LLC