Retirement Income - Are they really passive?

There is a lot of discussion on the Internet about Passive Income.   IMHO, there is not such thing as completely passive (zero effort) income. Rather, there a sliding scale of effort or initial investment versus zero.

Here's how I rank them on a scale of 1-10, where 10 is full time work and 1 is no effort at all.

Social Security:   After retiring and collecting:  1.   While working:  10, it takes 35 years to get maximize benefits.

Pension:   After retiring and collecting: 1-2.  While working:  10 it takes 30+ years to maximize one's pension.

Rental.  After retiring and collecting: 3-7 because one still needs to deal with tenants..  While working:  3-7.

Dividend and Interest: After retiring and collecting:   3-7 because need to monitor investments.   While working:  3-7 because need to monitor investments.   

Side Hustles:  After retiring and collecting:  3-10,  since a side hustle is really a job. While working:  5-12 since there is no "no effort" side hustle.

I don't believe in "passive" or zero effort income.   Yes, there are lower effort income, but YMMV.

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

Copyright © 2025 Achievement Catalyst, LLC

Bond Funds Tax Loss Selling

Our bond funds are long term losses, but they make a good monthly payment.  Therefore, I decided to tax loss harvest.   I will sell the bond fund losses to offset capital gains that I have, so that we don't pay taxes on the gains.

Since I believed the market is strong, I have first buying the amount I plan to sell.    I will hold it for at least 31 days, to avoid being a wash sale, and then sell the same amount of shares for a loss.  Net, I will still have the same income as if I didn't make the trade.

The main risk is the bond fund keeps declining during the 31 days.  However, it is a risk I willing and able to take.   We'll see how this works out in the next month.

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.

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Do What You Love and The Money Will Come...

IMHO, the worst advice ever. 

I prefer the Japanese Ikigai to do:   What you love; What you are good at; What the world needs; and What you can be paid for.

For more on  Reflections and Musings, check back every Saturday  for a new segment.

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

Copyright © 2025 Achievement Catalyst, LLC

YMMV

In 2012, I received shocking results that showed I had 4 90+% blockages in my heart arteries.  I took four stents to correct the issue OK, I had high cholesterol and high triglycerides.  I immediately went on a low fat diet advocated by Ornish and Esselstyn.  Their diet results were compelling.  Virtually, every participant lowered their cholesterol and didn't require further treatment.

In 2024, I did a stress test followed by a angioplasty.   The result was 80-90% blockage in the LAD.   I was disappointed.   My strict diet didn't prevent future blockages.  Though disappointed, I realized the YMMV even when one followed all the steps.   I started with robotic CABG but ended up open heart surgery, again contrary to expectations.

Yeah, despite all my actions, the blockages came back.  I came to realize that couldn't control all the factors.

I've concluded the same is true for financial situations.  I  did everything "right."  Then came the Great Recession.  We lost over half our savings.  We recovered, but it wasn't due primarily to our actions.  It was luck that the market recovered and that's why I've concluded YMMV, despite doing all the "right" things.

For more on  Reflections and Musings, check back every Saturday for a new segment.

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

Copyright © 2025 Achievement Catalyst, LLC

My Sources of Retirement Income

Here are my approximate percentages of income sources for 2024.

53% Interest and Dividends

27% Social Security

20% Rental Income

0%  IRA/401K withdrawals

We have no pension.  

Having interest rates in the 4-5% range has been a great benefit.  My plan is for interest rates to continue in the 4-5% range until 2030.  If interest rates drop, we may need to make some IRA withdrawals or sell some stocks for a Long Term capital gains.

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 © 2025 Achievement Catalyst, LLC

How Much Did I Need to Retire?

More than I thought.

I estimated that I would need to 20 times my final base salary to comfortably retire since neither of us had a pension. 

It did work, but it was really tight.  

What happened:

• The Great Recession of 08/09 happened right after I retired.   Reduced our retirement accounts by nearly 50% and it took several years to recover.
  
  
• Interest rates dropped to nearly 0%.   I was counting interest rates being around 5% for most of my retirement.
  
  
• While my spouse and received retiree health insurance at reduced premiums, our two minor children had to pay full premiums for health coverage.
  
  
• I retired at 49, which meant I wasn't eligible for Social Security.

What helped:

• The market recovered and my retirement accounts recovered.
  
  
• Early on, we paid off our mortgage which significantly reduced our monthly expenses.   We had already paid off our cars and didn't have any credit card or student loan debt.
  
  
• I had deferred compensation payments for 7 years during my fifties.
  
  
• We were able to avoid using any funds from our tax advantaged retirement accounts.
  

What made a difference:

• Interest rates are now at 4-5% making CDs and Bonds good income generating investments.
  
  
• The stock market recovered and is much higher than when I retired.   
  
  
• We were lucky and our parents left an inheritance equal to about 50% of our own savings.   We haven't spent any of the inheritance principal, only the earnings, and the principal has increased with the growth in the economy.
  
  
• I started taking Social Security benefits before full retirement age.
  
  

Bottom line:  I believe a significantly higher retirement savings amount is needed than when I retired.  If retiring early (e.g. in the fifties), I'm guessing 30-40 times final salary in savings.  If already receiving Social Security payments or a pension, perhaps towards the lower side.

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

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

Copyright © 2025 Achievement Catalyst, LLC

Trying to be Relevant Again

A while back, my nephew told me that being successful was much harder for him than for me.   He has no interest in my ideas and opinions on being successful.   It's as if I'm invisible and don't exist.   I can understand.  My path to success was graduate from college, work for a large corporation, and retire after being their for my entire career.   That doesn't happen anymore.

Also, when I started working, my retirement goal was to save $1 million, put it in a 5% CD and live off the interest for the rest of my life.  After all, that would be 150% more than my starting salary.    Today?  $1 million is far from enough and risks running out of money in retirement.  I should have made my goal $1 billion in retirement savings.

To become relevant again, I'm trying to give my kids a head start.    We'll pay for college and graduate school so that they have no student loan burden.   I'm also contributing a Roth IRA account equal to the maximum allowed or their annual pay, which ever is lower.   Finally, we're taking the opportunity to enjoy our time together and create exciting memories in great family vacations, which I didn't do as a child.

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

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

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I Fought the IRS and..

I won. AMA.

I filed my 2024  tax returns early this year, on March 7, 2025.  I was getting a $362.27 refund.   I checked Where's my Refund in April and was informed that the IRS corrected multiple calculation errors on my tax return and I owed over $1800.   Arrrgh!

Since I registered on the IRS website, I decided to check a transcript of my return, before receiving the notice.   A quick check showed the IRS had made transcription errors.  To note, I still file a paper copy of my tax return, usually filled in by hand.  However, this year I used the PDF fill in forms to type the numbers to avoid transcription errors.   In addition, the IRS didn't allow a American Opportunity Tax credit because I forgot to put the student's SSN on the form, even though it was on the first page of the tax return for being a dependent.

Essentially, there were two errors.   The omission of the SSN and the IRS transcribing a $57.78 loss as a $5778.00 loss, which was caused multiple calculation changes.

Even though I had not received the official notice in the mail, I called the IRS and an agent answered the phone within 10 seconds.  Note, I made the call at 7AM.   The agent read the notice and the transcript and advised me to wait for the official notice since there were "too many" calculation errors.  She advised that I would have to amend my return.

I don't have a issue with doing a amended return, if needed.  However, as I told the agent, the amended return would be my original return, since it was correct.  But I would wait for the official notice.

A couple weeks later, I got the notice and called in during the afternoon.  This time the wait was 30-50 minutes.  The first two agents claimed they didn't know how to adjust my corrections on the phone.   I decided to call back about an hour before closing and got a third agent, who understood exactly my points and agreed to make the corrections that duplicated my original return, over the phone.

The next morning, I called back at 7AM, and only had a 5 second wait.  (This is a pro tip to call the IRS amendment and notice department at the beginning of the day).  I asked why I didn't see the adjustment.  She explained the changes had been made and had been submitted for approval.

Yesterday, I received a notice that the IRS had made the changes.  I checked Where's my Refund and I'm getting a $362.40 refund, $0.13 more than originally requested.

Supers Saver 1   IRS 0 for 2025.

For more on  The Practice of Personal Finance, check back every Wednesday  for a new segment.

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

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