Money

October 2022 Best of the Web

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Happy Halloween!  Volatile investment markets, rising interest rates, and high inflation continue to dominate financial news and be scary for many investors. I have some great resources to help you navigate these challenging times.

This month’s resources attempt to change perceptions of FIRE so that more people find FIRE principles accessible. I also highlight an important older book and share the announcement of a new one.

Finally, one of my favorite personal finance writers who has helped countless others with their money is nearing his own retirement. We’ll see what he is focusing on.

Enjoy the articles and the rest of your fall!

Plans Changing Yet?

Gregg Greenberg reports that the current Stock Slump has rich rethinking retirement. I want to disclose that I don’t love the conclusions that this article draws. I chose to lead off here because I think it is a fascinating look into the psyche of investors.

A few quotes jumped out at me:

“The report also revealed that almost half (42%) of high-net-worth investors are so worried about retirement security that they avoid thinking about it all together.”

And:

“As for those historically low rates, more than half (58%) of high-net-worth respondents recognized that those many years of depressed yields will make it difficult to generate an income off their savings, even now that rates have sprung higher.”

It is simultaneously shocking at first glance, yet not all that surprising with further thought that sentiments have shifted so much in less than a year. This is a great example of the psychology that accompanies every economic cycle.

The next selection is from Allan Roth. Even if you don’t implement the particular strategy he outlines, it is worth a read. 

Roth demonstrates that current realities are exactly opposite of the sentiments and fears of many high-net-worth investors surveyed in the first article. Roth writes The 4% Rule Just Became a Whole Lot Easier.

What’s Your Financial Time Horizon?

One way to stay the course and avoid allowing your emotions to fluctuate wildly with economic cycles is to follow Sarah Newcomb’s advice. She suggests Investing With a Mental Time Horizon.

Another is to limit the financial information you take in. Jonathan Clements who has spent a career creating such information notes that most of it is News You Can’t Use.

Retire Before Dad ponders How Our Perceptions of Time and Money Change as We Age.

Misconceptions About FIRE

Physician on FIRE addresses common misconceptions about FIRE. He lays out a compelling case In Defense of FIRE.

This month I had the opportunity to talk about FIRE at the Bogleheads Conference. I devoted the first half of my presentation to making similar arguments to those made in the post above.

Unfortunately, people’s first impressions of FIRE are often not good ones. I acknowledged this and addressed the elephant in the room in an attempt to persuade people to open their minds to giving FIRE concepts a closer look.

One particular message resonated with a number of people that I spoke with after my presentation. Applying FIRE principles can be a game changer for people getting a late start on retirement saving. Several people specifically asked if I had ever met anyone “in the wild” who had actually done this or if it was theoretical.

So I’ve been sharing the story of my friend Becky Heptig who blogs about her and her husband Steven’s turnaround from Broke at Age 50 to Retired at 63.

For more examples of these principles in action with people who had little to nothing saved by their 40’s and 50’s, check out the Australian blog Late Starter FIRE’s Late Starter to FI Series.

New Love For an Old Book

Helaine Olen profiled Vicki Robin and her book Your Money or Your Life: Why this 1992 personal finance book still has a cult following. (Darrow recommended this article that he read in the Washington Post. It may be behind a paywall, but hopefully this link will work for you.)

An Important New Book

Mike Piper recently announced that he has written a new book: After the Death of Your Spouse — Next Steps for Surviving Spouses.

My policy is generally to never recommend a book that I haven’t actually read. I am making an exception here because:

  • I have such respect for and confidence in Mike Piper’s work, 
  • This is a topic near to my heart, and 
  • I am confident this will be a valuable resource for those who need it.

Inflation in the News

As inflation remains high, Charlie Wells explains why I Bond Yields Are Set to Drop Next Month.

John Manganaro reports that inflation means those of you receiving Social Security benefits will be getting a raise next year to help offset higher prices. He writes Social Security COLA for 2023 Set at 8.7%.

High inflation means that contribution limits for retirement accounts are increasing. Tax brackets are also widening and we will have larger standard deductions. Karl Evers-Hillstrom shares what is changing with links to details that most concern you, writing IRS unveils record contribution levels for 401(k) plans to meet inflation.

Retiring Right

Jonathan Clements shares what he’s focusing on as his retirement gets closer, writing Retiring Right.

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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