December 2022 Best of the Web
It’s been a wild ride this year. All asset classes took a beating. Financial scams dominated the news. A new law is being finalized at the end of 2022 that will substantially impact our financial planning in years and decades ahead.
In this last post of the year, I’ll touch on these timely topics. But as usual I’ll keep the focus on the timeless topics. They ultimately determine what matters in financial planning and life more generally.
I close with a few selections that will help you reflect on the year past and help you plan for a new year ahead. Happy holidays!
Last Minute News
As I was putting the final touches on this post, details of new legislation were still emerging on a bill that will impact our financial planning. Here is some good early reporting to give you a feel for key changes, including moving back the start date for required minimum distributions (RMD).
Jaime Hopkins explains 5 RMD Changes Looming With Likely Passage of Secure Act 2.0.
Jeff Levine breaks down all of the ways this new law will impact your financial planning in this Twitter thread.
How Much Money Do You Need?
This month I shared the two big challenges to knowing how much money you need to retire.
The first is knowing how much you can safely take from your portfolio. Christine Benz and John Rekenthaler address this question, writing What’s a Safe Withdrawal Rate Today?
The second big challenge is knowing who you are and will become and how you will you spend your time in retirement, which may impact how much you spend in retirement. The blogger Steveark touched on this, writing How Much Money? He shares why you may need far less money than most people think to have a happy retirement.
How Will You Spend Your Retirement?
Joe Casey thinks retirement is a great, but often missed, opportunity for a reset from the overly busy lifestyles many of us lead during our working years. He asks Are You Heading For a Busy Retirement?
Important Planning Topics
Steve Vernon writes that The Most Serious Financial Risk Facing Retirees is longevity risk, i.e. living longer than we planned for.
A less pleasant, but equally important financial planning topic, is preparing for what happens when we do pass away or become incapacitated and can no longer manage our affairs for ourselves. Rick Ferri, Ryan Barrett and Mike Piper discussed important estate planning concepts on the Bogleheads on Investing Podcast.
Updates to a Favorite Retirement Planning Tool
One of our preferred retirement planning tools, Pralana Gold, announced updates for the 2023 version. It will be released in a few weeks.
The updates reflect changes in tax law. They include an update to 2023 tax tables and eliminating the ACA subsidy cliff for two more years per the Inflation Reduction Act.
Of particular interest to many readers based on questions I receive is enhanced modeling of Roth conversions. The news I personally was most excited to see is that a web-based version of the tool is in the works for later this year. I think this will make this powerful retirement planning tool more user friendly for a larger segment of readers.
Breaking Down a Scam
Karsten Jeske writes A Post-Mortem for a Crypto Exchange: Is FTX Worse than Bernie Madoff?
Not Quite a Scam, But….
The next two articles address totally legal and legitimate investment opportunities. They are not scams. You should still be wary of them.
When I took control of my investments, I was shocked to learn that the actively managed mutual funds I held in my taxable accounts simultaneously went down in value and produced substantial taxable gains due to the trading that occurred within the fund during that same year. This is an important reason to favor tax efficient index funds or ETFs in taxable accounts.
If you don’t fully understand this concept, spend some time with the next article. Stephen Welch asks and answers Which Popular Funds Will Hit Investors With Losses and Capital Gains Distributions This Year?
A few years ago, I took a closer look at ESG investing. I love the idea of using your money to make the world a better place. I just don’t think ESG is a very effective way of doing it.
As evidenced by fund flows, a lot of influential people and organizations disagree with me. The Catholic church is one. Jeff Benjamin writes Vatican Report on faith-based investing crosses into ESG territory.
Reflecting and Looking Forward
The end of the year is a great time to reflect on where you are and plan where you want to go from here. The final three resources are shared with the desire to help you do so.
Jillian Johnsrud writes beautifully about the challenges of dealing with the unknown: In the Waiting.
This month I wrote about the concept of changing and becoming a different person in different phases of life, with the hopes of getting you to reflect on what you really want your life to look like on the way to and after financial independence. A reader commented that I should read Arthur Brooks’ book on the topic From Strength to Strength.
I actually had already picked up that book at the library to read over the holidays after listening to this outstanding interview Brooks gave on Peter Attia’s Drive Podcast. The Science of Happiness with Arthur Brooks.
A few months ago, I had the opportunity to speak at the Bogleheads Conference. I shared my thoughts on the experience, and promised that as soon as the conference videos were made available I would be sharing the keynote talk, an interview of Michelle Singletary by Christene Benz.
As you reflect on a year gone by and plan for the year ahead, I encourage you to watch it. This talk made me think long and hard about the potential we have to change our life’s trajectory and impact many other lives when we use our money wisely.
I hope you enjoy it as much as I did. Happy New Year!
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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 firstname.lastname@example.org.]
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