A Few Useful Finds for Life After Work — Issue #5
Hi from Stefan,
Welcome to the fifth issue of this biweekly newsletter.
Nothing in this newsletter is sponsored or written for compensation.
How Much Do You Know About Minimizing Taxes on Your Investments?
Take the Wall Street Journal quiz on the topic.
Why Do Retirees Underspend?
Morningstar recently looked at this question (article at ThinkAdvisor, full Morningstar report).
Some retirees underspend because they fear running out of money. Others prioritize leaving a legacy. But the study found an even bigger driver: most retirees stick with “simple, hands-off” withdrawal strategies. Morningstar acknowledged they couldn’t fully explain why retirees stick with simple strategies.
My view is that many simply aren’t aware of other options, and in general do not have a clear sense about how much they can safely spend. One of my main goals with The Best Third is to make it easy for people to estimate how much they can safely spend, so they can make more informed decisions as to how to use their financial resources in retirement.
A vacation idea if you don’t want to underspend
Irene and I took a Viking river cruise on the Danube a couple of years ago to celebrate our 25th anniversary.
It was our first cruise of any kind, and we enjoyed it very much. The shipboard atmosphere was relaxed and adult-focused. The on-shore cultural events were excellent, and the daily walking tours were well-guided with options ranging from easy strolls to more strenuous routes. The only “downside” is that all meals are included, and portions are generous. The onus of self-control is on the passenger.
Disclosure: after the cruise I purchased a small number of Viking shares.
Thank you to everyone who participated in the survey
Your input has been extremely helpful. Along with comments in the feedback form and conversations during office hours, the responses have taught me a lot about what users need from The Best Third. These insights are guiding the product development roadmap. In the coming weeks and months we’ll be rolling out new features that many of you have requested.
Recent product updates prompted by user input
There are two recent updates to the TIPS ladder construction.
First, the table listing the bonds to purchase now includes the CUSIP, which should make it easier to locate the bonds at your broker.
Second, we changed the approach for the “gap years” 2037-2039 when there are no maturing TIPS. Previously the system used zero-coupon Treasuries (STRIPS) maturing in those years. The new approach purchases additional 2040 TIPS as a bridge.
Then in January of 2027, 2028, and 2029, when new 10-year TIPS will be issued, a portion of the 2040 bonds would be sold and the proceeds rolled over into the new bonds for the corresponding maturity years. The output now shows exactly how many 2040 bonds would be sold and rolled over in each year. If there is sufficient interest in keeping the STRIPS approach as an alternative, we can add it as a configurable option.
Several survey respondents also asked for documentation on the tax assumptions used in estimating after-tax income. A detailed Methodology White Paper was recently added to the website.
Warmly,
Stefan Sharkansky, PhD
Founder of The Best Third