When to Take Social Security: A Real Life Case Study

One of the recommendations I get the most pushback on from retiring clients is to defer their Social Security benefits until age 70.

Note: It’s not appropriate to defer for EVERY client in every situation but certainly for most folks near retirement age for whom I work it appears to be the best decision. 

Before I go any further, let me very briefly explain a few of the primary options: The “Full Retirement Age” (FRA) at which people will qualify for their full benefit is around age 66-67 (depending on year of birth). However, you can begin taking a reduced benefit at age 62. Alternatively, you may elect to defer Social Security until age 70 and receive a greater monthly benefit for your lifetime and that of a lower-earning spouse’s lifetime.

For example, if you were born in 1960 or later, your FRA is age 67. By taking benefits early at 62 you would get a 30% reduced benefit. However, for example, if you were born in 1943 or later, your monthly benefit increases 8% each year you defer beyond FRA up to age 70 (or 2/3rds of 1% each month deferred).

There are several reasons that deferring to age 70 is in most people’s best interest: Continue reading “When to Take Social Security: A Real Life Case Study”

YOLO, FOMO and HODL Are Not Investment Strategies…

It’s been a little while since one of my commentaries because I’ve been very busy preparing (and updating) financial plans for clients old and new.

I have some long-time clients that are coming up on their retirement dates so we’ve been updating the projections accordingly and making necessary adjustments.

Additionally, about five new families have reached out within the last couple months so I’ve been busy preparing their financial plans as well. The financial plans serve as the blueprint for all major financial decisions we make together so it’s a critical, necessary first step in my relationships. It’s been a very busy but fun and very rewarding couple months!

Today, I wanted to provide an update on stock valuations to ensure we’re being mindful of the big picture and not getting too caught up in the short-term noise.

BUT, FIRST, LET US REMEMBER: Investing is a means to an end not an end in and of itself. For most people, investing is a means to an enjoyable, comfortable, stress-free retirement and maintaining their lifestyle throughout retirement. For some others, investing is also a means to gift more money to charity and family. However, for too many people as of late, “investing” has become a hobby, an obsession, a get-rich-quick scheme and/or a source of entertainment. “Investing” has simply become another method of gambling without regard to how various “investment” decisions can impact investors’ most important, long-term financial goals. That gambling mentality is another common feature of bubbles throughout history by the way. 

So, let us always remember the true purpose for investing and keep that big picture in mind when making investment decisions. Let us always remember our “why.” Continue reading “YOLO, FOMO and HODL Are Not Investment Strategies…”

Stealth Inflation Example

Inflation does not always show up in higher prices for the things you buy but often shows up in lower quantities for the same prior price.

Check out the paper towel quantity difference between these two rolls.


Now, this guy circled the wrong thing but compare the square footage of each roll. The prior roll included 85 square feet of paper towel while the new one included just 74 square feet. So, in order to get the same quantity as before, you need to buy 14.9% more (i.e. 85 / 74 – 1 = 14.9%)!

If the cost was previously $1.67 per roll, and the new smaller rolls cost the same amount, the equivalent quantity today would cost $1.92 or 15% more! That’s a very SIGNIFICANT inflation rate especially considering this inflation is not solely impacting paper towel but likely many of the goods we buy on a daily basis.

U.S. Stock Valuation Update

A reminder that valuations are NOT short-term timing tools. The purpose of monitoring and understanding stock market valuation data is so we can build more accurate financial projections using more realistic assumptions (and therefore make better financial decisions) and to assist with longer-term investment strategy (i.e. 10-12 year time horizons).

In short, folks who are chasing performance higher at current levels by adding more stocks to their portfolios and/or buying low-quality, money-losing companies at extreme prices are either (1) ignorant to market history, or (2) understand the history but are rationalizing today’s dislocations with “this time is different” or, (3) they simply believe they are smart enough to get out in time.

Let’s take a look at the big picture of U.S. stock market valuations that are more excessive than they’ve ever been in history exceeding even the pre-Great Depression peak at the end of the Roaring Twenties and the Dot-Com Bubble Peak.

Image Continue reading “U.S. Stock Valuation Update”