Pursuing Life Well-Being

Comment on “The Role of Financial Stability in Achieving Life Well-Being,” by Meir Statman, in the August 2024 AAII Journal:

For each of the domains of life, there are well-worn templates for a life well-lived. We can seek out an adviser and practice with the building blocks for financial independence, or we can seek out a therapist or coach to guide us toward higher levels of physical and mental health. Knowing there are templates for achieving mastery of all domains of a life well-lived, why would we not choose to put life experiences at our fingertips by retiring into financially comfortable lives? Live your best financial life today.
—John M. from Michigan

Including Your Spouse in Finances

Comment on “How Women (and Their Spouses) Can Thrive as Investors,” by Charles Rotblut, CFA, Cynthia McLaughlin and Nancy Tengler, in the August 2024 AAII Journal:

My wife and I have been married for 40 years, and I’m four years older, so expect I will pass away several years before her. I solely manage our portfolio. We’re both physicians, so understanding complex topics is second nature to us. The difference is that I enjoy studying finance and investing and she doesn’t. I’ve written several treatises on the various aspects of finance and managing our portfolio for her reference. I update these every year or two and always give her a printed copy to read, which may or may not happen. At least she has this as a reference, and if she hires someone to manage her money, they have some idea of what I’ve done, even after I’m no longer available to ask.
—Thomas S. from Oregon

Strategic Asset Location

Comments on “Maximizing Retirement Income With Asset Location,” by Charles Rotblut, CFA, in the August 2024 AAII Journal:

Thank you for a useful and informative review with enough depth to satisfy but not overwhelm. I would offer considering a taxable municipal bond fund for the tax-sheltered accounts, which pay higher interest rates, especially when using leveraged closed-end funds like the BlackRock Taxable Municipal Bond Trust of Beneficial Interest (BBN) or the Nuveen Taxable Municipal Income Fund of Beneficial Interest (NBB). The BlackRock fund has done well for me over the past 10 years or so. Leverage works both ways, and with interest rates perhaps starting to come down, it is showing renewed, leveraged life with 33% leverage and about an 11-year duration.

And I agree with your last sentiments about not allowing taxes to wag the portfolio dog. I’m always happy to pay taxes on gains and more taxes on bigger gains. I’m 70 years old but am not allowing volatility, local and global uncertainties, tax rates or fear of losing money to alter my ongoing plan, although there are times when such is not easy to do. When those feelings start to grow, I reread many fine AAII articles I’ve retained over the years.
—Craig B. from Wisconsin

Good discussion. I’ve struggled with how much regular individual retirement account (IRA) and 401(k) contributions to convert to a Roth account. I often read of people trying to convert 100% to avoid required minimum distributions (RMDs), which makes little sense to me. RMDs are low for many years, even on decently sized IRAs. Using qualified charitable distributions (QCDs) will be more tax-efficient. But I see an exception. If you have no pension or a very small pension, you may be able to convert 100% of a regular IRA to a Roth IRA and keep your Social Security in a no-tax or 50% tax threshold. That could be worthwhile.
—Kevin V. from North Carolina

I have found this free calculator very helpful [for calculating modified adjusted gross income (MAGI) to determine IRA contributions and tax deductions]: www.newretirement.com/retirement/roth-conversion-calculator. It gives you a variety of tweaks.
—F.P. from Massachusetts

F.P., the free calculator you suggest using is fine if the only income you have is ordinary income. It won’t help you if you have Social Security or dividends. I suggest this one gives a better outlook: www.aarp.org/money/taxes/1040-tax-calculator. Put in your details before doing the conversion and then add the conversion and see the change to your taxes.
—Dave G. from Texas