Author: Jeff

Turns Out an Age-Old Investment Rule Is Just Plain Wrong

The biggest problems an investor faces are internal, not external. Your decision-making will have the biggest effect on your success over the long-term, regardless of what the market does. It’s been said human nature is a terrible investor. That’s because what we think is the natural choice often turns out to be the worst choice in the world of investment decisions.

For decades, many people who were trying to decide how much of their investments should be in stocks versus bonds/cash locked onto the “100 minus your age rule.” Simply put, the rule says subtract your current age from 100, and that’s how much should be in stocks. So, a 30-year-old should have 70% in stocks and a 70-year-old should have 30% in stocks. There are many reasons for the popularity of the rule, including that it is pretty simple to apply and it seems to jibe with human nature wherein the older we get the more conservative we should be in everything (think about that pool of water on the sidewalk that you use to run and jump over that you now walk around).

In recent years the “100 minus your age” rule was put through historical scenarios by some very well-respected financial analysts, including Bill Bengen, Wade Pfau and Michael Kitces. They all came to the same conclusion: Rather than decreasing your allocation of stocks as you age you should do the exact opposite and increase the allocation of stocks versus bonds each year of retirement. To be specific, you start retirement with a base stock allocation, let’s say 55% for example, and you increase that by one percentage point per year starting in year two of retirement. This technique is called the “increasing glide path” retirement planning.

While this might seem counterintuitive (good investing decisions often do) it really makes sense if you think about it. Your biggest challenge during your retirement years is not a volatile stock market. It’s inflation eating up your spending power, and stocks are the antidote to counter inflation. Between growth in stock prices and growth in dividends, stock values have risen faster than inflation for decades. Therefore, decreasing your allocation of stocks as you age is hampering the ultimate inflation slayer, and a bad idea. In addition, if it turns out that you had the bad luck of having a big stock market downturn early in your retirement, using the increasing glide path is in essence dollar cost averaging into a down market.

The proof is in the statistical pudding so to speak. Bill Bengen found that the increasing glide path approach increased the SAFEMAX withdrawal rate I wrote about last week from 4.68% to 4.84%. That is a substantial change and puts to bed the fallacy of the 100 minus your age rule.

Fun Fact: The oldest living verified person was Jean Calment of France who lived 122 years, 164 days. Currently, the oldest living person in the U.S. is Naomi Whitehead, who turned 115 last month.  I’m sure you wouldn’t have to convince either of them about the effects of inflation over their lifetimes.

Now, Let’s Talk About What You Really Can Spend in Retirement

Last week I wrote a piece about what current research shows people typically spend in retirement. Most people spend far less than they could. Over a 30-year period, people with a net worth of $560,000 or more could typically spend over $1 million more than they do and still never run out of money. I discussed several factors as to why this occurs, but the most important is simply not being educated on what a safe withdrawal rate looks like.

William P. Bengen is one of the fathers of safe withdrawal rates. His research over 20 years ago established what many call the “4% Rule” which in reality was the 4.15% rule– it just got rounded down to make it easier to remember. The purpose of the “4% Rule” was to establish a safe annual withdrawal rate that would assure retirees that they would never run out of money. Bengen tested 400 retirees (1926-1976) and found that the absolute worst performing retirement portfolio (for the person who retired in 1968) still lasted over 30 years using an initial 4.15% withdrawal rate.

Here’s the details of how it worked:

1. Add up all of your retirement accounts and then multiply the total by .0415 (4.15%) and that gives you the safe withdrawal amount for year 1 of retirement.
2. In subsequent years (Years 2-30, assuming a 30-year retirement) simply increase the dollar amount you withdraw each subsequent year by the inflation rate. For example: a $1 million investment portfolio would have a safe withdrawal amount in year 1 of $41,500. ($1 million x .0415). In year 2, assuming a 2.5% inflation rate, the safe withdrawal amount would be $42,538 ($41,500×1.025). In year 3, assuming a 2.75% inflation rate, the safe withdrawal amount would be $43,708 ($42,538 x 1.0275). Each year thereafter you check the annual inflation rate and apply the same formula.
3. For the original rule, Bengen relied upon an asset allocation of 60% stocks and 40% bonds, and only used two asset classes: “US Large-Company Stocks” and US Treasury Bonds.

I just finished Bengen’s new book A Richer Retirement, Supercharging the 4% Rule to Spend More and Enjoy More wherein Bill shows his new findings primarily based on the expansion of asset classes. He revisited safe withdrawal rates using equal investments in 5 equity classes: US Large Cap, US Small Cap, US Mid Cap, US Micro Cap and International stocks. For bonds, he used 5% US Treasury Bills and 40% Intermediate Government Bond Funds. Overall, he primarily tested an asset allocation of 55% stocks, 40% bonds and 5% cash.

The result of using a much more diversified portfolio and then retesting the withdrawal rates over 30 years is a new safe withdrawal rate (now called SAFEMAX) of 4.7%. There’s no change in the formula set forth above; just start with 4.7% instead of 4.15%. While that is a great starting point to see if you are on track to retire, you should also be aware of the following:

1. No one, not even William P. Bengen, can guarantee that what has worked in the past will continue to work in the future.
2. The SAFEMAX of 4.7% is based upon the absolute worst investing environment he tested. Most of the retiree time periods allowed for a greater “safe” withdrawal rate and the average SAFEMAX for all retirees studied was 7.1%. On average, even with the 4.7% withdrawal rate the average retiree will die still having about 5 times what they started with.
3. While not 100% guaranteed under the research a 5.25% withdrawal rate had a 95.7% success rate.
4. The SAFEMAX withdrawal rate does not factor in leaving a legacy to heirs or charities. Decrease the withdrawal slightly to do that.
5. Bengen’s website offers updates even to his recent book. On September 18, 2025, he updated the research to now recommend an allocation of 65% stocks, 30% bonds and 5% cash for higher upside potential.

As I mentioned last week, life was so much easier for retirees when they could just add up their guaranteed income from pensions and Social Security to figure out how much they could spend each month. Times have changed and now with large defined contribution plans like 401(k)s and 403(b)s, retirees must find a way to create their own “pension” to be added to their guaranteed income like Social Security.

The 4.7% rule is a good starting point. Figure out what your expected monthly expenses will be and then subtract Social Security and any pension income. Whatever you have left is what you are going to have to cover with your retirement nest egg and now you can apply the 4.7% rule to see where you stand.

Fun Fact: Michigan’s only bear is the black bear, which has a lifespan of about 10 years. Male black bears live in an area of about 100 square miles, females live in a 10-20 mile area. There are about 12,000 black bears in Michigan and the number is increasing annually. A male black bear can reach 500 lbs.

In Retirement: What You Can Spend vs. What You Will Spend

Most people spend all of their working lives saving and investing so they have a nice nest egg to withdraw from once their working days end. I’ll put together a synopsis on what you can safely withdraw in retirement in a future Up Early, but not until I finish the new book by Bill Bengen who originated the “4% rule” 20 years ago.

For now, let’s look at some interesting research on how much retirees feel comfortable withdrawing from their investments during retirement (i.e. what you will likely spend).  The findings might surprise you.

In December 2024, David Blanchett and Michael S. Finke published a paper entitled “Retirees Spend Lifetime Income, Not Savings”. Their findings are that retirees spend less than what was originally predicted, and likely, less than their parents. That makes sense for two reasons:

1. Earlier generations of workers had what are called defined benefit plans. Those are your good old-fashioned traditional pensions which are nearly extinct except for government employees at the federal and state levels. Under the traditional pension, the retiree knew exactly how much their monthly income would be and could spend 100% of it comfortably knowing that next month the same check would arrive again. Today’s workers rely on defined contribution plans, primarily consisting of 403(b)s, 401(k)s and IRAs. Under these current plans, there is no monthly check in retirement, and the retiree has to decide how much to withdraw from their accumulated retirement savings.
2. There are many unknowns that retirees must grapple with these days, including their lifespan, future Social Security earnings and stock market volatility. Those unknowns, combined with the lack of a set amount in a monthly check from a traditional pension all lead to the same result: retirees spend less than they could in retirement because of both fear of running out of money and lack of knowledge on safe withdrawal rates.

Blanchett and Finke’s article summarized the statistics supporting that finding as follows:

1. Retirees spend only around 50% of their savings over their lifetime.
2. Married 65-year-olds with at least $100,000 in assets typically withdraw just 2.1% per year from qualified and non-qualified investment accounts.
3. Over a 30-year period, retirees in the top 20% of net worth (currently approximately $560,000) could spend over $1 million more than they do and not come close to running out of money.

These findings are no surprise to me from my experience as a financial planner and also as a personal investor. It is very hard psychologically to shift from saving and investing to what’s called the “the decumulation phase” when you need to start liquidating investments and begin systematic withdrawals. For most people, this is why professional help is a must in retirement.

A good financial planner can give you confidence in many ways, including in your ability to safely withdraw more than you probably would otherwise take from your investments. That doesn’t mean that you must increase spending on “things”, but perhaps for example, it would allow you to make lifetime gifts to watch the enjoyment it brings to family members and yourself rather than waiting until your demise. Alternatively, getting a warm appreciative letter from a charity for a donation is a great feel-good moment. Perhaps a family trip to a special place is really within your budget!

Fun Fact: Did you ever wonder at what age people are the happiest? German and Swiss researchers studied over 460,000 people around the world and found age 70 to be the happiest age. I’ve seen other studies that differed from that finding. One had age 23 and a study at Harvard found 35 to be the happiest age. For me, I will keep abiding by the words of Jonathan Swift: “No wise man ever wished to be younger.” – Experience is the best teacher!

Understanding Personal Loans

One of my sons is going back to school full-time this month to get his MBA. While he did get a scholarship, it wasn’t for the full amount of tuition so…I put on my “Bank of Mom and Dad” hat and offered to help with a personal loan for the next two years of tuition. Borrowing from or loaning to family members can be complicated. Here are some rules and recommendations:

1. Most personal loans are “unsecured” which means all I’m relying on from my son is his promise to pay me back. If I said “I want the title to your car so that if you don’t pay I can sell it for what’s owed”, then we would have a loan “secured” by his automobile. If the security for a loan is real estate, then the loan is typically called a mortgage.
2. I’m going to write out the loan terms in a document that is called a “promissory note.” That’s just a personal loan written out and signed by the parties with a promise to repay. You can agree to some collateral in a promissory note, but it usually is unsecured.
3. Writing out the loan terms does several helpful things: 1. Memorializing the obligation helps to strengthen the obligation. Signing the document fortifies the seriousness of the commitment. 2. Memories can fade about the terms of the loan as years pass. The writing sets forth the exact terms and conditions from the start for future reference.
4. Loans and gifts are closely related, especially within families. Because there are limits on how much you can gift tax-free each year ($19,000 per person in 2025), the IRS is well aware that some folks try to use a “loan” to get around those limits. As a result, the IRS requires you to charge a minimum interest rate on the loan to show it’s legit. The minimum rate is called the Applicable Federal Rate (AFR) and can be found online. Determining the minimum rate depends on the length of the loan and how frequently you will be compounding the interest rate. My son’s loan will be a 10-year loan (he should be on sound financial ground by then), so currently I must charge him 4% interest under the IRS AFR tables.
5. Michigan, like most states, limits the amount of interest that can be charged on a loan. Laws limiting interest rates are called usury laws and in Michigan the limit is 25% annually. Unfortunately, there are lots of ways businesses can get around that limit and charge a higher rate, but you should stay within that boundary on any type of personal loan.

Now, despite being a lawyer I don’t have a heart of pure stone (close, but not pure). I may very well forgive the loan over the years and as long as I stay within the applicable gift tax exclusion, then there are no tax consequences. Heck, I even made him link one of my bank accounts to his university because if I pay the tuition directly then the $19,000 gift tax exclusion limit does not apply. I left all of my options open, and I told him I’m expecting first class treatment when I can’t get out of my rocking chair anymore. Things seemed so much easier when the only issue was what type of pizza to get for his soccer party sleep over. I guess I need to remind myself of something I tell clients all the time: Figuring out the best way to help out with tuition for an advanced degree for my son is a “good problem to have.”

Fun Fact: I was watching the Lions game this weekend with one of my sons and I complained about all of the downtime (mostly filled with commercials), so I looked it up: There are about 18 minutes of actual live gameplay during the typical NFL game that airs for over 3 hours from start to finish. I prefer to tape the games and run through all the downtime, and both of my sons remind me that’s proof of my old age (LOL).

Understanding the Word “Fiduciary”

I see the word “fiduciary” tossed around a lot these days. New clients sometimes ask if I’m a fiduciary. Yes indeed, as both a financial planner with a wealth management firm and an attorney. It is always good to ask, and the word fiduciary is important. However, you can’t just stop at the word itself.

By definition, a “fiduciary” is a person who holds a legal and/or ethical relationship of trust with one or more other parties. Fiduciaries are legally obligated to put the best interests of another person ahead of their own. A fiduciary obligation is created in many different settings. A trustee of a trust is a fiduciary to the trust beneficiaries. Corporate board members are fiduciaries to the shareholders of a company. Anyone who manages financial assets for the benefit of another person is a fiduciary, with the legal responsibility to look out for the best interests of that person.

But being a fiduciary and having integrity are not one and the same. A person can be in a fiduciary role but breach their fiduciary duty because they lack honesty and integrity. There are a myriad of examples of breach of fiduciary duty. Bernie Madoff, the infamous investment manager who swindled billions from his clients, was a fiduciary who breached his duty.

Some people working in the financial planning/investment industry take careful pains to make sure the word “fiduciary” shows up after their name. They hope that word will enhance their credibility, but credibility and integrity have very little to do with what title comes after a person’s name. As I often tell my clients and prospects when we discuss the term fiduciary, it really comes down to whether the person you are dealing with is at heart an honest and straightforward person. If they aren’t then having the word fiduciary after their name is meaningless.

Don’t stop at the word fiduciary. References and, most importantly, your personal experience with the person and their firm will go a long way to tell you if that person really takes their position as a fiduciary seriously. Start your investigation by looking at little things. Did the person follow-up on their promises? Did they get that piece of information to you, or schedule your follow-up appointment as timely as they said they would? As Albert Einstein said, “Whoever is careless with the truth in small matters cannot be trusted with important matters.”

It’s appropriate for you to ask someone if they are a fiduciary. It’s just as important to go beyond the answer to really explore what kind of person you’re dealing with.

Fun Fact: Yes, I know the Lions were not fun to watch last Sunday. But let’s remember that since 2004 five teams lost the first game of the season and went on to win the Super Bowl: New York Giants, Baltimore Ravens, New England Patriots, Los Angeles Rams, and Kansas City Chiefs. Now, let’s see how the next game goes.

Tech Scams to Watch For

This past Tuesday I was in my office just finishing an appointment when a text popped up on my phone indicating that my bitcoin withdrawal had been confirmed and that if I had any questions to click on the link in the text.  Hmmm. I didn’t make any withdrawal request on my bitcoin, so I immediately logged on using my normal method to check my balance and it was safe. A new and dangerous scam just crossed my iPhone. That led me to think about looking up the five most dangerous current tech scams going around. Here they are:

1. Employment scams. These are phony job sites or recruitment ads. Some are intended simply to get your personal information. They can either ask for that information as part of the job application, or sometimes they claim you have been offered a job and need to fill out personal information. Some scams involve giving a bonus for training purposes or supplies. The bonus check bounces but not before they request a payback because there was an overpayment.
2. Crypto currency scams. I started this Up Early with the one that just hit me. Bitcoin values have soared, so the scammers are particularly interested in crypto. These are very sophisticated scams which typically start with slowly building trust with the victim and then offering an investment opportunity with large returns. The victim is asked to invest their crypto and it’s a disaster.
3. Celebrity imposter scams. As ridiculous as it may sound, the most common scam in this way relates to scammers who find emotionally vulnerable victims and make them believe they are in a romantic relationship with a celebrity. The “celebrity” then requests money to start a new charity or for the down payment on a house for both the victim and the celebrity to live in.
4. Tech-support scams. This one hit my family about six months ago. A “new” window pops up and freezes the window you are in and requests you click on a button. It usually has a logo of Microsoft or Apple and a menu to eventually get you to someone who asks to be able to get into your computer to fix things. Some scammers simply try to sell useless software maintenance or warranty programs. Remember, no legitimate pop-up window will ever ask you to click on a link and no legitimate company will ask you for permission to get into your computer remotely.
5. Card-decline scams. This usually happens with an online purchase. The victim tries to make an online purchase and is told the card was declined when in reality the charge went through and so they try a second time and either receive a second charge or a much larger charge than the first one. The best protection here is to use a credit card rather than a debit card because a debit card is an instant withdrawal while the credit card can be monitored and the credit card company can decline the charge.

The technological breakthroughs in the last decade have made our lives easier, but also made scams much more prevalent and dangerous. AI-powered scams, including voice impersonation and video cloning are not far off. You may read one or more of the five scams above and think it will never happen to you. Think again, in a moment of weakness anyone can fall for something that in hindsight seems ridiculous. Also, you may have a loved one who doesn’t think clearly enough and can get scammed in these areas.

We should all take note of the last command that the referee will give to Canelo Alvarez and Terence Crawford right before their epic boxing match next week – “Protect yourself at all times.” (I just cannot wait for that fight!!).

Fun Fact: Well, here we are in September. Did you know it’s the only month that has the same number of letters in its name as its numerical order (nine).

Credit Card Debt After Death

Credit cards are important tools for daily and monthly expenses. When used correctly, they offer the credit card holder a 30-day interest free loan – you make a purchase on your credit card today, but you don’t have to pay the actual bill until you receive the next month’s statement. I wrote a piece about various creditor issues at death last April, but today I want to focus on what happens to outstanding credit card debt when you die. There are a few important factors to consider:

1. Was there a joint account holder? If so, a careful reading of the credit card agreement likely holds the surviving card holder responsible for the full debt.
2. Was there a probate estate opened? If there is no joint account holder, then the debt becomes the liability of the decedent’s probate estate. If probate is required at death, the appointed Personal Representative will be responsible for addressing all debts, including credit cards. Remember, probate is a court proceeding that can and should be avoided with proper planning.
3. Was probate avoided? Perhaps the decedent had a good estate plan and avoided probate through a combination of a trust and beneficiary designations. Without probate, the credit card company (or the debt collection agency that typically buys the debt) has less leverage to collect on the debt because there is no formal place to file the debt claim. Sometimes the fact that there is no probate results in the debt being dropped. Other times, the trustee of the trust can negotiate the debt down significantly because the only recourse the credit card company has is to open a probate estate on the decedent just to collect the debt—very costly.
4. Are family members on the hook for the debt? Generally, no, unless they co-signed for the debt or are joint owners on the credit card. There is no legal obligation simply because one is a spouse or child of the credit card holder.
5. What should I do if I’m handling the financial affairs of someone who dies with a credit card? Immediately contact the company so that they stop any future purchases that could be fraudulent. Proceed slowly and don’t feel obligated to give too much information. Remember, you might not have a complete financial picture of the decedent for several weeks. If you know that there will be no probate, tell them. If you aren’t sure if there will be a probate estate, let the credit card company know that too. Do not share any details of the decedent’s financials. The credit card company does not have a right to know that unless they actually sue for collection.

Credit cards make life easier. Hopefully, the information above will help to make credit cards easier after the death of the card holder, too.

If It Seems Too Good to Be True…

Boy, we are a really long way from this past April when the stock market was tanking and everyone was trying to remember what a tariff was and what possible harm it could do. The 12% drop in the S&P 500 in a single week following “Liberation Day” was nothing to sneeze at; and anything but liberating. Since those early spring woes, the S&P 500 has surged by approximately 20%, and the NASDAQ by about 28%, even with the pullbacks this week. How things can and do change.

Of course, it doesn’t matter if we are in a bear market or a bull market, there’s always room for fear. April’s fear was a big market drop. Here in August the fear is an overvalued market. Even though I am an experienced financial planner, I have the same emotional reactions that you have when I peek at my investment portfolio. Things seem…well…almost too good to be true.

With almost perfect timing, last Friday I stumbled upon an essay by the noted economist and author, Burton G. Malkiel. Best known (at least in my mind) for his must-read book A Random Walk Down Wall Street, which was published almost 50 years ago, Malkiel wrote a piece in the New York Times last week entitled “The Stock Market Is Getting Scary. Here’s What You Should Do.” It’s a great read if you wish to settle yourself down. I’ll save you some time and set forth the gems in the article:

1. There are several identifiable risks in the stock market currently, and probably as many unidentifiable risks. We also have serious budget issues that may not be getting the attention they should be. Despite these facts, Malkiel does not suggest slashing the amount of common stock you have in your portfolios. Making investment decisions based on guesses about whether stocks will go up or down in the short-term is a recipe for poor results.
2. Moving any money to cash based on current asset levels amounts to timing the market. To be a successful market timer, you have to make two correct decisions: First, when to get out, and second, when to get back in. Every study comes to the same conclusion: trying to time the market ultimately ends in poorer results than staying the course.
3. To provide perspective and reinforce the market timing point above, Malkiel reminds his readers that an investor who bought a US stock market index the day after Alan Greenspan coined the term “irrational exuberance” in December 1996 – a time of huge market valuations – earned an average rate of return of almost 10% per year over the next 20 years with dividends reinvested.
4. Whatever funds you have committed investment-wise to the long term should stay invested and ride out this “too good to be true” bull market rush. That said, you should focus on revisiting potential changes on any invested money that you will need relatively soon (e.g. in the next 2-3 years). Mikael recommends safe short-term bonds.
5. You should also make sure that your portfolio hasn’t become overweighted in stocks versus bonds simply from the market increase. For my clients, we rebalance according to objective asset allocation rules, so we never get too far out of balance. If you are not exposed to that type of service, then you may want to check your asset allocations because if they don’t match your risk tolerance you may not be able to stay disciplined during a substantial market correction.
6. Young investors should not blink an eye at this frothy market valuation. Keep pushing money into your investments and stay aggressive. The most powerful tool in your investment tool kit is time to ride out market volatility.

Many people think about being disciplined and staying the course when the market is down. These days you can see that the discipline applies on the other side of the spectrum when the market is making a large advance. Check your emergency funds. Check your asset allocation. Condition yourself for the inevitable market drop. But remember, over the long term it’s very hard not to grow your wealth with equities.

Fun Fact: I couldn’t help but smile at a great quote Malkiel referenced about all the worries that exist in our economy, politics, and world events. Despite all that, as Americans we do generally find a way to land on our feet and as the old saying attributed to Winston Churchill goes: “Americans can always be trusted to do the right thing once all other possibilities have been exhausted.”

What Is RMD and Why Is It Important to Me?

If you start to consider retirement planning, you will inevitably run across three important letters: “RMD”. Understanding what they mean and how they can affect you is important. Here’s a basic primer to help:

Why is it called RMD? RMD stands for “required minimum distribution”. Just to make things more complicated it is sometimes referred to as MRD, which is simply “minimum required distribution”. Regardless of the sequence of those letters, they represent the IRS rule on the minimum annual taxable distribution that needs to be withdrawn from a tax-deferred retirement plan such as a traditional IRA, 401(k), etc.

When do I have to start taking RMD out of my own IRA or 401(k)? The age at which you need to begin taking RMD has changed over recent years. Currently, the age is 73, but if you were born on or after January 1, 1960, your RMD age will be 75. There are some exceptions to taking RMD, primarily for those who are still working in companies that they do not have an ownership interest in.

Is RMD different if I inherited the IRA from someone else? Yes, the rules are substantially different when you inherit an IRA from someone else. Generally speaking, you have to fully distribute the inherited IRA and pay the taxes by December 31^st of the year that includes the 10^th anniversary of the original owner’s death (Short answer-you have 10 years to completely withdraw the inherited IRA). You may also have to take required minimum distributions in years 1 through 9 as well, but only if the original owner was required to take RMD before his or her death.

How is RMD calculated? RMD is calculated annually. There are two moving parts: the value of your IRAs on December 31^st of the previous year and your age this year. The value of all of your IRAs on December 31^st of the previous year is divided by the number corresponding to your age in the IRS tables. The result is your RMD for the current year.

When do I have to take RMD during the year? The only requirement is that you fully take your RMD by December 31^st of that year. You can take it all at once or spread it out over the year as long as the total amount distributed by the end of the year is equal to or greater than your RMD number. The reason I underlined “greater than” is because RMD is simply the minimum amount you need to take. You can always take more if you have the need or the desire.

Do I have to take RMD out of each of my IRAs? Generally speaking, no. Although you typically will receive a statement from your financial institution showing what your RMD is from each IRA, you can usually satisfy it from any one or more of your IRAs. It’s the total amount of RMD withdrawn that the IRS is interested in, not that the RMD comes out proportionately from each IRA.

How does RMD affect my taxable income? The effect can be substantial. Every dollar withdrawn from the IRA is considered a dollar of taxable income, just as if you earned it by working. Most people will set up withholding, both Federal and State of Michigan, for each withdrawal they make so taxes are addressed immediately upon withdrawal. One way to minimize the tax impact of RMD is through the use of a Qualified Charitable Distribution (QCD). That IRS rule allows people over 70 ½ to donate directly from the IRA to a charity without the donation being considered taxable income. The limit on a QCD for 2025 is $108,000, and you don’t have to itemize to take advantage of this rule.

This is a basic description of what RMD is and how it works. The rules are extremely complex so don’t just rely on the statements above in your tax planning and RMD withdrawals. Give me a call or talk to your tax preparer before making any important decisions related to withdrawals from your own tax-deferred retirement plans or any IRAs that you inherit.

Fun fact: As we head into the heart of August and late summer, you might be interested in knowing that the month of August is named after the Roman Emperor Augustus Caesar. It marks the last month of summer (ugh!), which is often referred to as the “Dog Days of Summer” with the most hot and humid weather of the season.

Who Should Know About Your Net Worth

I recently came across Dave Ramsey’s “Millionaire Theme Hour” on YouTube. For those of you who don’t know, Dave Ramsey has a very popular financial planning show, and the “Millionaire Theme Hour” is a segment where “common” people announce their net worth and then answer Dave’s standard questions to explain how they managed to save so much on relatively normal incomes. I went back to review a recent segment to write this piece and up pops a picture of Glenn and his wife from Oklahoma City, Oklahoma with the clear heading that their net worth is $5.5 million. The 8-minute segment is inspirational as Glenn explains the saving and discipline it took to create a net worth that large, but I can’t help but think it is a bit dangerous. In my mind, when it comes to finances, it’s best to keep things close to the vest. Your view may differ, and I respect that, but let me explain my concerns.

First, just to be clear, a person’s “net worth” is the total fair market value of all of a person’s assets (e.g., bank accounts, real estate, investments, retirement plans, etc.), MINUS all outstanding debt. If someone owned nothing but a $300,000 house with the mortgage paid off and a bank account with a $20,000 balance, then their net worth would be $320,000. If that person still owed $100,000 on their mortgage, then their net worth would be $220,000 ($300,000+$20,000-$100,000). It’s natural to work toward increasing your net worth, and crossing the one-million-dollar mark is a big accomplishment, as are all the subsequent million-dollar thresholds.

My first problem with sharing this information concerns relationships. You never know how someone will react once they compare what you really have with what they guessed you have. I’ve seen children drastically change expectations regarding all sorts of things after they become aware of the large amount of wealth their parents have accumulated. The same holds true of friends and more distant relatives. I’ve also seen friends and relatives assume a much larger net worth then really exists. Money, or more importantly, information about someone’s money, can change people.

My second problem concerns fraud. We all know there are some terrible people lurking out there just looking for opportunities to cheat, steal or otherwise swindle. Announcing an impressive net worth on the internet, along with your picture and the city you live in, seems to me to be a recipe for problems. These days that is enough for a determined crook to figure out exactly where you live and who you and your family members are. In my book, that’s not a good idea.

I’ll share with you a personal change that has occurred for me over the span of my professional life. I worked very hard and built two successful businesses that I still love to work in. I have been rewarded in immeasurable ways by having wonderful client relationships. I will tell anyone who asks about the personal rewards of a holistic estate planning/financial planning practice. But our net worth will always stay private. In part, the more my wife and I have accumulated, the less we seem to care about what we’ve accumulated (isn’t life funny!).

I certainly don’t want strangers to know what I make or what I’m worth. When I financed my last car because of the great interest rate, I had to fill out a loan application. I put down the absolute minimum income level and net worth I thought would get me accepted for the loan instead of the actual numbers. Who knows where that information ends up?

Someday I’ll probably share all the details of our investments and net worth with my two sons, but the goal there will be to make sure they help my wife with it after I’m gone. They’re both in finance and my wife has little interest in investing. But other than that future event, I’m not comfortable sharing much information in that regard. I think it can do more harm than good.

Side Note: Please don’t confuse what I stated above with not keeping clear records with instructions and details on assets. We all should strive to make things as easy as possible for our loved ones if something unexpected happens. Once you are gone, your family should have a clear roadmap concerning all of your finances.

Fun Fact: YouTube was created in 2005. The first video uploaded on YouTube was titled “Me at the Zoo” and was posted by co-founder Jawed Karim on April 23, 2005. Today there are 4.3 billion videos on YouTube. It is estimated that every second, 6 hours of videos are uploaded to YouTube.