Daily Money - Tom Brady Returns

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March 15, 2022

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Consumer prices rose a whopping 7.9% in February. That’s the highest 12-month increase since January 1982, when Tom Brady was four years old. The age-defying quarterback came out of retirement the other day, and jokesters said on Twitter that it was because he pumped some gas and realized he would need to work longer to outrun inflation (then other people joked about deflation, but I digress). Rich superstars may not have to worry about climbing prices, but inflation is no laughing matter for the rest of us. So what should we do? Elon Musk recommended yesterday to “own physical things” to beat inflation. Read more about his comments, and Money’s tips for protecting your assets, in today’s edition.

Best wishes,

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Timely Retirement News, Insights and Advice

Cryptocurrency is relatively new and untested in a hyper-inflationary environment.

But here's where cost increases are the worst.

You may have to talk to a robot.

How to invest tax-efficiently

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When you think about taxes, it’s time to think beyond the yearly deadline.
  
Evaluating your investments through a tax lens could help improve your after-tax returns. Tax-smart investing techniques, such as tax-loss harvesting, monitoring holding periods, and investing in municipal securities, may help you defer near-term taxes or reduce your tax bill so that your money can stay invested and has the potential to grow.  

While your financial picture includes much more than just taxes, being strategic in how to manage, defer, or reduce your taxes can help your bottom line. Keep reading for more tax-smart saving techniques that can help you save more in the years to come.
 

Reader of the Week

What are you up to these days?

Since retirement, I have kept myself mentally and physically active. I’ve traveled to Ireland and Costa Rica, but Covid messed up travel plans for now so while homebound I am completing a 365-day Bible study plan and catching up on my reading.

My wife and I swim every other day, and were going to the gym regularly until Covid. Retirement has given me the time to pursue all the things I previously had to put on the "back burner.” I now know quite a bit about wines, learned German and a bit of American Sign Language. I've taken all the classes for a CFP [certified financial planner designation] as well as becoming certified as an investment advisor and stock broker.
 
Wow! What’s your best advice on retiring comfortably?

Save as much and spend as little as possible before retirement day. LIVE BELOW YOUR MEANS AND NEVER LIVE BEYOND YOUR MEANS. Make it your goal to max out any 401(k), Roth IRA, or other retirement savings plans that are available to you. Try to pay off most or all of your debt before retirement. Get long-term care insurance and pay it in full before retirement. Look for a return of premium rider if you are worried about not using it. And taking a mortgage into retirement can make sense if your investment returns are higher than your mortgage rate. If you have to take RMDs, that doesn't mean you have to spend it all. If you have money left over, reinvest it.
 
In retirement, I invest for current income, fun activities and growth. I make an annual budget so I know how much my expenses will be. In my first year of retirement, I bought a guaranteed life withdrawal annuity with a purchasing power (cost-of-living) rider. The initial amount of the annuity payout was enough that when added to my Social Security it 100% covered all the expenses in my first year's budget. This has meant that regardless of the market, my expenses are covered. Also, because of the annuity rider I am protected against inflation, since both the annuity payout and Social Security rise with inflation. I invest in closed-end funds, preferred stocks and investment grade bonds then use the dividends and interest for the fun stuff. These assets also do a pretty good job of preserving capital. The rest of my savings I put into growth or blended mutual funds.
 
Great! Any regrets to share (financial or otherwise)?

If I have any regrets, it would be that I did not take the time earlier to learn in-depth about personal finance and things like RMDs, Medicare, supplements, drug plans, estate and income planning and other problems unique to aging. I was unprepared when forced into an early retirement and had to learn very quickly.
 
I can sleep well at night knowing that all my expenses are covered now and in the future. I am protected from inflation and market gyrations, my long-term care will be covered if needed, and there will be something left over for my kids to inherit.

Retirement News From Around The Web

Older Americans Head Back to the Workforce Amid Inflation and Volatile Stocks
In February, 3% of retired workers returned to work, the highest level of the pandemic. YAHOO FINANCE

5 Steps to Take if You’re Facing a Whopping Tax Bill
For starters, don’t ignore the IRS. AARP

Should You Tap Your Retirement Account to Buy a Home?
If you must, start with your Roth IRA. MORNINGSTAR

I Was Clueless About Caregiving – But I'd Do It Again
A broadcast journalist takes an honest look at what he learned caring for his mother until she died at 105. NEXT AVENUE

Elizabeth O'Brien is deputy editor at Money. She has covered retirement and health care for nearly a decade. A Brooklyn resident and mom of two boys, she navigates the alphabet soup of Medicare and the New York City subway system with equal ease. You can email her at elizabeth.obrien@money.com and follow her on Twitter at @elizobrien.

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