Technical

WHEN I MET ARON for dinner, the occasion marked a milestone for both of us. Aron had earned his bachelor’s degree in audio production in 2020—during the thick of the pandemic—and finding his place in the industry had been more difficult than he’d hoped. Now that things were finally falling into place, Aron approached me for help with his finances. In particular, he wanted to understand his tax situation, which had grown into a mixture of self-employed contract work and part-time employment. I’ve known Aron since my wife Sarah began babysitting for the family when she and I were dating in...

HAVE YOU HEARD that you shouldn’t check your 401(k) at times like this? Market volatility can wreak havoc not only with our account balances, but also with our decision-making. Ignoring our 401(k) statements might help us stick with our long-term investment plan. True as that may be, there’s a good reason to peek at your second-quarter statement: to see if you can find a new feature—the lifetime income illustration. It was mandated by Congress as part of the 2019 SECURE Act, but it’s only now showing up on many 401(k) statements. Here are three points to help you make sense of...

LONG-TERM-CARE insurance and disability insurance can both be part of a comprehensive financial plan. But is it a good idea to have both coverages at the same time, or could one substitute for the other? After all, both policies are designed to help those who are, in some way, infirm. To answer this question, let’s start with another one: What’s the purpose of insurance? The best use of any type of insurance is to guard against financial disaster. It isn’t there to provide a discount on expenditures you could otherwise afford or to play a wealth-building role in your portfolio. There...

TARGET-DATE FUNDS are riding a wave of popularity. Morningstar reports that investors placed $170 billion into these funds in 2021, more than double their 2020 inflow. Morningstar also reports that, as of 2019, 58% of all 401(k) participants were invested in a target-date fund. That percentage is likely higher today. It’s clear why the funds have become so popular. They can be an excellent solution for retirement savers who prefer a hands-off approach. To this end, many employer retirement plans use target-date funds as their default investment choice. But there is, I fear, a...

TAX DAY IS ALMOST here, and I have a feeling that some of you may be less than excited. The cash that changes hands every year around this time gets a lot of attention, but it tells an incomplete story. The size of the check you write—or the refund you’re receiving—doesn’t, by itself, say much of anything about your tax situation. Back in the days before technology made transferring money so convenient, did you ever let a tab run both ways with a friend? Perhaps you were traveling and decided to take turns paying for meals, and then settled up any difference at the end of the trip. Just...

WILL YOU BE WORKING with a CPA to file your tax return? For eight years, I was one of the folks on the other side of this annual ordeal. Want to make life easier both for yourself and for us green-shade types? Here are 22 insights: 1. Time is money. CPAs sell expertise by the hour. They track everything they do, all day long, in six-minute increments—or perhaps 15. For the business to survive, it must convert time into revenue. It helps to look at the next 21 insights through that lens. 2. Buying insurance. CPAs envy investment advisors, who get paid by drawing a fee right out...