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Investing Blog Roundup: Are Target-Date Funds Good Investments?

When I speak with people who are early in their careers, by far the most common questions I get are:

  1. How do IRAs and 401(k) plans work, and
  2. Which fund(s) should I buy in my retirement accounts?

For question #2, target-date funds are always the first thing I bring up.

Christine Benz of Morningstar wrote recently that, “from where I sit, target-date funds have been nothing short of the biggest positive development for investors since the index fund.”

That’s my point of view as well. They’re not a good fit for every circumstance (most notably, they’re a poor fit for taxable accounts). But they are nonetheless, an absolute revolution of the investment industry, for the better of the client/investor.

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Investing Blog Roundup: The 4% Rule (Actually 4.3%) with a TIPS Ladder

I’ve been studying retirement planning for roughly 15 years now, and throughout that time a constant topic of debate has been whether a 4% inflation-adjusted spending rate over 30 years (i.e., “The 4% Rule”) is actually safe. And most of the time, that question is impossible to answer except in hindsight.

However, Allan Roth recently demonstrated that with TIPS yields being what they are right now, a TIPS ladder can very safely satisfy a 4.3% real spending rate, over 30-years.

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Investing Blog Roundup: Bogleheads Conference and 2023 Social Security COLA

It was a pleasure meeting many of you in person last week at the 2022 Bogleheads Conference. The sessions were all recorded and will eventually be made available on YouTube. I do not know the timing as far as when we should expect that, but I’ll share the link once they come out.

The SSA announced last week that the cost-of-living-adjustment (COLA) will be 8.7% for 2023.

To answer the question I receive every year: for anybody 62 and older, your primary insurance amount gets adjusted by the COLA each year regardless of whether you have filed for your benefit. In other words, a high (or low) COLA in a given year is not really a point in favor of filing earlier or later. (You can find a more thorough explanation for Social Security inflation adjustments here.)

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Investing Blog Roundup: Can You Save Too Much in an HSA?

Health Savings Accounts are the most tax-efficient of all accounts, when the money is used for medical costs. You get a deduction on the way in, the account gets to grow tax-free, and the money comes out tax-free as well (again, assuming it’s used for qualified medical expenses). That’s the best tax treatment, at every step of the way.

This week, Christine Benz addressed the question of whether it’s possible to save too much in an HSA — and what to do about it, if you suspect that maybe you have done so.

Recommended Reading

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Investing Blog Roundup: Where to Find Prior Bogleheads Podcasts, Videos, Interviews, and More

A reader writes in, asking:

“Is there a hub with a list of previous educational Bogleheads meetings that gives access to listen to them? I think I found it in the past and even listened to or read notes, but this was a few years ago, and I cannot recall how I found that place either.”

Yes, there’s a new such resource in fact. The Bogle Center (formally, The John C. Bogle Center for Financial Literacy) has recently had its website redesigned, to serve as a hub for all of the Bogleheads educational resources. You can find it here:

Just below the large banner with the photo of Bogle himself, you’ll find links to the podcasts, Twitter Spaces interviews, YouTube channel, etc.

You’ll also notice that there are still some available tickets for the 2022 Bogleheads Conference, next month in Chicago. (The new venue has significantly more capacity than the prior venue in Philadelphia.) It’s quite the agenda, with speakers including Burton Malkiel, Jason Zweig, Michelle Singletary, and many more (including the regular Bogleheads faces, such as Bill Bernstein, Rick Ferri, Allan Roth, Christine Benz, and myself).

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Investing Blog Roundup: How Much Do Retirees Spend on Out-of-Pocket Health Care?

Karolos Arapakis of the Center for Retirement Research at Boston College recently released a brief (adapted from a longer paper) that addressed the question: how much do retirees pay in lifetime out-of-pocket health costs, excluding premiums and including long-term care?

The finding: a 65-year-old single person will pay, on average, about $56,250 in out-of-pocket costs over their remaining lifetime (in 2021 dollars). For a couple, that figure is $80,000. At the 90th percentile of such spending, the total is about $111,250 for single people and $163,750 for couples.

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