WSJ: Stanford is #1

Rodin's Burghers of Calais in Memorial Court, Stanford

Many years ago I was accepted to Stanford's undergraduate program but didn't go. Though grateful for how everything worked out, I do feel a twinge of road-not-taken regret when I see yet another article extolling the glories of the Farm:

Stanford University tops the list of the best U.S. colleges in the latest WSJ/College Pulse rankings.

Unlike other school rankings, this list emphasizes one point: How well did the college prepare students for financial success? More than any other factor, it rewards the boost an institution provides to its graduates’ salaries, beyond an estimate of what they could have expected from attending any college.

Stanford returns to the top of this list for the first time since the 2017 rankings. Ivy League schools also figure prominently, with Yale University, Princeton University and Harvard University finishing third, fourth and fifth, respectively. Two other Ivy League schools—Columbia University and the University of Pennsylvania—come in at eighth and ninth, respectively.

Beyond the marquee names, the rankings’ distinct methodology highlights some institutions that don’t have as much name recognition but still help their students achieve remarkable success.

Babson College—the small Wellesley, Mass., school focused on business and entrepreneurship—retained its No. 2 spot from last year. Claremont McKenna College, near Los Angeles, clocked in at No. 6, and Davidson College, near Charlotte, N.C., ranked 10th.

The University of California, Berkeley, is the best-ranked public school, at No. 7 overall, and five other public schools from the state cracked the top 25...

The value of Stanford
Stanford scored well across the rankings’ metrics, including a high graduate salary score and a short amount of time to pay off the net price of college.

Raj Palleti, a 2024 Stanford graduate, says his computer-science education at the school has opened doors. While at Stanford, he interned at Nvidia and co-founded an AI startup, alphaXiv, where he is the chief operating officer. The company’s community platform helps researchers accelerate work with AI tools.

Palleti credits Stanford for fueling students’ drive and talents for innovation. “They have so much of an emphasis of like, ‘Oh, you should just build cool things,’ ” he says.

Karuna Taesopapong, a Stanford economics major who graduated in 2024, recalls discussion-focused, hands-on courses. One involved an energy-market simulation, where students had to navigate supply shortages and power outages to maximize profits.

“That’s the reason why you go to Stanford, because you try to get those niche insights and hear about stories that you wouldn’t necessarily get anywhere else,” she says. She now is the growth leader at a startup called Onton, an AI-powered home-decor shopping engine.

Ever since Business School Dean Jonathan Levin became its president, Stanford has been tacking toward the political center, a wise place to be for one of the world's top universities.

Marriage: from Cornerstone to Capstone

When we celebrated our golden anniversary last month, the status of our finances was the furthest thing from our mind, just as they were when we got married. Back then, when we consolidated our balance sheets--yes, we were and are accountants--the sum of our net worths was negative. My student loans had that effect, but she married me anyway.

Barriers to entry (Mendelson/WSJ) (

Few people who have our long-ago financial circumstances now tie the knot. [bold added]

For centuries, the institution of marriage functioned more as an economic contract than a romantic one—the promise of a better shot at achieving financial success and stability as a couple.

More recently, the script has flipped. Financial security is no longer a goal reached after marriage, younger Americans say, but rather a prerequisite for it...

The idea of both parties waiting to build a career or wealth before tying the knot is called a capstone model of marriage. Economists and demographers say that thinking has replaced the old “cornerstone” approach, where people would wed in their early 20s and then work together to buy a home, build a nest egg and progress in their careers...

“Marriage has become a status symbol,” said Krista Westrick-Payne, assistant director of the National Center for Marriage & Family Research. “People don’t want to get married until they have an education, have that job that can support them and they can afford a house, and they are also looking for a partner that ticks all those boxes.”

I sympathize with the desire to have financial security; in our case we didn't really feel that we were financially safe until we were in our 50's. Of course, waiting to marry until then would have made it unlikely that we would have had children.

Marrying when young and poor carries greater risk, but if you should make it, the stories you could tell.

Breaking Up is Hard to Do

Divorced Ryan Hambry and Morgan Dickson have dinner
together with their children at their Florida house once a week

The cliché about the economics of marriage--"two can live as cheaply as one"--remains true even though the marriage is over. Some divorced couples continue to live together because their housing costs would rise substantially if they were to sell their house with a low-interest mortgage.

For divorcing couples, there is a particularly tricky version of what housing professionals call the “lock-in effect,” where homeowners stay in place because they don’t want to give up their low rates. Across the housing market, the lock-in effect prevented almost two million home sales between mid-2022 and mid-2024, according to Federal Housing Finance Agency research. The number of people moving is significantly lower than it was before the pandemic, according to Bank of America.

Some ex-spouses are choosing to “nest,” an arrangement in which the kids remain in the family home and the parents rotate in and out. The practice has been around a long time, but it has gained popularity as the costs of moving have risen, according to family-law attorneys and mediators.

There are compelling short-term financial reasons for not cutting the cord completely, but keeping the family house under joint ownership will make it difficult to find other partners, relocate to other cities, and move on with their lives.

Mortgage Occupancy Fraud

The top of the mortgage application requires the borrower to declare
the loan's purpose (primary residence, secondary residence, investment).

The Trump Administration is investigating three outspoken political opponents, California Senator Adam Schiff, New York Attorney General Letitia James, and Federal Reserve governor Lisa Cook, for the possible crime of mortgage occupancy fraud. Claiming that a loan is for one's principal residence (versus a vacation home or a rental property) allows the borrower to have both a lower interest rate and a lower down payment, and it has been alleged that these three knowingly lied on their applications. [bold added]

Lenders typically offer better terms on mortgages for a primary residence, and let people borrow more than they would for a second home or an investment property they may rent out.

For a primary residence, for instance, the down payment can be as low as 3% to 5%. For a second home, typically 10% to 20%. For an investment property, it is usually at least 20%.

Mortgage rates for a second home are also typically 0.25% to 0.50% higher than the rate for a primary residence, said Garth Graham, senior partner at Stratmor Group, a mortgage advisory firm. The rate is usually 0.50% to 0.75% higher for an investment property.

The average rate on the standard 30-year fixed mortgage was recently 6.58%.

Another reason people might want to claim a second home as a primary residence: Nonowner occupied properties often have higher property taxes and higher insurance premiums than primary residences, said Jon Goodman, a lawyer with a specialty in mortgage fraud.

The crime is difficult to prove, partly because it is allowable to apply for a loan on a new primary residence while living elsewhere (for example, I want to move to a new purchased condo in Arizona first, then sell my California home), and circumstances may have changed (I don't like my retirement choice after all and will continue to live in my current home). In the latter case, the bank will not normally change the loan terms as long as I continue to make the payments.

Mortgage occupancy fraud is rarely prosecuted, and most real estate participants know this. Checking the wrong box can save thousands of dollars each year. Doing the right thing when there is hardly any penalty for doing the wrong thing and it's highly unlikely that one will get caught anyway is a true test of character.

BLSH

Nearly every adult has taken a word-association test (when you hear this word, what's the first word that comes to mind?), the practice of which originated with Swiss psychologist Carl Jung (1875-1961).

Chairman Blumer and CEO Farley (McDermid/Reuters/WSJ)

So when you see this ticker symbol of a company that went public this week--BLSH--, what is the first word that you think of? If you said the correct name, Bullish, you are a better man than I. The stock's performance did live up to its name.

Shares of Bullish soared 84% in the cryptocurrency exchange’s initial public offering Wednesday, highlighting the challenge of pricing an IPO in today’s exuberant market.

Just last month, shares of software company Figma jumped 250% in their debut. That prompted whispers about the risks of a company underpricing an IPO and potentially leaving billions of dollars on the table.

The ideal first-day gains are typically around 20% to 30%, many bankers who work on deals say. Bullish closed the day at $68, giving it a market capitalization of roughly $10 billion. Its stock, which trades under the symbol “BLSH,” was temporarily paused after it began trading...

Bullish priced its IPO at $37, above its already increased price range, raising roughly $1.1 billion. The company allocated about 20% of the offering to individual investors—a larger chunk than is typical—in part to prevent a run-up in the stock price once shares start trading Wednesday, according to a person close to the deal. Most IPOs allocate less than half of that to individual investors...

Bullish launched in 2021 and is backed by prominent investors including Peter Thiel’s Founders Fund and hedge-fund manager Louis Bacon. The exchange’s total trading volume had exceeded $1.25 trillion as of March this year.

Were I 30 years younger, I might invest in various aspects of the cryptocurrency market. However, it's hard for me to stomach the volatility and even harder to rationalize an investment in something immaterial, and yes, I know, that the dollar and other fiat currencies are also in the end only a little more solid than bitcoin.

For the sake of the stock market and the hopes of risk-taking investors, I hope it is not all BLSH.

Mind that DSUE (Deceased Spouse Unused Exclusion)

The estate tax exclusion for this year is $13.99 million and will rise to $15 million next year. If an individual's estate is worth less than that amount, his estate tax is zero; if more, then the tax is 40% on the amount over the exclusion.

Married couples can bequeath estates worth double the exclusion on a tax-free basis, but they must be careful to file an estate-tax return for the first spouse that dies. [bold added]

The U.S. tax code is generous when it comes to passing down money to heirs tax-free, and it has only become more so under the new tax law. But for married couples to obtain the full benefit, there is a strict set of rules. Messing up can be disastrous.

In the case of Billy Rowland, it cost his heirs $1.5 million in extra estate taxes.

Rowland expanded his many small businesses in Lorain, Ohio, over decades, with his hand in trucking, used cars, commercial real estate and banking. He served on local charity boards and wore a “World’s Greatest Grandpa” cap.

After he died, his executor filed an estate-tax return, and the Internal Revenue Service came calling in 2021, asking about the estate return of his late wife, Fay, filed years earlier. The tax agency said it believed her return was incomplete, and that disqualified his estate from getting a share of her exclusion.

The Rowland case has lawyers and accountants who prepare estate-tax returns on edge. The Tax Court sided with the IRS last month, disallowing the estate from using the common planning technique known as portability.

That lets a surviving spouse use any leftover exclusion amount from the first spouse to die—as long as the estate filed a return and filled it out properly. The trouble is, often no one checks the work until the second spouse dies. At that point, it can be too late to fix any mistakes.

The Tax Court said Rowland’s estate couldn’t take Fay’s unused exclusion amount of $3.7 million because of the error. Hence the extra taxes. The message to wealthy families is that obtaining the doubled estate tax shelter for married couples isn’t automatic...

For most surviving spouses, a $15 million exclusion is enough to shelter their estates from taxes. They don’t need the combined $30 million available to a married couple. Yet nearly 500,000 Americans have a net worth of $15 million or more, according to the global wealth tracker Altrata.

For those with estates worth $15 million to $30 million, it generally makes sense to file an estate-tax return when the first spouse dies to elect portability. “It would be a disaster if they fouled up,” said Ed Zollars, a Phoenix-based CPA.

Even those with less than $15 million today might need the first spouse’s extra exclusion amount later on. Their investments could grow, or they could get an unexpected inheritance or win the lottery...

IRS rules allow nontaxable estates to leave off specific values on the estate-tax return if the assets are left to a spouse or charity. Fay named children, grandchildren and friends among her heirs, so her estate wasn’t allowed to use those rules, the Tax Court said.

The rules may seem convoluted to people who are not tax accountants or lawyers, but the solution is relatively straightforward after 2025:

If there's a chance the combined estate will be worth more than $15 million after the death of the surviving spouse, file an estate-tax return upon the death of the first spouse--though there may be no tax due at the time. Be sure that the return assigns values to specific assets--I personally would use $10,000 as a threshold--and that the "DSUE amount portable to surviving spouse" (Form 706, Section 6, Part C, Line 10) is filled out.

Wealth Ladder - Getting the Rungs Right

I'm a sucker for "rate yourself" tests on the Internet, for example, how do you measure up in health, sports knowledge, 20th century history, or wealth? Concerning the latter, Nick Maggiulli's Wealth Ladder has specific numerical criteria: [bold added]

Those on the first rung have almost no wealth; the threshold is less than $10,000. Each subsequent rung represents an upper threshold of wealth 10 times as large as the previous level. Mr. Maggiulli’s scale is designed to express the declining utility of money as it accumulates. He also denotes each rung by the “freedom” such wealth generates.

Level 2, $10,000 to $100,000, offers “Grocery freedom” because “you can buy what you want at the grocery store without worrying about your finances.” Level 3, $100,000 to $1 million, provides “Restaurant freedom” because you can order what you want when you dine out. The fourth rung, $1 million to $10 million, means you can travel wherever you want; the fifth, $10 million to $100 million, means you can afford the home of your dreams. Mr. Maggiulli’s sixth and highest level, anything above $100 million, gives you the ability “to have a profound impact on the lives of others” through business and philanthropy....

Mr. Maggiulli recognizes that knowing which rung of the ladder you’re on doesn’t help in getting to the next one, so at each level he describes what is required to climb higher. Getting more education is most effective at Level 2. Income-producing assets are vital at Level 3. Once you get to Level 4, you’re going to have to take a different approach. If you reached Level 5 it is probably thanks to concentrated investments—the result of starting a business or accruing a big slug of company stock.

Some rungs are far too wide. Rung 3 spans $100,000 to $1,000,000, but IMHO there is a huge difference between the low and high end of the range. In the Bay Area $100,000 could be a half-year's salary, perhaps enough for an emergency expense reserve, while $1 million in many parts of the country allows one to have a paid-up home plus hundreds of thousands of dollars in savings.

There is a similar difference between $1 million and $10 million; again in the Bay Area, the lower amount could be a down payment while $10 million does allow one to have that four-bedroom house plus a comfortable retirement.

As for rung #5, over $100 million, I'll never get there and I'm glad because I don't need those kinds of problems (he said disingenuously).

Update - 7/29: Nick Maggiulli elaborates in a Morningstar interview.

Christine Benz: You share what you call as the 0.01% rule. Can you talk about what that is and how it can aid with decision-making about doing spending, and what expenditures to stress out about and which to not stress out about?

Nick Maggiulli: Yeah, so the 0.01% rule basically says that you can spend 0.01% of your wealth or just another way of looking at it’s one-10,000th. So you could call this the one-10,000th rule as well. You can spend one-10,000th of your wealth on a daily basis without having to worry about anything. And so I’ll explain where that comes from. So let’s say your net worth is $10,000. You’re basically right on the cusp between level one and level two. That means you can spend an extra $1 per day without any worry about jeopardizing your future wealth. And where that $1 that 0.01% comes from is, on an annualized basis, if you’ve got a return of 0.01% a day, that’s like a little bit under 4% a year. It’s like 3.7% a year. It’s very conservative return. So every day your wealth is generating that much money. So if you have $10,000 in wealth every day in theory, you’re generating an extra $1 a day without doing anything. So in theory, you could spend that $1 and not jeopardize your future wealth. So if you have $100,000 in wealth, you could spend $10 a day. If you have $1 million in wealth, you can spend $100 a day, et cetera. Now, obviously this isn’t your total spending. If you live in the United States, you’re not going to survive on $1 a day. This is the marginal spend. Everyone’s making a spending decision, you’re making it on the margin.

Like when you go to buy a car, you’re not saying, oh, should I get a Toyota Camry or a Maserati? You’re debating between the Camry and the slightly nicer Camry. That’s what I’m saying. You’re always doing it on the margin. Like when you sit down in a restaurant and you’re like, do I want to get the burger for $20 or the salmon for $30? That marginal difference is $10. And so my argument is that once you have like $100,000 in wealth, that extra $10, you can spend that every time you go to a restaurant without worrying about it. And so the 0.1% rule works in that way by just it allows you to have some lifestyle creep because you’ve shown financial disciplines. Like, hey, look, I’ve reached this level of wealth so I can now spend more in certain categories. But until I reach that level of wealth, I’m not going to do that.

And so like in my example—I still to this day, I don’t have basically any travel freedom. When I go to a restaurant, I’ll buy whatever I want. I don’t care. But I am still getting the coach seat. Maybe I will upgrade my seat to a slightly nicer seat, not a first-class seat, but I’ll go like get something with more legroom. That’s where I’m at in my wealth journey. Like one day if I do well, if things go well for me, I will maybe always get a first-class seat, but that’s not in the cards for me right now. And so I’m spending according to my wealth level, and I’m very strict about that.

It’s because that the extra whatever $100 or whatever it is, is not enough to upgrade to first class every time. So I can’t spend that money. That’s how I work through it.

Not Over the Hill Yet

Normally I pass on Internet quizzes, e.g., "how much do you know about this week's news?", as nothing more than clickbait for ads and traffic, but I had to test myself on the WSJ's Do You Know as Much About Personal Finance as These Savvy High-Schoolers?

Yes, there's some ego involved. I have a Finance MBA (though it's 50 years old) and am a long-retired CPA, but I should have at least a high-school-level knowledge of personal finance, right?

Right, though I confess I would probably have gotten wrong a question about crypto.

The New Asceticism

(Washington Post graphic)

Asceticism is not new, dating back at least to the ancient Greeks. Asian religions have practiced it for centuries, and many Christians and Jews in the Bible led ascetic lives.

A less extreme version with no religious overtones, "no buy 2025," has sprung up this year.

The “no buy 2025” trend encourages people to purchase as little new stuff as possible. Some people make lists of specific items they won’t purchase, while others vow not to buy any nonessentials.

While it’s occurring on social media, it has very real-life reasons for catching fire. There have been two years of higher prices and rising levels of debt for households. There was also a shorter holiday season that felt rushed, where many Americans on the lower income end cut back aggressively.

Instead of needing to have the latest and greatest viral products, people are finding it’s better to focus on what they already own...

An idea like no-buy has trended before on TikTok (last year, 20% of Americans tried the “no-spend” challenge, says fintech company Chime). Google searches for “no buy challenge” are up 40% year-over-year, while “no spend challenge” searches have hit an all-time high, Google says...

People also are adhering to “project pan,” a similar trend to no-buy that spurs people to finish all their skin care, makeup or body-care products before buying replacements. Some are even combining no-buy with project pan.

Elysia Berman, a 35-year-old who works in the beauty industry in New York, had a credit-card and loan balance of almost $49,000 from feeling pressure to dress a certain way for work. Last year, she decided to focus on lowering her debt.

Berman has used up almost 100 makeup products she’d purchased and received over the years. Now she plans to do the same with skin care products. Her no-buy list includes clothes, beauty products, perfume, jewelry, home decor and books, and she plans to cut down on takeout orders and make it to her Pilates classes to avoid cancellation fees.

“It really forced me to re-evaluate my habits,” Berman says. Since she started last year, she’s paid off $35,000 of her debt and will be done paying it off by April.

Although macroeconomists believe that high consumer spending is a sign of a strong economy, your humble blogger applauds the effort of many individuals to keep their credit cards in their wallets.

There are few actions that are better for one's well-being than paying down debt and/or adding to savings. It's a slow path to happiness but, speaking from personal experience, is one well worth taking,

Needing a Lot of Gold to Live in the Golden State

Retirement here is excellent
if you have enough money.

Bankrate says that California is the fourth-worst state in which to retire:

The analysis ranked states based on five categories: affordability, overall well-being, the cost and quality of health care, weather and crime. Affordability accounted for the largest share of a state’s ranking at 40%, while crime was the smallest, at 5%.

With this methodology, California ranked 47 out of the 50 states, largely due to its high cost of living. The state ranked 50th on the affordability scale, which took several data points into account, including cost of living, state and local sales taxes, property taxes and average cost of homeowners insurance, according to Bankrate.

The major reason that California ranks 47th is that it is the least affordable State, and affordability determines 40% of the score.

If one has a paid-up house and an adequate nest egg, California would rank much higher. Living on the Peninsula, we have access to excellent medical care within 30 miles (Stanford, Sutter Health, UCSF), the weather is mild all year, and crime and homelessness are controlled much better than in San Francisco and San Jose. Unless conditions worsen dramatically, these retirees will be staying put.

There But for the Grace of God Go I

Everyone I know has had a family member--sometimes it's my acquaintances themselves--who's had cancer. Whether or not the patient survives, it's a grueling experience for everyone. Years of tests, chemotheraphy, surgery, and/or radiation, plus the financial strain of paying for everything, await.

Fortunately--I realize that's not the appropriate word--most of the cancer victims I'm familiar with were retired or close to retirement, which means that they had Medicare or other health insurance to absorb most of the costs, and they probably didn't need to work to make up money shortfalls.

There is a growing cohort of Americans who are diagnosed long before retirement age, and, even if they survive the cancer, experience financial ruin. [bold added]

The economic burden of a cancer diagnosis is getting strikingly worse in the U.S., as drug and medical costs soar and more patients live longer with the disease. About 55% of cancer drugs introduced between 2019 and 2023 cost at least $200,000 a year, according to Iqvia’s Institute for Human Data Science. And an increasing number of patients are working-age, a group more likely to report financial hardship after diagnosis compared with older adults.

Nearly 60% of working-age cancer survivors report facing some financial difficulty. Many patients struggle to afford care and end up taking on debt, with some getting payday loans or running up credit cards. Cancer alone accounts for some 40% of medical campaigns seeking financial help on GoFundMe, research shows...

Among common diseases, cancer creates a uniquely difficult financial strain known as financial toxicity. Treatments with expensive medicines start immediately and come with a string of nonmedical costs. Chemotherapy and other treatments can leave patients too weak to work for weeks or months. This can result in a twofold blow, with patients losing income and their employer-sponsored health insurance. The financial fallout can last for years...

Many patients have to take time off—or actually stop working—after a cancer diagnosis. Patients who get chemotherapy are more likely to stop working within four years than those who don’t.

Could one straightforward way of relieving the financial burden be to buy up medical debts--for cents on the dollar because they've been sent to collections--then forgive them?

Undue Medical Debt (aka RIP Medical Debt) does exactly that--it's rated four stars by Charity Navigator--and is a 501(c)(3) organization that my church has donated to. RIP Medical Debt opened its books to economic researchers to find out whether paying off medical debt made a difference in people's lives. The results were disappointing:

[Stanford Prof. Neale] Mahoney and his collaborators find no evidence that buying and then forgiving medical debts that are in collections improved on average beneficiaries’ finances, access to credit, or their physical or mental health. People were even less likely to pay existing medical bills after their debt was eliminated.

Prof. Mahoney and other researchers, as well as RIP Medical Debt, are studying if earlier interventions might be more helpful.

Meanwhile, we're just lucky that we were able to enjoy good health during our working years. If either of us had been diagnosed with cancer in our 40's and 50's, when we didn't have much savings and had mortgages and tuitions to pay, then our lives would be immeasurably more difficult.

Financial Therapy

(WSJ Illustration)

When I was going to business school 50 years ago, I admired the select few who were in the JD/MBA program. They had to be accepted separately to both the law school and business school--each of which was tough to get into--and devote four years to complete their studies.

But I'm not impressed by this latest dual credential, the financial therapist: [bold added]

The goal of financial therapists ultimately is to help people make good financial decisions, typically by raising their clients’ awareness of how their emotions and unconscious beliefs have affected their sometimes messy experiences with money...

Financial therapists tend to come from mental-health and financial-planning disciplines, and there are signs that their ranks are rising: The Financial Therapy Association has 430 members, up from 225 in 2015. Still, according to the group, fewer than 100 financial therapists have completed its certification process, introduced in 2019. You can be an association member without being certified by it...

Still, there are possible pitfalls when hiring a financial therapist. One major drawback: Anyone can claim they are qualified to practice financial therapy.

No government agency regulates the young profession. Candidates for certification by the Financial Therapy Association must take online courses designed by the association covering financial and therapeutic techniques, counsel clients for 250 hours and pass a 100-question test. But you can call yourself a financial therapist and not be certified by the association.

Meanwhile, the cost of financial therapy varies widely—from $125 to $350 an hour, [Financial Therapy Association President Ashley] Agnew estimates. Insurance rarely covers the tab.

Because of recent well-publicized policy mistakes, "experts" have lost the deference that their credentials used to afford them. However, credentialing and licensing do have their place in verifying that a person has a certain level of knowledge to practice often-complex professions.

The fact that there are zero certification requirements in "financial therapy" will result inevitably in scandal, defalcation, and possibly worse outcomes for clients. I wish it weren't true, but sad experience teaches otherwise.

Retirement: How Much is Enough?

WSJ illustration

Seventeen (17) years ago I did a quick-and-dirty estimate of the nest egg required for us to have a "sleep-well" retirement. The answer: $2 million.

We can spend a lot more time fine tuning the calculation to include taxes, Social Security, lumpy expenditures such as medical care, cruises, and cars, and whether the savings are in tax-deferred or taxable accounts, but the extra precision won’t change the final number much. Am I there yet? Let's put it this way, I've got to keep working for a while---there are a few more years of mortgage and college payments--but I'm sleeping well, too.

In the intervening years we've been lucky. The performance of the stock market has kept our savings above $2 million, and we have paid off the mortgage. On the other hand, inflation has rocketed past the 3% used in my old calculations, and doesn't appear to be dampening anytime soon. The upshot: retiring in the SF Bay Area now requires more than $2 million to have sleep-well golden years (remember this is my personal opinion!), but that amount seems more than enough in other parts of the country.

A recent survey places the subjective target at $1.46 million.

It would take $1.46 million to retire comfortably, according to a recent survey of 4,588 adults released Tuesday by financial-services company Northwestern Mutual. That is up from $1.27 million a year ago. And over $1 million more than the average survey participant’s nest egg.

The rising magic number reveals more about retirement anxiety than retirement planning, said Teresa Ghilarducci, an economist at the New School for Social Research in New York City.

Money isn't the only way to buy retirement happiness, of course. Having trusted friends and family members--preferably younger--helps, as does living in a safe community with ample medical services. If through planning, skill, and luck you have all that, you're living the true American dream.

Keep Telling Yourself that Going Paperless is for Your Convenience

17 months ago I joined thousands of others who opened a Treasury Direct account. We bought I-bonds that paid 9.62% interest for the first six months. If the investor didn't withdraw his funds, the amount is reinvested at prevailing rates, currently 5.27%.

Typically savings bond interest is not reported until the bonds are cashed--this means years of deferred interest can be reported in one year--but I wasn't 100% sure that these bonds operated that way. In the old days I relied on the U.S. Postal Service to deliver all forms 1099 by mid-February, after which I could prepare our tax returns. The WSJ reminds us that times have changed, at least with regard to I-bond interest.

“A form 1099 will NOT be mailed to you,” explains an email from the government’s clunky TreasuryDirect site. For I bonds, you have to log in to the site and navigate to the page where you can download the form.

“Because it’s digital, many people forget, and many of them will end up getting IRS notices,” said Miklos Ringbauer, a certified public accountant in Los Angeles.

After making my way through the "clunky" site, I got the good news (screenshot). I had not taken the funds out; consequently there was no reportable interest for 2023. The lesson, however, is that one can't relax if a form doesn't come in the mail; one has to check each financial account to make sure. And woe is you if you can't remember every account and how to log in.

There was reportable interest on my Apple Savings account, which transmits Form 1099-INT only electronically (one can call a phone number to get a paper copy). From Apple Support:

Download a PDF of your Savings tax documents
On your iPhone, open the Wallet app and tap Apple Card.
Tap Savings account.
Tap the More More button, then tap Documents.
Tap Tax Documents. You may also have to tap the year that you want to download.
Tap the Share button to save, print, or share a copy of your tax documents.

Apple said I had $30 of interest. The rate of over 4% is good but for me not worth the administrative hassle. I'm going to close the account.

Two Ex-es Can Live as Cheaply as One

(Image from Freepik)

High housing costs have forced some divorcing couples to continue to live together:

Behind the uneasy arrangement is the housing market. Mortgage rates are over 7% and average home prices have hit record highs. This means more couples can’t afford to leave their home with its less than 3% mortgage interest rates and set up two different households.

Renting isn’t always an option either given that rents have risen more than 9% over the last two years.

Estranged couples stuck together are trying to create boundaries. Husband on the second floor. Wife on the first. They assign his and her cupboards in the kitchen, schedule laundry time and text whereabouts as needed. One woman locks her bedroom door and keeps her supply of batteries and toilet paper in her closet.

Many don’t tell colleagues about the set up because it seems unthinkable or they are embarrassed. They try to maintain civility for the kids and hold tight until they can afford to buy, rent and furnish two homes.

Couples used to remain together because of the social stigma of divorce.

Today the norm is to move out, "move on," and cut ties as quickly as possible.

If the couple still lives under the me roof, their acquaintances may correctly surmise that they don't have the funds to split up.

The new morality: failure in a marriage is no longer embarrassing, but it is shameful if one doesn't have the money to move out. The world has changed, not necessarily for the better.

Cash: Still the King

You still need to carry both

Square has expanded beyond its roots in mobile payments and now offers an array of services, such as inventory and payroll, to businesses. The risk to small enterprises is that their dependency on one provider like Square could be disastrous when the provider shuts down:

During what would become an hours-long [Thursday noon - Friday morning], nationwide outage of payment system Square...restaurants and bars throughout the Bay Area who rely on Square to take payments were left frustrated and scrambling. Many posted to social media, telling customers to bring cash.

Contingency planning is often neglected, and this experience should be a wake-up call to small businesses to work on back-up plans.

But customers need to be prepared, too. I've had to pay cash on two different occasions this year when the systems on fast food franchises went down. As noted earlier this year,

My thicker wallet undoubtedly reflects personal insecurities. I carry at least $100, 1 debit and 3 credit cards, a driver's license, a gym membership, a health insurance card, and an auto club card.

It has to be said: every small business I deal with--independent restaurants, dry cleaners, and hair salons-- prefers cash. When I handed a cab driver cash instead of the credit card he was expecting, his eyes lit up.

So carry a little green in your wallet: it insures against system outages, and it seems to make merchants happier!

Good Reasons to Stay

Less than a 10-minute walk from our home.

A San Francisco couple in their late 60's weighs the pros and cons of moving back to the Midwest. The negatives about San Francisco have been publicized for years, but it's rare to hear about the positives.

Many of Karen Yoder's reasons for remaining in SF are similar to mine for staying in the Bay Area. (These I have highlighted in yellow.)

We still have so much to do before we leave San Francisco, and we finally have the time and ease of mind to do it.

We’re within a 15-minute bike ride from major museums, concert halls, theaters, sports stadiums and other cultural offerings we seldom visited before. I’ve mapped out the free-admission days at the Asian Art Museum and the DeYoung Museum.

We really should attend the renowned San Francisco Opera at least once. And we never get enough of Giants games, sitting on the upper deck looking down at first base and out over the bay, our bicycle in free valet parking.

We want to explore more streets by bike, climb all the beautifully tiled stairs up the city’s hills, discover more hole-in-the-wall restaurants and find the best fresh fish in Sunset-district markets.

We have a network of friends, built up since we arrived in 1989, and a strong church community. Some of those friends live in our immediate neighborhood, which has a small-town feel. We run into acquaintances on the sidewalk, shopkeepers know us and a neighbor keeps us abreast of our block’s news when she walks by with her dog.

Within an easy walk [blogger's note: or ten-minute drive] are three grocery stores, our hospital, a library, a post office, a live-music venue and dozens of restaurants and coffee shops. Our “pantry,” as we call it, is the corner store across the street.

A few blocks from our house begin the car-free paths leading through Golden Gate Park and to the Pacific Ocean, where other cyclists recognize us and wave.

And all that’s just in the city. We frequently bike across the Golden Gate Bridge into Marin County or south down Highway 1 along the ocean. The Sierra Nevada are about a three-hour drive away.

We also have unfinished business: We want to continue our research on our 1893 house’s history, according to which the first owners emigrated from Eastern Europe and had a business in the Gold Country before settling in the city. The next owner kicked out his mother-in-law, who then sued him. The house begs us to tell its story.

Meanwhile, we’re sharing its charm with others. We open the door to friends nearly each week for dinner and an evening of quilting. We offer it as a space for fundraisers, music performances and seminars. We greet curious tourists from our stoop and give them a quick history of our block.

Why would we want to leave now?

Well, for one, as a reader writes to remind us: “San Francisco is one of the most expensive places in the country.”

That may be true for housing costs and taxes, but our remaining mortgage payments are low. As retirees, we don’t have some expenses that make living costly, such as school tuition. We seldom eat out. We ditched our car during the pandemic and maximize senior discounts.

I could go on.

It’s a dilemma. I love San Francisco, and I love Kansas. I share the sentiments of author Allen Say, who has straddled lives in Japan and California. In his children’s book “Grandfather’s Journey,” he writes: “The funny thing is, the moment I am in one country, I am homesick for the other.”

We’re beginning to talk of a hybrid solution: Sell the house, move to a small condo, and divide our time among the city, Kansas and travel.

We like our doctors and know how to get around the area. More than that, we know how to get around our house. The ability to find light switches and the refrigerator in the dark should not be underestimated!

Finally, we're lucky that economics is not the prime motivator that it is with many people. We enjoy a beer-budget lifestyle and are unlikely to outlive our savings.

Relocating to a cheaper area just to leave the kids a bigger estate is not a good enough reason to move. Yes, we're aware of other reasons, but this is not that post.

Inheriting a Parent's House: Not a Hallmark movie

It's the plot of a dozen Hallmark movies. A small-town girl (the character is usually female) who moved to the big city years ago returns to dispose of the home she inherited from a parent, grandparent, aunt or uncle.

During the process of putting the property up for sale she meets her high-school sweetheart who is single, divorced, or widowed, and she falls in love with him again. She also missed the small town friendliness more than she realized; the big-city partnership or corporate vice presidency she had been pursuing would not have been fulfilling. In the end she keeps the family home and moves back to the small town to form a family with her former lover.

(WSJ illustration)

But life isn't a Hallmark movie. Inherited homes are usually sold. [bold added]

One of the first things many people do when they inherit their parents’ home these days is put up a for-sale sign.

Deciding what to do with a family property is often both an emotional and financial decision, but the rising costs of renovations, property taxes and utilities are making it harder for adult children to hold on to the real estate, financial advisers say. Higher home prices and mortgage rates have often also made it impractical for heirs to buy out their siblings, said Dick Stoner, a Realtor in Rockville, Md.

The high home prices of the past few years have made the decision to sell even more attractive. If inheritors can unload a house in a hot location for a high price, the proceeds from the home’s sale can help secure their finances and fund goals such as retirement, advisers say.

Older heirs are probably comfortably situated and are unlikely to want to move to a half-century-old homestead in need of a lot of expensive repairs. Also, middle-class estates tend to be house-rich and cash-poor, so whichever sibling wants to keep the house will likely have to sell his existing home to buy out his brothers and sisters and fix the place. That's a real commitment to sentiment, and unrealistic like a Hallmark movie.

Sure, Warren, Easy for You to Say

Hats and no cattle? Hats for distribution at
Berkshire Hathaway's annual meeting.

"There's a sucker born every minute." --attributed to P.T. Barnum, circa 1860.

"Nobody ever went broke underestimating the intelligence of the American people."--H.L. Mencken, 1926.

“What gives you opportunities is other people doing dumb things...In the 58 years we’ve been running Berkshire, I’d say there has been a great increase in the number of people doing dumb things.”---Warren Buffett, May 6, 2023.

With all due respect to Warren Buffett and the managers at Berkshire Hathaway, the vast majority of people, including your humble blogger, 1) don't believe we're dumb like other investors; 2) don't recognize that our moves are dumb as we're doing them.

That's why most of us can't get Warren Buffett's results and should just buy index funds.

Weathering the Storm

Apple lost nearly $1 trillion in value. Its 27% loss was bracketed by the S&P (-19%) and NASDAQ (-33%)

Your humble investor/blogger has seen worse years than 2022 on a percentage basis, but the dollar value of his losses....well, I try not to think about how many hours I'd have to work in my pre-retirement life to make up for them.

The portfolio was down about 20%. AAPL, which fell 27%, is the largest single holding, and less volatile industrials, utilities, bonds, and consumer staples helped to offset AAPL's decline.

We've lived to fight another year, and these days that's not too bad.