Wealth and Wisdom: Week of March 3, 2025
- Mike Brown
- Mar 3
- 5 min read
Responses are still coming in, but I have some preliminary results from our unofficial poll last week on the so-called “four-percent rule” for retirement withdrawals.
First observation: I have yet to hear from anyone who uses this popular rule to guide their retirement spending. As I expected, these back-and-forth debates seem to be limited to academics, financial advisors with too much free time, and various other navel-gazers. Not retirees in the real world, at least not the ones we know.
Second observation: By and large, retirees who read Wealth and Wisdom don’t appear interested in consuming their nest eggs over the rest of their lives. That’s consistent with what I also read in larger, more scientific polling. Retirees, by and large, would prefer to preserve most if not all of their investment principal, living off dividends, interest, Social Security, other retirement income if at all possible.
Sounds like an antiquated notion these days. Is it still possible to live on your investment income without invading the principal that creates it? Absolutely. We see clients do it successfully every day, year after year. The key is owning investments that not only pay income but consistently increase that income faster than inflation. That’s the secret.
That idea is at the core of our investment philosophy, and you can count on us to continue passing along resources on dividend-growth investing as we find them.
New research shows Generation Z investors (born 1997-2012) are four times as likely to own cryptocurrency than participate in a 401(k) plan. (Reading time: 4 minutes)
Congress has discovered a quicker way to raise tax revenue – by convincing you to convert traditional IRAs and 401(k)s to the Roth version. (Reading time: 4 minutes)
More employers are now allowing workers to roll 401(k) assets to an IRA. Here are three reasons to consider doing it once you reach age 59½. (Reading time: 4 minutes)
Would you rather get an instant pay raise, or lend your money interest-free to the government all year long? Hmm. (Reading time: 2 minutes)
Going from married filing jointly to single can trigger higher taxes and Medicare premiums – but careful planning can soften the blow. (Reading time: 3 minutes)
This article is the subject of our March 27 webinar: “How Tax Planning Changes in the Four Phases of Retirement.” Stay tuned for details. (Reading time: 5 minutes)
Two big lessons in this year’s letter: 1) good investors learn from their own mistakes; and 2) America is still the best place in the world to invest. (Reading time: 20 minutes)
Before you adopt the super-successful as your role models, understand there’s often a difference between how they got there and what they now believe. (Reading time: 5 minutes)
Many people believe time is money. I believe money is time. So, how are you spending yours? (Reading time: 4 minutes)
And Illinois’ is about the size of Saudi Arabia. A fascinating illustration that puts U.S. economic output in perspective with the rest of the world. (Reading time: 2 minutes)
Words to the Wise
“Honesty is a very expensive gift. Don't expect it from cheap people.”
– Warren Buffett
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brown Family Wealth Advisors and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Expressions of opinion are as of this date and are subject to change without notice. Past performance does not guarantee future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
Investors should consider, before investing, whether the investor’s or the designated beneficiary’s home state offers any tax or other benefits that are only available for investment in such state’s 529 savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. There is also a risk that these plans may lose money or not perform well enough to cover education costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state.
Unless certain criteria are met, Roth IRA owners must be 59 ½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Brown Family Wealth Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.
These policies have exclusions and/or limitations. Guarantees are based on claims paying ability of the issuing company. Long Term Care Insurance or Asset Based Long Term Care Insurance Products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 ½ may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. Please consult with a licensed financial professional when considering your insurance options.
Dividends are not guaranteed and must be authorized by the company’s board of directors.
Roth 401(k) plans are long-term retirement savings vehicles. Contributions to a Roth 401(k) are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unlike Roth IRAs, Roth 401(k) participants are subject to required minimum distributions at age 72 (70 ½ if you reached 70 ½ before January 1, 2020).
Cryptocurrency issuers are not registered with the SEC, and the crypto marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.
