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This month I have a collection of interesting articles on a diverse set of topics. I start with resources looking at risk management from different vantage points. We also examine the challenge of opting out of activities and lifestyles of those that surround you.

The Best

I share a great resource to help with your 2021 tax planning. Other resources will help you to provide better inputs and better understand outputs from retirement calculators.

Articles also examine a rare year where a significant number of mutual funds more than doubled in value while we’re also experiencing a resurgent frenzy around bitcoin.

Finally, with all of the political and pandemic related news, I wanted to leave you with a smile on your face. So make sure to read to the end and let me know if I hit the mark.

Have a great month.

Managing Risk

As a lover of outdoor adventure, risk management is a topic I’ve long been fascinated with. I originally started following this blog after reading a guest post Darrow wrote relating the experiences of big wall rock climbing to building wealth that enabled his early retirement.

Years later, I came onto his radar when he read my review of his second book. I connected how his background as an outdoor adventurer shaped his writing on another topic which many people would consider to be very risky, retiring early. Accepting or managing risk in either domain is essential.

That is an admittedly long winded way of explaining why I decided to start off this month’s selections with a conversation that at first glance has absolutely nothing to do with the core question of this blog, Can I Retire Yet?.

There is a lot to learn by how people make risk management decisions in other domains. From the Utah Avalanche Center Podcast, avalanche forecaster Drew Hardesty speaks with Utah’s state epidemiologist Dr. Angela Dunn, Managing Risks With Avalanches, Managing Risks With a Pandemic.

Ben Carlson looked at risk from a different perspective. He applied William Bernstein’s concept of “deep risk” to our current political environment with Deep Risk in the United States of America.

Opting Out

In personal finance, the personal is often more challenging than the finance. This is particularly true when we’re making big life changes that go against the grain of everyone around us.

Cait Flanders and Doc G had a great conversation on the Earn & Invest podcast about Adventures In Opting Out.

The recent Netflix documentary The Social Dilemma has many people thinking about being more intentional with their social media use. Still, with social media so ingrained in our culture, it is hard to completely opt out.

Kristen Bor is the online entrepreneur behind one of my favorite websites for everyday adventurers, Bearfoot Theory. I can imagine how hard it would be for her to completely opt out of social media for nearly half a year while keeping her business afloat. She did it anyway and shared Lessons From My 4-Month Social Media Break And Why Digital Detox Is Necessary.

Taking a Longview

Christine Benz wrote Your 2021 Tax Fact Sheet and Calendar. It is a great one stop resource and checklist for 2021 tax planning. 

Benz’ co-host on the Morningstar Longview podcast, Jeff Ptak, shared fascinating results he found when he explored What to Expect From Funds After They Gain 100% Or More in a Year? Trouble, Mostly.

Benz and Ptak teamed up on the Longview podcast to interview NewRetirement’s Steve Chen, “How Do You Deliver Lifetime Income?

Retirement Calculators

We have an affiliate relationship with Chen’s NewRetirement PlannerPlus retirement calculator, because it is a great tool to assist people through the overwhelm of retirement planning.

We also have an affiliate relationship with Stuart Matthews’ Pralana Gold retirement calculator, because it is a great tool for sophisticated do-it-yourself planners who love it’s computing power and customizability. For Pralana users, the Gold 2021 was recently released.

New features of the Gold 2021 include:

  • the ability to automatically optimize Roth conversions to determine the best conversion percentages and tax-bracket limits to use to maximize lifetime savings, 
  • the Roth conversion optimization process takes into account the ACA subsidy cliff and user-specified IRMAA limits to prevent optimized Roth conversions from excessively driving up your medical insurance costs in early or traditional retirement,
  • detailed income tax calculations (using 2021 tax tables),
  • modeling of Home Equity/HELOC Loans, and
  • incremental improvement on the tool’s performance including faster Monte Carlo calculations and data import and export.

To learn more about these features and other updates, visit the newly developed user forum, and download the new Pralana Gold 2021 retirement calculator, go to the Pralana website.

Regardless of which retirement calculator you prefer, they can only be as accurate as the data you input. You also need to accurately apply the output they produce to guide your decisions. The next couple of articles will help you on those fronts.

Inputs and Outputs

Allan Roth advises using “probabilistic annualized financial market returns” as a better alternative to your market prediction addiction when forecasting future investment returns.

Morgan Housel wrote Two Worlds: So Much Prosperity, So Much Skepticism. This fabulous piece of writing shows that there are always a number of different narratives at any point in time, which makes predicting future market returns, inflation, etc. so incredibly difficult.

A great feature of retirement calculators is being able to quickly visualize the lifetime impacts of decisions such as whether to favor tax-deferred or Roth accounts. I favored tax-deferral in my highest earning years, based on an apples to apples comparison of effective tax rates when contributing vs. taking money from the accounts.

Mike Piper points out that sometimes these types of assumptions are not correct, which can lead to higher tax rates in the future. He writes Retirement Tax Planning Error: Not Planning for Widow(er)hood.

Derek Tharp shares Why 50% Probability Of Success Is Actually A Viable Monte Carlo Retirement Projection.

Detroit Rock City

This month I featured the financial comeback story of Mark Bovair, who I met in Detroit when promoting my book. Another person with a great financial turn around story who I also met on that trip was Amy Blacklock. 

Amy applied FIRE principles after finding them later in life. She recently shared her story on the Choose FI Podcast, demonstrating that even if you didn’t discover FIRE in your 20’s and retire in your 30’s or 40’s, you can apply FIRE principles to Retire Early… For You.

I got a surprise when one of my local friends, Andy LeBlanc, recently told me he was interviewed by another of my Detroit area friends, Andy Hill, after they connected in Hill’s Thriving Families Facebook Community. I knew from our conversations that LeBlanc was smart and interested in personal finance, but honestly I was blown away by just how well the father of four with a single income household was doing. He shared his story: How to Become a Millionaire by 40.

There is a much more important link between Mark, Amy, and Andy than knowing me or a connection to Detroit. The reason I am highlighting their stories is that, with all due respect, there’s nothing particularly exciting or special about any of them. And that’s an important thing for others trying to achieve something similar to see and understand.

These three people all have simple approaches of getting the big things right and doing them consistently. We need to hear more of these stories.

Too often the extremes get glorified. On one extreme, we hear about people who sell everything to go live in a van and eat beans and rice. On the other extreme, we read about people cashing out on a tech start-up or going all in on Tesla or Bitcoin to become wealthy overnight. Speaking of which…

Bitcoin and Belly Laughs

This month, Darrow shared his annual portfolio review. He sheepishly noted how his small position in cryptocurrencies “soared embarrassingly skyward again,” increasing by a whopping 350.7% in 2020 and boosting his overall portfolio returns for the year.

These types of returns are recreating the crypto frenzy of a few years ago. Before wading into these waters, it is wise to remember the many risks involved. Beyond the traditional risks of buying any asset class after it has already been run up in price is a unique risk of cryptocurrencies.

Nathaniel Popper highlighted a fascinating phenomenon. He wrote, Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes.

With everything going on in the world, I wanted to end on a happy note. Popper’s article provides a great transition to a short video that I promise will leave you with a smile on your face. Warning, this clip contains NSFW language.

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Valuable Resources

  • The Best Retirement Calculators can help you perform detailed retirement simulations including modeling withdrawal strategies, federal and state income taxes, healthcare expenses, and more. Can I Retire Yet? partners with two of the best.
  • Free Travel or Cash Back with credit card rewards and sign up bonuses.
  • Monitor Your Investment Portfolio
    • Sign up for a free Personal Capital account to gain access to track your asset allocation, investment performance, individual account balances, net worth, cash flow, and investment expenses.
  • Our Books

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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Disclosure: Can I Retire Yet? has partnered with CardRatings for our coverage of credit card products. Can I Retire Yet? and CardRatings may receive a commission from card issuers. Other links on this site, like the Amazon, NewRetirement, Pralana, and Personal Capital links are also affiliate links. As an affiliate we earn from qualifying purchases. If you click on one of these links and buy from the affiliated company, then we receive some compensation. The income helps to keep this blog going. Affiliate links do not increase your cost, and we only use them for products or services that we're familiar with and that we feel may deliver value to you. By contrast, we have limited control over most of the display ads on this site. Though we do attempt to block objectionable content. Buyer beware.