Bogleheads.org

Rom wrote: ↑Sun Mar 26, 2023 4:27 pm Reconciling a checking account (i.e. balancing your checkbook) is easy. But how do you all reconcile your investment account balances? For example, do you actually verify that the total annual contribution and/or withdrawal amounts are what you expect?

Absolutely! I use Quicken for the Reconciliation and a custom spreadsheet for Asset Allocation and Rebalancing.

Why wouldn’t you?

WoodSpinner

OP,

I believe you will — anecdotal reading of other’s experiences.

Short answer is no. Sequence of Risk returns are tied to volatility. Value stocks have equal or higher volatility than the total market. +1 Many posters on BH have commandeered the term “Sequence of Returns” risk and now use it to pretty much mean “any risk that prevents my portfolio from lasting 30 years”. I would recommending reading one of the many diversification threads. Even assets with 0.8 correlation can help reduce the worst case outcomes. It doesn't even matter if correlations go to 1.0 in a crisis, you have removed the worst outcome of only owning the one that performs worst. It depends on the specifics of the crisis which asset that will be. Exactly. The best way to minimize SW risk is to be thoroughly well-diversified in both ...

OP,

Many thanks, a lot to digest

Do you consider TIPs held to maturity a CASH Equivalent? That didn't work out too well for SVB Bank. Not sure how this relates to my question…. My point is that I would not consider Bill’s recommendations to build an LMP portfolio in TIPs to be using a Cash Equivalent investment. WoodSpinner It really does relate to your question. Because while shorter term TIPS might be considered quasi-cash, longer term tips are subject to enough market fluctuation so as to be at risk for not being available when needed...the definition of cash. SVB bank had that exact issue. Sure, their 20 or 30 year treasury securities might be fine in 20 or 30 years, but they needed that "cash" now. It wasn't cash at all. And if you are willing to hold longe...

Do you consider TIPs held to maturity a CASH Equivalent? As a generalization of course not because you are hostage to timing. Also the terms and conditions regarding the return offered by TIPS are about as opposite to cash as you can get in fixed income. If you really need cash TIPS would be a terrible substitute. In the context of Bernstein's advice TIPS held to maturity are far superior to cash because they are inflation indexed and you may be fortunate enough to obtain them with a positive real return guaranteed at maturity. I would not confuse the concept of an inflation indexed portfolio income stream with holding cash assets. The next closest thing to holding TIPS to maturity is an actual pension such as Social Security but SS has th...

If you're retired, which safe withdrawal rate (SWR) has allowed you actually to grow your nest egg, inflation-adjusted? This response will make me sound like a simpleton compared to the entries above, but all I did was review my spending for the 2 years prior to retirement to get a sense of what I'd need. Then, I set all the dividends in my taxable portfolio to go to my settlement fund. I've been using that money ever since. Every once in a blue moon I have to sell something, but it's rare. This has allowed my tax-deferred and Roth accounts to continue to grow. Even my taxable account has grown, but at a slower rate than it would have, had I not been taking the dividends. Regards, If you are holding dividend queens your SWR using the divid...

Leesbro63 wrote: ↑Tue Mar 21, 2023 7:28 am

WoodSpinner wrote: ↑Tue Mar 21, 2023 7:24 am
Do you consider TIPs held to maturity a CASH Equivalent?

That didn't work out too well for SVB Bank.

Not sure how this relates to my question….

My point is that I would not consider Bill’s recommendations to build an LMP portfolio in TIPs to be using a Cash Equivalent investment.

WoodSpinner

I plan to retire with a 4% SWR for "Fat Fire" that includes international travel, but it's dynamic spending. So only 2% SWR to cover "needs". The other half is discretionary. So if we're in a bear market, I sure as heck wouldn't sell 4% of the portfolio at a loss to go live it up. OldSport, I have heard and read others with a similar plan and it always makes me think …. Why on earth not? Time and health is even more precious than a portfolio balance. Rather than using current returns we chose to develop a better understanding of ourFunded Ratio and built a more resilient portfolio that will meet our Wants as well as your Needs . For instance, our Funded Ratio is 1.2 and we have built an LMP to cover Cashflow needs till ...

Prudence may warrant keeping 2 or 3 years of living expenses liquid and readily accessible in an income producing account. In fairness "prudence" in terms of 2 or 3 years in cash in an "income producing account" has only been heard of frequently around here recently, really during the last year or so. An emergency fund as always been popular, but more in the sub-year range, even for retirees. That’s not correct. In my time on the forum, there has always been a significant group of posters who advocated for keeping several years of net expenses (total expenses minus Social Security & pensions) in cash equivalents during retirement. And Bill Bernstein, amomg other financial notables, have recommended even more years (...

Looks like regulators knew about SVB's problems. They issued warnings but didn't follow up when SVB didn't correct the problems. https://www.nytimes.com/2023/03/19/business/economy/fed-silicon-valley-bank.html "Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations. Those warnings, known as “matters requiring attention” and “matters requiring immediate attention,” flagged that the firm was doing a bad job of ensuring that it would have enough easy-to-tap cash on hand in the event of trouble. But the bank did not fix its vulnerabilities. By July 2022, Silicon Valley Bank was in a full supervisory review — getting a more careful look — and was ultimately rated deficient for gove...

As a novice making QCDs, I made a few via an IRA at TIAA-CREF. They send the check directly to the charity. I was able to determine that TIAA did not provide any address information to the charity, which resulted in my not receiving any evidence of my contribution in the form of acknowledgement from the charity. I'm concerned that I might need that documentation if the IRS comes calling. I've subsequently opened an IRA at Vanguard for the purpose of QCDs. My understanding is that they will send the checks to me and then I can forward them to the charities, along with my letter identifying the fact the check is a QCD and asking for acknowledgement. Do I have a problem with the TIAA QCDs? If so, why does TIAA do it this way? If you receive a...

pjtallman wrote: ↑Sat Mar 18, 2023 5:07 pm

WoodSpinner wrote: ↑Tue Mar 07, 2023 9:42 am

Charles Joseph wrote: ↑Tue Mar 07, 2023 6:14 am I know the standard advice is to withdraw from taxable accounts first in retirement. But if one wants to leave their taxable account for heirs (for the stepped-up basis), how damaging is it to withdraw from tax-deferred first and leave taxable alone as long as possible? Is there a way to calculate this?

Definitely not a Cardinal Sin!

To best gauge the impact use a Retirement calculator where you can vary the funding source. See the WIKI for some popular links….

WoodSpinner

Would you be so kind as to post wiki article link:)

Here you go ….

https://www.bogleheads.org/wiki/Retirem ... d_spending

cbox wrote: ↑Sat Mar 18, 2023 7:44 am If you're retired, which safe withdrawal rate (SWR) has allowed you actually to grow your nest egg, inflation-adjusted?

And how about the future? Do you have any plans to change your SWR?

Asset allocation?

I'd like to compare your experience with my plans for an SWR. Of course, in my planning, the withdrawal rate has to be adjusted upwards when required minimum distributions kick in, and that makes portfolio growth particularly difficult, as it is supposed to, I suppose.

Thanks.

Question ….

Why would you want to grow your Nest Egg in Retirement? For our Retirement, this is considered a Red Flag that means we might be able to spend more consistent with our Plans and Goals.

WoodSpinner

OP,

Wondering if there is an opportunity for Mega-Backdoor Roth conversions via Taxable 401K contributions. Does your plan allow that?

WoodSpinner

I would love his take in using VPW or ABW to help calculate a reasonable spending target for the current year given Future Income streams (SS, Pensions ..) and Expected Returns. Looking for a different approach than a SWR based spending plan.

Thanks

WoodSpinner

Marseille07 wrote: ↑Wed Mar 08, 2023 4:36 pm

watchnerd wrote: ↑Wed Mar 08, 2023 4:30 pm There aren't planned expenditures in retirement?

Property taxes, for instance.

The point isn't that we don't have short-term planned expenses. The question is why hold bonds to pay property taxes every year. Your liability isn't matched at all.

Huh? I have Planned Expenditures just about every year of Retirement (58-90). Magnitude changes but I am NOT Cashflow positive throughout Retirement and will need to spend from the Portfolio.

Why would you think any normal bank let alone a major bank do that kind of thing? I don't know how it works to be honest. why? Because while I think the money is FDIC insured, I do not want to take any chances. It is a POD account with multiple beneficiaries. From my reading I think this should mean the money is FDIC insured, but I don't know of a way to definitively confirm how this all works exactly. I think you are a bit over-reacting. The failure of a single bank does not mean the failure of the entire financial system. That said, if you ever bought I-bonds, you might have your Treasury Direct account login? I have bought I bonds, but I have never bought treasuries of this type at that website. Instead I have used Vanguard for that. Th...

OP,

One of the big things to consider is that Siblings who are not more than 10 years younger are Eligible Designated Beneficiaries and allowed to STRETCH RMDs from an Inherited IRA.

WoodSpinner

Charles Joseph wrote: ↑Tue Mar 07, 2023 6:14 am I know the standard advice is to withdraw from taxable accounts first in retirement. But if one wants to leave their taxable account for heirs (for the stepped-up basis), how damaging is it to withdraw from tax-deferred first and leave taxable alone as long as possible? Is there a way to calculate this?

Definitely not a Cardinal Sin!

To best gauge the impact use a Retirement calculator where you can vary the funding source. See the WIKI for some popular links….

WoodSpinner

OP,

Lots of ways to handle it …

I have them withhold taxes on the conversion.

Estimated Tax Payments also work.

Witholding on other income (e.g. SS) also works.

WoodSpinner

I forget where I read it. It was years ago, but it was to the effect that people that claim at 62 receive on average the same benefit in total dollars received as those that delay until 70. They receive a smaller amount over a longer time frame. Those that delay have higher monthly payments but for a shorter time. Yes - that is how it is designed. You get around the same total amount assuming you die at the age in the SS actuarial table. Your bet is whether you will live past that age or not, if you're concerned about total lifetime benefits. If you are only interested in maximizing the annual benefit, then you would delay. Actually, this is NOT true! SS is NOT Actuarially Neutral …. It doesn’t factor in: - Gender - Health - Family History...

I forget where I read it. It was years ago, but it was to the effect that people that claim at 62 receive on average the same benefit in total dollars received as those that delay until 70. They receive a smaller amount over a longer time frame. Those that delay have higher monthly payments but for a shorter time. Yes - that is how it is designed. You get around the same total amount assuming you die at the age in the SS actuarial table. Your bet is whether you will live past that age or not, if you're concerned about total lifetime benefits. If you are only interested in maximizing the annual benefit, then you would delay. Actually, this is NOT true! SS is NOT Actuarially Neutral …. It doesn’t factor in: - Gender - Longevity Changes - Hea...

Policies sold today will not have the big rate increases older policies had because the policies sold today already include those rate increases in the current pricing. This is true in all 50 states. Independent sources beg to differ: Long-Term Care Insurance: Higher Premiums for Shrinking Benefits: https://www.kiplinger.com/retirement/604759/long-term-care-insurance-higher-premiums-for-shrinking-benefits Regulators across nation warn of this negative effect too (Sep 9, 2022): "..another round of rate hikes for long-term care insurance" .. in line for double- or triple-digit percentage jumps in bills for their long-term care insurance.." https://richmond.com/news/state-and-regional/virginians-face-another-round-of-rate-hikes...

WoW2012 wrote: ↑Sun Mar 05, 2023 10:55 pm
Hire an aging life specialist:
https://www.aginglifecare.org//

and contact a large home care agency in your area.
I used Amada:
https://www.amadaseniorcare.com/

Thanks for the tips, will check them out.

Not everyone can purchase long-term care insurance. You may not be healthy enough to purchase a policy. You should still make a plan. Making a plan for long-term care requires some effort, some research and some serious discussions with those you love and who love you. Your long-term care plan should answer questions like: If you can stay at home, who will provide the hands-on care? Who will manage the care? If you can’t stay home, where will you go? Approximately, how much will your care cost per month? Worst case scenario? Best case scenario? How will the care be paid for? Income sources? Assets? Who will be the durable power of attorney and handle the finances? Who will be the healthcare surrogate and handle healthcare decisions? Are th...

WoW2012 wrote: ↑Sun Mar 05, 2023 12:35 pm

WoodSpinner wrote: ↑Sun Feb 26, 2023 9:23 pm

chassis wrote: ↑Sat Feb 25, 2023 4:26 pm If WoW2012 sells LTC insurance, he/she should recuse him/herself from this thread?

Anyone else agree?

Absolutely NOT!!

He fas done a great job of informing, not SOLICITING.

It’s very valuable insights!

WoodSpinner

Thank you WoodSpinner. You've made my day!

No worries—glad it helped.

We retired early-ish (him) and very early (me) for a reason: we wanted to travel around the western U.S. in an RV while we were still fairly young. After a few years of withdrawals from savings to help fund this lifestyle, we decided that *he* should take his SS at 63.5. This ended the necessity for withdrawals. (I later took mine a few months short of my FRA, at 65). Now, 36 years later, I am alone with a houseful of photos and a head full of memories. My life is circumscribed by my health issues, but definitely not by lack of finances. Although we retired on a shoestring (by Boglehead standards), and we both claimed early ( by the same standards), *and* he lived well beyond the break-even point, *and* he was a decade and a half older tha...

If you look at your Social Security (SS) estimate prior to taking SS, you'll see that SS dangles that much bigger sum at you if you wait till age 70 to claim. So if you claim before 70, you're essentially "leaving money on the table," as they say. If you claimed SS prior to age 70, how did you come to terms with leaving money on the table? Any regrets? Are “they” showing you a lifetime net worth analysis of various claiming scenarios? SS is actuarially neutral. A benefit of claiming early, in addition to the lifetime net worth positive effect, is increased cash flow, starting for example at age 62. Use the RPM tool to see this with all of your own personal inputs in the calculations. Actually, SS is NOT Actuarially Neutral! It do...

OP, I am an avid DIYer and have a very well thought out Retirement Plan. That said, I absolutely think a Financial Advisor (as opposed to an Investment Advisor) can be very worthwhile. In fact, we are in the process of interviewing right now…. Reasoning: My wife will need help making Financial Decisions if I become incapacitated. She has been learning quite a bit from our discussions but she wants help, another set of eyes and additional input. Investment Decisions are pretty minimal at this point. The portfolio is pretty simple and easy to manage. We want to engage before we need help so that we can develop a trusting relationship ahead of time and both of us can evaluate the Decision Making Process and Advice offered. Being a knowledgeabl...

Ray_McKigney wrote: ↑Sat Feb 25, 2023 5:30 pm Good grief.

So far, you are the only one I have read make this allegation!

WoodSpinner

chassis wrote: ↑Sat Feb 25, 2023 4:26 pm If WoW2012 sells LTC insurance, he/she should recuse him/herself from this thread?

Anyone else agree?

Absolutely NOT!!

He fas done a great job of informing, not SOLICITING.

It’s very valuable insights!

WoodSpinner

Quicken for Mac I suspect Quicken could have been a good match for me, as I’m looking for customizability and a wide feature set. However, reviews consistently point out that the Mac version of Quicken is missing many features compared to the Windows version, particularly around investments. There doesn’t seem to be any demo version I could try out - the only way to evaluate it is to purchase a subscription and then apply for a refund with their money-back guarantee. I saw it as arrogant to ask users to purchase the software without having an opportunity to try it, and didn’t want to deal with the hassle of asking for a refund, so I decided not to try Quicken. I've been a Quicken on Windows for years - initially on a PC, then on a Mac usin...

Why does one person choose 50% in bonds while another chooses 40%? Why does someone else choose 50/40/10 where 10% is a pile of cash in a HYSA or money market account? It's all emotion based and nothing more. Some people need an extra 10% in bonds or cash. It makes them feel better. You are overlooking the 2/3 of the equation that isn't emotionally-based, but rational. Risk tolerance is the need, ability, and willingness to take risk. Only the willingness is emotionally-based (to some extent, the "need" as well b/c of greed). But the ability (and largely, need) to take risk has nothing to do with how good you feel, if you depend on nest egg for living expenses and plan to stop working in a year, you have less ability to take risk...

Why does one person choose 50% in bonds while another chooses 40%? Why does someone else choose 50/40/10 where 10% is a pile of cash in a HYSA or money market account? It's all emotion based and nothing more. Some people need an extra 10% in bonds or cash. It makes them feel better. You are overlooking the 2/3 of the equation that isn't emotionally-based, but rational. Risk tolerance is the need, ability, and willingness to take risk. Only the willingness is emotionally-based (to some extent, the "need" as well b/c of greed). But the ability (and largely, need) to take risk has nothing to do with how good you feel, if you depend on nest egg for living expenses and plan to stop working in a year, you have less ability to take risk...

My wife and I hold shares of a MLP (EPD) in a taxable ‘Schwab One Designated Beneficiary JT Account’. I know that if an individual owns shares of a MLP that, upon death, the cost basis is fully stepped-up for the heir(s). But how does the step-up work with MLP shares held in a joint account if one of us dies? Step-up for half of the shares? We are in California, if that makes any difference. Finally, I am considering changing the ownership of the account from ‘Joint Tenant with Rights of Survivorship’ to ‘Community Property’. Everything that I have read says to definitely make this change of ownership. Any reason why I should not make that change? I believe you get a full step up in basis, since California is a community property state.

True or False? These are the two questions that matter (impact outcome): 1) How much cash will you hold as a percentage of your overall portfolio (as compared to your bond and stock percentages respectively)? 2) If/when/how will you rebalance? The rest of the "bucket strategy" really is just window dressing (mental accounting) and has no meaningful impact on outcome. My guess is these two "debaters" are both very clever. They likely already agree that the above is true. Framing this as a debate and friendly controversy between the two of them makes this topic click bait and attracts readers to their respective blogs. I would say False … er maybe. The bucket strategy is also a very effective way of positioning your asset...

I am 37 but looking to retire in 5 years. All I can think about are TIPS , I Bonds, MYGAs, etc. I'm 75; retired 9 years. I have the same thoughts. TIPS for inflation protection; Nominals to lock in rates. Give me the income, I'll find a way to pay taxes. Hopefully I'll do more tax paying and less tax loss harvesting. I’m a novice in this area, but have the same goal as CletusCaddy (retirement in 5 years). I don’t want to sell my equity positions, but am ready to buy TIPS, Ibonds, mygas etc, as long as it’s all in my Vanguard brokerage account. Can you give me some simple examples of funds to buy for the very long term? I.e. buy and hold and get decent returns for retirement? Every time I think about this, my head spins and I do nothing. I’...

Agreed …

I would have liked to see some more pointed questions though.

WoodSpinner

What I don't get in this thread, in your comment and a few others, is the decision to leave no money to children (assuming you have first taken care of yourself in whatever way you desire). In a case where there is a serious estrangement or deep personal issues that go beyond this forum, I would understand disinheritance. But excepting that, is the decision to not leave money to children (who presumable are by that time adults) that it somehow spoils them, or creates negative incentives, or that they make bad decisions with the inheritance? ...For me, it is also the sense that it is more difficult to get ahead today, there are more complicating issues in life so why not use family wealth, at least to some extent, to improve your family (yo...

Most estate tax returns are prepared by lawyers. Most tax preparers have never prepared an estate tax return. In 2009, only 34,000 estate tax returns were filed. When portability became possible, many people thought that there would be a flood of estate tax returns, but the flood never arrived. In fact, the number of estate tax returns decreased. In 2016, only 32,000 estate tax returns were filed. That's why the tax preparers haven't gotten into the business. They're not going to compete with the lawyers for 30,000 estate tax returns when there are 165 million individual income tax returns. We discussed DIY estate tax returns, portability elections, and statistics in this thread from 2022: https://www.bogleheads.org/forum/viewtopic.php?t=3...

My thoughts on the bucket strategy: 1. Bonds probably work better for this purpose than cash (in which case, you're just moving your asset allocation slightly) 2. It could help ride out a few years of a stock market crash - but isn't perfect, you don't know if the crash will be 3 years or effectively much longer (ex. 2000-2009) 3. It would only really be of use during the spenddown phase AKA retirement 4. It would not help during most inflationary periods, which are often bigger threats to retirement than the typical market crash. (1906-1921, 1966-1982) 5. If cash is used for this purpose, it is losing out in the inflationary periods (most savings accounts or CD rates have historically been below the rate of inflation) 6. If cash is used f...

Most estate tax returns are prepared by lawyers. Most tax preparers have never prepared an estate tax return. In 2009, only 34,000 estate tax returns were filed. When portability became possible, many people thought that there would be a flood of estate tax returns, but the flood never arrived. In fact, the number of estate tax returns decreased. In 2016, only 32,000 estate tax returns were filed. That's why the tax preparers haven't gotten into the business. They're not going to compete with the lawyers for 30,000 estate tax returns when there are 165 million individual income tax returns. We discussed DIY estate tax returns, portability elections, and statistics in this thread from 2022: https://www.bogleheads.org/forum/viewtopic.php?t=3...

As said, several times earlier in this thread, the effectiveness of any Strategy needs to be measured both behaviorally and financially. Frankly, the behavioral aspects are probably more important. Is there any evidence that a bucket strategy helps people avoid behavioral errors more than alternatives? Will leave that question for others more expertise and research experience. I suspect it relates to the Personality and Goals of the people implementing an approach for Retirement. https://retirementresearcher.com/retirement-income-style-awareness-profile-risa-and-its-accuracy/ For our family our Bucket (or pseudo LMP) strategy works just fine probably because we like having an approach that adapts our Assets (and our investment allocations)...

My thoughts on the bucket strategy: 1. Bonds probably work better for this purpose than cash (in which case, you're just moving your asset allocation slightly) 2. It could help ride out a few years of a stock market crash - but isn't perfect, you don't know if the crash will be 3 years or effectively much longer (ex. 2000-2009) 3. It would only really be of use during the spenddown phase AKA retirement 4. It would not help during most inflationary periods, which are often bigger threats to retirement than the typical market crash. (1906-1921, 1966-1982) 5. If cash is used for this purpose, it is losing out in the inflationary periods (most savings accounts or CD rates have historically been below the rate of inflation) 6. If cash is used f...

Feel free to point out any of the Christine Benz articles where she demonstrates buckets helping. Of the half dozen papers I have read by her on the subject, I have yet to come across that one... Some people like complexity because they think it means they are sophisticated. I am more than willing to add tons of complexity. I just want it to do something. If buckets were great at reducing SORR, it would be trivial to demonstrate that. But for some reason none of the bucket advocates can every post such a study while everyone who does look at it comes to the ineffective conclusion. The bad news about buckets is that they don't help. The good news is they don't hurt. Feel free to add them. Just don't pretend they are helping. Ms. Benz analyz...

Hello, Over the past decade I have had my grandparents as well as my wife’s grandparents pass away. Each set of grandparents had an estate valued between 800k - 1.5m. One thing I have noticed is that they had that level of wealth of even in their 60s/70s but it did not grow much (even declined some) from then till their death in their 90s. I always thought I should be set up investment-wise in a way where my wealth is still growing, compounding and doubling even in my 70s -90s? Therefore the estates should have been worth more like $2million or more each. I believe the stagnant wealth in the last two decades is due to essentially zero equity exposure, increased costs for nursing home, etc. but I wanted to see if the bogleheads have seen th...

No. The cost of routine maintenance and parts on my BMWs is not all that different than when I had Hondas. The problem is that if you have major repairs, and you use the dealer, BMW, Mercedes, Audi dealers will charge a lot more than a Honda dealer. The trick is either doing the work yourself or finding a good independent mechanic. Do luxury cars break down more often? Depends on the brand. In the most recent consumer reports reliability survey, BMW was ranked 3, only behind Toyota and Lexus. Mercedes was ranked dead last so you can't just say luxury car=unreliable...brand makes a difference. Also, Mercedes came in last largely due to infotainment issues, which wouldn't leave you stranded on the side of the road so there are nuances. BMW a...

For those of you who use spreadsheets to calculate your taxes, do you happen to have any templates or formulas going around? I'd be interested in doing this for myself too, but wouldn't know where to start. Google is your friend, search “ Excel Templates for Federal Taxes” Here is one of many results https://www.wps.com/academy/the-best-10-excel-tax-spreadsheet-templates-for-2022-quick-tutorials-1867161/ You can also look in the WIKI https://www.bogleheads.org/wiki/Tax_estimation_tools FWIW, if you just want to estimate a single years taxes then I would use one of the calculators from the Wiki (link above). OTOH, I think an Excel approach works best when trying to model future taxes and multi-year projections. Lastly, if you are interested...

There is also the issue of taxes. In a Roth, TIPS are understood, aside from how CPI is calculated. In IRA or taxable, there is an inflation drag , potentially significant, and it is possible to lag real purchasing power by 50% of inflation per year. Can you tell me more about the inflation drug mentioned above? Not sure I understand this concept…. TIA WoodSpinner As per feedback from TimeLord, the inflation drag applies just to taxable. If inflation is 8% and you get an 8% adjustment, that adjustment gets taxed, so you are not keeping pace with inflation. Just like getting an 8% raise to "match" inflation at work, you are still losing out to inflation. Ok, I have always seen it referred to as the Phantom Income drag. Appreciate ...