Is a sustainable turnaround in small-company stocks under way? Maybe. Since April 2025, the Russell 2000, an index of small-cap stocks, has returned a cumulative 48.1%, outpacing the 35.6% gain in the S&P 500.

Our favorite small-cap exchange-traded fund, the iShares Core S&P Small-Cap ETF (IJR), beat the S&P 500, too — but not by as much, with a 41.4% climb over the same 15-month period. The ETF tracks an index that sifts for profitability, unlike the Russell 2000, and much of the rally's early days favored unprofitable companies.

Enthusiasm around artificial intelligence (AI) has fueled the upturn. The AI buildout is now filtering down to small firms that supply the tools, components and services to the mega-cap firms, according to a recent report from Francis Gannon, co-chief investment officer at Royce Investment Partners, a small-stock shop. Beneficiaries include semiconductor component makers, as well as energy providers and construction companies (think data centers).

A mix of tech, healthcare and industrial stocks has led the charge at Core S&P Small-Cap, including triple-digit gains from broadband service provider Viasat (VSAT) and drugmaker Protagonist Therapeutics (PTGX). Over the past 12 months ending July 31, the ETF gained 33.6%; the S&P returned 19.6%.

Same old story for small caps?

Small-cap rallies have fizzled out before. But earnings growth tends to drive stock prices higher, and profitable companies have been behind recent returns in the Russell 2000. Brandon Nelson, a Calamos Investments fund manager, says he sees "significant and sustained upside" for small-cap stocks from here, supported by earnings-growth momentum and attractive valuations.

Royce's Gannon agrees. He has noticed a "gradually improving" earnings picture for many small-cap stocks. Analysts expect 54% annual growth for Russell 2000 companies in 2026 and 32% in 2027, he says in his report. That's better than the 19% and 15% year-over-year growth in earnings that analysts expect for large companies.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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As the final quarter of 2026 approaches, you may be taking a closer look at your investment portfolio, weighing which losses are temporary setbacks and which positions no longer make sense to hold.

Thankfully, selling an underperforming investment can not only free up cash to put elsewhere but also offer a tax benefit.

When you sell an investment for less than you paid, the loss can offset capital gains from other investments, reducing the amount of profits subject to tax. And if your losses exceed your gains, federal tax rules allow you to use some of those losses to reduce your other taxable income. The key number to know? $3,000.

Knowing how the IRS nets your gains and losses before December 31 — and how unused losses can carry forward to future years — can potentially make a difference in your tax bill. Here's more to know about the capital loss deduction.

How the $3,000 capital loss carryover works

If your capital losses exceed your capital gains for the year, under IRS rules, you generally may deduct the lesser of your net capital loss or $3,000 against other income on your federal income tax return. For taxpayers who are married filing separately, the annual limit is generally $1,500.

Capital losses first offset capital gains, without the $3,000 limit.

For example, if you realize $10,000 of capital gains and $7,000 of capital losses in 2026, the losses generally offset $7,000 of the gains, leaving a $3,000 net capital gain.

If you instead have $10,000 of capital losses and $4,000 of capital gains, you have a $6,000 net capital loss. You can generally use $3,000 of that net loss to reduce other income on your 2026 federal return, and carry the remaining $3,000 forward.

*This is a fictional, simplified example for educational purposes only.

Unused capital losses generally carry forward indefinitely. In future years, they offset capital gains first; if losses still exceed gains, you can generally deduct up to $3,000 per year against other income ($1,500 if married filing separately) until the carryforward is used.

The carryover must be reported on future returns and is subject to the IRS’s netting and carryover rules.

The loss must be realized

It's important to note that an investment that has fallen in value isn't necessarily a tax loss yet.

Suppose you paid $20,000 for an investment and it is now worth $12,000. As long as you continue to hold that investment, you generally cannot claim the $8,000 decline as a capital loss on your tax return. The loss generally becomes realized when you sell the investment.

This is a fictional, simplified example solely for educational purposes.

That's the principle behind tax-loss harvesting. Investors may sell investments that have declined in value and use those realized losses to offset gains from other investments.

Whether to sell, however, is both an investment and a tax decision. A potential tax deduction doesn't necessarily make selling an otherwise appropriate investment worthwhile.

Selling at a loss doesn't always mean you can claim the loss

The IRS wash sale rule can affect investors who sell an investment at a loss and then buy a substantially identical security.

• Generally, if you sell a security for a loss and acquire substantially identical securities within the 30-day period before or after the sale, the loss may be disallowed for current tax purposes.
• That 30-day window on either side of the sale matters at year-end. Selling an investment at a loss in December and buying it back in January can still result in a wash sale.

The rules can also become more complicated when purchases are made across different accounts or through certain investment plans.

For more information, see our report: The Wash Sale Rule: 6 Things to Know.

Capital loss deduction: What to check before Dec. 31

If you've sold investments during 2026, look at the gains and losses you've realized before the year ends. From a tax perspective, the investments currently showing a gain or loss in your account aren't necessarily the same as the ones that appear on your federal return.

The key is to look at the full picture — not just the investment that is up or down, but what you've already realized this year and how a potential sale might affect your tax strategy.

Also, of course, always be sure to follow applicable IRS rules.

Note: Since this information is provided solely for educational purposes and everyone's financial situation is different, consult a trusted tax professional or financial advisor who can help with your specific circumstances.

Related

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• The Capital Gains Tax Exclusion for Homeowners
• Cut Your Losses With Tax Loss Harvesting in 2026
• Federal Capital Gains Tax Rates for 2026: What to Know

Tax preparation and tax planning are not the same thing. For retirees with pensions, the difference could be worth tens of thousands of dollars over the course of their retirement.

When you think about working with a CPA, you probably think about your tax return. And that makes sense — tax professionals help calculate what you owe, identify available deductions and credits and make sure your return is filed correctly.

But there is a big difference between preparing your taxes and planning your taxes. Tax preparation looks backward. Tax planning looks forward (I wrote a book on this called I Hate Taxes — request a free copy here).

That distinction becomes particularly important for retirees with pensions, substantial savings and multiple sources of retirement income. A pension can provide valuable lifetime income, but it also creates a tax-planning challenge that many retirees don't anticipate: Your retirement income could be higher than it was during some of your working years.

As the founder and CEO of Peak Retirement Planning and a CFP® Professional, I recommend that retirees look beyond their federal income tax bracket and consider how decisions affect Social Security taxation, Medicare premiums, capital gains, Roth accounts and estate planning.

Here are eight retirement tax strategies worth discussing with your financial planning team.

1. Don't automatically dismiss Roth conversions

A Roth conversion involves moving money from a traditional IRA or other tax-deferred account into a Roth IRA and paying income taxes on the converted amount today.

In exchange, qualified Roth withdrawals in retirement are generally tax-free, and Roth IRAs aren't subject to lifetime required minimum distributions (RMDs) for the original owner.

The conventional wisdom around taxes is often simple: Defer taxes as long as possible. But that isn't necessarily the best strategy for every retiree.

Consider someone who has a pension, Social Security and several million dollars in traditional retirement accounts. Their future taxable income could be substantial, as RMDs will eventually force money out of tax-deferred accounts, and pension and Social Security income continues arriving regardless of whether the retiree needs additional cash.

This can create a very different tax picture than the one they had while working. A Roth conversion could make sense when the tax cost today is lower than the expected lifetime tax cost of leaving the money in a traditional account.

However, the calculation should include more than the federal income tax bracket. Social Security taxation, Medicare's income-related monthly adjustment amount (IRMAA), state taxes, future RMDs and estate planning goals all affect the result.

The goal isn't necessarily to pay the lowest tax rate this year; it's to pay the lowest lifetime tax bill.

2. Put charitable giving on your tax-planning calendar

If charitable giving is part of your retirement plan, don't wait until tax season to think about it. Beginning in 2026, a new above-the-line charitable deduction allows eligible taxpayers who take the standard deduction to deduct up to $1,000 of qualifying charitable contributions for single filers and $2,000 for married couples filing jointly.

This creates another planning opportunity for retirees who don't itemize deductions.

But retirees with larger retirement accounts have another important tool: Qualified charitable distributions (QCDs). Once you reach age 70½, a QCD allows you to make a charitable contribution directly from an IRA.

The distribution may satisfy part or all of an RMD, subject to applicable limits, while generally keeping the transferred amount out of adjusted gross income.

That distinction matters. For a retiree with a pension, keeping taxable income under control could have ripple effects beyond the income tax return, as it can influence Medicare premiums and the taxation of Social Security.

Charitable retirees therefore shouldn't simply ask, "How much can I deduct?" They should ask, "Which account should the charitable gift come from, and when should I make it?"

3. Stop treating tax preparation as tax planning

Your CPA might prepare an excellent tax return, but that doesn't necessarily mean you're receiving comprehensive retirement tax planning.

Tax preparation is largely reactive — the tax year has ended, your income and transactions are known, and your professional calculates the resulting liability.

Tax planning is proactive. It asks questions such as:

• Should you make a Roth conversion this year?
• How much should you convert?
• Which account should fund your next withdrawal?
• How will an RMD affect your tax bracket?
• Could a large capital gain increase your Medicare premiums?
• Should you delay Social Security?
• How will your tax strategy change after one spouse dies?
• Where should assets be held for tax efficiency?

These decisions often need to happen months or years before the tax return is prepared.

Retirees shouldn't necessarily expect one professional to handle every aspect of the process. Instead, the CPA and financial adviser should communicate so that investment and tax decisions work together rather than operating in silos.

That collaboration can be especially valuable for retirees with pensions, because the interaction between guaranteed income, retirement accounts and government benefits can add a lot of complexity to your plan.

4. Build tax diversification into your retirement portfolio

Most investors understand investment diversification: Don't put all your money in one stock or one asset class.

The same concept applies to taxes. Retirees may potentially benefit from having assets spread among three different tax "buckets":

• Tax-deferred. Traditional IRAs, 401(k)s, 403(b)s and similar accounts
• Tax-free. Roth IRAs and other qualifying Roth assets
• Taxable. Brokerage and other non-retirement accounts

Having everything in tax-deferred accounts could create a problem later. When you need money, you have limited flexibility — withdrawals generally create taxable income, and RMDs will eventually force distributions whether you need the money or not. A Roth account provides another option.

Suppose tax rates are relatively high in a particular year. You could draw more heavily from Roth assets, assuming the withdrawals are qualified, rather than adding more taxable income.

In another year, when your taxable income is lower, drawing from a traditional IRA could be more attractive.

Tax diversification gives retirees choices, and in a retirement that could last 20 or 30 years, flexibility has real value.

5. Pay attention to the "three-legged stool" of retirement income

Pension retirees often have three major sources of income:

• A pension
• Social Security
• Withdrawals from retirement accounts

Individually, each might be beneficial, but together they can create a surprisingly large stream of taxable income. A retiree with a $70,000 pension, $50,000 of Social Security and significant IRA withdrawals could have considerably more taxable income than they expected when they first retired. The consequences extend beyond ordinary income taxes.

This increased income could cause up to 85% of Social Security benefits to be taxable and can also push long-term capital gains into higher brackets, eliminating opportunities to realize gains at the 0% rate.

Medicare Part B and Part D premiums increase through IRMAA, when income exceeds certain thresholds. That means an additional dollar of taxable income isn't necessarily just another dollar subject to income tax. It could also contribute to higher Medicare premiums.

For pension holders, this is one reason tax planning needs to look beyond the tax return.

6. Don't overlook the tax implications of pension decisions

Choosing between pension options is primarily an income-planning decision, but taxes deserve a seat at the table.

For example, someone might be deciding between a monthly pension benefit and a lump-sum distribution. The choice involves numerous factors, including longevity, investment risk, survivor benefits, liquidity and spending needs.

Taxes are only one piece of that decision, but they influence the long-term outcome. Survivor benefits deserve particular attention, as while you may be able to file jointly now and enjoy the more favorable tax brackets, one spouse passing away could result in a severe increase in your tax and IRMAA situation. Not to mention the potential to lose a Social Security benefit.

That combination creates what is commonly called the widow's penalty. A pension strategy that looks perfectly reasonable while both spouses are alive could create a very different tax picture for the surviving spouse.

In some situations, Roth conversions during the couple's joint-filing years could help reduce the future tax burden. The key is to model the decision before making an irrevocable pension election.

7. Make your investment strategy tax-efficient, not just return-efficient

Retirement investing isn't only about selecting investments that you believe will perform well. It's also about deciding where those investments should live.

For example, highly appreciated assets held in a taxable brokerage account create capital gains when sold. Meanwhile, mutual funds often distribute taxable capital gains even when you didn't sell the fund yourself, creating "phantom gains."

Those distributions might make tax planning more difficult because you don't necessarily control when the taxable income occurs. Tax-loss harvesting is another strategy worth considering. Selling an investment that has declined in value generates a capital loss that offsets capital gains, subject to applicable tax rules.

The proceeds could then potentially be reinvested in another investment while maintaining a similar overall portfolio strategy, provided you follow the wash-sale rules.

Asset location matters, too. Growth-oriented investments could be particularly attractive inside a Roth account because future qualified growth can be tax-free.

More conservative investments could potentially fit better in traditional accounts, while certain investments in taxable accounts often benefit from favorable capital gains treatment.

The best location depends on the entire portfolio, not simply the investment itself.

8. Don't let your pension create a retirement tax trap

Here's the overarching issue pension holders need to understand: A guaranteed income stream could make retirement taxes more complicated, not less.

Many retirees have relatively little taxable income, so they remain within the standard deduction or lower tax brackets. Pensioners with significant savings can have a different experience.

Their pension continues producing income. Social Security then becomes partially or largely taxable. Their retirement accounts continue growing. Eventually, RMDs begin. If they don't need those RMDs for living expenses, they often reinvest the money in a taxable account, creating another layer of potential capital gains and taxable investment income.

The result is a cycle in which one source of income affects another. That's why retirees with pensions and substantial assets should look at taxes as a long-term planning issue rather than an annual filing exercise.

The objective isn't to eliminate taxes. Instead, the goal is to coordinate the different pieces of a retirement plan so that you aren't unnecessarily creating taxable income, Medicare surcharges or avoidable tax bills later in life.

The bottom line

Retirement tax planning isn't about finding one magic strategy; it's about understanding how today's decisions affect the next 10, 20 or even 30 years.

• A Roth conversion could be beneficial in one situation and counterproductive in another
• A charitable gift could comprise cash, appreciated investments or an IRA, with different tax consequences
• A pension election could affect the surviving spouse's future tax burden
• And the way investments are allocated among taxable, tax-deferred and Roth accounts may influence how much flexibility you have later

Perhaps most importantly, tax preparation and tax planning should not be confused. Your tax return tells you what happened. A comprehensive retirement tax plan asks what you can do about what happens next.

For retirees with pensions and significant savings, that distinction could be one of the most valuable parts of their retirement strategy.

Now, for those who have a financial planner who says, "I am not a tax professional, go talk to your tax preparer": It may be time to find a new adviser. We believe retirees should work with what we call a "one-stop shop," where the CPA and financial planners work in the same office to ensure the above strategies get implemented.

Related Content

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• 13 Things to Know About How Your Pension Affects Your Taxes in Retirement
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• 10 Retirement Fixes You Can Implement Today to Strengthen Your Financial Plan
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In a survey of over 4,200 Kiplinger readers earlier this year, Charles Schwab was the overwhelming favorite among respondents for internet banks. It's won the annual Kiplinger Readers' Choice Awards in this category three times and it's not hard to see why readers love it.

"Schwab bank is perfect," raved one Kiplinger reader, adding that the internet bank "goes above and beyond and is absolutely the best in customer service hands down."

Whether you've been considering Schwab bank specifically or you're just exploring your options for moving your money away from your current bank, find out why Kiplinger readers voted Charles Schwab the best internet bank for the third time.

1. Manage all of your wealth in one place

One of the most cited reasons Kiplinger readers keep choosing Schwab as their favorite internet bank: the convenience of being able to manage all of their accounts at one institution.

"I like housing our checking, savings, brokerage and IRAs in the same place," wrote one reader. Alongside all the typical checking and savings account options you expect from any bank, Charles Schwab also offers various loan products, retirement accounts, brokerage accounts, money market funds and even a trading platform.

With all of your finances on one dashboard, it's easy to move money around and monitor your complete financial picture.

2. No unnecessary fees

No one likes getting nickel-and-dimed by their bank. At a time when just about every major financial institution seems to be charging everything from "maintenance fees" to ATM withdrawal fees, Schwab's fee-free checking accounts are a breath of fresh air.

A Schwab account "costs nothing and works well," said one reader. Not only will you not have to worry about getting hit with maintenance or inactivity fees at Schwab, but the internet bank also covers fees you might be charged elsewhere.

"They pay any fee on any ATM that I use," said one enthusiastic Kiplinger reader. Schwab is one of the few banks to offer unlimited ATM fee rebates. That's a relief when you need cash. There's no need to track down a Schwab location for a withdrawal. You can head to whatever machine is closest to you and grab the cash you need without worrying about fees.

Those fee rebates apply to any ATM fee anywhere in the world. Between that and the zero transaction fees, Schwab checking accounts are just as great for travelers as they are investors.

3. FDIC insurance and robust security features

When it comes to your cash, you don't want to cut corners with security. That's one area that sets Schwab apart from others. Many internet banks are technically fintech companies that partner with brick and mortar banks to offer banking services. As the 2024 bankruptcy of Synapse Financial Technologies revealed, fintech companies aren't FDIC insured because they aren't technically banks. That can leave your money vulnerable if the company goes under.

You don't have to worry about that here because Charles Schwab is a true member FDIC bank, so your checking account is insured up to the standard $250,000.

In addition to being FDIC insured, Schwab accounts come with other security features like fraud alerts, travel notifications and the ability to quickly and easily lock or unlock your debit card as needed to prevent theft.

Where you bank is just one piece of your financial picture. If you're looking for help bringing your savings, investments and retirement strategy together, a financial adviser can help you build a plan around your goals.

Use the tool below to connect with a vetted financial professional today:

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When the world gets expensive, uncertain and volatile, the investors who win are the ones who move toward tangible assets and tax efficiency, not away from them.

Let me paint the picture.

• Oil is above $80 a barrel and volatile
• Gas is hovering around $4 a gallon nationwide (and above $6 in parts of California)
• The Strait of Hormuz, through which roughly 20% of the world's oil supply normally flows, has been contested and largely closed since early March — the International Energy Agency has called it the largest supply disruption in the history of the global oil market
• Moody's recession model is sitting at 49%
• Mortgage rates have climbed back above 6%

If your instinct right now is to freeze, to sit on your hands and wait for the smoke to clear, I understand the impulse. But I'd also argue that's exactly the wrong move.

Because buried inside this chaos is one of the most compelling arguments for tax-advantaged real estate investing that I've seen in my career.

Let me explain what I mean.

When everything else gets expensive, real estate gets interesting

Inflation is the silent killer of stock market portfolios. When oil prices spike, the cost of everything follows: Food, shipping, manufacturing and consumer goods. Corporate margins shrink. Consumer spending contracts. Stocks, which are priced on future earnings expectations, take the hit.

Real estate, on the other hand, has a fundamentally different relationship with inflation. Rental income tends to rise with inflation, because landlords adjust rents as costs increase. Property values tend to hold or appreciate because the replacement cost of building new construction rises with materials and energy prices. And the debt on the property, which is typically fixed-rate, becomes cheaper in real terms as the dollar loses purchasing power.

In other words, inflation erodes the value of what you owe while increasing the value of what you own. That's not a bad deal.

This dynamic doesn't guarantee positive returns in every scenario, of course. Rising mortgage rates can suppress transaction volume and put downward pressure on prices. But for investors who already own real estate, or who are exchanging into it using tax-advantaged strategies, the inflationary environment actually strengthens the fundamental case for staying in the game.

One crisis, three investors, three strategies

Let's look at how this energy crisis is affecting three very different investors and how each one is using the current environment to their advantage.

Nadia is a 58-year-old landlord who owns a small strip center in suburban Houston. She's been thinking about selling for years, but the capital gains tax bill has always stopped her cold. Now, with commercial property values still holding steady in her market but stock portfolios getting hammered, she's fielding calls from buyers who want to move money out of equities and into something tangible. Her property is suddenly more attractive to a wider pool of buyers than it has been in years.

Nadia's move: Sell now while buyer demand is strong, execute a 1031 exchange and roll the proceeds into a portfolio of Delaware statutory trusts. She defers the entire capital gains tax, exits active management and picks up monthly passive income from institutional-grade real estate, the kind of property that weathers inflationary storms better than a strip center with two vacant units.

She also captures bonus depreciation through DSTs that have undergone cost-segregation studies, creating paper losses that offset her passive income and reduce her current tax bill.

David is a 44-year-old software executive who sold $2 million in company stock when his restricted stock units (RSUs) vested in January. He was already sitting on a significant capital gain. Then the market cratered, and now he's watching his remaining portfolio shrink while staring at a six-figure tax bill on the shares he already sold.

David's move: Invest the capital gains from his stock sale into a Qualified Opportunity Fund within his 180-day window. He defers the tax on those gains through the end of 2026 and, more importantly, starts the 10-year clock toward completely tax-free appreciation on any growth within the QOZ investment.

His money moves from the stock market — which is at the mercy of oil prices, geopolitics and Federal Reserve press conferences — into tangible real estate in communities poised for long-term growth.

Ten years from now, if all goes well, the IRS doesn't see a dime of the new appreciation.

Patricia and Ray are both 67, and they're done. Done with tenants, done with maintenance, done with the stress of checking their brokerage account every morning to see what the latest Strait of Hormuz headline did to their retirement savings overnight. They own a rental duplex worth $800,000 and a stock portfolio that lost 15% of its value earlier in the year. They want simplicity, stability and income they can count on.

Their move: Sell the duplex via a 1031 exchange into DSTs for the real estate side, eliminating landlord duties while deferring the capital gains. For the stock portfolio, they harvest losses on their worst-performing positions to offset gains elsewhere and redirect a portion of any remaining gains into a QOZ fund.

The combination gives them passive income from the DSTs, tax-loss harvesting from the stock sell-off and a long-term growth vehicle in the QOZ. They've turned a crisis into a retirement plan.

Why timing matters more than usual

There are three reasons why this particular moment demands attention.

First, the Opportunity Zone clock is ticking. Deferred gains from earlier QOZ investments come due on December 31, 2026. If you're making a new QOZ investment today, you're still under the OZ 1.0 rules, which means the 10-year tax-free appreciation benefit is fully intact.

And with the OZ 2.0 maps being drawn, which began on July 1, investors who understand both programs will have a significant edge over those who don't.

Second, bonus depreciation is back at 100%, permanently, thanks to the One Big Beautiful Bill Act. For high earners investing in DSTs with cost-segregation studies, this creates the opportunity to offset passive income with accelerated first-year depreciation deductions. In an inflationary environment where every dollar of tax savings matters more, this benefit is amplified.

Third, the energy crisis itself is creating urgency among sellers and opportunity among buyers. Landlords who are spooked by rising costs and uncertain economic conditions are motivated to sell. Investors fleeing the stock market are looking for stable, income-producing alternatives.

The result is a marketplace where well-advised buyers using 1031 exchanges, DSTs and QOZ strategies can acquire quality assets at attractive valuations while deferring or eliminating taxes in the process.

The bigger picture

Every major economic disruption in modern history — the 1973 oil crisis, the 2008 financial collapse, the 2020 pandemic — has reshaped how investors think about risk, tangibility and tax efficiency. The 2026 energy crisis will be no different.

When the dust settles, the investors who moved toward real estate and deployed tax-advantaged strategies during the turbulence will have built portfolios that are more resilient, more diversified and more tax-efficient than those who waited for calm seas that may be years away or may never come.

The tools are all on the table: 1031 exchanges for tax-deferred repositioning, DSTs for passive income and bonus depreciation and Qualified Opportunity Zones for tax-free long-term growth.

Each one is powerful on its own. Used together, in the hands of an adviser who understands how the pieces fit, they become something close to a complete playbook for navigating exactly this kind of environment.

The crisis is real. But so is the opportunity. The only question is whether you're positioned to take advantage of it.

Related Content

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• DST Inventory Just Hit a Record $3.9 Billion: What 1031 Exchange Investors Should Do Next
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• Don't Defer Retirement if You're a Landlord, Defer Taxes Instead
• I'm a Real Estate Investing Pro: This Is How to Use 1031 Exchanges to Scale Up Your Real Estate Empire

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance, as the letter from the editor. We're sharing it here to shed light on our findings for our digital audience, as part of our Trillion Dollar Talk campaign. Subscribe to help you make more money and keep more of the money you make here.

In our cover story this month, we've taken a deep dive into what the Great Wealth Transfer — the estimated $124 trillion of assets that will flow from older generations to heirs and charities through 2048 — means for families. While a good chunk of that transfer will come from a small slice of high-net-worth households, those who aren't among the super-rich are making plans to share their wealth over the coming couple of decades, too.

To gather insight into how families are handling this historic shift, Kiplinger commissioned an exclusive survey, conducted by research firm Morning Consult, of more than 5,000 older parents and adult children, asking for their knowledge and expectations surrounding the inheritance that parents will leave for their heirs.

Drawing from the survey's findings, the story you can find here offers advice on how families can successfully navigate this transition, from determining what information you may want to disclose to your children about their inheritance ahead of time to ensuring that you pass along your values, too. In another story, we outline some key takeaways from the survey.

And in a third story, we provide guidelines on having conversations with your adult children that will leave them well positioned to manage their inheritance and minimize conflicts and confusion among your heirs when the assets change hands.

How real families are handling this transition

As a complement to the stories in our cover package, we asked readers to send us their responses to this question: Are you giving away some of your money or assets to your heirs while you're still living, or do you intend to leave a larger inheritance later? I'm sharing a few responses here.

Many readers said they are offering some financial help while they're still around to see their children enjoy it, and at a stage during which their kids may most need the assistance. Says one reader, "My in-laws gave us money at a time in our lives when we were raising three children, and it was very helpful to our family. We feel that our retirement is secure and have started giving some money each year to our children while they are young adults, as they raise children and buy homes. I feel that it can benefit them more at this stage of their lives than later."

Another reader emphasized the importance of conveying financial lessons along with giving gifts. "Our philosophy for giving to children is to make their lives better, not remove the incentive for hard work and development of good spending habits," he says. He and his wife provided about 35% of the down payment for their son's home purchase, and they explained to him how paying extra on his mortgage can reduce total interest on the loan and shorten the time it takes to pay it off.

Several of you mentioned that you're helping your grandchildren, too, funding their retirement accounts and college-savings plans. One reader is contributing $5,000 yearly to each of his five grandchildren's 529 plans, with a goal of contributing $100,000 total per beneficiary.

"Because I was willing to start early, my family can benefit from the tax-free growth of these funds," he says. And, he notes, if any of the grandchildren don't use all the savings on education expenses, they can roll over as much as $35,000 from the 529 to a Roth IRA tax- and penalty-free, "giving that generation a head start on retirement savings."

A reader whose two oldest grandchildren are in college is boosting their retirement savings — and encouraging them to start thinking about investing—by contributing to their Roth IRAs. And, he says, "Once they begin their careers, we will offer to match their retirement-fund contribution."

More Trillion Dollar Talk

• The Great Wealth Transfer is Creating a New Generation of Family CFOs
• The $124 Trillion Great Wealth Transfer: Fact vs Fiction Quiz
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When money or property changes hands after a loved one passes, the tax rules surrounding inheritance taxes and estate taxes can feel daunting.

Additionally, many people may have heard claims about owing IRS tax bills after an inheritance or intimidating phrases like "death taxes," which can blur the lines between myth and reality. In fact, a new survey conducted by Morning Consult for Kiplinger's Trillion Dollar Talk campaign found that a third of both older adults and adult children are unsure whether heirs will owe taxes on an inheritance, demonstrating the confusion around this topic.

As with all tax rules, knowing the facts is important. So why not test your knowledge with this short quiz to see if you can separate inheritance tax facts from fiction.

More Trillion Dollar Talk

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• What Happens With Taxes When You Inherit a House?

You may envision aging in place and remaining independent throughout retirement. But as you plan for the years ahead, it is also important to consider the possibility that you may eventually need some form of long-term care.

According to the U.S. Department of Health and Human Services, approximately 70% of people turning age 65 can expect to need some form of long-term care during their lives. Long-term care costs can add up quickly, potentially affecting both your retirement savings and the assets you hope to leave behind.

A Morning Consult survey commissioned by Kiplinger as part of our Trillion Dollar Talk campaign found that 47% of parents expect to leave a meaningful inheritance. But even a carefully planned inheritance can be affected by expenses later in life, particularly the cost of long-term care. If leaving money or other assets to your children is important to you, planning for those potential costs now can help protect your own financial security while preserving more flexibility for what you ultimately leave behind.

How long-term care costs can affect an inheritance

Long-term care can be expensive, and what you pay will depend on the type of care you need and where you live. According to the CareScout 2025 Cost of Care Survey, national median costs for several common types of care include:

• In-home care: $80,080 per year, assuming 44 hours of care per week
• Assisted living community care: $6,200 per month, or $74,400 annually
• Nursing home care in a semi-private room: $315 per day, or $114,975 annually
• Nursing home care in a private room: $355 per day, or $129,575 annually

Paying for several years of long-term care could significantly reduce your savings and other assets, leaving less to pass on to your heirs. It's a concern shared by many parents. The Trillion Dollar Talk survey found that 24% of parents surveyed worry long-term care or healthcare costs could deplete their estate.

While you may want to preserve an inheritance for your children, your own retirement and care needs should come first. Planning ahead can help you prepare for those costs while protecting your broader financial goals.

Build long-term care into your financial plan

Because you may need long-term care at some point, it is important to plan for how you would cover the cost before you actually need care.

Savings and retirement income may be part of that plan. If you are eligible for a health savings account (HSA), it can provide a tax-advantaged way to set aside money for future health care expenses.

HSA balances roll over from year to year, allowing you to build up funds that can be used tax-free for qualified medical expenses. You can also use HSA funds to pay qualified long-term care insurance premiums, subject to annual IRS limits based on your age.

Long-term care insurance is another option to consider. Medicare and traditional health insurance generally do not cover ongoing custodial care, such as help with everyday activities like bathing, dressing or eating. Depending on the policy, long-term care insurance can help cover services provided at home, in an assisted living facility or in a nursing home.

Coverage varies by policy, so it is important to understand what you are buying. Policies typically have an elimination period before benefits begin and limits on how much they will pay per day or month and over your lifetime. Premiums, benefit amounts and covered services can also vary considerably.

No single strategy will be right for everyone. Your approach might include a combination of savings, retirement income, insurance and other assets. As your finances and circumstances change, revisit your plan to make sure you have adequate resources to cover potential care costs.

A financial adviser can also help you evaluate your options and how they fit into your broader retirement and estate plans.

Use the tool below to connect with a vetted financial professional:

Make sure your estate plan reflects your priorities

An estate plan can include a will, trust, power of attorney and other documents that outline how you want your finances, property and other affairs handled during your lifetime and after your death. Yet the Trillion Dollar Talk survey found that nearly 3 in 10 parents have no formal estate plan, while 41% have a will.

If you already have an estate plan, review your will, trust, beneficiary designations and other documents periodically to make sure they still reflect your wishes. As part of that review, consider how potential long-term care expenses could affect the assets you expect to leave to your heirs.

When you develop or review your estate plan, keep in mind that the value of your assets today may not reflect what is ultimately passed down to your heirs. Retirement spending and long-term care costs can reduce your assets over time, potentially leaving a smaller inheritance than you originally planned.

Talk to your children about what to expect

Talking to your children about your estate plan can be difficult, and many families put off the conversation. The Trillion Dollar Talk survey found that roughly two in five families have never discussed plans for passing down money and assets. Among parents who haven't discussed their plans in detail, 34% say there are too many unknowns, including how long they will live and how much they will ultimately have to leave behind.

You don't need to provide an exact inheritance amount. Instead, the conversation can focus on the plans you have in place and how your assets may be used during your lifetime, including how to pay for long-term care.

This is also a good time to discuss whether you expect your children to play a role in your care or help manage your finances. Make sure they know where to find important information, including details about your financial accounts, life and long-term care insurance policies, will and other estate planning documents.

Having these conversations before a health crisis gives your children time to ask questions, understand your wishes and prepare for any responsibilities they may take on. It can also help avoid confusion or difficult decisions during an already stressful time.

Ultimately, the inheritance you expect to leave may change as your care needs and expenses evolve. Planning for those costs now can help you protect your own financial security while giving your family a clearer idea of what to expect.

More Trillion Dollar Talk

• The Great Wealth Transfer is Creating a New Generation of Family CFOs
• Long-Term Care Insurance: 10 Things You Should Know
• These Are the 2 Legal Documents Everyone Should Have, Courtesy of an Estate Planning Attorney

For many families, the Great Wealth Transfer starts long before an inheritance. Many adult children are becoming their aging parents' go-to financial decision-makers.

The shift from adult child to the family's Chief Financial Officer (CFO) can happen suddenly after discovering unpaid bills, a suspicious bank wire request or an aging parent falling prey to a scammer. Or the job can be created out of necessity after realizing mom and dad's financial life has grown too complex to manage on their own, says Tyler Rosser, managing director at Oxford Financial Group.

Longer life expectancies, coupled with the staggering $124 trillion in wealth set to change hands through 2048, according to Cerulli Associates, are making the family CFO an increasingly common job description. "It's becoming much more prevalent," says Rosser.

Serving as the de facto family CFO means taking on a broad range of money-related responsibilities, such as overseeing estate planning and long-term care. It's time-consuming and, depending on your parents' situation, difficult, so make sure you take care of yourself throughout your "term" as CFO.

Here are six steps to acting as a family CFO.

1: Start with a conversation

The best plan of action is to sit down with your aging parents while they are still capable of making financial decisions — and before a crisis strikes, such as the onset of dementia — and explain why you'd like to play a larger role in managing their finances and be privy to their estate planning.

"It starts with a conversation with the older parents and getting their buy-in," says Rosser.

"Millions of families [are] going through generational transitions," says Timothy Habbershon, managing director and founder of the Fidelity Center for Family Engagement. Unfortunately, many families have not had these important sit-downs. A Morning Consult survey, commissioned by Kiplinger as part of the Trillion Dollar Talk campaign, found that roughly two in five families have never discussed the plans for passing on money and assets.

"As people get older — especially past 70 — they often become less willing to talk about things like estate planning," Habbershon said. It's a unique opportunity, he says, to "create confidence, closeness and peace of mind for years to come."

2. Collect relevant financial information with an "audit"

To perform CFO duties properly, the adult child in charge must have access to all pertinent financial information for both parents, including the following items.

• Account access: Savings, investment, and retirement account numbers and passwords, as well as combinations or keys to safes and safety-deposit boxes.
• Cash flow: Monthly bill statements and recurring expenses.
• Legal documents: Real estate records, wills, and trusts.
• Insurance: Life, health, and long-term care policies.

"When your parents are aging, the most important thing adult children (acting as CFO) need to do is gather key financial information," says Noah Doyle, CEO of SoundRidge Private Wealth.

Gathering these documents gives the family CFO a fuller picture of their parents' finances. By laying everything out on the table while the parents are still alive and mentally competent, the family CFO also has a better chance at preventing in-fighting between adult siblings who have a stake in their aging parents' estate, adds Doyle.

Ideally, the family CFO will have full transparency into his or her parents' financial life. At a minimum, the CFO should get the parents to grant access to their account statements, preferably via a "duplicate statement" arrangement or "view-only access."

"It gives the family CFO insight into transactions that are coming in and out of a checking account or what withdrawals are coming out of an investment account," says Rosser. "They can log into a Fidelity or Schwab account, for example, and see account data in real time."

A parent can also authorize his financial institution or financial adviser to add the adult child and family CFO as a "trusted contact," which allows the adviser to contact the family CFO if he suspects financial exploitation, fraud, cognitive decline, or can't reach the client. They can do the same for their Social Security accounts.

"The last thing you want is your parent to be susceptible to some sort of elder fraud," says Doyle. "So, anytime a wire goes out, or a transaction looks suspicious or fishy, you know it's time to step in."

A key piece of information that must be clarified, adds Doyle, is whether aging parents have a long-term care policy in place. Often, elderly parents do have a policy but don't share that key information with their adult children.

If a long-term care policy does exist, it's important to evaluate it closely.

"You need to know what the policy number is and understand what the benefits are because if there's ever a time when your parents have to use this policy, it's the children who are going to actually file the claim and know what the care options are," says Doyle.

If there's no long-term care policy in place, the CFO must analyze the parents' assets to determine whether they have enough to cover long-term care and, if so, the most tax-efficient ways to raise the cash to pay for care, says Doyle.

3. Secure power of attorney

In many cases, it's prudent for the family CFO to have the aging parent or parents grant them power of attorney (POA), a legal authorization that lets the child manage the parents' financial affairs. "A power of attorney can encompass everything from paying their mortgage to making sure they have enough liquid resources to satisfy their day-to-day living expenses," says Rosser.

Peggy Sizow, chief fiduciary officer at National Advisors Trust, says a power of attorney can be customized however a family wants. If the family CFO is most suited for financial matters, a financial power of attorney can be set up; if another family member is more comfortable with health care issues, a healthcare power of attorney can be set up in their name, says Sizow.

The financial power of attorney can enable the family CFO to take control over all a parent’s finances, or it can specify certain types of financial accounts, such as bank accounts, brokerage accounts or retirement accounts. "They can be as customizable as you like," says Sizow.

Having full visibility into a parent's financial accounts is also a way to protect them from cybercriminals and other fraudsters and scammers, and in some cases protecting them from themselves, says Rosser.

"It protects them from bad actors," says Rosser. An elderly person may also inadvertently cause financial harm to themselves by continuing to give to charities they have supported their entire life but can no longer afford. A review of checking accounts by the CFO can spot those types of self-inflicted wounds.

"The family CFO can step in and say, 'Mom, you've done such a good job gifting to charity in your life, but you really need to preserve most of those assets for the rest of your life," says Rosser.

4. Build a team of trusted advisers

The family CFO likely won't be an expert in money management, estate planning, or tax planning. So, it's prudent for the adult child managing a parent's finances to connect with and build a relationship with experts when needed, adds Rosser.

"Bringing in a broader advisory group is a really good strategy," says Rosser. "Lean on the professionals around you."

Aging parents may be more willing to listen to a suggestion by the family CFO if it is backed up by the parents' long-time financial adviser or CPA.

"Everyone is sort of singing the same tune," says Rosser. "You get more buy-in that way."

An effective family CFO gathers key financial information from trusted experts and makes a sound financial decision.

"The family CFO's job is to get the information and options from the parents' long-term accountant, long-term estate attorney, long-term financial adviser," says Doyle. "And once they've gotten all the information from the professionals, then they make the best decision that’s best for their family."

5. Create or manage the estate plan

Finalize and verify your parents' estate plan well before mom or dad gets sick or incapacitated, says Sizow. "There are quite a few things that could take place prior to an inheritance," says Sizow.

Creating a trust and titling assets as "payable on death," for example, can help assets pass more easily to heirs and avoid costly, time-intensive probate court, Sizow advises.

It's important that you know the key components of the estate plan, including the names and contact information of the professionals your parents worked with on it, as well as how to access estate documents. Kiplinger's Trillion Dollar Talk survey found that a third of adult children whose parents have estate documents don't know how to access those documents.

6. Act when necessary

Hopefully you will not need to step in on your parents' behalf for years to come. Still, it makes sense to monitor their accounts and keep an eye on their health, especially if they show signs of physical or mental decline.

Read More on Managing an Estate

• How to Talk to Your Family About Estate Planning (Without the Drama)
• Being the Executor of an Estate Is a Thankless Job: Here's How to Do It Well Anyway
• How to Organize Your Financial Paperwork for Your Heirs
• 12 Common Estate Planning Mistakes

Your friend is running a race for a local charity. Do you make a donation?

A natural disaster has occurred. Do you want to donate to help out?

You're checking out at your local store and get a prompt asking if you want to round up for charity. Do you do it?

While many of us are basking in the hazy days of summer vs the cold reality of the months to come, the warm weather seems to bring a lot of "Giving Tuesdays." The asks for everything from swim teams to summer camps to walk-a-thons begin to add up, leaving me to ponder: "Am I giving enough?"

So, while the end of the year feels a long way away, this time of year is a good time to think about creating a giving plan for the rest of the year and identifying how you want to maximize the tax benefits for your gifts.

There are a few key components to unpack with this process. Some include:

• Is charitable giving important to your core values?
• What capacity do you have to give to charities?
• How much can you give to receive a tax benefit?

The causes

Every one of us, without too much trouble, could find, or be asked, to give to a charity every day. There are plenty of groups that need help (some we've never heard of) and plenty of people (some we've never met) looking to raise cash.

Psychologically, if I give to something in a reactionary way — maybe I got put on the spot to give — I'm most likely going to feel less connected to the outcome, and the feel-good nature of the gift will be fleeting.

So, how do conversations with my clients go? Especially with those who might have a significant capacity to give.

I always advise my clients who are charitably inclined to set an intentional giving plan. This means rather than scattering a few dollars here or there based on various fundraisers, pick one or two core causes that align with your personal values.

Local youth sports? Animal welfare? Your alma mater? A local house of worship? Take the time to see if these fit the legacy you want to leave. After determining the cause, spend the time to do the due diligence on the charitable options presented in that space.

Look at the mission and the impact measurements, as well as the financials of an organization so you feel more confident that your investment is going to be spent in a way that you feel good about and aligns with your own goals and values.

What's your giving capacity?

Once you've determined that you want to give to charity, it's important to look at your personal capacity to give.

Everyone has different demands on their bank account. If someone is in a position where they need to pay off high interest debt, build an emergency fund or saving for a large purchase or a college education, their capacity is going to look differently than someone who doesn't have any of those events looming, is fully funding their retirement plans and is in their peak earning years.

While charitable giving is initially driven by values and purpose, it's OK to also want to maximize the financial advantages associated with giving to nonprofit organizations.

By the numbers

It's important to address upfront that while giving your money to something you believe in can feel good, a dollar-for-dollar tax deduction is not guaranteed.

In truth, a deduction lowers your taxable income, rather than your final tax bill.

The next key thing to know is the level of deduction you are eligible for depends on whether you take the standard deduction or itemize.

The standard deduction for 2026 tax year is $16,100 for single filers and $32,200 for married couples filing jointly — leaving many Americans finding themselves in the standard-deduction camp.

For a long time, this meant that you wouldn't get any deduction for giving to charity. But, as a result of the One Big Beautiful Bill Act, passed on July 4, 2025, taxpayers utilizing the standard deduction will now be able to receive a deduction for charitable gifts up to $1,000 for single filers and $2,000 for married couples filing jointly.

For individuals who itemize, there is a new floor for deductions. The amount given to charity that is equivalent to the first 0.5% of adjusted gross income (AGI) is not deductible, and for taxpayers in the top tax bracket, the tax benefit of the charitable deductions is capped at 35% rather than 37%.

Meaning if you have $500,000 AGI and charitable contributions of $20,000, then the first $2,500 (0.5% of $500,000) is not deductible, but the remaining $17,500 is. But, because you're in the highest bracket, the benefit is capped at 35%. In this example, the gift produces about $6,125 of federal income tax savings.

For individuals who want to get more of a tax benefit, but don't give enough in a single year to make the most of these limits, there is an idea called "bunching." Instead of giving a small amount every year, they can bunch two or three years of giving into a single year.

As a reminder, in order for you to receive a charitable deduction for your donation, the charity you choose must be a registered 501(c)(3) organization. So, while giving money to a friend's GoFundMe page after they experience misfortune is kind, it's not tax-deductible.

Additionally, for gifts of $250 or more, taxpayers must receive a formal acknowledgment letter from the charity confirming the donation and making it clear that they didn't receive any goods or services in return for their largesse.

So, should you be giving more to charity? Well, many of us could probably give more.

But a better question — and one I always ask my clients — might be: Are you giving in a way that reflects your values and maximizes the impact you want to have?

When charitable giving is approached with intention rather than obligation, it becomes more than a tax deduction or a response to the latest fundraising appeal.

It becomes an expression of purpose, a reflection of personal values and an opportunity to create meaningful change for the causes and communities we care about most.

Having a plan in place for your charities and your taxes makes great sense — especially as peak giving season approaches.

Related Content

• Donating Complex Assets Doesn't Have to Be Complicated
• Give More But Pay Less: An Essential Guide to Tax-Smart Charitable Giving in 2026
• Five Ways to Maintain Charitable Giving in Volatile Times
• 3 Reasons Young People are Filled With Financial Anxiety — and How to Help
• Tending to Your Estate Plan? Don't Forget to Give Your IRA Some Love

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The Great Wealth Transfer is upon us: A decades-long period in which over $100 trillion in assets are expected to pass from one generation to the next.

This once-in-a-lifetime transfer of generational wealth has long been hyped in the press, online and on social media for good reason. An estimated $124 trillion will flow to heirs through 2048, according to research firm Cerulli Associates. That's a lot of money individuals will have to spend, save and invest — and many don't even know it's coming: A new survey conducted by Morning Consult on behalf of Kiplinger found that while 47% of parents expect to leave a meaningful inheritance, only 24% of adult children expect to receive one.

But there's more to the Great Wealth Transfer than the dollar amount, even though it is eye-popping. There's who actually gets a piece of the pie, how end-of-life expenses will shrink it, and what it means for your financial plan. And that's just scratching the surface.

If you are one of the millions of Americans who stand to inherit wealth during the coming decades, it's important to know everything you can about the Great Wealth Transfer. To test your expertise and help you prepare, take our "Fact or Fiction" quiz.

More Trillion Dollar Talk

• An Expert's Guide to the Estate Planning Documents Everyone Needs
• Is Your Will 'Fair'? Estate Planning Is About More Than Money
• Why the 'Great Wealth Transfer' Could Leave Heirs With Less Retirement Money Than Expected
• Do Your Successful Kids Really Need an Inheritance?

A home is one of the most valuable assets many parents will eventually leave behind. It may also carry decades of memories, making it a particularly personal inheritance. But passing down a house isn't always as simple as handing over the keys.

Even a mortgage-free home comes with ongoing expenses, from property taxes and insurance to maintenance and repairs. And when multiple children inherit a property, questions about whether to keep, sell or live in the home can make matters even more complicated.

And you're not alone in facing these decisions. As the Great Wealth Transfer unfolds, baby boomers are expected to pass trillions of dollars in wealth to younger generations, and homes will be a significant part of that inheritance. A record 340,000 U.S. homes were passed down through inheritance between August 2024 and August 2025, according to Cotality. If your home is likely to be part of that transfer, it's worth deciding what you want that inheritance to look like before your children are the ones left to figure it out.

Have you asked your children what they want?

The first conversation your children have about what to do with the family home shouldn't happen after you're gone. Talking about your plans now gives everyone an opportunity to be candid about what they would realistically want to do with the property and gives you time to adjust your estate plan if their expectations differ from yours.

I can tell you to have this conversation, but I know actually sitting down and having it is another matter. And our research suggests many families feel the same way. In a new survey conducted by Morning Consult on behalf of Kiplinger for our Trillion Dollar Talk campaign, both parents and adult children ranked inheritance among the most uncomfortable family topics to discuss, second to sex and dating.

Yet when forced to choose between the two uncomfortable conversations, 71% of adult children said they'd rather talk with their parents about what they'll inherit than discuss sex and dating. Parents felt similarly: 79% said they'd rather discuss what their children will inherit.

So, while inheritance may not be an easy conversation, your children may be more willing to have it than you think. You don't need to settle your entire estate plan in one sitting.

Start with practical questions about the house. Would anyone actually live there? Would they prefer to sell it? If more than one child is involved, do they have different ideas about what should happen? These conversations may also uncover financial concerns you hadn't considered, such as whether someone could afford the ongoing costs of keeping the home.

And don't assume one conversation settles the matter permanently. A move, marriage, divorce, major renovation or change in finances can alter what's practical for you or your children. Revisit the plan periodically so that what you've put on paper continues to reflect what you and your family actually want. Once you've opened the conversation, these are the questions worth working through together.

1. Do your children actually want the house?

You may love your home and everything it represents, but that doesn't necessarily mean your children will want to keep it. Before making the house a central part of your estate plan, ask your children what they would realistically want to do with it.

Consider where they live and what their lives might look like when they inherit the property. A child who owns a home across the country may have little interest in moving back, while another may not want the financial responsibility of maintaining a second property.

Even if they don't plan to live there, they could face decisions about whether to rent it, maintain it as a vacation home or sell it. The longer those decisions drag on, the more likely the property is to become a financial burden or fall into disrepair.

In my years as a real estate agent, I worked with families who struggled to decide what to do with a home after someone passed away. The property held so many memories that selling it felt painful, but no one wanted to live there. Meanwhile, the bills kept coming and the house continued to deteriorate.

The truth about what makes sense for a family home can hurt, but indecision has a cost, too. Wait too long, and you may find that time, money or the condition of the property has made the decision for you.

Sentimental attachment can also vary from one family member to another. You may see the house as an important part of your family's history, while your children may prefer to inherit assets that are easier to manage or divide. Having that conversation now gives everyone a chance to share their expectations and can help you avoid making plans based on assumptions.

2. Can they afford to keep it?

Even if your children want the house, the next question is whether they can realistically afford to keep it. A mortgage-free home isn't a free home. Property taxes, homeowners insurance, utilities, HOA fees, routine maintenance and major repairs can add up to thousands of dollars each year.

This is something I've thought about with my own home. It's the "big house" where our family gathers, and that makes it important to me. But my children aren't established yet, and the things that make the house great for a large family gathering could make it too much for one person or a small family to maintain. Leaving someone a valuable asset doesn't necessarily mean you're leaving them something they can comfortably afford.

That matters even more when the home represents a large share of what you're leaving behind. Kiplinger's Trillion Dollar Talk survey found that 33% of parents said real estate, including their home, would make up the greatest share of their children's inheritance.

For children who aren't yet financially established, an inheritance could have a big impact on their personal finances. The value tied up in a home could help them buy a home of their own, pay down debt, invest or build long-term financial security. But realizing that value requires a plan. Without one, heirs could instead find themselves responsible for a valuable property they can't afford to maintain or can't agree on what to do with.

If you still have a mortgage, that adds another consideration. Your children may inherit the home, but the debt doesn't simply disappear. Talk through what keeping the house would cost, whether anyone could comfortably take on those expenses and what would happen if they couldn't. In some cases, selling a beloved family home may ultimately make more financial sense than struggling to keep it.

3. What happens if one child wants the home and another wants the money?

Leaving a home to multiple children can turn what seems like a straightforward inheritance into a complicated financial decision. One child may want to keep the family home, while another would rather sell and receive their share of the proceeds.

If one heir wants the property, consider whether they could realistically afford to buy out their siblings without putting themselves under financial strain.

For many parents, dividing an estate equally is the goal. Kiplinger and Morning Consult's Trillion Dollar Talk survey found that 71% of parents with more than one child intend to divide their assets equally among them. But an equal inheritance doesn't necessarily require dividing every asset into equal pieces. Parents can look at their other assets when deciding how to accomplish that.

For example, one child might inherit the home while another receives a larger share of savings, investments or life insurance proceeds. What's equal on paper may not always be what's most practical for your children, so think about both the value you're leaving each child and what inheriting each asset would actually mean for them.

For my family, I've decided I don't want my children to have to wrestle with what to do with our home or risk having the house become a source of disagreement. Our plan is for the home to be sold and the proceeds divided among them. The house has been where our family built memories together, but I'd rather its value help my children build dreams of their own.

Do your children understand the potential tax consequences?

Inheriting a home can come with tax implications, particularly if your children eventually sell it. Under current federal tax law, inherited property generally receives a "step-up" in cost basis to its fair market value as of the owner's date of death.

That can significantly reduce the capital gains taxes an heir might otherwise owe compared with receiving the home as a gift during the parent's lifetime.

For example, if you bought your home for $150,000 and it's worth $500,000 when your children inherit it, their cost basis would generally be stepped up to $500,000. If they soon sold it for about that amount, there might be little or no taxable capital gain. If they kept the house and later sold it for $600,000, however, the increase in value after they inherited it could potentially be taxable.

Federal taxes aren't the only consideration, and the rules can vary depending on how the property is transferred, when it's sold and where you live. Before deciding how to pass down a home, consider talking with an estate-planning attorney or tax professional who can explain how your plan could affect both your estate and your heirs.

Whatever you decide, make sure your estate documents can actually carry out those wishes. An estate-planning attorney can help you determine the best way to transfer the property or direct its sale under the laws in your state.

Make sure the house fits their future

As I get older, I'm starting to see my children in a different light. They're building lives and growing in directions I couldn't have predicted when they were younger. I want the inheritance I leave them to support that growth, not limit the choices they have about what comes next.

For my family, that means planning for our home to eventually be sold and the proceeds divided. But what's right for my family may not be right for yours. Keeping a beloved home in the family could be exactly what your children want, and it could become a place where another generation builds memories of its own.

The important thing is not to assume. Talk with your children about what the home means to them, what they would realistically want to do with it and whether they could afford the responsibilities that come with keeping it. Then make sure your estate plan reflects those conversations.

A family home can be an incredible legacy. Just make sure the legacy you're planning is one your children actually want.

More Trillion Dollar Talk

• What to Do With an Inherited House
• Manage an Inheritance Like a Pro in Just 7 Steps
• What Happens With Taxes When You Inherit a House

As the saying goes, there are only two certainties in life: Death and taxes. But when it comes to estate planning, many Americans are reluctant to spend time thinking about either.

According to a new survey conducted by Morning Consult on behalf of Kiplinger, only about 56% of parents admitted to having a conversation with their children about inheritance. That number drops to just 39% when you ask adult children whether they have had a discussion about family plans for passing on money and assets.

The lack of engagement and understanding is also stark when it comes to estate taxes, according to the survey. Roughly 40% of both children and parents say they are "not sure" whether taxes will apply to any inheritance plans.

Considering the U.S. is already in the beginning stages of the Great Wealth Transfer, where members of the massive baby boomer demographic reach the end of their lives, this kind of procrastination with estate planning comes with a real cost. By some estimates, the collective fortune that will be passed down to younger generations tops well over $100 trillion in value.

Naturally, you want to ensure that your financial legacy stays in the hands of your loved ones, and doesn't get consumed by the Internal Revenue Service. Perhaps you're making arrangements for your own estate. Maybe you're overdue for such a plan and don't know where to start.

Whatever your case may be, take a few minutes for an introduction to the most tax-efficient ways to leave investments to your children.

1. Hold appreciated investments until death

A lot of research shows that the best strategy for investing is to buy and hold stocks for very long periods of time rather than actively trading in and out of fads. And when it comes to tax planning, one of the best strategies for those stocks that have appreciated over the long-term is to hold them until the day you die.

According to IRS rules, heirs are frequently eligible for a "step-up" in cost basis to the asset's fair market value at the date of death. That has the potential to entirely eliminate capital gains taxes on a stock's appreciation over the original owner's lifetime.

Considering long-term capital gains can be 15% or more of the profits on a stock sale, this strategy of handing down the stock itself can result in significant cost savings.

If you've invested wisely and have big winners, one of the most tax-efficient ways to leave investments to your children is to not liquidate shares or to pass on the stock as a gift while you're still alive. Just let your heirs inherit the stock and do the selling directly.

2. Make your 401(k) and IRA beneficiaries your heirs

For many families, one of the biggest legacies they will leave is the retirement funds left in a tax-deferred retirement account like a 401(k). As the term implies, the taxes on this money were deferred when originally invested. So, when withdrawals are made, the IRS is due its share.

The challenge is that withdrawals from such an account are taxed as "ordinary income," so a big one-time windfall results in a big tax bill. For example, current tax brackets include a 24% tax rate on anything above $105,701 – and a hefty 32% rate on anything above $201,776.

Remember, because this ordinary income category includes an employer's paycheck, an heir who makes a decent living may find themselves in a steep tax bracket even if the distribution from your estate is relatively modest.

This is where adding heirs directly to your account can help. The IRS generally allows 10 years for non-spouse beneficiaries to liquidate an account like a 401(k). As such, they can withdraw the money in smaller chunks on their own terms to maximize tax savings.

While there's no way to avoid taxes entirely on an inherited 401(k) or traditional IRA, this longer runway allows heirs to avoid a big one-time tax hit from a single distribution.

3. Regular gifts under the tax threshold

If you want the warm feeling of delivering some cash into your child's hands so you can watch them enjoy it, there are also ways to pass on assets now without running afoul of the tax man. Parents can gradually transfer investments during their lifetime using the federal annual gift tax exclusion.

The maximum annual tax-free gift as of 2026 IRS rules is $19,000. That's a nice chunk of change by itself, but you can also continue to provide that gift annually – and to as many different individuals as you see fit – to transfer significant wealth over time.

What's more, making annual gifts in this manner may actually reduce the size of a taxable estate after death.

As long as you don't cross the threshold in a given year, your heirs won't have to claim the cash on their tax returns. They also can put that money to immediate use to take a trip, put a down payment on a house or anything else – while you have the benefit of seeing them put your gift in action.

4. Irrevocable trusts

It's worth noting that most families won't face significant tax burdens by deploying the strategies above. However, if your estate is particularly large, then a comprehensive irrevocable trust may be in order.

Irrevocable trusts are commonly used by higher-net-worth families to remove future appreciation from a taxable estate by permanently giving ownership of assets to a trust. That trust then manages those assets for the benefit of other people and can deliver the cash according to the grantor's instructions.

This is the big artillery when it comes to the most tax-efficient ways to leave investments to your children.

Trusts have numerous benefits, including protecting assets from creditors or lawsuits as well as taxes and allowing you a measure of control on how your heirs spend their inheritance long after you've passed away.

However, the word "irrevocable" is not to be taken lightly. Many estate planners call such a trust a one-way street where you can't change your mind to get the money back or change your mind about your directions.

That said, these trusts can sometimes span multiple generations and efficiently protect a hard-earned fortune from eroding thanks to mismanagement or heavy taxes.

5. Financial planning is personal, so talk about it

The Morning Consult survey conducted for Kiplinger found that almost a third of all U.S. parents say they have no formal estate plan at all – including failing to document arrangements in a will. There are many reasons for this, of course, including the fact that some families don't have significant assets to pass on.

But it's also simply a matter of avoiding the topic.

Estate planning begins by taking stock of what you want to leave behind when you're gone. These financial goals will naturally be personal, based on your specific portfolio as well as your family situation and your final wishes.

You have a sense of your situation; consider talking with a good estate planning attorney or tax adviser next. These professionals can be well worth their fees by providing tailor-made solutions where various investing and tax strategies can be used in complementary ways.

And most importantly, share your plans clearly with your heirs before it's too late.

Nobody likes to dwell on death or taxes, but they are realities for all of us. If you're confused about how to arrange your estate, the simplest way to begin is by talking about it.

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Do you plan to leave your children a meaningful inheritance? Do you worry about how inflation and long-term-care costs might affect how much you have to give? Have you talked to your kids about your plans? Or, if you're the adult child in this equation, have you broached the subject of inheritance with your mom and dad?

On the eve of what's expected to be a historic generational transfer of wealth in the U.S., Kiplinger set out to explore how families are navigating inheritance planning in their households — what they intend, what they hope for, what they worry about and how they've communicated with each other. Toward that end, we partnered with research firm Morning Consult to field a national survey asking 5,156 Americans — half adult children ages 25 to 60, half parents ages 55 and up — to share their views and circumstances.

Here is a look at what we learned.

Parents and adult children are not on the same page

When it comes to inheritance plans, the survey reveals a big gap in expectations and knowledge between the older and younger generations in many families.

For starters, adult children are far less likely to think they'll be getting an inheritance at all, compared with parents who expect to leave one. Some 42% of younger respondents say they don't expect to receive a meaningful amount, but just 15% of parents say they won't have any money to pass down. On the flip side, about twice as many parents, in fact, do plan on leaving a meaningful inheritance as adult children who anticipate they'll get one.

The kids generally aren't clear what assets will be involved, either. Nearly two-thirds of parents say they have money in cash and savings, but fewer than four in 10 children think those assets are part of the older generation's estate. Adult children are also far less likely to say that life insurance, real estate, an IRA or a 401(k), and other investments are part of their parent's holdings, compared with parents who say they own these assets.

There are also big generational gaps concerning how much financial help parents extend to their children now (parents consistently say they are helping more than children believe); whether it's better to split inheritances evenly among siblings or consider other factors such as financial need or past assistance (more kids favor "fair" over equal than parents, by a 21 percentage point margin); and whether they've discussed an inheritance plan (more parents report having shared information than children recall hearing).

"Both parents and adult children need to do a better job of understanding where the other side is coming from," says Kurt Supe, a certified public accountant and retirement planner at Creative Financial Group in Indianapolis and CFD Investments. "The key is better communication."

There's a gender gap when it comes to inheritances, too.

Sons are more confident about their ability to manage an inheritance than daughters, the survey results show. That's in keeping with other research showing men's greater belief in their financial acumen (although the studies don't necessarily indicate that faith is justified).

Sons are also more likely than daughters to expect an inheritance (30% versus 18%), to say their parents have shared plans for passing down assets, and to know how to locate Mom and Dad's will and other estate-planning documents. Daughters, by contrast, answered "not sure/don't know" to questions more frequently than sons — about how much they'll inherit, whether they'll owe taxes on the bequest, and even whether they prefer financial help from their parents now or a larger inheritance later.

When it comes to talking to the kids about inheritance plans, moms rule. Although both mothers and fathers express the same comfort level in talking to their children about money, dads in practice are more likely to have said nothing to their kids about their inheritance plans (45% of dads have stayed tight-lipped, compared with just 33% of moms).

Financial adviser Stephanie McCullough, founder of Sofia Financial, a financial planning firm for women in Berwyn, Pa., suggests that women who aren't confident about managing their finances may get past the hump if they connect with a friend they feel comfortable talking with about money or if they consult with a professional. Says McCullough: "Find a money buddy or an adviser to help. And if they make you feel stupid, find a different one."

Everybody has big questions about inheritance

Inheritance plans live largely in the dark, the survey shows. Two in five families have never discussed them, and three in 10 parents have no formal plans. Families rank inheritance next to last among topics they feel comfortable discussing — only sex and dating elicit more of a shudder.

And the less wealth parents have, the quieter things get.

It's not just that parents and kids don't communicate; it's that many don't even know what's at stake. More than one-third of adult children and nearly four in 10 parents aren't sure whether the older generation will have any assets left to pass down; just over one-fourth of parents can't estimate the size of their estate; and 43% of children and 38% of parents have no clue how much each of the kids will inherit.

The top reason parents stay silent: "There are too many unknowns about how long I will live or how much will be left." Inflation and other economic pressures top their list of concerns, along with possible long-term-care costs. Kids worry about those things on their parents' behalf, too, and some 16% are also anxious that their moms and dads will need financial help from them instead of the other way around.

Wealthier families — parents with incomes above $100,000 or estates worth $1 million or more — share those same top concerns. But they also keep quiet about estate plans because they do not want their offspring to count on an inheritance (cited by about one in three parents with estates estimated at $500,000 or more, for instance, compared with 19% of parent respondents overall).

That's understandable, says financial psychologist Brad Klontz, who notes, "You don't want your child's financial plan to be your death."

Love and good intentions are abundant

When asked what they'd want done or would do with an inheritance, both parents and adult children focused primarily on practical moves that would help the younger generation. Paying off debt. Buying a home. Saving to build wealth and a secure retirement. Providing a better life for the children of the adult kids and the parents' grandchildren.

Something else families agree on: Most adult children feel ready to manage an inheritance (70%), and nearly as many parents (67%) feel the same.

What would adult children ask their parents, if they felt comfortable? Sure, some (18%) were curious to ask, "How much?" But others wanted to know their parents' wishes for the money so they could respect those intentions (9%), and to understand more about the older generation's experiences (12%). As one adult child put it, "I would ask if they were truly happy in life."

David Chubak, head of wealth management and field management at Edward Jones, says families shouldn't keep questions, feelings and plans about wealth transfer inside. He encourages them to talk in advance of assets changing hands. "These are important conversations that touch every family and every level of wealth," he says. "My best advice is to start now."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

More Trillion Dollar Talk

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Stepping into the role of a trustee is a major responsibility, but it doesn't have to be overwhelming. At its core, being named a trustee means someone placed an extraordinary amount of confidence in your judgment and integrity to handle their assets for the benefit of others.

While the job comes with legal duties — from keeping accurate financial records to protecting trust property — your main objective is simply to carry out the grantor’s vision while looking out for the beneficiaries.

It helps to know right off the bat where your role begins and ends. While you might hear "trustee" and "executor" used in the same breath, they cover different ground: an executor wraps up a person's individual estate through probate, whereas a trustee manages the assets held specifically within a trust. Understanding that distinction is just the starting point.

The real work lies in navigating the day-to-day decisions, balancing competing interests and staying on top of the administrative details that keep a trust running smoothly.

Trustee vs executor: How the roles differ

A trustee holds legal title to assets in a trust and manages them for the benefit of designated beneficiaries, according to the instructions in the trust agreement. An executor is appointed by a will — or designated by a probate court — to manage and settle a deceased person’s individual estate.

While both act as fiduciaries with a strict legal duty to act in good faith and in the best interests of the beneficiaries, their scope of work, duration of responsibility and oversight differ significantly.

Core duties and responsibilities of a trustee

When you accept the role of trustee, you assume a high standard of care known as a fiduciary duty. This means you are legally obligated to act with absolute loyalty to the trust beneficiaries, avoiding conflicts of interest and self-dealing.

Your primary job isn't to make bold financial moves, but to manage and protect the trust's assets strictly according to the grantor's instructions and for the exclusive benefit of the named beneficiaries.

You have the option to say "no" to being a trustee before you start, or you can step down later and pass the role to a successor named in the trust. You are also entitled to be paid for your time, with reasonable compensation usually stipulated in the trust document itself or guided by state law.

If you find the prospect at all intimidating, you can and should get outside help. "There are a lot of different components in how to administer a trust, and you can hire professional advisors to help you do that. And those fees are an appropriate expense of the trust," said Kerry L.S. Mast, a fellow of the American College of Trust and Estate Counsel (ACTEC).

• Duty of loyalty: You must place the beneficiaries' interests above your own at all times. You must strictly avoid self-dealing, conflicts of interest or using trust assets for personal gain, ensuring every decision benefits the trust.
• Duty of prudent administration and investment: Your main job is to protect the assets and investments of the trust, safeguard trust property (real estate, accounts, business interests) and invest liquid assets prudently to balance growth with income needs.
• Duty of recordkeeping and accounting: It’s vital to maintain detailed records of all income, expenditures, distributions and investments and to provide periodic accountings to beneficiaries. Your records should also include an inventory of trust assets, copies of important communications with beneficiaries/professionals and receipts for expenses.
• Duty of impartiality: When a trust has multiple beneficiaries, you cannot show favoritism toward any one individual or group. You must balance competing interests fairly, such as providing sufficient current income to lifetime beneficiaries while preserving principal for remainder beneficiaries.
• Duty to follow the trust terms: The trust instrument serves as your ultimate guide and rulebook. You are legally obligated to execute the grantor's explicit instructions regarding investments, distributions and administrative procedures, departing from those terms only if ordered by a court or required by law.
• Duty to communicate: Transparency is key to maintaining trust and avoiding legal disputes. You must keep beneficiaries reasonably informed about the administration of the trust, provide regular financial accountings and promptly answer reasonable requests for information about trust assets.
• Tax compliance: Obtain an employer identification number (EIN) for irrevocable trusts, file annual trust income tax returns (Form 1041) and issue Schedule K-1s to beneficiaries receiving distributions.
• Distributions: Follow the trust guidelines regarding when and how much to distribute to beneficiaries. Pay attention to discretionary vs mandatory distributions, age milestones and any health or education requirements.

What to do when you become a trustee

While your exact duties depend on the wording of the trust document, every trustee has basic tasks to complete to get the trust in order. This is a good place for a new trustee to begin.

Step 1: Review estate documents. Obtain and thoroughly read the trust agreement, any amendments and associated estate planning documents, such as the will. This step helps you understand the grantor’s exact intent, your specific authority as trustee, payout instructions and any conditions placed on distributions.

Step 2: Categorize assets. Take a complete inventory of all assets connected to the trust, distinguishing between liquid property (such as bank accounts and stocks) and non-liquid property (such as real estate, business interests, jewelry or physical collectibles). Knowing what the trust owns allows you to determine immediate management needs, insurance requirements and appropriate investment strategies.

Step 3: Review beneficiary assignments. Examine beneficiary designations across all relevant accounts and policies to ensure they align with the trust agreement. Verifying primary and contingent beneficiaries helps prevent assets from bypassing the trust unexpectedly or triggering unnecessary probate proceedings.

Step 4: Account titling. Confirm that all designated assets are formally re-titled in the legal name of the trust rather than the grantor’s individual name. Properly titling bank accounts, real estate deeds and brokerage holdings is essential to ensure you have legal control to manage, protect and distribute those assets.

Common problems and issues trustees encounter

Even with the best intentions, administering a trust rarely goes without a hitch. Most complications don't come from bad math or missing paperwork — they stem from human dynamics, vague trust language and the heavy legal burden placed on the trustee. Knowing the most common pitfalls ahead of time is the best way to protect both the trust's assets and yourself.

• Discretionary conflicts: Trust documents often give trustees discretion to approve or deny requests for funds (e.g., for health, education, maintenance and support). Deciding when to grant or deny requests can create friction with beneficiaries.
• Competing beneficiary interests: Balancing the current income needs of lifetime beneficiaries (such as a surviving spouse) with the long-term capital preservation expectations of remainder beneficiaries (children from a prior marriage).
• Personal liability: Trustees can be held personally liable for financial losses resulting from improper investments, failure to pay taxes or misapplication of trust funds.
• Co-trustee deadlock: If multiple co-trustees are named without a clear tie-breaker mechanism, disagreements on investment strategy or distributions can paralyze administration.
• Administrative burden: Managing non-standard assets — such as closely held businesses, rental real estate or complex private equity investments — requires specialized expertise that many trustees may lack.

They trusted you for a reason

If you think you'll be managing a trust for your parents one day, take an opportunity to talk to them. An astonishing 51% of parents and adult children say they rarely or never discuss money, according to the Kiplinger Trillion Dollar Talk survey. The "element of surprise" is fun for birthdays or scavenger hunts, but that's not the case when you are on deck to assume an important responsibility.

Ultimately, serving as a trustee is less about mastering legal jargon and more about executing a series of thoughtful, deliberate choices over time. The real key to success lies in handling the trickier human and administrative moments — such as evaluating tough distribution requests, keeping peace among family members and maintaining pristine records to safeguard yourself from personal liability.

By honoring the boundaries of your role and making each decision with transparency and care, you can carry out the grantor’s vision with confidence and protect the people relying on you.

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

SpaceX has launched a building spree. Next year, the company’s capital expenditures will be nearly $200 billion, according to an estimate by S&P Global. That’s up from nearly $70 billion this year and $21 billion in 2025.

The rapid growth highlights the company’s ambitious plans to build space-based data centers, a computer chip plant, new rockets, massive AI data centers here on Earth, and a lot more.

The company recently announced it will invest $100 billion in a launch facility in Vermilion Parish, Louisiana, with five launch complexes, each with two launch pads. It will also produce propellant and house employees. Construction begins next year and the facility will be able to support thousands of launches per year when completed. The huge chip plant, Terafab, has started construction already, with an initial investment of $17 billion. For the most recent quarter, which ended June 30, capex spending on AI totaled $16 billion.

The level of capex spending puts SpaceX in a class with the rest of Big Tech’s AI hyperscalers. The four major players — Amazon, Alphabet, Meta and Microsoft — will collectively spend more than $700 billion this year, and a lot more than that in coming years.

Such lofty spending comes with huge risk for SpaceX. Many of its plans are for the long term, and customer demand and sales could take years to pan out. Some markets, such as orbital data centers, have both untested business models and technologies. It’s likely SpaceX will push hard to build the infrastructure it needs, making a big bet that demand for rocket launches, orbital data centers, AI compute capacity and computer chips will materialize.

The company’s response to the challenges is to point to the huge potential market opportunities and fast-growing sales. SpaceX says it is on pace to hit a yearly revenue rate of $100 billion by December, mostly from its Starlink broadband service, but also from fast-growing AI sales. CEO Elon Musk says that internal projections show the company reaching $1 trillion in yearly revenue by 2030, which would be an astounding achievement, and frankly improbable. Capex spending is also buoyed by its $100 billion cash pile, which mostly stems from the company’s blockbuster initial public offering earlier this year.

The strategy behind all this building is to take the engineering prowess of SpaceX’s rocket scientists and deploy it elsewhere. There’s no telling what SpaceX will try to build next. For example, Musk is looking into building the blades of gas-powered turbines to accelerate new power generation for SpaceX’s growing AI data centers. S&P Global predicts the company’s yearly capex will be around $230 billion in both 2028 and 2029. We think there are good odds that the figure ends up far higher.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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The amounts are staggering. Over the next 20 years or so, U.S. households are expected to pass an estimated $124 trillion in financial assets to heirs and other beneficiaries, according to Cerulli Associates, a financial services research firm. That includes some $85 trillion going to the Gen X and millennial offspring of boomer and Silent Generation parents, with many trillions more headed to surviving spouses and charity.

Experts are calling it the greatest wealth transfer in history, and the drumbeat heralding its arrival grows louder every day.

To explore how American families are navigating this inheritance wave and offer smart advice to help them meet the challenge, Kiplinger commissioned an exclusive, national survey of more than 5,000 older parents and adult children, conducted by the research firm Morning Consult.

What we discovered is a mix of big hopes and deep uncertainty as the older generation prepares to pass down the assets they've built over a lifetime, the younger generation stands poised to receive them and concerns grow on both sides that outside factors could erode that wealth before it changes hands.

The results also make clear there is a big gap in expectations and knowledge between older and younger family members about the money and property at stake — in part because both sides are deeply reluctant to talk to each other about it. Among the survey's key takeaways:

• Nearly half of older parents expect to leave their kids a meaningful inheritance, but the majority of adult children don't think they're getting anything or aren't sure what might be left for them.
• The amounts involved for most families are not the life-changing windfalls recent headlines suggest but still have the potential for serious impact, from enabling the younger generation to buy a home to helping put their own kids through college.
• Many parents worry that a shaky economy and their own healthcare costs will upend their plans to pass down wealth — even as the children, facing big expenses of their own, wish their elders wouldn't wait so long to send money their way.
• Plans for gifting and inheritances live mostly in the dark because parents and kids would rather talk to each other about almost anything else — only sex and dating are more awkward topics.
• As a result, uncertainty casts a cloud over the inheritance process and keeps many families from taking the steps needed to make the most of these assets — moves that could also help parents and adult children forge an even closer bond.

"People are grappling with being asked to make important decisions that will impact their wealth and the assets they want to pass to future generations without having perfect information," says Valerie Galinskaya, managing director and head of the Merrill Center for Family Wealth.

"The individuals and families I see excel and do this most effectively don't wait for uncertainty to disappear. They build their plans and then adapt as life unfolds."

Here is what you need to know to ensure that you and the people you love plan for inheritance in a way that not only creates a smooth and effective transfer of wealth but also helps bring your family closer in the process.

The Great Wealth Transfer won't be great for everyone

Lest anyone feel bad that the assets parents intend to leave to children in their family can't be counted in eight or more digits, rest assured those megasize amounts that pundits are quoting about the Great Wealth Transfer aren't all they're cracked up to be.

More than half of the expected inheritances coming down the pike over the next two decades will be concentrated among the richest 2% of U.S. households, Cerulli estimates, leaving a lot less to be divided among everyone else.

How much less? About one-fourth of the parents who expect to leave an inheritance to their children estimate their estate will be worth less than $100,000, and about half put the total at less than $500,000, according to the Kiplinger–Morning Consult survey.

Just over one in 10 valued their estate at $1 million or more. Homes made up the greatest share of the wealth to be passed down, followed by life insurance, liquid savings and investments.

The numbers get whittled down even further when you consider that in many families these assets will be divided among more than one child. Roughly one in four parents thought each of their children would inherit less than $50,000 from them, with 44% estimating the amount per child would be less than $250,000.

Bequests in seven-figure territory were rare, cited by just 5% of the parents who expect to leave an inheritance. These findings are largely in keeping with Federal Reserve data, which shows that about half of heirs receive less than $50,000 and 30% of inheritances range from $50,000 to $249,000.

"That big, huge $124 trillion number is irrelevant to the vast majority of people — but it's not that there's nothing coming, either," says Teresa Ghilarducci, professor of economics at The New School for Social Research, who puts the number of adult children who can expect an inheritance at about 30 million.

That's a lot of potential heirs, but relatively few of them know what to expect. While nearly half of parents 55 and older expect to leave a meaningful inheritance for their children, only about one-fourth of adults ages 25 to 60 with at least one living parent think they'll receive one, the Kiplinger–Morning Consult study found.

Driving the disconnect: Relatively few families are talking about inheritance. Roughly two in five have never discussed the older generation's plans for passing along their assets, the survey reveals. And among those who have talked, it's mostly in generalities, such as whether the parents have a will or who will inherit something, rather than specifics, with details about the assets parents have, their value, or Mom and Dad's wishes regarding them.

"When families do not talk, everyone makes up a different story," Ghilarducci says. "That's when trouble starts."

"Parents may think they don't want to burden a child by talking about their death," says certified financial planner Douglas Boneparth, founder and president of Bone Fide Wealth, a New York City firm that specializes in advice for millennials.

"But not communicating a plan or conveying your wishes to the very person or people who ultimately will be responsible for settling your estate and dealing with your affairs will leave them in the dark and scrambling to figure things out while they're grieving over the loss of a loved one. It's an absolute kick in the pants and burdens them more than you could have imagined."

Lack of knowledge can also prevent the younger generation from making informed choices about their lives, financial experts say. That's especially true if the parents intend to gift money during their lifetime — say, to help with the down payment on a home or a grandchild's college education.

"Counting on nothing may seem like the safest approach for adult children, and the easiest emotionally," says adviser Stephanie McCullough, founder and CEO of Sofia Financial in Berwyn, Pa.

"But if knowing that your parents plan to leave you some money might help you breathe a little easier financially now or do a little more for your own kids, it would be good to have some sense of it."

Uncertainty prevails — and paralyzes estate planning

There are plenty of reasons why many families shy away from conversations about money generally and inheritances specifically.

For starters, no one likes to talk about their own mortality or think about their parents dying. Or about the possibility that illness or disability might drain the older generation's savings.

Then, too, many boomers and members of the Silent Generation grew up in homes where talking about money was considered impolite or taboo. (Our survey found that families would prefer to talk about almost anything else — politics, mental health, you name it — than inheritances. Only sex was a more awkward topic.) And, especially at greater levels of wealth, parents may worry that learning of an inheritance could be de-motivating for their children.

Adult kids also don't want to raise the subject and risk coming across to Mom and Dad as grasping. "Bringing up a parent's finances can feel like you're being greedy or morbid," Boneparth says. "Millennials want to know but feel like they shouldn't have to ask."

Yet the top reason families stay silent, the Kiplinger–Morning Consult survey shows, is uncertainty. More than one-third of parents who haven't discussed inheritance plans with their adult children say there are too many unknowns about how long they'll live or how much money they'll have left.

Overall, the top worries among parents about the inheritance they've earmarked for their kids are that, given inflation and other economic pressures, they might not have much left to give and that long-term care or other health costs might deplete their estate. And that was true even at higher levels of income and wealth.

Another source of uncertainty for many parents is whether and how long they may need to help their kids financially now, given sometimes shaky career paths, high housing costs and, for some, hefty student loans, says David Chubak, head of wealth management and field management at Edward Jones.

The Kiplinger–Morning Consult study confirms that lots of parents are providing that support: More than four in five say they have given their adult kids financial assistance, from helping with expenses or debt to regular gifting.

"The reality is we live in an age of financial uncertainty and anxiety like no other," Chubak says.

Bundle all of that uncertainty together and it can become paralyzing, stopping parents from crafting an estate plan or talking about any plans that have been made, says Joshua Morris, vice president of thought leadership and research insights at the Fidelity Center for Family Engagement.

Parents in the Kiplinger survey who were uncertain about the value of their estate, for instance, were half as likely to have a will as parents who were confident about leaving an inheritance, and even fewer had discussed estate-planning issues with their kids.

"The senior generation often feel they need everything completely buttoned up before they say anything to their children, so feeling uncertain about one or two things regarding estate planning shuts down dialogue about everything," Morris says.

"And if you're not having dialogue, that compounds the uncertainty both generations feel, because without conversation, there's no flow of information or talking about concerns and wishes."

What the "kids" really need to know about inheritance

When it comes to inheritances, parents are usually most reluctant to share specific numbers, such as how much money they have saved or expect to leave to each child, financial advisers say.

"Mom and Dad worry if they tell the kids they have, say, a million dollars, the kids will think they're rich — the gifts should be bigger at Christmas, they should be doing more for the grandkids, and why aren't they helping me more when I'm struggling to pay my rent?" says Kurt Supe, a certified public accountant and retirement planner at Creative Financial Group in Indianapolis and CFD Investments.

"Meanwhile, the parents are thinking, We don't know if we have enough to last our lives, and a long-term-care event could wipe out half of what we've got."

If you'd prefer to keep the amounts to yourself, or you just don't know what they'll be, that's fine, advisers say. And if you choose to disclose, keep it to broad ranges and possibilities, because circumstances can change.

More important than the numbers, though, is sharing practical details, such as whether you have a will and, if so, where you've stored it, as well as insight into the reasons for key decisions, such as who your executor will be.

"A lot of times people think about disclosure as a light switch — you're either on or off," says Galinskaya at the Merrill Center for Family Wealth. "We prefer a dimmer-switch approach."

New research from the Fidelity Center for Family Engagement suggests what younger family members most want to know are details that will bring them peace of mind, instead of anxiously wondering what to expect. While the definition of peace of mind differs from individual to individual, and from family to family, common themes pop up.

For instance, a separate Fidelity study found that 76% of the younger generation want to know whether they are named as beneficiaries — something that applies to retirement accounts and life insurance policies as well as being named in a will or trust — but only 35% of baby boomers have shared this information.

A Merrill report identified clarity around expectations as the top concern of younger family members, including whether parents have specific wishes for how any money they inherit should be used. Adult children with a special-needs sibling might be concerned about whether their parents have made provisions for care when they're no longer around to provide it.

The key is to identify the issues that might cause confusion or anxiety in your particular family circumstances. And if younger family members approach the subject respectfully, they don't have to wait for parents to initiate the talk.

Says Boneparth, "The best thing a millennial child can do is give their parents a reason to have a conversation about their estate planning that has nothing to do with money. It's asking about their wishes, their values and their worries."

One exception to the suggestion that parents can stay tight-lipped about dollar figures is if you intend to provide financial gifts during your lifetime, because that knowledge might affect the decisions and choices your children make.

"Let your adult children know whether they can expect financial help from you at key moments in their life when a lump sum would really help, such as when they want to buy a house, or when they graduate from college, get married or have a child," says Ghilarducci. "Be frank and up front about what you have budgeted."

How families can set up for estate transfer success

A smooth transfer of wealth requires a clear plan that lays out who your heirs will be and how you want your assets divided among them. It should also appoint individuals you trust to settle your affairs, with legal documents in place to ensure your wishes are upheld. Few families, however, have such a plan in place.

"Most people take the ostrich approach: I'm going to stick my head in the sand and hope I never have to deal with this," Supe says.

In fact, only four in 10 parents in the Kiplinger–Morning Consult survey say they have a will, just over one-third have designated beneficiaries on retirement accounts or life insurance policies, and a scant 14% have written a letter of instruction outlining their wishes.

Wealthier families are far more likely to have the legal paperwork drawn up, but large swaths of them still go without. About one-third of parents with estates worth more than $500,000, for instance, don't have a will, and nearly half haven't documented what they want to happen to their personal possessions.

"A will is not just for rich people," Ghilarducci says. "Even a modest estate can include a house, retirement accounts, a car and personal property. Somebody has to sort all that out. Parents usually need a will, a financial power of attorney, a healthcare directive and updated beneficiary forms. A simple letter explaining where everything is can save the family a lot of grief."

Once the documents are drawn up, you'll need to communicate that information to your children and other loved ones. Let them know where the papers are stored, whether you place them in a digital file, a physical binder or both.

And it's not a one-and-done exercise; you'll want to revisit and update, as needed, every few years and after major life milestones.

"The plans that worked for you in your fifties may need to be adapted in your sixties, as well as once you retire, when your children get married or you have grandchildren, and then again in your seventies and eighties," says CFP Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Md.

You will also need to consider how taxes may impact a planned inheritance — an issue that causes a lot of confusion for both generations, the Kiplinger survey shows. None but the ultra-wealthy will owe federal taxes, with the amount exempt from estate taxes now at $15 million for individuals and $30 million for couples.

However, about a dozen states have estate taxes of their own, including Oregon (exemption: $1 million), Rhode Island ($1,838,056) and Massachusetts ($2 million). If you live in one of those states and calculate your net worth in seven figures, you'll want to consult a financial adviser about ways to minimize the impact.

A more pressing issue for most families: If you plan to leave money in a traditional IRA or 401(k) to your children, they could be in for a big tax hit. Under a recent rule change, heirs other than a spouse now typically have to withdraw all the money in these accounts by the end of the 10th year after the original IRA owner's death rather than stretching withdrawals over their life expectancy, and they'll pay taxes on the money at their ordinary income tax rates.

A possible double whammy: Those withdrawals could push heirs into a higher tax bracket.

"The biggest threat to eroding the value of an inheritance for adult children who are beneficiaries of traditional retirement plans is the possible tax hit," Supe says.

What to do? Supe suggests you might convert all or a portion of a traditional IRA or 401(k) to a Roth account over time. You'll pay income tax on the amount you convert, but your children will then be able to withdraw the money tax-free when they inherit — a strategy that makes sense if you are in a lower tax bracket than your kids, as is the case for many retirees with offspring who are in their peak earning years.

You'll want to make sure, though, that your withdrawals from the traditional plan don't push you into a higher income tax bracket or income tier for Medicare, which could cause your premiums to increase sharply.

McCullough says some people are reluctant to do the conversion and pay taxes up front because they've been taught to defer, defer, defer, and it's hard to break that mind-set. She says, "Think of the taxes you'll pay as part of what you're gifting to your children, a way to maximize the value of what they inherit from you."

Issues that can topple your inheritance plan

One of the thorniest challenges that many families face in transferring wealth to younger generations: The great now-versus-later debate.

Nearly twice as many adult children in the Kiplinger–Morning Consult study say they'd prefer their parents help them financially now, when their biggest life expenses are upon them, as those who say they favor getting a bigger inheritance later.

With older generations now living longer, healthier lives, it could be a long wait — 10 to 20 years or more — and millennials and Gen Xers are buying homes, raising children and paying for college now. Indeed, Fed data shows that inheritances in middle-class and affluent families most commonly go to recipients in their early to mid-sixties, when those heirs are often closing in on retirement themselves.

Many parents, however, aren't on board — with good reason. The largest segment of parents in the survey (42%) intend to wait to provide an inheritance, most commonly because they want to be sure they have enough money to support themselves throughout their lifetime. Just 14% said they would rather give more now to see their children benefit from the money.

Then, too, a lot of parents are already providing a generous helping hand. Nearly half of the parents in the Kiplinger–Morning Consult survey report they have provided financial help to adult children on an as-needed basis, nearly one-third have helped with other expenses and one-fourth have assisted with major life events.

Similarly, recent Visa research shows that one in four millennial homeowners received help with the down payment from their parents, and about the same number said they couldn't have purchased the house without it.

How can families navigate the competing, compelling needs of both generations? "It's a balancing act," says Cheng. "While parents don't want to give away too much during their lifetime, the flip side is that if you wait until you're gone, did your money really have the greatest impact it could have?"

Cheng suggests putting parameters around the financial help you offer now. For instance, you might provide money for a specific purpose rather than ongoing, unrestricted gifts — say, supplying the money for a down payment, paying for a grandchild's music lessons or sleepaway camp, or contributing to a 529 college-savings plan.

If you do choose to gift annually — in 2026, you can give up to $19,000 per recipient, without filing IRS paperwork; couples can give up to $38,000 — make it clear that you'll revisit your strategy every year and that you may not always be able to give the amount you've been giving, or be able to give at all, if your financial circumstances or needs change.

The key, says Galinskaya, is to avoid binary thinking. In other words, do not consider gifting to be an all-or-nothing proposition and that you'll have to do it forever once you start, or that you'll always have to give the same amount to each of your children. "There's a spectrum of options," she says.

For parents with more than one child, the question of fairness is perhaps toughest of all. Typically, parents are eager to avoid discord among siblings. That's likely why the vast majority of them in the Kiplinger–Morning Consult survey — 71% in all —said they intend to divide their assets equally among their children.

Sons and daughters, however, are less convinced that's the best approach. Although half of the adult children in the survey preferred an even split with siblings, one in five thought inheritances should be based on factors such as how much each of them had helped their parents or gotten financial help in the past (11%) or each one's financial need (9%).

Many also anticipated trouble ahead, with one-third of the adult children respondents expecting an inheritance to create conflict with their siblings. And experts agree: The risk is high.

"Adult children will often view inheritances through the lens of unresolved issues and patterns in the family, especially if the way assets are divided between siblings comes as a surprise to them," says financial psychologist Brad Klontz, coauthor of Psychology of Financial Planning. "Someone feels hurt and thinks, Oh, Mom must have loved you more than me, or You influenced our parents behind my back."

For many parents, it's their worst nightmare.

The best way to avoid that outcome is for parents to talk with their children in advance about how assets will be divided and, critically, why. "Err on the side of equality unless there's a good reason not to — and sometimes there is a good reason not to. Maybe one child works in the family business, one puts in more effort, another has special needs," says Galinskaya.

"A good outcome is less about whether dividing things equally or fairly is best and more about how you communicate your actions and explain the intent behind them."

Leaving a legacy beyond money

Experts say that's generally true of inheritance planning. "The biggest mistake parents can make is passing down money without communicating the family values that drive your thinking," says Klontz. "That could be and should be the most valuable part of your legacy."

Make sure the conversations you have as a family about transferring wealth are two-sided and collaborative, not just parents delivering news and rendering decisions from on high, advisers say. "It's Mom and Dad's money, and they get to choose what to do with it. But children should have a voice, if not a vote, in the process," Galinskaya says.

Rather than a single big talk, think in terms of having a series of smaller chats over a long period. "One misconception about the Great Wealth Transfer is that it is a single point in time, the reading of the will, like the movie scene where everyone is in the room and you find out where all the money goes," says Joshua Morris of Fidelity.

"We like to reframe the transfer as a transition that's happening over decades as parents move into and through retirement — planning, gifting and adapting plans along the way."

Fidelity uses the skiing concept of bunny slopes and black diamond trails to suggest how the conversations should move from initially low-stakes, emotionally easy topics — say, what to do with family heirlooms or where the will and other documents are stored — to more challenging subjects around inheritance and estate planning involving how assets will be divided and their value. (For more about the best ways to approach these conversations, see our article on talking to your adult kids about inheritance.)

Each conversation is an opportunity for parents and children to share feelings as well as facts, and for parents in particular to provide insight about what they view as the purpose behind the assets they've accumulated, big or small, and their wishes for the next generation.

"Whatever number is attached to the wealth you've built, it is the story of your career, the story of your life, and there's a vulnerability and emotionality attached to sharing your story that brings families closer together," Morris says.

Fidelity's latest research bears that out. It found that parents who regularly share planning details and keep family members informed are more likely to report peace of mind and confidence about the future than those who don't. Adult children will probably feel a lot better too.

Says Morris, "That's a payoff for families that goes far beyond money."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Joseph Moore's oldest daughter was 10 years old when she raised the question some parents dread: Are we rich?

She'd noticed that, unlike her friends, she lived in a gated golf course community with celebrities as neighbors, Moore says. The family's affluent lifestyle reflected the wealth Moore had built through real estate investing. But he was quick to challenge his daughter's assumption.

"I said to her, 'No, I'm rich,' " Moore says. "'You have what you've put in your savings account.'"

The distinction was intentional. Moore wanted his daughter to understand he had worked to create his wealth, and she would have to do the same to create her own fortune.

That doesn't mean that Moore's oldest daughter and her younger sister won't benefit from the wealth he has amassed. Rather than save the conversation for adulthood, Moore has a multiphase plan for talking with his daughters, now 13 and 6, about money and how he will share his assets with them. The framework grew out of research for his best-selling book, How to Get Rich in American History: 300 Years of Financial Advice That Worked (& Didn't).

He's already started teaching them basic financial concepts and money-management skills. With his teenager, he has moved on to explaining the kinds of opportunities he'll pay for, such as college, a down payment on a home or a business venture. When his daughters are mature enough, he will share details about what assets he will pass on to them and others, including charities.

"I'd much rather them be handed these things in phases than think that there's some huge pot of gold that they're going to get at my demise," Moore says. The real inheritance he hopes to leave his daughters, he says, is competence: "That to me is the lesson of history, that competence outperforms trust funds."

Most families don't take such a deliberate approach. More than half of parents ages 55 and older surveyed by Morning Consult for Kiplinger say they rarely or never discuss money with their children.

Talking about inheritance is even more taboo. Both generations rank it as one of the most challenging topics to raise — more uncomfortable than talking about mental health, politics, or even your end-of-life wishes and funeral arrangements.

Financial experts say that avoiding these conversations can leave children unprepared to manage wealth and families vulnerable to confusion or conflict when assets eventually change hands.

"I have seen many families really struggle, be torn apart due to surprises about things that came out after people passed away," says Ruschelle Khanna, a therapist with 25 years of experience working with high-net-worth families and author of Inherited Trauma and Family Wealth.

One reason many find it difficult to have these discussions is that there's little historical precedence for having them, Moore says. In the past, few families had the type of wealth that could be bequeathed to the next generation. Since the shift from pensions to 401(k)s began in the early 1980s, Americans have been retiring with more liquid assets that can be passed on when they die, Moore says.

Known as the Great Wealth Transfer, $105 trillion is expected to be handed down — largely by high-net-worth households — to heirs through 2048, according to the consulting firm Cerulli Associates. After removing the top 1% from the equation, there's still an estimated $36 trillion that will be transferred from boomers to their Gen X and millennial children over the next two decades, according to Visa Business and Economic Insights.

"This is a newer conversation for middle-class families," Moore says. "If your parents didn't sit you down and explain how you were going to inherit your wealth, you don't know how to do it with someone else."

That doesn't mean you can't learn. Experts say productive inheritance conversations aren't about revealing dollar amounts all at once. Instead, they recommend treating them as an ongoing dialogue that evolves with your child's age and maturity and any changes in your own circumstances or views. Here's how to start.

The case for talking about inheritance

When it comes to inheritance, there's a transparency gap. Nearly half of parents expect to leave money or assets to loved ones when they die, but only about one-fourth of adult children expect to receive an inheritance, according to the Kiplinger–Morning Consult survey.

The most-common reasons parents give for not talking are that there are too many unknowns, they don't have a clear plan or that they simply haven't gotten around to having the conversation, the survey found.

"I have had clients say, 'I don't care what happens because I'll be dead,'" says Sandi Bragar, chief client officer at wealth management firm Aspiriant in San Francisco.

If you die without any estate-planning documents, such as a will or trust, that spell out who gets what when you die, your state's laws will determine how your assets will be distributed. "People of all net worths ought to have a plan," says Michael Whitty, an estate-planning attorney with Smith, Gambrill and Russell in Chicago. "Even if they are of very modest means, they should have at least a will."

Online will and trust creation services, such as LegalZoom, Trust & Will and Quicken WillMaker & Trust, are low-cost options. However, Whitty advises working with a professional who can ask the right questions about your wishes to tailor estate-planning documents to your needs, rather than trying to rely exclusively on self-help services.

Once you have a plan, it's important to let your family know that you have one and to share some details. "One of the biggest mistakes is not communicating with your children or asking your advisers to communicate on your behalf," says Dawn Jinsky, a partner with Plante Moran Wealth Management in Ann Arbor, Michigan. "They need to hear it from you."

If they don't, your children could make assumptions about the reasons you won't share inheritance information with them. They might think that you don't trust them with money, Jinsky says. Or they might have unrealistic expectations about what they will inherit.

Lack of communication can also leave children unprepared for the wealth they receive or roles they'll have to fill. "For example, if a child is meant to become a trustee of a trust, we want to help the client make sure the child has the skills and competency to fulfill the responsibilities of the trust," Bragar says.

Plus, an unwillingness to discuss your plan and explain the reasoning behind your decisions can lead to resentment or disputes among your children.

"There are plenty of stories of families throughout history who go to the will reading to find out that what they had assumed would be a fair and equitable distribution was not," Moore says. "Your legacy is forever locked into that last moment of conflict."

When to have conversations about inheritance

The best time to start talking about inheritance isn't when you're drafting your estate plan. Ideally, parents should start laying the foundation for discussions as soon as their children can understand the concept of money. "The families that do this the best begin as young as possible," Khanna says.

When children are in elementary school, conversations can focus on family values and money-management basics. As children mature, parents can gradually introduce more information about family finances, including goals for their wealth and, eventually, details about their inheritance planning, Whitty says. The goal is to avoid leaving children to fill in the blanks.

"If you're silent, the kids might think, I don't know if I'll get anything, but I may get a lot," Whitty says. "That could distort their motivations about their own careers, personal development, even their choice of a potential spouse."

Parents who missed earlier opportunities shouldn't assume they have waited too long. Experts say discussions with adult children are essential — as long as they happen before a crisis forces the issue.

"I'm sure a lot of these conversations occur on the deathbed," says David Russell, a wealth adviser with Argent Trust in Ridgeland, Missouri. "At that time, it's too late to do anything planning-wise."

Don't let reluctance to talk hold you back. "If you're not ready to jump into the conversation, find an adviser as soon as possible," Khanna says.

She recommends working with a financial planner with experience facilitating family money talks. (You may be able to find one using the directory at 2164.net/advisors, which lists financial pros who focus on multigenerational planning and family philanthropy.)

If emotional barriers are getting in the way, a financial therapist can help you address fears that are preventing you from sharing inheritance information with your children. You can find a financial therapist through the Financial Therapy Association

What to share about inheritance

Before you talk, Bragar recommends identifying what you hope to achieve. "How do you want your family to think about the wealth that will be left?" she says.

"When people care about their family members and want there to be some level of harmony, it's easier to go into the conversation when you visualize what is important."

Then, consider the questions your children might have. "What type of information might they need about you to live their lives stress-free?" Bragar says. For example, they might be wondering whether you have enough money to live comfortably in retirement or to pay for long-term care.

Bragar says some parents are reluctant to spend savings because they want to leave more for their children — even though that can be the last thing the children want.

Russell has what he calls "who does what when" meetings with his clients and their children to foster conversations about both wealth transfer and long-term-care planning. The focus on logistics can help keep emotions at bay to ensure a more productive discussion, he says.

To replicate the process, parents can create three columns on paper or a computer document to list the people they expect to be involved with their finances as they age and after they die, what role each person will play, and when they are expected to fill those roles. Parents could add a fourth "Why" column to explain the reasoning behind their choices, Russell says.

Note that there's not a column for "How much." Russell says that most of his clients aren't willing to share the details of how much they have.

Other financial advisers meet with the same resistance. "Clients feel like communication means opening the curtain and sharing everything," Jinsky says. "You don't need full transparency with your children."

There are a handful of reasons why it could make sense not to share specifics about how much your children or family members will inherit. For starters, you might end up needing to spend more of your savings than you think, especially if dementia or another chronic condition forces you to pay hundreds of thousands of dollars for many years of care.

Another reason: You might change your mind. "Don't lock yourself into a conversation your children will remember," Jinsky says. For example, one of her clients who lived to age 96 changed her estate-planning documents 32 times — every time she did or didn't get a call on her birthday.

However, Jinsky cautions that full disclosure is needed in some circumstances, such as when you've legally appointed your child to manage your assets when you die. "If you're in your eighties and your child is the trustee, that is a pull-the-curtain-and-share-everything moment," she says.

Another reason parents might opt for sharing some details with children about what they can expect to inherit or receive while you're still living: If knowing, even just broad ranges, might help them make more-informed financial and estate-planning decisions in their own lives, Whitty says.

How to keep inheritance conflict to a minimum

Experts recommend having a family meeting with all of your children to share your inheritance plans if everyone gets along well. This holds true even if you plan to divide your assets unevenly or give the bulk of your wealth to charity, your place of worship or a similar organization.

Children who are mature and have a strong relationship with their parents and each other should understand why, for example, their parents plan to give more to a child with special needs, Whitty says.

When a family meeting isn't the best choice: "If there is resentment, jealousy or in-fighting, or any sort of disrespect, maybe you want to have those conversations individually," Khanna says. It also can be helpful to have a third party, such as an attorney, financial adviser or therapist, mediate potentially difficult inheritance talks to "slow the conversation down and hold space for big feelings," she says.

Another option is to write letters to your children to explain your decisions. This tactic can also be effective if you have children who are unwilling to engage in a conversation because of their fears about aging and death, Khanna says.

Although it's your money at the end of the day, and the approach you choose is ultimately up to you, Khanna says, "I always try to encourage families to make compassionate decisions knowing the impact it will have on people."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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An escalating trade war in North America, on top of more shooting in the Middle East, made for another risk-off trading session on Wall Street, as investors, traders and speculators returned from a three-day weekend. After a mixed open, the main stock indexes extended their collective losing streak to two, with markets focused on incoming inflation data before next week's Federal Open Market Committee (FOMC) meeting.

The economic calendar is abbreviated, but it already feels like a long wait until the release of the August Consumer Price Index (CPI) report before the opening bell on Friday. And that's only after the Bureau of Labor Statistics (BLS) reveals August Producer Price Index (PPI) data on Thursday.

"With geopolitical tensions and oil prices on the rise, the markets may find it difficult to focus on much beyond the inflation discussion," E*TRADE from Morgan Stanley Managing Director Chris Larkin observes.

Indeed, the front-month West Texas Intermediate crude oil futures contract was up 2.4% to $93.65 per barrel on reports of fresh war-related damage to energy infrastructure around the Strait of Hormuz. The global benchmark, Brent Crude oil futures, traded as high as $99.45, approaching the psychologically significant $100 barrier.

The 2-year Treasury yield was up 1.7 basis points to 4.396% vs 4.379% on Friday, while the 10-year Treasury yield (+1.0 bps, 4.794%) and the 30-year Treasury yield (+0.5 bps, 5.251%) also ticked higher.

Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.

Following a blowout August jobs report, odds of a rate hike next week remain near 60%. According to CME Group FedWatch, the federal funds rate futures market is pricing in a 60.4% probability the FOMC boosts its primary benchmark by 25 basis points, up from 59.4% on Friday and 44.4% a month ago.

"Unlike the stock market's reaction to the jobs report, good economic news this week — that is, cooler inflation — should be treated as good," Larkin concludes. "Anything that reduces concerns about possible Fed rate hikes will likely get a warm reception."

Intel looks particularly chipper

Utility stocks were tops among the 11 sectors defined by S&P Global Market Intelligence, while energy stocks and real estate were in the green, too. Tech stocks in general were lower on Tuesday, but semiconductor stocks surged.

And Intel (INTC, +9.1%) was the main mover from a price-action perspective, even after Qualcomm (QCOM, +3.2%) said it inked a deal to supply Amazon (AMZN, -0.6%) with custom AI chips for the e-commerce and cloud computing giant's data centers.

For its part, Intel announced a 10% price increase designed to support its profit margins. That move prompted Northland Securities analyst Gus Richard to upgrade INTC to Outperform (Buy) from Market Perform (Hold).

Richard cited "material progress" in the chipmaker's turnaround program, as well as the pricing power revealed in its price hike amid a CPU shortage.

Advanced Micro Devices (AMD, +5.9%) and Marvell Technology (MRVL, +0.8%) also posted notable gains.

At the closing bell, the tech-heavy Nasdaq Composite was down 0.3% at 26,421, the broad-based S&P 500 had slipped 0.6% to 7,673, and the blue-chip Dow Jones Industrial Average was lower by 1.2% at 52,786.

AMGN's worst day since October 2000

Amgen (AMGN, -10.1%) suffered its steepest one-day sell-off in almost 26 years and was the worst-performing Dow Jones stock on Tuesday after Novartis (NVS, -13.9%) reported the failure of an experimental cardiovascular treatment, pelacarsen, to meet phase 3 trial expectations.

Investors, traders and speculators are selling AMGN because the negative result for Novartis' pelacarsen suggests a similar outcome for Amgen's heart disease drug, olpasiran.

At the same time, BMO Capital Markets analyst Evan Siegerman cited AMGN's year-to-date outperformance vs the S&P 500 as a primary reason for downgrading the healthcare stock to Market Perform (Hold).

"Commercial execution is now the base case with shares up +34%," Siegerman writes, noting gains of more than 13% for the broad index and the NYSE Arca Pharmaceutical Index.

Amgen "continues to face significant LOE [loss of exclusivity] headwinds with more work needed for us to get comfortable with the company's longer-term trajectory." Siegerman maintained his $450 12-month target price for AMGN, upside of more than 14% from its closing price on Tuesday.

According to Dow Jones Market Data, Amgen declined by 13.4% on October 27, 2000.

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With a challenging economy and rising business failures and bankruptcies, the need for thoughtful asset protection planning is greater than ever.

Asset protection is a layered strategy — a financial fortress built one wall at a time — and the right combination of tools depends on your needs, your risk profile and your circumstances.

Understanding what asset protection is — and is not — is essential: Done properly, it is not about hiding assets or evading legitimate debts, but it is entirely lawful and transparent.

The goal is to structure your affairs so that reaching your assets becomes difficult, slow and expensive for a creditor — changing the economics of a dispute so a claimant is motivated to settle for a fraction of the claim, if anything at all.

While the objective is not mere concealment, legitimate steps such as holding real property in an anonymous LLC can keep your ownership out of public view, since title to real property is a matter of public record.

Protection layer No. 1: The right business entity

The foundation of most plans is to operate any active trade or business through a properly formed and maintained entity, most commonly a C corporation, an S corporation or an LLC.

The purpose is liability containment: A shareholder or member is generally not personally liable for the entity's debts, so long as corporate formalities — separate bank accounts, adequate capitalization, documented governance and arm's-length dealings — are respected. However, the extent of the protection depends on the nature of the claim, the creditor and all the circumstances.

For example, a corporation or LLC is formed for liability protection, but the business owner fails to pay the employees' share of payroll taxes. Most states and the IRS provide for personal liability of not only the corporate or company officers but anyone with control over the business accounts.

The benefits of the limited liability entity were lost for failure to pay the employees' share of the payroll tax liability.

Ignoring those formalities invites veil-piercing or alter-ego claims that reach the owner personally. The choice among entities is driven mainly by taxation:

• A C corporation is a separate taxpayer subject to double taxation
• An S corporation is a pass-through but is limited to 100 eligible shareholders and a single class of stock
• An LLC is the most flexible, offering pass-through taxation by default with the option to elect other treatment

Protection layer No. 2: Foundational estate planning

Before layering on advanced tools, everyone should have a foundational estate plan, because incapacity or death can itself expose assets and because the advanced structures are built on these documents.

The core documents are:

• A revocable living trust, to avoid probate and manage assets on incapacity
• A pour-over will, to name an executor and guardians and catch assets left outside the trust
• Durable powers of attorney for financial and healthcare decisions
• An advance healthcare directive
• A HIPAA authorization

Key considerations include properly funding the trust, coordinating beneficiary designations on retirement accounts and life insurance and using discretionary and spendthrift provisions so that what you leave to children is shielded from their future creditors and divorcing spouses.

A revocable trust avoids probate, but, because you retain control, it does not protect your assets from your own creditors during life; a blind trust — which can even be a revocable trust whose name does not identify you — can hold title to real property without revealing your name in public filings.

Protection layer No. 3: Statutory exemptions

State and federal law already shield specified assets without any special structuring, so careful planning means identifying and maximizing the exemptions available where you live.

The homestead exemption protects equity in a primary residence, but the amount varies enormously by state — from a few thousand dollars to a capped figure (California ties its exemption to countywide median home prices), to the effectively unlimited exemptions in Florida and Texas.

Retirement assets receive some of the strongest protection: ERISA-governed plans such as 401(k)s enjoy a federal anti-alienation shield, and IRAs are protected in bankruptcy up to an inflation-adjusted cap.

Most states also exempt some combination of life insurance cash value and annuities, a motor vehicle up to a set value, household goods, tools of the trade, a portion of wages, public benefits such as Social Security and workers' compensation, college savings accounts and a "wildcard" amount — and some protect property held as tenancy by the entirety from the creditors of only one spouse.

A well-known illustration is the O.J. Simpson matter: After a roughly $33.5 million wrongful death judgment for the Goldman and Brown families, little was collected, in part because his NFL pension and other retirement assets were beyond creditors' reach, and he'd moved to Florida, where the homestead exemption is essentially unlimited in value.

Protection layer No. 4: Limited liability entities

Holding investment assets and real estate in limited liability entities such as LLCs and limited partnerships adds a layer of separation and changes the remedies available to a creditor.

Their signature feature is the charging order, which in many states limits a creditor to a lien on distributions rather than the entity's assets — and where the charging order is the exclusive remedy, the creditor cannot foreclose on the interest or force a distribution, improving settlement posture.

The strength of this protection varies by state: Nevada makes the charging order the exclusive remedy even for single-member LLCs, one of the strongest positions in the country, while single-member LLCs are weaker elsewhere (Florida's Olmstead decision is the well-known example, since addressed by statute).

Holding real property in an anonymous LLC also keeps ownership off the public record, though this is privacy, not concealment, and transfers into an entity remain subject to fraudulent transfer law.

Protection layer No. 5: Marital planning

For married couples, careful planning can shift lower-risk assets to the spouse less exposed to liability. The mechanics depend on the marital property regime:

• In community property states, community property is generally reachable for the debts of either spouse, so planning may involve a written transmutation or partition agreement converting it to the separate property of the lower-risk spouse
• In common-law states, titling — and, where available, tenancy by the entirety — controls ownership.

Premarital (prenuptial) and postmarital (postnuptial) agreements are central tools, characterizing assets as one spouse's separate property and defining how future earnings are owned — generally enforceable only with full financial disclosure, independent counsel for each spouse and the absence of duress.

This planning must be proactive: A transfer to a spouse made after a claim arises can be unwound as a fraudulent transfer, and it carries divorce-related risk that should be weighed separately.

Protection layer No. 6: Domestic asset protection trusts

A domestic asset protection trust (DAPT) is a self-settled spendthrift trust that, contrary to the traditional rule, lets you remain a discretionary beneficiary while shielding trust assets from many creditors after a seasoning period.

DAPTs are authorized or permitted in 20 states, which include Alaska, Delaware, Nevada, South Dakota, Tennessee and Wyoming. Nevada is often favored for its lack of a state income tax, short two-year seasoning period and absence of statutory exception creditors.

A DAPT can also enhance privacy, since assets titled in the trust's name are not held in your own name.

Residents of states hostile to self-settled trusts — California, in particular — should plan carefully, often using a third-party trust (for the benefit of a spouse, child or parent) rather than a self-settled DAPT.

Protection layer No. 7: Foreign and hybrid trusts

A fully foreign trust is often considered the highest level of protection because it places assets beyond the easy reach of U.S. courts, but it carries the heaviest U.S. tax compliance from the outset, including foreign trust and foreign account reporting (Forms 3520 and 3520-A and FBAR filings).

The hybrid trust captures the benefit while deferring that cost: It begins as a DAPT and stays domestic until a defined threat arises, at which point the U.S. trustee resigns, and a predesignated foreign trustee takes over.

Because a trust is generally governed by the law of the jurisdiction where the trustee sits, that change shifts the trust into an offshore regime such as the Cook Islands, Nevis or the Cayman Islands — where U.S. judgments are not recognized, registries are private, and, in the Cook Islands, a creditor must prove its case beyond a reasonable doubt with no contingency fees allowed.

Even greater protection comes from also moving the underlying assets offshore, and the heavier reporting is triggered only if the trust actually goes foreign.

One important caution: If you remain within reach of the U.S. courts while your assets sit offshore, a court can order you to repatriate them and hold you in civil contempt — even jailing you until you comply, as happened in FTC v. Affordable Media, LLC and in Re Lawrence.

In both cases, though, the debtor retained control or acted in bad faith; a trust settled in calm weather is harder for a court to reach, but the personal risk of contempt is real.

Critical limitations

The most important rule is timing: Planning must be completed before the events that give rise to the liability.

Every state has a fraudulent transfer statute — the Uniform Fraudulent Transfer Act or its successor, the Uniform Voidable Transactions Act — allowing a creditor to unwind two kinds of transfers:

• Actual fraud, made with intent to hinder, delay or defraud, inferred from "badges of fraud" such as transfers to insiders or after being sued
• Constructive fraud, made without reasonably equivalent value while insolvent, regardless of intent

A voidable transfer can be set aside and clawed back from the transferee.

In asset protection, once a claim is on the horizon, the most effective tools are largely off the table, so implement any plan well in advance and with experienced counsel.

The same principle applies to exemptions, which are powerful but not absolute: In bankruptcy, the homestead exemption is reduced to the extent its value derives from property disposed of within the prior 10 years with intent to defraud a creditor, so last-minute conversions of nonexempt assets into exempt ones can be challenged.

In conclusion

Asset protection works best when it is proactive, layered and tailored to your circumstances.

Beginning with the right operating entity and a sound foundational estate plan, then adding statutory exemptions, limited liability entities, marital planning and — where appropriate — domestic, hybrid or foreign trusts, you can build a financial fortress that stands up to future challenges.

Because the rules vary significantly by state, interact with federal tax and bankruptcy law and turn heavily on timing, this planning should always be done well before any claim arises and with the guidance of qualified counsel.

This article is provided for general informational purposes and does not constitute legal advice. Consult a qualified attorney regarding your specific circumstances.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Spending time with the grandkids tops many retirees' wish lists, and so does helping their adult children out. So it would only seem natural to sign up to become a free nanny. You can check off both boxes, save your kids money, and bond with your grandchidren.

It's what financial planner Kelly Regan's parents have been doing ever since she went back to work at Girard, a Univest Wealth Division, about a year ago. To save $480 a month or nearly $5,800 a year on daycare, Regan's parents watch her 17-month-old twin daughters on Fridays. The arrangement works for both sides — Regan and her husband save money, and her parents get fulfillment from their granddaughters.

"We coordinate calendars about a month ahead, so if they can't watch them one Friday, my husband and I have time to pivot. We understand they're doing this for free and don't want them to miss out on things if we can find other coverage," said Regan. "We also bought a house 20 minutes from them three years before we had kids, knowing my mom had expressed interest in helping. Being close makes it easy for them to come and go without long commutes."

Depending on where you live, the age of your grandchildren and the kind of childcare they have, your adult kids could save a lot by having you babysit. The national average for childcare is $15,000 annually, and $17,000 for infants. In some cities, an in-home nanny can cost up to $60,000 per year.

3 Questions to ask before signing up to be the grandkids' nanny

While Regan's parents are OK with helping out one day a week, doing it full-time would be a different story. Regan said her mom does most of the caregiving and is usually exhausted at the end of the day. "Chasing kids, toddler meltdowns, and not sitting down is no joke," she said.

Caring for the grandkids full-time comes with other challenges. Expenses like transportation, meals and activities could put a dent in your retirement savings. Plus, it means less time to enjoy your own pursuits, something retirement is supposed to be about.

That's not to say it won't work out, but before you become a full-time babysitter for the grandkids, ask yourself these three questions.

1. Can I afford to help out?

Acting as the full-time nanny can save your adult children some serious cash, but you don't want it to come at the expense of your retirement. That's why the first question you should ask yourself is: Can I afford to help?

"A lot of times people talk about it as making a retirement choice, but they also have to protect their financial plan," said Regan. "Who is paying for transportation, covering the groceries, and the zoo memberships? All of that stuff can add up. You have to iron out the financial details."

2. Can I physically manage childcare?

Grandchildren are tiring, especially toddlers. Depending on your health and fitness level, it can be easy or extremely taxing. That's why the second question you should ask yourself is: Can I physically help with childcare for the schedule I've been asked to follow?

"If you are running yourself down caring for the grandkids, at what point does it cause health issues?" said Regan. If it does, can you afford the trips to the doctor's office or to the emergency room? Plus, if you get injured helping with the grandkids, it could prevent you from pursuing your own hobbies.

3. Do I have the time to help?

Caring for the grandkids is a big commitment. It usually means long days and plenty of notice if you have to miss one. It also means goodbye to spontaneous trips and the freedom that comes with retirement. It's a big trade-off, which is why the third question you need to ask yourself is: Am I willing to give up my freedom to care for the grandkids?

"The freedom component is very important here," said Frank Legan, partner and financial adviser at Signature Estate & Investment Advisors. "What will they be giving up by committing their time to caring for grandchildren?"

Before you say yes, think about what watching the grandchildren five days a week means to your social life, your alone time with your spouse, the pursuit of hobbies, and your own happiness. Resentment can breed bitterness, which could lead to family strife, something you likely want to avoid in retirement.

Set boundaries for success

Ultimately, stepping in as a full-time caregiver can be a rewarding gift to your family, but it shouldn't come at the expense of your own wealth, health and well-being. By setting clear boundaries, having honest conversations about finances, and finding a balance — whether that means helping out one day a week like the Regan family or several days — you can support your adult kids while still enjoying the freedom you worked so hard to earn in retirement.

Editor's note: This article is part of an ongoing series looking at three questions to ask yourself before making a major financial or lifestyle decision. The other stories in the series are:

Retirement readiness

3 Questions That Determine If You're Actually Ready to Retire Early

3 Questions to Ask Before Unretiring

Lump Sum vs Monthly Pension: 3 Questions To Ask Before Making a Permanent Mistake

Where to retire

Moving to Florida or Texas for Retirement? 3 Questions to Ask First.

3 Questions That Reveal If You're Actually Ready to Age in Place

Thinking About Moving Near the Grandkids? Ask Yourself These 3 Questions First

Retirement savings and spending

3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You

3 Questions That Help You Find Your Perfect Social Security Claiming Age

Go Ahead and Splurge, But Ask Yourself These 3 Questions First

Before You Give Money To Your Kids, Ask Yourself These 3 Questions

3 Questions to Ensure Your Retirement Nest Egg Is Inflation-Proof

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Until very recently, the stocks of America's most-hated industry — prescription drugs, of course — had been having a rough time. While the S&P 500 index was notching a return, including dividends, of well over 200% during the nine years that ended June 30, 2025, the S&P Pharmaceuticals Select Industry index eked out a mid-single-digit showing.

Then pharma stocks surged, rising more than 66% in the past 12 months. Is the recent performance of drug stocks a harbinger or an anomalous blip up on an oscillating EKG chart?

First, understand that pharmaceuticals are not rising with a healthcare tide. The complete sector — which also includes insurers, hospitals, nonprescription medicines, suppliers and medical devices — has lately performed about the same as the market as a whole. Some investors see healthcare as a haven in turbulent times because consumers can't scrimp on treating their illnesses. But something different is going on with pharmaceuticals. And it could be something big.

How the pharmaceutical industry overcomes obstacles

Pharmaceuticals have a unique supply chain, with a complicated reimbursement system. The chain is exposed to changing government rules at every curve.

Because the best new medicines are expensive, politicians of both parties have responded in ways meant to take a bite out of profits. And like many industries, drug manufacturing, much of which occurs abroad, is being hurt by President Donald Trump's tariffs.

But innovation can trump intervention, and if a drug company can keep developing powerful new medicines, it can still be exceedingly profitable. Governments have not yet curdled the secret sauce of the drug-company business model: The monopoly status that a novel prescription pharmaceutical enjoys.

A dynamic duo of pharma stocks

Investors did not suddenly wake up last year and decide to love drug stocks. Instead, two companies have been the main drivers of the sector's remarkable performance.

In a column two years ago on what I call "faith-based stocks," companies whose stocks have hit a bad patch but have bulletproof brands, I predicted Johnson & Johnson (JNJ) would "get its mojo back — somehow."

It has. J&J has returned 58.8% in the past year, mostly on the strength of its oncology therapies. Seven of them, including Darzalex for multiple myeloma, have been approved, and 23 more are in Phase 3 trials (the last stage before Food and Drug Administration approval). The company in 2023 made a smart spin-off of its consumer products division, which was less profitable than prescription drugs. (Prices, returns and other data are as of July 31, unless otherwise noted.)

Since the start of 2023, the second leader, Eli Lilly (LLY), has more than tripled to become the ninth-largest U.S. stock, with a market capitalization (price times shares outstanding) of $1.1 trillion. Pouring enormous sums into research, Lilly has cultivated nine "blockbusters" (drugs with over $1 billion in annual sales) in the past decade, such as Verzenio for breast cancer.

But Lilly's triumph has been GLP-1 weight-loss drugs. Its Mounjaro and Zepbound medicines soared in popularity last year, and Lilly's edge in mass manufacturing helped make the two drugs best-sellers among all medicines, with combined revenues of $36 billion. Lilly's first oral GLP-1 treatment, Foundayo, launched in April. This drug category also treats Type 2 diabetes and may have other uses — not yet approved by the FDA — in such diverse areas as heart and liver disease, sleep apnea, and even substance-abuse disorders, the Harvard Gazette reports.

Lilly has outdistanced such traditional pharmaceutical leaders as Merck, and the company's future looks bright. Value Line forecasts earnings will rise at a spectacular annual average of 26.5% for the next five years. Based on a consensus of analysts' projected earnings for 2027, Lilly trades at a price-earnings ratio of 27. Not unreasonable.

The two stocks are by far the largest holdings of my top exchange-traded fund recommendation, iShares U.S. Pharmaceuticals (IHE), with an expense ratio of 0.38%. Together, J&J and Lilly represent nearly 43% of assets. Normally, I wouldn't want to own an ETF so top-heavy, but this one is a good way to buy two of America's best stocks.

An alternative is a managed mutual fund such as Fidelity Select Pharmaceuticals (FPHAX), with an expense ratio of 0.67%. It has outperformed the iShares ETF by an average of roughly three percentage points annually for the past 10 years. Among its top 10 holdings are U.K.-based AstraZeneca (AZN), which focuses on cancer and rare diseases and has three of the world's 25 best-selling drugs.

Mergers have helped boost pharmaceutical prices lately. Part of the business model for large drug companies is buying up smaller biotech firms that are developing a few groundbreaking medicines, or even just one. Through June, drug companies have engaged in 33 such deals in 2026, spending $134 billion. That includes larger purchases, such as AbbVie's buyout, at a 50% stock premium, of Apogee Therapeutics, which makes drugs that fight inflammatory diseases like atopic dermatitis and asthma.

The average investor doesn't have the industry knowledge to figure out which biotech is about to get purchased by a drug giant. You're competing with investors and advisers who spend their lives studying these little firms.

It's better to buy bigger firms, invest in the entire sector through an ETF, or purchase a fund such as Franklin Biotechnology Discovery (FBDIX), another managed fund that's an ETF beater—despite an expense ratio of 1.02%. (You can buy the fund with no sales charge at platforms including Fidelity, Schwab and E-Trade.) Evan McCulloch, who has co-managed since 1997, owns smaller companies, some unprofitable but very promising, like Revolution Medicines (RVMD), which recently won approval for its drug that nearly doubled the survival rates of patients with deadly pancreatic cancer.

An edge from AI

Finding new drugs that work is an arduous and expensive process. Clinical trials have a 90% failure rate, and it costs $2.8 billion to bring a successful pharmaceutical to market. Artificial intelligence is perfectly designed to sift through billions of possible molecules before they are tested in the laboratory.

Companies like Lilly and U.K.-based GSK (GSK) are investing heavily in the technology. GSK's blockbusters include Shingrix, a shingles vaccine, and Trelegy Ellipta, an inhaler to combat COPD and asthma. The stock appears undervalued at a P/E of 10 and a 3.5% dividend yield.

Although AI is one catalyst for pharma stocks, another is the possibility that the political picture could change. Pharmaceuticals are undoubtedly a success at saving lives. Statin drugs, which lower cholesterol and now cost only a few dollars a month, have drastically reduced heart attacks and stroke. Targeted drugs have turned cancers that were once quickly fatal into longer-term illnesses. HIV, which invariably led to AIDS and death, can now be treated and prevented with two shots a year.

In the first half of 2026 alone, the FDA approved new medicines for lymphoma, ovarian cancer, hypertension, thyroid eye disease, COVID-19, schizophrenia and many more indications — 29 drugs in all. Over the preceding five years, the FDA approved 238 such small-molecule drugs and dozens of biologics, which are more-complicated medications derived from living organisms.

The field is competitive. Of last year's 10 best-selling drugs, eight are made by different companies. After all those rough years, are pharmaceutical stocks ready to take off? It's a good bet.

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. He owns none of the stocks listed here. You can reach him at JKGlassman@gmail.com.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The age-old advice of "buy low, sell high" seems simple enough to follow, and it is — except when the market tosses out surprises and emotions kick in.

We watch as stock prices plummet and something inside calls out, "Sell now, before it's too late." Of course, at that point it already is.

Or the market soars and that inner voice says, "Buy now and catch this wave." But the wave may have already crested.

Humans are human, which means if we aren't careful, emotions can replace logic when market volatility comes into play, causing us to make financial moves we later regret.

We saw this in 2020. When the pandemic began to affect markets, some people grew nervous and moved their money into the safety of money market accounts. By the end of the year, when the market had recovered and they had missed out on the gains, they lamented that move.

One thing we can count on is that there are always events that can lead to market volatility. Wars. Natural disasters. Government shutdowns. Unexpected election results.

During this year's midterm elections, depending on how people react to the results, the market could soar, plummet or hold steady. (Interestingly, the market tends to do well, on average, after a midterm election, although that doesn't mean every midterm election has proved favorable for investors.)

We can't control market volatility. But what retirees can do is have an investment portfolio that is suitable for this stage of life and that matches their risk tolerance. That way, they are in better shape to withstand market swings.

With the right investments attuned to their needs, they won't see as many large fluctuations as they would with a high-growth portfolio, and they will feel more comfortable with what they do experience.

Gauging risk tolerance

Among the problems retirees face with volatility is that they may not have time to recover when the market tumbles. Younger clients may have a 20- or 30-year time horizon, so a loss today isn't as worrisome because they have decades to recover.

Retirees, who often are withdrawing money from their accounts to live on, even as the value drops, are in a rougher spot. For example, after the 2008 financial crisis, it took more than five years for the S&P 500 to fully recover.

Still, that doesn't mean your situation is the same as everyone else's. One of the keys to building a portfolio is to look at all of your assets and determine how to invest them in the most efficient way.

If you are working with a financial professional, the more they know about your complete financial picture, the better. Much like a doctor, they can advise you based only on what they know.

An effective strategy many retirees use is to divide their investments among different investing buckets with different levels of risk that accomplish different goals.

When doing this, you first want to make sure your income is taken care of. That's the bucket with safer investments that will pay for your current living expenses.

After that, other buckets with different time horizons can be more aggressive because you don't anticipate needing to use that money anytime soon.

Once again, though, your risk tolerance comes into play. How much risk are you taking, and how do you feel about that risk? At our firm, Retirement Solutions Group (RSG), we use specific tools and technology to help our clients identify their risk tolerance. We determine what their pain points are so we can allocate investments appropriately.

It's not unusual for a husband and wife to have different results on the risk questionnaire, with one more conservative than the other. In those situations, it's important to get them on the same page so they are both comfortable with the investing decisions.

Helping you set aside the emotions

Market volatility always has been and always will be a possibility, and no one has a crystal ball to predict when the going might get rocky.

That's why it's important to have a financial professional you can speak with about any concerns you have, someone who can help you separate emotions from investing decisions and who understands your needs.

With the right person in your corner, you can build a portfolio where you will feel comfortable regardless of market ups and downs.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In all states, the most common complaint filed with state bar associations by clients is that the attorney failed to return phone calls in a timely manner, or not at all.

According to data from the American Bar Association (ABA), a lack of communication and client neglect consistently rank as the most common complaints filed against attorneys nationwide. There is a direct and strong correlation between lawyers who fail to return phone calls, state bar discipline and legal malpractice.

But not only are clients being ghosted, but lawyers often ignore other attorneys, sometimes under circumstances where you might conclude the attorney has a character defect leading to irresponsibility and, at times, is using calculated behavior to play dirty, especially during hotly contested litigation.

Let me share with you concerns I have about "Diane," an attorney whom I helped pass the California Bar Exam last year after she failed it multiple times and who may be headed for trouble.

A troubling trend

Over the years, I have worked with several law graduates — often the children of clients — who failed the bar repeatedly. They lacked good writing skills, a testament to our education system, which decades ago quit requiring weekly essays in many high schools. Once they learned how to analyze a bar exam question and write an answer in a coherent manner, they passed.

Diane was consistent when it came to confirming an appointment or showing up for lunch and a tutoring session. Often, neither texts nor emails would confirm the appointment. The courtesy of not standing me up was a foreign concept in her psyche.

Days later, she would text, "Sorry, I got so busy that I just forgot."

So, she gets sworn in, is hired by a firm and is working in an area of the law I am writing about. I wanted to see if anything had changed. Did becoming a lawyer impact her sense of responsibility and thinking of others, especially colleagues and clients?

So, I texted and emailed her the factual basis of my question and asked for her input.

Now, as a new attorney, getting your name in a major publication is a feather in your cap and a plus for your employer, so anyone with a full deck would jump at the chance, right? Especially if asked by the person who helped them pass the bar!

Well, not Diane.

It's as if she has "I'm Irresponsible" tattooed on her forehead — really no surprise.

Can you imagine how she will deal with clients who depend on her? Pulling those same stunts — like not showing up in court for a hearing — is an engraved invitation to put her bar license at risk.

Top complaints against lawyers

State bars across the country have a massive amount of data on lawyers who have gotten into serious trouble. In an overwhelming number of instances, complaints about a lack of returned phone calls and "failed to communicate with client" led to worse violations of our legal and ethical duties.

One bar investigator, who asked not to be identified, told me, "It took them years of study and hard work to become an attorney, but they are passive-aggressive with clients. Their message is, 'I'll get back to you when and if I want to.'"

He added, "With the enormous amount of lawyer advertising, when phone calls from potential clients are not returned in a timely manner, we have seen instances of the statute of limitations (to file lawsuits) being blown.

"Even when we warn them to knock it off, their irresponsible behavior continues right to the point where they face suspension, or worse."

Failing to return a phone call to a client is one thing, but there is another closely related issue.

The Dalai Lama: 'Be kind whenever possible. It is always possible.'

Passing a state's bar exam and being sworn in as an attorney is a license to become quite wealthy. To me, while you will never find anything in our rules of professional responsibility and legal ethics that requires giving a fraction of your time to someone who phones your office at one of the lowest points in their lives — needing someone who will listen — that act of kindness should be obvious and thought of as obligatory. If not from you, the lawyer, then from a member of your staff.

I receive many calls from people who find one of my columns that relates to their situation, call attorneys, share the specifics with a receptionist and are promised a return call that never comes. Perhaps it is not a matter the firm handles, but at least call them back and say so!

A woman who resides in Houston called our office in August. Her 78-year-old husband died in the hospital two years ago in October, so the statute of limitations on malpractice is running.

As she related his many health conditions, the finding of "natural causes" seemed supported. At such moments with a terminally ill patient, family is distraught, and in their minds, hospital personnel might seem less than kind.

I listened as "Chelsea" told me about their marriage: "He was 35 years older than me when we were married 30 years ago. He was my world, a man of integrity, and they treated him so badly."

I explained that a malpractice case is complicated and usually difficult to prove.

We spoke for about five minutes before I asked her, "How many lawyers have you discussed this with?"

"None," she replied. "I left messages, was promised a return call, but you are the first."

It took only five minutes. Five minutes — the amount of time it would take to have a chat over coffee with a member of your staff or talk with your spouse. That's an invisible amount of time in reality, but too much for all the law firms she reached out to.

"Please keep my number," I said. "And if anything positive comes out of all of this, call me. Your husband was one of the luckiest men on the planet."

"And I was one of the luckiest wives, as well, Mr. Beaver. God bless you for taking the time to talk with me," she said, her tears audible.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Market timing is a well-known no-no in investing. But when prices dip, it's an opportunity to buy, so it helps to be prepared. That's when a wish list of stocks you want to own comes in handy. Having a stock list at the ready can help you in other ways, too. At a minimum, the list may deter you from making aimless impulse buys because it keeps your eye trained on companies you've vetted as worthy investments. And it can bolster your courage during a market decline, when fear tends to kicks in.

It may even help you keep a discerning eye on the rest of your portfolio. "Even if you're 100% invested," says Thomas Martin, senior portfolio manager at Globalt Investments, "you have to have a list of stocks that you would buy if something in your portfolio has a problem and you end up not liking it anymore."

That's one way the portfolio managers at Argent Capital Management use what they call their bench, a list of their favorite stocks — one in each sector — that they don't own, says portfolio manager Jed Ellerbroek.

Argent's large-company exchange-traded fund, Argent Large Cap (ABIG), currently owns shares in four healthcare firms. But "if we like the bench stock more than one we own, we'll swap it in. We want to own the highest-conviction stocks, the ones we believe in the most," says Ellerbroek.

Building a shopping list of stocks can take some work. "It's about doing your homework and looking at the fundamentals of a company," says Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute.

Keep in mind that a shopping list should be part of a broad investing plan that's aligned with your time horizon and your tolerance for risk. And aim to identify stocks of interest ahead of potential downturns, because declines tend to start and end quickly. We'll walk you through some of the steps you should consider as you craft your shopping list.

Worthy candidates for you stock shopping list

The best prospects for your shopping list are high-quality companies that miss out on making it into your portfolio; they meet your criteria on nearly every measure but slip on one or two. Maybe it's a market darling that's too expensive. Or perhaps it's a company that trades at a decent valuation, but one or two corporate events have you worried — a new chief executive has arrived, or the firm has just made a sizable new acquisition.

It's worthwhile, then, to review the qualities that make a good stock. This requires a good understanding of what the company does. What's its business? What end market does it serve? What problems is it solving for customers? What kind of growth rates does the business have? And where does the company stand in its peer group?

At Argent Capital, an ideal company has to meet three fundamental measures. First, the business must have a competitive advantage over peers. "Capitalism is a full-contact sport," says Ellerbroek, "so what about this business keeps its competition at bay?" Second, the company must allocate capital wisely and act in the best interests of shareholders. "The question to answer is, What does the company do with its profits?" he says. The third measure is good long-term growth prospects.

Amazon.com ticks all these boxes to Argent's satisfaction, and it's a portfolio holding. Amazon dominates the U.S. e-commerce market. It has been deploying cash — and issuing debt — to build data centers to power artificial intelligence, a long-term move that Ellerbroek believes is in shareholders' best interests. And the company's long-term driver is the steady one percentage point annual growth of e-commerce activity in the overall retail market.

Companies of interest that don't pass all three tests land on Argent's bench. For example, Netflix's outsized bid for a Warner Bros. division earlier this year (which failed) was "higher than I was comfortable with," says Ellerbroek, and it would have added debt to the company's balance sheet. "I'm nervous about its capital-allocation priorities. We're in wait-and-see mode," he says. Insurer Arthur J. Gallagher is on the bench largely because of uncertainty about whether its cybersecurity insurance business can withstand disruption from AI. Understanding why the stock is on your "buy" list — and not in your portfolio — can make monitoring that stock easier.

The ultimate test in determining whether a stock moves from watch list to Argent portfolio is its valuation. One such measure is how the stock's current price-earnings ratio compares with its industry and sector peers.

For instance, the managers for now deem shares in otherwise-attractive Intuitive Surgical, a medical device company, too expensive, says Ellerbroek. Though Intuitive shares have declined in recent months, the stock still trades at double the P/E of its peers on year-ahead estimates. "We hope the stock will continue to come down," says Ellerbroek. "We have a price target, and if it hits it, we're ready to buy."

Don't jump the gun on stock buys

Once prices shift down, do a quick review of why the stock has moved lower before snapping up shares. You want to make sure the drop isn't because of a fundamental problem with the company or industry before you buy. "Stock prices tend to come down for a reason — there are usually some questions about the company's business that have come up," Globalt's Martin says.

Semiconductor stocks have tumbled recently over concerns that there could be a slowdown in orders. "There's a realistic fear that's hit those names and caused them to fall in price. But if some of those are stocks you want to own for the long term, it may be a buying opportunity," WFII's McMillion says.

Chip company Micron Technology, for instance, posted blowout results in late June, capping a better than 800% rise in the stock over the same period a year ago. But over the next few weeks, shares sank from more than $1,200 a share to roughly $850. Part of the problem was its stratospheric rise: Short-term traders were taking profits. "They're not investing based on long-term fundamentals," says Martin. Meanwhile, in mid July, analysts significantly hiked their earnings estimates for the current year and for 2027. Martin views the dip as a buying opportunity.

The pullback in the software industry — over fears that AI will shrink the business — is more of a minefield. "Some software companies may be disrupted by AI. In that case, you might not want those firms on your shopping list," says McMillion. But some software companies have other business lines that can continue to grow, such as Microsoft with its cloud computing unit, and those discounted shares might be an opportunity, too. It's important to assess each software company individually, says McMillion, to determine AI's overall impact on its business.

Some price dips move in step with disappointing corporate moves. Red flags that might keep a company off your shopping list include trimming its guidance on future earnings growth, cutting its dividend, issuing more stock or debt, or curtailing a share-buyback program. These moves can be a drag on a stock, and investors should take them as a signal to, at the very least, look more closely at the business to find out what and whether anything fundamental has changed.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Despite economic uncertainty seemingly around every corner, the stock market seems unfazed, continuing to set record highs.

It's a welcome sight for investors, particularly those playing the long game.

But for those nearing retirement, it can create a sense of unease, wondering if or when the shoe could drop.

It's a reasonable concern since deciding when to retire is one of the most important financial decisions you'll ever make. But in many cases, retirement readiness has far less to do with what the stock market is doing today and more to do with the planning you've done leading up to retirement.

If you've planned well, market highs can present an opportunity to retire sooner than you expected. As a wealth planner at Blue Ridge Wealth Planners with nearly 15 years of experience, I'm here to help you figure that out.

What makes early retirement possible?

Retirement should not be driven by fear or by trying to predict the market's next move. It should be based on preparation, spending needs and risk management.

One of the biggest threats to any retirement plan is when retirees must withdraw from their accounts while the market is down, which locks in their losses and can have a negative compounding effect on their nest eggs. This is known as sequence of returns risk.

That is why many retirement income strategies focus on ensuring that the first few years of retirement are funded through more stable income sources or lower-risk assets.

You can never remove all risk, but the goal is to make sure any sudden market drops don't force major changes to your retirement plan.

How can you manage risk leading up to retirement?

Strong markets can be especially helpful for those who are close to retirement. If your portfolio has seen significant growth, those gains might improve your odds of retiring when you want.

In some cases, it might even allow you to retire early. But being able to call it quits early depends on more than just account balances.

As you get closer to retirement, the goal is no longer simply maximizing returns. It's about ensuring that the wealth you've accumulated can support your lifestyle throughout your retirement.

For example, if you're someone within a few years of retirement, today's elevated market conditions might provide an opportunity to lock in gains, reduce risk and position your assets more strategically to focus on income generation.

Why is retirement planning as important as building savings?

Without proper planning, wild swings in the stock market can create problems. For example, if you're heavily exposed to stocks and planning to retire soon, a sudden market drop could delay your retirement by years.

That's a long time to continue working because you took on too much risk nearing retirement. Your retirement plan needs to be resilient enough to handle market ups and downs without jeopardizing your long-term future.

Your retirement income plan should be stress-tested against different market conditions and life scenarios. You need a clear strategy for generating income.

Retirement isn't simply about having a large account balance. It's about turning your assets into a dependable income stream that can last for decades.

What do you spend in retirement?

Keeping your expenses down is also a key factor. Someone who spends conservatively may be able to retire earlier than someone with a more expensive lifestyle, even if their savings are similar.

The difference comes down to how much income will be needed each year and how much flexibility exists within the budget. If you've done a good job controlling your expenses, you might have more options than you realize.

Don't let your emotions drive your decision-making

Many investors wait for the bottom to fall out, assuming that a stock market correction must be around the corner. That mindset can lead people to postpone retirement when they don't have to. This could cause you to spend years trying to make back the money you had, then lost.

Instead of making an emotionally charged decision, I encourage clients to ask themselves a series of questions to help determine their retirement readiness:

• Do I have enough saved to support my lifestyle?
• Are my expenses low enough to make my savings last?
• Have I reduced risk enough to avoid having the market dictate my retirement date?
• Would delaying retirement improve my outcome or add unnecessary stress?

If their answer is yes to any of those questions, then market conditions might be less of a warning sign and more of an opportunity.

The bottom line

No one knows when the next market correction will happen. Instead of trying to predict what markets will do next, focus on what you can control: Your savings, spending habits, income strategy, tax planning and overall risk exposure.

At Blue Ridge Wealth Planners, we take the guesswork and complexity out of financial planning. We help our clients create a plan for everything that covers all the bases in their wealth world.

If you're nearing retirement, now is the time to evaluate your readiness. Strong market performance has created opportunities for many investors, but retirement success isn't about chasing every dollar. It's about converting the wealth you've accumulated into lasting financial confidence.

Blue Ridge Wealth Planners is an investment adviser registered with the Securities and Exchange Commission. SEC registration is not an endorsement by the SEC nor does it imply a certain level of skill or training.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Even now, a quarter of a century after the 9/11 attacks, no one can forget that day. The towers collapsing, leaving downtown Manhattan choked in dust, smoke and rubble. The terrifying sense of being under siege. The incomprehensible loss of more than 3,000 lives, most of whom worked in finance.

For six days, Wall Street was closed. It was and still is the longest hiatus since the Great Depression. The financial infrastructure of the American economy was hobbled. And who knew for how long?

Yet incredibly, on Monday, Sept. 17, the markets reopened and trading resumed on the floor of the New York Stock Exchange, only about 3,500 feet from the fallen World Trade Center. It was a triumphant realization of NYSE then-chairman Charles Grasso’s bold assertion two days before: "We are very, very confident that come Monday morning the greatest capital market on earth will indeed be back in business."

Grasso was right, mostly. But it would take years before "back in business" would look anything like "back to normal."

The markets took a steep slide that day, with the Dow Jones Industrial Average dropping just over 7%, deepening a bear market that began with the dot-com crash in March of 2000. But what nobody could anticipate was that the black swan event of 9/11, a tragic outlier in many respects, would soon become a driver of the so-called Lost Decade: A recession-recovery-recession rollercoaster that wouldn’t fully end until 2010.

"No one can predict black swans because, by definition, they're unpredictable," says Liz Ann Sonders, chief investment strategist with Charles Schwab, who witnessed the 9/11 attacks firsthand. "What you can control is whether your investments, and your temperament, can survive one."

That perspective is as valuable now — amid AI uncertainty and Mideast troubles— as it was then. The markets have long since rebounded, of course, as the stock chart above (and many portfolios) show.

But the financial professionals who were there 25 years ago, like Sonders, absorbed specific lessons that go beyond the standard advice about staying the course.

In a series of candid interviews, industry experts shared their hard-won insights, distilled from one of the most challenging moments in history, about volatility, risk, resilience and the importance of being human.

Lesson #1: You can't predict, but you can prepare

Sonders remembers the morning of Sept. 11, 2001 in terrifying detail. "I was on a plane at Newark Airport, scheduled to fly to Los Angeles at 8:45 am," she says. From her seat, Sonders could see the World Trade Center across the river in Manhattan, an ordinary sight on a clear day — until she saw a plane hit one of the towers.

"My 'lessons' from that period have never been abstract," she says, "they became seared in my memories."

In the tumultuous weeks that followed, Sonders had an epiphany. "The insight that has stayed with me through every shock since — the global financial crisis, the pandemic and myriad geopolitical flare-ups — is that the market's job in a crisis is not to make sense," she says. "It's to price fear first and facts later."

It sounds paradoxical, but Sonders' insight came from witnessing investors’ real-time reaction to an almost incomprehensible situation. "When the stock market reopened on September 17th, the instinct to do something was overwhelming for many investors," she recalls. "But the ones who fared best were those whose plans had been built before the crisis, not during it."

Jim Shagawat, CFP, a partner adviser with AdvicePeriod in Paramus, N.J., has a corollary to that, which he's often turned to since the days of 9/11 and the many times of market turmoil since then. "After an event like 9/11 — or the Great Recession, or the Covid crisis — there's an impulse to want to prepare yourself for what's next," he says.

"But the real lesson is not to predict the next crisis, because it won't be anything like the last one."

In behavioral economics, there's a term for the human tendency to believe the past will repeat itself: Recency bias. It can show up in a number of ways, but after a market shock, people's focus naturally shifts to the rearview mirror. What just happened, how and why?

Hindsight may or may not be 20-20, but it's a well-loved tool in the investor's toolkit. It's just more effective to trust the plans you've made with a cooler head than let the market be your guide.

Lesson #2: Put some faith in market infrastructure

In her work with investors, Melissa Caro, financial planner, wealth manager and founder of My Retirement Network, an advisory and consulting firm in New York City, has a specific perspective she likes to impart to her clients. It's an insight she traces back to the day the markets reopened after the 9/11 attacks.

Caro was then an equity trader on the buy side for institutional markets, providing liquidity to big financial clients like mutual funds and hedge funds. Though Caro and her colleagues on the trading floor were able to evacuate from their office in downtown Manhattan on the morning of Sept. 11, everyone knew someone who had suffered a loss. "When the markets reopened a week later, we were all in an emotional state," she recalls.

Yet what also struck Caro that day was the mood among the big financial companies. Compared to the retail market, "I felt like the institutions were almost tiptoeing. There was a real sense of patriotism. No one was going to make a big move. 'Don't bet against America,' was on everyone's mind," she adds.

In part, she says, that was due to the traumatic events that were still unfolding. But it also reflected the power of Wall Street's institutions. "There was a recognition that you don't unwind a position just because one thing happened, no matter how big or tragic it was. That's not the M.O. on the institutional side."

Some 25 years later, Caro often returns to this observation: Many investors don't know, or don't appreciate, that the markets they see reflected in CNBC headlines are part of a much wider Wall Street infrastructure.

It's an article of faith that Caro believes can help investors remain calm in the face of even the blackest of black swans. "In a crisis, these larger players are not running for the hills, or putting everything in Treasurys," she says. "So neither should you."

To be sure, Caro's takeaway isn't to close your eyes and blindly trust the beneficence of the financial powers that be (see "Too big to fail" c. 2008-09). Rather, as Shane Tenny, a managing partner with wealth management firm Spaugh, Dameron & Tenny in Charlotte, N.C., puts it: "I remember when a colleague told me: 'Help remind clients they're not investing in markets. They're investing in companies.'"

Tenny, who was a newly minted adviser working at a brokerage house during 9/11, says this distinction provided a meaningful reality check for his clients, and it gave him some much-needed ballast as a newbie adviser at a tough moment (and in the years since).

"It seems to help clients, particularly retired clients, move from an ethereal view of 'the market' being up or down — to the realization that they are a tiny shareholder of real companies, managed by real CEOs, who are working to create profits and sell their goods and services around the world."

Being able to climb to 30,000 feet and look around has real benefits, Sonders notes. "Panic isn't an investing strategy. And of course, neither is bravado."

Lesson #3: Put together all the pieces of your plan

The counterpart to appreciating the machinery of the financial world is paying attention to the cogs and wheels of your own financial plan.

This was not a lesson Shagawat expected to learn 25 years ago, when he was in his early 30s and establishing what he hoped would be a career in corporate accounting. But when a close friend was killed in the 9/11 attacks, leaving behind a grieving widow and a two-month-old son, Shagawat offered to help get their affairs in order — and realized he'd found a more compelling line of work.

"I'd always studied the personal side of finance, even though my job was looking at P&L statements," he says. "But helping my friend's family was the first time I saw how deeply it mattered."

For Shagawat, 'it' didn't refer to abstract ideas of portfolio construction, but solutions to real-world dilemmas. "Here was a young widow with an infant son who needed answers to questions like, 'Can I stay in my home? Do I have enough to raise my child? How do I make good decisions when everything in my life is upside down?'"

"What 9/11 taught me is that a crisis exposes whatever isn't already simplified and coordinated ahead of time," he says.

While Shagawat recognized that it was only natural that a young family wouldn't have been prepared for a global tragedy, the real eye-opener, he says, has been the experience in the years since, "working with clients who think they have a plan — when really what they have is a collection of pieces."

The essential task for most people, then, is to pressure-test their financial plans and take a more proactive approach to connecting those pieces as life evolves.

"Like a lot of planners, most of my work is with pre-retirees or people who are retired — all of whom have saved well, but they have a lot of moving parts," he says.

"They're thinking about retirement income, taxes, investments, sometimes company stock, insurance, estate planning, aging parents, adult children, their own longevity."

Like an old-time clockmaker, there's a need to fine-tune all these interlocking parts on a regular basis, he says. It doesn’t have to be a fire drill. "Just don’t wait for a crisis like 9/11 to show you how you wish things had been connected."

Lesson # 4: Give your adviser a stress test

One of Tenny's vivid memories from 9/11, when he was in his late 20s and had only been in the advisory business for a couple of years, was the jarring awareness that it was his job to calm frantic clients — while managing his own reactions to those extreme conditions.

"I found myself emotionally pulled into the fear for my own family, my career, and the country," he says. "At the same moment, our clients were saying to us: 'What should we do?'"

It wasn't just managing the fallout from that one global crisis, but maintaining his equilibrium as the dot-com crash fed into a bear market, which deepened with the 9/11 attacks, the collapse of Enron, the invasion of Afghanistan and more. "I was an adviser for four years before the markets were ever going up," Tenny says. "It was a difficult time to earn your stripes."

There is something to be said for the school of hard knocks, but Tenny acknowledges that "that was a long and nasty road." It made him value those around him who modeled the ability to remain clear-eyed in the face of turmoil — and because of that he was able to draw another conclusion: Here was a skill that clients also needed to expect from their advisers.

"It's an important thought exercise," Tenny says. "Amidst all the discussion on what to look for in a financial adviser, rarely is there any suggestion about asking them how they deal with their own fear in times of stress," Tenny notes. "My counsel is to find out: Does your adviser have the self-awareness to recognize their own tendencies when there's a crisis?"

Given the recent World Cup excitement, Tenny can be forgiven for making a soccer analogy: Consider the dynamics of a penalty kick, when a player gets a free shot at the opposing goal from the penalty line, with only the goalie defending.

In many cases, Tenny says, FIFA analyses show that goalies often leap at the ball, a natural impulse. But the data suggests that goalies can also be successful blocking a penalty kick by standing still. "But nobody wants to look lazy," Tenny says.

There's a similar dynamic that can emerge between clients and advisers, he says. In a crisis, does the adviser feel pressure to make a move? Does the client add to that pressure?

"I think there is an implied expectation to deliver an answer, and it takes a unique humility to come into a client meeting where the adviser is expected to offer a solution — even though the best answer might be to do nothing."

The cycles continue.

The graph at the top of this story showing the potential growth of $10,000 over the last 25 years is meant to be reassuring, perhaps inspiring. But mostly realistic. The markets don't always go up, as the financial professionals who shared their experiences here can attest. In fact, you can count on the downturns as well as the upswings.

It's more useful to contemplate what's embedded in that bumpy upward fever line. It's woven from the experiences shared by the financial professionals featured here (and many more), along with brokers and traders and countless investors over time. And those stories will continue.

The terrorist attacks on September 11th, 2001, changed this nation as they changed the world.

But as Sonders summarizes: "Markets are ultimately a reflection of human resilience, and betting against that resilience over the long term has been a losing trade, even well before 9/11."

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that's right on the money.

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Dear Wealth Wise: I'm in my 60s and will retire in March 2027. I'm happy with the amount I have saved and, at this point, would like to keep no more than 15% in equities. Where should I put the remaining 85% to generate stable income? — Intentional Investor

Dear Intentional Investor: When you're in the process of building wealth for retirement, it's common to invest the bulk of your portfolio in stocks. But it's equally common to shift away from stocks as retirement nears to reduce risk.

Our reader has clearly done a good job of saving for retirement and understands their income needs. They want minimal stock market exposure so they can sleep at night. Here's the approach our experts suggest to build an ultra-low-risk portfolio.

Bonds can get the job done

Bonds are often a great fit for retirees because they offer predictable income without the wild swings for which the stock market is known. Paul L. Gaudio, CFP, director and wealth planner at Crestwood Advisors, says that for a simple portfolio, a broad investment-grade bond fund or a pure Treasury bond fund could be a good choice.

These funds can deliver competitive yields without the homework of tracking individual maturity dates, he notes.

That said, it's important to consider near-term cash flow and upcoming expenses.

"If they have specific spending needs coming up, then a Treasury ladder may offer a great solution," Gaudio explains.

"Picture splitting money evenly across 1-, 2-, and 3-year Treasuries," he continues. "Each year a rung matures, and that principal is there for spending or reinvesting at whatever rates look like then. It's predictable and helps reduce some interest rate risk."

Municipal bonds might be worth a look

Keeping taxable income as low as possible in retirement is crucial. When income creeps up, it could trigger Medicare premium surcharges called IRMAAs, or income-related monthly adjustment amounts, that could add hundreds of dollars per month to the cost of Part B.

The "problem" with bonds is that interest payments are commonly included in taxable income. That's why Gaudio says municipal bonds might be worth considering.

"If they're in a high tax bracket, municipal bonds deserve a serious look," he says. "Municipal bond interest is exempt from federal tax entirely, and home-state bonds usually avoid state tax, too."

On the other hand, municipal bonds can't protect you from IRMAA surcharges, as their interest is added back to your modified adjusted gross income (MAGI).

Gaudio also says that for higher-income retirees, municipal bonds can offer more financial upside than Treasuries when accounting for tax-equivalent yields.

However, he cautions, "The trade-off is lower headline yields and thinner liquidity than Treasuries, so they work best as part of the mix, not the whole allocation."

It's worth considering an annuity

Retirees who are extremely risk-averse are often willing to forgo portfolio gains and liquidity for peace of mind. In that case, Gaudio says, "If this client’s true concern is guaranteeing income, then it may also be appropriate to consider an immediate annuity with a portion of their wealth."

As Gaudio explains, an annuity requires an up-front sum that guarantees income for the remainder of the client’s life. But annuities have certain drawbacks. They can be complex and often come with hefty fees. They might also lack inflation protection.

"The trade-off is that the principal is locked up in exchange for that guarantee, so it works best for money the client won’t need for flexibility or legacy purposes," he says.

Focus on liquidity

When you're retired and are actively using your savings to cover living costs, it's important to make sure you have enough safe, liquid assets to cover at least a few years' worth of living expenses, says Stoy Hall, CFP and founder at Black Mammoth.

"High-yield money market funds are paying in the neighborhood of 3.5% right now, and Treasury bills are around 3.7% and backed by the government," he says. Both could be appropriate places to stash one to two years of living costs.

Hall also recommends building a CD ladder for midterm liquidity. With this approach, "cash lands in your lap on a schedule, and you're never forced to sell anything at a bad time."

Protect against inflation

Hall understands the desire our reader has to unload risk.

"You saved enough, and you want to sleep at night, so we build you a paycheck, not a portfolio to babysit," he says.

On the flip side, Hall cautions that over the course of what could be a 30-year retirement, a 15% equity allocation exposes you to inflation risk. For this reason, he says, the remaining 85% of your income needs to keep up with the cost of living.

To this end, he says, it could be wise to put money into TIPS, or Treasury Inflation-Protected Securities, as well as I-bonds. TIPS adjust the bond's principal for inflation, while I-bonds adjust their interest rate. (Note, however, that I-bonds impose an annual investment limit of $10,000 per individual.)

"With most of your money in fixed-rate assets, this is your hedge against the one force that quietly shrinks a 'safe' retirement," he adds.

Look at the big picture

Many financial experts warn that a 15% equity allocation can erode purchasing power over time.

Gaudio says this allocation could work for some people, but not everyone.

"It tends to make the most sense for clients spending this money within the next five years, or clients who are highly risk-averse and have spending needs well below their portfolio's long-term potential," he says.

Ultimately, Gaudio explains, the right investment mix depends on a given retiree's full picture, including their income needs, spending patterns and tax situation.

"That's where working with a planner earns its keep — translating a menu of good options into the portfolio that actually fits this investor's life," he says.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Every sports fan loves the game-winning touchdown, the walk-off home run or the buzzer-beating shot. Those unforgettable moments make the highlight reels.

But ask any championship coach what really wins titles, and you'll hear a different answer. Championships are usually won long before the final whistle. They're built through preparation, discipline, communication and making countless small decisions that put a team in position to succeed when the pressure is highest.

Retirement is no different. The people who enjoy the most successful retirements rarely arrive there by accident. They get there through years of preparation, thoughtful decisions and disciplined execution.

Many people assume a successful retirement comes down to having a large investment portfolio or earning the highest possible return. While those certainly help, the retirees who enjoy the greatest financial freedom often succeed because they follow many of the same principles great coaches emphasize every season.

Focus on the fundamentals of your plan

As Vince Lombardi famously reminded players by holding up a ball and saying, "Gentlemen, this is a football," championship teams focus relentlessly on fundamentals.

For retirement, those same fundamentals apply to achieving your financial goals. Here are 10:

• Saving regularly during your working years
• Avoiding emotional investment decisions
• Adjusting plans as life evolves
• Seeking advice before major financial decisions rather than after
• Living within your means
• Maintaining an appropriate emergency reserve
• Diversifying investments
• Reviewing beneficiary designations
• Managing taxes proactively instead of reactively
• Rebalancing periodically instead of emotionally

Over the course of a 20- or 30-year retirement, mastering these fundamentals often matters more than trying to predict the next hot investment. Small improvements, repeated consistently over decades, often produce extraordinary results.

1. Review your game plan every year

Preparation creates options.

• The best time to think about taxes isn't during tax season
• The best time to plan for required minimum distributions (RMDs) isn't the year you turn 73
• The best time to evaluate your Social Security strategy isn't the month before you file

The more decisions you make before they're urgent, the more flexibility you'll have when opportunities — or unexpected challenges — arise.

Legendary UCLA men's basketball coach John Wooden always preached that, "Failing to prepare is preparing to fail." Winning one game doesn't guarantee a championship.

Likewise, retirement isn't won by making one brilliant financial investment or decision. A successful, secure retirement is achieved by a series of thoughtful decisions year after year:

• Should this be the year for a Roth conversion?
• Should I realize capital gains this year while I'm in a lower tax bracket?
• Is it time to begin Social Security benefits?
• Which accounts should fund this year's income?
• Will an additional IRA withdrawal increase Medicare premiums in two years?
• Should appreciated investments be sold now or later?

Viewed individually, these choices may seem small, but they can significantly influence how much retirement income you keep after taxes and how long your savings last.

Coordinate the pieces of your plan

Even the best head coach relies on assistants, scouts and a coordinated game plan. The various pieces of retirement planning work much the same way.

• Investment decisions affect taxes
• Tax decisions influence Medicare premiums
• Estate planning impacts future generations
• Insurance decisions affect retirement income
• Withdrawal strategies affect all of the above

Some of the greatest retirement opportunities occur when tax planning, investment management, retirement income planning and estate planning are coordinated rather than addressed separately.

That's one of the advantages of working with both a CFP® and a CPA. When each piece is considered independently, opportunities are often missed. When they're coordinated, they reinforce one another.

Create a long-term plan that brings calm during uncertainty

Preparation creates confidence. Confidence makes disciplined decision-making easier when emotions run high.

One of the defining characteristics of great coaches is their ability to remain composed when circumstances become unpredictable. Financial markets inevitably experience periods of volatility. Headlines create anxiety. Predictions dominate television and social media.

Retirees who remain committed to a thoughtful, long-term strategy often fare better than those who constantly react to the latest news cycle.

Be flexible to adjust when necessary

No coach expects every game to unfold exactly as planned. No master strategist like Bill Belichick walks into the locker room at halftime and says, "Let's keep doing exactly what we planned before the game started."

They evaluate what's working and what isn't. They prepare for injuries, weather, unexpected opponents and momentum swings. They develop contingency plans because they know uncertainty isn't an exception — it's part of the game.

Retirement deserves the same mindset. Markets will fluctuate. Tax laws will change. Healthcare costs may rise. Family circumstances can shift. Inflation may persist longer than expected.

A retirement plan shouldn't be built for one perfect scenario; it should be flexible enough to adapt when life inevitably calls an audible. The best retirement plans are living documents that are revisited regularly. A retirement plan shouldn't be a trophy placed on a shelf and forgotten.

Winning in the long run

Much like championship teams, people who get the most out of their retirement years trusted a process. Retirement is about preparation, adaptability and disciplined execution over time.

The highlight moments — traveling with family, supporting grandchildren, pursuing long-delayed passions or simply enjoying the confidence that comes from financial security — are often the result of years of quiet decisions that no one else ever noticed. That's a lesson every championship coach understands — and one every retiree can benefit from embracing.

It is often said that winning moments lead to winning days. Winning days lead to winning seasons. Winning seasons ultimately create a championship retirement.

No single decision determines financial success. Rather, it's the accumulation of hundreds of thoughtful decisions made consistently over time that builds lasting confidence and financial security.

Dan Dunkin contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

A 65-year-old retiring in 2026 can expect to spend $185,000 on healthcare costs. That's a 130% increase since 2002.

Those figures come from a new report from Fidelity, and they don't include long-term care, such as at-home caretakers or retirement homes.

You may have mapped out your retirement destination and legacy plans, but have you thought through the long-term care costs?

As a Registered Financial Consultant (RFC®) who specializes in tax-efficient planning for retirees, I'm sharing four considerations that every retiree should think about when it comes to planning for healthcare costs later in life.

1. Healthcare could become your largest retirement expense

Most Americans are ready to plan their housing, travel and everyday living expenses in retirement, but a portion could find that healthcare costs balloon beyond expectations, becoming the overall largest expense.

Consider the costs of Medicare premiums, prescription drugs and out-of-pocket costs that factor into your yearly budget.

You should also be honest with yourself about your mobility and health later in life. Americans are living longer, with more people making it to age 100 every year. Self-sufficiency at older ages can deteriorate quickly, and if you expect you'll need long-term care from professionals or a facility, monthly costs can range from $6,000 to $11,000, according to CareScout.

2. Medicare could fall short in retirement

Don't assume that Medicare will take care of your healthcare expenses in retirement. While it will certainly help with inpatient care, specialist visits and important screenings, there are multitudes of expenses that Medicare will not cover.

Beneficiaries will still pay for things like deductibles, coinsurance and insurance premiums. You can be hit with surprise expenses for out-of-market coverage or emergency care. It also won't cover routine dental, hearing and vision care appointments.

There are also significant time limits to the care that Medicare covers. If you find yourself at a long-term care facility, Medicare will cover only the first 20 days of your stay in full and only a portion of the care up to 100 days.

Medicare offers great support for paying for medical expenses, but if you're expecting it to take care of you on its own, you'll find a pile of unexpected bills in your mailbox.

3. Make your healthcare plans now

The earlier you begin planning for healthcare expenses, the more options you will have in retirement.

If you're still working, contributing to a health savings account (HSA) can offer one of the most tax-efficient ways to save for future healthcare costs.

Part of your plan should be what age you intend to enroll in Medicare. Most should enroll around the age of 65, but you may be able to delay Medicare Part B without penalty if you're still working and receive health insurance through your employer.

This will keep you from paying the premiums on your current insurance and Medicare at the same time.

You will be allowed to sign up for Medicare during a special enrollment period if you leave your position and lose your employer coverage.

The real issue to avoid is enrolling late without qualifying coverage. If you miss your window to apply, your premium can increase by 10% for each year you were eligible but chose not to enroll.

That is a devastating and unnecessary expense that will follow you throughout your retirement.

Be sure to speak with a financial adviser or retirement professional to understand the important windows of when you should enroll.

4. It's never too late to lower risk and costs

The best way to reduce your healthcare costs is by not needing healthcare in the first place.

Obviously, some unforeseen conditions and circumstances will impact our healthcare spending, but it's never too late to reduce the risk factors.

Eating well and exercising regularly will help keep risk factors for a wide range of illnesses and health conditions down. A lower risk of heart disease or broken bones means fewer medical bills throughout your retirement.

It will also greatly improve your mobility later in life, helping you enjoy your golden years to the fullest.

Just like saving for retirement, the sooner you invest in your health, the better. But it's never too late to start the journey to healthier living.

It's not a conventional consideration when making your financial plan, but it is a factor that could make a major impact on your healthcare spending in retirement.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

During my long career in journalism, I was good at meeting deadlines, which made me popular with editors. I’ve always filed my tax return well before April 15. I even return my library books on time.

But when it comes to things that don’t have a hard deadline, I’m less diligent. I often postpone mundane tasks, such as cleaning out my spice cabinet, because I don’t have to worry about paying interest or penalties — or losing my job — if I put off tossing some expired cumin.

I suspect that for many people, estate planning falls into this category. It’s something we’re all aware we’re supposed to do, but since we don’t know when we’re going to die, there’s no specific deadline for completing this unpleasant task.

It’s important to understand that creating an estate plan isn’t just about deciding who will inherit your assets after you’re gone. Without advance directives for your finances and healthcare, your family could be forced to go to court to obtain the authority to manage your affairs if you become incapacitated.

Here's my checklist.

Update beneficiary designations

Now that I’m semi-retired and definitely not getting any younger, I’m in the process of getting my estate in order. My first step is to update my beneficiary designations. My husband and I don’t have children, so I’ve named him as the beneficiary for retirement accounts and other financial assets that aren’t already jointly owned. But I need to add a secondary beneficiary — also known as a contingent beneficiary — to those accounts.

A secondary beneficiary will inherit your assets if the primary beneficiary is deceased, can’t be located or declines the inheritance. If that happens and there is no contingent beneficiary, your assets will go into probate — the legal process by which assets are distributed in accordance with state law.

You can name multiple contingent beneficiaries, so I plan to designate some of the charities I support. (If I outlive my husband, I’ll probably name them as my primary beneficiaries).

Update powers of attorney

My next step is to make sure our powers of attorney for finances and healthcare are up to date. Many people believe married couples don’t need these documents, but if you are incapacitated, there may be limits on what your spouse can do with jointly owned accounts without a POA. The same goes for power of attorney for healthcare (also known as a healthcare proxy), which gives someone you trust the ability to make healthcare decisions on your behalf.

If you don’t have an attorney, you can download the documents from websites such as LegalZoom and Rocket Lawyer. It’s a good idea to have these documents notarized, even if your state doesn’t require it, because financial institutions and hospitals may not recognize forms that a notary doesn’t sign.

You should also make sure that your financial service providers will honor your POA for finances. Some institutions require you to use their own POAs, and obtaining one at the last minute is not something you want to have to deal with in an emergency.

Draw up a will

The final estate-planning task I need to tackle is drawing up a will. Although beneficiary designations will provide for the distribution of my financial accounts, both my husband and I have inherited items with a lot of sentimental value, and we need to think about what will happen to them after we’re gone.

And I’m going to start getting rid of things I’m pretty sure nobody wants — an effort popularized by Margareta Magnusson, author of The Gentle Art of Swedish Death Cleaning. Magnusson, who died earlier this year, said that decluttering is one of the greatest gifts you can leave to your heirs. Hard to argue with that.

Sandra Block is a former senior editor of Kiplinger Personal Finance. Send comments to sandra.block02@futurenet.com.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Financial confidence in retirement isn't just about accumulating a large nest egg.

According to the Employee Benefit Research Institute, retirees in the top 10% of the wealthy share distinctive money-management behaviors — and many have little to do with investment genius and everything to do with discipline and planning.

What makes these patterns valuable is that many are accessible across the wealth spectrum — you don't need millions to adopt the behaviors that protect millions.

Here's what the most successful retirees do differently, and how to apply it at any account balance.

1. They treated retirement savings as non-negotiable during working years

Their security was built decades before retirement. These retirees consistently maxed out 401(k) contributions, treating savings as a fixed expense rather than a choice.

The compounding is dramatic — $20,000 a year from age 30 to 65 at 7% grows to roughly $2.7 million — and they added catch-up contributions after 50.

They automated contributions, raised them with every pay increase and never cut them in downturns.

2. They front-loaded Roth conversions in early retirement

Many of these retirees spent their 60s converting traditional IRA assets to Roth, especially in the low-income years from retirement to claiming Social Security.

The strategy is counterintuitive — paying taxes now to avoid them later — but it works when you convert in low brackets instead of the higher ones that required minimum distributions (RMDs) and Social Security might trigger later.

The benefits compound: Roth IRAs have no lifetime required distributions, withdrawals don't count toward Medicare IRMAA surcharges, and assets pass to heirs tax-free.

These retirees typically hold 30% to 40% of assets in a Roth by their mid-70s, vs under 10% for others.

3. They maintain multiyear cash reserves

Market volatility doesn't stress wealthy retirees because they're not forced to sell during downturns. They typically keep two to four years of spending in cash and equivalents — high-yield savings, money market funds, short-term CDs or Treasury bills.

The modest opportunity cost is really insurance against sequence-of-returns risk: The danger that selling stocks in an early downturn permanently depleting a portfolio.

Studies show two to three years of reserves raise the odds of a portfolio lasting 30-plus years by 15 to 20 percentage points.

4. They delay Social Security to maximize lifetime benefits

The top 10% overwhelmingly delay Social Security to age 70, funding the early years from other assets. Each year of delay past full retirement age raises the benefit about 8% — a guaranteed, inflation-adjusted return impossible to replicate elsewhere, and for a high earner, that can mean an extra $10,000 or more a year for life.

They bridge the gap with taxable-account withdrawals, Roth conversions and earmarked cash.

For married couples, the higher earner often delays to 70, while the other claims earlier, ensuring the surviving spouse receives the maximum benefit.

5. They work with fee-only or fee-based financial advisers

According to Russell Investments' 2024 Value of an Advisor study, advisers add roughly 3.75% in net value annually through planning, coaching, tax strategy and portfolio management.

These retirees typically work with fee-only or fee-based fiduciary advisers, compensated through transparent fees rather than product commissions — so recommendations aren't skewed toward whatever pays most.

The value isn't investment selection but coordination of tax planning, behavioral coaching, estate and healthcare decisions and sustainable withdrawals.

They view advisory fees (typically 0.5% to 1.5% of assets) as insurance against costly mistakes.

6. They separate essential from discretionary spending

Wealthy retirees separate non-negotiable expenses (housing, healthcare, food, insurance) from discretionary ones (travel, entertainment, gifts, dining out).

Essentials are typically covered by Social Security, pensions and bond income, while discretionary spending comes from portfolio withdrawals — so in a downturn they can cut it 30% to 50% for a year or two, easing pressure at the worst time to sell. This isn't deprivation but options.

7. They optimize healthcare decisions strategically

These retirees treat Medicare enrollment, Medigap vs Medicare Advantage and drug-plan selection as serious planning exercises, not administrative tasks.

They typically choose Medigap — higher premiums for lower out-of-pocket risk and broader provider access — and watch income before age 65 to avoid IRMAA surcharges.

Most important, they plan for long-term care early, often buying coverage in their 50s when premiums are lower.

8. They practice tax-bracket arbitrage religiously

Perhaps the most distinctive behavior: These retirees obsess about marginal tax rates, making year-by-year decisions to minimize lifetime taxes — filling low brackets with Roth conversions, realizing capital gains at 0% when income allows, avoiding IRMAA cliffs, bunching deductions in alternate years and making qualified charitable distributions after age 70½.

Over a 30-year retirement, that discipline can save $100,000 to $200,000.

9. They rebalance systematically without emotion

These retirees rebalance on a schedule, acting when allocations drift 5% or more from their target. This enforces buying low and selling high: Surging stocks get trimmed into bonds, and crashes become buying opportunities.

The discipline matters more than the frequency: No panic-selling after declines, no chasing rallies.

10. They update estate plans and beneficiaries regularly

Finally, these retirees review estate documents every three to five years and after major life events.

They keep beneficiary designations current — which is critical, since these override will provisions — and update powers of attorney, directives and trusts to reflect current wishes and tax law.

The distinction: Average retirees create a plan once and file it away; these retirees treat it as an ongoing process.

The common thread

These behaviors share a common trait: They require planning, discipline and often some upfront costs.

These retirees build wealth not because they're investment geniuses but because they're systematic, proactive and make decisions that compound over decades.

Most of these traits can be adopted at any wealth level — you can keep proportional cash reserves, delay Social Security, practice tax-bracket arbitrage and rebalance systematically without millions in the bank.

Financial confidence in retirement is less about the size of your nest egg than how strategically you manage it.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When most people picture retirement, they think of the traditional "hard stop": handing in a resignation and walking away from a career overnight. But some of today's retirees are rewriting the rules.

According to a Fidelity Investments® study, 72% of Americans expect to retire "on their own terms," with 61% opting to phase out full-time work — embracing what many now call a "soft retirement" by transitioning into part-time consulting, freelancing, or passion-driven roles.

"Retirement is being reframed," said Rita Assaf, Vice President of Retirement Offerings at Fidelity Investments, in the Fidelity study's release. "It's no longer a single date and instead is an adaptable stage."

Yet while stepping down gradually may offer lifestyle benefits, like maintaining a sense of structured routine, blending part-time earnings with long-term tax planning takes precision.

For instance, dropping into a reduced federal income tax bracket can open a prime window for lower-cost Roth IRA conversions, but stacking wages on top of those conversions can limit how much you convert.

Here are the ways to navigate this modern trend and coordinate your income without running into unexpected tax pitfalls in 2026.

What is 'soft retirement'?

"Soft retirement" describes working in a reduced capacity during your traditional retirement years. It often pairs with a sister concept, "soft saving" — prioritizing present-day experiences over more aggressive saving strategies like FIRE (Financial Independence, Retire Early).

"Soft saving is the opposite of a movement like FIRE," Melissa Almuttar, H&R Block Director of Financial Services, told Bankrate. "It's the moment where you've had enough, and you want to do something different."

• Soft saving strategies include micro-saving habits like setting up small automatic transfers of your paycheck (like 5% or 10%) into savings or retirement accounts before spending the rest.
• Soft savers direct their discretionary funds toward meaningful purchases like hobbies or self-care while minimizing spending on less significant items (see also: 3 Creative Ways to Lower Retirement Taxes).
• By setting aside less for retirement, soft savers commit to a "soft retirement" — or working more during their golden years — but in a part-time capacity and with something that brings them joy (like getting a job at the local bookstore, for instance).

According to AARP's "The Push and Pull of Work and Retirement" survey, roughly 7% of retirees return to work after retiring, driven largely by economic need (48%) or a desire to stay active (18%).

Soft retirement embraces that flexibility for those who want (or need) additional income. But it comes with certain financial risks.

How soft income impacts 2026 Roth conversions

A common strategy in any retirement plan is converting traditional IRA funds into a Roth IRA. In essence, you pay ordinary income tax on the converted amount from a 401(k) (or other traditional IRA) today, so the funds can compound and be withdrawn federally tax-free from a Roth account later.

However, executing a Roth conversion strategy during soft retirement creates a balancing act. You have to weigh two competing dynamics:

• On one hand, leaving a high-salaried job for a lower "soft retirement" job may drop you into lower federal marginal tax brackets (like the 10% or 12% brackets). This can allow you to convert pre-tax IRA dollars at significantly lower tax rates than during your peak earning years.
• Conversely, unlike a 100% full retirement — where taxable income starts at $0 — part-time earnings create a baseline income floor. So if you earn $30,000 in consulting income, your Roth conversions start on top of that $30,000. This leaves less "space" in lower tax brackets before you push yourself into a higher tier.

Contributing to a Roth as a part-time retiree in 2026

Working part-time in 2026 also allows you to make direct Roth IRA contributions using cash from your paycheck.

To do this, you must meet two IRS rules: your contribution cannot exceed your actual job earnings, and your modified adjusted gross income (MAGI) must stay below the IRS phase-out limits.

• Annual contribution limits for 2026. $7,500 for workers under 50, or $8,600 for those age 50 and older (which includes a $1,100 catch-up contribution).
• Income phaseout thresholds for 2026. Full contributions are allowed up to a MAGI of $153,000 for single filers ($168,000 upper phaseout limit) and $242,000 for married couples filing jointly ($252,000 upper phaseout limit).

So, depending on when (or if) your "soft retirement" becomes a "full retirement," you might want to prioritize funding a direct Roth IRA alongside smaller, strategically timed conversions to help maximize tax-free growth.

Related: New 2026 Tax Change Could Mean More for Your IRA and 401(k) Savings

Four tax traps to avoid during a soft retirement

By stepping away from a financially lucrative career into a lower-paying one, retirees with a soft retirement strategy may face more tax complexities. For instance:

1. Increased health insurance costs. Leaving employer-sponsored healthcare before age 65 requires buying private health insurance or ACA marketplace coverage, which can offset much of your part-time income.
2. Reduced Social Security benefits. Transitioning from full-time to part-time work may incentivize you to claim Social Security early to offset lower wages. However, claiming Social Security before your full retirement age (FRA) permanently reduces the monthly payment amounts you receive — and could push your taxable income higher (and more of your Social Security benefits may be taxed with a part-time job).
3. Higher IRMAA Medicare surcharges. Some retirees may also find that part-time income combined with investment income pushes their modified adjusted gross income (MAGI) higher, triggering the income-related monthly adjustment amount (IRMAA). For 2026, the IRMAA threshold sits at $109,000 for single filers and $218,000 for joint filers.
4. Added self-employment (SE) Tax. Freelancing or consulting income is subject to a 15.3% self-employment tax (covering 2.9% Medicare and 12.4% Social Security) on top of standard federal and state income taxes. If you've never done freelance or contract work before, this may come as a surprise.

Is a soft retirement right for you?

A soft retirement isn't for everyone. It requires lifestyle changes, shifting your professional identity from a senior role to a part-time position, and sacrificing the complete free time you would get in a "full" retirement.

And then there are the financial shifts required. Balancing your retirement budget as you move from higher to lower paychecks, potentially drawing on savings, and entering into complex tax situations all take discipline.

But the payoff may be worth the sacrifice.

"The heart of the new retirement playbook is keeping things personal and practical," Assaf said in the Fidelity release. "Planning is what turns preference into payoff. With the right plan — built around retirement income, taxes, health care, and consolidation, investors can have the tools in their corner to help define a successful retirement journey."

So whether or not you adopt a soft retirement, sitting down with a tax professional can help ensure your golden years hit the ground running — and not a hard stop when you expect a soft landing.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

Read More

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According to insurance-comparison marketplace Insurify, the national average cost of full coverage car insurance is $2,244 per year, while liability-only coverage averages $1,176 per year. But drivers in some states are paying thousands of dollars more than that national average to keep their car insured.

While there's not much you can do if you live in one of the 10 states below — aside from moving to another state with cheaper car insurance — it helps to know how your state compares to the average.

If you know you're in a more expensive state, you can be even more diligent about the rate-influencing factors that are in your control. For example, make your next car one of the cheaper models to insure or take a defensive driving class to earn a discount on premiums.

The 10 states that pay the most for car insurance

Based on the latest data fromInsurify, the 10 states that paid the most for car insurance in August are largely concentrated along the east coast, from Connecticut stretching down to Florida.

Whether you live in one of the most expensive states are not, the best way to keep your premiums under control is to shop around ahead of every renewal to see if you can find a better deal elsewhere.

Start that process using the Bankrate-powered car insurance shopping tool below:

What makes car insurance more expensive in some states?

You might already know that things like your driving history or your car's make and model influence your car insurance premium. But why would the state you're driving in matter to an insurance company? There are many reasons, but here are a few of the most common state-level factors that drive your premium up:

• Population density: Many of the most expensive states are also among the more densely populated. When you've got a lot of drivers packed into a smaller area, accidents become more likely compared to drivers cruising on the wide, open roads of, say, the Midwest (which is underrepresented on the top 10 list). Insurers see more densely populated areas as more prone to auto theft as well.
• Weather and natural disasters: Just as home insurance rates go up in more disaster-prone areas, so too, do car insurance rates. This will primarily affect your comprehensive car insurance as that's what you'd file a claim against if your car was damaged in a weather-related event. But it can also spike rates on the rest of your coverage as accidents become more likely in bad weather.
• Coverage requirements: Some states require higher levels of coverage than others. This can make even minimum coverage policies in one state pricier than full coverage in another state.
• Rates of uninsured or underinsured drivers: The share of drivers without adequate insurance can also affect insurance costs. Florida, for example, has one of the nation's higher rates of uninsured motorists. When an at-fault driver has no insurance or doesn't have enough liability coverage to pay for your injuries, uninsured or underinsured motorist coverage can help cover the difference. Higher rates of uninsured drivers can contribute to insurers' claims costs and, in turn, put upward pressure on premiums. Some states require drivers to carry uninsured or underinsured motorist coverage, while others allow drivers to decline it.
• Legal costs: If you file a lawsuit against the at-fault driver or their insurance company after a serious accident, you may receive a higher payout than you would through the initial claims process. In states where costly lawsuits are more common, insurers may spend more on legal fees and claim payouts. Many insurers pass those costs on to consumers in the form of higher premiums.
• Cost of living: Housing and groceries aren't the only expenses that tend to be higher in states with a high cost of living. Auto repair costs can also be more expensive, in part because of higher labor costs. When insurers have to pay more to repair vehicles after covered accidents, those higher claim costs can contribute to higher car insurance premiums.

While car insurance rates shouldn't be your main criteria for choosing which state you want to move to, they can be a useful way to narrow down your options or balance quality of life with cost of living.

Say you want to retire on the coast of Florida, for example. Since both home insurance and car insurance are significantly more expensive there, you might be able to enjoy a similar quality of life at a fraction of the price by heading to the gulf coast of Alabama instead.

The average rates can also vary substantially from one area of the state to the next. If you don't want to trade Florida for Alabama, moving to a less populated area within Florida could result in car insurance rates below the state average, for example.

Finally, you can use average rates as an indicator of what driving might be like in a state. If it's more expensive, that's because insurance companies expect to handle more frequent or more expensive claims. As a driver, that means you might need to be even more cautious than usual when you're behind the wheel to avoid an accident.

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Many investors spend their lives staying the course, saving well, pushing for growth and riding the market as long as they can.

The problem with that strategy is that it ignores the most critical phase of your retirement saving journey: The five-year home stretch until you retire.

Most people don't want to hear this, but one wrong move or assumption can do lasting damage.

A common mindset among pre-retirees is the expectation that strong market returns will continue indefinitely. It's not unusual to hear someone project 15% — or even 20% — annual returns as part of their retirement plan.

On paper, that kind of growth can make everything work beautifully. But markets don't move in straight lines, and they rarely cooperate with timelines.

The real risk isn't just that returns fall short. It's that they fall at the wrong time.

How one bad year can upend your retirement

As retirement approaches, the impact of market volatility changes. A downturn early in your career is inconvenient. A downturn just before or after you retire can be devastating.

Consider what happens if the market drops 30% to 40% in the years leading up to retirement. Many investors assume their portfolios will perform in line with the S&P 500, but that's often not the case.

Many portfolios are made up of mutual funds, sector funds or other investments that can behave very differently, sometimes falling even further due to overlapping risks and hidden correlations.

Then comes the bigger issue: Withdrawals.

If you're taking 4% to 5% income from a portfolio that just lost 30%, your effective loss isn't just 30% — it's closer to 35% once withdrawals are factored in.

This also means the following year, you're taking income from a significantly smaller base.

That creates a mathematical uphill battle that many portfolios never fully recover from. This is known as sequence of returns risk, and it's one of the most underestimated threats in retirement planning.

Lessons from past market cycles

During the dot-com bubble and the 2008 financial crisis, many investors discovered that their portfolios were far more vulnerable than they'd realized, which had a significant impact on those nearing retirement.

Even those who believed they were diversified found that their investments were heavily tied to the same underlying risks. When markets fell, everything seemed to fall together.

The major lesson learned is that diversification isn't just about owning different funds — it's about understanding how those assets behave under stress.

Why asset allocation matters more than ever

In the final years before retirement, asset allocation becomes less about maximizing returns and more about managing risk. That doesn't mean abandoning growth altogether, but being intentional with your investment decisions.

Every piece of your portfolio should have a defined purpose. Some assets should be geared toward growth, others earmarked for protection and designed to generate income.

When portfolios are heavily skewed toward one objective, typically growth, without enough consideration for what happens when markets take a turn for the worse, that's when problems occur.

Think stability first, growth second

One of the best ways to manage risk is to flip the traditional planning process. Instead of starting with investments and hoping they generate enough income, start with the income itself.

How much do you need in retirement? From there, identify reliable income sources — Social Security, pensions, rental income, etc. Determine how to fill any remaining gaps with strategies designed to produce consistent, predictable income.

For some investors, that could include annuities, particularly those that offer guaranteed lifetime income or principal protection with some growth potential. While they may not be right for everyone, these tools can serve a specific purpose: Creating a baseline of income that isn't dependent on market performance.

Once that foundation is in place, the rest of the portfolio can be invested for growth with a clearer sense of purpose and pressure.

The mindset shift before retirement

Perhaps the biggest transition in the final five years before retirement is not financial, but psychological.

You've spent decades accumulating: Saving, investing and growing your portfolio. Retirement flips that script. Now the focus shifts to distribution: Turning assets into income. That's not always an easy transition.

Many retirees struggle with the mechanics of withdrawals — deciding which investments to sell, when to sell them and how to do so efficiently. Those decisions become more complicated and emotionally charged in volatile markets.

A structured income strategy can simplify this process. Instead of constantly making withdrawal decisions, you're replacing a paycheck with a predictable income stream. The rest of the portfolio can then be managed with a longer-term perspective.

The bottom line as you near your golden years

Retirement planning isn't just about building wealth — it's about making that wealth last, because in the final years leading up to retirement, the margin for error becomes much smaller.

A strong market can mask underlying risks, but a single downturn at the wrong time can expose them quickly.

Keep these issues in mind to ensure your retirement plan can withstand whatever the market delivers:

• Markets don't move in straight lines. Adjust your investment strategy in the five years leading to retirement.
• One bad year in the market can ruin your retirement if your portfolio is not properly balanced.
• Asset allocation matters more than ever. Every piece of your portfolio should have a designed purpose.
• Flip the traditional planning process and think stability first, growth second.
• Embrace the mindset shift from accumulation to distribution to make your wealth last.

Retirement success isn't determined by how high your portfolio climbs; it's about whether it can carry you through your golden years.

Your 50s are not the time to take chances with the money you've worked your whole life to earn. It's never too late to create or adjust your retirement plan.

Work with an adviser who can help you find investments that will grow at a steady pace, benefiting when the market goes up without taking a hit when it goes down.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

JP spent 38 years in technology. He built two companies, sold one and retired at 66 with a portfolio he described as more than sufficient.

He had done everything the financial planning industry said was essential to a strong retirement plan: The right accounts, the right withdrawal rate, the right estate documents and enough money to do almost anything he wanted.