"For more than 40 years, Costco has consistently listened to our Members and earned their trust delivering consistent value on essential goods and expanding our health service offerings," said Ron Vachris, CEO of Costco, in a press release from SCAN.

Recent data shows that 63% of Costco customers are Gen X (born 1965-1981) or baby boomers (born 1946-1964), making senior health services a natural extension of their current membership. This expands on Costco's recent healthcare push, which includes discounted prescription drug pricing programs (Costco Member Prescription Program) and virtual doctor visits through Sesame.

Here is what we know so far about the potential rollout.

What we know now about MA and Medigap at Costco

Costco announced a strategic partnership with SCAN Health Plan, a major nonprofit Medicare insurer, to launch co-branded Medicare Advantage and Medigap (Medicare Supplement) plans.

"Older adults want healthcare that is easier to navigate, more responsive to their needs and rooted in organizations they trust," SCAN Group CEO Dr. Sachin H. Jain told The Independent. SCAN Group is a mission-driven, not-for-profit organization that serves almost 460,000 members across 33 counties in six states, including California, Arizona, Nevada, Texas, New Mexico and Washington.

The initiative aims to bring Costco's low-cost, high-value retail model into the $500+ billion Medicare Advantage program by leveraging its existing pharmacy, optical and hearing center offerings.

• Insurance partner: SCAN Group / SCAN Health Plan, a California-based nonprofit Medicare Advantage program serving nearly 500,000 members.
• Initial scope of the rollout: The rollout will begin as a limited pilot, offering co-branded Medicare Advantage products in two states and a Medicare Supplement (Medigap) plan in a third state, pending federal regulatory approval from CMS. Together, these initial target markets reach an estimated 5 million Medicare-eligible enrollees.
• Where it will be sold: The insurance products will be offered online, through insurance-licensed brokers and inside participating Costco warehouses. Enrollees do not strictly need a paid Costco membership to sign up, though the plans are designed to incentivize members to utilize Costco services.

Be loyal to your needs, not a brand

A Costco-branded Medicare plan sounds appealing on paper, but brand loyalty shouldn't replace a thorough side-by-side comparison of plans. Until official pricing and local network details are released, the smartest move for retirees is to stay informed, review your current drug and doctor coverage and wait to see whether the actual savings live up to the Kirkland name.

Related Content

• Is a Medicare Advantage Plan Right for You?
• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D

Putting your savings into a HYSA can help maximize what it earns in interest while still keeping it accessible if you need the cash. But simply opening a HYSA doesn't guarantee that you're getting the maximum return on your money.

Small habits and overlooked details may quietly reduce your earnings or keep your money from working as hard as it could. Here are five common HYSA mistakes to avoid.

1. Sticking with a low-rate savings account

Many people still keep emergency savings in their primary savings account, where it earns a fraction of the interest it could earn in an online HYSA.

Since online banks don't face the overhead that brick-and-mortar banks do, they often pass those savings along to customers in the form of perks, like higher interest rates on HYSAs. HYSAs currently offer APYs up to about 4.2%, while traditional savings accounts offer an average APY of 0.38%, according to Experian. Interest on both types of accounts typically compounds monthly, meaning your earnings can generate additional interest over time.

Let’s say you deposit $10,000 into a HYSA earning 4% APY. If the APY remains unchanged and you don't make any withdrawals, you could earn about $400 in interest after one year.

By comparison, that same $10,000 in a traditional savings account earning 0.38% APY would earn about $38 after one year. That’s roughly $362 less than you could earn with a HYSA paying 4% APY.

2. Chasing every tiny APY increase

You want to choose a HYSA that offers a competitive rate, but it’s often not worth the hassle to switch banks every time another institution offers 0.05% or 0.10% more in interest. Interest rates are variable, so making the switch for a small increase in earnings may not pay off.

Instead, look for larger and more meaningful perks:

• Convenience: A bank that offers streamlined digital banking or other banking products you need might be an appealing and more convenient option.
• Customer service: If you’ve had a negative experience with your bank’s customer service, then you might want to consider changing to another bank with a reputation for excellent customer service.
• Account features: It might be worth it to switch to a bank that offers desirable features like no monthly fees, a low or no minimum balance and lots of freedom on withdrawals.

3. Keeping all your savings in cash

HYSAs are ideal for your emergency fund and short-term goals, since the money remains easily accessible while earning interest. But HYSAs aren't the ideal solution for long-term savings goals.

If you have money earmarked for retirement goals several years away, it may be better invested or placed in a certificate of deposit (CD). According to Bankrate, CDs earn around 4% APY, with top rates reaching 4.35%.

Unlike HYSAs, where interest rates are variable, CDs feature a guaranteed rate, and their APY may be even higher than a HYSA. Depending on your timeline, a CD might be an ideal choice for your long-term investments.

Not sure where your savings should go? A financial planner can help you build a strategy for your money based on your short- and long-term goals, including how much to keep accessible in savings and how much to consider investing for the future.

Use the Bankrate tool below to connect with a financial professional who can help you map out your next steps:

4. Forgetting to review your account

Since HYSAs feature variable interest rates, your bank may raise or lower that rate over time. Letting your account sit without periodically reviewing it can be a mistake that might cause you to miss out on potential interest.

Check your account's interest rates a few times a year to ensure that it stays competitive. Make sure to check a few weeks after Federal Reserve meetings; if the Fed raises or lowers the benchmark interest rate, your bank may also follow suit. If your HYSA’s APY drops, consider shopping around to see if you can find an account with a more competitive rate.

5. Ignoring FDIC insurance limits

Just like with any other banking product, it's essential to verify that your HYSA is insured and your money is protected. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 of your money per ownership category, per insured bank.

For example, if you have a HYSA and a checking account at an FDIC-insured bank, then up to $250,000 of the value of those combined accounts is insured.

If you have larger balances exceeding $250,000, then consider dividing those balances up across multiple banks or multiple ownership categories, such as by putting your money in a single account, a joint account and a trust account.

Contact any bank you use or are considering using and verify that it’s FDIC-insured so that you know your money is protected. The bank can also help you determine which types of its accounts are insured, so you can strategically and confidently choose the best places for your money.

Make the most of your high-yield savings account

Opening a HYSA is a smart first step to putting your money to work, but getting the most from the account requires doing some extra work. Periodically review your APY rate, be sure you understand how the account works and make sure that your savings strategy still fits with your financial goals.

Performing a few check-ins each year, such as by verifying the HYSA’s current interest rate, can help ensure your cash continues earning a competitive return. It can also ensure that your money stays protected, and your financial strategy stays aligned with your short- and long-term goals and needs.

Savings rates can change frequently, so it pays to periodically compare your account with other options.

Use the Bankrate tool below to explore some of today’s top-earning savings accounts and see whether you could earn more on your cash:

Related Content

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The high cost of living is part of the problem, but President Donald Trump's second administration has also introduced major student loan repayment changes, including the new Repayment Assistance Plan.

While attention usually focuses on monthly payments, important student loan tax consequences can be overlooked. Some can work in your favor, like the student loan interest deduction, while others, surrounding tax filing status or employer benefits, can be complex.

If that weren't enough to worry about, 2026 marks the return of federal taxes on some forgiven student loan debt. Here's more to know about that shift and navigating other student loan "tax traps."

Student loan repayment changes

Before we dive into student loan tax issues, it helps to look at how much the student loan landscape has changed in recent years.

New repayment options took effect on July 1, 2026, including the Repayment Assistance Plan (RAP) and Tiered Standard Plan. Other repayment plans have been restricted, and various rules governing which loans qualify for which plans have also changed.

The Trump administration has also pursued changes involving student loan forgiveness while tightening loan limits for some graduate and professional degree programs and adjusting collections processes.

Those shifts all matter, especially with average student loan monthly payments reportedly hovering around $430.

Avoiding student loan tax traps

It's important to note that this is not an all-inclusive list of potential tax issues and concerns surrounding federal student loans. It highlights some key concerns merely for educational purposes.

And because every borrower's situation is different, it's important to consult a tax or financial advisor familiar with your situation to determine the best course of action to potentially reduce your tax liability and student loan payment amounts.

1. Getting hit with the student loan “marriage penalty”

If you’re married with student loans, your tax filing status can affect both your student loan payment calculation and your tax bill. This is especially important this year because of the new federal student loan Repayment Assistance Plan (RAP).

• RAP uses a borrower's income and family information to determine the federal student loan monthly payment.
• For married borrowers, tax filing status can affect whether the calculation includes a spouse's income.

That creates a potentially significant trade-off for some couples.

Consider a married couple with $100,000 of combined adjusted gross income (AGI), split evenly between the two spouses. If only one spouse has federal student loans, filing jointly would put the couple's full $100,000 of income into the RAP calculation.

Under RAP's payment schedule, that could translate to a base payment of roughly $750 a month. If the borrower instead files separately, only the borrower's $50,000 in income would be used, potentially resulting in a base payment of about $167 per month. That's a difference of roughly $583 a month — or nearly $7,000 a year.

But that lower student loan payment comes with a glitch: Filing separately can increase a couple's income tax bill and generally makes them ineligible for the student loan interest deduction and/or other potentially valuable tax deductions or credits.

So the couple would need to compare the potential $7,000 in annual student loan savings with the additional taxes and lost tax benefits of filing separately.

Disclaimer: This is a fictional illustrative calculation, not a prediction of what every borrower of $50,000 or $100,000 will pay. RAP also reduces payments for borrowers with dependents.

Remember:

• Married taxpayers who file separately generally cannot claim the student loan interest deduction.
• Other federal tax credits and deductions can also be limited or unavailable to married couples filing separately.
• That means borrowers shouldn't decide on filing status just by looking only at their student loan payment.

It’s good to consult with a trusted tax professional who can help you select the best filing status for you.

2. Paying taxes on student loan forgiveness

The idea of having the federal government forgive your student loan debt can be exciting. But if you anticipate having your loan debt forgiven in 2026, that relief could come with tax liability.

Why? A little history: During the pandemic, the American Rescue Plan Act (ARPA) temporarily excluded certain student loan debt discharged between 2021 and 2025 from federal taxable income.

• However, that broad temporary exclusion expired at the end of 2025.
• As a result, some borrowers whose student debt is forgiven or discharged this year (2026) could face federal income tax on the canceled amount.

Keep in mind: Whether forgiven student debt is taxable at the federal level depends on when and why the debt was discharged and whether a specific exception or exclusion applies.

• For example, the IRS says certain types of forgiveness and discharge remain excluded from federal taxable income, including Public Service Loan Forgiveness, Teacher Loan Forgiveness, and certain discharges due to death or total and permanent disability.
• Borrowers who are insolvent when debt is canceled may also be able to exclude some or all of the canceled amount under general cancellation-of-debt rules.

But…state taxes can add a wrinkle. States don't necessarily follow the federal tax treatment of forgiven student debt. So whether your state will tax your forgiven student loan amount may depend on the type of forgiveness and whether your state conforms to federal tax law.

If you expect a significant amount of debt to be discharged this year, try to understand the tax treatment before the forgiveness takes place. That might give you time to set aside money, adjust withholding, or make estimated tax payments rather than being surprised when tax season rolls around.

3. Overlooking the student loan interest deduction

Student loans aren't all negative for your taxes. One commonly overlooked benefit is the federal student loan interest deduction.

• Eligible borrowers can deduct up to $2,500 of interest paid on qualified student loans during the year.
• The deduction is available even if you don't itemize deductions, although income limitations and other eligibility requirements apply.

The student loan interest tax deduction can be easy to miss because it doesn't reduce your tax bill dollar-for-dollar. Instead, it reduces the amount of income subject to federal income tax.

Your loan servicer generally reports qualifying interest payments on Form 1098-E, Student Loan Interest Statement. But receiving the form isn't enough to establish eligibility for the tax break. Your income, filing status, and other circumstances come into play.

The student loan deduction can also interact with the filing-status decision some married borrowers face.

• As mentioned, married taxpayers who file separately generally cannot claim the student loan interest deduction.
• If you're a couple considering filing separately to reduce an income-driven student loan payment, you should carefully consider the tax trade-offs.

4. Missing out on tax-free employer student loan assistance

Under federal educational assistance rules, employers can provide up to $5,250 a year in tax-free educational assistance, including qualifying payments toward an employee's student loans.

The 2025 Trump/GOP tax law made this student loan provision permanent.

• But there is an important distinction: This isn't a tax deduction an individual borrower can claim on their own.
• The employer has to offer a qualifying educational assistance program.

It’s also important to note that employer educational assistance and tuition reimbursement are different.

Educational assistance programs can cover a broader range of expenses, including tuition, fees, books, supplies, and student loan repayments. Tuition reimbursement programs, on the other hand, typically cover only tuition and related expenses for courses taken while employed.

Check with your employer if you’re unsure about education-related benefits they do or don’t offer.

5. Skipping retirement contributions while paying student loans

Student loan payments can also affect your retirement savings even if your employer doesn't directly help pay the loans.

Under the SECURE 2.0 Act, employers can treat certain qualified student loan payments as elective deferrals for purposes of making matching contributions to a workplace retirement plan.

That means some borrowers can receive an employer retirement match based on their student loan payments even if they're not making equivalent contributions to the retirement account themselves.

• To qualify, you must be making student loan payments and have a direct legal obligation to repay the loan (guarantors do not qualify).
• Parents paying installments on Parent PLUS loans* taken out for their children's education are also eligible.
• Total matched loan payments and direct 401(k) contributions combined cannot exceed the annual federal IRS deferral limit ($24,500 for 2026, excluding catch-up contributions).

The provision could help address an increasingly common financial dilemma: Some people with student loan debt might not have enough money to make student loan payments and, at the same time, contribute enough to a 401(k) to receive an employer match.

As Kiplinger recently reported: "According to the American Institute of CPAs (AICPA), over half (53%) of personal and parent borrowers say student debt directly hinders their ability to save for retirement. For these households, the default reaction may be to reduce or even pause monthly 401(k) contributions."

But this is optional for employers. Not every workplace retirement plan offers student loan matching, and the workplace plan's specific rules determine which payments qualify and how the match is calculated.

*Also keep in mind that Parent PLUS loans (and consolidation loans containing Parent PLUS loans) are excluded from the Repayment Assistance Plan (RAP). These loans are now generally at $20,000 per year per student (with a $65,000 lifetime limit).

Check your employer retirement plan documents or ask your benefits administrator whether student loan payments qualify for matching contributions.

Related

• A Little-Known Tax-Free Way to Help Pay Your Student Loan
• Don't Miss the $2,500 Student Loan Tax Break
• What's in the 2025 Trump Tax Bill?
• The Silent 401(k) Drain Costing Thousands in Retirement Growth

You've built a successful career, accumulated meaningful assets and likely earn more today than at any other point in your life.

Yet, there is a surprising reality many successful women face: A big paycheck doesn't automatically translate into long-term financial security.

The amount you save, how you invest and how you manage taxes will have a profound impact on the wealth you ultimately keep. Small inefficiencies that may seem insignificant today can compound into meaningful missed opportunities over time.

That challenge is particularly important for women, who generally live longer than men and often face higher lifetime healthcare costs. As a result, your assets may need to support a longer retirement and provide greater financial flexibility than you initially expected.

Many successful women accumulate less retirement wealth than their male counterparts despite high incomes. Vanguard's 2025 retirement data found that women have about 21% lower 401(k) balances than men despite saving at similar rates.

The real issue is not just how much you earn, but how well you turn that income into long-term wealth.

That is why intentional investing matters.

Intentional investors understand that every dollar has a job

Intentional investing can have an outsize impact on long-term financial security, especially for women who are in their peak earning years.

In addition to supercharging your savings, savvy investors should consider expected returns as well as risk, taxes, liquidity, diversification and how those investments fit within your overall financial plan.

Ask yourself:

• Do I have a diversified portfolio?
• Do I have a concentrated position in one investment that creates unnecessary risk?
• Am I holding investments in the most tax-efficient accounts?
• Does my asset allocation reflect my true time horizon and goals?
• Is my investment strategy aligned with the life I want to live in the next 10, 20 or 30 years?

The hidden cost of being conservative by default

If you're in your peak-earning years, retirement may still be 15, 20, even 25 years away. Yet, your portfolio could be positioned as though retirement is only a few years from now.

Over time, cash accumulates:

• A bonus gets deposited and never invested
• The proceeds from a stock sale sit in a money market account longer than intended
• An old 401(k) remains untouched for years
• Dividends and interest payments accumulate without being reinvested

In some cases, you may find yourself holding an increasingly large allocation to bonds simply because you've been told that bonds are "safer" than stocks.

Individually, each of these decisions may seem reasonable. Collectively, they can create a portfolio that is far more conservative than you realize.

The challenge is that the cost of being overly conservative is often invisible. Unlike a market decline, which immediately grabs your attention, the opportunity cost of holding too much cash or too many bonds unfolds slowly over time.

Every dollar that sits on the sidelines is a dollar that's not benefiting from the long-term growth potential of the stock market.

While cash and bonds play an important role in providing stability and liquidity, a portfolio that becomes overly weighted toward these assets may struggle to generate the growth needed to keep pace with inflation, rising healthcare costs, and a retirement that could last three decades or more.

In other words, avoiding market risk can sometimes create a different kind of risk: The risk that your money won't grow enough to support the future you envision.

Asset location: One of the most overlooked investing decisions

You've probably spent time deciding in what to invest. Far fewer investors spend time thinking about where those investments should be held.

Asset location is the art of placing investments in accounts where they are taxed most efficiently. For high-earning women in their peak earning years, this can be particularly important because they're often in the highest federal and state tax brackets of their careers.

Over a lifetime, the tax savings can be substantial, allowing more capital to remain invested and benefit from long-term compounding.

To understand why, it helps to think about investments in two broad categories.

Ordinary income investments generate income that's typically taxed at higher ordinary income tax rates. Examples include taxable bond interest, real estate investment trust (REIT) distributions and certain dividend-paying investments. For high-earning women in their peak earning years, that income may be taxed at some of the highest federal and state tax rates they will ever face.

Capital appreciation investments generate most of their return through growth in the stock price rather than current income. Stocks, stock mutual funds and many exchange-traded funds might produce relatively little taxable income. Instead, investors can defer paying taxes until they choose to sell. At that time the gains will be taxed at lower long-term capital gains tax rates.

While both types of investments can play an important role in a diversified portfolio, they're not always best held in the same type of account.

Income-producing investments that generate ordinary income are better suited for tax-deferred accounts such as traditional IRAs and 401(k)s. This income is not taxed until you withdraw it from the account, and it continues compounding.

Over time, that additional growth can make a meaningful difference in the value of a portfolio.

Taxable brokerage accounts, on the other hand, are better for holding investments such as stocks that generate most of their return through capital gains. Stocks can increase in value over time without creating an immediate tax bill. When the stock is eventually sold, the gains will be taxed at more favorable capital gains rates.

Coordinating a complex portfolio

If you're a high-earning woman, there's a good chance your wealth has been built through multiple channels rather than a single investment account. Assets are often spread across employer retirement plans, brokerage accounts, equity compensation, deferred compensation, real estate and business interests.

Each asset carries different tax treatment, liquidity constraints and risk profiles. Without coordination, portfolios can become unintentionally concentrated or inefficient.

I saw this firsthand with a client I'll call Carrie. Carrie was an executive at a Fortune 500 company earning well into the seven figures and had saved more than $4 million. When we evaluated all her investments, we discovered that a significant portion of her wealth was tied directly to her employer.

Carrie's financial future was more dependent on one company than she realized. She had stock options, restricted stock units (RSUs), deferred compensation and retirement accounts invested heavily in her employer's stock.

We developed a coordinated strategy that diversified her holdings over time, improved tax efficiency and aligned her portfolio more closely with her long-term goals rather than simply the accumulation of past decisions.

Diversifying away from her employer reduced her risk and gave her greater financial peace of mind. Carrie ultimately transitioned into a consulting role that she was passionate about and shared that knowing her financial plan and investments were working together gave her the confidence to live her dream.

The bigger picture

High-earning women face a retirement paradox in which they often need more savings due to longer lifespans, but retire with fewer assets than men.

The solution is not simply saving more. Every investment decision, tax strategy and portfolio allocation should work together to maximize the wealth you keep, the opportunities you preserve and the flexibility you create for the future.

Related Content

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• I'm a Wealth Adviser: These 10 Strategies Can Help Women Prepare for Their Impending Financial Power
• Yay! You've Been Awarded Stock! Boo, the Tax Hit Is Massive: How to Avoid the Mistakes High Earners Make Before They Even Realize 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.

As Amy Zamikovsky, JD, CFP, and senior wealth adviser at Focus Partners, says, "Extra retirement income allows retirees the ability to more easily absorb financial surprises, which is important while our broader macroeconomic reality still looms."

But earning extra money doesn't have to mean retail work or committing to a job you find boring. (It might not even mean working at all.) We asked financial pros for creative ways retirees are generating more income.

1. Sell your expertise (and your network)

You may have spent many years in the workforce honing skills and learning your industry inside and out. In retirement, you can take advantage of that knowledge in a couple of ways. First, you can consult in your former field on a schedule that works for you. Brandy Barnes Marion, retirement plans education manager at BOK Financial, says you can also take the concept a step further by selling your expertise.

"Expert networks pay retired operators and executives by the hour for short calls with investors and researchers," she says. "Medical schools pay standardized patients. Law firms pay mock jurors. Forty years of knowing how a distribution center actually runs is worth real money to somebody."

Other such jobs include acting as an expert witness, an industry mentor and a peer reviewer or grant reviewer.

Tip: These gigs can be lucrative, and they aren't necessarily time-consuming. You can work them into your schedule around vacations or other plans. Some of these jobs can be done virtually, though they may command a lower hourly rate.

2. Work a seasonal job with fringe benefits

Committing to an ongoing part-time job or gig work may not be optimal in retirement, as it might too closely mimic the work schedule you're trying to move on from. That's why Elias Friedman, CFP and founder and senior wealth adviser at Kadima Wealth, suggests pursuing seasonal work.

"Seasonal jobs at golf courses, museums, theaters, or parks can be fun, a great way to make new friends, and stay active," he says. "There are other perks retirees can receive by working at these places, too."

Tip: If you work in a museum or theater, your gig might include free admission or comp tickets for friends and family. You can check sites like Indeed for listings.

3. Rent out space you don't need

You'll often hear that renting out unoccupied space in your home, like a spare room, basement, or finished garage, is a great way to generate income in retirement. But it also means sharing your living quarters with another person. That's why Friedman suggests a different approach.

"I have seen interesting and creative things to get additional income," he says. "For example, this could include renting a garage, parking space, storage area, spare room, or even an RV space."

Tip: Apps like Neighbor can help you rent out your driveway, shed, garage or other home space, providing you with $1 million insurance coverage and charging a processing fee of about 5%. If you have an EV charger at home, you may also want to bundle it into a parking space rental. However, before you sign up, check your home insurance policy and local regulations to make sure it won't affect your coverage and is allowed in your neighborhood.

4. Turn clutter (yours and your friends') into income

It's pretty common to accumulate a lot of stuff in the course of your lifetime. Ernie Wingard, RFC and adviser at Capital Choice Financial Group, says you can turn unwanted items into a goldmine during retirement.

"The most creative thing I've seen is a retiree who built a resale marketplace for her own friend group," he explains. "She takes pictures, posts them online, and takes a small commission for her efforts. After all is said and done, it brings in another $400 or $500 a month."

Tip: Learn about collectibles that are genuinely valuable and niche areas such as silverware and vintage stereos.

5. Launch a YouTube channel

YouTube may not be the most popular app among retirees, but Wingard insists it offers solid opportunities to make money.

"I've also seen some really creative YouTubers in the retirement space," he says. "Lots of shared experiences from their previous field, passing those stories on to future generations, and even providing consulting for people trying to get a leg up in that same industry."

Wingard says one person he knows has a channel where he talks about golf from his perspective of being a caddy for several decades.

"He teaches people how to pick up caddying professionally while teaching golfers how to read greens for themselves," Wingard says. "Talking about your life from that perspective can be a lucrative endeavor, and it can get really cool with some sponsorships, too.

Tip: Don't expect to make money at this type of venture until you have invested substantial time building a brand. Even then, you may not turn much of a profit if you can't grow an audience, so research the competition and various platforms first.

6. Do something you love

When you're in your 30s, 40s, or 50s, you may have to take a job that covers the bills, even if it's not something you're particularly passionate about. But if you're going to work in retirement for extra money, Zamikovsky says it pays to pursue something you enjoy.

"Once upon a time I worked with the loveliest retired couple," she says. "Neither one of them had any experience in photography, but what they lacked in technical experience, they more than made up for with their inspirational love for each other and natural talent at being great with people."

That couple, Zamikovsky says, went on to establish a lucrative photography business.

"With their solid reputation, they booked regular weddings and created a fun and meaningful income stream. Being wedding photographers fit who they were and allowed them the opportunity to build something meaningful together."

The takeaway?

"Don't confine your search or ideas to the tasks and jobs you did pre-retirement," Zamikovsky says. "Instead, be honest with yourself about what it is you're good at, what you like to do, and what unique knowledge or product you can offer the world. If you're going to work during retirement, the work should truly reflect who you are and be something you enjoy."

Read More

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• The Top 10 Side Gigs For Retirees In 2026
• Best Jobs for Retirees

Significant opportunities for retirees

One of the more significant retirement provisions under the new law is the expanded deduction available to many retirees. But receiving the full benefit isn't automatic. Eligibility is based on your modified adjusted gross income, so withdrawals from traditional retirement accounts, pension income, capital gains and, even Roth conversions can all impact whether you qualify.

That makes coordinating when and how you recognize taxable income especially important. Taking time to plan may help some retirees keep the deduction while also reducing taxes on Social Security benefits.

Retirees may also want to revisit whether Roth conversions are appropriate. Moving money from a traditional IRA into a Roth IRA and paying taxes on the converted amount now may help some retirees reduce future taxable income. This can also create additional future tax flexibility.

The One Big Beautiful Bill Act permanently extends many of today's lower income tax rates, which gives retirees more certainty when evaluating whether converting assets over time make sense with their retirement plan. Combined with the delayed age for required minimum distributions (RMDs) under the SECURE 2.0 Act, many retirees may now have more time to strategically convert portions of their retirement savings before they must start taking withdrawals.

Rather than waiting for RMDs to increase taxable income, converting assets gradually over time may help retirees better manage future tax obligations while staying in a comfortable tax bracket.

Looking ahead

But tax planning isn't just about your taxes right now — it also includes considering how the decisions you make today might affect your spouse, your heirs, and your future decades from now.

A commonly overlooked scenario is the death of a spouse. Despite the fact that a household's income is often reduced after the death of a spouse, the surviving spouse will usually file as a single taxpayer the following year. Because single tax brackets reach higher rates at lower income thresholds than married couples who file jointly, many surviving spouses end up paying more in taxes.

However, taking time to plan strategies like Roth conversions while both of you are alive may help reduce that future tax burden, known as the widow's penalty.

This same principle also applies to estate planning. While many retirees hope they can give their remaining savings to their children or grandchildren, inheriting a large, pre-tax retirement account could also mean inheriting a future tax liability.

This can be overwhelming, especially to an heir who may not have been involved in your plan. However, including tax management strategies in your estate plan can help your loved ones avoid that risk. It may even help preserve more of those assets for future generations.

Take time to create a tax plan

Although it has introduced several new tax opportunities for retirees, the OBBBA alone isn't enough to determine how much you'll ultimately keep.

However, taking the time to make a thoughtful plan, with the help of a professional, can help.

Retirees who coordinate withdrawals and manage taxable income, while considering the long-term impact of today's decisions, may be better positioned to preserve more of their savings for themselves, their families and future generations.

Investment advisory services offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor. BWA and Beckett Financial Group are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents.

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• 5 Ways the OBBBA Rewards the Midwestern Millionaire
• 3 OBBBA Tax Provisions Wealthy Families Should Act on Now, From a Financial Pro
• Buying an Annuity? Avoid These 3 Classic Mistakes
• Strategies to Optimize Your Social Security Benefits

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 problem is that millions of displaced professionals can't simply pivot overnight from cognitive, credential-heavy careers into physically demanding trades — without major financial and psychological repercussions.

If employers and policymakers keep pretending the answer to AI's impact on white-collar jobs is a straightforward retraining problem, they risk creating a generation of displaced professionals who feel economically abandoned by the career paths and systems they were told would protect them.

The skilled trades labor shortage isn't a manufactured narrative that appeared out of nowhere. Fields that include electrical work, HVAC and infrastructure maintenance all need workers, and younger people questioning the value of expensive four-year degrees are pursuing these pathways instead.

Not a universal solution

The problem is that the current AI workforce narrative treats the trades as a universal solution for white-collar displacement.

That framing can sound practical and reassuring. There are open trade jobs with clear demand, and career paths appear to be less susceptible to automation in the near term.

But for employers and policymakers trying to calm fears about AI, "go learn a trade" is an overly tidy answer to a far messier problem.

The scale of the disruption that lies ahead makes that answer even less convincing.

AI systems are compressing parts of the office economy.

• Marketing teams are operating with fewer people
• Entry-level analysts are competing against systems that can summarize reports, generate presentations, and handle administrative tasks in seconds
• Customer support, legal review, coding and financial services are encountering similar pressures

Recent estimates suggest AI can already perform the equivalent of more than one in 10 U.S. jobs, much of it concentrated in administrative and knowledge work.

Even a major expansion of trade training would only go so far toward softening the landing for displaced office workers.

Financial repercussions

The financial adjustment would be substantial. In many areas of the country, an entry-level HVAC technician earns just $20 to $25 an hour. This would be a difficult transition for professionals accustomed to significantly higher salaries.

Construction-related trade work is stable, valuable work, but it also represents a major reset for a midcareer professional who may have spent 15 years building a six-figure career in an entirely different field.

Professional careers shape routines, social identity and long-term expectations about stability and mobility. Many white-collar workers followed the path they believed would protect them from economic volatility, only to take on debt and build households on the assumption that specialized knowledge would remain economically valuable over time.

But many of those same workers are now confronting the possibility that all or parts of their accumulated expertise might be rapidly losing market value.

Emotional repercussions as well

White-collar unemployment also carries an unusually intense form of self-blame. Professional hiring systems place enormous emphasis on communication, confidence and perceived competence.

Extended displacement can quietly destabilize marriages, physical health and long-term planning while producing a private sense of shame that rarely appears in economic data.

The earnings damage can last for years, even if workers find employment again. This is particularly true when they re-enter the workforce in lower-paying sectors with weaker upward mobility.

Over time, that shift becomes more than a temporary decline in income, as it can reshape lifestyles, retirement expectations and social positioning.

Part of what makes the current AI transition so destabilizing is that it targets cognitive and status-based work. Traditionally, repetitive manual labor has been the most vulnerable during previous waves of automation.

AI training evolves quickly

The historical record for retraining deserves a realistic assessment before we determine what comes next. Large-scale workforce retraining efforts have struggled for decades to consistently return displaced workers to their prior earnings levels, often because they eventually land in lower-paying occupations with weaker upward mobility than the careers they lost.

The pace of AI development presents greater challenges. Technical skills in areas such as data, software and operations are evolving so quickly. Reskilling curriculum can struggle to keep up with the systems that workers are being asked to learn.

A more nuanced workforce strategy would treat transition support as a broader economic issue instead of a narrow training initiative. Technical retraining is always necessary, but workers will also need clear transition pathways to navigate environments where the ground is constantly shifting beneath them.

The pace of AI development presents greater challenges. Technical skills in areas such as data, software and operations are evolving so quickly. Reskilling curriculum can struggle to keep up with the systems that workers are being asked to learn.

A more nuanced workforce strategy would treat transition support as a broader economic issue instead of a narrow training initiative. Technical retraining is always necessary, but workers will also need clear transition pathways to navigate environments where the ground is constantly shifting beneath them.

Midcareer workers navigating abrupt displacement might need counseling and temporary income support alongside technical certifications training and job placement.

Some companies are already funding skilled trades programs tied to infrastructure and manufacturing demand.

Still, those efforts were built to address labor shortages, not to accommodate large numbers of displaced white-collar workers.

There are still many unknowns. AI could ultimately reshape more jobs than it eliminates, and many professions might evolve through human-AI collaboration rather than outright replacement.

But uncertainty is not a strategy.

If large-scale workforce disruption materializes, retraining in trades alone will not be enough. A comprehensive response that includes soft skills development, job placement assistance, mental health support and some form of income assistance will be essential to preserve both economic opportunity and social stability.

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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.

At the close, the blue-chip Dow Jones Industrial Average was down 0.2% at 53,343, the broader S&P 500 was 0.7% lower at 7,691, and the tech-heavy Nasdaq Composite was off 1.3% at 26,289.

Treasury yields also finished the day lower, but not before the 30-year yield hit a fresh 19-year intraday high.

Bond yields are rising even as the recent batch of soft inflation and jobs data lowers the odds of a September rate hike, says Daniela Hathorn, senior market analyst at Capital.com.

"Instead, the long end is responding to persistent inflation risks, heavy government borrowing and growing competition for capital — including debt issuance associated with the AI investment boom," she explains. "That creates an uncomfortable environment for equities because financial conditions can tighten even without the Fed raising rates."

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.

Higher oil prices are only adding to this inflation risk. Today, front-month West Texas Intermediate crude futures rose 0.5% to $84.94 per barrel after President Donald Trump said there are currently no talks happening between the U.S. and Iran and no plans to start them.

Bond yields weigh on chip stocks

Tech stocks were a notable area of weakness on Tuesday, due in part to higher borrowing costs. Semiconductor stocks, in particular, took a beating, with the iShares Semiconductor ETF (SOXX) slumping 5.0% as fund heavyweights Nvidia (NVDA, -2.3%), Micron Technology (MU, -7.0%) and Advanced Micro Devices (AMD, -4.3%) sold off.

Chip stocks have rebounded in recent weeks, with SOXX rising nearly 11% for the month to date through Monday's close following a 21% drop in July.

Housing data disappoints

Higher borrowing costs are also weighing on the housing market, as evidenced by today's economic data.

According to the Census Bureau, housing starts fell 12.5% from June to July, to a lower-than-expected 1.24 million. This is down 13.5% year over year.

Separate data from the National Association of Realtors showed pending home sales fell 2.3% from June to July, hitting their lowest level since January.

"Housing disappointed in July," says Bill Adams, chief U.S. economist at Fifth Third Commercial Bank. "The big headwind from high mortgage rates looks likely to persist into 2027."

Adams adds that buyers also have more options right now as folks who delayed selling their homes when mortgage rates started rising "are gradually accepting the new normal and listing their homes, providing buyers more options outside of new construction."

Home Depot takes aim at Amazon

Home Depot (HD, -0.1%) Chief Financial Officer Richard McPhail called out "frozen housing conditions" in the home improvement retailer's earnings call this morning.

"While consumer uncertainty and housing affordability continue to pressure demand for larger home improvement projects, we remain focused on what we can control, our strategy of driving our core and culture, delivering a frictionless interconnected experience and winning the Pro," explained McPhail.

In its fiscal second quarter, Home Depot said its Pro segment outperformed DIY (do-it-yourself) and posted positive comparable store sales. Total comparable store sales for the company rose 1.7% in Q2 — the biggest increase since 2022 and higher than the 0.9% rise Wall Street anticipated. Earnings and revenue also beat expectations.

The comparable store sales number was impressive, says David Wagner, head of equity and portfolio manager at Aptus Capital Advisors, but his attention is more focused on the retailer's three-hour delivery announcement.

"Home Depot announced it's launching express delivery nationwide, promising orders within three hours or less," Wagner explains. "It's a direct shot at Amazon/Walmart-style speed competition, aimed at capturing the 'I need this part now to finish the project today' pro and DIY customer — a use case where Home Depot has a structural edge (2,300+ stores close to where people live) that pure e-commerce players can't easily match."

With big-ticket renovations still on hold due to higher mortgage rates, Wagner says this move echoes the broader theme of the quarter: "Home Depot is leaning hard into speed and convenience to win the smaller, more frequent project spend that's currently driving growth."

Klarna sinks 23% after earnings

Elsewhere on the earnings calendar, Klarna (KLAR) plunged 22.8% after the buy now, pay later firm reported earnings.

While KLAR beat on the top and bottom lines for its second quarter, it lowered its full-year outlook for gross merchandise volume (GMV) — a key metric for fintechs — due to "a more measured view of European volumes in the second half, particularly in Germany, our largest market by volume," the company said.

Klarna also said its chief financial officer and chief marketing officer will step down early next year.

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Take our quick Medicare travel readiness Quiz to test your knowledge, spot hidden coverage gaps and make sure you're protected wherever your itinerary takes you.

And don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Medicare and Traveling:

• What Medicare Covers When You Travel in the US and Abroad
• Medicare and Cruises: The 6-Hour Rule
• What’s the Best Medigap Plan?
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• The 10 Most Valuable Vacation Destinations for Retirees in 2026
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Even for investors who don't hold a single share of any of those companies, the past 12 months have been strong. Markets have climbed steadily, with technology stocks leading the way. A lot of people are sitting on gains — and many of them are likely thinking about taxes.

For investors with appreciated stock, that tax exposure also creates a giving opportunity, and a donor-advised fund (DAF) is one of the most effective tools to act on it.

At DAFgiving360, one of the nation's largest DAF providers and where I am the director of the Charitable Strategies Group, we're having these conversations regularly with donors and advisers.

While DAFs have been growing in popularity in recent years, many investors may not realize the role charitable giving can play in their overall tax and wealth management planning. A DAF isn't just a charitable giving vehicle — it can be a tax and investment management tool with significant charitable outcomes.

For anyone holding appreciated non-cash assets such as stock, a private business interest or real estate, donating the assets directly to a DAF can unlock additional funds for charity in two ways:

• You can potentially eliminate the capital gains taxes that would be incurred if the assets were sold first and then donate the proceeds — which can increase the amount available to charity by up to 20%
• You may claim a fair market value charitable deduction for the tax year in which the contribution is made

Why a donor-advised fund is often the right vehicle

Most charities are not equipped to receive stock directly, particularly stock that comes with complexity: Shares subject to lockup restrictions, concentrated positions in newly public companies, equity compensation awards or holdings in private companies.

That's where a DAF becomes even more useful to both the donor and the receiving charity.

A DAF is a 501(c)(3) public charity that accepts the contribution on your behalf, handles the valuation and liquidation of the asset and holds the proceeds in your account.

A donor takes the tax deduction in the year they contribute (if they itemize deductions), and the contribution is invested for tax-free growth — creating additional available dollars for charity.

Then, on their own timeline — this month, next year or over the next few years — donors can recommend grants from the account to the charities they want to support.

DAFs typically have the resources and expertise for evaluating, receiving, processing and liquidating complex non-cash gifts that most individual charities are not equipped to handle.

Generally, the most complex asset contributions can be handled and processed by major DAF sponsors within five days.

You don't have to be an IPO insider for this to matter

The IPO headlines are attention-grabbing, but this strategy applies to anyone holding appreciated stock.

Tech-heavy portfolios, company stock held through an employee purchase plan or brokerage account, equity compensation that is vested over several years — any of these can create the same dynamic: Shares that have grown substantially in value, with a capital gains tax bill waiting whenever the assets are sold.

If you've been holding off on portfolio rebalancing or trimming a concentrated position because of the tax consequences, donating a portion of those shares to a DAF before selling is worth considering.

The tax rules are straightforward. Shares must have been held for more than one year to qualify for the full fair market value tax deduction.

The deduction for appreciated non-cash assets is generally limited to 30% of adjusted gross income in any given year, with a five-year carryover for any amount above that limit.

And all contributions to a DAF are irrevocable — once contributed, the assets belong to the charitable organization that sponsors the DAF.

The flexibility factor

One thing that surprises many donors is how much flexibility a DAF provides. Donors don't need to decide where their money goes before they contribute. Separation between the financial decision and the charitable decision removes a lot of pressure.

Major liquidity events tend to be busy and emotionally complicated. A DAF lets donors make the contribution now, while using their contribution to support both short- and long-term charitable giving goals.

If you have appreciated stock — whether from an IPO, years of market growth, equity compensation or a concentrated position you've been managing — now is the time to start thinking about how your philanthropic goals can align with your overall wealth management goals.

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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.

Just as being house poor can create a cash squeeze in your prime earning years, investing the bulk of your money in a traditional retirement account can make a seemingly solid retirement plan more vulnerable.

The big risk of retiring with too little cash is a costly liquidity crunch if a large, unexpected expense hits. Not having adequate cash reserves may force you to take withdrawals from your retirement account at the worst possible time — when markets are tanking and asset prices are falling.

The case of the missing bucket

There are two major downsides to forced selling of stocks and other so-called risk assets: 1) it can trigger taxes, and 2) it can deplete your nest egg prematurely.

That's where a large cash hoard comes in. Cash, as is often said, is king — mainly because it's safe, liquid, and easy to access with zero tax consequences. Financial planners recommend putting money in three separate buckets.

• An emergency savings bucket (e.g., cash savings)
• A goals bucket (e.g., car down payment)
• A retirement bucket (e.g., long-term savings, typically invested in a tax-advantaged account that holds more volatile assets with growth potential like stocks)

Ideally, the cash bucket should be outside a traditional 401(k) so you won't have to pay taxes on any withdrawals. But in reality, many people don't have an emergency savings bucket. More than half of Americans (53%) say they don't have sufficient liquidity to cover a $1,000 emergency expense, according to Bankrate. That's where Plan B (which we'll discuss in more detail later) comes in: holding ample cash reserves for emergencies in a retirement account, where you're likely to have the bulk of your assets.

Risk 1: a bigger tax bill

Withdrawals are taxed as regular income. Distributions from traditional 401(k)s are treated as income. That means your withdrawals will get taxed at ordinary tax rates, which range from 10% to 37%. The tax you pay to the IRS also puts an extra drain on your account balance. Let's say you're in the 24% tax bracket and need to raise $45,000. To net that large lump sum, you'll need to withdraw $59,211 from your 401(k) to account for the $14,211 tax owed to Uncle Sam.

Withdrawals may push you into a higher tax bracket. The extra income generated from 401(k) withdrawals may bump you up to a higher tax bracket, increasing your tax bill. Say you're at the tippy top of the 24% bracket and you withdraw $45,000 from a traditional 401(k). All that extra income will bump you up from the 24% bracket to the 32% bracket. The tax amount on $45,000 at 32% is $14,400, which is $3,600 more than the $10,800 tax hit in the 24% bracket.

That additional income could also inadvertently result in a future increase in Medicare Part B and Part D premiums (IRMAA) if it pushes your modified adjusted gross income (MAGI) above certain income thresholds.

Another financial drawback of keeping most of your savings within a traditional 401(k) is less flexibility in managing taxes on withdrawals.

"You don't have optionality around crafting an income tax-efficient cash flow stream," says Charles Carter, managing director at Oxford Financial Group. "You're beholden to the ordinary income tax rate. The more you take out of the retirement plan, the more your ordinary income goes up, the higher your marginal tax rate. It becomes sort of a vicious cycle."

Risk 2: the growth hit and sequence of returns risk

Withdrawing money during a down market means you must sell more shares to raise the cash you need. So, you now have fewer shares in your retirement account to benefit from a market rebound. That, in turn, means you lock in losses and miss out on compound growth.

This risk, known as sequence of returns risk, is particularly damaging for retirees at the beginning of retirement, as their account balance is depleted more quickly than planned, which is hard to overcome.

"Retirees who withdraw from a retirement portfolio in a down market are unfortunately steepening the already uphill battle," says Jonathan Lee, investment adviser at U.S. Bank Private Wealth Management.

Liquidating stocks, equity funds, or other positions in your 401(k) permanently reduces the dollar amount and share count in your account, shrinking the amount of assets that can benefit from compounding over time. For example, at a 7% average annual return, $10,000 withdrawn 20 years before it would have been needed represents $28,697 in lost appreciation.

"We don't know what the market is going to do in two days, two months, or two years," says Jason Grover, a financial planning specialist at Grover Financial Services. "What we don't want to do is be forced to sell positions to generate cash that we need to pay our everyday bills." That cash protection, Grover adds, allows the retiree to stay invested and benefit from an eventual market recovery.

Where to keep your cash buffer

Ideally, you have set up an emergency fund outside of your 401(k). Financial advisers recommend retirees keep one to three years of expenses in a cash account, preferably in a high-interest savings account they can access without incurring penalties or taxes.

Grover recommends retirees set aside a cash reserve totaling at least two years of living expenses. "Anything less than that is irresponsible," says Grover. "For a client who is taking $5,000 a month (or $60,000 a year) from their 401(k), I'm going to have $120,000 minimum in cash," says Grover.

You should also pay close attention to "asset location" as you save for retirement. That strategy refers to having a mix of investment buckets with different tax treatments such as taxable brokerage accounts, tax-free Roth accounts, and traditional retirement accounts. However, a sound plan also requires proper "asset allocation" — including an ample cash buffer to ride out market downturns.

If you don't have an emergency fund and most of your savings sit inside a tax-deferred (traditional) retirement account, you can still take action. You should build a cash hoard inside your traditional 401(k), even though any withdrawals will be taxed as ordinary income. Having a cash allocation in your 401(k) gives you an all-important liquidity option that's not negatively impacted by short-term market movements.

"If your 401(k) is your sole bucket for cash flow, it would be risky, if not foolish, to not have a sufficient cash reserve sitting there ready and waiting," says Carter.

Actionable ways to replenish cash savings

Rebalance your 401(k) portfolio. If the lion's share of your assets is in a traditional retirement plan, a short-term fix is to rebalance your portfolio periodically to bolster your cash bucket in your 401(k), Carter advises. Ideally, opportunistically sell stocks when the portfolio's equity weighting has swelled beyond financial plan targets — and when markets are up. "Those are opportunities to strategically raise cash," says Carter.

Consider Roth IRA conversions. Roth accounts allow tax-free withdrawals and are a valuable tool for managing cash in retirement. However, Roth conversions are a taxable event, so work with your financial adviser and run the numbers to see whether you can convert savings held in traditional IRAs or 401(k)s to a Roth account.

Buy a short-term Treasury and hold it to maturity. If you have an adequate emergency fund now but plan on burning through the money in the next two years, you can replenish your bucket for year three and beyond by purchasing a short-term U.S. Treasury bond of, say, three years' duration, says Grover. "Hold the bonds to maturity," said Grover. By holding to maturity, you'll lock in the current yield of roughly 4.25% and know the money will be there when you need it in a few years.

Commit to a savings plan to build a rainy-day fund. A long-term solution to a cash shortage is to start building an emergency fund outside your 401(k), advises Carter. Rejigger your budget and start setting aside money in a high-yield savings account or a taxable brokerage account. "Take a thoughtful, intentional, and diligent approach to saving," says Carter. Building an ample emergency fund this way won't happen overnight. It could take a few years.

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One advanced strategy that addresses these concerns is the inter-vivos QTIP trust.

In this article, I'll explore what an inter-vivos QTIP trust is, its key benefits and design considerations, and why it can be particularly well suited to married couples with modest estates (below the current $15 million unified gift and estate tax exemption limits) who are seeking effective, flexible estate planning with lawsuit protection.

What is an inter-vivos QTIP trust?

A qualified terminable interest property (QTIP) trust allows a spouse (the settlor) to provide for their surviving spouse while maintaining control over how the trust's assets are ultimately distributed after both spouses have passed away.

The term "inter-vivos" means the trust is created and funded during the lifetime of the settlor, as opposed to being established at death through a will (testamentary trust).

The inter-vivos QTIP trust is established while both spouses are alive, and it is designed to qualify for the marital deduction for gift tax purposes, i.e. it won't be considered a taxable gift to the donee spouse, provided it meets certain requirements.

The trust must pay all income to the beneficiary spouse for life, and no one else can receive distributions from the trust during that spouse's lifetime.

Why use an inter-vivos QTIP trust?

The primary motivation for using an inter-vivos QTIP trust is to "lock in" estate planning decisions and protect assets from risks that can arise after the first spouse's death. Common threats include undue influence from new partners, children from previous relationships or even diminished capacity of the surviving spouse.

By placing assets in an irrevocable trust, both spouses can ensure their joint wishes are respected and that assets ultimately benefit their mutual descendants.

Key benefits

Asset protection. The inter-vivos QTIP trust provides robust asset protection for both spouses during their lifetimes. Assets in the trust are generally shielded from creditors and outside claims, especially when combined with structures such as LLCs.

Stepped-up basis. The trust can allow for a step-up in cost basis for trust assets at each spouse's death, potentially reducing capital gains taxes for heirs. However, planners must be mindful of the one-year limitation under Internal Revenue Code Section 1014(e).

Irrevocable planning. By making the trust irrevocable, couples prevent either spouse from unilaterally changing the estate plan after the first death, which is a common risk in traditional planning.

Tax flexibility. The trust can be designed as an incomplete gift, meaning the settlor retains certain powers (such as a limited power of appointment), which can defer gift tax consequences while still qualifying for the marital deduction.

Divorce and remarriage protection. Provisions can be included to address the possibility of divorce, ensuring that trust assets remain protected and are not diverted to unintended beneficiaries.

Administrative efficiency. Using LLCs in conjunction with the QTIP trust can streamline investment management and reporting, consolidate accounts and simplify administration for the family.

Design considerations

All-income mandate. The trust must pay all income to the beneficiary spouse for life to qualify for the QTIP election.

No other beneficiaries. No one other than the beneficiary spouse can receive distributions during their lifetime, with limited exceptions for the settlor spouse in certain jurisdictions.

State law protections. Some states, such as Nevada, provide statutory protection for the settlor's retained interest in the trust, enhancing asset protection.

Powers of appointment. Retaining a limited power of appointment can allow the trust to be treated as an incomplete gift, offering additional tax planning flexibility.

Conclusion

The inter-vivos QTIP trust is a versatile and powerful tool for married couples who want to secure their estate plan, protect assets and optimize tax outcomes.

While it requires careful drafting and consideration of both federal tax law and state creditor protection statutes, its benefits make it an excellent option for most couples — especially those who want to avoid the pitfalls of more complex or less protective planning strategies.

By working with experienced estate planning professionals, couples can tailor an inter-vivos QTIP trust to meet their unique needs and ensure their legacy is preserved for future generations.

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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.

While the events described here concern an alleged California slumlord-on-steroids family, these creeps are found all over the country. Over the years, you can't imagine the calls I get from tenants whose basic rights to a habitable rental unit are ignored.

When I call their landlord or management company, instead of a businesslike response — "Yes, we will look into it" — I often hear the equivalent of, "Go pound sand."

Sadly, the crooks get away with ripping off tenant after tenant because the tenants are frequently unaware of their rights in every state and are either naïve or feel unable to speak up and just walk away before handing over their first month's rent and security deposit.

That description fits 23-year-old "Sandy," who rented an apartment in Bakersfield, California, just a few blocks from my office. She filled out a detailed rental application, so the local property managers — just like property managers everywhere — knew a great deal about her.

But she knew nothing about her landlord or that she was about to step onto the dance floor with Mike Nijjar and PAMA Management, whom California Attorney General Rob Bonta has accused of breaking housing laws.

Bonta's lawsuit says Nijjar and others "exploited vulnerable families" while owning and managing more than 22,000 low-income apartments throughout California.

Violations include subjecting tenants to vermin, sewage leaks, broken security gates, illegal contracts, rent hikes and much more stomach-turning behavior.

A simple Google search

If Sandy had simply Googled the apartment's address, she would have found this massive lawsuit that alleges "rather than provide their tenants — primarily low-income families — with the basic package of housing goods the law requires, the Nijjar Companies rent out unsafe and uninhabitable units, disregard tenants' requests for repairs and fail to eradicate pests, inflicting harm and anguish on tenants." You can read more about the case here.

Sandy could easily have learned that the vermin- and cockroach-infested apartments described in the lawsuit, BBB reviews and elsewhere online would be exactly what she was getting. She would have found — as I did — that the local property managers were precisely as described in the BBB reviews and complaints — the very same people.

Like residential and many commercial tenants everywhere, it never occurred to her to spend a few minutes researching her landlord to learn if they had been sued and for what.

Not allowed to do a walk-through

Sandy told me she and her mother saw an advertisement for a "nice, clean, ready-to-move-into" apartment in downtown Bakersfield owned by Equity Management. State filings and legal actions by the California Department of Justice report that Equity Management is an alias used under the property portfolio managed by Nijjar (Nijjar Realty/PAMA Management) in El Monte, California, and is part of the lawsuit referred to above.

I should point out that the attorney general's lawsuit lists 93 separate entities — a massive "hide the ball" move commonly used to isolate actual owners behind various shell companies and partnerships.

Sandy went to the apartment's address, met "Jasmine," the resident manager, and:

• Filled out a rental application.
• Signed a rental agreement and handed Jasmine $2,300 in money orders prior to actually doing a walk-through of the apartment. "I was not allowed to go into the apartment until I paid the money," she told me.
• The following day, she said, "I was allowed in, only to find hundreds of cockroaches everywhere."
• Sandy spoke with a resident in an adjacent apartment who related the same, ongoing problems.
• Jasmine placed cockroach bombs in Sandy's apartment, but they had little impact.

Sandy never moved into the apartment. She and her mother were referred to me for help.

It would not take much time before the extent of the accusations against this operation would become clear.

And now the runaround begins

After I talked with Sandy, I phoned Jasmine. She seemed to have great difficulty in recalling the cockroach problem, but she confirmed that Sandy did not actually move into the apartment.

When I told her that, given these habitability conditions that clearly violated California law, Sandy is owed a complete refund of the money Jasmine collected from her, she referred me to "Beth" at the Bakersfield head office.

"You can call them, but next week, because they only answer the phone Wednesday to Friday from 11 a.m. to 1 p.m.," she said, giving me the phone number in a tone that I interpreted as, This isn't my first rodeo. I know how to deal with people like you.

I did not wait until the next week. I called the number right away, and a receptionist answered, "Equity Management." I asked for Beth and was immediately connected. I explained why I was calling and asked her to refund Sandy's money, and she promised to call me back within 10 minutes.

That call never came, and so I phoned back, and this time, Beth was as nasty as described in the many complaints I read online and hung up on me.

Sandy blows her chance of getting her money back

I told Sandy to immediately go to Beth's office with her mom and insist on a refund. That was the moment to at least try, or she would have to sue them in small claims court. After not hearing back from her, I called her later in the day.

"Oh, I had to take my kids to get their immunizations for school," was her excuse.

Hearing that, I was not kind. "You had weeks to do that. Life is a great teacher. Perhaps one day you will develop the courage to stand up for yourself. Good luck."

The moral of today's story: Before you sign a lease or give a landlord or property manager any money, you need to discover as much as you can about who owns and manages the rental unit.

This includes entering the landlord/property manager's name on Yelp and the Better Business Bureau website — pay particular attention to the one-star reviews. Also, Google the landlord's and/or property manager's name along with "complaints against" and "lawsuits."

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.

President Donald Trump urged Iran to "put up the white flag of surrender" in a pre-opening bell phone conversation with Fox News, during which he also threatened to bomb Oman if it "gets in the way" of U.S. negotiations to open the Strait of Hormuz.

"The number one Goal is, and always will be, that Iran cannot have, in any way, shape, or form, a Nuclear Weapon," Trump posted on Truth Social at around the same time. "I have no time schedule," a multitasking Trump told Fox News. "I'm not in a hurry."

The front-month West Texas Intermediate crude oil futures contract was higher by 2.5% to $84.45 per barrel. WTI declined to $67.04 intraday on July 2, just above its pre-war closing price of $67.02 on February 27 and vs a 52-week high of $119.48 on March 19.

The 2-year Treasury yield rose from 4.171% on Friday to 4.182% today, though the indicator of short-term Fed intentions has come down about 20 basis points from a 52-week high of 4.377% on July 24.

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.

The 10-year Treasury yield ticked up to 4.724% from 4.696% on Friday, and the 30-year Treasury yield was up from 5.266% to 5.310%, reaching a new 19-year high in the process.

By the closing bell, the blue-chip Dow Jones Industrial Average was down 0.5% to 53,459, the broad-based S&P 500 had lost 0.5% to 7,745, and the tech-heavy Nasdaq Composite was off 0.3% to 26,644.

How healthy are earnings

Most of the S&P 500 has already reported, and results from the earnings calendar are good. Indeed, as Ritholtz Wealth Management research associate Matt Cerminaro calculates, the overall year-over-year earnings growth rate is tracking to 32.2%.

In the aftermath of an unexpected decline in retail sales in July, reports from Home Depot (HD, -0.2%) tomorrow morning and Walmart (WMT, -0.8%) on Thursday morning will offer more color about the state of the consumer.

Still, as Cerminaro notes, 10 sectors are expected to report earnings growth, and eight are expected to post double-digit growth. And that bottom-line growth rate: "Talk about running it hot," Cerminaro says. "That number is on fire."

Indeed, all 11 stock market sectors defined by S&P Global are on track to grow revenue, with an overall annual rate for the S&P 500 of 15.4%, the strongest rate since the fourth quarter of 2021.

That's not all: "These companies are crushing estimates, raising guidance, and their stock prices are following suit. It's exactly what you want to see in a healthy bull market."

Why AMZN can hit $500

Amazon (AMZN, -0.5%) has had only a so-so 2026 so far. The e-commerce giant, cloud computing juggernaut and bellwether consumer discretionary stock posted a total return of 13.8% through Friday vs 14.5% for the S&P 500.

AMZN is trading around $260 today, up from around $230 at the end of 2025. According to Morgan Stanley analyst Brian Nowak, there's reason to believe the stock could hit $500 by the end of 2027, most notably on the opportunity for Amazon Web Services.

"We can debate the long-term margins of a GenAI enabled AWS," Nowak writes, "but if AMZN management's comments on AI tracking toward similar margins and returns as core cloud are in the right ballpark, this likely implies ~30% EBIT margins."

According to Nowak, that means about $1 trillion of AWS revenue and approximately $300 billion AWS EBIT (earnings before interest and taxes) over the next eight to 10 years. "Layering in reasonable Retail assumptions, this would imply AMZN is set to generate approximately $500 billion of EBIT in 2034-2036 … and that company wide EBIT could CAGR at a 16-20% rate."

The analyst reiterated his Overweight (Buy) rating, as well as his $335 12-month target price. Even from Nowak's "base case," there's about 29% of upside from here for AMZN.

What made SNDK pop again

Sandisk (SNDK, +8.9%) was the hottest of S&P 500 stocks on Monday in the aftermath of a warmly received "investor day" presentation last Thursday highlighted by management's long-term guidance, as well as an ambitious stock buyback plan.

As Bernstein analyst Mark Newman reports, management of the memory device and solution provider forecast mid- to high-teens volume growth and stable pricing through fiscal 2030. "The company also guided long-term gross margin around 80%," Newman writes, "which was better than expected."

Sandisk also announced that 100% of free cash flow (FCF) will be returned to shareholders and hinted that most, if not all, of this FCF will be used to buy back shares.

"Using even the most conservative of estimates for free cash flow," Newman says, "Sandisk can buy back 47% of shares outstanding in the next four years of free cash flow generation at current share prices."

Newman reiterated his Overweight (Buy) rating and his $3,000 12-month target price for SNDK.

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SpaceX is going big with Terafab, which it says will be the largest chip-making plant in the world when completed. But it’s hard to know if Elon Musk’s extraordinarily ambitious semiconductor plans will work.

One thing is certain: Musk is serious about building it. SpaceX is dedicating nearly $17 billion for the initial phase of the advanced semiconductor manufacturing factory, and tens of billions more in spending is likely. When finished, the company says Terafab will span 100 million square feet, making it one of the largest manufacturing facilities in the world.

Within Terafab’s walls, SpaceX will manufacture, package and test advanced logic and memory chips. The reason for entering the market is based on Musk’s sky-high forecast of the chips needed for driverless cars, humanoid robots and orbital data centers for both SpaceX and Tesla.

SpaceX says its demand for chips will eventually be so astronomical — more than the current global supply — that it can’t rely on leading chipmaker Taiwan Semiconductor Manufacturing Co. for all its needs. Or Intel, which is working overtime to start a division that makes chips for outside companies, and which has partnered with SpaceX to help build Terafab.

"Elon has a proven track record of reimagining entire industries," said Intel’s CEO Lip-Bu Tan when the partnership was announced. "This is exactly what is needed in semiconductor manufacturing today."

Will chipmaking be reimagined by the world’s most dominant space company? The answer is unclear, but here are some of the early questions we’re pondering.

1. Can SpaceX build a successful semiconductor fabrication plant?

Semiconductor manufacturing is incredibly costly and challenging. It pushes the limits of physics, chemistry and engineering. The clean rooms are up to 1,000 times cleaner than an operating room. The lithography machines needed to print chip patterns on silicon wafers cost hundreds of millions of dollars. There are specialty gases and chemicals, along with all sorts of automated machinery. The ecosystem involves thousands of suppliers around the globe.

And the economics don’t work unless the facility is running at full capacity, churning out finished wafers with a miniscule amount of defective chips. To add to the challenge, SpaceX wants to push the limits of current chip manufacturing, saying it will be the first to do so many of the processes under one roof. "The most epic chip-building effort in the world," says the company.

Musk says that eventually, a huge production volume will allow Terafab to test and develop new chip designs rapidly, calling the way current chipmakers operate "extremely conservative." He also wants to harness new physics and chip technologies, saying in a presentation, "We’re going to try a bunch of wild and crazy things."

2. How will Terafab distort the chip ecosystem?

SpaceX will become another big spender on chip equipment. The company needs advanced photolithography machinery from Dutch company ASML, pitting it against TSMC, Intel, Samsung and others. Plus, it will need to buy all sorts of other gear that goes into a leading-edge chip plant from Lam Research, Tokyo Electron, KLA Corporation and many other suppliers. Building a cutting-edge chip plant can already cost more than $30 billion and Terafab, with its scale and ambition, will cost far more.

SpaceX is also likely to poach top chip talent from other top companies. The U.S. chip sector already has a severe shortage of workers to operate chip plants. The massive project will take up lots of skilled construction labor as TSMC, Intel, Samsung and chip companies try to expand in the U.S. Over the long term, there’s the question of whether Terafab’s chip production could affect the sales of other chip leaders.

Musk’s viewpoint is that there will be an ongoing, huge shortage of chips compared with the exploding demand for AI compute. SpaceX says Terafab chips are solely for its own internal use, but one has to wonder if the company would ever consider selling its chips to outside customers. Or even making chips for customers. Plus, if SpaceX can eventually win more AI market share, that affects the chip market. Its AI competitors would need to buy fewer chips.

3. What kind of turmoil will SpaceX cause for chip stocks?

In the coming years, some investors may start monitoring SpaceX’s competitive threat to other chipmakers or even start worrying about a potential glut of chips. SpaceX wants other chipmakers to expand production as it makes plans to wean itself off outside chips. "While we are deeply appreciative of our current chip suppliers, and encourage them to expand production whenever possible, this looming gulf between supply and demand is at the core of Terafab’s necessity," according to the company’s latest update.

It wouldn’t take SpaceX completing the project or even making chips in high volumes to affect other chip stocks. Hitting early milestones or even building a promising narrative around Terafab could spark stock gyrations. Intel’s partnership with Terafab could become an uncomfortable one in years to come if SpaceX starts to be a competitive threat. Consider that SpaceX’s long-term plans for Starlink to take on terrestrial wireless carriers have already hit telecom stocks, causing U.S. wireless carriers and tower firms to trade lower.

4. What does this mean for Nvidia?

Over the short term, not much. But SpaceX takes the long view, and that’s where things get interesting. As SpaceX pursues manufacturing its own chip designs, it could mean trying to move past Nvidia, at least in the very long term. For now, SpaceX is all-in on Nvidia chips, recently committing to the company’s AI chips for its orbital data centers. "We have decided to build exclusively on Nvidia, because we think the Vera Rubin architecture is the best architecture," Musk said during SpaceX's recent earnings call.

But over time, that relationship could get challenged if SpaceX somehow is able to make its own chips and become a dominant force in AI data centers, on Earth and in space. SpaceX’s investor prospectus underscored how it wants to keep all options on the table: "While Terafab is intended to expand our internal chip manufacturing capabilities and alleviate potential future AI chip shortages at SpaceX, particularly as we pursue orbital AI at scale, we expect to continue sourcing a significant portion of our compute hardware from third-party suppliers."

What is the timeline for Terafab?

While the initial construction has started, the time it will take to produce viable chips is anyone’s guess. And there’s a difference between just making chips and producing them economically at scale. It’s likely that SpaceX faces all sorts of technical challenges in coming years.

Here are some of the key dates up to today: SpaceX announced in March 2026 that it was building Terafab in collaboration with Tesla. The partnership with Intel was announced in April 2026, which will include Intel lending its manufacturing expertise to help with design, fabrication and packaging. The latest announcement about breaking ground on Terafab in Grimes, Texas, happened on August 6 and included an aerial shot of the futuristic-looking facility.

Other development timelines, milestones and spending haven’t been determined yet (or at least are not public). It’s likely SpaceX moves aggressively on this project and the timeline for initial production is faster than other chip plants built in the U.S. However, completing the full vision of Terafab would take many years, extending well into the 2030s.

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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If you're among the 66% of baby boomers who plan to pass on generational wealth during their lifetime, living nearby guarantees you'll see your gifts make an impact firsthand.

Sounds like what retirement dreams are made of. But not so fast — it can quickly become far more complicated than expected if you aren't careful. After all, your grandchildren won't stay young forever. Plus, there are financial costs you may not have considered. And let's not forget the emotional side of stepping away from your established life for a completely new one.

"It's one of the largest financial decisions that retirees never actually model into their plans," says Patrick Shope, a certified wealth strategist and founder of Shope + Associates. "They will spend months looking at their budgets, but they drop everything when asked to move near their grandbabies. That decision comes very quickly, but it affects their taxes, their health care, and their spending for the next thirty years."

Moving near the grandkids in retirement may be the perfect decision for you, or the flawed, complicated, not-so-ideal decision. Before deciding if you want to move for your grandkids, ask yourself these three key questions.

Don't retire near the grandkids until you answer these three questions

1. Why am I moving, and is everyone on the same page?

Unless your children are begging for your help, make sure you can answer this question first: Why do I want to move there?

"I want to spend time with my family," or "I want to help out," isn't sufficient. Your reasons need to be specific, and they can't only be about your family. Sure, they can be the draw, but if you hate everything else about the location, you'll end up miserable when you aren't with your loved ones. Find other attributes that make relocating feel like home. Maybe it's the weather, the proximity to cultural events and the arts, or nature. Whatever it is, there has to be something about the move that appeals to you beyond the grandkids.

After that, make sure your adult children are on the same page. You don't want to uproot your entire life to spend time with your grandkids, only to find that your adult children and grandkids are too busy to spend much time with you. Nor do you want to become a full-time, free nanny, with no time to pursue your retirement dreams.

"Retirees may think this is going to be a Norman Rockwell picture where everyone sits down for weekly dinners, but the children may be thinking 'I need childcare,'" says Joe Buhrmann, advisory financial planning consultant at eMoney Advisor. "Have an honest conversation about how often you will see each other, what role grandpa and grandma will play, and what support looks like on both sides."

2. Can I afford to maintain my lifestyle and to undo the move if things change?

Spending time with the grandkids is great, but it can also get expensive. How expensive? According to a recent AARP survey, grandparents spend $2,654 per year per grandchild. And that's just an average. If you are living near your grandkids, expect that bill to increase.

That's not the only cost of relocating to be near the grandkids. Depending on which state you move to, you could pay more in taxes, insurance, or cost of living, all of which puts pressure on your retirement budget. That's why the second question to ask yourself is: Can I afford my lifestyle and a move back if I had to?

After all, you could be ready for your final place of residence, but that may not be true of your adult children. If you moved to live near them and then they decided to relocate, you may find yourself wanting to go back to your original home.

"So many people price what the cost is to move out to this new location to be near the grandchild, but they never price out what the cost is to move back," says Shope. Should you have to move back, not only would you be reentering the market at a higher price point than when you originally bought a home, but you would have lost tax breaks from moving.

3. Will this location still work if I need caring for?

When you move to be near your grandkids, you might start eager to play cheerleader, chauffeur, and caregiver. But as you age, getting around becomes harder, making it important that you choose a location that continues to support your independence. That’s why you must ask yourself: Will this location still work if the tables turn and I am the one who needs care?

"Most people make this move while they are healthy, and the value they bring is physical: carpools, babysitting, being at the pool. Twenty years later the direction of help reverses, and the same house has to serve a very different set of needs," says Eric Ludwig, director of the American College of Financial Services Center for Retirement Income.

While you want to be near the grandkids, Ludwig says to consider how far the location is from major hospital systems, and whether it has the specialists you may need. If you have to travel for care, will you still be willing and able to do so at 83?

Consider a hybrid approach

If you can't answer all of these questions definitively, then you may want to consider a hybrid approach. Instead of moving full-time to a new location, move part-time, or on a seasonal or trial basis, to the new location and see how it goes. Some retirees have a second home near the grandkids, while others opt for extended stays in hotels or Airbnbs.

Ludwig's parents, for one example, are residents of Florida and spend their summers with him and his family in Wisconsin. While they live a mile away, there are stretches in the summer where they go a week or two without seeing each other, but that is what's expected. "It’s close to my Dad’s golf buddies and their doctor appointments, so it works well all around," says Ludwig.

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

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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There have been intermittent signs of volatility when world events made the market temporarily shaky, but overall, there's been a positive upward trend for quite some time. The S&P showed double-digit gains for 2023, 2024 and 2025.

Retirees and those nearing retirement may have been especially jubilant as they watched their portfolios grow. But they also may be experiencing another feeling. To accomplish what they have with their retirement savings, they may have taken on risk, which may or may not have made them anxious.

Now the questions arise:

How do they feel about risk right now?

Have the recent good times lulled them into thinking that they aren't facing as much risk as they actually are?

The dangers of recency bias

Investors can sometimes fall prey to something called recency bias. This is the tendency to place too much emphasis on what's happened lately rather than also looking at long-term trends.

Recency bias can work both ways. If times have been tough, people can become gloomy and worry that they will never get better.

If the market has performed well — as it has for three years in a row — they expect that to continue, even though history tells us that, almost certainly, the market will head in the opposite direction at some point.

History shows that three years of double-digit gains are uncommon, with a negative year almost always tossed in there somewhere.

If you look at long-term return data for the S&P 500 — such as datasets compiled by institutions such as the NYU Stern School of Business — you'll find there have been only a handful of periods since 1926 in which the market produced three consecutive years of double-digit gains.

In most of those cases, the fourth year has been positive as well, though not always.

While that leaves room for optimism, it's no guarantee that this particular three-year double-digit span will be followed by a fourth good year or even a fifth one.

Still, recency bias can be hypnotic, and retirees and near-retirees especially need to be careful not to be caught up in its spell.

Risk tolerance vs risk capacity

It's easy to fall prey to the enchantment. As success builds on success with your portfolio, your confidence grows along with the numbers. The idea of a market drop can seem distant — and even more so after a few of these positive years are strung together.

But while your willingness to take more risk may have increased, your ability to might not have kept up.

This is where it's wise to look at your risk tolerance vs your risk capacity.

Risk tolerance is how willing you are to endure market volatility without losing sleep over each fluctuation.

Risk capacity is whether you and your portfolio can withstand those fluctuations.

When you're nearing retirement age, your risk tolerance may or may not remain the same. But your risk capacity changes. In your younger years, you could afford to be unmoved by market dips because you had plenty of years — even decades —to recover.

Now, your focus is no longer on growing your money; it's about protecting it. You'll be counting on that money to live on in retirement, and a market decline can be devastating to your portfolio, especially if you're withdrawing money at the same time you're sustaining market losses.

It becomes difficult — if not impossible — to recover, and soon your portfolio could wither away completely.

At this stage of life, the timing of a loss becomes as important — maybe even more— than the amount of the loss due to This is sequence of returns risk. Essentially, a market decline early in your retirement can have a disproportionate effect on the long-term outlook for your portfolio.

The five years right before retirement and the first five years of retirement are sometimes referred to as the "fragile decade" because of how vulnerable your portfolio can be during this time.

That is why around five years out from retirement is a good time to start reassessing your risk and deciding whether you should reduce it.

Re-evaluating risk

When evaluating risk at this stage, I often ask clients a clarifying question: If your portfolio grew by another $100,000, would it change your lifestyle?

For many families, the answer is no.

Then I ask a follow-up: If the market declined and that same $100,000 disappeared, would it affect your decisions? Your confidence? Your peace of mind?

In most cases, the answer is yes.

For many, losses are much more devastating than gains are gratifying.

Does this mean, as retirement approaches, you should eliminate all risk, withdrawing from the market entirely and putting your money in CDs, bonds or anything else that seems a safer bet?

Not at all. Even in retirement, it's important to have a portion of your portfolio invested for growth. Otherwise, another risk — inflation — can whittle away at your buying power.

But you do want to re-evaluate and possibly trim back the risk. If you've spent decades saving, investing and taking on risk — and your portfolio has benefited from that discipline — there may come a point at which the question shifts from "How much more can I gain?" to "How much am I willing to risk losing?"

For many investors nearing retirement, the answer to that question is more important than any market forecast.

If you've already played the game, taken the risks and won, it may be worth asking whether continuing to play the same way still serves your future.

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.

Dear Wealth Wise: We've saved almost $4 million: $3.2 million in retirement and a $500K inheritance from my father that we put toward education and has already grown to almost $800K. I'm 53 and my husband is 54. Our children are aged 16, 13 and 10.

My husband and I work full-time but want to retire in eight years once our youngest graduates high school. Staying in our starter home helped us save, but we outgrew it years ago. We have equity in our home we could use to upsize, but we'd triple our mortgage payments and take on higher property taxes and insurance. We're not sure how much additional money we'll be able to save.

Can we just say we've saved enough for retirement plus college for three kids? In a few years, it won't make sense to upsize since our kids will be moving out. We've worked hard and would enjoy a bigger space. We're willing to downsize in eight years along with retiring. I see buying a bigger house as a very expensive rental to get more space while we see our kids through to college. — Cramped but Cautious.

Dear Cramped but Cautious: Saving for retirement often requires sacrifice. By staying in a starter home, you have clearly saved a bundle and understandably want to upsize while it still makes sense.

You may struggle to find something affordable. During the first quarter of 2020, the median U.S. home sale price was $329,000. Today, it's $410,700. That marks a roughly 25% increase. Throw in elevated mortgage rates, and it's no wonder you question if you can keep saving after upsizing.

But do you really need to worry? Let's see what our experts have to say.

You've probably saved enough for retirement

Moving to a larger home can feel like a risky financial decision when it means you don't have extra money to fund a retirement account. But Christopher Walsh, regional marketing director and financial adviser at Capital Choice Financial Group, says that assuming your future income needs aren't too outrageous, you're probably OK to stop contributing toward retirement.

"I would say for the most part, your work is done," Walsh says. "If your investable assets continue to compound around 9%, and if you follow the rule of 72, your retirement [account] should be near double what it is today."

Walsh says that if you also follow the 4% rule in retirement, that should provide an income of about $256,000 a year. Keep in mind that a 9% return may be too high a goal as you near retirement and invest more in fixed income. You'll also need to account for inflation. Still, with Social Security added in the income mix, you should have plenty to work with.

"For most people, that's an outstanding retirement income and should also empower you both to leave quite a legacy for your children," Walsh insists.

Watch out for the expensive college years

While your strong nest egg positions you well to hit the brakes on retirement savings, it's the college years that may trip you up, says Michael McSweeney, financial adviser at Ascend Wealth Partners.

"An $800,000 balance should go a long way toward paying for college," McSweeney acknowledges. Indeed, your family's college savings are far ahead of the average 529 college savings account balance, which had just over $34,000 at the end of 2025.

"That said, I'd be careful not to underestimate what the next eight years will look like," cautioned McSweeney. "Having three children close in age means there could be several years where college costs run $50,000 to $100,000 per year, or more, on top of their normal living expenses."

Given that you're looking at expensive college costs in the years leading up to retirement, the danger, says McSweeney, is being tempted to tap your nest egg to cover added expenses that arise, such as expensive off-campus housing or airfare to a distant school. That would still likely leave you with plenty of money to retire on, but it does change the math.

"That's why I would think twice about buying a larger home," McSweeney says. "The question isn't whether they can afford it. It's whether it makes sense to dramatically increase their housing costs for a home they already expect to sell in eight years."

As McSweeney points out, "A larger house doesn't just mean a bigger mortgage. It usually means higher property taxes, insurance, utilities, maintenance, and furnishing costs."

There may be options other than buying a new, more expensive home

Eager as you may be to upsize while you still have kids living at home, whether it makes the most financial sense is questionable, says McSweeney. His recommendation? Renovate your current home to make it more comfortable.

"A home equity line of credit could be a great tool here," McSweeney says. "They can tap into the equity they've built over the years to remodel the kitchen, update bathrooms, finish a basement, add usable living space, or make other improvements that help the house function better for a family with teenagers."

The payment on a reasonable HELOC, McSweeney explains, may be much lower than the cost of upgrading to a more expensive home. And that way, he says, if you want to downsize in eight years, you'll have an updated home that's easier to sell.

The downside? Because they’ve lived in this starter home so long, their capital gain may already be approaching the $500,000 tax-free exclusion for married couples. Staying put for eight more years means future appreciation may be taxed. (On the other hand, documenting qualified renovation costs will raise their home's cost basis, helping to offset some of that future tax bill).

The verdict: go for it (or renovate)

All told, you can probably afford to stop saving for retirement and college and buy the bigger house you've always wanted. But you'll need to decide if it's worth the potential financial stress.

"When you factor in transaction costs, mortgage interest, property taxes, insurance, maintenance, and moving expenses, they're spending a significant amount of money for something they already know is temporary. That's not necessarily wrong, but it's a lifestyle decision, not a financial investment."

If living in that bigger home is important to you, then you should go for it. You've earned it. But if you can make your current home work with a thoughtful renovation, McSweeney says, you'll likely enjoy these last few years with your kids just as much while keeping your monthly expenses lower, preserving more flexibility, and putting yourself in an even stronger position when it's finally time to retire.

"They've spent years making smart financial choices, including staying in a modest home while building nearly $4 million in assets. I wouldn't abandon that strategy just a few years before retirement," McSweeney says.

A word from Wealth Wise on college costs

One of the hardest lifetime expenses to plan for (aside from retirement) is college. We agree that $800,000 for three children is a robust college fund, leaving an average of $266,000 for each child. That's almost exactly what four years of private college would cost ($60,920 x four years), according to College Board Research (PDF).

The reality, however, is that few students pay full price these days. As the table above shows, the net cost of attendance is about $28,000 less than the "official," published cost of attendance. Even if your income is high, your child may qualify for merit-based aid. Moreover, your child might choose an in-state public school which is much more affordable; the net cost of attendance at a public college was $21,340, according to the same study.

Still, it doesn't hurt to have plenty of college savings. Your child might wish to take a gap year abroad before college starts or might need more than four years to complete their education. Finally, if one of your children wants to go to law school or study medicine, they may need to stetch their college funds into graduate school.

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.

More Wealth Wise Retirement Advice

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Business Outlook: Economic impacts

To help plan budgets for 2027 amid lots of uncertainty, here’s our take on where a range of key costs are headed.

The U.S. economy will grow moderately next year. Expect 2.2% GDP growth, versus 2.1% growth in 2026. A recession isn’t happening, unless oil tanker traffic in the Persian Gulf stays blocked for many more months. The Federal Reserve will raise its short-term interest rate from 3.5% to 4.0% between October 2026 and the end of 2027. Chairman Kevin Warsh will want to cut rates a bit in 2027, but it’s unclear if other Fed members will agree.

• Short-term consumer lending and interest on CDs will edge up with rate hikes.
• Auto loans will continue at about 7% on new cars.
• Home equity lines of credit will be about 7.25%.
• The 10-year Treasury note will fluctuate around 4.5%, the same as in 2026.
• 30-year mortgage rates will stay bouncing around 6.5%.

Brace for another year of stubbornly high inflation, only getting down to 3.0% by the end of 2027, after registering 3.6% at the end of this year.

Corporate profits are poised to jump 17% for large companies, a bit less than the 25% rise in 2026. Double-digit earnings growth is likely for most industries, except consumer staples, materials and real estate. Energy-sector profits will decline. Wages/salaries will be up 3.0%, after 2026’s 3.0% rise. Total benefit compensation will rise 4.0%, similar to 2026, boosted by a 6.7% rise in health insurance premiums per employee, up from 6.0% in 2026. Prescription drug costs will be up 3-4%, depending on the type. Companies will try to control weight-loss drug spending.

Business Outlook: Energy costs

Energy prices in 2027 depend heavily on the Middle East situation calming. Assuming it does, oil and the fuels made from it should decline modestly next year. Prior to the Iran war, global oil markets were well-supplied. Production was threatening to outrun demand growth. If oil shipments from the Persian Gulf can get back to near normal, abundant supplies should again push down prices.

Figure on gasoline averaging $3.25-$3.50 per gallon (for regular-grade)… more than the $3.10 average from 2025, but less than the $3.70 so far this year. Diesel should also slip, but not by as much as gas. Global diesel supplies are expected to remain tight due to constrained refinery capacity. After averaging $3.66 per gallon in 2025 and $4.75 so far this year, budget for $4.25-$4.50 in 2027.

Natural gas prices seem bound to rise next year after this year’s drop took the benchmark gas futures contract to $2.64 per million British thermal units in recent trading. Much of the world is short of natural gas, but the U.S. has plenty and can export only so much to overseas markets. That has weighed on prices here. But the combination of soaring U.S. power usage and tight supplies abroad should give U.S. natural gas prices a lift. How much depends heavily on factors like next year’s weather, which can’t be known now. But to be safe, price in a rise of 5% vs. what you currently pay for natural gas to account for rising consumption.

Another year of painful electric cost increases lies ahead, as soaring usage outruns utilities’ ability to keep pace. Commercial and industrial power customers should pencil in 6-7% higher rates, similar to the increases they are seeing this year. Residential customers can expect even steeper increases vs. their current rates.

Business Outlook: Payroll costs

We see payroll taxes rising, as the Social Security wage base goes to about $190,200. For firms that pay pension premiums to the Pension Benefit Guaranty Corporation, no change in rates for 2027. The exception is inflation-related indexing for flat-rate premiums, which will hover around $115 per plan participant in 2027. Variable-rate premiums for underfunded pension plans will be $52 per $1,000 of unfunded vested benefits (subject to a $781 or so per-participant ceiling).

Business Outlook: Insurance costs

A mixed bag for insurance.

Rates for commercial property insurance figure to decline for well-managed, low-hazard properties. Facilities that are exposed to natural catastrophes face increases of up to 5%. For policies with recent losses expect increases of up to 10%.

Primary general liability and umbrella or excess liability will rise between 5% and 20%.

For cyber insurance, rate declines or coverage enhancements at no cost can be obtained by companies with robust security controls in place. For those with recent claims or elevated threat profiles the rate increases up to 10%.

Rates for directors and officers insurance: Public companies should see a rate drop of up to 5%, while rates for private firms and nonprofits will be flat to up to 5% higher. Hourly rates paid to law firms, up around 6-7%, about the same as in 2026. Accounting fees for a typical business rising by 5-8%. As routine work gets automated, there’s a shift from hourly billing to fixed-fee and other pricing.

Business Outlook: Travel and transportation costs

Airfares will be up slightly, versus this year’s sharp increase. However, war-induced jet fuel price hikes, aircraft shortages, labor expenses and other factors could push up prices. Note that airlines are cutting flights and routes to cut costs.

Hotel room rates, up just a bit, about 1.5% more than in 2026 in the U.S. Globally, rates will inch up more. Group rates aren’t expected to increase much, but ancillary costs for hotel meetings and conferences are likely to cost more.

Car rental rates, flat. At most, costs could be 1% higher than this year. But there could be fewer vehicle options, and don’t expect to find many bargains.

Only a bit of relief is on tap for shipping costs. Truck spot shipping rates (excluding fuel charges) will decline 7% during 2027. After the 41% rise this year, that still puts them 31% higher than in 2025. Contract rates that rose 27% in 2026 will rise a further 6% to mid-2027, then level off. For the peak season next year, ocean shipping rates will likely be less, if the Persian Gulf situation stays stable. Overcapacity will likely become a problem again, depressing rates. Air cargo rates will remain high, but will return partway to pre-Iran war rates as fuel costs decline.

Business Outlook: Property costs

Prime office rent, up 3-5%, while nonprime properties are flat or lower. Retail space, up 3-4% for asking rents, as a scarcity of supply continues. Warehouse rents will pick up 2% to 4%, as demand remains firm.

Business Outlook: Technology costs

Brace for higher tech hardware costs, as costlier memory and components continue to boost prices of smartphones, PCs, tablets, etc.

Apple is set to raise prices on new iPhones by up to hundreds of dollars this fall. Device prices will be up 10% or more from other vendors, too.

Buy IT this year or early next year, if you can. Expect fewer deals on wireless service as competition cools a bit. Carriers are still battling it out, so keep an eye out for new plans and money-saving bundles. Ditto for wired broadband, where premium high-speed plans could cost a bit more.

The very best artificial intelligence services will cost more, such as Anthropic and OpenAI. But other AI models from xAI and Meta will offer cheaper plan options.

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 and make the most of your investments and money. Subscribe to The Kiplinger Letter.

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Earning 4% to 5% on money that's backed by a bank or the federal government can feel like a welcome change after years of watching savers earn next to nothing.

For investors who have experienced bear markets, inflation shocks and economic uncertainty, the appeal is understandable. Safety matters, particularly when you're retired and no longer collecting a paycheck.

But while CDs and Treasuries can play an important role in a retirement portfolio, relying on them too heavily may create risks that are less obvious than stock market volatility.

In some cases, the greatest threat to a retirement plan isn't losing money in the market. It's failing to generate enough growth to maintain purchasing power through a retirement that could last 20, 30 or even 40 years.

The challenge of inflation

One of the biggest dangers retirees face is inflation.

Even modest inflation can significantly reduce purchasing power over time. Per the Rule of 72, at an inflation rate of 3%, the cost of living roughly doubles every 24 years. A retiree spending $80,000 annually today could need about $160,000 per year later in retirement just to maintain the same lifestyle.

Many retirees focus on the yield they're earning today. What often gets overlooked is their real return after inflation and taxes.

For example, if a CD pays 4.5%, federal taxes reduce that return, and inflation consumes another portion. The resulting increase in purchasing power may be far smaller than expected.

While preserving principal is important, preserving purchasing power is often the larger challenge.

Retirement has changed

Previous generations frequently spent 10 to 15 years in retirement. Today, many retirees can expect retirement to last 25 to 35 years.

A healthy 65-year-old couple has a meaningful probability that at least one spouse will live into their 90s. That longer time horizon changes the planning equation.

Investments designed primarily for capital preservation can be useful for short-term income needs, emergency reserves and near-term spending goals.

However, a portfolio that lacks sufficient growth assets may struggle to support decades of increasing expenses.

The irony is that investors often become more concerned about market losses as they approach retirement, even though inflation and longevity could become equally important risks.

The opportunity cost of safety

Consider two hypothetical retirees who each begin retirement with $1 million.

The first retiree places nearly all their assets in CDs and Treasury securities, earning about 4%.

The second retiree maintains a diversified strategy that includes investments designed to provide long-term growth alongside assets intended to reduce volatility and generate income.

The first retiree may experience fewer market fluctuation, but in a 25- or 30-year retirement, the difference in portfolio growth can become significant.

While no investment strategy guarantees results, history demonstrates that portfolios containing growth-oriented assets have generally provided better long-term protection against inflation than portfolios invested exclusively in fixed-income instruments.

The question isn't whether safety is important; it's whether safety alone is sufficient.

Taxes can create additional headwinds

Many retirees are surprised to discover how much taxes can affect their retirement income.

Interest from CDs is generally taxed as ordinary income each year. Treasury securities receive favorable state tax treatment in many states, but federal income taxes still apply.

For retirees who already have substantial balances in traditional IRAs, 401(k)s, 403(b)s or other tax-deferred accounts, additional taxable interest income can contribute to a larger tax burden.

It may also affect other areas of a retirement plan. Higher taxable income can increase the portion of Social Security benefits subject to taxation and may contribute to higher Medicare premiums through income-related monthly adjustment amount (IRMAA) surcharges.

This is one reason comprehensive retirement planning often focuses not only on investment returns but also on tax efficiency.

Building a retirement income strategy

None of this suggests that retirees should avoid CDs or Treasury securities.

They can serve valuable purposes.

Many retirees benefit from maintaining a portion of their assets in highly conservative investments to fund near-term spending needs, provide liquidity during market downturns and reduce overall portfolio volatility.

The challenge arises when investors view these tools as a complete retirement solution rather than one component of a broader strategy.

An effective retirement plan often considers multiple risks simultaneously, including:

• Inflation risk
• Longevity risk
• Market risk
• Tax risk
• Health care expenses
• Sequence of returns risk

No single investment addresses all of these concerns.

Finding the right balance

Retirement planning is ultimately a balancing act.

Investors need enough safety to weather unexpected events and market downturns. They also need enough growth potential to preserve purchasing power and support a retirement that could last decades.

For some retirees, that balance may include a meaningful allocation to CDs and Treasuries. For others, those investments may represent only a portion of a broader strategy designed to address income, taxes, inflation and long-term growth.

The goal isn't simply to avoid losses.

The goal is to create a retirement plan capable of supporting the lifestyle you've worked so hard to build.

CDs and Treasuries can help provide stability and confidence. But for many retirees, they may be only one piece of the puzzle.

A successful retirement often requires looking beyond today's yield and focusing on the bigger picture: Maintaining purchasing power, managing taxes and generating sustainable income for the years ahead.

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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.

This is where the best travel credit cards come into play. With generous miles or points back, you can score significant discounts on your trips along with a few other perks. To find the best travel rewards credit cards, we asked you, as part of our Readers' Choice awards — an online survey conducted every winter to recommend the best based on factors such as customer service, overall satisfaction and most recommended.

Here are three reasons why you chose the Capital One Venture Rewards Credit Card as the top option. I'll also include the other travel cards earning high rankings.

1. Abundant travel perks

Here's an example of the many travel perks this credit card offers you:

As you can see, you'll earn elevated miles back when using Capital One's travel portal. The other benefit of this approach is that it is among the most affordable for credit card portals, according to The Points Guy. It means not only are you receiving exceptional rewards for regular travel, but you're also not overpaying either.

Furthermore, Capital One offers a price match. If you book flights, hotels or rental cars through their portal and find a lower price on another website within 24 hours, you can contact Capital One and they'll issue a travel credit for the difference.

2. Flexible and easy redemption

One Kiplinger reader shared, "I never had a problem redeeming my points/miles. Very easy to do." There are a few ways to redeem miles easily:

• Pay for past purchases: After using your Capital One Venture Rewards card for travel purchases, you'll earn miles. Once those apply to your account, you can use these miles, at a rate of one mile per cent, to pay for some or all of your recent travel purchases.
• Transfer miles to participating partners: Another option is to pool your miles and transfer them to more than 15 travel partners, including airlines and hotels. Some transfers could fetch you higher redemption rates, such as moving your miles to Air Canada.

Overall, these options give you more ways to redeem miles, helping you save even more on future trips. By removing the complexity from the redemption process, this card ensures that your rewards are actually usable — turning miles into real savings rather than just numbers on a screen.

3. Proactive fraud detection

One of the main reasons this credit card received such a high ranking was the customer service Capital One provides, especially fraud detection. One reader noted, "The card has been excellent at holding fraudulent costs, waiting to ask. It has caught every legit fraud and rarely halts non-fraud. "

Overall, this card is a great fit for regular travelers who want to save on flights, access elevated hotel experiences, and redeem travel rewards flexibly. This card will not be great for travelers seeking airport lounge access, luxury travel perks, and other credits, such as dining and shopping.

Along with Venture Rewards, these cards also ranked highly among our readers:

• Chase Sapphire Preferred
• The American Express Platinum Card

While the Venture Rewards card is a fantastic all-around choice for many, these alternatives offer different strengths — so consider which travel goals matter most to you before you apply.

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What were they trying to build? What were some of their thoughts about their Great Experiment? Since money issues are my lane, I'm on it.

When we think about America's Founding Fathers, we probably picture powdered wigs, heated debates and the signing of the Declaration of Independence. We don't usually think about budgets, debt, inflation or investment strategies.

But perhaps we should.

The founders weren't just creating a country — they were building an economy from scratch. Many were entrepreneurs, landowners, merchants, inventors and investors. Some became wealthy. Others died deeply in debt.

Their successes — and mistakes — still offer remarkably relevant financial lessons for families today.

Here are six timeless money lessons worth borrowing.

1. Live below your means

Benjamin Franklin may be America's first financial educator. His famous advice, "Beware of little expenses; a small leak will sink a great ship," could have been written for today's subscription economy … and streaming services, food-delivery apps, impulse Amazon purchases and buy now, pay later plans.

These are today's "small leaks." The lesson isn't to eliminate every luxury. It's to recognize that financial freedom usually disappears one small purchase at a time — not with one catastrophic decision.

Today's tip: Audit recurring expenses every six months. Small savings can compound into significant wealth over time.

2. Debt can build — or destroy

Alexander Hamilton understood that debt wasn't automatically bad. As the nation's first Treasury secretary, he believed responsible debt could build infrastructure, create opportunity and establish America's creditworthiness.

The founders also witnessed how crushing personal debt could destroy families and businesses. Thomas Jefferson, the major craftsman of the Declaration of Independence, was deeply in debt when he died after years of overspending, declining tobacco income and borrowing against his plantation. Much of his estate had to be sold to pay creditors.

Today, debt and overspending matter more than ever. Mortgage debt that builds equity is very different from paying 24% interest on a credit card debt.

Student loans that lead to a higher-paying career may be worthwhile. Financing vacations or dinners out rarely is.

Today's tip: Before borrowing, ask yourself one question: Will this debt make my future stronger or simply make today more enjoyable?

3. Diversification isn't new

George Washington's secret to investing? Diversify. He constantly experimented at his Mount Vernon home in Virginia, shifting from tobacco — which depleted soil and produced inconsistent profits — to wheat, corn, barley, milling, fishing, whiskey production and other ventures. He even introduced crop rotation.

He literally understood something investors still preach today: Don't put all of your eggs in one basket. Don't rely on one source of income. The result was a more stable income and a farm that was better prepared for changing markets and unpredictable harvests.

Today's equivalent? Not depending solely on one paycheck or investments in one type of investment portfolio. A portfolio concentrated in one stock, in one industry or on one investment strategy may produce spectacular gains — for a while. But when markets shift, that concentration can quickly become a liability.

Economic surprises happen. Income and investment diversification provides resilience.

Today's tip: Develop additional income streams through a mix of investments, rental income, dividends or even a side hustle.

4. Inflation is nobody's friend

The founders experienced inflation firsthand during the Revolutionary War. To finance the war, the Continental Congress printed large amounts of paper money known as Continentals. Without enough gold or silver to back the currency — and with Britain flooding the colonies with counterfeits — the money rapidly lost value.

Prices soared, savings evaporated and merchants often refused to accept the currency. The crisis gave rise to the expression "not worth a Continental."

By 1781, America was broke, and the troops were demanding payment. Washington knew he had to do something. He turned to Haym Salomon, who'd migrated from Poland, loved his new country and could raise funds fast.

Salomon raised the money to fund the Battle of Yorktown, and we won the war.

Unfortunately, Washington's debt to Salomon went unpaid and left his family bankrupt at the time of his death.

The lesson of inflation remains painfully familiar today. Inflation quietly erodes purchasing power, creates uncertainty and can undermine confidence in an economy.

Whether in 1779 or 2026, protecting the value of money remains one of the foundations of long-term financial stability. Many retirees discover this the hard way. A comfortable retirement income today may buy significantly less 20 years from now.

Today's tip: Families should regularly review whether their savings and investments are keeping pace with inflation — not just preserving dollars, but preserving purchasing power.

5. Invest in knowledge before you invest money

Jefferson believed education was one of society's greatest investments. Financial literacy works the same way.

Before buying cryptocurrency, options, private investments or the latest "can't miss" opportunity, understand exactly what you're buying. Too many investors confuse excitement with education. Knowledge remains the highest-return investment most people will ever make.

Today's tip: Families who talk openly about finances raise children who make better financial decisions as adults.

6. Build wealth that outlives you

The founders weren't simply building fortunes. They were trying to build a nation that would endure for generations. Families should think the same way. Your greatest financial legacy isn't the size of your estate. It's the financial confidence, values and decision-making skills you pass to your children and grandchildren.

I've spent my career teaching families that money conversations should begin long before estate planning documents are signed.

Today's tip: Teach children how to earn, save, spend wisely, give generously and invest thoughtfully. Inheritance without education often disappears within a generation. Financial wisdom can last forever.

The bottom line

The Founding Fathers disagreed about politics. They argued over the size of government, taxation and the role of the federal government. But they largely agreed on principles that still matter today:

• Personal responsibility
• Planning ahead
• Education
• Preparing future generations to succeed

More than 250 years later, those lessons haven't become outdated. They've become even more valuable. Technology changes. Markets change. Tax laws change.

Human behavior doesn't.

That's why the best financial advice often isn't the newest.

Sometimes it's the oldest.

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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.

His savings are solid, his withdrawal strategy is documented, and his estate plan is current. He walks every morning and sees his doctor twice a year.

By the industry's retirement checklist, he has done everything right.

However, according to a second checklist that may be even more important for a fulfilling retirement, four of his five pillars are missing.

Every retirement planning conversation eventually centers on the same five items:

• Savings rate
• Social Security timing
• Withdrawal strategy
• Healthcare costs
• Estate planning

These are legitimate concerns, well researched and worthy of careful attention. The financial planning industry has spent decades refining tools to address them.

They answer one question with considerable precision: Can you afford to retire?

However, research has identified a second important checklist. Those five pillars have received considerably less attention in planning conversations, generate no tax provisions and do not appear on any financial statement.

The second checklist predicts the quality of your retirement years more reliably than the first checklist. For most retirees, the score on the second checklist determines whether retirement feels like a reward or a long, quiet drift.

Five pillars of a fulfilling retirement

The five pillars of a fulfilling retirement are not a motivational framework. They are a research-based map of the conditions that sustain health, meaning and well-being in later life. Each has a body of longitudinal evidence behind it. Each is plannable. Yet, in most retirement conversations, each is left to chance.

Pillar No. 1: Exercise

Tom has this one covered. The daily walk, the Wednesday golf round, the annual physical and blood pressure well within range.

Golf, it is worth noting, ranks among the top three exercises for retirees alongside cycling and pickleball: The walking, the outdoor exposure and the social dimension compound its value beyond what most people assign it.

Among the five pillars, exercise is the one the financial industry most often acknowledges, though typically as a healthcare cost to plan for rather than as an asset to build.

The distinction matters. Physical activity is not only a hedge against medical expenses. It is also a cognitive protector, a mood regulator and the most accessible form of independence insurance available to a retiree.

Tom has this pillar but has not yet fully valued it.

Pillar No. 2: Intellectual stimulation

Tom reads the Wall Street Journal every morning. He follows the markets, tracks economic indicators and considers himself intellectually engaged. He is not wrong, but he is missing a distinction that the research makes with precision.

Consuming information is not the same as generating it. For 35 years, Tom's role required him to produce: Analysis, decisions, arguments and strategic recommendations with real consequences. That daily cognitive demand kept his mind operating at full capacity.

Reading is maintenance. The brain grows under novelty and demand, not under consumption and repetition.

A 2025 systematic review confirmed that retirement is associated with measurable cognitive decline because structured cognitive demand disappears. Researchers called the mechanism the mental retirement hypothesis. Passive engagement does not prevent it.

Pillar No. 3: Emotional well-being

Tom's professional relationships were genuine. Over 35 years, he built real trust with colleagues, clients and direct reports. Most have moved to different cities and chapters. His marriage is intact and stable, running on parallel tracks that worked well when his career organized his days.

What Tom lacks is what Harvard's Study of Adult Development, the longest-running longitudinal study of human flourishing in history, identified as the single strongest predictor of health and happiness in later life: The quality of close relationships.

Not the quantity. The quality.

Relationships with real depth, mutual accountability and trust that does not depend on a shared project or a professional context.

Tom has acquaintances. He has a history of relationships. That gap is not a character flaw. It is a planning oversight.

Pillar No. 4: Spirituality

This pillar is the one most likely to be dismissed in a financial planning context and the one most consistently validated by the research.

Spirituality, as the research frames it, is not necessarily religious. It is a connection to something larger than oneself: A sense of meaning, a reason to matter beyond the personal, an answer to why the days are worth living.

Tom's career provided this without his noticing. The company's mission, the team's outcomes and the clients' results gave his work a context that extended beyond his own interests.

In retirement, that context disappeared without a replacement being designed. His days are comfortable and, in a way he has not yet named, purposeless.

Pillar No. 5: Hobbies

Tom golfs on Wednesdays. He enjoys it. The research draws a distinction worth making explicit: Activity that passes time pleasantly is not the same as activity that generates meaning. The difference is whether the outcome matters to anyone, including the person doing the activity.

Golf, in this context, is a placeholder, a reasonable one while a person figures out what comes next.

The hobbies pillar, properly understood, is purposeful engagement that fosters identity and contribution outside professional life.

It is the answer to the question retirement eventually forces on every retiree: Who am I when the job is over, and what do I build with what I know?

This is Tom's shakiest pillar. He has not yet found what replaces the sense of contribution his career provided automatically.

The second checklist

Tom is not unusual. He is representative of the retiree the financial planning industry serves most effectively: Financially prepared, psychologically unprepared and genuinely surprised by the gap between the two.

The five pillars are not equally difficult to build. Most people arrive at retirement with one or two already intact. Tom has exercise. His intellectual engagement is passive and insufficient, as research shows. This is a redesign problem, not a rebuild.

The other four pillars are largely absent. The work is to identify which are missing and to treat that absence as a planning problem rather than a personal failing. Absence is not deficiency. It is a design gap, and design gaps have design solutions.

For Tom, securing the four missing pillars does not require dramatic reinvention. Three commitments cover all four.

The first addresses two pillars at once: A role that demands his analytical skills in a context where he holds no authority, such as a nonprofit board, a civic commission or a mentorship program for young finance professionals. That single commitment restores both intellectual stimulation and purposeful engagement.

A standing social commitment with two or three people who depend on his presence, not merely his availability, addresses a third.

And a question he has not sat with long enough to answer honestly addresses the fourth: What would make the next chapter matter to someone other than himself?

None of these are financial decisions. All of them will determine the quality of the years his financial plan is intended to fund.

The first checklist tells you whether you can afford to retire. The second tells you whether retirement will be worth it. Both are necessary. For too long, only one has been completed.

To learn more about designing a fulfilling retirement, pick up my new book, Your Encore Years: The Psychology of 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.

It's an important question, and if you've spent the last 30 or 40 years investing diligently for retirement, you've probably checked your progress more times than you can count.

Then one day you open your accounts, look at the balances and realize you've hit it. You've reached the number you've been working toward all these years. Naturally, you then ask, "Is it really enough?"

That's not the right question. What you should be asking is, "How will I turn my savings into the paycheck I'll be living on for the next 25 or 30 years?" That conversation is vital but, in my experience, far too few people are having it.

Reaching your number tells you that you've accumulated enough assets to support retirement. It doesn't tell you how prepared you are to make the transition from building wealth to living on it.

You've spent 40 years making one financial decision over and over: How much should I save? Retirement hands you a different set of decisions, starting with how much you can safely withdraw, where your income should come from, how taxes fit in and when to claim Social Security.

Each decision carries consequences that can last for decades. That's a conversation a retirement calculator, or an AI agent, simply isn't equipped to have.

Your portfolio has a new job

Managing your finances may have been relatively straightforward during your working life. You earned a paycheck, spent some of it and invested the rest. When the market dropped, you kept contributing because time was still on your side. If you made a mistake, there was another paycheck coming and another opportunity to recover.

Retiring changes the rules. The day your paycheck stops, your portfolio takes over. You're no longer asking how much you can save. Now you're asking how much you can safely spend.

And here's what surprises many new retirees: Two people can earn the exact same investment return and end up living very different retirements. It's not because of what they invested in, but because of how they withdraw the money.

Your discipline got you most of the way there. A strong market may have carried you across the finish line. We tend to assume the day we hit our retirement number is purely a function of years of disciplined saving, but that's only part of the story.

Here's what people easily overlook. A strong bull market may have helped push your portfolio over your retirement goal, but that doesn't necessarily mean it's the ideal time to retire.

If markets weaken just as you begin drawing income, those early retirement years can have an outsized impact on how long your savings last.

That doesn't mean retiring after a strong market is a mistake, or that you should wait around for "perfect" stock market conditions. No one knows when those will arrive.

It does mean that hitting your retirement number shouldn't automatically trigger your retirement date. It should trigger a different question: Not "Can I retire?" but "How should I retire?"

Your savings are only half the story now

Consider two couples who both retire at age 67 with $2 million saved. They invest the same way, earn the same returns and spend the same amount every year. The only difference is how they generate retirement income.

One couple simply withdraw money as they need it. The other intentionally coordinate withdrawals, Roth conversions and Social Security claiming to manage taxes over time.

Twenty-five years later, the second couple could realistically end up with hundreds of thousands of dollars more in after-tax wealth — not because they earned higher investment returns, but because they kept more of what they earned.

Research on retirement income planning has consistently shown that coordinated withdrawal strategies can add significant lifetime value for many affluent retirees. The exact benefit varies from household to household, but one point is remarkably consistent: How you withdraw your money can matter almost as much as how you invested it.

Ignoring withdrawal planning doesn't just cost you a little at the margins. It can blindside you years later, at exactly the wrong time.

Consider what's known as the widow's penalty. A married couple filing jointly enjoy lower tax brackets and a larger standard deduction. When one spouse dies, the survivor typically loses the smaller of the two Social Security checks, but required minimum distributions (RMDs) often remain largely unchanged because the retirement accounts themselves haven't disappeared.

Now much of that same income is taxed using the narrower single-filer tax brackets, while Medicare premium thresholds become much easier to exceed.

The result? It's entirely possible for a surviving spouse to pay tens of thousands of dollars more in lifetime taxes than they would have if the couple had gradually converted some of their traditional IRA to a Roth during the lower-income years they shared together.

Nobody made a bad investment. Nobody timed the market poorly. They simply never looked ahead and asked what their tax picture might look like after one spouse was gone.

There's another cost to not having a retirement income plan — and this one is emotional.

According to a 2025 survey from the Employee Benefit Research Institute, more than three-quarters of retirees say they could actually afford to spend more freely than they do. Yet nearly half admit they continue to hold back because they're afraid they'll eventually run out of money.

Imagine spending 40 years building your retirement savings, only to spend the next 30 afraid to use them.

That's the real cost of not knowing exactly where your retirement paycheck is coming from each month.

If you've just hit your retirement number, celebrate it. You've earned that moment. But before you decide today's the day to retire, take the time to pressure-test the income plan that will support the next 25 or 30 years of your life.

That's where a knowledgeable, fee-only retirement income adviser can make an enormous difference.

Reaching your retirement number answers one important question: Have I saved enough? Retirement immediately asks another: Do I know how to live on it?

Those are two very different questions, and the second one deserves every bit as much attention as the first. That's where retirement planning becomes far more interesting — and far more valuable.

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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.

That's the problem. These are three different things, and mixing them up can quietly cost money. Here's a breakdown.

Cash flow is the movement of money, regardless of tax implications.

Move money from savings to checking? Cash flow, but no tax.

Take a qualified withdrawal from your IRA? Cash flow with a tax implication.

Sell $50,000 of stock you bought for $40,000? That's $50,000 of cash flow, but only the $10,000 gain is taxed.

Harvest a loss on a position that's down? That's cash flow, too, and it can actually lower your tax bill.

Much of what moves through your accounts is simply your own money changing seats.

Income is what gets taxed (and it comes with a decision). Income shows up on your tax return:

• Dividends paid
• Interest earned
• Rent collected
• Capital gains realized
• IRA withdrawals taken

Here's the part many people miss: Income comes with a decision. You can spend the money or reinvest it.

Depending on the account, your decisions are taxed differently. For example, in a brokerage account, the dividend (income) is taxed whether you spend it or not. If the dividend comes into your qualified account (IRA or Roth), it's not taxed.

It's important to pay attention to these little differences.

Spending is what's gone. This is the money that leaves your accounts to support you and your lifestyle (groceries, travel, property taxes). Once it's spent, it's gone. It isn't coming back as shares, basis or anything else.

Spending is the number your plan actually has to cover. Not your cash flow. Not your income. Your spending.

The drag many miss

Once the terms are straight and the plan is in place, the leaks start to become visible. Many retirees generate more taxable income than they spend.

A $1 million portfolio in your brokerage account, yielding 3% in dividends, puts about $30,000 of income on your tax return each year, whether you spend it or reinvest it.

Let's say you spend only $10,000 of it — you still pay tax on all $30,000. You wrote the IRS a check for the privilege of reinvesting money you'd already had invested. Do that for a decade, and the drag compounds quietly, every April.

Even withdrawal coordination can make a big difference. A retiree younger than 65 who funds an entire year from long-term capital gains might pay mostly 0% in capital gains tax. That's because only the realized gains count as income.

If they keep their gains/income low enough, they may also be able to lower their ACA health insurance premiums. That's a very different situation than taking a little from an IRA, a little from a brokerage account, collecting dividends along the way and layering on Roth conversions.

Same spending, very different tax bill.

Total return still wins

This is why I push retirees toward "total return" thinking. There's little difference between a stock that grows by 7% and a stock that grows by 4% while paying a 3% dividend.

The grower lets you decide when to realize income. The dividend payer decides for you, every quarter, whether you need the money or not.

Sometimes growth may be better than dividends, and vice versa.

The same is true in real estate: Rent plus appreciation is the whole picture, and the rent is taxed as it arrives.

Control what you can control

Dividend investing is a great way to grow a portfolio or generate income you can spend in retirement. The main problem is that you can't control what a company pays out.

When a dividend stops paying out, the stock may also go down in value, which can feel similar to a stock you have purchased for growth that stopped growing. The market (stocks, bonds, real estate) carries risk, no matter how you look at it.

What you can control is how much you spend from your accounts. In other words, grow your money however you see best, whether it's through growth, dividends or real estate. That's up to you.

Next, separate the growth or payout rate from how much you want to spend.

Lastly, make sure you have a backup plan so you can maintain your lifestyle and spending, regardless of market conditions.

In my book, How to Retire on Time, I call that your Reserves. Other advisers have other names for it.

The bottom line: Don't let someone else's decision (dividend payout, etc.) control your retirement, and make sure you are watching your cash flow, your income and your spending so they all work together efficiently.

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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.

He had bought a small strip mall in 2011, managed it through two recessions, survived a pandemic that emptied three of his five tenant bays and come out the other side with a property worth nearly four times what he paid for it. He was 61, his wife was ready to travel, and he was tired.

When he finally sold, his accountant looked up from the numbers and said the words Marcus had been expecting: "You need to do a 1031 exchange."

Of course he did. Everyone does a 1031.

Except … did he?

Why so many investors default to a 1031 exchange

The 1031 exchange is one of the most powerful tools in the real estate investor's toolkit. Used correctly, it lets you defer capital gains taxes indefinitely, compound your wealth inside the investment and, if structured right, potentially pass a stepped-up basis to your heirs and eliminate the deferred gain entirely.

As chief investment strategist at Provident Wealth Advisors, I've written about it extensively, I use it with clients regularly, and it belongs in the conversation for almost every investor facing a real estate sale.

Almost every investor.

The problem isn't that 1031 exchanges are overrated; they're absolutely not. The problem is that "you sold a property" has become automatic shorthand for "you're doing a 1031," and few people stop to ask whether the math and their life actually support it.

Here's the honest conversation more investors need to have.

The tax tail and the investment dog

There's a version of the 1031 exchange that works beautifully: You sell Property A, you've identified a strong replacement property you would have bought anyway, and the exchange lets you do it with pretax dollars. That's the dream. That's the brochure.

Here's what happens more often than advisers admit: The investor sells Property A, the 45-day identification clock starts running, and suddenly the goal isn't "find the best investment," it's "find something that qualifies before time runs out." In a thin, overpriced market, that pressure is dangerous.

When interest rates are elevated and property prices haven't fully adjusted to reflect that reality, replacement properties are expensive on a cash-flow basis. You may be buying a $2 million asset that yields 4% annually, in a world where Treasury bills pay 4.5%. You're not buying because it's a great investment. You're buying because the alternative is writing a large check to the IRS.

That's the tax tail wagging the investment dog.

The real question Marcus, and every investor in his position, should ask: If I ignore the tax bill entirely, would I still want to buy this replacement property?

If the answer is yes, do the exchange. If the answer is "not really, but it beats paying taxes," slow down and think about the options.

Running the actual numbers

Let's say Marcus's adjusted basis in that strip mall is $400,000, and he sold it for $1.5 million. His capital gain is roughly $1.1 million. At combined federal and state rates — long-term capital gains, net investment income tax (NIIT) and depreciation recapture — he might face a tax bill in the neighborhood of $280,000 to $350,000, depending on his state and income situation.

That feels catastrophic, unless you reframe it.

He would net somewhere between $1.15 million and $1.2 million after taxes. Invested conservatively at a 6% annual return, that $1.15 million becomes about $2.06 million in 10 years.

That's a real number. But here's what that comparison misses.

A $1.5 million replacement property generating 4% annual income produces $60,000 in income per year before debt service and expenses. Add even modest appreciation — say, 3% annually, a conservative assumption by historical real estate standards — and that property is worth about $2 million at the end of year 10.

Stack the cumulative income on top of that, and the total picture is closer to $2.6 million over the same period.

The 1031 path, in other words, puts higher numbers on the board over time, because it keeps the full pretax capital working in an appreciating asset rather than a reduced post-tax sum.

The honest caveat: The deferred tax liability doesn't disappear. It follows the asset until you sell, exchange again or die holding it. If Marcus holds the replacement property until his death, his heirs receive a stepped-up basis, and the entire deferred gain is eliminated forever.

If he sells without a plan, the IRS eventually collects. The 1031 is a deferral tool, not a permanent solution on its own.

Which is exactly why the choice of what to exchange into matters as much as whether to exchange at all.

The burnout problem nobody talks about

There's also a conversation that almost never happens in the exchange paperwork: Do you actually want to be a landlord again?

For investors like Marcus — in his mid-60s, two decades into managing tenants, watching his peers downsize their lives rather than expand their portfolios — the traditional 1031 exchange can become a trap.

You defer the taxes, sure. But you also defer the exit. The next property has its own lease expirations, its own roof and its own tenant who stops paying rent in month eight of a five-year lease.

This is where the Delaware Statutory Trust deserves a serious look, not as a footnote, but as the actual solution.

A DST allows Marcus to complete his 1031 exchange into a fractional ownership interest in institutional-grade real estate — a professionally managed multifamily community, a medical office portfolio, a net-lease industrial facility — without taking on any management responsibility whatsoever.

He owns real estate. A professional sponsor runs it. The 1031 deferral is fully preserved. The passive income distributions keep coming.

And here's the part that ties the numbers together. Because the full pretax proceeds go to work inside a real, appreciating asset, not a reduced post-tax sum in a brokerage account, Marcus gets the full benefit of both income and long-term appreciation that make the 1031 math compelling in the first place. He just doesn't have to unclog a drain to earn it.

For the investor who is done with active management but not done with real estate, the DST is often not a compromise. It's the upgrade.

The structure requires a genuine long-term commitment — typically five to seven years — and is not the right fit for someone who wants liquidity or operational control. But for Marcus, who wants passive income, preserved wealth and a legitimate exit from the landlord business without a tax catastrophe? The DST isn't Plan B. It may well be Plan A.

That said, if you truly want out — clean, simple, liquid — sometimes paying the tax is the honest answer.

The estate planning equation

Here's the angle that changes the math for many older investors — and that most people discover too late.

When you die holding an appreciated asset, your heirs receive a stepped-up cost basis equal to the fair market value at the date of your death. The embedded capital gain — all of it, including decades of deferred 1031 gain — effectively disappears.

That means that if Marcus holds his replacement property until his death, his heirs inherit it at $2 million (or whatever it's worth then), with no taxable gain. The IRS never collects what Marcus spent his entire investment career deferring.

If Marcus is 61 and in good health, that math looks very different from how it looks for a 74-year-old investor with a modest estate. For investors who are doing their estate planning alongside their 1031 planning — and those two conversations should absolutely be happening simultaneously — the decision calculus shifts considerably.

The takeaway isn't that you should plan to hold until death; it's that a complete picture of the 1031 decision has to include your age, your estate plan, your health and your heirs' tax situation.

That's a bigger conversation than most people realize when they're sitting across from a qualified intermediary (QI) signing exchange documents.

The right questions to ask before you file the 1031 exchange

Before any investor pulls the trigger on a 1031 exchange, here's the short list of questions worth answering honestly:

• Am I buying to defer taxes, or because this is genuinely a good investment? There's a meaningful difference.
• What does my estate plan say about what happens to this property when I'm gone? The step-up in basis may change the entire analysis.
• Am I actually willing to be a real estate owner for another decade? There are passive alternatives if the answer is uncertain.
• Have I run a complete after-tax comparison across both paths — not just the deferral headline, but what my net proceeds actually do over time? The full picture often looks different than the tax bill alone.

Marcus, for what it's worth, did end up doing a 1031, but not into another strip mall. After sitting down to run the real numbers and finally having the estate planning conversation he'd been putting off for years, he exchanged into a passive DST structure.

No tenants. No leases. No roof calls. And best of all, his wife booked the trip.

That's not the right answer for every investor. It was the right answer for him, but only because someone asked the right questions first.

The 1031 exchange is one of the most valuable tools in American tax law. Use it when it serves your goals.

Just make sure you know what your goals actually are.

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• A 1031 Exchange May Look Great for You on Paper, But It's Not Just About Taxes
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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.

They're sharing how they did it and what they're doing with it. This time, we hear from a married 73-year-old Oklahoma man who retired from the oil industry in 2011 with a salary of $150,000.

See our earlier profiles, including a writer in New England, a literacy interventionist in Colorado, a semiretired entrepreneur in Nashville and an events industry CEO in Northern New Jersey. (See all of the profiles here.)

Each profile features one person or couple, who will always be completely anonymous to readers, answering questions to help our readers learn from their experience.

These features are intended to provide a window into how different people build their savings — they're not intended to provide financial advice.

To learn what these millionaires have taught us, check out the articles 5 Key Insights We Learned From 50 Millionaires and 5 Things 50 Millionaires Wish They'd Known Before They Retired.

And to hear more about My First $1 Million, you can check out this podcast with bestselling author and tax attorney Toby Mathis:

The Basics

How did you make your first $1 million?

In 1982, I had $30,000 saved and invested in the market until 1995, when I hit $1 million. It dropped and then came back to $1 million, then $2 million by 2011. Most investments were old-style stocks, high dividend yield, reinvested, not much tech.

Continued to invest as extra money came in.

Hit $4 million four years later, then $5 million in 2024, then $6 million in 2026.

What are you doing with the money?

Continued to invest heavily until 2022 when I sold the house. Already retired by then.

We donate through endowment funds to various organizations.

The Fun Stuff

Did you do anything to celebrate?

Every time we reach an additional million dollars, we watch one scene from the movie Giant. James Dean hits an oil well and says, "I'm a-richin'. I am a rich boy." A pretty funny scene.

Then we usually go out and have a Mexican dinner.

What is the best part of making $1 million?

I have a coin collector mentality. I like collecting bunches of different stocks. I probably have well over 120 stocks and maybe another 20 bonds.

Did your life change?

Yes, it allowed us to move into a nice retirement home. The important thing is not the amount of money you have, but the cash flow from that money that you can depend on.

It is like having a self-made annuity that helps to make life more stress-free.

Does anyone know you're a millionaire?

Due to where we live, it is implied that we must be rich.

Did you retire early?

Retired at 59.

Looking Back

Anything you would do differently?

I would have learned to do better research. I lost a lot of money on bad stock decisions. Fortunately, I was lucky on my good decisions. I usually bought on dips.

What advice would you give to your younger self?

Learn to do better research.

Did you read any books that helped you on your journey?

Yes, by Geraldine Weiss, a compatriot of Warren Buffett. One of the first women on Wall Street.

Also, my favorite newsletter, called Retirement Watch, which has a lot of great information in it, written by Bob Carlson, a CPA/attorney/investor.

Did you work with a financial adviser?

No.

Did anyone help you early on?

Yes, I had a friend who was saving and investing back in the 1980s. He got me started in saving and investing.

Looking Ahead

Plans for your next $1 million?

I have over $6 million right now. I plan to give away most of anything that I make over that amount. Mostly to charities.

Also to have nice parties and dinners for my friends.

Any advice for others trying to make their first $1 million?

Keep your costs down and invest the profits.

Do you have an estate plan?

Yes, with trusts, POA, advanced care directives, etc.

Most important is a booklet that has about 100 pages of directions for my daughter once I am gone.

It is based on the NOLO book called Get It Together: Organize Your Records So Your Family Won't Have To (by Melanie Cullen and Shae Irving).

I used those ideas and then created my own forms.

What do you wish you'd known …

Before you retired? I started bracing for retirement eight years before I retired, so I was ready when I did retire. I always say I was born to retire.

When you first started saving? Do better research.

When you first started investing? Do better research.

If you have made $1 million or more and would like to be anonymously featured in a future My First $1 Million profile, please fill out and submit this Google Form or send an email to MyFirstMillion@futurenet.com to receive the questions. We welcome all stories that add up to $1 million or more in your accounts, although we will use discretion in which stories we choose to publish, to ensure we share a diversity of experiences. We also might want to verify that you really do have $1 million. Your answers may be edited for clarity.

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That first year of retirement, though, proved challenging. Landau and his wife planned a trip to Portugal for March 2020 — the month and year the world practically shut down thanks to the COVID-19 pandemic. With travel canceled and life on pause, Landau did what entrepreneurs do: He launched a new venture, creating a wry, weekly podcast looking at life and identity post-career that he called I Used to Be Somebody.

Within months, the project had morphed into a second career. "I realized I had built another full-time job," says Landau, adding that he found he had little time to pursue his passion for pickleball, one of the activities he’d most looked forward to in retirement.

So Landau recalibrated again. He scaled back production of the podcast and a companion newsletter to once a month, and he now averages some 12 hours a week at work. The rest of his time is reserved for socializing and recreation (pickleball!). Looking back, he recommends that newbie retirees bake flexibility into their plans to accommodate shifting priorities and unexpected experiences.

"There are going to be ups and downs, particularly if you worked really hard for 40 years and all of a sudden you’re not doing that," he says.

Landau’s story is less a cautionary tale than a template for what comes next, as millions of newly minted retirees are now learning. The post-career years, especially in the beginning, are an ongoing experiment. "No matter how prepared for retirement people are, they are unprepared," says certified financial planner Ross Levin, cofounder of Accredited Investors Inc., a wealth management firm in Edina, Minn.

The impact of "Peak 65"

Thanks to the aging of the massive baby boom generation, the ranks of first-time retirees looking for financial security and purpose in the next stage of life are historically large right now.

Between 2024 and 2027, a record number of Americans will turn 65 or will have already celebrated that milestone birthday, including 4.1 million this year and about the same number next year — a cohort known as Peak 65. All boomers will be at least 65 by 2030.

Many of these freshman retirees understandably face the transition to their next chapter with some trepidation. The percentage of workers who feel confident that they have enough money to live comfortably in retirement fell by 6 percentage points from 2025 to 2026, to 61%, according to a recent survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research.

Among the concerns stoking worries about finances in retirement were inflation, debt, healthcare costs and housing expenses, as well as doubts about the future financial viability of Social Security and Medicare.

Adding to the anxiety: Many near-retirees haven’t spent much time planning for what they will actually do once they’ve put a full-time career behind them. That’s the key takeaway from a 2025 survey by the Financial Planning Association and the Journal of Financial Planning. About half of the financial planners surveyed said their clients were financially prepared to stop working, but only 11% said the people they advise were emotionally prepared for the lifestyle adjustments that retirement entails.

If you’re looking ahead to retiring soon or have recently embarked on the retirement journey, you want to make sure you have both parts of the process covered. Experts recommend these steps to ease the transition from full-time work and to ensure that you flourish in this next chapter.

Rethinking what retirement looks like

Part of the challenge you face as a new retiree is that the definition of this stage of life is changing, as people generally live longer and in better health than previous generations. Yes, the word retirement still typically signifies the end of a long career. But individual paths diverge wildly from there these days.

The classic vision of retirement as full-time leisure and relaxation remains an option. Increasingly, though, many retirees take on part-time jobs, gig work or even encore careers. Some become passionate volunteers or dedicated hobbyists; others go back to school. Some embrace an active role as grandparents or become caregivers to aging loved ones. Often, retirees pursue a mix of these roles that evolves with age.

What’s right for you? The beauty of a long retirement is that you don’t have to figure it all out from the jump or stick with a single vision. It helps, experts say, to view the first year of retirement as a period for gathering information that will help smooth the transition to this next chapter and build a strong foundation — financially, socially and emotionally — for a comfortable, meaningful retirement.

"The first year is a test year," says CFP Lazetta Rainey Braxton, founder of the Real Wealth Coterie, a wealth management firm in New Haven, Conn.

The key, experts say, is to be willing to experiment and to seek out pursuits that offer purpose, keep your body and brain active, and help you maintain social connections. You also need a good idea of how much you can safely spend to make those things happen.

In other words, you need both a purpose plan and a financial plan at the beginning of your first year of retirement. That allows for smarter decision-making and flexibility, helping you adapt as experiences and new data inform your views and the inevitable curveballs come your way.

"If you’re thriving, it’s because you have a personalized vision for what retirement means to you," says Lisa Stornaielo, cofounder of The Future of You, a Boston-based consultancy that helps individuals and corporations navigate the transition to retirement. "Your finances are an important piece.

But what we’ve found is just as important is that people are very clear not only on what they’re retiring from but also on what they’re retiring to, and there’s an intentionality around that."

Treating your first months as a sabbatical

Of course, you’ll need time at first to decompress, exercise, read, and tackle long-delayed home projects or similar tasks. There is immense value in giving yourself permission to relax and enjoy new experiences.

Think of those first few months as the equivalent of taking a sabbatical — a necessary window to recharge mental and physical energies while creating psychological distance from a lifelong work identity.

A sabbatical is temporary; retirement is not. The profound shift in navigating the transition between the working world and retirement comes down to sheer time.

Leaving a full-time career suddenly frees up roughly 2,500 hours each year, calculates executive coach Joe Casey in Win the Retirement Game: How to Outsmart the 9 Forces Trying to Steal Your Joy. "People enter retirement at different ages and with various levels of resources," he writes. "But all new retirees are time-rich."

The core question to ask yourself: How will you invest that newfound wealth of time? What is your purpose? What matters to you? "I encourage people to write some sort of business plan," Landau says. "It doesn’t have to be elaborate. Just list your goals, what you really enjoy doing and the things you don’t like."

Adapting your plan as life happens

Any entrepreneur will tell you that a solid business plan not only increases the odds of success but also accounts for the fact that the blueprint will change multiple times. Take the experience of Joy Norquist, 70, and Ron Wawrzon, 69, who retired — she from a career in insurance compliance, he from working as an operations manager for a small manufacturing company — in 2021 and 2022, respectively.

The Saint Paul, Minn., couple both have pensions, retirement savings and a long-term relationship with a financial planner. They planned to move to Chicago, where Wawrzon is from, but life intervened. Wawrzon faced a health setback (he’s fine now), and Norquist’s mother required months of intensive care following a serious fall. Those initial plans for retirement went on hold.

Meanwhile, the couple discovered part of their post-retirement rhythm almost by accident. One afternoon, for fun, they went to an open house for a condo in a high-rise building in downtown Saint Paul, and they fell in love with the view. The couple moved to the building two years ago. They joined a local walking club, they participate in a weekly study group at a local tavern, and they enjoy movie nights with neighbors and other activities.

Norquist’s mother passed away in late 2024, and the couple spent much of last year dealing with her estate. Now that’s mostly done, but Chicago may no longer beckon and Norquist and Wawrzon are taking their time to decide what comes next for them in retirement. But they view the future with optimism. "We feel like we haven’t really launched yet," Norquist says. "We’re figuring out the rest of our lives from here."

Build your core strategy

As you shift from earning and saving money to spending the fruits of your labor, retirement triggers a cascade of financial decisions, from where to live and how you’ll pay for healthcare to when to start taking Social Security benefits and how much you can safely withdraw from retirement accounts.

Yet only one in four Americans in their sixties has a formal, written financial strategy for retirement, according to a 2025 report from the Transamerica Center for Retirement Studies.

If you’re among them, now is the moment to create a plan — or revisit and update the one you already have. You need realistic data on expenses (needs and wants), liabilities, tax rates and healthcare costs to figure out where you stand and what options make the most sense for your circumstances.

You can work with an adviser (find one at napfa.org, letsmakeaplan.org or garrettplanningnetwork.com) or do it yourself using planning software, such as Boldin (free for the basic version; $12 a month for advanced features) or WealthTrace ($229 a year, standard; $289 a year, deluxe).

Maximize your Social Security payout

Among the most critical decisions to ponder in year one: when to claim Social Security benefits. The earliest you can apply is age 62 and the latest is age 70; the longer you wait, the bigger the monthly payout will be.

For instance, boomers celebrating their 65th birthday this year who wait to file until they hit their full retirement age of 67 — that is, the age at which they’re entitled to 100% of their benefits — will get a monthly benefit that is roughly 43% bigger than if they’d claimed at 62, according to the Social Security Administration. Wait until age 70, and that monthly benefit will be 77% higher than the payout at 62.

Because you can’t outlive your Social Security benefit and the payout is adjusted annually for inflation, the standard advice is to hold off filing for as long as possible — at least until your full retirement age. However, there can be good reasons to claim earlier — if, say, your health is poor, or you’d otherwise need to withdraw too much from savings to pay fixed expenses.

An adviser can help determine the optimal time to claim for your situation, or you can tap online resources for assistance, such as Open Social Security, a free strategy calculator, or planning software such as MaxiFi ($109 a year, standard plan; $149, premier). (For more guidance, see "Perfect Timing: When to Claim Social Security," April.)

Master your portfolio withdrawal strategy

You’ll also need to tackle the puzzle of how much money you can safely withdraw from your retirement portfolio. One common guideline is the 4% rule, developed by retirement researcher William Bengen in the mid ’90s.

It suggests taking out 4% in the first year of retirement (it assumes the portfolio is split roughly 50-50 between stocks and bonds), then adjusting subsequent withdrawals annually for inflation. Historically, Bengen calculated that strategy would ensure you would never run out of money, even in the worst-case scenario for financial markets.

Although the 4% rule is a simple and convenient metric, experience has shown that strictly adhering to it often leads retirees to withdraw less than they can afford to spend, potentially stopping them from enjoying this chapter of life to the fullest. Many experts, including Bengen himself, have revised the initial withdrawal rate upward to the 4.5%-to-6% range.

In his 2025 book A Richer Retirement, for instance, Bengen suggested 4.7% would be a better starting point for withdrawals, and he changed his model portfolio to hold as much as 65% of long-term savings in stocks.

Likewise, CFP Rainey Braxton typically recommends that you withdraw up to 5% the first year — ideally somewhere between 4% and 5% — and possibly a little more, depending on what she calls "the nuance and art of knowing the client’s circumstances."

A popular alternate approach is the bucket strategy, initially developed by CFP and wealth manager Harold Evensky, chair of the Coral Gables, Fla., financial planning firm Evensky & Katz. As Evensky said in a Morningstar interview last year, the strategy was "designed so the client wouldn’t get panicked if the market was falling apart because [they’d know] where the grocery money was coming from."

The basic idea is to set aside enough cash to cover, say, one or several years of living expenses, when combined with Social Security and any other guaranteed sources of income, such as a pension.

Money that you won’t need for several years is then invested in a diversified portfolio of fixed-income securities and equities, which offer the prospect of higher long-term returns but at greater short-term risk. The cash cushion offers peace of mind that you’ll get through the inevitable market slumps without needing to sell depreciated stock or bonds.

Despite the differences between the two strategies, the central takeaway is the same: Spending plans should be dynamic. In essence, the first year of retirement provides a trial run to implement a fluid strategy, allowing you to track your actual lifestyle costs while remaining flexible enough to make adjustments if market or economic conditions or personal priorities shift.

"People think they need to have it all figured out right away," says Andrea Eaton, a CFP at Cornerstone Wealth Advisors in Edina, Minn. "It takes a year to figure out your actual cash needs. It really is a guesstimate initially, and that can be changed up or down. It simply takes time getting used to taking money out versus putting money in."

Discovering your post-career purpose

Newbie retirees often feel unmoored when they are no longer defined by their job and the need to make a living. So it’s important to build a new sense of purpose for your retirement years and have good reasons for getting up in the morning.

"You should be working on what your life will look like before you even retire," Eaton advises. "What is your greater purpose? How are you getting involved in your community? What gives your life meaning beyond working for an income?"

How do you find that purpose now? Stornaielo, who spent 21 years at Fidelity in human resources and executive coaching, warns against getting too caught up in pretentious visions about purpose. She recalls a three-day retreat focused on purpose that she attended while still at Fidelity. The retreat was very serious and high-minded. At the end of it she declared her purpose was to be "the yeast in the bread of life," she laughs. "Whatever that means."

Her purpose mantra now is far simpler and grounded: "Helping people achieve their potential." Also helpful, she says, is not to think of your retirement as the end part of your life. "Don’t get hung up on how much time is left. [The focus should be] what I can do today to feel like I’m making the most of my time."

Finding meaning through community, learning, and giving

For Laura and Ben Cooper, giving back to their community is what’s providing that feeling and sense of purpose in retirement. Laura, 78, a former law professor at the University of Minnesota, became a volunteer teacher in a citizenship program in the Twin Cities when she first retired in 2018.

Along with Ben, 79, a former mathematics professor at Augsburg College in Minneapolis, they’ve since branched out to support a variety of causes that include local arts organizations, environmental groups, nonprofits focused on refugee rights, and their local library system. Freed from the busyness of active careers and raising their now-grown son, they were able to ask themselves, says Laura, "What do we really care about?"

The Coopers manage much of their giving through a donor-advised fund, a tax-advantaged charitable-giving vehicle that works like a personal investment account for philanthropy.

Added benefits of their philanthropic work, they’ve found, are the sense of community and opportunities for continued learning it has given them. They’ve joined outings with Nature Conservancy scientists, attended private theater rehearsals to hear from actors and directors, and learned from experts about international human rights. "Learning is absolutely vital, and we have pretty diverse interests," says Laura.

Conversations with family, friends and acquaintances are a rich resource for thinking about purpose. One technique is to pay close attention to the tasks, conversations and projects that leave you energized rather than drained. Introspection helps, too.

Think back to other major life transitions and see what consistent core values carried you through those shifts. Volunteering, mentoring, taking a course or learning a new skill are activities that also offer useful information.

And some resources can help. Among the books that might provide both inspiration and practical suggestions are: Who Do You Want to Be When You Grow Old? The Path of Purposeful Aging, by Richard Leider and David Shapiro; The Big Shift: Navigating the New Stage Beyond Midlife, by Marc Freedman; and The Second Mountain: The Quest for a Moral Life, by David Brooks.

Evaluating year one to recalibrate year two

At the end of your first year of retirement, Eaton suggests conducting a personal audit.

Ask yourself, What activities brought you the most joy and fulfillment? Which were a waste of time? Are you feeling lonely? Do you need to inject more intentional social interactions, clubs or group hobbies into your life? How is your budget holding up against the reality of retirement? Do you need to scale your spending up or down based on your actual first-year cash flow?

The answers to those questions will help you shape year two of retirement, which in turn will help guide year three. Retirement is iterative by nature — a series of continuous recalibrations. You want to be continuously asking yourself, says Eaton, "What didn’t go well? And how do I want next year to be?"

Know this: Your first year probably won’t look exactly as you imagined it would before you stopped working full-time, and that is perfectly fine. Year one isn’t supposed to be the final draft of your retirement; it is simply the initial run of a grand experiment.

Build a personalized plan with confidence

Retirement is full of important financial decisions, from creating a sustainable withdrawal strategy to deciding when to claim Social Security. A financial planner can help you build a personalized plan with confidence.

Use the Bankrate tool below to connect with a vetted financial planner who can help you create a retirement income strategy that fits your goals:

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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They should.

That selection of that number wasn't inspired by biology. It came from actuarial arithmetic in another century.

In 1889, Germany's Otto von Bismarck created the first national pension and set the eligible age at 70, then lowered it to 65. He wasn't being generous. Life expectancy in Germany at the time was around 45. Almost nobody would live long enough to collect.

Franklin Roosevelt imported the same number into Social Security in 1935. The average American lived to 61. The math worked for the same reason. Most workers were never expected to touch the benefit.

Neither man was designing for a retirement that lasts 30 years. Neither could have imagined it, and no one rewrote the number once medicine changed the outcome.

That is the part almost everyone misses: 65 was never a biological marker for the end of useful work. It was a budget line, set for a population that lived a third as long as we do now. We kept the number and forgot why it existed.

Meanwhile, the country is living through something demographers call Peak 65. More Americans are turning 65 right now than at any point in our history. More than 12,000 people a day are crossing that line.

Soon, nearly one in five Americans will be 65 or older. Most are walking into retirement following advice written for their grandparents' bodies, lifespans and bank accounts.

Here is the number that should worry you more than any market forecast. A 65-year-old man today can expect to live an additional 18 years; a woman, an additional 21. One in four will reach their 90s.

Retiring at 65 doesn't mean funding a short coda. It means financing a second adulthood, decades long, with no paycheck behind it.

Do the math on what that means for your money

Every year you keep working is a year your savings compound without a withdrawal. It's also a year less that your savings need to cover. That is not one benefit. It is two, working in the same direction at once.

Delay Social Security instead of your paycheck, and the math compounds again: Your benefit grows by roughly 8% for every year you wait past full retirement age, up to 70. Few investments anywhere offer such a guaranteed return.

Run the comparison. A worker who retires at 65 with $600,000 saved, and one who works three more years with the same balance and the same contributions, aren't close to the same outcome.

The second worker adds years of growth and years of savings and shrinks the number of years the money has to last.

Three years doesn't sound like much. On a retirement that may run three decades, it can be the difference between a plan that survives and one that does not.

None of this means grinding through the same job at the same pace until you drop. It means questioning the idea that the only options are full speed or full stop.

There is no single right answer. A construction worker with a bad back is not weighing the same choice as a consultant who sits at a desk. Someone caring for an aging parent has a different calculus than someone with no obligations at home.

The point is not that everyone should work until 70. The point is that 65 should be a choice you make with open eyes, not a deadline you face without reading the fine print.

The workplace is already moving in this direction, even if nobody has given it a name. The share of Americans 65 and older still working has more than doubled in the past 25 years. Among workers 75 and older, it has tripled.

Employers are inventing workarounds because they can't afford to lose the knowledge walking out the door.

• Engineers retire on Friday and return Monday as consultants
• Law partners shift to "of counsel" instead of disappearing
• Hospitals bring back nurses on schedules that fit their lives instead of erasing them from the roster

These aren't formal programs yet. Most companies are improvising, seeing an opportunity, not a wall.

If you are 10 years from a traditional retirement date, start the conversation with your employer now about what a phased exit could look like:

• Reduced hours
• Project-based work
• A shift from full-time to advisory

The earlier you raise it, the more leverage you have to shape it instead of accepting whatever you're offered on your way out.

If a full phase-down is not realistic in your field, look for a bridge.

• Consulting
• Board work
• Teaching what you know

Even a part-time role in a different field can cover living expenses long enough to leave your portfolio untouched and your Social Security benefit growing.

None of this is about loving your job so much that you never want to stop. Some people are done at 65, full stop, and that's a legitimate answer.

The point is that most people aren't choosing 65. They're inheriting it, the way you inherit a hand-me-down that no longer fits, then spending years wondering why the plan feels tight in all the wrong places.

Longevity isn't the problem. It's the reward. Unprepared longevity is the problem, and the retire-at-65 default is one of the clearest ways people back into it without noticing.

The finish line most of us grew up picturing was built for people who didn't get this many extra years. You did. The plan should reflect that.

Before you set a retirement date, run the math on what one, three, or five more years of earning does to the rest of your life. Then decide on purpose, not on a number handed to you by a 19th-century chancellor who never expected anyone to collect.

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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.

As home prices and borrowing costs make purchasing in many U.S. markets difficult, some would-be homeowners are looking thousands of miles away for their first property. Instead of waiting until they can afford a $400,000 or $500,000 home domestically, they might continue renting in the U.S. while purchasing a smaller property overseas.

Reuters recently highlighted this growing interest in international real estate among younger buyers priced out of their local markets. The idea isn't entirely new. Americans have long purchased vacation homes and retirement properties abroad.

What's changing is when some buyers are doing it. International ownership does introduce factors like currency, tax, financing and legal considerations that can quickly complicate an otherwise attractive purchase.

For buyers considering this unconventional path to homeownership, the potential savings can be compelling, but there’s a lot to weigh before purchasing property in another country.

Why an overseas home can make financial sense

The biggest attraction is relatively simple. Your money may buy considerably more in certain overseas markets.

A buyer struggling to accumulate a down payment for a home in an expensive U.S. city could potentially find an apartment or small house elsewhere for a fraction of the price. That can make buying in cash or making a substantial down payment more realistic.

There can be other financial advantages, depending on the country and property as well. Property taxes and ongoing ownership costs may be lower than those in some parts of the United States. An international property can also add geographic diversification to a buyer's assets rather than concentrating all of their wealth in one local housing market.

Then there's the property's potential future use. Someone who already knows they would like to retire abroad could purchase a home years or even decades before retirement. In the meantime, it might serve as a vacation property or generate rental income where local regulations permit it.

That last point deserves careful planning. Americans generally remain subject to U.S. tax rules on their worldwide income, meaning rental income earned from a foreign property may have U.S. tax implications even if the money remains overseas.

The new starter home isn't always where you live

Traditionally, first-time buyers purchased their primary residence. But high-cost housing markets and increasingly flexible work arrangements can make other strategies possible.

Someone might rent an apartment in New York or Chicago because that's where their career and social life are based while owning a smaller property in Portugal. Another buyer might purchase a vacation property before ever owning a primary residence.

Future retirees could buy the home they eventually hope to live in while they're still working in the United States. Others might simply see an affordable international property as a place to begin building equity while postponing a much more expensive U.S. home purchase.

This approach won't eliminate housing costs back home. If you're renting in the U.S. while owning abroad, you're still responsible for rent in addition to taxes, insurance, maintenance and other expenses associated with the property you own.

Where buyers are looking for property abroad

Affordability varies considerably from one country, and even one city, to another. Buyers looking overseas should focus on more than a low listing price, considering factors such as accessibility from the U.S., rental potential, ownership rules and whether the location fits their long-term plans.

Here are a few countries where buyers are looking for property abroad and why.

Italy

Italy has drawn attention for inexpensive properties in smaller towns and southern regions, where prices can be considerably lower than in major U.S. cities or popular Italian destinations.

Reuters recently profiled a buyer who purchased a studio apartment in Tropea, a seaside town in southern Italy, for €38,000. She later began renting the property during the tourist season, giving her an opportunity to generate income from the home when she wasn't using it herself.

Portugal

Portugal has become a popular destination for international buyers, including remote workers and Americans considering retiring in Europe. While prices have risen in sought-after areas, buyers willing to look beyond hotspots such as Lisbon and parts of the Algarve may find more options.

However, don't assume buying a home automatically gives you the right to live in Portugal. The country eliminated real estate purchases as a qualifying investment for new Golden Visa applications in 2023, so prospective buyers need to consider property ownership and residency as two separate issues.

Mexico

For U.S. buyers, one of Mexico's biggest advantages is proximity. Shorter and often less expensive flights can make it easier to visit a property regularly, which may be especially attractive if you're buying a vacation home or rental.

Foreign ownership rules can be more complicated near coastlines and international borders though so keep this in mind.

Panama

Panama has long attracted foreign buyers interested in retirement, rental properties and eventually relocating abroad. Foreigners can generally purchase titled property, although restrictions apply in certain areas, including near international borders.

For someone thinking decades ahead to retirement, purchasing earlier could provide a place to visit now and potentially live in later. Buyers interested in generating income in the meantime should research local rental regulations and demand before purchasing.

What buyers need to understand before purchasing abroad

A $75,000 overseas apartment isn't necessarily comparable to buying a $75,000 property in the United States.

Every country has its own rules governing foreign ownership, property registration, inheritance, taxes and transactions. In some countries, foreigners can purchase property relatively freely. Others impose restrictions based on location, property type or the buyer's residency status.

Here are some other important factors to consider.

• Financing: Buyers accustomed to putting 3% or 5% down on a first U.S. home shouldn't assume they'll find comparable financing overseas. Local lenders may impose larger down payments or stricter requirements on nonresidents, while U.S. mortgage lenders generally aren't going to finance a property located in another country.
• Cashflow: Putting a large portion of your savings into a foreign property could leave you short of cash for emergencies or other financial goals.
• Expenses beyond the sale price: Legal fees, taxes, property registration, insurance, maintenance, travel and currency conversion costs can all affect your return. If you're renting the property, you'll also need to investigate local short-term rental laws and possibly pay a property manager when you aren't there.
• Currency risk: If you're earning dollars but paying property expenses in euros, pesos or another currency, changes in exchange rates can raise or lower your effective ownership costs.
• Taxes (in both countries): U.S. citizens and resident aliens are generally subject to U.S. tax rules on worldwide income, making professional tax guidance particularly valuable for someone earning rental income or eventually selling a foreign property.

Finally, don't confuse property ownership with immigration status. Owning a home may help with certain residency applications in some countries, but buying property does not universally provide a visa, residency rights or citizenship.

Who this strategy is actually best suited for

Buying overseas isn't a shortcut everyone priced out of the U.S. housing market should take.

It can make more sense for fully remote workers who have flexibility over where they spend their time, frequent international travelers who already know a particular region well or future retirees who have a clear idea of where they eventually want to live.

It's also potentially better suited to buyers with enough cash to avoid unfavorable international financing while still maintaining adequate emergency savings and funding other financial priorities.

Most importantly, buyers need to be willing to learn an entirely different real estate system. Reuters notes that financial experts recommend caution and, in some cases, renting in an area first before committing to a purchase.

For the right buyer, however, the definition of a starter home may be expanding. Your first property doesn't necessarily need to be a two-bedroom house 20 minutes from your office. It could be a small apartment across the Atlantic or a vacation property you'll eventually retire to.

If owning a home abroad is part of your long-term retirement vision, planning for it now can help turn that idea into a realistic financial goal. Prepare now for the retirement you want.

Use the Bankrate tool below to connect with a vetted financial professional who can help you build a plan for the future you envision:

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Any child under age 18 with a valid Social Security number can have a Trump Account established on their behalf. Eligible children born between January 1, 2025, and December 31, 2028, who are U.S. citizens can get a $1,000 contribution from the federal government.

With or without that contribution, you can add up to $5,000 a year to the account, and your employer can contribute as much as $2,500 of that total without it counting as taxable income to you.

Free money for a newborn is a good deal, and you should claim your kid's $1,000 if they're eligible.

But I keep hearing the same question from parents: Should I put college savings here instead of a 529 plan?

The answer is no, and the reason has nothing to do with politics. It is in the tax code.

A retirement account under a different name

Strip away the branding and a Trump Account is a retirement account with a head start. Here is how it works. Until the year your child turns 18, the money is locked in what the law calls a growth period. It has to sit in a low-cost fund tracking a broad index of American stocks, with fees capped at 0.1% and no leverage allowed. Nobody can take money out during those years — not you and not your kid.

Then the account turns 18 and becomes a traditional IRA. That single fact drives everything else. Money in a traditional IRA grows tax-deferred, not tax-free, and when it eventually comes out, the earnings are taxed as ordinary income. Pull money before age 59½ and you generally owe a 10% penalty on the taxable portion unless an exception applies.

There is one more wrinkle that catches people. Only the money you and your family contribute creates "basis." The government's $1,000, anything your employer adds and any state or charitable contributions do not.

That means those dollars, plus every dollar of growth on top of them, come out fully taxable down the road.

Why a Trump Account is a poor substitute for a 529 plan

Put the two side by side and the gap is obvious. A 529 also grows without annual tax drag, but when you spend it on qualified education costs, the withdrawal is tax-free. Not deferred. Free. That is the whole point of the account, and it is exactly what a Trump Account does not offer.

Say you use a Trump Account to help pay for college. Because it is a traditional IRA by then, an exception can spare you the 10% penalty for qualified higher education expenses. Good.

But the earnings still land on the tax return as ordinary income, at whatever rate applies. The same dollars pulled from a 529 for the same tuition bill would have come out untaxed.

For a college goal, one account is built for the job and the other is being asked to moonlight.

The 529 also just got better, which sharpens the comparison. The annual K-12 withdrawal limit doubled to $20,000. Qualified expenses now include tutoring, SAT and AP fees, and educational therapies. And 529 money can now pay for workforce credentialing programs, not just traditional degrees.

If you want to see how the vehicles stack up against your actual goal, a college savings comparison guide like the one at the website I founded, CollegeLens, is a better starting point than a headline.

So where does a Trump Account fit?

It fits — just not where people are trying to put it. Think of the Trump Account as your child's first retirement account, funded by someone else. A thousand dollars invested in a broad stock index at birth, left completely alone for six decades, is a genuinely powerful thing.

That is not a small gift, and the lock-up that makes it useless for tuition is the same feature that makes it work as long-term compounding.

A few practical tips:

• Open the account and take the $1,000. It costs you nothing and there is no reason not to claim if your child is eligible.
• Ask HR about the employer contribution. Up to $2,500 a year, tax-free to you, is a benefit many workers do not know exists yet.
• Keep your college money in the 529. If a dollar is earmarked for tuition, it belongs in the account that lets you spend it tax-free.
• Do not skip the 529 to fund this. Contributing $5,000 a year here while your college plan sits empty is optimizing for the wrong decade.

The bigger picture

New accounts arrive with a lot of noise, and the noise tends to drown out the mechanics. The mechanics are what decide whether an account helps you. A Trump Account is a retirement vehicle wearing a family-finance label, and it is a decent one, especially if someone else is making the first deposit. It is simply not the thing that pays a tuition bill.

So take the free money. Open the account, let it sit and let it compound for 50 years. Then go back to funding the account that was actually designed for the goal you are worried about.

Two different jobs, two different tools, and the mistake would be asking one to do the other's work.

One caveat worth noting: The IRS has said more guidance and regulations are still coming, and state tax treatment does not always follow the federal rules.

If you are making a large contribution, it is worth checking where things stand before you commit.

Related Content

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• Why the Trump Account Rollout Is Raising Questions About Social Security
• I'm a Financial Planner: Trump Accounts Are a No-Brainer if You're Eligible (How to Apply)
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• Parent PLUS Caps Just Changed the Math on Paying for College: How Will You Fill the Gap?

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.

Because of how habitual your grocery shopping trips can become, this is one of the areas in a budget that is most vulnerable to waste — whether you're buying duplicates of things you already have, being swayed by sales on items you would never normally buy, or just watching a lot of perishables sit uneaten in your fridge until they expire.

If it seems like there's no way to spend any less on groceries than you already do, you might be surprised at just how many sneaky sources of waste are hiding in your monthly grocery spend. If you're making any of the following mistakes, you could be wasting hundreds each month.

1. Driving around to multiple stores in a single trip

This is one of those seemingly frugal habits that aren't actually worth it. Having a store rotation is great. Costco might have the best prices for some items, but not for others – or there might be some specialty items on your list you can only get at a more niche market.

But if you're visiting every store every week, you're using up a lot of gas and a lot of time. Instead, you should make a rotation. If Costco is your go-to for bulk buys, try to plan your trip so that you buy a month's worth of groceries from the wholesale club in one trip. Next week, get a week or two of groceries from the next store in your rotation.

2. Not using a cash back card to pay for groceries

Even if you have the most meticulous strategy for eliminating wasteful spending from your grocery budget, you're still leaving money on the table if you're paying for those groceries with cash or debit.

There are so many great rewards credit cards available now that there's no reason not to earn something back on the spending you know you have to do every month. I earn over $300 each year on gas and groceries just by making sure I swipe the right card.

The key here is to continue strictly budgeting how much you spend on groceries every month and paying off the balance in full by the statement's due date so that you can earn cash back without paying interest on credit card debt.

3. Paying for multiple shopping memberships

This is a sneakier form of subscription creep that can feel justified if you don't do the math. If you've got both Costco and Sam's Club memberships, for example, take some time to look through your bank statements and find out how much you're really using each and whether you get enough value out of each to keep them.

While some families might be able to squeeze enough value out of each membership to make the annual fees worth it, a lot of families don't really need so many.

If you prefer the grocery selection at Costco but keep Sam's Club because the gas station is closer, for example, maybe you can ditch the Sam's Club membership and get the Costco credit card which offers 4% back on non-Costco gas stations. The cash back on the credit card and the amount you're saving by skipping the Sam's Club annual fee might be enough to make up for any savings you were getting at Sam's Club gas stations.

Do the same math for other shopping memberships like Amazon Prime or Walmart+. Think about which perks you're actually using and whether or not there's a cheaper way to get those perks.

4. Shopping without a list

Every grocery shopping trip should start with looking through your fridge and pantry to find out what items are actually running low and what items need to be used up. Then, use that information to come up with at least a loose meal plan for the coming week.

Even if you don't have the energy or desire to create a detailed meal plan, you can at least jot down a few of the meals you typically cook every week or the kinds of meals you're craving. That plan should be built on the items you already have so that you're shopping to supplement what's already there rather than buying all new ingredients.

Without a list, you can end up with a fridge stocked with four bottles of ketchup and not a single food item that goes with ketchup. Shopping without a list also leaves you vulnerable to sales and impulse buys that you don't actually need.

5. Shopping for the person you want to be instead of the person you are

Trying to eat healthier is a great goal. But how many bags of spinach have you bought only to watch them quietly turn to slime in your fridge? If you're buying a bunch of fresh veggies with no plan for them, you're just pouring money into the garbage.

If you're in the process of changing the way you eat, meet yourself where you are. Get frozen or canned veggies that won't spoil so quickly. Get precut fruit so it's easier to grab as a snack. Find ways to incorporate healthier foods into what you already eat — like sneaking some oatmeal or chia seeds into the meatballs you're making for dinner or adding a can of peas to your favorite stew.

Don't just buy the foods you think you should be eating and hope you'll actually eat them. That's a recipe for wasting money without making any progress on your health goals.

6. Buying the wrong things in bulk

Bulk deals can be a great way to save money on the things you use regularly. But it's not the most cost effective move for every item on your grocery list. You have to be especially careful with anything that's perishable — make sure you only buy as much as you can eat before it turns.

Even some food items that seem a little more shelf-stable can still be bad to buy in bulk if your family won't use it fast enough. That includes things like coffee (especially if it's already ground) and olive oil.

Always check the expiration date when buying large quantities. Try to estimate how much of that item your family can eat in that time frame and limit your purchase to that quantity.

Buying 10 pounds of potatoes because it's cheaper per pound than buying a five-pound bag only works if you can eat 10 pounds of potatoes before they expire. If you only end up eating five pounds or less, you paid more for the five pounds you actually consumed than you would have if you'd just bought a five pound bag to begin with.

7. Not having a grocery budget

With rising grocery prices, this one can seem impossible. But having a target number you want to stay under can help more than you think. By the end of the month, if you're cutting it close to that target number, you know it's time to get creative with what you've already got at home rather than just buying more of the usual on autopilot.

Just about every kitchen is stocked with those neglected canned foods, forgotten frozen veggies or the leftovers from a couple nights ago you swore you'd eat. Holding yourself to a budget can force you to actually make use of those things before buying more.

If you're not sure where to start with setting a grocery budget, look at how much you spent on groceries last month and then challenge yourself to spend, say, $100 less than that this month. Keep pushing that number down each month until you find an amount that you can comfortably afford while eliminating wasteful spending and stockpiles of uneaten food.

Cutting waste from your grocery budget isn't just about spending less at the supermarket. The money you free up can be redirected toward bigger financial goals, whether that's building an emergency fund, paying down debt or saving more for retirement. Want help deciding where those extra dollars could make the biggest difference?

Use the Bankrate tool below to connect with a vetted financial professional who can help you with a strategy to reach your financial goals.

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If you already own a reliable vehicle, the best choice may seem to be to take it with you. In practice, this can be one of the most misunderstood decisions in an international relocation.

As an Italian attorney who helps Americans moving to Italy and other parts of Europe, I've seen many cases where the cost and complexity of shipping a vehicle end up far exceeding expectations. In some situations, the decision still makes sense, but in many others, purchasing locally after arrival is not only simpler but also significantly more economical.

Customs duties, registration requirements, insurance constraints, compliance rules and logistical risks can quickly turn what seemed like a simple shipment into a costly, time-consuming process.

The hidden costs of shipping a vehicle overseas

At first glance, international auto shipping quotes can appear reasonable. Depending on the origin and destination, Americans may see base prices ranging from a few thousand dollars to more than $10,000 for enclosed transport.

But the shipping fee is only part of the equation.

Once the vehicle arrives in Europe, it must pass through customs clearance. In many cases, import duties and value-added tax (VAT) apply unless the owner meets specific exemption criteria, such as transferring residency and proving long-term ownership of the vehicle before relocation. Even then, documentation requirements are strict and inconsistently applied across jurisdictions.

Italy, for example, has detailed registration and other requirements that can create significant hurdles for imported vehicles. Cars must comply with European technical standards, and modifications may be required for headlights, emissions systems or other components. These adjustments can be expensive and sometimes impractical for older or highly specialized vehicles.

Car insurance presents another layer of complexity. U.S. insurance policies are not valid abroad, and European insurers may be hesitant to fully cover imported vehicles, particularly in the initial registration period. Premiums can be higher and coverage limitations more restrictive than many Americans expect.

When all of these factors are combined — shipping, customs, modifications, registration fees and insurance — the total cost of importing a car can exceed the price of purchasing a comparable used vehicle locally.

When shipping a car does make sense

Despite these challenges, there are circumstances where shipping a vehicle can be justified.

One common case involves individuals relocating temporarily under specific visa arrangements or diplomatic postings where the stay is short and the vehicle is already adapted to international standards.

Another scenario involves high-value or specialized vehicles, such as classic cars or models that are significantly more expensive or difficult to source in Europe. Even then, careful planning is essential, including confirming import eligibility and compliance requirements before the vehicle leaves the U.S.

For most long-term relocations, however, particularly those involving families settling into everyday life abroad, buying a car locally is often the more efficient path.

The risks of choosing the wrong shipping company

Beyond regulatory and financial considerations, one of the most common problems involves the shipping process itself.

The international vehicle transport industry is not uniform, and standards vary widely. Some companies are highly professional and experienced in cross-border logistics, others are not.

A recurring issue is the presence of hidden fees that appear only after the vehicle has been collected. These can include unexpected port charges, storage fees or administrative costs that were not clearly disclosed in the initial agreement.

Insurance coverage is another area where misunderstandings arise. Clients often assume their vehicle is fully insured door-to-door, only to discover that coverage is limited during certain stages of transport or that claims are subject to strict exclusions.

Delays are also common. Vehicles can be held at customs for extended periods owing to incomplete paperwork or compliance questions. In some cases, owners are forced to pay additional storage fees while issues are resolved.

In the worst cases, clients may fall victim to outright fraud — paying deposits to companies that are not properly licensed or that outsource transport without clear contractual accountability.

Why local purchase is often the smarter financial decision

When Americans arrive in Europe, they are often surprised by how functional and accessible the local used car market can be. While vehicle preferences and driving styles differ from those in the U.S., many regions offer well-maintained, reasonably priced vehicles that are already fully compliant with local regulations.

Buying a used car locally means new residents avoid customs complexity, eliminate shipping risks and gain immediate access to proper insurance coverage. They also have the advantage of selecting a vehicle that fits local driving conditions, which in many European cities can include narrower streets, limited parking and lower speed limits.

From a financial planning perspective, this approach often reduces uncertainty at a time when many other relocation costs are already coming into focus.

A decision best made early in the relocation process

Transportation decisions should be made early in the relocation process, not as an afterthought once logistics are already underway.

The question is not simply whether a car is worth shipping, but whether the cost, risk and administrative burden align with the broader goals of the move. In many cases, the answer becomes clear once all factors are fully considered.

For Americans moving abroad, the emotional attachment to a familiar vehicle is understandable. But international relocation is full of hidden trade-offs, and this is one area where practicality often outweighs sentiment.

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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.

Although Berkshire was a net buyer of equities for the first time after 14 straight quarters of easing up on stocks, the company revealed no flashy new positions or big additions in a Securities and Exchange Commission (SEC) filing on August 14.

True, Berkshire purchased another $10 billion worth of stock in Google parent Alphabet in a private placement. The deal, disclosed in a June 1 statement, boosted its holdings of Class A shares (GOOGL) by 45% and Class B shares (GOOG) by more than 650%.

At 9.4% of Berkshire's U.S. equity portfolio value, GOOGL is now the company's fourth-largest position. The Class B shares, at 3.2% of the portfolio, are now the firm's 10th-largest holding. Berkshire initiated its stake in the tech giant in the third quarter of 2025.

Separately, Berkshire closed its $6.8 billion acquisition of the U.S. homebuilder Taylor Morrison in July.

Abel oversees the Berkshire Hathaway equity portfolio, although Buffett keeps his hand in and plays a key advisory role. That said, times have changed.

The company added one new stock to its holdings in Q2 — D.R. Horton (DHI) — but then it has bought and sold the homebuilder several times in the past. And while Berkshire boosted stakes in some existing positions, both new and old, it also continued to pare back on some legacy holdings.

Interestingly, Berkshire cut back on some investments in the financial sector, including long-time Buffett favorite Bank of America (BAC).

But before we get to the stocks Berkshire Hathaway bought and sold in the second quarter, let's take a look at the bigger capital picture. In addition to being a net buyer of stocks for the first time in more than two years — the conglomerate made $19.8 billion in purchases vs $3.7 billion in sales — it also repurchased $4.5 billion of its own stock. That's Berkshire's largest quarterly buyback since 2021. Furthermore, it bought back another $3.3 billion in July.

Some folks have criticized Berkshire for not putting its cash hoard to work. Well, Abel appears to have answered them. Berkshire's cash holdings are still gargantuan, but they did fall to $365 billion in the second quarter from a record $380 billion at the end of Q1.

With a market cap of $1 trillion, Berkshire still maintains a sort of barbell portfolio of approximately $325 billion in stocks and the aforementioned $365 billion in cash.

Before we get into Berkshire's most recent buys and sells, it's important to know that Berkshire has always run a highly concentrated portfolio.

Excluding the company's Japanese brokerage stocks and other overseas equities, Apple (AAPL) alone accounts for more than a fifth of Berkshire's stock portfolio. (That's down from more than 40% at its peak.)

Furthermore, Berkshire's top five U.S. equity holdings comprise about 68% of its portfolio value, while the top 10 account for 88%.

As Buffett likes to say, diversification is for those who don't know what they're doing.

Stocks that Berkshire is buying

Buffett famously avoided airlines for decades. When he finally did come around, his timing was terrible, spreading his bets among a handful of major carriers not too long before COVID-19 set the industry into a tailspin. As a result, he quickly closed out those positions.

So it's a mark of change that Berkshire upped its stake in Delta Air Lines (DAL) by 44% in Q2 after initiating the position just three months earlier. The company bought another 17.5 million shares, bringing its total holdings to more than 57 million. With a market value of $5.4 billion at the end of Q2, the air carrier is now Berkshire's 13th-largest holding.

In another move in the homebuilder industry, Berkshire increased its positions in Lennar Class A (LEN) and Class B (LEN.B) stock, by 30% and 25%, respectively. At 0.4%, LEN is the company's 18th-largest investment. LEN.B, at less than 0.1%, is essentially immaterial.

Meanwhile, Berkshire added to two recent additions to its investments. It boosted its stake in The New York Times Co. (NYT) by almost 4%, while more than doubling its position in Macy's (M). NYT accounts for about 0.4% of the portfolio, while M sits at less than 0.1%. Although it's nice to have the imprimatur of Berkshire Hathaway, these are not needle-moving investments for a trillion-dollar company.

Stocks Berkshire is selling

In a reprise from previous quarters, Berkshire once again sold some Bank of America stock, which has been a major holding since 2017. It's too soon to panic, though. Berkshire reduced its investment in the nation's second-largest bank by assets by less than 6%. BAC is still a top-five holding, although GOOGL did replace it at No. 4.

Elsewhere, Abel pared back on supermarket operator Kroger (KR), reducing the position by 22%. At 0.7% of the portfolio value, KR drops to Berkshire's 16th-largest holding from 12th at the end of Q1.

In the financial sector, Berkshire eased up on investments in Ally Financial (ALLY) by almost 7%, while slicing its position in Capital One Financial (COF) by 58%. ALLY accounts for just 0.4% of Berkshire's U.S. equity portfolio, while COF amounts to 0.2%.

Lastly, Berkshire reduced exposure to Nucor (NUE) by 52%. NUE now accounts for about 0.1% of the portfolio, or the firm's 24th-largest position. In the only exit, Berkshire sold its entire stake in Constellation Brands (STZ), a position it initiated in the final quarter of 2024. At less than 0.1% of the portfolio prior to the liquidation, STZ was immaterial.

The bottom line on Berkshire's holdings

Abel continues to remake Berkshire's portfolio, and the way it deploys capital, in his own image. Big bets on tech are in favor, and he's doubling down on some recent investments, such as Macy's and The New York Times Co. Berkshire also clearly likes exposure to homebuilders.

At the same time, Abel is reducing exposure to several legacy investments and less material names. While the portfolio remains top-heavy, its concentration is now weighted more to its largest 10 holdings, with less exposure to the top five.

It's a new era, indeed.

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At today's close, the Dow was staring at a one-day decline of 0.2% at 53,732, the S&P 500 was off 0.2% at 7,785, and the Nasdaq was 0.3% lower at 26,729.

Despite Friday's quiet finish, the three main equity indexes are near record highs — and they remain "in something of a sweet spot for now," says Daniela Hathorn, senior market analyst at Capital.com.

This week's soft inflation data has diminished the threat of a Federal Reserve rate hike, Hathorn explains, while earnings remain supportive.

B. Riley says to buy the dip on hot AMAT stock

Applied Materials (AMAT) was the biggest name on the earnings calendar, though the chip equipment maker shed 5.1% after reporting its fiscal third-quarter results late Thursday.

AMAT beat on the top and bottom lines and gave fiscal fourth-quarter guidance that beat the Street's estimates. But B. Riley analyst Craig Ellis says some investors may have been hoping for greater near-term gross margin upside.

Gross margin tells you how much revenue a company keeps after deducting costs required to make its products or services. AMAT said it expects fiscal Q4 gross margin to be flat on a quarter-to-quarter basis, at 50.4%.

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.

But Ellis believes today's post-earnings pullback represents a buying opportunity on a company poised for "high-visibility EPS expansion." He has a Buy rating on AMAT and a $700 price target, representing implied upside of nearly 40% on a stock that's already doubled for the year to date.

Next week, we'll start to hear from some of the country's biggest retailers, including Home Depot (HD, -0.8%), which reports on Tuesday. Walmart (WMT, -0.4%) takes its turn on the earnings stage Thursday morning.

Retail sales unexpectedly fall

Ahead of these key updates on consumer spending, data from the Census Bureau this morning showed that retail sales unexpectedly fell 0.6% in July. Economists expected a 0.1% increase.

The University of Michigan's Consumer Sentiment Index also fell short of estimates, with August's preliminary reading sinking to 51.0 from July's 55.2.

"A colossal double miss on retail sales and consumer sentiment is worrying investors, who fear that affordability pressures, dwindling savings and reduced hiring could mean the economy's engine is on its last legs," says José Torres, senior economist at Interactive Brokers.

The disappointing data follows "stronger tax refunds that were providing relief to personal wallets," he adds, and "with that source of fiscal stimulus behind us, market participants are rightfully concerned about the potential for further deterioration in consumer momentum."

Reddit will join the S&P 500 on Tuesday

Elsewhere on Wall Street today, Reddit (RDDT) popped 12.6% after S&P Global said the social media platform will join the S&P 500 ahead of the open this Tuesday, August 18.

RDDT will replace AvalonBay Communities (AVB, +0.1%), which is merging with fellow real estate investment trust (REIT) Equity Residential (EQR, 0.0%).

"Stocks tend to get a lift from inclusion in the S&P 500 because many trillions of passive dollars are held in products that track the index," explains Kiplinger contributor Dan Burrows.

The Vanguard 500 Index Fund (VOO), the largest exchange-traded fund (ETF) in the world, has $1.7 trillion in assets under management — and is just one of many funds that will now have to buy shares in RDDT.

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Call it the market timing trap. It sounds reasonable on the surface: Buy low, sell high, avoid the downturns. But decades of data make one thing abundantly clear: Most investors who try to time the market don't just fail to beat it — they meaningfully underperform it.

And the investors most likely to be caught waiting on the sidelines are often the ones who can least afford to be there — those approaching or already in retirement.

This article is not a call to invest recklessly or ignore risk. It's a call to understand what the evidence actually says about market timing — and then to use that understanding to stop letting the pursuit of the ideal moment become the enemy of a sound, logical and process-oriented financial plan.

Market timing: The obsession nobody talks about Americans are obsessed with market timing. They may not call it that; they call it being cautious, being patient, waiting for things to settle down.

But at its core, the behavior is the same: Holding off on financial decisions — rebalancing a portfolio, funding an account, shifting an allocation — until the market feels more certain.

The problem is that the market never feels certain.

• In 2020, investors waited to see if the pandemic recovery was real
• In 2022, they waited for rising interest rates and the worst bond market in history
• In 2023 and 2024, they waited to see if the rally would hold

Today, amid myriad persistent geopolitical concerns and markets somehow testing all-time highs almost daily, many are waiting again.

And while they wait, something costly is happening. It's not what most people think.

The real cost of missing the market's best days

There is a data point that has appeared in financial research so many times, across so many decades and market cycles, that it should by now be tattooed on the arms of every investor. And yet somehow, it doesn't seem to change behavior.

Here it is: Missing just the 10 best trading days in the market over a 20-year period can cut your total returns roughly in half.

According to J.P. Morgan Asset Management's widely cited research, a $10,000 investment in the S&P 500 made on January 1, 2005, and left untouched through December 31, 2024, would have grown to $71,750. Miss the 10 best days? That balance drops to $32,871 — a reduction of more than half. Miss the 20 best days? The damage compounds further still.

Here's the kicker: The best days and the worst days cluster together. They tend to occur during volatile stretches — exactly the moments when nervous investors are most likely to be out of the market.

Seven of the 10 best days over that 20-year period occurred within 15 days of the 10 worst days. The investor who pulls out to avoid the turbulence often misses the recovery that follows.

This is not a theoretical risk. It's a mathematically measurable one, and it plays out again and again across every major market cycle we have on record.

The illusion of the perfect entry point

One of the most persistent myths in personal finance is that patient investors who wait for the right moment will eventually be rewarded with a lower-risk entry into the market. The research does not support this. For every (lucky) win I hear about from a lifetime investor, they gloss over several drops and run-ups they missed or frankly misplayed.

A well-known study by the Schwab Center for Financial Research examined the outcomes of five hypothetical investors over the 20-year period ending December 31, 2024, each receiving $2,000 annually to invest in the S&P 500.

The strategies ranged from perfect timing (always buying at the annual low) to the worst possible timing (always buying at the annual high) to simply investing immediately each year regardless of conditions.

The perfect timer finished with $186,077. The investor who simply put money in on the first trading day of each year finished with $170,555 — only $15,522 less, despite zero effort at timing.

Even the investor who somehow managed to buy at the annual high every single year finished with $151,343. The investor who stayed in cash the entire time? $47,357 — last place by a margin that isn't close.

The pursuit of the perfect entry point is not a strategy — it's a form of procrastination dressed up in financial language.

Inaction is not a safe move

This is perhaps the most important point in this article, and the one most investors get backward.

When the market feels uncertain — which, to be clear, is essentially always — the instinct is to view inaction as the safe, conservative choice. Do nothing. Stay in cash. Wait it out. That feels like risk management. In reality, it often is risk itself.

Consider the investor approaching retirement who has been meaning to rebalance a portfolio that has become too equity-heavy after a strong run. She knows it should be done. She's heard her adviser mention it. But she keeps waiting — for the market to peak, for volatility to pass, for more certainty.

In the meantime, she is exposed to exactly the downside risk she's trying to avoid. And when the correction comes, she hasn't protected herself. She was just waiting.

The same dynamic plays out across dozens of common financial planning decisions. Funding a Roth IRA. Adjusting a 401(k) allocation. Moving money from accumulation to income-generating assets as retirement nears.

These are not timing decisions. They are structural ones. Treating them as timing decisions — waiting for the ideal moment — is one of the most common and costly errors in retirement planning.

Inaction has a price. It simply doesn't show up on a brokerage statement the way a losing trade does. That makes it invisible to most investors. But the cost is real, and it compounds over time in the wrong direction.

What the evidence says about market timers

It's worth being direct here: Professional market timers — people whose entire career is devoted to getting in and out of the market at the right moments — have an almost universally poor long-term track record versus simply staying invested.

DALBAR's annual Quantitative Analysis of Investor Behavior has tracked this gap for decades. Over the 20-year period ending December 31, 2024, the average U.S. equity investor earned an annualized return of 9.24%, compared with the S&P 500's annualized return of 10.35% — a gap of more than one percentage point per year, every year, for two decades.

In 2024 alone — a year when the S&P 500 returned 25.02% — the average equity investor earned just 16.54%, a gap of nearly 850 basis points.

DALBAR traced the shortfall directly to behavior: Withdrawals from equity funds occurred in every quarter, with the heaviest outflows arriving just before the market's biggest surges. Investors guessed the direction of the market correctly just 25% of the time.

This is not a knock on investor intelligence. It's a recognition that trying to predict the market's short-term direction is extraordinarily difficult — and that the emotional pressure to act or not to act during turbulent periods works directly against long-term returns.

When timing actually does matter

None of this means that when you buy or sell is completely irrelevant. Context matters.

For a long-term investor with a 20-year horizon, the specific day they invest a lump sum matters very little — studies consistently show that most outcomes cluster tightly regardless of whether you invested at a peak or a trough.

For someone funding a 401(k) with regular payroll contributions, dollar-cost averaging handles the timing question automatically and effectively.

The calculus shifts somewhat for investors in or near retirement. Sequence of returns risk — the danger of experiencing a major market decline in the first few years of drawing down a portfolio — is real and meaningful.

Research by CFA Wade Pfau and CFP Michael Kitces identifies what they term the "retirement risk zone": The approximately 10 years surrounding the retirement date, roughly five years before and five years after, when the portfolio is at or near peak size and withdrawals have begun or are imminent.

A bad sequence of returns during this window can permanently impair a plan in ways that simply cannot be recovered.

That's a structural problem. And it requires a structural solution — not perfect timing.

The framework that actually works

If market timing is a false solution to a real problem, what's the right answer?

As my book Spend, Protect, Grow explains, the most important thing a retirement investor can do is build a structure that makes market timing irrelevant.

The framework has three components:

• Spend. The assets dedicated to funding the next 10 to 12 years of retirement income. This bucket must be stable — it can't afford the volatility of equities because it's funding your life.
• Protect. The money you have decided you never want to lose to market performance. This is where safe money strategies — index annuities, fixed index strategies — do their most important work, providing growth potential without downside risk.
• Grow. The long-term equity holdings with a decade-plus horizon, where short-term volatility can be tolerated because there's no near-term pressure to sell. This bucket customarily provides a long-term approach to outpacing inflation, which most people are aware of.