Signing up for Medicare isn't as clear-cut a process as some might think. That's because enrollees have a big decision to make — stick with original Medicare (Parts A and B) and pair it with a Part D drug plan, or sign up for an all-in-one Medicare Advantage plan.

As of February 2026, more than 35 million people were enrolled in a Medicare Advantage plan. And enrollment in Medicare Advantage has increased steadily in recent years, with 19% of eligible Medicare beneficiaries signing up in 2007 versus 54% in 2025, reports the Kaiser Family Foundation (KFF).

It's easy to see why so many people find these plans appealing. Not only do many Medicare Advantage plans come with $0 premiums, but most also offer supplemental benefits beyond what original Medicare covers.

Plus, some enrollees like the security of an annual cap on out-of-pocket spending, which Medicare Advantage plans offer. Original Medicare does not, though a supplement (Medigap) can help cap costs to a large degree.

That doesn't mean Medicare Advantage plans are perfect, though. Enrollees who ditch Medicare Advantage often cite reasons such as limited provider networks and strict prior-authorization rules.

Mark Prip, a Medicare supplement insurance agent at Policy Guide, says, "If you've kept up with the headlines over the last year or two, you've seen Medicare Advantage undergo a significant shift. More than a million Medicare beneficiaries have been affected by Medicare Advantage plan terminations, consolidations, and service-area exits due in part to lower federal reimbursement rates."

Prip also explains that to combat these lower reimbursement rates, many insurance companies have been shrinking provider networks and ending contracts with large hospital systems across the country.

Given these and other constraints, there are certain people for whom Medicare Advantage simply may be a poor fit. Here are three signs you may want to stick with original Medicare instead.

1. You don't have great health

There's a common saying that people in good health tend to do well with Medicare Advantage, while those in poor health tend to lose out financially. Scott R. Maibor, Managing Director at Senior Benefits Boston, says there's some truth to that generalization.

"For someone with multiple or severe health issues, a Medicare Advantage plan may prove to be ultimately more expensive than traditional Medicare with a supplement due to the higher copays and maximum out-of-pocket limit," he says.

Just beware of the "Medigap trap." Those supplemental insurance policies that wrap around Original Medicare can be almost impossible to get if you enroll in Medicare Advantage first and try to switch back later. In most cases, you can only sign up for Medigap plans without facing medical underwriting during the first six months after you become eligible for Medicare, though state rules do vary.

Another reason you might prefer original Medicare if you have a chronic illness? Out-of-pocket prescription drug costs under Part D are capped at $2,100 annually (for 2026).

Danielle K. Roberts, co-founder of Boomer Benefits, a national Medicare insurance agency, says Medicare Advantage plan maximum out-of-pocket limits matter more than some people realize.

"If you're managing a serious illness or anticipating frequent medical care, make sure to ask yourself, 'If I had a year with significant medical expenses, could I comfortably afford to reach that maximum?'" she says.

On the other hand, Roberts points out that Medicare Advantage plans aren’t automatically the wrong choice just because someone has health issues.

"They can be an excellent idea for many people, especially those with certain health conditions or life situations who qualify for both Medicare and Medicaid," she says.

Roberts also explains that Medicare Special Needs Plans (SNPs), a type of Medicare Advantage plan, are designed specifically for people with certain health conditions or who are dual-eligible for Medicaid and are "actually one of the strongest examples of how Medicare Advantage can work well."

As of February 2026, more than 8 million people were enrolled in an SNP, accounting for 83% of total Medicare Advantage enrollment growth over the previous year, per KFF.

2. You plan to split your time between different ZIP codes or travel frequently

Because Medicare Advantage plans limit enrollees to specific provider networks, Prip cautions that people who travel a lot may run into issues.

"While most plans will cover you out of state for medical emergencies, seeking care at specialty facilities in another state can become a real issue because of Medicare Advantage provider networks," he explains. "So if you're someone who travels frequently or simply wants the option to seek specialty care anywhere in the country, Medicare Advantage may not be the best fit."

Maibor agrees and says snowbirds or retirees with providers in two locations may find it difficult to use a Medicare Advantage plan.

3. You don't have the patience for constantly changing rules and providers

Another issue with Medicare Advantage plans? The rules aren't set in stone. And that could make managing care cumbersome.

"I think the main reason Medicare Advantage may not be a good fit for someone is if they're not comfortable keeping up with the rulebook that comes with these plans," Prip says.

"Whenever we conduct a needs analysis with a client, we ensure they understand exactly how Medicare Advantage works," Prip continues. "For example, I ask them, 'Are you OK knowing that your current medical providers who are in network today may not be in network in the future? Are you OK with having to switch doctors if your insurance company is no longer contracted with your medical providers?'"

Prip says that if you live in a smaller town and don't travel often, Medicare Advantage may be a more suitable option. However, he says that for those who want freedom, flexibility, and fewer surprises, original Medicare with supplemental insurance may be a better, less confusing choice.

How to choose the right Medicare Advantage plan

Medicare Advantage is wrong for some people but right for others. If you're in the latter camp, it's important to know how to choose the right one. To that end, Roberts says the key is not to get hung up on premium costs.

"The first thing I'd do is verify that your doctors, specialists, hospitals, and preferred pharmacy all participate in the plan's network," she says.

Next, Roberts says, you should make sure every prescription you take is covered by the plan's formulary and see what your copays will actually be. From there, you can compare each plan's out-of-pocket maximum.

Roberts says you should also estimate the cost of a major medical event.

"Understanding what you could owe if you need surgery, chemotherapy, or frequent specialist care is just as important," she says.

Finally, Roberts advises, don't let extra benefits be the driving factor. They can seem tempting, but you may not end up needing or using all of them.

"I always tell people to choose the plan that gives them confidence they'll have access to the care they need at a cost they can comfortably afford," she says.

Read More

• What Medicare Covers When You Travel in the US and Abroad
• How Medicare Advantage Costs Taxpayers — and Retirees
• Problems with Medicare Advantage Plans Keep Mounting
• What Does Medicare Not Cover? Eight Things You Should Know

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers pertaining to whether an activity is a hobby or a Schedule C business engaged in for profit. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Hobby income and expenses

Question: I like to knit hats. Lately, I have started selling some of the hats that I knit at craft shows. I have a full-time job, and my hat knitting is just a fun extracurricular activity that I engage in sporadically. It's not a business. Do I have to report the sales proceeds I get from selling my hats on my Form 1040? And can I deduct my expenses?

Joy Taylor: You will have to report the sales proceeds on your Form 1040. Since you said your hat knitting activity is not a business, but a fun activity that you engage in sporadically, the activity is likely considered a hobby. You would report your hobby revenue as other income on Schedule 1 of the 1040.

Unfortunately, you will not be able to deduct your expenses. The 2017 Tax Cuts and Jobs Act temporarily eliminated, through 2025, all miscellaneous itemized deductions previously subject to the 2%-of-adjusted-gross-income threshold. That includes hobby expenses. Last year's One Big Beautiful Bill permanently ended this tax write-off.

2. Hobby versus business

Question: My spouse and I both work full-time. I also have a dog-breeding activity that I run in my spare time. Can I deduct the losses from my dog-breeding activity on Schedule C of my Form 1040?

Joy Taylor: It depends. You can deduct the loss on Schedule C only if your dog-breeding activity is a business. The activity must be conducted with continuity and regularity in a businesslike manner, and you must have a reasonable, good-faith objective of making a profit from it.

If your activity rises to the level of a business, then yes, you can deduct the losses on Schedule C. If not, then you would report revenues from the activity on Schedule 1 of your Form 1040, and you cannot deduct your expenses.

3. Hobby-versus-business factors

Question: What factors does the IRS look at in determining whether losses reported on Schedule C are from a business or a hobby?

Joy Taylor: The IRS and the courts look at many factors in determining whether the reported Schedule C activity is a hobby or instead rises to the level of a business/for-profit activity.

IRS regulations provide a safe harbor. If your activity generates a profit in three out of five consecutive years, or two out of seven years for horse breeding, the law presumes you're in business to make a profit unless the IRS establishes otherwise.

The hobby-business analysis is trickier if you can't meet the safe harbor. That's because the determination of whether an activity is properly categorized as a hobby or a business is then based on each taxpayer's facts and circumstances, with the IRS and the courts generally looking at the following nine factors:

• Expertise of the taxpayer and advisers
• Manner in which one carries on the activity
• Time and effort devoted to the venture
• Expectation that assets from the activity may appreciate
• History of income and losses (the more years of large consecutive losses, the harder it is to show a profit motive, unless the activity is still in its start-up stage)
• The amount of occasional profits
• Success in carrying out other activities
• Elements of personal pleasure or recreation
• Whether the taxpayer has substantial income from other sources, such as wages or investment income

4. Audit red flag

Question: I keep reading that claiming losses on Schedule C from an activity that sounds like a hobby is an IRS audit red flag. Is this true?

Joy Taylor: Yes. Claiming large hobby losses on Schedule C is a perennial audit red flag. The IRS is on the hunt for taxpayers who year after year report large losses from hobby-sounding activities on Schedule C or F of the 1040 to help offset wages, business or investment earnings, or other income.

The hobby loss rules are often litigated in the Tax Court. When people think of hobby losses, horse, cattle and/or dog breeding generally comes to mind. Of course, the Tax Court has addressed those ventures. But other cases involve activities as varied as ecotourism, rodeo events, acting, writing and researching, flying antique fighter jets, poker playing, collecting law enforcement badges, donkey breeding and restoring old cars. The IRS usually wins these cases, partly because it tends to settle cases in which it doesn't believe it can prevail. But taxpayers have also pulled off a victory in a number of cases.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

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 editors and experts, in this Q&A series, 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 or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Estimated Tax Payments and Withholding
• Ask the Editor: Questions on Selling a Home
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Tax Rules for Landlords

Many 1031 investors — especially those who are nearing retirement — don't understand the full breadth of replacement options available to them.

Most of them are in a similar spot: They own a rental or a small commercial building, and they're worn out from the day-to-day management. They're ready to sip piña coladas on the beach, not answer phone calls or text messages about how the plumbing stopped working or what the pet fee will be if their tenant gets a fourth cat.

In 2024, 38% of landlords said property upkeep is one of their biggest issues, and in 2026, a survey of 4,055 independent landlords showed that ownership costs rose for 74.4% of them.

That paints a clear picture of collective landlord psychology: They're sick of maintenance, and to make matters worse, prices keep rising.

Since the 1031 exchange is such a good option for deferring taxes, most landlords are heavily incentivized to keep the money working for them in real estate (and that's especially true for retirees who are investing for cash flow).

So, what are their options? Most investors think there are only two:

• Go passive through a Delaware statutory trust (DST)
• Stay in control by buying another building and doing the work all over again

Completely passive with lower returns or potentially stroke-inducing total control?

In reality, this is a false dichotomy.

The actual range of options is much wider.

Once you sell, you have 45 days to formally identify a replacement property and 180 days to close. That window is short — and the IRS is not lenient at all about missing deadlines, so let's get started.

The full range of options, from most work to least

Another active property. This is the default option. And, frankly, for some sophisticated investors who have the time and patience for it, it's the right answer.

You trade into another rental, a multitenant building or a value-add project, and you keep full control along with full responsibility:

• Tenants
• Repairs
• Vacancies
• Taxes
• Insurance

If the reason for the exchange was the work itself, this puts you back where you started, usually with a larger asset. Not ideal for someone nearing retirement.

Tenancy in common (TIC). A TIC lets several investors hold direct, fractional title to a single property. You keep the standing of a direct owner, which is more control than a fractional trust interest gives you, but decisions generally require coordination among the other owners, and financing is more complicated because the lender underwrites the group.

It sits in the middle, and it has become less common than it once was.

A Delaware statutory trust. With a DST, you buy a fractional beneficial interest in a professionally managed, institutional-grade asset, and a sponsor runs everything.

The appeal is convenience: A DST can close in three to five business days, minimums are low, and you can spread proceeds across several of them for diversification.

Those are meaningful advantages when the 45-day clock is tight or the remaining balance to place is small.

The trade-off, of course, is control.

In order to qualify for a 1031, a DST has to follow a set of IRS rules (often called the seven deadly sins): Among them, the trust:

• Cannot take on new financing
• Cannot sign new leases
• Cannot make major capital improvements
• Cannot reinvest sale proceeds

Investors get no vote on when the property sells, and because proceeds cannot be redeployed inside the trust, the sponsor's exit sets the timing of your next exchange.

Fees are the other consideration, since front-end fees on DST offerings commonly run 10% to 15% and are disclosed inside a lengthy private placement memorandum.

For frustrated, burnt-out landlords, that seems like it's an easy trade … but it's not the only option available to you if you want to move from being fully active to being mostly passive.

The lesser-known middle-ground options

Single tenant NNN (triple net). While this is still technically 100% ownership, it stands out because it shifts the maintenance responsibilities onto the tenant. With a NNN property, you hold title outright and lease the building to a single tenant, usually on a long 10- to 15-plus-year lease, and the tenant pays the three nets:

• Property taxes
• Insurance
• Maintenance

You keep control (the hold, the sale and the timing of your own exchange), and the operating burden shifts to the tenant, so your responsibilities as owner are low.

The pricing behaves a lot like fixed income: Single tenant net lease assets traded around a 6.80% cap rate as of the first quarter of 2026, and the yield tracks the tenant's credit and the remaining lease term more than the building itself.

Absolute NNN. This is a triple net lease taken to its furthest point. The short version: The tenant carries everything, including the roof and structure, which is not always true of all NNN leases.

A REIT. Worth naming mostly to correct a common assumption: You cannot complete a 1031 exchange directly into REIT shares, because a share of a trust is not like-kind to real property.

There is an indirect path called an UPREIT (a DST interest can later be contributed to a REIT operating partnership through a Section 721 exchange), but that is effectively a one-way door out of 1031 treatment, since you generally cannot exchange out again afterward.

There are also plenty of hidden risks associated with this strategy.

Weighing your options: Two questions to answer

In evaluating these options, you need to answer two questions:

• How much control do you want to keep?
• How much of the work are you willing to do yourself?

A DST gives up control almost entirely in exchange for simplicity, which suits an investor who just wants it all to be over with.

A single tenant absolute NNN property keeps title, control and exchange timing in your hands while keeping the work low, which suits an investor who was tired of the job rather than tired of owning. Another active building keeps everything: Control and work alike.

Each is a legitimate answer to a different set of priorities.

Whatever you land on, three habits pay off early: Match the structure to whichever of those priorities is most important to you, read the underlying documents (the lease on a net lease deal, the private placement memorandum on a trust) and make sure to cross your t's and dot your i's. The 45-day clock rewards the investors who have thought it through before they sell.

Related Content

• I'm Retired and Hate Being a Landlord. Should I Sell My Rental Property?
• A Cautionary Tale: Why Older Adults Should Think Twice About Being Landlords
• Counting on Real Estate to Fund Your Retirement? Avoid These 3 Costly Mistakes
• Should I Sell or Rent My House When I Relocate for Retirement?
• Do 1031 Exchanges Make Sense for Baby Boomers?

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 broadest possible level, every investor shares the same objective: earning a return. Where investors differ, however, is in how much risk they're willing to take to earn that return, how long they remain invested before needing their money and how large a return they need to reach a financial goal.

These differences closely mirror the three variables that financial advisers routinely discuss with their clients: investment objective, risk tolerance and time horizon.

The interesting part is that these concepts are closely interconnected. A young investor early in their career, for example, typically has a long investment horizon before retirement. In theory, that longer time horizon allows them to tolerate greater short-term volatility because they have more years to recover from market downturns and benefit from long-term compounding.

Of course, investing is not purely mathematical. Individual psychology and behavioral finance play important roles. Two investors of the same age with identical personal finance situations may have very different comfort levels with market volatility, leading them to build very different portfolios.

That is precisely why clearly defining your investment goals is so important. This ultimately determines which assets are appropriate for your portfolio and which are not.

The need to make those distinctions has never been greater. The U.S. exchange-traded fund (ETF) industry has grown to more than 5,500 funds, spanning everything from broad market index funds to highly specialized leveraged, inverse, thematic and options-based strategies. While this variety gives investors more choice than ever before, it also makes selecting the best ETFs increasingly challenging.

In this guide, we'll examine five common financial goals U.S. investors pursue. For each one, we'll discuss the characteristics that investors may want to prioritize when evaluating ETFs and highlight one standout fund that fits that particular objective.

Investing for Retirement

For most Americans, retirement planning today rests on two primary pillars: employer-sponsored retirement plans, such as a 401(k), and Social Security. Traditional defined-benefit pensions have become increasingly uncommon in the private sector, leaving workers with greater responsibility for building their own retirement savings.

Many investors supplement their workplace retirement plans and Social Security by opening self-directed accounts such as a taxable brokerage account or a Roth IRA. Within these accounts, ETFs have become one of the most popular investment vehicles.

For retirement investing, the objective should generally be long-term compounding while avoiding uncompensated risk. Concentrating too heavily in a single company, sector, country or asset class introduces risks that have historically not been associated with higher expected returns.

One standout here is the iShares Core 80/20 Aggressive Allocation ETF (AOA). The fund charges a net expense ratio of just 0.15%. It maintains an approximately 80% allocation to global equities and 20% to bonds using a diversified portfolio of underlying iShares ETFs in a fund-of-funds structure.

For investors with different risk tolerances, iShares also offers more balanced and conservative allocation ETFs, including portfolios built around 60/40 and 40/60 stock-bond mixes. Each fund is automatically rebalanced, removing the need for investors to maintain their target allocation themselves.

Learn more about AOA at the iShares provider site.

Investing for Your Kids

Few investors have a longer time horizon than parents saving for their children's future. With decades available for compounding, younger investors can afford to allocate a larger portion of their portfolio to stocks, accepting greater volatility in exchange for the potential for higher long-term returns.

One new savings vehicle is the Trump Account, which launched in July. For children born between January 1, 2025, and December 31, 2028, the federal government contributes an initial $1,000 into an investment account established in the child's name, with a parent or guardian serving as custodian. Families can simply let that initial investment compound over time or make additional contributions of up to $5,000 per year.

One notable feature of these accounts is that the investment menu is built around low-cost U.S. equity ETFs. While stock market investments can experience significant short-term volatility, broad U.S. stock indexes have historically delivered strong long-term capital appreciation over multi-decade periods, making them well suited for investors with very long investment horizons.

Parents have several investment options available, but the standout choice is also the program's default investment: the State Street SPDR Portfolio S&P 500 ETF (SPYM). The fund charges a 0.02% expense ratio, making it one of the lowest-cost ways to gain exposure to the largest publicly traded U.S. companies. To put that into perspective, a $10,000 investment incurs only $2 per year in fee drag.

Although past performance never guarantees future results, SPYM has produced an annualized total return of approximately 15.5% before taxes over the past decade. According to the latest S&P Indices Versus Active (SPIVA) Scorecard, 85.6% of actively managed U.S. large-cap funds underperformed the S&P 500 over the trailing 10-year period.

Learn more about SPYM at the State Street provider site.

Investing for an Emergency Fund

Previous generations may have kept a rainy day fund in a jar on top of the refrigerator, gradually filling it with spare change. Today, many savvy investors maintain an emergency fund as a reserve readily available to cover an unexpected financial need.

A major car repair, an emergency visit to the veterinarian, an unexpected roof leak, a temporary job loss, travel for a family emergency and funeral expenses are all situations where having cash immediately available can prevent a financial setback from becoming a much larger problem.

When building an emergency fund, investors should prioritize two characteristics above all else before selecting assets: safety of principal and liquidity.

Safety of principal means your money should remain intact regardless of what financial markets are doing. Whether stocks are soaring or experiencing a sharp correction, the amount of cash in your emergency fund should still be there when you need it.

Liquidity is equally important. Emergency savings should be accessible without lengthy lockups, surrender charges or significant withdrawal penalties. After all, money that cannot be accessed quickly is of limited use during an actual emergency.

One ETF designed around these principles is the iShares 0-3 Month Treasury Bond ETF (SGOV). The fund invests exclusively in U.S. Treasury bills with remaining maturities of zero to three months, continuously replacing maturing securities with newly issued Treasury bills. The interest earned is distributed to shareholders each month, and the bond ETF currently yields 3.6%.

Unlike a certificate of deposit (CD) or a high-yield savings account, SGOV is not insured by the Federal Deposit Insurance Corporation (FDIC). However, its holdings are obligations of the U.S. Treasury and mature in only a matter of months, giving the portfolio high credit quality while minimizing interest rate risk.

Short of a U.S. government default, the fund has historically maintained a very stable net asset value. Even if short-term interest rates rise, SGOV's price is unlikely to experience the sharp declines associated with longer-duration bond funds. Instead, the income generated by the portfolio generally adjusts upward as maturing Treasury bills are replaced with newer securities offering higher yields.

SGOV is also highly liquid. Shares trade throughout the day on an exchange just like a stock, and the ETF currently has a 30-day median bid-ask spread of 0.01%. This helps keep transaction costs to a minimum.

Learn more about SGOV at the iShares provider site.

Investing for Passive Income

Passive income is one of the most common reasons investors turn to ETFs. Many income-oriented funds distribute cash monthly, allowing investors to generate a relatively predictable stream of cash flow without having to select and manage individual dividend-paying stocks themselves.

Many income ETFs are also reasonably tax efficient. This is because some option-income strategies use accounting treatments that allow a significant portion of their distributions to be classified as return of capital. Rather than being immediately taxable, return-of-capital distributions reduce an investor's adjusted cost basis, effectively deferring capital gains taxes until the investment is eventually sold.

There are, however, several trade-offs investors should understand. Many high-income ETFs generate their elevated yields by writing covered calls or employing other options strategies. These approaches typically result in higher expense ratios than traditional index funds and add another layer of complexity. They can also limit capital appreciation because covered calls cap a portion of the portfolio's upside during strong bull markets, meaning these funds may underperform when markets rally sharply.

For most income-focused investors, the goal should be generating a distribution stream capable of supporting planned withdrawals without taking unnecessary risk. Retirees, for example, often reference the 4% rule, which suggests withdrawing approximately 4% of a portfolio during the first year of retirement and adjusting that amount for inflation thereafter.

One ETF that currently exceeds that threshold is the Amplify CWP Enhanced Dividend Income ETF (DIVO). The fund currently offers a distribution rate of approximately 4.8%, calculated by annualizing its most recent monthly distribution and dividing that figure by the ETF's net asset value. According to DIVO's July 19a-1 notice, 90% of its latest monthly distribution was estimated to be return of capital.

DIVO owns a relatively concentrated portfolio of roughly 25 to 30 companies selected for characteristics such as consistent earnings growth, dividend growth, strong free cash flow generation and high returns on equity. The portfolio managers then selectively write covered calls on individual holdings. The ETF pays distributions monthly and charges a 0.56% expense ratio.

Learn more about DIVO at the Amplify ETFs provider site.

Investing to Lower Taxes

Once you've fully utilized tax-advantaged accounts such as a 401(k) and a Roth IRA, any additional investments typically need to be made through a taxable brokerage account. While these accounts offer complete flexibility and no contribution limits, they also expose investors to taxes on investment income.

Depending on the investment, taxable income can come from several sources. These include dividends, short- and long-term realized capital gains and ordinary income generated by assets such as taxable bonds and real estate investment trusts (REITs). For investors in higher federal and state tax brackets, these taxes can meaningfully reduce long-term returns.

Fortunately, certain ETFs hold investments whose income may be exempt from federal income taxes. The most common example is municipal bonds. Municipal bonds are debt securities issued by state and local governments and their agencies to finance public infrastructure projects.

These can generally be divided into two categories. General obligation bonds are backed by the issuer's taxing authority and general revenues, while revenue bonds are supported by income generated from specific projects, such as toll roads, airports, hospitals, water systems or public utilities. In both cases, investors are effectively lending money to the issuing authority in exchange for periodic interest payments and the return of principal at maturity.

Municipal bonds are generally considered a high-credit-quality asset class, although some issuers carry below-investment-grade credit ratings because of financial challenges. For most investors, though, the interest earned from municipal bonds is exempt from federal income tax and, in many cases, is also exempt from the alternative minimum tax (AMT).

A popular municipal bond fund is the iShares National Muni Bond ETF (MUB). The ETF charges a low 0.05% expense ratio and holds more than 6,800 municipal bonds. Its largest state exposures include New York, California, Texas, Illinois, Massachusetts, New Jersey and Florida. The portfolio is also conservatively positioned from a credit standpoint, with approximately 60% of holdings carrying AA credit ratings, with most of the remainder distributed among AAA and A -rated securities.

At first glance, MUB's 30-day SEC yield of 3.5% may not appear especially compelling. However, iShares notes that investors should instead consider the fund's tax-equivalent SEC yield of 5.8%. This is an estimate of the taxable yield a conventional bond investment would need to generate to produce the same after-tax income as MUB for investors in the highest federal income tax brackets.

Investors should also know that municipal bond ETFs are also available in state-specific versions. For residents who purchase a fund investing exclusively in bonds issued by their home state, the interest income may also be exempt from state income taxes. This is valuable in high-tax states such as California and New York, where iShares offers dedicated state-specific municipal bond funds.

Learn more about MUB at the iShares provider site.

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Minority-owned businesses are one of the fastest-growing segments of the U.S. economy.

The U.S. Census Bureau puts the number at an estimated 1.3 million.

And according to the 2024 Minority Businesses Economic Impact Report, they generate nearly $600 billion in annual economic output while posting year-over-year gains in production, employment and wages.

Yet for many founders, the greatest challenge comes after building the business, when it's time to sell. As research from Brookings Metro highlights, minority-owned businesses face unequal access to capital.

When that's coupled with unequal access to experienced advisers and sophisticated legal and financial resources, it means many otherwise successful businesses reach the sale process without the documentation, governance or operational infrastructure buyers expect.

The result can be lower valuations, prolonged negotiations or deals that never make it to the closing table.

With thoughtful planning and preparation, however, founders can address many of the common obstacles before a buyer even begins due diligence, positioning themselves to protect the value they've spent years creating.

Assess your business

A U.S. Department of Commerce study found that minority-owned firms are more likely to be denied loans, pay higher interest rates when they do secure financing and are less likely to apply for credit because they expect to be turned away.

Minority-owned companies typically have fewer banking relationships and collateral options than their non-minority counterparts.

These barriers do not disappear at the point of sale. They can affect how a business is valued, how a deal is structured and who shows up at the negotiating table.

For any business owner, preparing for a sale may be the first time they have navigated a transaction of such a size and complexity. Compounding the overwhelm for many minority founders is the fact that not all business owners have equal access to the legal, financial and advisory networks that help companies prepare for an eventual exit.

As a result, some business owners enter the sale process without fully appreciating the level of scrutiny buyers will apply to their records, contracts, compliance practices and financial reporting.

One of the most important things a business owner can do before pursuing a sale is conduct a thorough internal audit. While many owners focus on financial performance, buyers go beyond revenue and profitability. They want reassurance that the business is well organized, compliant and free of surprises that could delay or derail a transaction.

Where to start

Start with your corporate records. Formation documents, operating agreements, bylaws, shareholder agreements, capitalization tables and board records should be complete, accurate and readily accessible.

Buyers will also examine customer and vendor contracts, loan agreements, liens and property leases.

Next, review legal and regulatory risks. Pending litigation, environmental matters, product liability claims, recalls and other compliance issues should be identified early.

Financial statements and tax returns for at least the previous four years should be organized, prepared in accordance with generally accepted accounting principles where possible, and reviewed or audited by a reputable CPA.

Intellectual property is another critical area. Trade secrets, trademarks, patents, copyrights and related registrations should be documented, along with confidentiality agreements for employees, contractors and third parties.

Businesses should also confirm compliance with applicable data privacy laws.

On the employment side, verify worker classifications, ensure I-9 documentation is complete, identify any pending employment claims and review employee benefit plans for legal compliance.

Finally, organize information on your key customer and vendor relationships, including revenue concentrations over the past 12 months. Any transactions involving affiliated entities or related parties should also be clearly documented.

The goal is to identify and resolve issues before a buyer discovers them. The more organized and transparent your business appears during due diligence, the more likely the transaction is to proceed efficiently and on favorable terms.

Close the gaps before a buyer finds them

Once you've completed your internal audit, expect to find gaps. Nearly every business does. The difference between a smooth transaction and a difficult one often comes down to whether those issues are addressed before the company goes to market.

Buyers are trained to identify risk. When they uncover missing documentation, unresolved compliance issues or operational weaknesses during diligence, those findings frequently become negotiating leverage.

What might seem like an administrative oversight can quickly translate into a lower purchase price, additional indemnification obligations or delays in closing.

Corporate records should be brought up to date, whether that means preparing written shareholder and/or director consents to ratify corporate actions or correcting deficiencies in stock issuances.

Outstanding liens that should have been released should be formally terminated, and any informal arrangements between related parties should be documented through written agreements.

Financial records deserve the same attention. Incomplete or inaccurate financial statements should be reviewed and corrected with the assistance of a qualified CPA. Intellectual property should be evaluated to determine whether trademarks, patents, copyrights or trade secrets require additional protection.

Businesses that rely on proprietary information should ensure employees and contractors have executed appropriate confidentiality and invention assignment agreements.

Ultimately, buyers use diligence to assess both risk and value. Companies that present organized records, documented processes and resolved compliance issues signal that the business is well managed and ready for transition.

That preparation can help support valuation, accelerate the transaction process and reduce the likelihood of post-closing disputes or liability.

Start building your team 12 to 24 months out

Minority-owned businesses face challenges that stem from systemic discrimination. That is one of the reasons why it is essential to assemble your team of trusted professional advisers 12 to 24 months before you plan to go to market.

Your attorneys, accountants, financial advisers and investment bankers will work together to help you address gaps, position the business and its owners favorably and work through some of these structural obstacles.

Beyond your professional team, lean into community networks. Minority business organizations, industry events and peer groups can provide introductions to potential buyers, capital sources and strategic partners that may not be visible through traditional channels.

Consider seeking investors focused on diversity or exploring alternative funding sources, such as SBA programs and crowdfunding platforms.

A stronger top line and a more diversified customer base make a business more attractive to buyers. If you have not already, consider applying for minority business certification, which can qualify your company for certain government and corporate contracts and add another proof point for prospective acquirers.

Preparation is what separates a closed deal from a missed opportunity

The minority business community is building something remarkable. The growth numbers are real, the economic impact is significant and the entrepreneurial ambition behind these companies is clear.

However, too many founders leave value on the table because they did not prepare for the exit with the same rigor they brought to building the business.

Clean documentation, clear organizational structure, resolved compliance issues and a strong advisory team are what separate a deal that closes at full value from one that falls apart in due diligence.

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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.

Three decades ago, buying a stock required a phone call to a broker, a sizeable fee and the confidence to act on limited information.

Today, a client can analyze their portfolio, stress-test retirement plans and execute trades before finishing their morning coffee. I've seen this transformation unfold remarkably quickly over the course of my career in this industry, and it is still accelerating.

But as technology has made financial planning faster, cheaper and more transparent, it has also introduced a new category of risk — the illusion of certainty. More data and authoritative-looking outputs do not always produce better decisions. And in retirement planning, the gap between what technology can model and what it cannot understand is consequential.

From gatekeeping to empowerment

The shift in financial access over the past generation has been profound. High fees and limited platforms once kept most investors dependent on intermediaries for even basic transactions. The emergence of online brokerage accounts, zero-commission trading and real-time data fundamentally changed that dynamic — and the nature of the adviser-client relationship itself.

Clients come to meetings better informed, ask sharper questions and hold advisers to a higher standard of transparency. That accountability is healthy. It pushes advisers to be more rigorous and to communicate with greater clarity.

Technology has freed advisers from operational tasks that once consumed a disproportionate share of the day. Investment selection, trade execution and portfolio rebalancing were painstaking manual processes at one time.

Today, they are largely automated. That shift allows advisers to direct their attention toward the work that matters most: Understanding a client's values, goals and concerns in ways that no algorithm can replicate.

The promise — and limits — of artificial intelligence

Artificial intelligence (AI) has become the most discussed tool in financial planning — and with good reason. AI-powered platforms can process vast datasets, generate retirement projections and identify tax-planning opportunities in a fraction of the time it would take a human adviser working manually.

But while I'd recommend using AI tools to prepare for advisory meetings, they can't replace them. When clients arrive having already worked through an initial plan, the conversation moves past the basics to focus on the decisions that are genuinely complex.

• How do we plan for a child with special needs?
• What does retirement look like for someone who intends to keep working part-time?
• How do we balance competing obligations to aging parents and a college-bound teenager?

These are not questions AI can answer without truly knowing the client, and they are often the most significant.

There is also a subtler risk that plays out more than once in any advisory practice. Clients often assume that because a plan was generated by a sophisticated platform, it is fully personalized to their situation.

In reality, AI outputs are only as good as the inputs they receive. A projection built on incomplete or inaccurate information can create overconfidence — a false sense of retirement readiness that goes unexamined because the output looks authoritative. The plan may be technically sound but emotionally incomplete.

It's important to view AI not as a threat but as infrastructure — a foundation that makes advisory work faster and more precise, while leaving the interpretive and relational dimensions of planning firmly in human hands. The financial advisers who thrive in this environment are not those who resist technology, but those who integrate it thoughtfully.

Beyond the headline technology

AI has been behind some of the most consequential improvements in financial planning. Tax planning is a good example. AI-assisted platforms can now model complex strategies around Roth conversion timing, charitable giving and capital gains harvesting — work that previously required hours of manual effort.

Advisers still review and refine these outputs, but the platform does most of the analytical heavy lifting, enabling more sophisticated planning to reach a broader range of clients.

Automation has simplified everyday financial management for clients as well. AI-powered note-taking tools now capture meeting conversations accurately and feed them into client management systems.

Context from one meeting is preserved and accessible in the next, which is incredibly valuable for maintaining continuity in long-term advisory relationships.

Where human judgment remains irreplaceable

Perhaps the clearest illustration of technology's limits can be seen at the transition from accumulation to distribution — the shift from building wealth to drawing it down. This phase involves products and strategies, including certain annuities, long-term care solutions and income-layering approaches that are typically available only through licensed advisers.

A client relying entirely on self-directed digital tools may not know these options exist, let alone understand how to evaluate them. Bridging that gap is what advisers are for.

Then there is behavioral finance. Markets decline. Plans require revision. Life circumstances change in ways no projection anticipated. In these moments, an adviser's role is not primarily analytical — it is steadying.

The conversations that matter during a market downturn, job loss or unexpected health crisis have nothing to do with spreadsheets.

Helping someone hold a long-term perspective when emotion is pulling in another direction is a distinctly human skill, and one with real financial consequences.

Avoiding costly mistakes in times of volatility can impact retirement outcomes as much as years of disciplined saving.

As automation handles more of the technical work, advisers get to focus on the aspects of planning that are most personal, complex and consequential. That is not a smaller role — it is a more meaningful one.

A more useful question

The right question about technology in retirement planning is not whether to use it. The better question is how to use it well and where to recognize its limits.

The clients who navigate this environment most effectively treat digital tools as a starting point, not a final answer. They use AI platforms to build initial frameworks, then bring them to an adviser who can pressure-test the assumptions, account for the intangibles and translate a spreadsheet into a plan that reflects how they want to live. Technology makes that conversation more efficient. It does not eliminate the need for it.

In a world where financial data is more accessible than ever, the scarcest resource in retirement planning is no longer information. It is the discernment to use it wisely —and that is still a very human strength.

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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.

My wife and I are expecting our third child later this year. When a client is expecting, I generally advise them to start thinking about their baby's financial future right away.

Trump Accounts allow parents to open an investment account on behalf of any children under age 18 who are U.S. citizens. If the child is born from 2025 through 2028, the government will deposit $1,000 into the account for your child.

Thanks to philanthropic donations, an extra $250 will be deposited into the account if you live in a ZIP code with a median income below $150,000.

If your child qualifies for that deposit, opening a Trump Account is a no-brainer; it's free money!

Where things get less clear is when considering whether you should contribute your own money to the accounts. As a financial adviser at Burns Estate Planning & Wealth Advisors and an expectant father considering the best path forward for my own child, I see both pros and cons.

What are the benefits of contributing to a Trump Account?

Contributing to a Trump Account can significantly increase your child's nest egg. The federal government estimates that if you simply take the $1,000 deposit from the government, that deposit will turn into $6,000 by the time your child is 18.

By contributing just $250 per year, your child would have an estimated $19,000. Clearly, contributing to the Trump Account — even a small amount — will have a significant impact on the amount of money your child ends up with.

While the Trump Account is touted as a retirement account for your kid, your child can also make withdrawals without penalty much earlier for qualifying reasons, such as paying for college or buying their first home.

Those withdrawals could be subject to restrictions and would be taxed at ordinary income tax rates.

Employers can make contributions up to $2,500 per year into the account as well, making it a potentially attractive employee benefit.

What are the downsides of contributing to a Trump Account?

If you're considering making contributions to a Trump Account for education for your child, you should first ask yourself: Why would you use a Trump Account for education when a 529 plan grows tax-free and is tax-free on withdrawal?

The nest egg your child has after 18 years of contributions to a Trump Account could be significant. However, that's not due to any special property of the Trump Account itself; it's simply the result of compound interest over time, which you would also enjoy with other investment accounts like a 529.

Unlike with a 529, your children will have to pay taxes on the growth of money in a Trump Account when they withdraw it. I often recommend that my clients convert their IRA to a Roth IRA because, while you pay taxes on the contributions or conversions to a Roth, you don't pay taxes when you withdraw the money.

Trump Account contributions are non-tax-deductible, like a Roth IRA, but the entire amount is taxable upon distribution, like a traditional IRA. That double taxation is not as tax-efficient as other options.

When my baby is born later this year, I'll definitely open a Trump Account to take advantage of the $1,000 free deposit, but I'll also open a 529 account and contribute my own money to that, because withdrawals will be more tax-advantaged for my child.

That isn't to say this is the right move for everyone with a newborn. A Trump Account is a tool, but, as with any other investment, it's not a one-size-fits-all solution.

If the goal is to save for higher education, it may make more sense to use a 529 plan, based on the tax laws that apply to distributions compared to a Trump Account.

It will likely be less common to use a Trump Account to save for your children's retirement, as most children are beneficiaries of their parents' estate to begin with.

However, if getting a jump-start on your children's retirement accounts is the goal, a Trump Account would likely make more sense.

It's important to work with your financial adviser for advice that takes into account your unique circumstances before deciding how to set your children up for a strong financial future.

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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.

You found your dream home, the seller accepted your offer, and you're eager to close on the sale. But as you finalize the paperwork, make sure you don't overlook a policy that could prove invaluable down the road: owner’s title insurance. Without it, you could lose your home and the money you've put into it if someone else one day lays an ownership claim to the title — your legal right to own the property.

Many home buyers assume that the title insurance their mortgage lender requires them to pay for at closing protects their interests. However, that policy applies only to the lender's investment. It does nothing to shield your finances if a title dispute arises.

Although purchasing an owner's title insurance policy is optional for home buyers, doing so is worthwhile because it can safeguard your investment, including any financial losses or legal fees, says Sarah Frano, vice president of corporate underwriting with First American Title. "I would not buy a property without title insurance," she says. "I’ve seen the variety of things that can pop up after closing — sometimes years or decades after someone purchases their home."

How it works.

Lenders order a title search once a home is under contract to ensure there are no outstanding ownership claims so that title can pass from one owner to the next. But title examiners don't catch everything, said Karina Borgia-Lacroix, owner of American Real Title in Ft. Myers, Fla.

If they miss an undisclosed heir with a valid claim to the home, for example, that heir could take you to court to challenge ownership. Or if there's a lien on the property for, say, work that a contractor completed but went unpaid by the previous owner, then the home could be forced into a foreclosure if the contractor files a lawsuit. If you don’t have an owner's policy when these types of problems arise, you’ll either have to pay the outstanding liens or defend yourself against title claims in court.

Other scenarios that can result in a dispute, says Frano, include forgery and fraud (such as fake signatures, impersonation or fraudulent sellers); recording errors in county records; misspelled names on recorded documents; and unknown easements that limit how property can be used.

How much does owner's title insurance cost?

While you can purchase owner's title insurance at any time, it’s best to do it during the closing process so you can protect yourself against title claims during the entirety of your ownership.

Plus, purchasing it after closing can be more complex and expensive. If you inherit a property, review the existing title policy to see whether the insurance covers you as an heir, says Frano. If it doesn’t, you’ll need to buy a new policy.

Title insurance premiums are regulated by each state. Expect to pay roughly 0.5% to 1% of the home’s purchase price for an owner's policy. You'll pay much less for the lender's policy, which is based on the loan amount and typically adds just a few hundred dollars to your closing costs.

Buyers usually cover the cost of the lender's title policy. With the owner's policy, whether the buyer or seller pays — or the cost is split down the middle — depends on local customs and laws, Frano says.

Title agents often provide discounts when you combine the purchase of an owner's and a lender's policy, says Borgia-Lacroix. You can shop around among title insurance companies to compare costs and coverage levels.

Buying a home involves more than saving for a down payment. A financial professional can help you build a plan for closing costs, ongoing homeownership expenses and protecting your investment over the long term.

Use the Bankrate tool below to connect with a financial professional and get started today:

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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Think you need $1 million or more to retire happily? You're not alone. Northwestern Mutual's 2026 Planning & Progress Study found that Americans think they need $1.46 million to retire comfortably. High-net-worth Americans think they need even more — an average of $2.67 million. Meanwhile, conventional wisdom says you should save at least 10 times your annual salary.

But here's the reality: many retirees do just fine with far less.

You don't have to spend your entire working life chasing a seven-figure benchmark. Combined with Social Security and smart estate planning, a retirement fund of $300,000 to $400,000 is often enough to enjoy a comfortable, stress-free retirement.

Matt Twiford, fractional CFO and Managing Director of the Pegacom Group LLC, notes, "While it would be nice to have $1 million in retirement, not having it doesn't mean you can't enjoy a good quality of life and feel somewhat financially free."

Here are 6 practical reasons why a "modest" retirement fund may be more than enough to be happy in your golden years.

1. Keeping your spending in check prevents lifestyle creep

On average, Americans have roughly one year's worth of their current annual income saved in tax-advantaged accounts. For most households, that figure hovers around $80,000, according to a SmartAsset study. That's far less than $300,000 and worlds away from the magic number of $1.46 million. Other surveys suggest that only about half of retirees have any retirement savings at all.

Even so, retirees who paid off their mortgage years ago and have annual expenses of about $45,000 to $50,000 avoid the stress that can come with maintaining a more extravagant lifestyle — or lifestyle creep (increased spending on non-essentials and making luxuries feel like necessities).

Paying down or paying off a mortgage and resisting expensive vehicles and gadgets can save thousands over time and make a happy retirement possible even with limited savings.

2. Moving to a lower-cost area can stretch your retirement dollars

Location plays a big role in retirement finances. Living in high-cost states such as Hawaii, California, New York, or Massachusetts takes a much bigger bite out of your budget than living in places such as Tennessee, Arkansas, Oklahoma, or Missouri. Choosing a lower-cost state frees up more money for travel, family, or charitable giving, rather than sinking more cash into housing, taxes, utilities and healthcare.

“My advice would be to start by evaluating where you are and what you have,” says Twiford. “Many retirees own their home outright and have little if any debt, along with a large Social Security check. That's great if that's the case. Others may rent and have few assets, but hopefully some funds from Social Security coming in. Regardless of where you are, analyze it honestly and be truthful with yourself.”

3. Social Security and savings can provide a steady base income

As of 2026, the average monthly benefit for retired workers is approximately $2,071, or about $25,000 annually. While that's a good number, it's probably not enough to live on each month for most people. However, a couple with combined benefits of $40,000 to $50,000 per year only needs about $20,000 to $40,000 from savings to reach a $60,000 to $70,000 lifestyle.

For example, claiming $2,000 per month in benefits at age 62 with a life expectancy of 87 yields $600,000 over your lifetime. But because Social Security payouts grow the longer you delay, waiting until age 70 boosts your annual benefit by roughly 80% compared to starting at 62.

4. Low-risk investing can generate a reliable income

Generating income from investments while also preserving hard-earned savings is key, especially for those with a modest retirement fund. When savings are limited, low-risk investments are often the smartest move. That's because protecting your principal takes priority when you don't have time to recover from market losses.

Most financial experts recommend taking a more conservative investment path as you near retirement. Instead of risky, higher-yield investments, consider low-risk investments, such as bonds, Treasury notes, money market funds, fixed annuities, and CDs.

Robert Laura, retirement expert and co-founder of Retirement Coaches Association, suggests considering preferred stocks, another asset class that doesn't get much attention but can put more income in a retiree's pocket. Preferred stock can be particularly helpful to a retiree with a more modest nest egg. "For example, the iShares Preferred and Income Securities (PFF) ETF currently yields over 5%."

While it's true that all investments carry some level of risk, low-risk assets are typically less likely to fail.

5. Planning for healthcare costs now removes one of retirement’s biggest threats

A healthy 65-year-old woman can expect to spend around $340,000 on healthcare over the course of her lifetime. A 65-year-old man can expect to spend about $297,000, according to Milliman's 2026 Retiree Health Cost Index.

Those figures assume the person has original Medicare, Medicare Part D for prescription coverage, and a Medigap Plan G supplement plan. However, these figures do not include long-term care, which can easily add up to six figures. Unfortunately, most retirement plans can't cover a bill of that size.

"Max funding an HSA can help reduce these costs and thus withdrawals from an IRA or other investment accounts," says Laura of Retirement Coaches Association. "Additionally, allocating funds to a Roth IRA for this purpose, since they come out tax-free in retirement, can also play a role in reducing taxes on distributions. It's also worth noting that some large companies do offer health care to part-time employees."

Also, by taking care of your health, getting routine tests and screenings (many covered by Medicare), getting recommended immunizations, and practicing healthy habits, like not smoking, you can enjoy a higher quality of life and stretch your retirement savings even further.

6. A cash buffer helps during tough times

Life happens. Whether it's unexpected car or home repairs, a health issue, or rising inflation, things don't always go as planned. That's why retirees with more modest lifestyles usually keep a three- to six-month supply of cash in an emergency fund to cover living expenses — just in case.

Having a little extra cash on hand helps create a financial buffer that can keep you afloat without relying on credit cards or high-interest loans.

According to NerdWallet's April 2026 savings report, nearly half (45%) of Americans surveyed said they are actively saving money in a bank account for emergencies. Since an emergency can happen at any time, it's probably best to put your emergency fund in a high-interest savings account for easy access rather than a long-term investment fund.

Why a "modest" retirement fund can be enough

In the end, a "modest" retirement fund can be more than enough to be happy. By focusing on smart habits around spending, investing, saving and everyday life, you may discover you already have more than enough to live comfortably.

The real secret isn't a massive nest egg. Instead, it's having the freedom, flexibility and peace of mind to enjoy all of the years ahead. After all, your retirement shouldn't be only measured in dollars, but by how well your money lets you live the life you actually want.

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The letter arrives unexpectedly in the mail, tucked among bills and junk mail, and many people are likely intrigued.

A former employer has a proposition. The letter's recipient is vested in a pension at their former workplace, and that pension is still on track to be paid every month for life once they reach a certain age.

The employer has an offer: The person can take a one-time lump-sum amount now instead of future monthly pension payments. The window for making a decision comes with a deadline, so don't wait too long to decide, the letter says.

For the former employer, this is a chance to reduce some long-term risk and limit how much future pension payments to employees might affect the company's financial performance.

But if you're the one receiving the letter, you might need to puzzle over the math, trying to figure out how the numbers will work best for you.

• Is it wiser to stick with the plan you had — drawing a pension when the time arrives?
• Is the lump sum an opportunity to build an even better retirement?

People still working for an employer that offers a 401(k), a pension or both face similar questions as they gear up for retirement. What are the best options for them, and are there ways they can act before retirement to get the most out of their money?

For example, if their plan allows it, should they roll their 401(k) money into an IRA before they retire, to protect their assets and perhaps have more investment options? If they do, should they also take their pension as a lump sum and use that to replenish the 401(k) account?

Are there other strategies they can put into play?

To reject or not

There are things to mull over here.

One reason to decline a lump sum could be that you expect a long life — much longer than the average — and the pension is guaranteed, regardless of how long you live.

Holding on to that pension promise might feel less risky than taking the lump sum and investing it on your own.

In contrast, a reason for taking the lump sum could be that doing so will give you more control of the money as you explore the options for investing it and how that might fit in with your other investments.

Perhaps you have other retirement savings, and the lump sum would give you an opportunity to leave more of a legacy for your children.

The questions are many, and the answers aren't sitting on a one-size-fits-all shelf waiting for you to put them to use.

This is, without a doubt, a complex decision that requires careful thought.

A case study

All that said, though, in many cases, I find it's best to take the lump sum, seizing control of your future and putting the money to the best use for you.

In my experience, you can use that lump sum to purchase an annuity that will match the monthly pension payment and still have money left to invest in other ways.

Rolling over a current 401(k) into an IRA can also be a wise move in many instances. I've seen that play out in real life, and here is one example: Sometime back, a client still working at the business where she has a pension and a 401(k) came to me to review her options and try to determine the best way forward.

In her case, the numbers were sizable, which made the decision even more consequential. The monthly pension she had earned would pay her $5,855 a month for life or $4,808 monthly if she chose an option that allowed her spouse to continue to receive the pension after her death.

After evaluating the numbers and the possibilities, we came up with a plan.

We decided to roll over her 401(k) money, and when she retires, we will replenish the account we moved with the lump-sum money from her pension.

We could arrange for her to buy an annuity that would pay her the same $4,808 as the spousal option. She'll have the same amount of income that the pension would provide, but with a larger amount of invested assets.

If necessary, seek assistance

If you receive a letter offering a lump-sum option on your pension — or you're nearing retirement and wondering about the proactive steps you could take —review the numbers carefully and see how they line up with your personal situation and goals.

Usually, you get only one chance to make a decision on this, and you want to make the right one for you.

It's understandable if you find the options confusing and overwhelming. Plenty of other people are just as confused.

If you work with a financial professional, bring them into your decision-making process. They can help you review the numbers and decide on a strategy that's best for your situation.

Maybe that's keeping those pension payments in place. Maybe it's using the lump sum to buy an annuity. Maybe it's taking the lump sum and investing it in some other manner.

Ultimately, it's your money and your decision. But with thoughtful consideration, you can arrive at the right choice and feel satisfied that you did all you could to try to give yourself a more secure 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.

By the time September arrives, taxes are probably the last thing on your mind.

Summer is winding down, spring filing is behind you, and the third-quarter estimated payment due on September 15 feels like a formality.

For most business owners, it is whatever they paid last quarter, sent off without much thought.

That habit is where the money leaks.

By September, you can see most of the year:

• Two-thirds of your income is already on the books
• You know whether the year is running ahead of plan or behind it
• The spring projection your estimates were built on is probably out of date

The Q3 payment is a great opportunity to true up before the year closes. Skipping that recalculation is one of the most common and most avoidable mistakes I see.

I'm a CPA and head of Tax at Gelt, and here is what the conversation with your own CPA should cover before the deadline.

Recalculate the number — don't repeat it

Most business owners pay their Q3 estimate by copying the Q2 figure forward. That works only if nothing changed, and for a growing business, something almost always has.

A strong sales quarter, a large client payment, a capital gain or a major asset purchase can all push your income far from what you projected in April. If your estimates are still built on that spring number, you are likely to be underpaying, or worse, overpaying, and not find out for months to come.

The fix is to rerun the projection with actual numbers through August:

• Pull your year-to-date income and compare it to the figure your estimates were based on
• Add any one-time events you're still expecting that may not have been in the original plan
• Recalculate what you owe for the full year, then check it against what you have paid so far

As a CPA, I'd recommend doing this in early September, not on September 14. If the review turns up a shortfall, you want time to act on it.

Know the number that protects you

You do not have to predict your tax bill perfectly to avoid a penalty. The IRS gives you a safe harbor, and hitting it is the goal.

You generally avoid an underpayment penalty if you pay the smaller of two amounts:

• 90% of what you owe this year
• Or 100% of what you owed last year

If your adjusted gross income last year was over $150,000, that second figure rises to 110%.

A few numbers worth keeping in mind:

• You face a penalty only if you are short by $1,000 or more after withholding and credits
• The penalty is really interest, currently 7% a year compounded daily, charged on what you underpaid
• It runs from each missed deadline until you pay, so a Q3 shortfall keeps costing you until you close it

For most business owners, the prior-year safe harbor is the one to lean on, because it is a known, fixed number. You already know last year's tax. Paying 100%, or 110% if you are over the income threshold, across four even installments is the cleanest way to stay protected when this year's income is hard to pin down.

Use withholding as a late-year fix

If your September review turns up a gap, there is a tool most business owners overlook.

Estimated payments count only for the quarter you actually make them. Withholding works differently. The IRS treats withholding as if it were paid evenly across all four quarters, even if it all came out of a December paycheck.

If you or a spouse has W-2 income, increasing that withholding late in the year can patch an earlier shortfall in a way a catch-up estimated payment cannot.

There is also relief if your income is genuinely uneven. The annualized income installment method lets you match your payments to when you actually earned the money, so a large third or fourth quarter is not treated as income you should have paid tax on back in April.

If most of your income lands later in the year, this can lower or even erase a penalty. It takes more documentation, so it is a conversation to have with your CPA rather than a box to check on your own.

At Gelt, we treat the September estimate as a planning moment, not just a payment. It is the point where the year is finally clear enough to act on, and there is still time left to act.

Make September 15 a checkpoint, not just a payment

What makes this deadline matter, beyond the payment itself, is what it sets up. A wrong Q3 estimate does not stay contained in Q3. It follows you into the final January 15 installment and into the bill you settle in April.

When you recalculate now, you get more than a correct payment. You get an early read on where the year will land, and that gives you room to make real moves before December, such as adjusting your compensation, timing a large purchase, funding a retirement plan or accelerating a deduction.

So before September 15, ask your CPA three questions:

• What do I actually owe for the year based on income through August?
• Am I on track to hit my safe harbor?
• If I am short, do I fix it with an estimated payment, with withholding or by annualizing my income?

Those three questions turn a routine deadline into the most useful tax checkpoint of your year.

Related Content

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• I'm a CPA: This Is the High Earner's Guide to Winning Your 2026 Tax Season
• 6 Ways to Use AI to Improve Your Financial Life
• Ask the Tax Editor, June 19: Estimated Tax Payments and Withholding
• The Top 10 Side Gigs For Retirees In 2026

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.

I like long-term CDs. They earn a guaranteed rate of return, the APY won't change, and they can help you meet long-term savings goals. In a world full of questionable financial options, they're among the most dependable things you can get.

Yet, timing when to open one is imperative. Locking in a rate now, with the current 3.50% inflation rate as a permanent ceiling, will likely prove short-lived, which means inflation might erode some of your future purchasing power. With the ongoing war in Iran raising gas prices again, expect inflation to follow suit.

On top of this, the Federal Reserve is currently holding steady. However, if the bond market tightening doesn't bring down inflation through higher borrowing costs, they may be forced to hike rates — meaning today's locked-in rates could quickly look like a missed opportunity. With that in mind, here is the short-term strategy I'm currently using, as someone who checks and analyzes savings rates for a living, to stay flexible as the market settles.

Short-term CDs provide the dependability and flexibility you want now

I recommend a short-term CD in the interim. With one, you'll have all the benefits you come to love about CDs, with quick access to your cash.

They work best if you have an emergency fund already established and don't need to touch your money during the term. If you have to break it open for any reason, you'll lose some of your earnings to early termination fees. Thankfully, with terms that accommodate all savings goals, you can find the best fit for your goals and cash flow.

Use this Bankrate tool to shop for and compare the best CD rates quickly:

Having quick access to your cash is important because if inflation continues to creep back up, you might want to revisit where you invest your cash when the CD matures. And if the Federal Reserve decides to hike rates later this year, it places you in an excellent position to capitalize on higher returns.

Does waiting really make that big of an impact?

Timing matters when choosing the right savings account. And knowing when to lock in a long-term CD can be the difference between earning hundreds to thousands of dollars more.

To demonstrate, say you locked in a $50,000 five-year CD at 4.00%. You'll earn $10,832.65. However, if you wait a few months and the Fed hikes rates, you could have access to higher returns. A five-year CD at 4.25% APY will earn you $11,567.33, a difference of almost $735, just for waiting a few months.

That's pretty significant, and it's one of the reasons why I would wait on a longer-term CD. On the other side of the coin, you might be thinking, well, would waiting hurt me? After all, what happens if CD rates drop in the interim?

Rest assured, I don't see that happening any time soon. I review CD rates biweekly and have found that some banks have raised CD rates. Here are some of the ones I found recently that rose:

And with inflation so high, cutting the federal funds rate would not be a sound strategy to curb rising costs. While waiting carries the risk of returns remaining flat, the potential upside of a higher rate makes this strategy a smart move in this environment.

Ultimately, short-term CDs are the better play right now. They provide a safe place to park your cash while the economic landscape settles, without locking you into a long-term commitment. By prioritizing terms that keep your money accessible, you're not just earning a competitive term — you're maintaining the flexibility to pivot as soon as better opportunities arise.

Related content

• Where's the Best Place to Store $10k Now?
• Best CD Rates — Earn Up to 4.35%
• Iran Conflict Boosts Inflation Threat

When you move — whether upgrading, relocating for work or inheriting a family property — you're often left with a deceptively complex decision: Should you keep the home and rent it or sell and move on?

At its core, the rent-vs-sell decision comes down to a fundamental trade-off.

• Renting the property offers the potential for ongoing income and continued exposure to long-term appreciation. It could also provide flexibility, whether as a future residence, a home for family members or a legacy asset.
• Selling the home delivers immediate liquidity, simplifies your financial life and allows you to redeploy capital more efficiently.

Neither approach is inherently superior; the right decision depends on which trade-offs align with your broader financial plan.

A logical starting point is to evaluate the potential return of the property, but that requires defining return correctly. Many homeowners focus on gross rental income and quickly conclude that the property is cash flow positive.

In reality, what matters is net rental yield after accounting for all operating costs, including vacancy, maintenance, property taxes, insurance and management fees if applicable. Once these costs are included, the expected return is often significantly lower than initial assumptions.

Consider a simple illustration. A home valued at $600,000 might rent for $2,500 per month, generating $30,000 annually in gross income. After factoring in vacancy, repairs, insurance, property taxes and potential management costs, the net cash flow might fall in the range of $16,000 to $18,000 per year, implying a net yield of roughly 3%.

By contrast, selling the property and investing $600,000 in a diversified portfolio earning 5% annually would produce about $30,000 per year before taxes.

This comparison is not to suggest that one outcome is inherently better, but rather to highlight that rental property should be evaluated as a net return on capital, not simply as an income stream.

Look at the entire financial impact

Beyond return, risk and portfolio concentration deserve careful consideration. Many homeowners who keep a former residence while purchasing a new one end up with a significant portion of their net worth tied up in residential real estate, often within a single geographic market.

Selling reduces that concentration and converts an illiquid asset into liquid capital that can be diversified or used to fund other financial priorities. Renting preserves the exposure to real estate, which might provide an inflation hedge and long-term appreciation potential, but it also limits liquidity and flexibility.

Taxes are another area in which the decision becomes more nuanced, and many homeowners underestimate the long-term implications.

One of the most valuable tax benefits available to homeowners is the capital gains exclusion under Internal Revenue Code Section 121. If you meet the ownership and use requirements — generally, having lived in the home as a primary residence for at least two of the last five years — you can exclude up to $250,000 of gain if single or $500,000 if married filing jointly.

This benefit can meaningfully reduce or eliminate the tax cost of selling.

That exclusion is tied to timing. Many homeowners have a limited window after moving out during which they can rent the property and still qualify for the exclusion if they sell within the applicable five-year lookback period.

This creates a viable hybrid strategy in some cases: Rent the home temporarily while preserving the option to sell tax-efficiently.

About depreciation

Once a home is converted to a rental, depreciation becomes a key factor. The IRS generally allows the building portion of a rental property to be depreciated over 27.5 years, creating annual deductions that can reduce taxable income.

While this can be a meaningful short-term tax benefit, it also introduces a future cost. When the property is ultimately sold, the portion of gain attributable to depreciation is subject to what's referred to as unrecaptured Section 1250 gain, which is taxed at rates of up to 25%.

A simple example illustrates the point. Assume that $400,000 of a home's value is attributed to the building and the property is rented for five years. Straight-line depreciation over that period would total about $72,700.

At the time of sale, that amount is generally subject to tax at a rate of up to 25%, resulting in a potential federal tax liability of roughly $18,000 on that portion alone.

Perhaps more important, this depreciation-related gain typically can't be excluded under the home-sale exclusion, even if other portions of the gain qualify. For many homeowners, this creates an unexpected tax bill that offsets some of the perceived benefits of renting.

Another misunderstood area

Rental losses are another area that's often misunderstood. While depreciation and other expenses can create tax losses on paper, rental real estate is generally considered a passive activity for tax purposes. As a result, those losses typically can't offset wages or other active income.

There is a limited exception that might allow up to $25,000 of rental losses to offset ordinary income for certain taxpayers who actively participate in the property, but this benefit phases out as income increases.

Losses that can't be used currently are generally carried forward, which means the tax benefit might be delayed rather than eliminated.

Consider the big picture

While financial and tax considerations are central to the decision, don't overlook the lifestyle component. Even with professional management, the owner remains responsible for key decisions, oversight and the financial consequences of vacancies and repairs.

Cash flow isn't guaranteed, and expenses tend to be unpredictable rather than smooth. A useful way to frame this consideration is to ask whether you're comfortable taking on what is effectively a part-time role as a property owner, particularly if you're approaching or already in retirement.

Given the range of factors involved, a structured decision framework can help bring clarity. The most important questions tend to be straightforward:

• Do you need the proceeds from a sale to fund your next financial goal, such as purchasing a new home or strengthening your balance sheet?
• Are you willing to take on the responsibilities of owning and managing a rental property, either directly or through a third party?
• What is the realistic net return after all expenses, rather than the optimistic projection based on gross rent?
• How important are simplicity and flexibility at this stage of your life?

Both renting and selling can be appropriate and financially sound decisions when aligned with broader goals.

• Renting can provide income and long-term appreciation potential, but it introduces complexity, variability and future tax considerations that are often underestimated.
• Selling offers immediate liquidity, simplicity and the opportunity to lock in favorable tax treatment, but it means giving up future real estate exposure and potential rental income.

Content in this material is for general information only and is not intended to provide individualized tax or legal advice. Discuss your specific situation with a qualified tax or legal professional.

Related Content

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• I'm Retired and Hate Being a Landlord. Should I Sell My Rental Property?
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• Why More Seniors Are Renting – And Is It Really a Better Alternative to Downsizing?
• Social Security Fairness Act: Five Financial Planning Issues to Revisit

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.

Retiring with a traditional pension is a financial win, putting you among the lucky minority of Americans with such income. But your most important decision is still ahead of you. If your employer asks you to choose between guaranteed monthly checks and a lump-sum cash buyout, opting for the wrong payment type could cost you thousands over your lifetime.

"Everyone's situation is a little different," says Thrivent Financial Advisor Jason Rogoff. "You have to analyze the situation and look at what other assets people have, what other streams of income, their age and health."

When it comes to pension payouts, some rules may impact the decision-making process. For example, with many pensions, payouts end with the spouse, so they can't be passed on to the children. Meanwhile, the majority of private pensions don't account for inflation with a cost-of-living adjustment (COLA). Then there are tax treatments and investment choices to worry about.

Since there are so many moving parts, it's important to put yourself through the paces before selecting a payout. To help you decide, answer these three questions first.

1. Do your guaranteed income sources already cover your monthly bills?

A peaceful retirement is one where you don't have to worry about paying the bills. The rent is covered, there's food in the fridge and the lights are on. Rogoff says retirees get that peace of mind through guaranteed income, and if they don't have enough of that, annutizing a pension may be a way to create it.

"I like to have a guaranteed source of income for my clients over things like housing, utilities, healthcare and food," says Rogoff. "One of the first questions people should ask is, do I have enough guaranteed income, or do I need more? '"

To determine if you have enough guaranteed income, add up all your monthly expenses and subtract them from your guaranteed monthly income before your pension. If you face a shortfall, Rogoff said it may be better to take lifetime monthly payments to ensure your expenses are covered.

There are downsides to getting paid monthly for your lifetime, including:

• Inflation: Most private pension payments are fixed with no inflation protection. (Public plans usually do offer a COLA.)
• Liquidity: You can't pull out more money for a one-time emergency.
• Stability: Payouts depend on the plan's stability and may be reduced. The federal government's Pension Benefit Guaranty Corporation (PBGC) acts as an insurer of private pensions and will step in if a pension fails. All 50 states offer some form of protection for public pensions.
• Heritability: The benefit often ends with the spouse. You typically can't pass it on to your children.
• Tax complications: If your monthly benefit is significant, it may push you into a higher tax bracket over several years, especially if you'll have to take required minimum distributions (RMDs) at 73 or 75.
• Hybrid options: You may not have to make an all-or-nothing decision, as some pensions allow you to divide your benefit into a lump sum and monthly checks.

2. Are you comfortable managing an investment portfolio through market ups and downs?

When you take a lump sum payout from your pension, your employer pays you an amount that is typically calculated by estimating the present value of all your future monthly checks using IRS interest rates and life expectancy tables. You give up a guaranteed monthly income for life and shift all the investment risk onto yourself. But in return, you get complete control over your money and full investment flexibility.

That can be scary for some retirees and exciting for others. Knowing your level of comfort with investing and the markets is essential in making the right decision. After all, if you take the lump sum and select to roll it into an IRA, you will have to decide what to invest in and when to sell. There is also the potential for it to grow more in the markets than if you chose a fixed monthly payout over your lifetime.

"If you have financial sophistication and don't mind dealing with risk, it may be wisest to take the lump sum," said Jeffrey Smith, owner of The Retirement Smith, a financial advisory firm.

Keep in mind that if you take the lump sum and don't roll it into an IRA, it will be treated as ordinary income and subject to taxes, including a 20% withholding by your employer in certain circumstances.

3. Is leaving an inheritance important, and how is your health?

Your health and legacy goals must be considered in lockstep when deciding how to receive your pension payments. After all, your guaranteed monthly pension payments are tied to your life expectancy; for many pensions, the checks stop coming once you pass away.

If protecting your spouse is of utmost importance and there is a significant age gap, a monthly payout with a joint-and-survivor option may be the better choice. It guarantees your spouse continues to get paid after you are gone. Keep in mind that selecting that option typically reduces your monthly benefit.

Note that if a married person wants to take a lump sum or a single-life annuity (cutting out the spouse), the spouse must sign a waiver.

Installment payments may also be the better option if everyone in your family lives well into their 90s, as it guarantees you won't outlive your money. But it also means once you and your spouse are gone, your kids won't see a dime. So if legacy is more important than protecting a spouse, a lump-sum payout that you can invest and leave to your children may be the better option.

No two retirements are the same

Whether to choose a lump-sum payout or guaranteed monthly income over your lifetime will depend on your cash flow, health, legacy and financial sophistication. What makes total sense for one person may seem completely wrong for another.

Before you make a decision that you can't take back, weigh all your options, answer these three questions, and if you are still unsure, seek the help of a trusted adviser. Remember, you are among the lucky ones to still have a pension — make sure you are getting the most out of it for you and your family.

Read More "3 Questions" Stories

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
• 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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• Should You Retire Now or Work Five More Years?
• Afraid to Dip Into Your Savings? 8 Guilt-Free Ways to Finally Enjoy Your Retirement
• 9 Upgrades That Transform Your Family Home Into a Retirement Oasis
• 6 Strategic Moves to Keep Growing Your Wealth After You Retire

One of the first questions many people ask after learning they’ll receive an inheritance is: "Will I owe taxes?"

It’s an understandable worry. Taxes can be confusing, especially during an already emotional time when someone has passed away. But there is some good news — receiving an inheritance doesn’t automatically mean you’ll owe taxes to the IRS.

That's because for most people, the inheritance itself isn’t a taxable event. Whether you owe anything depends on what you inherit, where you live, and whether those assets later produce income or are sold.

Still, before you decide what to do next, it helps to understand which tax rules might apply to your situation and when. Here's more to know.

Do you owe taxes on an inheritance?

When you first inherit money or property, your instinct might be to prepare for a heavy tax bill on your next federal income tax return. It's a natural concern, but the IRS actually treats inheritances with a surprising amount of grace.

As a general rule, the federal government doesn't handle inherited assets as taxable income.

Simply receiving cash, a house, a stock portfolio, or other property won't trigger an automatic tax event or change your baseline tax situation for the year. In most cases, you aren't required to report the initial inheritance on your federal return.

Where tax responsibilities tend to enter the picture is not from the gift itself. The inheritance itself is generally a "clean slate," so to speak; what you choose to do with those assets is what determines which tax rules may apply.

Different inherited assets come with different tax rules

If you inherit cash: For most people, inheriting cash doesn’t create a federal income tax bill. That's because, as mentioned, the inheritance itself isn’t taxable. But any income it earns afterward might be.

For example, if you deposit inherited money into a high-yield savings account, any interest you earn is generally taxable. The same applies if you invest the money and later receive dividends or realize capital gains.

If you inherit a house: Inheriting a home generally isn’t a taxable event. If you later sell the property, however, capital gains tax rules may apply.

That’s where the tax picture can start to change.

• Most inherited homes receive a stepped-up basis, which adjusts the property’s value to its fair market value at the time of the owner’s death.
• That can reduce the amount of taxable gain if you later sell the home.

For example, if you inherit a home worth $400,000 and later sell it for about that amount, you may owe little or no capital gains tax. If the home’s value increases after you inherit it, you may owe tax only on the appreciation that occurs after the inheritance.*

*This is a simplified example solely for educational purposes. Consult a trusted financial professional to help determine possible capital gains tax liability if you plan to sell an inherited home.

If you inherit stocks or investments: Stocks, mutual funds, and other investments generally aren’t taxable when you inherit them.

Much like inherited real estate, inherited stocks, mutual funds and other investments generally receive a stepped-up cost basis. If you sell them later, you may owe capital gains tax only on the appreciation that occurs after you inherited the assets.

If you inherit an IRA or retirement account: Inherited retirement accounts follow different tax rules than most other inherited assets.

While inheriting the account itself usually isn’t taxable, withdrawals often are. The rules depend on your relationship to the original account owner, the type of retirement account, and other factors.

• For example, distributions from an inherited traditional IRA are generally taxable, while qualified withdrawals from an inherited Roth IRA are typically tax-free.
• However, even though inherited Roth IRA distributions aren't taxed, most non-spouse beneficiaries are required under the SECURE 2.0 Act to withdraw all funds from the account within 10 years.

Because inherited retirement account rules can be complex, it’s important to understand these distribution timelines before taking money out and to consult a trusted tax advisor who knows your individual circumstances.

Common inherited assets and when taxes may apply

State inheritance taxes

Although there is no federal inheritance tax, a handful of states impose an inheritance tax paid directly by the beneficiary.

(Note: This is separate from a state estate tax, which is paid from the deceased person’s estate before assets are distributed.)

Whether you’ll owe state inheritance tax depends on where the deceased lived or owned property and your relationship to them — spouses and close relatives are often exempt.

If you’re unsure whether your state imposes an inheritance tax, our guide might help, but also consult a trusted tax professional or financial planner since every beneficiary's situation is different.

Keep in mind: Whether you’ll owe an inheritance tax largely depends on the state involved and your relationship to the deceased.

Frequently asked questions about inheritance taxes

Even though most inheritances aren’t subject to federal income tax, there are a few situations that can confuse beneficiaries.

Can you owe taxes years after receiving an inheritance?

Yes. While the inheritance itself usually isn’t taxable, you may owe taxes later if inherited assets earn interest or dividends, appreciate before you sell them, or require taxable withdrawals from a retirement account.

Does every state tax inheritances?

No. Only a handful of states impose an inheritance tax, and many exempt spouses and other close relatives. In most states, beneficiaries don’t owe a state inheritance tax.

Should you talk to a tax professional?

If you inherit a retirement account, real estate, a business, or other high-value assets, a qualified tax professional can help you understand how federal and state tax rules apply to your situation.

You can also find additional guidance in IRS Publication 559, Survivors, Executors, and Administrators, which explains the tax responsibilities of beneficiaries, executors, and estates.

Related

• Inherited an IRA? Key Distribution Rules to Know
• States That Won’t Tax Your Death
• Estate Tax vs Inheritance Tax: Who Actually Pays the Bill?
• Filing a Deceased Person's Final Income Tax Return

As affordability issues continue to plague the housing market, many homeowners are choosing to make changes to their home rather than their address to get the living space they need.

According to a recent survey from Citizens Financial Group, nearly half of homeowners now say that renovating their house is the most realistic financial option for their family — compared with just 13% who plan to buy a new home — and seven in 10 expect to complete a remodeling project in the next two years.

"They can’t find another place to go," says Linda Kody, a broker with Kody & Company in North Andover, Mass. "They love their neighborhood, and they want a home exactly the way that they want it."

The boom in renovations makes sense given the current state of the housing market. Home prices have jumped 54% since 2020, according to the Joint Center for Housing Studies at Harvard University.

Meanwhile, with mortgage interest rates hovering between 6% and 6.5% lately, many homeowners are reluctant to give up the 3% to 4% loans they scored before rates began climbing a few years ago. The resulting lack of inventory — there are 17% fewer homes for sale now than before the pandemic — also means there are fewer options available for those who want to move.

If you're among the many homeowners contemplating a remodeling project in the next year or two, these strategies can help you decide which projects to tackle and how to keep costs manageable.

Choose renovations strategically.

Start by thinking about your immediate maintenance needs and the functionality required for your lifestyle. If you're planning to stay in the house through retirement, for instance, consider adding design elements, such as a walk-in shower or zero-step entryway, that will make living there easier as you get older.

"The risk of having to move later can be significantly reduced if you prepare your home in advance," says Louis Tenenbaum, president and CEO of HomeRenewed Ventures, a Washington, D.C., firm that offers consulting services for homeowners to age in place.

Tenenbaum recommends completing as many necessary projects as possible simultaneously, because trying to remodel in stages as health and mobility challenges arise ends up being more expensive and stressful. Basic upgrades and repairs, such as replacing old wiring or fixing a leaky roof, also help your home retain its value and reduce maintenance costs in the future.

After that, look at high-use areas such as kitchens and bathrooms. If resale value is important to you, focus on projects that will allow you to recoup a big chunk of your costs.

Recently, that included exterior upgrades (such as replacing garage doors or upgrading siding), minor kitchen remodels and installing a backup power generator, according to Zonda, a home-building data and marketing company.

Keep spending in check.

For larger projects, Alan Archuleta, CEO and president of Archuleta Builders in Morristown, N.J., recommends starting with an architect or design firm with experience in your municipality. Rates for this type of work vary depending on scope, but the average is about $6,600, according to HomeAdvisor.

"The architects and towns dictate what you can and can't do to a home, from a zoning standpoint or an actual structural standpoint," Archuleta explains.

Get quotes from at least three contractors, and ask for itemized bids that spell out costs. Then, add an extra 20% to your budget to allow for surprise expenses, such as water damage or structural repairs, especially in older homes. "Remodeling often prompts code upgrades that would not otherwise be required," says Mari Adam, a certified financial planner in Boca Raton, Fla.

You can lower costs further by opting for midrange fixtures and materials, which balance quality and costs. If you can be flexible with your project’s timing, you may also find better contractor availability and pricing.

"The smartest approach right now is to renovate with intention, rather than rushing into a project," says Elizabeth Gomez, owner of Bridge City Contracting in Portland, Ore.

If you're planning a major renovation, comparing today's refinance rates could help you determine whether tapping your home's equity makes sense for your budget.

Use the Bankrate tool below to compare some of today's top refinance offers:

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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Many investors are struggling to find the right balancing act in the current market environment.

U.S. equity markets continue pushing to new all-time highs despite persistent inflation, elevated valuations, geopolitical uncertainty and higher interest rates.

These risks can make investors uncomfortable as markets rise and fall — sometimes in the same trading session.

But history suggests that all-time highs alone aren't a reason to step away, and new ETFs that help investors stay invested through highs and lows are growing in popularity.

Markets rise

New market highs tend to cluster together during prolonged bull markets.

From 1989 to 2000, the S&P 500 reached a new all-time high roughly every nine trading days. From 2013 to 2022, it was every eight trading days.

In 2026, it has hit a new all-time high over 20 times as of June — roughly once every five to six days.

Still, many investors have chosen the perceived safety of cash. According to the Investment Company Institute, assets in money market funds stood at $7.9 trillion as of July 22.

These investors have missed out on significant upside and may continue to do so. But at the same time, they cannot afford to ignore the downside risks markets currently present.

Markets also decline

Significant market declines can delay retirement, force spending changes or derail major goals like buying a home or affording higher education for children.

Declines can also undergo long periods: Look at the NASDAQ-100. It took nearly 15 years (March 20, 2000, to April 23, 2015) to fully recover from its prior peak after the tech bubble.

Many investors don't have that kind of recovery horizon, creating tension between participating in market growth and managing downside risk. It's a key challenge, but remaining on the sidelines doesn't have to be the answer.

This is where defined outcome ETFs, designed to help investors navigate unease and return to the market, can be one solution.

What are defined outcome ETFs?

Defined outcome ETFs seek to provide investors with equity market participation while limiting an initial level of losses over a specified outcome period, typically in exchange for reduced upside potential.

With strategies available across different underlying assets, protection levels and growth-oriented objectives, investors can choose an approach that best reflects their individual goals and time horizon.

While the market's direction will remain uncertain, having clearer parameters around potential gains and losses may provide the confidence needed to stay invested when volatility rises.

Defined outcome ETFs may be particularly relevant for investors approaching a major financial transition, such as retirement, who still need equity growth but have less capacity to recover from a significant drawdown.

Two defined outcome-oriented ETF approaches that have gained traction in today's environment are buffer ETFs and managed floor ETFs.

Buffer ETFs: Participate in market gains with a defined buffer against losses

Buffer ETFs may appeal to investors who want to maintain market exposure while seeking protection against an initial portion of losses over a specified period.

Typically tracking an underlying index like the S&P 500, Nasdaq-100 or Russell 2000, these ETFs provide participation in the index's gains up to a predetermined cap.

Common buffer levels (or standard amounts of downside protection) are 9%, 15%, 20% or 30% over a defined period, often three, six or 12 months. This means that if the index declines by less than the stated buffer over the outcome period, the ETF is designed to absorb that loss; if the decline exceeds the buffer, the investor remains exposed to losses beyond it.

The tradeoff is that buffer ETFs cap how much of an index's gains an investor can capture. For example, if the ETF has a 10% cap, and the index rises 13% over the outcome period, the investor's return would be limited to 10%, before fees and expenses.

These ETFs are often used for assets tied to shorter-term spending needs, frequently serving as an alternative for capital that may be needed within the next one to three years.

Managed floor ETFs: Stay invested with a built-in floor against declines

Managed floor ETFs, on the other hand, may appeal to investors who still need long-term equity growth potential but desire a strategy that is designed to reduce the impact of a severe market decline.

Unlike buffer ETFs, which seek to absorb an initial portion of losses over a defined period, managed floor ETFs are generally designed to tolerate shallow declines and step in with greater protection when markets begin to fall more sharply.

The strategy combines equity exposure with an options overlay intended to hedge against deeper losses while often maintaining meaningful upside potential.

The options positions are laddered across different expiration dates and renewed systematically. As a result, the fund's effective floor can change over time and may be higher or lower than its approximate target at any particular point.

Tradeoffs? Because the floor is maintained through active decisions rather than a fixed contract, protection can vary; the fund may still be repositioning when a rebound starts, missing part of the upside.

These funds also tend to carry higher costs and offer less predictability than buffer ETFs.

Don't want to pick a market movement side? Consider managing tension

Buffer ETFs provide defined protection over a set period in exchange for a capped upside. Managed floor ETFs take a different approach, seeking to limit deeper losses while often maintaining meaningful participation when markets rise.

Neither ETF eliminates risk nor replaces a financial plan created around specific goals and timelines.

But both offer a way to stay invested with more clarity about what's protected and possible rather than an all-or-nothing approach to market risk.

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• How to Invest in ETFs for Beginners
• The Best Hedged ETFs for Lower-Risk Investors and Retirees
• The Best ETFs to Buy and Hold for the Long Term
• The Best All-in-One ETFs to Keep Your Investment Portfolio Simple
• How to Use the Dividend Barbell Rule in Retirement With ETFs

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.

You’ve spent 30 or 40 years mastering the art of saving; it's now time to master the art of spending. You built the budget, made the trade-offs and watched your nest egg grow. But now that you’ve reached the finish line, turning off "saving mode" can feel surprisingly unnatural.

If the thought of spending down your hard-earned portfolio causes a pang of anxiety, you aren't alone — in fact, most retirees spend far less than they safely can, shortchanging the very lifestyle they sacrificed to build.

This 10-question quiz is designed to help you identify the subtle psychological traps that keep retirees in perpetual saving mode. Take a few minutes to test your knowledge, unpack the financial mindset holding you back, and learn how to spend with confidence. You earned this life — it’s time to enjoy it.

Follow the links below to learn more about safely spending in retirement without guilt.

More on overcoming the fear of spending:

• The Average Retirement Withdrawal Rate by Age
• Are You a Retirement Millionaire Too Afraid to Spend?
• Master the Art of Spending in Retirement
• The 'Permission to Spend' Rules of Retirement Spending
• Average IRA Balance by Age and Generation
• The 'Die With Zero' Rule of Retirement

I'll start with what you already know: Index funds, with portfolios determined by computer algorithms to reflect categories of stocks and bonds, have a much better track record than funds whose stocks and bonds are selected by human beings — so-called actively managed funds.

Over the 10 years ending December 31, 2025, research firm Morningstar calculates, only 3.6% of active large-capitalization growth funds have beaten the average index fund in the same category.

I enthusiastically endorsed index funds in the 1999 book I coauthored, Dow 36,000, and I have advocated them ever since.

Investors have caught on. In 2010, index securities held just 19% of the total assets in mutual funds and exchange-traded funds (ETFs); at the end of 2025, the figure was 52%. For funds that own U.S. stocks, index funds now hold 63% of assets.

Index funds took off after Vanguard aggressively cut fees and other fund houses followed suit. The Vanguard S&P 500 ETF (VOO), with $1.7 trillion in assets, has an expense ratio of just 0.03%, or $30 a year for a $100,000 investment. The iShares Core S&P 500 ETF (IVV) levies the same fee, and mutual fund Fidelity 500 Index (FXAIX) charges just 0.015%. That compares with about 1%, on average, for managed funds, according to the Investment Company Institute (PDF). (Prices, returns and other data are through June 30 unless otherwise noted; stocks and funds I like are in bold.)

So why not join the crowd? Is there a reason to own actively managed funds? Yes — two.

The first is that an index fund, by definition, will never beat its index after expenses. An active fund has a shot. Second, choosing an active fund and rooting it on is one of the thrills of investing.

In search of the best actively managed fund

Some mutual funds do beat the indexes. In 1996, I set out to find America's best mutual fund. I was seeking a diversified U.S. large-company stock fund with great long-term returns, comfortable risk levels, a decent expense ratio and strong prospects.

My choice then is my choice today: Fidelity Contrafund (FCNTX), which has returned an annual average of 18.2% over the past 10 years, compared with 15.5% for the S&P 500 index. Contrafund has beaten a majority of funds (including index funds) in its category for five calendar years in a row and so far in 2026.

The fund may have started with a contrarian bent, as the name implies, but it's now a large-cap growth fund. Will Danoff, who has managed or co-managed Contrafund for 36 years, has the courage of his convictions. He'll retire at the end of the year, but I'm optimistic about the two veteran Fidelity managers who will succeed him, and the firm has a deep bench of analysts.

Contrafund first added Nvidia (NVDA) to its portfolio in 2016, and it's now the fund's top asset. Danoff bought Alphabet (GOOGL) in 2004 when it went public. Lately, he has been trimming technology stocks, especially Meta Platforms (META) and Microsoft (MSFT), and the sector represents a smaller proportion of Contrafund's portfolio than it does of the S&P 500.

Contrafund has whipped the index while charging expenses of 0.74%, which is more than 20 times what Vanguard's S&P 500 ETF charges but still relatively low for an actively managed fund. (Funds with people doing the picking are more expensive to run than index funds — after all, computers don't need health insurance.)

If you believe that stocks are priced efficiently — the price of a stock being a reflection of everything that's known today about a company's future prospects — then beating the performance of a market index is undoubtedly difficult. Throw in the expense differential, and active managers would seem to have an impossible task.

Also, when a fund does beat the index, it could be luck. In an experiment, S&P Global, a major compiler of indexes, found that 336 actively managed funds were in the top half of a universe of more than 1,000 funds after a year. But after two years, just 81 of those active funds were still in the top half; after four years, 43.

A rich legacy for active funds

How do you find the favored few? I look for managers who have a long track record, a taste for bucking the market, and the bravery to buy and hold. It's true that many of the great managers of yesteryear are gone, but in some cases their funds and investing strategies live on.

Take Philip Carret, who founded the Pioneer Fund in 1928 and ran it through his retirement in 1983. Carret, a bargain hunter, died in 2003 at age 101, but his fund today, now called Victory Pioneer (PIODX), has beaten Morningstar's large-cap blend benchmark (a mix of growth and value stocks) in a majority of the past 10 years and so far in 2026. The fund comes with a sales charge, but you can find it load-free at Schwab, E*Trade and perhaps other platforms. The expense ratio is 0.92%.

The fund has lately been adding to its holdings of United Parcel Service (UPS), one of the components of my Top 30, and NRG Energy (NRG), a Houston-based fossil-fuel and renewables power company whose shares have nearly quadrupled in five years as demand for electricity has taken off.

I have always liked mutual funds named and managed by their founders. Upholding a family reputation is good discipline. Many of these are now run by family members. A good example is Davis New York Venture (NYVTX), co-managed by Christopher Cullom Davis, who took over from his founding father, Shelby, in 1995. You can find it load-free at Fidelity, Schwab and E*Trade; the expense ratio is 0.91%.

The fund has ranked in the top half of its peer group (currently large-cap value funds) in seven of the past 10 years, outpacing the S&P 500 Value Index by 1.4 percentage points annualized over the past decade.

The Davis fund is light on technology and heavy on financial services, including its top holding, Capital One Financial (COF), which specializes in credit cards, both under its own brand and that of several leading retailers. Research firm Value Line forecasts the stock's earnings will rise by an average of 13.5% annually for the next five years.

With his son Michael, founder Ron Baron still co-manages Baron Partners (BPTRX), which has had a spectacular decade, beating the S&P 500 by an annual average of more than nine points, again despite high fees. The portfolio is highly concentrated: just 23 stocks, with Tesla (TSLA) the top holding at nearly one-fourth of assets. But that kind of conviction is how a manger beats an index.

Similarly, Baron Focused Growth (BFGFX), also managed by father and son, is in the top 2% of its category (mid-cap growth), returning an annual average of 21.5% over 10 years.

Want more evidence that stock pickers can whip computers? Look to small-cap funds. Both Oberweis Small-Cap Opportunities (OBSOX), another fund managed by a member of the founding family, and T. Rowe Price Small-Cap Value (PRSVX), managed by J. David Wagner for the past 12 years, have been beating their respective target indexes.

So have three funds that are currently closed to new investors but may reopen, so keep an eye on them: Harbor Small-Cap Growth (HISGX); Invesco Discovery (OPOCX), which has returned nearly 39% so far in 2026; and Fidelity Small-Cap Growth (FCPGX), in the top half of its category for nine of the past 10 years.

Of course, you should own index funds, but owning funds managed by smart people is not as crazy as many investors think. The legendary John Bogle, the late Vanguard CEO, called such investing akin to a second marriage: the triumph of hope over experience. Actually, many second marriages do work out — and so do managed funds.

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

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

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In July, Morningstar published a column, "These 15 Funds Cost Investors Billions Over the Last Decade." The list was revealing. Many of the biggest wealth destroyers were inverse ETFs, products designed to deliver one, two or three times the inverse daily return of a market benchmark.

Among the funds highlighted were ETFs betting against semiconductor stocks, the S&P 500 and the Nasdaq-100, often with leverage. Given the strong performance of U.S. equities over much of the past decade, these strategies proved costly for investors.

Also appearing on the list were leveraged long ETFs tied to particularly volatile non-equity assets. Products seeking to triple the daily return of long-term 20-year U.S. Treasury bonds and natural gas futures struggled as their underlying markets performed poorly, with the effects of daily leverage compounding further eroding long-term returns.

The list also included several thematic ETFs. Unlike broad market index funds, thematic ETFs focus on a narrow investment idea or emerging trend that cuts across industries. Morningstar's list included funds concentrated in Chinese internet companies, as well as two innovation-focused ETFs from ARK Invest.

While every investment carries risk, the list also highlights several characteristics that investors may wish to avoid when building long-term wealth.

Many of the funds charged relatively high fees, concentrated their holdings in a small number of stocks or sectors or relied on leverage and derivatives such as options that were designed for short-term trading rather than long-term compounding.

Finding ETFs with a greater likelihood of building wealth over time can therefore be as much about avoiding these characteristics as identifying attractive investments.

What does it mean to build wealth over the long term?

For most investors, the best chance of building wealth over the long term is by owning equities. The reason is the equity risk premium, the additional return that stocks have historically delivered over lower-risk assets such as Treasury bonds and cash.

Share prices fluctuate, recessions occur and companies can fail. Investors are compensated for accepting those risks over long periods.

More importantly, however, the stock market represents ownership in thousands of companies.

Collectively, those businesses strive to sell more products and services to more customers, expand into new markets, improve productivity and earn higher profits.

When you're a shareholder, those profits accrue to you in several ways. Companies can repurchase their own shares, and a stock buyback increases your proportional ownership.

They can distribute profits as dividends, reinvest in new projects, acquire other businesses, reduce debt or simply accumulate cash to strengthen their balance sheets for future opportunities or economic downturns.

This only works consistently, however, if you are sufficiently diversified. A well-diversified portfolio should own companies from countries around the world, represent all 11 sectors recognized by S&P Global and include large, medium and small businesses.

Diversification reduces the impact that any one company, industry or country can have on your long-term outcome.

Even so, investors should remember that the equity risk premium is not earned every year, or even every decade.

There have been extended periods, such as from 1999 through 2009, when stocks underperformed bonds and, after accounting for inflation, generated disappointing real returns.

Building wealth through equities is rarely a straight line. It's a process of compounding over many years rather than getting rich quickly.

How to use ETFs to build wealth over the long term

Simply staying invested in equities is only half of the journey. The remaining portion comes down to a handful of good investing habits.

First, keep fees as low as possible. Every dollar paid in management fees is one less dollar left to compound over time. Even seemingly small differences in expense ratios can have a meaningful impact when compounded over decades.

Second, reinvest your dividends whenever possible. Dividends have historically accounted for a significant portion of total equity returns. Reinvesting those cash payments allows you to purchase additional shares, which in turn generate future dividends of their own, creating a compounding snowball effect.

Third, pay attention to taxes. Dividend distributions received in taxable accounts generally create taxable income, and selling ETF shares can trigger capital gains taxes.

Whenever possible, investors should take advantage of tax-advantaged accounts for long-term investments. In taxable accounts, avoid unnecessary trading and allow capital gains to remain unrealized.

Finally, low costs, broad diversification, ample liquidity and disciplined portfolio construction have historically stacked the odds more favorably for investors.

Based on these factors, here are five ETFs that stand out for their ability to build wealth over the long term.

Vanguard Total World Stock ETF

• Inception date: June 2008
• Expense ratio: 0.06%
• Assets under management: $77.6 billion
• 30-day median bid-ask spread: 0.01%

If building wealth over the long term is largely about capturing global economic growth, then few ETFs accomplish that as comprehensively as the Vanguard Total World Stock ETF (VT).

Rather than attempting to identify the next winning country, sector or stock, the VT simply owns nearly the entire investable global stock market. That removes many of the active decisions investors often get wrong.

The ETF tracks the FTSE Global All Cap Index, providing exposure to more than 10,000 stocks across the U.S., developed international markets and emerging market economies.

The portfolio spans all 11 sectors and includes large-cap stocks, as well as mid caps and small-caps. Each holding is weighted by market cap, allowing the market itself to determine how much each company should represent.

Despite this enormous portfolio, VT is remarkably inexpensive. Its expense ratio is just 0.06%, meaning a $10,000 investment costs approximately $6 annually in fund expenses.

The strategy is also highly efficient. Because VT already owns virtually the entire investable global equity universe, relatively few securities need to be added or removed from the index each year. Portfolio turnover is just 3.4%, reducing unnecessary trading within the fund.

Geographic composition also evolves automatically. Approximately 62% of assets are invested in U.S. companies, reflecting the strong performance of the U.S. stock market over recent decades.

However, those allocations are not fixed. If another region, whether China, India, Europe or another market, grows to represent a larger share of global equity market capitalization, VT will naturally increase its exposure over time without requiring investors to make any tactical allocation decisions.

For long-term VT investors, the job is refreshingly simple: Contribute regularly, reinvest distributions and stay the course while the ETF continuously adapts to changes in the global economy. Over the last 10 years, VT has delivered a 12.8% annualized total return before taxes.

Learn more about VT at the Vanguard provider site.

State Street SPDR Portfolio MSCI Global Stock Market ETF

• Inception date: February 2012
• Expense ratio: 0.08%
• Assets under management: $1.7 billion
• 30-day median bid-ask spread: 0.11%

On paper, the State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM) is somewhat less compelling than VT. It has a shorter operating history, significantly fewer assets under management, a slightly higher expense ratio and a wider bid-ask spread, making it somewhat more expensive to trade.

For investors simply looking for a single global equity ETF, VT generally has the edge. That said, long-term investors, including those who already own VT, may still find SPGM worth keeping on their watch list. The primary reason is tax-loss harvesting.

During a market downturn, an investor holding VT in a taxable brokerage account may choose to sell shares at a loss, realizing a capital loss that can be used to offset capital gains and, if unused, carried forward to future tax years. proceeds can then be reinvested into SPGM without sitting 30 days on the sidelines.

This approach may also avoid the IRS wash sale rule because, despite their similar investment objectives, the two ETFs track different underlying indexes. VT follows the FTSE Global All Cap Index, while SPGM tracks the MSCI ACWI Investable Market Index.

Although the portfolios have substantial overlap, they are based on different benchmark methodologies and therefore may not be considered "substantially identical" under current IRS guidance.

Investors with questions about their specific circumstances should consult a qualified tax professional or financial adviser before implementing a tax-loss harvesting strategy.

Learn more about SPGM at the SPDR provider site.

iShares MSCI World ETF

• Inception date: January 2012
• Expense ratio: 0.24%
• Assets under management: $7.9 billion
• 30-day median bid-ask spread: 0.07%

It's important to remember that the definition of the "world stock market" depends on the benchmark an ETF tracks. Some global indexes include small-cap stocks, while others do not. Likewise, some include emerging markets, whereas others are limited exclusively to developed economies.

Over long investment horizons, these differences can produce meaningfully different results. The reason these benchmarks coexist is that investors have different preferences.

When it comes to global diversification, some investors are hesitant to own emerging markets such as China, India and Brazil. Common concerns include higher volatility, geopolitical tensions, regulatory uncertainty and currency risk.

Whether those concerns ultimately prove justified is less important than choosing an investment strategy you can stick with through both good and bad markets.

If exposure to emerging markets is likely to cause you to abandon a globally diversified portfolio during periods of underperformance, a developed-markets-only approach may be the more practical choice.

The iShares MSCI World ETF (URTH) represents one such compromise. URTH tracks the MSCI World Index, which provides exposure to the U.S., Canada and other developed economies, including Japan, the UK, France, Switzerland, Germany, Australia and the Netherlands.

Compared with VT, the portfolio is less diversified, holding roughly 1,200 large- and mid-cap stocks.

This approach has worked in investors' favor over the past decade. Maintaining a heavier allocation to U.S. equities helped generate a 10-year annualized total return of 13.4%, outperforming VT despite charging a meaningfully higher expense ratio.

Learn more about URTH at the iShares provider site.

Dimensional World Equity ETF

• Inception date: September 2023
• Expense ratio: 0.24%
• Assets under management: $1.6 billion
• 30-day median bid-ask spread: 0.11%

Index investing has earned its reputation for a reason. By tracking a benchmark rather than attempting to outguess the market, index ETFs typically offer low fees, broad diversification and excellent tax efficiency. But active ETFs have closed much of that gap.

The Dimensional World Equity ETF (DFAW) is a good example. Despite its relatively short track record, the ETF is managed by Dimensional Fund Advisors, a firm with decades of experience in factor-based investing.

Rather than weighting companies purely by market cap, factor investing systematically emphasizes characteristics that academic research has historically associated with higher expected returns. In Dimensional's case, that means tilting the portfolio toward smaller companies, value stocks and higher profitability.

DFAW is not an actively managed ETF in the traditional stock-picking sense. Dimensional uses its own quantitative models to determine which securities to own and when to rebalance them.

The firm applies its own rules-based process with the goal of retaining many of the benefits of indexing, including diversification, transparency and relatively low turnover.

Its approach seeks to avoid drawbacks of traditional indexes, such as predictable reconstitutions that can invite front-running and concentration that naturally develops in market cap-weighted benchmarks. The ETF is also competitively priced, charging a 0.24% expense ratio, identical to URTH.

While its live performance history is understandably limited following its 2023 launch, DFAW has gotten off to a strong start. For the one-year period ending June 30, the fund generated a total return of 25.3%, outperforming the MSCI All Country World Investable Market Index's return of 24.2%.

Learn more about DFAW at the Dimensional provider site.

Avantis All Equity Markets ETF

• Inception date: September 2022
• Expense ratio: 0.23%
• Assets under management: $1.1 billion
• 30-day median bid-ask spread: 0.11%

One potential risk of active management is style drift. An ETF's investment approach can gradually evolve as portfolio managers leave the firm or the quantitative models underlying the strategy are updated.

Over time, these changes can result in a portfolio that differs meaningfully from what investors originally purchased, with corresponding effects on long-term performance.

The best defense against style drift is staying informed. Investors should periodically review a fund's prospectus, manager commentaries and shareholder reports to ensure the ETF continues to follow the investment philosophy they originally intended to own.

Another practical approach is to diversify across multiple active managers rather than rely on a single firm's process. Competing directly with Dimensional in this space is Avantis Investors.

Like Dimensional, Avantis employs a transparent, quantitative active investment process designed to preserve many of the advantages of indexing, including diversification, low turnover and transparency. The strategy also tilts toward many of the same factors, notably value, size and profitability.

The Avantis All Equity Markets ETF (AVGE) is Avantis' global equity offering, and it's constructed as a fund of funds. Its expense ratio is comparable to DFAW, making it another competitively priced option for investors seeking an actively managed global portfolio.

For the three-year period ending June 30, AVGE delivered an annualized total return of 20.4%, outperforming the MSCI All Country World Investable Market Index, which returned 19.5% annualized over the same period.

Learn more about AVGE at the Avantis provider site.

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Digital payments refer to any transactions where money moves electronically rather than in cash. That means credit and debit cards, online bank transfers, e-wallets and mobile payments, such as Apple Pay and Google Pay, as well as Buy Now, Pay Later (BNPL) plans.

Charge cards emerged in the 1950s, followed by mass‑market credit cards in the 1960s and 1970s, and e-commerce in the late 1990s. But cashless payments have become standard over the past decade, since smartphones and contactless cards turned payments into taps.

Here's the problem: When the way we pay changes, the way we think about spending changes, too. And that shift can affect our budgets and long-term financial goals.

The psychology behind spending For decades, paying with cash created a natural pause. You took out your wallet, counted bills, felt them leave your hand and saw the remaining stack of cash get thinner. That small moment activated a real sense of loss and served as a natural check on spending.

Making digital payments with apps such as Venmo and Zelle smooths that friction away. Spending decisions happen faster and with far less thought.

As our spending has moved from bills and coins to cards and phones, we've lost some of those guardrails. The transaction is the same on paper, but it doesn't register in the same way in our minds.

How digital payments make spending feel less real

Cash has weight and texture. Digital money doesn't. That missing weight can quietly change our choices.

Not touching money severs a sensory link between cost and purchase. Without the visual of a thinning wallet, it's easier to misjudge how quickly small buys add up.

Online retailers' checkout flows are designed for near-zero friction. Stored cards, one-click buttons, autofill shipping and express wallets move you from want to "order placed" in seconds.

The design of digital checkouts drives impulse purchases. Convenience is deliberately engineered to keep transactions effortless.

Every tap and swipe is built to eliminate hesitation. The easier they make it to pay, the less time you spend weighing whether you actually need something. That speed is exactly what turns a passing want into a completed sale.

You can see the flip side in ecommerce data: Slow checkouts are the number-one reason shoppers bail, according to research from Baymard, with average cart abandonment hovering around 70%. Businesses remove friction because it works.

With cash, you see less money in your hand. With digital, you see a number in an app sometime later. Autopay and BNPL plans can further blur the picture, spreading the cost out and moving it away from the moment of purchase. In that way, the spending is real… but the sensation is faint.

What this means for your money

When purchases feel easier, two things often follow: Spending creeps up and awareness drifts down. That's a tough combination for any household budget.

You can see the pattern in newer payment forms, too. BNPL options split a single cost into multiple future payments, keeping the initial checkout total low.

Research from the Consumer Financial Protection Bureau (CFPB) highlights the rapid adoption of BNPL. The CFPB has also raised concerns about late fees and the risk of juggling multiple payment schedules.

The frictionless nature of digital payments can quietly erode savings. That's why consumers should reintroduce intentional pauses into their spending. The biggest danger isn't a single large purchase. It's the steady stream of small transactions that add up unnoticed.

Practical ways to make digital spending more visible:

• Turn on real‑time transaction alerts for every card and account
• Remove stored cards from browsers
• Use category caps and alerts in your budgeting app
• Adopt a 24‑hour rule for non-essential online purchases

These small moves help create a clearer picture of your spending. And they help keep your longer-term goals in focus, whether that's paying off debt or building up your emergency fund.

The role of financial institutions and tech providers

Banks and fintechs helped make spending seamless. They can just as easily help make it understandable, starting with better defaults for users, such as real‑time push notifications on your smartphone that alert you to spending, or the option to set custom spending limits by merchant or category.

Subscription management tools that spot and surface recurring charges can help keep money on autopilot without it slipping out of view. And for higher-risk features, such as tap-to-pay without strong authentication or instant credit at checkout, providers can offer opt-in speed bumps and clearer disclosures.

Ultimately, the goal isn't to add friction for the sake of it, but to give users the visibility they need to stay in control.

The bottom line

Digital payments are here to stay because they're fast and wildly convenient. However, they also make spending feel less real. Lower payment friction dulls the "pain of paying" and can nudge us toward buying more than we mean to.

As payments keep evolving, the need for personal guardrails will only grow. Take a few minutes this week to turn on smartphone alerts or add a couple of speed bumps that slow down your spending.

Small moves make digital payments feel real again. And that will help keep your financial plan on track in a world where paying gets easier every year.

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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.

With economic uncertainty spreading across the country, Americans are finding it difficult to keep up.

If an unexpected expense arises, they feel even more financially vulnerable, with 29% of Americans having more credit card debt than they have in savings and nearly one in four having no savings at all.

This is why it's becoming increasingly important to have money set aside for emergencies. The peace of mind that comes with planning and being prepared for surprise expenses can't be overlooked.

While the costs of goods continue to rise and credit card debt has hit record highs, there are three things we can do to be prepared for unexpected expenses in the future.

1. Start small

Between putting money aside for retirement and making sure you have enough for everyday expenses, it might seem as if you can't afford to invest in an emergency fund.

One of the biggest mistakes people can make with their emergency funds is to start out believing they need thousands of dollars set in it. This isn't feasible or necessary.

The truth is that every emergency fund begins and is useful with that first deposit.

Financial security isn't about suddenly having thousands of dollars on hand; it's investing in the habit of slowly increasing your funds over time. Even something as simple as a few hundred dollars set aside can cover common financial expenses like a minor car repair, a broken appliance or a higher-than-normal utility bill.

If you find yourself stuck with one of these emergencies and you don't have any money to cover them, these expenses could often end up on a credit card. This leads to debt that will stay around much longer than the emergency itself.

Never underestimate the importance of the first deposit into your emergency fund. It's a crucial step in creating a financial habit that will protect your future self.

2. Automate your savings

The easiest way to save money is to not be tempted to spend it. While you're stressed about paying for everyday expenses and investing money into your retirement, saving anything extra often gets forgotten. This is why automating your savings can be such a powerful tool.

Don't start your savings habit by setting aside whatever funds you have left over at the end of each month, because many times, there is often nothing or very little left.

Making things automatic creates a set-it-and-forget-it mindset where you save first and spend what's left. When you schedule this automatic transfer every month, you are telling yourself that this emergency savings account is a priority instead of an option.

One of the most overlooked benefits of automatic transfers is that you are removing the emotional side of it. It is likely that every month will bring a temptation to buy yourself something.

Maybe you've had your eye on a new TV or a band you have been wanting to see is coming into town. If you look at your account and see "extra" funds, it appears you can afford to spend the extra money, when in reality, you can't.

If it goes into your savings accounts as soon as your paycheck hits, your spending decision has been made for you.

Many of my clients have found that once money is transferred automatically, their spending habits begin to adapt to this normal remaining balance.

3. Invest in a high-yield account

While it's best to keep your emergency fund in an easily accessible account without withdrawal penalties, that doesn't mean that you can't still earn interest on your funds.

While traditional savings accounts can be a good place to start, this might be an opportunity to research high-yield savings accounts. Look for accounts that offer high interest rates, such as a money market account or an online savings account.

Traditional savings accounts generally offer rates from 0.01% to 0.02%, while high-yield accounts pay higher than 4%, with some rates higher than 5%. That means if you deposit $10,000, you'll have an additional $500 in one year without doing anything else.

Unlike the investments that you might have for retirement, where there are taxes or penalties for early withdrawals, funds in high-yield savings accounts are generally available immediately when you need them. If there are a few months when you aren't able to actively contribute to the account, the money in it is still growing.

While the interest alone isn't going to help cover all of your emergencies right away, they provide that extra boost that requires no effort from you.

When you start your emergency fund, instead of focusing on a goal that could be years or months away, concentrate on achieving smaller objectives. Break it down into smaller amounts that don't seem too overwhelming.

• Goal No. 1: Save $200
• Goal No. 2: Save $400 more
• Goal No. 3: Save $800 more
• Long-term goal: Save three to six months' worth of expenses

While it might be easy to do, don't start comparing yourself with others. Everyone is at a different stage in their savings journey.

People who are considered in a positive financial situation didn't get there through big, dramatic changes. It often starts with small actions that quickly become common habits.

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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.

Retirement is supposed to be carefree and financially predictable, but that doesn't mean you're exempt from recurring bills. That's particularly true if you own a home. Everything from maintenance to insurance comes at a cost. How you pay those bills — all at once or over time — can have a big impact on your savings and cash flow.

The secret to saving money is timing. Some annual expenses offer discounts if you lock them in early, while others are best kept flexible so you can shop around or keep your money earning interest.

To help you figure it out, here are four everyday bills you should wait to pay to save some serious cash.

4 bills retirees should not prepay

1. Heating oil

For retirees who value predictability, locking in heating oil rates ahead of winter provides peace of mind amid volatile energy markets, but they typically pay extra for that relief.

A fixed-rate plan locks in your price for the entire season, protecting you from cold-weather price spikes. But you won't benefit if market prices drop. A capped-price plan sets a ceiling and lets you pay lower rates if prices fall, but dealers usually charge an upfront protection fee for that option.

The cheapest option, according to nonprofit consumer energy groups and state agencies, is a floating-rate plan. With that, you pay the current market rate and that's it. Over multiple years, those savings can add up.

2. Electricity

Just like heating oil, you can lock in your electricity rate for the year, but doing so can cost you if electricity rates decline.

Plus, you have to be careful of the fine print when signing up for a fixed-rate electricity contract. Some may have early termination fees, monthly recurring charges, and promotional rates that spike once the initial period expires.

3. Auto and homeowners insurance

Who doesn't love the convenience of auto-renewal for auto and homeowners insurance? It's one less thing to worry about, and doesn't loyalty always pay? It turns out it's better to shop around each year to ensure you're getting the best rates.

How much can you actually save? According to a LendingTree survey, drivers reported saving at least $100 per year simply by switching auto insurance providers.

Use the Bankrate tool below to connect with auto insurance providers and compare quotes:

4. Home warranty contracts

Home warranty contracts are supposed to protect you from expensive repairs. For a fixed annual fee, you won't have to worry if the furnace dies, a pipe bursts or the AC is on the fritz. Often, you get high service call fees, strict restrictions on what is covered and exclusions hidden deep in the fine print.

Instead of locking up money in a warranty contract that will require you to pay out of pocket anyway, put it in a high-yield savings account where your cash earns interest until it's needed for a repair.

Keep control of your retirement

Cash is king; it couldn't be truer in retirement, which is why patience pays off when it comes to some everyday expenses.

By shopping around annually and keeping your cash accessible in high-yield savings, you'll ensure your money stays liquid and under your control.

Use the Bankrate tool below to search for today's top high-yield savings account offers:

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Watching your retirement portfolio take a hit is painful, but it offers an unexpected gift: a discount on your future tax bill. Converting to a Roth IRA during a down market lets you pay taxes on depressed share prices now, turning market losses into years of tax-free growth.

Kiplinger's investing experts expect the second half of 2026 to remain strong. At the same time, there are signs that some asset classes or industries (such as AI) may struggle, which could provide an opportunity for savvy investors to convert holdings that see a significant drop.

The benefits of doing a Roth conversion in a down market

Since the amount you pay in taxes on a Roth conversion is based on the dollar amount you convert, a lower account balance means you’ll pay less to the IRS.

"The tax payment on the conversion is going to be smaller since the account value is lower," says Ben Rizzuto, wealth strategist with the Specialist Consulting Group at Janus Henderson Investors.

When moving a specific position, a smaller account balance doesn't mean the number of shares you convert to a Roth will be lower. In a down market, the value of the stock, mutual fund, or exchange-traded fund (ETF) may be depressed — but you'll still be able to convert the same number of shares.

How a Roth conversion in a down market works

Let's say you planned on converting a traditional IRA balance of $100,000. But the asset you own in the retirement account, say, an AI memory chip maker, suffers a 20% drop, reducing your balance to $80,000. The big decline in the stock price means you'll be able to convert all of your shares to a Roth IRA while only recognizing $80,000 in taxable income.

The depressed shares you convert to a Roth will benefit from an eventual market recovery inside the tax-free Roth wrapper. The upside? The future growth of those converted shares benefits from a longer runway to compound without IRS taxation, compared with a traditional IRA, which is taxed as ordinary income in retirement.

The best time to do a Roth conversion is in a year when not one but two financial forces are working in your favor.

The first, as discussed above, is a market pullback (a drop of 5% to 9.99% from a high), a correction (a 10% to 19.99% drop) or a bear market (a decline of 20% or more). Or, even if the market remains strong, you may be able to take advantage of a price drop in an industry or asset class.

The second is when your taxable income is lower than normal. In years when you report less income, you can convert more dollars to a Roth at a lower tax rate.

"That's a double benefit," says Steven Conners, founder and president of Conners Wealth Management. You end up converting fewer dollars and get taxed at lower rates.

How to decide if this Roth conversion strategy makes sense for you

Financial advisers, however, stress that a big market drop isn't the only factor a retirement saver should consider before doing a Roth conversion. Timing a Roth conversion based on market conditions is akin to trying to time a stock's purchase or sale.

The biggest factor by far when deciding whether to do a Roth conversion is the overall tax impact. Saving some money on taxes by doing a conversion during a down market doesn't necessarily mean doing the conversion is a slam dunk, financial pros say. You must look at the bigger tax picture you face in any given tax year.

A Roth conversion makes the most sense if your current income tax rate is lower than it will be in retirement. The idea is to pay a lower tax rate on the conversion now and pay zero taxes on withdrawals in the future when your tax rate is expected to be higher.

So, if you think your tax rate may be lower in retirement than it is now, you may want to hold off on a conversion even if a down market makes it a more attractive option, says Rizzuto.

Another factor to consider is whether converting a larger dollar amount to a Roth in a down market could result in an income increase large enough to bump you up to a higher — and more costly — tax bracket. That's something you want to avoid, especially if the conversion amount puts you at risk of going from the 22% or 24% tax bracket to the 32% bracket.

"You need to think about how much of a traditional IRA you are going to convert, and whether that conversion will bump you up into a higher tax bracket," says Rizzuto.

One way to dodge a higher tax bracket is to convert only a portion of your traditional IRA in a single tax year. Convert just enough dollars to stay below the higher bracket's threshold, then repeat the process over time. "The conversion can be done piecemeal," says Rizzuto

Once you've determined that the tax aspect of the conversion works in your favor, taking advantage of a down market to do the conversion makes an awful lot of sense, adds Conners.

That's especially true if you own a hard-hit tech stock or other company whose business model and future growth outlook remain intact. As explained above, moving a mispriced asset that’s likely to bounce back into a tax-free Roth account is likely to benefit you over the long haul.

"With a Roth, all your withdrawals will be tax-free, so you're better off from a conversion with a starting point when tech stocks are down 15% to 25% from their highs," says Conners. "That's a much safer spot to buy into something (i.e., a Roth) that's going to give you tax-free benefits down the line."

What to watch out for when following this strategy

Avoid Roth conversions that bump you up into a higher tax bracket. "Talk to your accountant and ask, ‘How much of my traditional IRA can I convert without bumping up my tax bracket?'" says Conners.

Make sure you have free cash to pay the tax bill. You don't want to sell assets from your IRA to pay the tax bill on the conversion, as it reduces the number of shares you can convert into a Roth and benefit from tax-free withdrawals. The goal of a Roth conversion is to move as many shares as possible under the tax-free umbrella to benefit from long-term growth. Remember that using IRA funds to pay the tax bill triggers an additional 10% early withdrawal penalty if the account holder is under 59½.

Avoid generating too much income and paying a Medicare penalty. A Roth IRA conversion increases your taxable income for that year, which can raise your premium two years later due to IRMAA (Income-Related Monthly Adjustment Amount) surcharges on Parts B and D if your modified adjusted gross income (MAGI) tops an income threshold ($109,000 for single filers and $218,000 for joint filers). For this calculation, the IRS looks back at income from two years ago. So, 2026 MAGI will impact 2028 Medicare premiums.

The bottom line? A down market doesn't necessarily mean it's always a good time to do a Roth conversion. But if the tax piece works in your favor, a bear market in stocks is a great time to move traditional retirement assets into a Roth account.

Read More on Roth Conversions and Retirement Investing

• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
• How to Turn a $1 Million Nest Egg Into a Lifetime Income Machine
• Understanding Roth Conversions: Quiz
• 3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You

"Kenny" needed to speak with a lawyer — any lawyer — as soon as possible. "I was in a panic, frightened out of my mind of what could happen," he told me during our phone call on a recent Friday evening.

This was the beginning of one of the strangest 30 minutes I've ever spent on the phone with someone in the category of "I need your help now — but I'm not going to give you any information about why."

He not only had a legal problem, but there was an additional reason for his call that had nothing to do with his panic. "I phoned several lawyers' offices, but all of my calls are being filtered by receptionists, who are not very nice and refuse to connect me with an attorney.

"That's why I am calling you. I read your story about the legal aid office manager who illegally placed microphones and cameras throughout the office and recorded confidential, attorney-client conversations."

A real concern

I asked Kenny, "How is that article relevant to your complaint about not being connected with an attorney?"

"They are asking me why I want to talk with the lawyer. They all want me to go into detail about what I am dealing with. That scares me! I do not want to be in the same situation as the clients in your story whose confidential conversations were recorded without their permission."

"Kenny, the receptionist has to find out if your problem is something the firm deals with."

"I don't want to tell the receptionist too much, because they are not the lawyer," he explained.

His concern is real and raises an important question: If you speak with a lawyer's receptionist or paralegal instead of the attorney, is what you tell them protected by the attorney-client privilege?

In many, but not all, instances, the answer is yes.

A cornerstone of our legal system

Everyone has heard of the attorney-client privilege, one of the oldest and most respected principles in the law. It protects confidential communications between a lawyer and their client that relate to the client's reason for seeking legal advice or services.

While there are exceptions — such as asking a lawyer how to get away with a crime — the protection applies to not only verbal discussions but also written correspondence, emails, text messages and other forms of communication.

Obviously, a lawyer cannot provide sound advice without knowing all of the facts — the good, the bad, the ugly. The privilege encourages complete honesty without fear that what the client says will be used against them.

If clients feared their conversations might later be revealed in court, they would withhold information, thereby frustrating justice.

How a law office functions

When you first call a law office, often the person answering the phone will be a receptionist. In addition to setting up appointments, their job is to discover why you are calling — your legal problem or concern — and determine if their office handles such matters.

They also provide the attorney with the information that is needed before the first consultation.

In our office, my paralegal, Anne, will say, "Tell me what's going on. What's the problem, and how can we help you?"

These open-ended questions yield a great deal of information, enabling her to brief me quickly while the caller is on hold.

I then speak with them, further refining the nature of the legal issues to determine if this is something we will handle or can refer to a colleague.

I try to talk with everyone who calls our office, even if we do not deal with their specific legal issue, because I know a lot of lawyers can't be bothered with spending a couple of minutes with someone who is at a low point in their lives.

To me, it is part of the reward and duty to the public of being a lawyer. These conversations often are the basis for my articles.

In most offices, lawyers do not work alone

While there are some solo practitioners — mostly criminal defense attorneys — law offices today are organizations that in many ways resemble teams in which receptionists, intake personnel, secretaries, paralegals, investigators, office managers and translators play vital roles in the delivery of legal services.

This is a practical reality, as no law firm could function if clients could speak only with the attorney.

For that reason, confidential communications with a lawyer's receptionist or other authorized staff member for the purpose of obtaining legal advice are, in most circumstances, protected by the attorney-client privilege.

The lawyer's employees who gather information for the attorney are legally considered agents of the lawyer, and it is as if the client were speaking directly with the attorney.

What a receptionist needs to know

The receptionist should be thought of as a screener, and yes, sometimes their questions may be a bit uncomfortable.

If you're calling about an auto accident, you would be asked to describe what happened:

• What is the name of the other driver?
• When did the accident occur?
• Have you spoken with your or their insurance company and/or another lawyer?
• Did you hire another lawyer and are unhappy with the way they are handling your case?

Answers to these questions impact whether the firm is interested or able to take your case.

A "conflicts check" must be run to see if the firm already represents the other driver. Also, are there any critical time limits, such as statutes of limitations, to worry about?

Present and potential clients are covered by the privilege

It is important to stress that the privilege is not limited to people who actually become clients of the lawyer. Even if you don't hire that firm, your conversation remains confidential.

Clearly, prospective clients deserve protection when they consult a lawyer in good faith for the purpose of getting legal advice. The confidentiality of those communications encourages obtaining advice before making seriously wrong decisions.

When privilege does not apply

These are the times when attorney-client privilege does not apply:

• Non-legal/administrative details. Routine interactions, such as providing your name, asking billing questions or scheduling appointments, are administrative facts, not confidential legal disclosures.
• Conversations in public. Speaking loudly to a receptionist in a crowded waiting room or public lobby, where others can overhear, voids the requirement for privacy.
• Unnecessary third parties. If you share details with a receptionist while unrelated strangers or outside parties are present within earshot, the privilege can be waived.
• Future crimes or fraud. Telling a staff member or attorney about your plans to commit a crime or ongoing fraud strips away confidentiality under the crime-fraud exception.
• No intention to retain. There's no protective relationship if you give casual information to a front-desk worker without any intent to seek formal legal representation or advice.

What was Kenny so worried about?

After explaining all of that to Kenny, I was itching to know what he was so worried about.

He told me, "Some people saw a few things I had on my computer that should not be there, and I am being surveilled."

"Pornography?" I asked.

"Well, I'd prefer not to answer, but you are close," he replied, thanking me for my time and fatefully concluding, "A police car just pulled into my driveway."

Then I heard, "Hands up. Turn around."

And the call was disconnected.

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.

Last month, I proclaimed short (but not ultra-short) maturities as the ideal place along the present fixed-income curve. Is there also an ideal target for yield-seeking stock investors?

This year has been swell for popular dividend funds. Through June 30, for example, the Schwab U.S. Dividend Equity ETF (SCHD) returned 18%, boosted by tech and drug winners. Based on its most recent quarterly distribution, the exchange-traded fund yields 2.7%, which lags utilities, energy partnerships, real estate investment trusts (REITs) and even a fourth of the names in the S&P 500. Perhaps the path to optimizing dividends is simply to concentrate on pipelines, REITs and utilities. But that leaves out a pile of possibilities.

When you benchmark stocks against 4% bank, Treasury and money market rates, 2.7% appears weak. I disagree, given that good stocks appreciate, dividends are not fixed, and the payouts are often tax-qualified, with a maximum 20% tax bite (23.8% for a few rich taxpayers). I would not chase the top of the stock-yield charts, where long-term returns can be awful.

Is there a dividend sweet spot? I set a goal of 10% total return that includes 2.5% (or more) from cash. Here's where I found possibilities:

1. A screen for qualifying companies with rising earnings and cash flow and a reasonable payout ratio.
2. Mutual funds and ETFs that filter dividend payers by a formula designed to provide high risk-adjusted returns.
3. Actively managed dividend funds.
4. A strategy of accumulating individual shares, building a substantial yield on their average cost.

The twist: Enter only at yields of 2.5% or above.

Thoughts on each:

1. Screening quality stocks for yield and return.

If you set a 10% five- or 10-year return target, plus a 2.5% yield hurdle, you lose high-yielding losers like Medtronic (MDT) but green-light an array of energy giants such as Exxon Mobil (XOM) and Chevron (CVX), big banks such as PNC Financial Services (PNC) and Fifth Third Bancorp (FITB), and some defense contractors. These embellish any collection of REITs and utilities without requiring you to spot long shots and turnarounds.

2. Gadget-type dividend funds.

The archetype is the WisdomTree U.S. High Dividend Fund (DHS), whose method is complicated but selects much of what I just described. The monthly dividends are lumpy, but you get more than 3% with low volatility; in the first half of 2026, the fund returned 13.7%.

The ALPS Sector Dividend Dogs ETF (SDOG) has a method utterly unlike that of the WisdomTree fund, but results are comparable; it is up 17% and change. The Fidelity High Dividend ETF (FDVV) is another option, albeit riskier as the ETF includes high-octane fuel such as Nvidia (NVDA) and Alphabet (GOOGL). I would be chary of any new or unproven dividend-filter ETF schemes, but this trio is worthy.

3. Active dividend funds.

Besides the Schwab ETF mentioned above, I suggest the Federated Hermes Strategic Value Dividend Fund A (SVAAX) and its more U.S.-focused ETF cousin, U.S. Strategic Dividend (FDV).

Whether purely active management outdoes the rules-based dividend screeners like those employed by ALPS and WisdomTree is an open question. But you get paid well and distributions per share often rise annually.

4. Buy, hold, collect and grow.

Normally, a dividend-growth plan centers on world-beaters such as Apple (AAPL) and Walmart (WMT) in their early years when they start to pay cash, because you can anticipate a lifetime of generous raises.

I propose a variation: Build fresh positions in 2.5%-and-up payers also known for robust dividend growth. This will be the subject of a future column. Hold the thought.

Jeff Kosnett is editor of Kiplinger Investing for Income. You can reach him at Jeff.Kosnett@futurenet.com.

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

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Election season can turn even levelheaded investors into political strategists. New polls, fresh candidates, hot debates and updated predictions about which party will control Congress can all seem like reasons to make drastic portfolio changes.

Following such impulses is usually a mistake. "I regularly remind investors to save politics for Thanksgiving dinner; they have no place in an investor's portfolio," says Marta Norton, chief investment strategist at Empower.

The trouble is that it's easy to assume the political party you prefer is also the best one for markets, Norton explains, even though earnings and valuations, as well as interest rates and inflation, all have much greater influence on markets over any meaningful term.

History shows midterm years are more volatile. The data also says they tend to produce strong rebounds once results are in. According to BlackRock, the S&P 500 has posted an average gain of 14.1% in the six months following midterm elections since 1970.

So preparation does matter. But it's not about predicting a winner. It's about returning to what really determines long-term investment success: your financial plan, diversification and fundamentals.

Here are five tips from experts to help you prepare your portfolio for midterm elections.

1. Let your financial plan, not your politics, guide you

When you hit traffic on a road trip, you might take a detour. But you don't abandon your map and your destination. You can think of midterm-related market volatility the same way.

When uncertainty rears its menacing head, D.A. Davidson Vice Chairman Andrew Crowell says to "trust your financial plan. A good financial plan should be able to sustain some volatility and keep you focused on future goals, no matter the outcome."

Even with increased volatility, midterm years are generally good for market returns. Since 1937, the S&P 500 returned an average 9.2% during midterm years, according to J.P. Morgan Asset Management.

Rather than trying to predict every turn in the road, though, take the opportunity to ensure "your risk and return objectives are properly calibrated during the summer preceding the midterm election," says First Horizon Wealth Management Chief Investment Officer Eric Teal.

Review whether your goals, time horizon, risk tolerance and upcoming cash needs have changed. Then check whether your current portfolio mix is still aligned with those priorities.

2. Rebalance investments that have drifted

Staying the course doesn't mean ignoring your portfolio. Market performance over recent years may have pushed your investments away from your chosen target weights. Volatility can be an opportunity to bring them back into balance.

"If and when markets sell off, investors have a chance to reevaluate their strategy and determine whether the prevailing lower prices offer a good opportunity to increase exposure to a now-cheaper asset class," Norton says.

Rebalancing means trimming investments that have become overweight and using the proceeds to buy those that have become underweight. It doesn't always require selling. You can achieve the same effect by simply investing new cash into your underweight areas.

Rebalancing can be a smart way to scratch the "itch" to take action around election time, Crowell says. It ensures any trades you make support your long-term goals, rather than reflect short-term election noise.

3. Build resilience through diversification

Midterm elections aren't the only potential source of market turbulence. The weakest midterm-year markets also coincided with other major forces, such as Federal Reserve rate hikes and the bursting of the dot-com bubble, as J.P. Morgan Asset Management found.

Uncertainty around inflation, geopolitics and the future of the AI boom could also make for a bumpier ride this year.

Instead of trying to predict which risk will rattle the markets first, make sure your portfolio isn't dependent on a single outcome. "Diversification across asset classes, including fixed income, along with sector diversification, can play a valuable role," Norton says.

Check under your portfolio's hood to see how diversified you really are. Compare the largest holdings and sector weights. Exchange-traded funds (ETFs) and mutual funds can hold many of the same stocks or sectors and leave you more concentrated than you may realize.

Depending on your goals, diversification can include owning companies of different sizes, geographies, investment styles and asset classes, including bonds.

"In a world fretting about inflation, it's tempting for investors to lose faith in bonds," Norton says. "However, yields now price in far higher inflation, growth, and rate expectations, offering investors better cushion for potential equity market drawdowns, particularly if those drawdowns are fueled by AI concerns."

Bonds and diversification can't prevent losses, but they can help mitigate them and smooth your overall investing journey.

Different sectors also tend to hold up better than others during midterm years. As BlackRock notes, since 1990, healthcare stocks and energy stocks delivered stronger average returns, while industrial stocks and financial stocks have lagged.

That doesn't mean you should make election-based sector bets. The stronger sectors may not continue to outperform. But it does reinforce why diversified exposure across sectors matters.

4. Stay invested and focus on fundamentals

Sometimes the best move is to make no move at all. The trouble with trying to time the market around election cycles is that you need to be right twice: when to get out and when to get back in.

This is further complicated by the fact that the best days in the market often occur close to the weakest ones. According to Vanguard, $100,000 invested in the S&P 500 for the entire period from 1988 through 2024 would have grown to $4.9 million. Missing only the 10 best days cuts the ending value in half to $2.3 million.

"Markets ultimately follow fundamentals, not geopolitics," says Scott Helfstein, head of investment strategy at Global X ETFs. Corporate performance has remained strong, he says, with markets driven more by earnings expectations than political sentiment.

Elections are not irrelevant, though. Changes in tax, regulatory and/or trade policy can affect company earnings and valuations. But moves based on evaluations of those effects are different from selling based on predictions of who will win at ballot boxes.

The time to consider whether to de-risk your portfolio is if and when fundamentals deteriorate, or an asset no longer fits your financial plan, not because political headlines make you nervous.

5. Set rules for how you respond to sell-offs

Athletes know preparation is as much mental as physical. Investing is similar: It's easy to promise yourself that you'll keep your head when the markets make others lose theirs.

Following through on that promise can be another matter when you see your account balances tumble, and every headline seems to predict a worse outcome.

The best way to handle it is with a predetermined plan. Write down both the trigger and response before volatility arrives and the market's "fear index" spikes.

That might involve rebalancing when your allocation crosses a certain threshold, dollar-cost averaging into specific investments or continuing automatic contributions regardless of what the market does.

If election-season volatility does produce a significant decline, Teal says investors can "consider rebalancing and redeploying cash for the eventual rebound and recovery."

That doesn't mean you should start hoarding cash now in the hopes of timing the bottom. But it can mean having a plan for how you'll invest cash that's already earmarked for long-term investing.

You should also specify what you won't do, such as selling solely because of polling results or a sudden sell-off.

The key to surviving midterm season with your portfolio intact is to remember that "the objective is not to try to 'win' the election trade," Crowell says. "The objective is to achieve one's long-term financial goals."

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A few months ago, I got a call from a dentist who had been working as an employee for three years.

She was making close to $200,000 a year, had no major complaints about her job and wanted my professional opinion on a crossroads: Should she buy a practice now, or wait a few years until she felt more confident running a small business?

I asked her a different question first. What does waiting cost you?

She didn't know. Almost nobody does, because almost nobody runs the math before they decide to wait. When smart professionals think about buying a business, they evaluate the decision entirely in terms of visible risk:

• The debt
• The staffing responsibilities
• The fear of something going sideways

What gets left out of that calculation is the compounding cost of staying put.

I work exclusively with buyers on the acquisition side of dental practice transitions. My team has advised on more than 1,500 deals across 49 states, and the most expensive mistake I see isn't a bad purchase.

It's a highly capable, well-qualified buyer who waits years longer than the financial numbers support, because waiting feels like the responsible choice.

It isn't.

What the delay costs

The American Dental Association's Health Policy Institute tracks net income for dentists who own their practices vs those who work as employees. Practice owners netted an average of $217,781 in 2024. Associates netted $160,891. That's an annual income gap of roughly $57,000, and it has held steady for years.

To see how that plays out over a career, picture three professionals who start practicing at age 36 and retire at age 65:

• The early buyer buys a practice at 38
• The hesitant buyer waits five years and buys at 43
• The career employee stays an associate for the entire 29-year career

When you model realistic income progressions, business equity and tax structures, the outcomes look very different. By retirement, the early buyer accumulates roughly $10.8 million in cumulative career earnings. The hesitant buyer accumulates $9.7 million. The career employee finishes around $6 million.

That's a $1.1 million penalty for a five-year delay, and a $4.8 million gap between buying early and never buying at all. Every year a capable buyer waits is a year of wealth compounding they can't recover.

The number most people miss in this calculation is the financial inflection point. A business owner's income jumps sharply once the initial acquisition loan is paid off.

The dentist who bought at 38 hits that milestone at 48. The one who waited until 43 doesn't get there until 53. Those extra five years, spent at a lower income level while carrying acquisition debt later in life, are where most of the seven-figure gap comes from.

It's not one bad year. It's a decade of smaller numbers that never have the time to catch up.

Why capable people still wait

The professionals I advise aren't reckless. If anything, they're the opposite. Clinical fields attract people who are cautious, detail-oriented and trained to avoid mistakes. That instinct produces excellent patient care, but it works against the same people at the negotiating table.

The hesitation I hear most often isn't about money. It's about competence.

• Will I know how to manage payroll?
• Will the staff quit on me?
• Will I make a leadership mistake I can't undo?

These are fair questions, but buyers routinely overstate the real operational risk. When my firm tracked patient retention across hundreds of transitions, the data showed that the average practice gains 4.1% more patients in the six months after a sale than it loses. The fear tends to be larger than the reality.

Student debt makes the hesitation worse, not better. Many young professionals graduate with $300,000 or more in loans and assume the safer move is to hold on to a steady paycheck until that balance feels more manageable. It's an understandable reaction, but the math runs the other way.

Ownership income is almost always the fastest path to paying down that debt, because a $57,000 annual income gap closes a six-figure loan significantly faster than a flat employee salary ever will.

A framework for anyone weighing this decision

The issues at play here aren't unique to dentistry. Any licensed professional who could own the practice they currently work in, whether that's a veterinarian, an optometrist or a physician in private practice, is working through a version of the same math.

Before deciding to wait another year, three considerations are worth addressing honestly:

What is the actual income gap in your field between owners and employees?

Do not estimate. Most professional associations publish this data the way the ADA does for dentistry. Find the real number.

What does that gap cost you over the years you consider waiting?

Multiply the annual income difference by the number of years you're thinking about delaying, then add a conservative estimate of the equity you would build in a business purchased today.

The number is almost always larger than people expect. Remember, too, that skills and experience compound just as the numbers do.

Separate the fears that are about your own competence from the fears that are about the specific deal in front of you.

Competence fears are solvable.

With the right accountant, attorney and an adviser who works only for you (not the seller), most people learn the business side faster than they think.

Deal fears, such as a practice with declining revenue or a lease with serious problems, are worth taking seriously and leaving behind.

Take heart that at this very moment, within a few miles of you, there is an owner-professional of the business you're considering buying who is operating a level below what you'd consider "competent" — and they're not going bankrupt.

The professionals who build strong lifetime wealth aren't the ones who eliminate every uncertainty before buying. They are the ones who run the numbers, build an unconflicted team around them and move when the math says they are ready.

The question is not whether you feel ready. It is what another year of waiting is already costing you.

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

When we talk about retirement, the conversation usually focuses largely on building a nest egg.

With employers moving away from offering pensions and average life expectancies increasing, saving for retirement has fallen on the employee.

As a result, industry professionals consistently encourage workers to maximize contributions to their IRAs or 401(k)s.

While asset accumulation is important, and fundamental to affording retirement, financial planning doesn't stop once you leave the workforce, because saving for retirement and living in retirement are different and require separate approaches.

New hurdles for retirees

When entering retirement, many retirees face new hurdles when it comes to tax planning, healthcare expenses, account withdrawals and making their savings last. When you're working, retirement planning is often centered around saving.

For example, financial professionals might help you identify your risk tolerance, guide you through long-term investments and many employers offer a retirement plan with a matching program as an incentive to contribute.

If savings fall behind while you're still working, it can be fixed by increasing contributions, delaying retirement or working a side gig, if your schedule allows.

In retirement, circumstances are different. Rather than actively earning income, which can come with raises and bonuses, retirees must rely largely on their savings, which are likely fixed.

This phase of life is also when federal programs, such as Social Security and Medicare, become prevalent, raising questions about when to claim benefits, what Medicare options to pick and how to withdraw money from those retirement accounts without triggering access taxes or becoming penalized.

Rather than focusing solely on growth, retirees must figure out how to turn their savings into a reliable source of income that lasts.

A big mistake

One of the biggest mistakes I see retirees make is assuming the investment strategy that helped them build their nest egg will work the same once it's time to live on it. When you're working, market volatility is easier to recover from because you're actively earning income, and you have the time to recover from downturns.

However, once your portfolio becomes your main source of income, you might need to make withdrawals regardless of where the market stands. For some, this could mean selling investments at a lower value to meet income needs.

Over time, this can strain your savings, potentially depleting your portfolio prematurely.

Generating income from your investments involves much more than taking out money when you need it. Traditional IRAs, Roth IRAs, brokerage accounts, Social Security benefits and pensions, if you have one, are all taxed differently.

Without a coordinated withdrawal strategy, you could unintentionally pay more in taxes or miss opportunities to make savings work more efficiently.

One coordinated strategy

Instead of viewing retirement accounts as separate buckets of money, a retirement income plan allows you to manage withdrawals, taxes and income needs under one coordinated strategy.

Unfortunately, many people wait until they're in retirement to start thinking about their retirement income strategy.

In addition to prioritizing growth, the time leading up to retirement can also be used to start planning for how those assets will be used.

Estimating future income needs, reviewing healthcare costs, coordinating retirement accounts and understanding how they'll work together in retirement will make the transition much easier when that time comes.

Saving for retirement is crucial, but the financial planning doesn't end once your golden years begin. The transition from earning income to living off retirement savings requires a different mindset and a new approach.

Developing a retirement income plan that addresses how income will be generated, how withdrawals will be taxed and how your savings will support future spending needs can help ensure the nest egg you've spent decades building serves you throughout 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.

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Got a question? See below for how to send it to us.

Dear Wealth Wise: My mother suffers from MS and now needs daily help. I'm starting to look into programs that will pay me to be a caregiver. Am I allowed to keep my regular job or will I be forced to quit? I'm a freelance consultant with flexible hours, but I can't give up that income (or not easily). I assume the pay to be a caregiver isn't great. — Squeezed

Dear Squeezed: As the U.S. population ages, a growing number of Americans are finding themselves thrust into a role they may not be prepared for — caregiving.

AARP reports that one in four U.S. adults is a caregiver, with the majority caring for another adult. Additionally, one in three caregivers is under 50, which means they may be trying to balance providing care for a loved one with maintaining a career during their peak earning years and keeping up with retirement savings goals.

Here, we have a reader who wants to step in and care for her ailing mother. But every hour she spends providing care is an hour she can't earn income through her consulting business.

While there are programs that may pay her to care for her mother, the question is: Will the income be enough to cover her lost wages? Here's what our experts say someone in this situation needs to know.

You probably won't have to quit your job

For people with strict working hours, juggling a full-time job and caregiving may not be possible. For someone with flexible hours who isn't tethered to an office, it may be doable.

Faris Flournoy is the CEO at Flournoy Health Systems, a home care management company. And he says that in this situation, you definitely do not need to rush to quit your consulting job.

"One of the biggest misconceptions about family caregiving is that you have to choose between caring for your mother and keeping your career," he says. "There are programs that may allow you to do both. Some states offer programs that compensate family caregivers while they continue working another job, particularly if they have flexible schedules."

Before reducing your work hours, contact your state's Medicaid office or Area Agency on Aging to determine exactly which caregiver programs are available, how many hours are covered, whether your parent qualifies and whether family caregivers are eligible for payment. Rules differ by state, so don't assume a program available elsewhere is the same where you live.

Don't expect caregiver pay to replace your income

As our reader correctly assumes, the wages associated with caregiver programs do not tend to be overwhelmingly generous. Plus, Flournoy cautions, "Many programs cap the number of paid hours, even if you are providing significantly more care than that."

Flournoy explains that while being paid as a family caregiver can certainly help offset some of the financial burden, it's rarely enough to replace a full-time income. And even with a flexible job, it may be challenging.

"Some caregiver programs require you to provide care during approved hours or meet minimum hour requirements, which can make managing another job more challenging," Flournoy says. "Before making any financial decisions, get clear on exactly what the program expects, how many hours it will cover, and whether those requirements fit with your current work schedule."

Flournoy also emphasizes the importance of looking out for your own financial best interests while trying to help.

"The financial impact of caregiving extends well beyond today’s paycheck," he warns. "Many family caregivers reduce their work hours, pass on promotions, or leave the workforce entirely, which can affect retirement savings, Social Security benefits, and long-term financial security. Those are sacrifices families often do not anticipate until they are already making them."

Evan Farr, Certified Elder Law Attorney and retirement planner, agrees that caregiving can have more long-term financial consequences than expected.

"While the immediate costs include lost income for this calendar year, the true cost includes compounded losses from reduced savings and reduced career longevity due to interrupted employment," he insists.

Medicaid is what usually pays, but there are other solutions too

Medicaid: While getting paid to be a caregiver may be an option, there are requirements to meet. And one of those may be qualifying for Medicaid.

"Most paid family caregiver programs are funded through Medicaid, not Medicare, and each program has its own financial and medical eligibility requirements," Flournoy says.

Depending on the program, some Medicaid caregiver payments may receive favorable federal tax treatment.

Flournoy commonly sees families land in situations where they've saved too much money to qualify for Medicaid but not enough to comfortably pay for ongoing home care.

Flournoy also says that for the most part, Medicare does not have paid caregiver programs in place, nor does it pay for custodial care — the ongoing personal assistance many people need with bathing, dressing, meal preparation, and other daily living activities.

Special cases: "Some Medicare Advantage plans, veterans’ benefits, and long-term care insurance policies may provide additional support, but families should not assume Medicare alone will cover long-term daily caregiving," he says.

To be clear, some Medicare Advantage plans (Part C) cover limited in-home support services or respite benefits, but they generally do not pay family members as ongoing caregivers. They may, however, cover adult daycare.

Veterans' benefits are available only if the care recipient is an eligible veteran (or, in some cases, a qualifying spouse).

Become your parent's employee: Finally, if your mother has sufficient assets to pay you directly, you could consider setting up a personal care agreement. Your compensation must be set at a "reasonable" rate, or what you would typically pay someone else to do caretaking. The national average for non-medical in-home care was $35 per hour in 2025, according to CareScout. If you happen to be a trained nurse, you can charge more, or $90 per hour on average.

However, be aware of the "nanny tax." If your parent hires you as a household employee, payroll tax rules may apply once annual wages exceed the IRS threshold. Check current IRS rules or consult a tax professional.

The devil's in the details when it comes to Medicaid

A big reason not to rush into a caregiving arrangement is that the nuances can be complicated, Farr says. As he explains, it's important to determine whether you can legally perform the authorized care within the authorized time frame and properly keep records of that care.

"Medicaid-paid family caregiving is not merely a family-arranged situation where Medicaid sends you a check. It is a regulated form of caregiving," Farr insists.

"The mother must meet medical requirements and financial requirements to receive Medicaid-funded LTC," Farr continues. "The state must also approve a care plan. The caregiver may be required to register through an agency, fiscal intermediary, or through the consumer-directed model."

Farr says that, in addition, to become a caregiver, you'll typically need a background check and training. You'll also need to see how many hours of care Medicaid actually approves.

"One of the largest misconceptions is that the family decides what hours of care need to be performed and then expects Medicaid to pay for those hours," Farr explains. "This is not how Medicaid-paid family caregiving works."

Rather, Farr says, each state determines what hours are allowed in the approved care plan.

Flournoy says that one challenge of becoming a caregiver is that each state administers these programs differently.

"One of the biggest differences from state to state is how many caregiving hours are eligible for reimbursement. Documentation requirements also vary," Flournoy says.

Some programs, he explains, require detailed time logs and care plans, while others have a more straightforward reporting process. Eligibility rules can also differ, including which family members can be paid.

"In some cases, spouses or legal guardians may not qualify," Flournoy cautions.

Build a robust care plan for your mom — and a financial plan for yourself

While it may be possible to get paid to care for your mom, both Flournoy and Farr recommend looking beyond the caregiver paycheck and instead focusing on a holistic care plan.

"I have seen too many families spend valuable time searching for one program that will cover everything, when the better approach is combining the right services at the right time," Flournoy says. He says that in this situation, a comprehensive plan may include personal care, skilled nursing, therapy services, hospice, and palliative care.

"The sooner families can identify what level of care their loved one needs and which programs can help along the way, the more flexibility they will have to build a care plan that supports both their loved one and their own financial stability," Flournoy says.

Farr, meanwhile, recommends consulting with an experienced elder law attorney to ensure that your mother maintains eligibility for Medicaid benefits and advise on the legal side of things.

He also says it's important to protect your family's financial well-being in addition to your own.

To that end, you may want to sit down with a financial planner to discuss how your caregiving role may affect your long-term financial goals. Even if you're able to continue working as a consultant, juggling both roles may force you to forgo income that impacts your retirement savings and future plans.

It's noble to want to step in and help your mother. But it's important not to sacrifice your financial security in the process.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts in this advice column are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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With the stock market trading near record highs, confidence is soaring, and investors are increasingly buying into the good vibes.

Many people think the bull market will continue indefinitely. They reason that President Donald Trump's pro-growth policies will create a durable expansion, with deregulation and decreasing oil prices and mortgage rates fueling the surge.

Market forecasters have no crystal ball, but history teaches us important lessons, such as: The good times don't last forever, and sometimes the warm glow of summer optimism in the market fades into a long, cold winter of harsh economic reality.

Maybe this era will defy history and the economy will have several more years of solid economic growth. But investors nearing retirement should ask a different question: What if it doesn't?

History shows that periods of confidence often create the conditions for complacency, which can be expensive.

Middle-class realities

After enduring inflation, rising interest rates, regional banking concerns and geopolitical uncertainty, markets have proven remarkably resilient. The S&P 500 has more than doubled from its October 2022 lows, rewarding investors who stayed invested through volatility.

There's a belief among many market experts that any pullbacks will be shallow, and if markets decline, many investors assume recoveries will be swift because that's largely been their recent experience — their recency bias (which we'll explore later). But they're overlooking two important realities:

• The middle class is struggling
• Debt — both personal and the national debt ($40 trillion) — keeps climbing

Those factors could help trigger a prolonged or extreme market pullback.

One challenge in interpreting today's economy is recognizing that experiences vary dramatically. The economy is stronger only for a small percentage of people.

For example, only 3.2% of American retirees have at least $1 million or more in retirement savings. But for many people, their financial situation in today's economic climate isn't so great.

• According to the Federal Reserve Bank of New York, household debt reached about $18.8 trillion in early 2026, an all-time high.
• Getting an affordable mortgage is difficult and burdensome. Mortgage balances, credit card debt, auto loans and student debt have all expanded meaningfully in the last several years.
• Consumers are increasingly relying on loans and debt to cover the rising costs of daily expenses and sustain their lifestyles.

Debt works wonderfully when times are good. But it becomes unforgiving when economic conditions deteriorate.

The danger of recency bias

Some investors and market experts believe that a market pullback will be a 20% to 30% decline at the maximum, and that the recovery will happen within a year.

They have recency bias pointing to recent pullbacks and recoveries, such as events that occurred in 2020, 2022 and 2025. But they fail to consider what happened in the 2007-2009 Great Recession and before that, in the technology crash in 2001.

They've forgotten or never experienced previous bear markets during the 1950s, 1960s, 1970s, the early 1980s and Black Monday of 1987.

This isn't even to speak of the Great Crash of 1929 and the Great Depression of the 1930s. Most people don't believe those events will ever happen again.

The scary part for many investors is that they have an investment and retirement plan that assumes economic recessions will be short-lived, market downturns will be shallow, and the recovery will be quick.

But what if that doesn't happen? Investors must contemplate that question and plan for it.

Prudent investors need to ask these uncomfortable questions:

• What if growth slows unexpectedly?
• What if inflation proves stickier?
• What if deficits eventually pressure interest rates?
• What if consumers begin pulling back?
• What if the next bear market looks more like 2000 or 2008 than 2020?

For those in retirement or nearing it, how do they prepare? They shouldn't ignore the realities of the past. As the famous maxim goes, "History doesn't repeat exactly, but it often rhymes."

Have peace of mind by creating your own economic reality

There are so many factors out of our control that will often give us reasons to worry — wars, politics, inflation, interest rates, market headlines, etc.

But financial confidence doesn't come from predicting the future correctly. It comes from preparing thoughtfully. Focus on what you can control — your spending, debt, tax-mitigation strategies, market risk exposure and income planning.

Just as in proper business planning, you should consider the worst-case scenario and develop a contingency plan. Create your own economic reality by building a retirement framework that will protect you in a market pullback, a framework that prevents you from having to adjust your lifestyle.

Because eventually, another prolonged downturn will arrive. No one knows when. But history suggests it will happen again.

Stress-test common retirement assumptions. Ask yourself:

• "If markets fell 35% and remained down for three years or more, would my plan still work?"
• "In the event of a market decline, can my lifestyle be sustained, or might I be forced to reduce spending or not travel as desired?"
• "If inflation remained elevated, would my income sustain my lifestyle?"
• "Could I maintain peace of mind regardless of market headlines?"

These questions matter — especially when retirement shifts from the accumulation stage to the distribution stage.

It's not the time for a high-risk, high-reward approach

Savings goals for many people are way ahead of schedule. Protect the harvest you enjoy now and store up for a long winter, so when the market is disrupted for a lengthy period, you have what you need and can help family members and others, too.

The most successful retirees we meet are rarely the ones who took the greatest risks. Often, they are the ones who planned thoughtfully.

• They retired earlier than expected because their conservative plans exceeded expectations
• Their spending confidence increased because reality exceeded assumptions
• They were able to travel more, give more, help family members more and enjoy life more — not because they chased the upside of the market, but because they built margin into their lives

Others implemented tax-efficient strategies that allowed more of their wealth to remain invested. Some created robust income streams that were less dependent on daily market fluctuations.

A comfortable retirement in these uncertain times requires reducing your risk and taking a conservative approach.

You've spent decades working, saving, investing, sacrificing and delaying gratification. You built wealth so that one day your money could begin working for you.

Don't leave that next chapter to chance. Plan carefully enough that if markets disappoint, your lifestyle remains intact, your confidence remains strong and your peace of mind remains unmoved.

That might ultimately be the greatest return an investment plan can provide.

Dan Dunkin contributed to this article.

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

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

The past few years gave many investors exactly what they hoped for — and also set them up for some major risks.

If you bought the right stocks and held them through the volatility of the past few years, your positions have grown substantially. The problem is that "substantial" and "safe" are not the same thing.

We talk to a lot of clients who have watched a single holding climb to 20, 30 or even 40% of their net worth. Sometimes it's a tech stock they've owned for a decade, or a company stock that has accumulated through a career of compensation packages. Either way, they're sitting on significant gains.

Many investors recognize the risks of holding too much in a single stock — they just don't act.

Investors who struggle in retirement are often the ones who held for so long that the decision was eventually made for them, whether by a market correction, an estate situation or the realization that the tax bill they were trying to avoid had grown far larger than if they'd started earlier.

The position that built your wealth doesn't have to be the one that defines your retirement. Getting there is mostly a matter of being willing to ask the question.

The attachment problem

When a stock has been good to you for a long time, it starts to feel like a relationship. Clients who've held Nvidia (NVDA) or Apple (APPL) or Microsoft (MSFT) through multiple cycles have watched those stocks get them through a lot. The idea of selling feels like betrayal. It isn't rational, but human nature rarely is.

That attachment compounds over time. The longer a position has outperformed, the more convinced investors become that it will keep outperforming. We don't want the discomfort of being wrong after so many years of being right.

Consider this: If you didn't already own this stock, would you choose to put 35% of your retirement savings into it today? For most people, the honest answer is no.

At a certain point, the conversation ought to shift from maximizing returns to protecting what you've already built. Unlike institutions, individual investors don't have the benefit of perpetuity — there's a finite window to use and enjoy wealth.

The tax trap

Many advisers recommend reducing concentrated positions. The problem is, most people know that intellectually, but as soon as advisers bring it up, all the client hears is "taxes." They're not entirely wrong to do so.

Investors often let the tax tail wag the dog — prioritizing the avoidance of a tax bill over making decisions that better align with their long-term goals.

A position worth $1 million with a $100,000 cost basis carries $900,000 in embedded gains. In higher-tax states, the combined federal and state rate could reach 37.1%, meaning selling could result in a tax bill of more than $330,000.

So investors hold. They tell themselves the position is still performing. They say they'll deal with it later. But deferring a decision is still a decision, just not a conscious one.

Eventually, "later" becomes "now." The closer a client is to retirement, the more that tax liability weighs on their financial decisions. Spending decisions, income planning and even how much they let themselves enjoy retirement all get filtered through the same question: What will it cost me in taxes?

People end up taking the minimum required by their RMDs and missing the years when they actually have the energy and desire to use their wealth. The government's distribution schedule isn't designed around your travel plans.

Building a way out

The good news is that selling everything at once is rarely the right answer anyway. There are structured approaches that can gradually reduce concentration, spread tax consequences over time and preserve flexibility.

The most straightforward is staged selling across multiple tax years, which allows an investor to recognize gains in manageable increments rather than all at once.

Paired with detailed cash flow modeling in retirement, this approach can actually free people up to spend more by making the tax exposure visible and predictable.

For investors who want to build a more systematic tax strategy, they can offset their gains through tax-loss harvesting.

Direct indexing strategies have also evolved considerably. The newer long/short variation is particularly relevant for people dealing with concentrated positions.

These methods are designed to generate losses over time, which may help offset gains as a concentrated position is gradually reduced. The goal isn't to predict market direction, but to create flexibility and improve after-tax outcomes.

Another option worth serious consideration, especially in the current interest rate environment, is the charitable remainder trust.

The core appeal is simple: An investor contributes appreciated stock to the trust, and the trust sells the stock tax-free and reinvests the full proceeds.

The investor receives an income stream from the trust over their lifetime, and the tax liability on the original gain is spread across those payments rather than being due all at once.

With current interest rates, distribution rates from these trusts may exceed 10%, and the deduction generated can be paired strategically with Roth conversions in the years before RMDs begin.

None of these strategies requires perfection or a full exit. What they do require is a willingness to start. A conversation with your financial adviser is a meaningful way to get the ball rolling.

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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.

For decades, you've saved in tax-deferred retirement accounts, watching your balance compound untaxed. Then you turn 73, and the IRS comes calling.

Required minimum distributions (RMDs) force you to begin withdrawing and paying taxes on those savings — whether you need the money or not.

What many retirees don't realize until it's too late is that RMDs don't just create a tax bill. They trigger a cascade of consequences that can raise Medicare premiums, subject Social Security to taxation, push you into higher brackets and affect your estate planning.

Understanding these traps before your first RMD can save you thousands over your retirement.

1. The Medicare premium surcharge trap

One of the most common surprises hits retirees in their monthly Medicare bills. Part B and Part D premiums are income-based, with higher earners paying more through income-related monthly adjustment amounts (IRMAAs).

The trap: IRMAA is based on your modified adjusted gross income (MAGI) from two years prior, so a large RMD in 2025 raises your premiums in 2027.

For 2026, surcharges begin at $218,000 for joint filers. At the highest tier, Part B premiums reach $689.90 per month per person, versus the standard $202.90.

A $1 million account generates an RMD of roughly $37,736 at age 73. If that pushes you just over an IRMAA threshold, you could pay an extra $2,000 to $5,000 a year in premiums — money that never shows up on your tax return but flows directly from your RMD.

2. The Social Security taxation trap

Up to 85% of your Social Security benefits can become taxable depending on your combined income (adjusted gross income, tax-exempt interest and half of your benefits). The thresholds are surprisingly low: $32,000 for joint filers and $25,000 for single filers.

Large RMDs push many retirees over these thresholds, turning tax-free Social Security income into taxable income. Consider a couple with $40,000 in Social Security and $30,000 in pension income.

Without RMDs, they might owe minimal tax, but add a $50,000 RMD and suddenly $34,000 of their Social Security becomes taxable (85% of $40,000), sharply raising their bill.

The math gets worse because the effect is marginal. In the phase-in range, every additional dollar of income makes 85 cents of Social Security taxable.

3. The tax bracket cascade

RMDs don't just add to your taxable income — they can push you into higher tax brackets, where each additional dollar is taxed at a higher rate. The 2026 federal brackets create several danger zones where modest RMDs trigger significant tax increases.

For married couples filing jointly, the jump from the 12% to 22% bracket occurs at $100,800 of taxable income. The next jump to 24% happens at $211,400. These thresholds are inflation-adjusted annually, but RMD amounts grow faster as you age and your life expectancy decreases on the IRS tables.

The hidden trap: Many retirees assume they'll be in a lower bracket in retirement. But combine RMDs with Social Security, pensions and perhaps part-time or investment income, and your marginal rate can exceed what it was in your working years.

4. The net investment income tax trap

Once your MAGI exceeds $250,000 (joint) or $200,000 (single), you face the 3.8% net investment income tax (NIIT) on interest, dividends and capital gains.

The indirect trap: RMDs don't count as net investment income themselves, but they raise your MAGI. If that pushes you over the NIIT threshold, your investment income becomes subject to the extra 3.8% tax.

For retirees with substantial taxable accounts, this can add thousands to the annual bill.

5. The charitable deduction trap

Many retirees donate to charity and assume they can deduct it. But the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction to $31,500 for joint filers in 2025, making itemizing unnecessary for most households.

The trap: if you take the standard deduction, your charitable contributions provide zero tax benefit, while your RMD increases your taxable income. The solution is a qualified charitable distribution (QCD), but many retirees don't learn about it until after they've already taken their RMD and made separate gifts, missing the chance to lower their taxable income.

QCDs let retirees 70½ and older transfer up to $111,000 annually, directly from an IRA to charity. The distribution counts toward your RMD but doesn't appear in taxable income, effectively making your giving tax-deductible even if you take the standard deduction.

6. The state tax trap

While the federal consequences of RMDs are widely discussed, state treatment varies dramatically. Some states fully exempt retirement distributions, others tax them at ordinary income rates, and a few have special provisions.

In high-tax states, RMDs can trigger substantial bills. California's top rate is 12.3% (plus a 1% surcharge over $1 million), and New York's reaches 10.9%. A $100,000 RMD could generate $10,000 or more in state taxes alone.

The trap: Retirees who move to low- or no-income-tax states, such as Florida, Texas and Nevada, can avoid this. Those who delay the move may pay substantial state taxes on RMDs for years.

7. The widow's penalty

When one spouse dies, the survivor faces a particularly painful RMD trap. Joint filers enjoy wider brackets and higher standard deductions than single filers. After the year of death, the survivor must file as single, with brackets roughly half the width of joint ones.

Yet the RMD continues at nearly the same level, based on the account balance and the survivor's age, not filing status. This combination often pushes widows and widowers into significantly higher brackets, a phenomenon planners call the "widow's penalty."

How to minimize RMD tax traps

While you can't avoid RMDs entirely once you reach the required age, several strategies can reduce their tax impact.

Roth conversions before RMDs begin. Converting traditional IRA funds to Roth IRAs in your 60s and early 70s lets you control the timing and amount of taxable income. Roth IRAs have no RMDs during the owner's lifetime, and qualified withdrawals are tax-free.

Strategic timing of other income. Delay Social Security or spread capital gains across multiple years to create lower-income years for Roth conversions or to minimize the impact of early RMDs.

Qualified charitable distributions. Use QCDs to satisfy RMD requirements while reducing taxable income if you're charitably inclined.

Asset location planning. Keep tax-efficient investments (index funds, municipal bonds) in taxable accounts and high-income holdings (REITs, bonds) in Roth accounts where possible.

The key is planning ahead. By the time you face your first RMD, many of the most effective strategies are off the table. Working with a financial adviser in your 60s to model scenarios can help you avoid these hidden traps before they cost you.

Related Content

• New RMD Rules: Starting Age, Penalties, Roth 401(k)s, and More
• Got $2.5 Million Saved for Retirement? Here Are the Huge RMDs You Must Take at 73, 75, 80 and 85
• 5 Costly RMD Mistakes That Will Put a Dent in Your Savings (and How Early Planning Can Help)
• 7 Assets to Leave Out of Your Roth IRA, From a Financial Planner
• 7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial Planner

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.

For nearly three decades, financial planning experts relied on a 30-year benchmark: retire at 65, and your money will last to age 95. However, medical advancements, earlier career exits, and active longevity have shifted the baseline.

According to Social Security Administration (SSA) data, a 65-year-old married couple has about a 50% chance that at least one partner will live past 90, and a 20% chance of reaching 95. So, preparing for a 40-year retirement is becoming the new normal for many.

Yet while most investors recognize that living longer requires a larger nest egg, few might account for how a four-decade timeline reshapes the tax landscape. Stretching a retirement portfolio across that span exposes wealth to escalating forced withdrawals, Medicare surcharges, and bracket jumps that standard 30-year models might not capture.

Here are the primary financial and tax risks of a potential 40-year retirement — and how you might adapt your strategy accordingly.

Financial Risks

1. The compounding math of inflation

Across a 30-year period, inflation is already a hassle to deal with. But over 40 years, it can significantly degrade your purchasing power.

A quick way to visualize this decay is the "Rule of 72." This rule states that, at a modest 3% annual inflation rate, your buying power is cut in half roughly every 24 years. By year 40, a single dollar retains barely 30% of its original value, as shown in the table below.

So, a lifestyle that costs $100,000 at age 60 could require over $326,000 annually by age 100 to maintain the same standard of living, assuming a flat inflation rate (though, of course, economic periods fluctuate — more on that below).

2. Exposure to more market downturns

Historically, the S&P 500 Index enters a bear market (a decline of 20% or more) roughly once every 4 to 5 years. While market cycles are unpredictable, these historical patterns suggest that over a typical retirement:

• A 30-year plan will navigate between 6 and 7 bear markets.
• A 40-year plan must survive 8 to 10 major downturns.

Naturally, when these downturns occur matters just as much as how many you face.

Research on sequence-of-returns risk shows that a severe crash in the first three years of retirement is far more damaging to a portfolio’s longevity than one occurring two decades later.

Extending your retirement to 40 years compounds this vulnerability in two ways. 1) It doubles your chances of starting retirement during a market trough. 2) Even if you survive an early crash, adding a fourth decade increases the odds of a second prolonged downturn later in life — when years of withdrawals have already left your portfolio with less capital to recover.

3. A multiple-decade healthcare horizon

In a typical 30-year plan, healthcare and long-term care expenses are frequently modeled as a late-stage spike occurring in the final three to five years of life.

But in a 40-year plan, medical expenses can become a multi-decade expense.

Fidelity recently reported in its annual Retiree Health Care Cost Estimate that a single 65-year-old retiring today can expect to spend an average of $185,500 (or roughly $371,000 for a couple) out of pocket on healthcare throughout retirement (and that assumes standard Medicare coverage without long-term care needs).

Comprehensive long-term care or extended medical needs over 40 years can push total healthcare expenditures well beyond $600,000 for a couple, far outpacing general consumer price index (CPI) inflation rates.

Managing these financial risks over 40 years requires careful portfolio drawdowns. But withdrawing more capital to keep up with inflation and healthcare introduces a secondary threat: triggering a domino effect of late-life tax penalties.

Tax Risks

1. The RMD expansion spike

When you save money in a traditional IRA or 401(k), the government lets you defer paying income taxes on it right away. But they won't wait forever.

Under current law (SECURE 2.0), starting between ages 73 and 75, the government enforces a rule called a required minimum distribution (RMD). This rule requires you to withdraw a set amount each year so they can tax it.

The catch? The older you get, the bigger the percentage you are forced to take out.

The IRS divides your account balance by a life expectancy divisor that shrinks every year you live. Because you divide by a smaller number, the required withdrawal percentage spikes as you age:

• Age 75: Divisor 24.6 (~4.07% of balance mandatory withdrawal)
• Age 85: Divisor 16.0 (~6.25% of balance mandatory withdrawal)
• Age 95: Divisor 8.9 (~11.24% of balance mandatory withdrawal)

If tax-deferred accounts compound undisturbed for 15 to 20 years before RMDs begin, a $1.5 million balance at age 60 could easily grow to over $3 million by age 80.

A forced 6.25% withdrawal on $3 million means $187,500 in mandatory taxable income in a single year. This extra income can push you into higher tax brackets and exceed your actual lifestyle cash-flow needs.

2. The survivor or 'widow's tax' penalty

When one spouse passes away during a multi-decade retirement, the surviving spouse often inherits the combined balance of tax-deferred accounts. However, their tax filing status changes from married filing jointly to single the next year after their spouse passed away.

Single federal tax brackets are approximately half as wide as joint brackets for the same rate tiers. The result? Higher taxes on the surviving spouse, also known as the "widow's tax" penalty.

• For example, the threshold to enter the 24% or 32% single federal tax bracket is roughly half the dollar amount allowed for joint filers.
• The impact is that the surviving spouse receives nearly the same mandatory RMD income stream from inherited accounts, but pays higher marginal tax rates at much lower income levels. Over a 40-year horizon, this survivor penalty can erode wealth when late-life health costs peak.

For more information, check out Kiplinger's report, Avoiding the Widows' Penalty Tax Trap After a Spouse Passes.

3. Social Security 'tax torpedo' and IRMAA surcharges

During a standard 30-year retirement, tax traps are often viewed as short-term hurdles in late life. With a 40-year projection, however, decades of tax-deferred growth force larger required distributions, which can subject your wealth to multi-decade tax penalties:

Social Security tax torpedo. The IRS determines Social Security benefit taxation using a figure called "provisional income."

• This is basically your adjusted gross income (AGI) plus tax-exempt interest and 50% of your Social Security benefits.
• By increasing provisional income with, say, higher RMDs, up to 85% of your Social Security benefits may become subject to federal income tax.
• For instance, taking just $1,000 extra from an IRA can expose up to $850 of Social Security benefits to taxation, effectively pushing your marginal tax rate above 40%.

IRMAA Medicare surcharges. Realized capital gains or large IRA withdrawals can also cross Medicare's income-related monthly adjustment amount (IRMAA) thresholds.

• In 2026, the first IRMAA threshold begins at $109,000 for single filers and $218,000 for joint filers. (Because Medicare uses a two-year tax lookback, your 2026 premiums are actually determined by your modified adjusted gross income (MAGI) from your 2024 tax return.)
• Because IRMAA uses strict "cliff" thresholds rather than marginal tiers, crossing these thresholds by as little as $1 can cost you thousands in retirement through full monthly premium surcharges on Part B and Part D for both spouses.

Absorbing high-tier IRMAA surcharges ($6,900 to $13,800+ annually for a couple) over 15 to 20+ years, rather than just a few final years, can dramatically accelerate portfolio depletion in your 80s and 90s.

Related: 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later.

Update Your Tax Plan

Although minimizing your taxes on a four-decade retirement plan isn't everything, avoiding taxes can help you control your tax brackets across different life phases.

Below are a few strategies that may help protect a 40-year portfolio (though this list is certainly not exhaustive; be sure to consult a qualified tax professional regarding your specific situation).

1. Maximize the 'gap years' with strategic Roth conversions

The period between your career exit and the start of Social Security and forced RMDs (typically ages 60 to 73 or 75) can be used as a valuable planning window. During these relatively "low" income periods, your marginal tax rate might be lower than when you were working.

Instead of letting this low-tax window go to waste, you can try a multi-year Roth conversion.

How it works: Suppose a retired couple (both born in 1960 or 1961) pays $80,000 in annual living expenses from savings, which generates $2,200 in high-yield taxable interest income.

To capitalize on this temporary "tax valley," they convert $100,000 from a traditional IRA to a Roth IRA in 2026:

• Gross income: $102,200 ($100,000 conversion + $2,200 interest)
• Deductions: -$35,500 (2026 standard deduction for joint filers 65+)
• Net taxable income: $66,700

This taxable income figure of $66,700 falls squarely into the lowest federal tax tiers — the 10% and 12% brackets (which max out at $100,800 for joint filers in 2026).

Paying this relatively low tax rate today permanently shifts those funds into tax-free Roth status.

By the time RMDs kick in at age 75, the couple’s traditional IRA balance is substantially smaller, suppressing forced distributions, mitigating the Social Security tax trap, and shielding them from higher tax brackets in their 80s and 90s.

Related: 6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't).

2. Treat your HSA as an extended-life medical account

Health savings accounts (HSAs) offer an unmatched triple-tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are 100% tax-free.

In 2026, individuals can contribute up to $4,400 (or $8,750 for family coverage), plus a $1,000 catch-up contribution for those age 55 and older. (Provided they are not yet enrolled in Medicare, which stops all active HSA contributions).

Furthermore, expanded 2026 eligibility rules now include certain catastrophic marketplace plans and direct primary care (DPC) arrangements alongside traditional high-deductible health plans (HDHPs).

How it works: Instead of spending HSA funds as medical bills arise during your working years, pay those bills out of pocket, digitally scan and back up the receipts, and leave the HSA invested in low-cost index funds. Over 20 to 30 years, an HSA balance can grow into a multi-hundred-thousand-dollar tax-free health fund.

• Then, when late-life healthcare costs inevitably rise in your 80s or 90s, you can draw from the HSA completely tax-free to cover doctor bills and long-term care.
• This eliminates the need for extra traditional IRA distributions, keeping your taxable income low and protecting your core retirement portfolio.

3. Establish a three-bucket asset location model

A 40-year portfolio may need more spending flexibility than a 30-year window. To help navigate market cycles over four decades, structure your wealth across three distinct tax environments:

How it works: Having balanced amounts across all three buckets allows you to "blend" annual withdrawals. For example, if you need an extra $10,000 in a given year for a home improvement or medical event, withdrawing that money from a Roth account or using unrealized cash/principal from a taxable brokerage account may keep your taxable income from crossing an IRMAA cliff or perhaps triggering higher Social Security income taxes.

A quick warning on taxable accounts: Liquidating appreciated stock in a taxable brokerage account to generate cash triggers realized capital gains tax. These gains increase your modified adjusted gross income (MAGI), which can inadvertently trigger an IRMAA surcharge.

Furthermore, high earners should watch out for the 3.8% net investment income tax (NIIT), which sits on top of capital gains tax rates and can push your total capital gains tax rate up to 23.8%.

The bottom line

Living to 95 or 100 should be celebrated without fear of financial liability. But stretched over four decades, tax drag becomes a compounding weight on your portfolio if you rely on an outdated 30-year model.

Thus, achieving a 40-year retirement isn't just about accumulating a larger total sum — it's about controlling when, where, and how you pay the IRS over the next forty years.

By converting pre-tax assets early, building multi-bucket flexibility, and leveraging tax-free accounts like Roths and HSAs, you might help ensure your wealth lasts as long as you do.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

Read More

• 5 Little-Known Senior Tax Deductions in 2026
• States With No Retirement Tax Ranked by Medical Care
• Taxes on Social Security Benefits: 6 Things to Know

Medical billing mistakes are an expensive epidemic in American healthcare.

Studies consistently show that a staggering majority of hospital invoices contain errors, ranging from double billing to miscoded procedures.

For decades, consumer advocates have given the same advice: Request an itemized statement and review the codes. But for the average patient, staring at a sheet of five-digit current procedural terminology (CPT) codes is like trying to read hieroglyphics.

Fortunately, the balance of power is shifting. Generative artificial intelligence (AI) tools such as OpenAI's ChatGPT and Google's Gemini have emerged as powerful personal finance assistants.

By feeding cryptic billing logs into these AI platforms, consumers can instantly break down complex medical jargon, verify insurance logic and pinpoint specific overcharges that human eyes routinely overlook.

The AI audit in action: A case study

To understand exactly how this works, let me share a real-world analysis related to Mohs surgery I underwent earlier this year. Upon receiving my itemized statement from my medical provider, I compared it with my insurer's explanation of benefits (EOB).

The sticker price was a dizzying $3,802, loaded with confusing five-digit codes and multiple offsetting entries, and my insurance covered just $1,390, leaving me responsible for $2,412 out-of-pocket.

That's when I turned to Gemini.

I snipped the detailed information from my bill and saved it as a PDF, keeping my personal information private. I uploaded the document to Gemini with the following prompt: Analyze this bill and tell me what the codes mean and assess whether the insurance coverage is correct.

Gemini systematically untangled each line item to explain each in easy-to-understand terms.

The AI discovery: The consultation trap

Beyond mapping codes to plain English, AI's real value lies in its ability to cross-examine billing logic against standard insurance rules. AI successfully verified that the provider was treating me as an "in-network" patient due to the presence of "Code 3000-Contractual Write-Offs" across seven distinct entries.

The AI mathematically validated that the write-offs properly reduced the gross retail price to an allowed contract amount.

But critically, AI flagged a glaring systemic discrepancy that I should inquire about, in this case an office consultation fee. AI flagged that there was a very high probability that this consultation line was being contested or denied entirely by the insurance provider.

Insurance companies generally bundle the initial evaluation into the surgical procedure if they happen on the same day, unless the doctor evaluated a separate, unrelated medical issue during that same visit.

In my situation, there was no such "consultation." I had been referred to the Mohs surgeon by my regular dermatologist after a biopsy.

Because the itemized bill split the write-offs across multiple entries for "technical" and "professional" components, it effectively masked whether the core consultation line was rejected and pushed directly onto my out-of-pocket responsibility.

After calling the provider and disputing the charge, they removed the office consultation fee of $269.

Your step-by-step guide to auditing bills with AI

If you want to put ChatGPT or Gemini to work on your medical bills, follow this strategic blueprint to ensure accuracy and protect your financial interests:

Secure an itemized bill. Don't rely on the summary invoice that simply demands a "balance due." Call the provider's billing office or log into your patient portal and request an itemized statement showing CPT codes, revenue codes and logged contractual write-offs.

Redact sensitive information. Before uploading any document or typing text into an AI model, scratch out your name, Social Security number, address and policy ID number to protect your medical privacy.

Deploy a structured audit prompt. Feed the text or a clear image of the bill into the AI. Use a direct prompt such as: "Act as an expert medical billing advocate. Decode these CPT codes, explain what procedures were done, calculate the total write-offs, and check for standard insurance logic errors."

Cross-reference with your EOB. Never pay a hospital bill until you match it against the explanation of benefits (EOB) mailed by your health insurer. If the AI identified a contested line — such as the 99243E consultation fee — verify if your insurer passed 100% of that charge onto you.

Arm yourself for the dispute. If the AI spots a bundling error or an overcharge exceeding the allowed contract threshold, call the medical provider's billing office.

If appropriate, you can ask them to apply a specific modifier to prove the consultation was distinct from the surgery, or dispute the charge entirely if no separate consultation took place. Know that mistakes can occur in coding that cause insurers to not cover otherwise covered procedures.

The bottom line

Artificial intelligence won't write a check for you, but it acts as a free, highly trained financial advocate.

Spending 10 minutes running your medical invoices through an AI model can prevent you from paying hundreds of dollars in automated administrative errors.

Related Content

• How to Negotiate to Lower Your Medical Bills: These Strategies Can Help Reduce Your Costs
• 15 Ways To Lower Your Healthcare Costs
• Should Your Asset Allocation Change When You Retire?
• The Fiduciary Rule Is Gone (Again): Why Your Retirement Safety Net Just Shrank
• This Is How the 'Brady Bunch' Safety Net (aka a QTIP Trust) Protects Your Kids' Inheritance

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.

There's a conversation that comes up in the mortgage business more than you'd think.

Consider a retired couple, financially comfortable, with no substantial debt, a home they own outright and brokerage and retirement accounts that have been accumulating wealth for 30 years.

They want to buy a place in Florida, move closer to grandchildren or downsize and free up some equity. They apply to get preapproved to buy a home with financing — and get denied by the lender.

The issue isn't their credit score, nor is it their ability to afford the payments. It's their income. It doesn't meet the threshold the lender is looking for.

That experience is more common than most people realize, and it points to something worth understanding before you find yourself in the same position.

Traditional mortgage guidelines weren't built for most retirees

Mortgage qualification in the United States runs on a single central question: How much verifiable income comes in every month?

That question made sense when the dominant borrower was a salaried employee in their 30s or 40s, with pay stubs, W-2s and a tidy debt-to-income (DTI) ratio. The whole underwriting framework, from DTI calculation to income documentation requirements to approval logic, was calibrated around that person.

Retirement changes the picture entirely. Social Security counts. Pension income counts. Required minimum distributions (RMDs) from an IRA count, provided they've already started, count.

But a brokerage account with $900,000 in it? That's negligible. A paid-off home worth $700,000? That can't show up as income.

In conventional underwriting, home value doesn't service a mortgage.

According to research from the Center for Retirement Research at Boston College, rejection rates rise consistently with age. Borrowers ages 60 to 69 are 1.54% more likely to be denied than younger applicants. Past 70, that gap reaches 2.7%.

Wealth is not the problem. The mismatch between where that wealth lives and what lenders are looking for is.

Asset depletion as a workaround

A methodology called "asset depletion" — you might also hear it called "asset-based qualification" or "asset dissipation" — exists specifically to bridge that gap. It's been around for a while, and most lenders are aware of it.

The issue is that not all offer it, and among those that do, the version available through conventional channels often doesn't produce enough qualifying income to matter. That distinction is worth understanding before you start shopping.

Here's the basic idea. A lender totals your eligible liquid assets (checking, savings, taxable brokerage accounts and retirement accounts after a standard discount for taxes and market risk) and runs a calculation.

Under conventional mortgage standards, the total gets divided across the remaining loan term to produce a synthetic monthly income figure. That number goes into the DTI calculation alongside whatever documented income you're already receiving. If the math works, you qualify.

To put some numbers to it: Say a retiree has $2 million in a brokerage account and wants to buy a home in Boca Raton, Florida. Under conventional asset depletion guidelines, that $2 million gets discounted roughly 30%, then divided across 360 months, producing about $3,900 a month in qualifying monthly income.

Combined with Social Security, that might not be enough to qualify for a home at the price point they're looking at in that market.

The same $2 million run through a non-QM, or non-qualified mortgage, framework, where lenders can divide by as little as 60 months rather than 360, produces closer to $23,000 a month in qualifying income.

That's a different conversation entirely. Instead of being ineligible to purchase a home, the buyer can easily qualify to buy a home in excess of $1 million. It's a huge part of why lender selection matters. While the assets didn't change, the calculation changes the qualification.

What counts as eligible is key. Liquid, accessible accounts generally do. A paid-off home doesn't since equity isn't income until you tap it.

Business assets, illiquid investments, and anything pledged as collateral typically get excluded. The discount applied to retirement accounts varies by lender, with most taking somewhere from 30% to 40% off the top to account for the tax liability and withdrawal timing.

What to do before you apply

Most big banks and conventional lenders don't offer asset-based qualification, or they offer a narrow version of it that doesn't serve most retiree profiles well.

The Fannie Mae and Freddie Mac framework for asset depletion divides eligible assets over 360 months, regardless of the actual loan term.

For most retirees, the monthly income figure that process produces is too compressed to move the needle on a purchase loan. If you're working with a lender whose only option is conforming underwriting, you might be hearing "no" when a different lender would have said "yes."

Portfolio lenders, meaning institutions that hold loans on their own books rather than selling them into the secondary market, can offer asset-based qualification, but they tend to carry higher rates than lenders operating in the non-QM wholesale space.

Non-QM lenders set their own underwriting guidelines rather than following Fannie or Freddie's framework, and because they distribute through wholesale channels, the pricing is generally more competitive.

Non-QM is not a synonym for high-risk. For a retiree with substantial assets and clean credit, it's often the channel that produces the best combination of qualification flexibility and rate.

The catch is that most consumers don't have direct access to these lenders, and the ones they can access typically have higher rates.

Working with a mortgage broker rather than going directly to a bank or portfolio lender matters here more than in most borrowing situations because you get more access to lenders, and more options often mean lower rates as lenders compete for your business.

Brokers have wholesale relationships across multiple investors and underwriting frameworks and can match your financial profile to the product built for it.

On the documentation side: Be ready. Lenders using asset depletion typically want two to three months of statements across every eligible account, proof of ownership and, sometimes, a written explanation for any large deposits or transfers in the recent statement period.

If your accounts are spread across four or five institutions, start gathering statements early.

One thing worth saying plainly: Drawing down the assets you use to qualify affects the financial picture those assets were meant to support long term. This decision sits at the intersection of mortgage strategy and retirement income planning.

A conversation with a financial adviser before you apply will help you think through whether the structure makes sense for your situation.

Who you talk to determines your ability to buy a home

Getting this right has less to do with how much you have than with understanding, before you walk into anyone's office, that the conventional mortgage path wasn't built for your financial profile.

The borrowers who find their way through it are usually the ones who went looking for lenders equipped to work with them.

Remember, a denial is not a verdict.

Related Content

• Can You Get a Mortgage In Retirement? And Should You?
• A Different Way to Approach Your Mortgage in Retirement
• Should You Pay Off Your Mortgage Before You Retire? A Financial Planner Gets Real
• Four Reasons to Buy When You Downsize for Retirement
• High Mortgage Rates Are Holding My Retirement Hostage: Can I Still Downsize and Retire?

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.

Welcome to Kiplinger's My First $1 Million series, in which we hear from people who have made $1 million.

They're sharing how they did it and what they're doing with it. This time, we hear from a 52-year-old senior category manager in aluminum in Southeast Michigan. He's married and still working, making $175,000 after starting at $40,000 in 1996.

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?

Slow and steady wins the race! A small inheritance came at the same time as my first $1 million.

Shortly after getting married in 2004 — my wife became a U.S. citizen in 2006 — we created a will to assign her as beneficiary, and it was on that day, about 10 years after college graduation, that the lawyer looked us in the eyes, very impressed at the $112,000 in my 401(k), and he congratulated me on being a millionaire…

I was a bit confused, but he was the first, and not the last, to explain that money doubles on average every 10 years (Rule of 72).

So I learned that the $112,000 would be $1 million by the time I retire at 67. It was an eye-opening and rewarding experience — and the day when we took to budgeting more seriously.

What are you doing with the money?

Hired a financial adviser to give guidance and suggest new products.

The Fun Stuff

Did you do anything to celebrate?

A high-five in the kitchen, then we increased our 401(k) and Roth contributions and set a new goal to pursue $4 million net worth.

What is the best part of making $1 million?

Being able to relax about the strict budget, but not too much. Still, the goal is to live happy without debt.

Did your life change?

No. Not at all. We are halfway to our end goal of $4 million and probably have 10 years to go?

I'd be 62 and the wife 56, if all goes to plan, and we will then start a new chapter.

We plan to keep busy volunteering at local schools, church and nonprofit groups we support. Maybe we'll call it semiretired, but we'll be giving back time to our community.

Does anyone know you're a millionaire?

Our kids, but we don't really think about it, let alone talk about it.

We are the silent millionaires next door. Our neighbors' houses are just 15 feet away.

Any plans to retire early?

What's "early" mean? We are pursuing a $4 million net worth, and when the time comes, it comes.

Retirement is not an age to us — it's having a net worth with enough to leave behind a legacy.

Looking Back

Anything you would do differently?

I would have chosen memories over material purchases. I'd have taken my parents on vacations with me instead of driving a new Jeep.

What advice would you give to your younger self?

Don't go into debt just to look cool with friends. Friends who care about fancy cars don't matter, and those who matter won't care what you drive.

Also, learn how to DIY — with everything! Over time, I've learned how to do my own brake jobs, finished my own basement, remodeled my kitchen and bathrooms, repair my own car.

I had a 2012 Dodge Avenger with 100,000 miles (paid off early in 2016) that I gifted to my daughter for a college beater. Every week that she drives it instead of a new lease is a $100 bill back into her pocket — every week!

Then we accrued the monthly payments until my wife and I had cash to buy a new 2024 Chevy Trailblazer with no car payment.

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

Not really … maybe … likely. Nothing memorable, though.

I prefer the quick five-minute articles from Kiplinger, Money, Fidelity, Vanguard and Fortune.

Did you work with a financial adviser?

Yes. Bassem Moez at Fortress Financial.

Did anyone help you early on?

My dad. He was laid off in the '80s, and it was tough times. Having cheese and crackers was one of my favorite dinners.

Yet, through his hardship, the family of seven endured, and we all learned about saving money for a rainy day, having an emergency fund, working hard and putting in effort, avoiding debt — he was a guiding light to all of us kids.

He retired in the '90s with a full pension and a 401(k) that he was one of the first ever to have access to.

He took time at the dinner table to give all of us kids savings and other financial advice.

Looking Ahead

Plans for your next $1 million?

Using a financial adviser to accelerate investments in non-typical products that are low risk but offer after-tax Roth-like income streams that we can use first, before tapping our 401(k)s, when taxes will be due.

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

Create a budget and stick to it. Debt is enemy No. 1.

Consider community college for the first two years, then transfer credits, or consider joining the military to help pay for college, or find a profession, like being an electrician or a plumber, instead of getting a $100,000 degree.

I worked while attending college (engineering degree) and lived at home mostly, so it took me five years to finish a four-year degree, but I graduated with minimal school debt and nearly five years of experience, so I hit the ground running at a young age. No regrets there!

I find it sickening that younger generations rack up $100,000 in school loans just to say they graduated from a fancy college that most hiring managers don't care as much about as the three C's — compatibility, competence and commitment.

Do you have an estate plan?

Yes, the full package, everything. After closing my parents' estate, I quickly learned about estate planning and trusts and wealth preservation for beneficiaries.

I have five siblings — I'm the second youngest — and being the executor/personal representative for my parents' estate, I learned a lot and recommend everyone set up a trust.

What are you glad you know before you retire?

Life is short. Health and fitness matter much more than I'd admit when I was in my 30s and 40s raising kids. I let my body slip a bit.

At least I'm addressing it now in my 50s so I can hopefully live to my 90s and actually travel and enjoy my early retirement years while the joints are still flexible.

What do you wish you'd known …

When you first started saving? Planning a more diversified portfolio for tax planning in early retirement, having both 401(k) and Roth after-tax plans to optimize withdrawal strategy.

Maybe I'd have found some rental properties, but my budget would have only allowed me to buy into areas where the renters would be higher risk. I feared I'd spend more money on court evictions and repairs, so I avoided it.

When you first started investing? You will not miss the money invested. A proper budget and small sacrifices matter more than delaying your retirement savings. Start early is the first step!

When you first started working with a financial professional? Interview with at least three in person. Choosing a like-minded adviser is a good idea. The one we liked the most was in his 70s. He admitted he was trying to sell his business, so we avoided him, but I liked him the most.

Then, meet quarterly — a good adviser should not be churning products but explaining changes.

Anything you'd like to add?

I mentioned other things I don't regret, but another thing is skipping an expensive wedding — that's another debt young couples can avoid. People who matter won't care about your venue, and those who do care don't matter. Kick them to the curb and find new friends that matter.

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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When Jude and Matt Bell got engaged, they faced their first major argument: minimalist or floral dinnerware? As a money-management writer, Matt notes that these small decisions often reveal deeper differences you bring into a marriage.

After decades of disagreements, you’d think couples would have mastered the art of compromise by retirement age. Alas, that doesn’t seem to be the case for many. Studies show that more than one third of divorces today occur between people 50 and older — what’s often called "gray divorce."

The good news, financial experts say, is that the same money decisions that strain a marriage can also strengthen it. While money may not buy a happy marriage in retirement, these financial moves can help keep partners aligned.

1. Build a plan that you both believe in

What works best to keep couples together might not be found in a therapist’s office or in the bedroom. Rather, it sits on a printed page or screen.

"One of the biggest things that keeps couples together in retirement is having a financial plan they both understand and believe in," says Nathan Sebesta, CFP® and founder of Access Wealth Strategies.

The confidence a plan provides is measurable. According to Fidelity’s 2026 State of Retirement Planning study, Americans with a financial plan in place are more than twice as likely as their peers (83% vs 38%) to feel confident about their retirement prospects.

Bell agrees a plan is invaluable, especially when spouses disagree about how quickly to spend down their savings, and says it’s often worth working with an adviser who can bring objectivity.

"The ideal is to create a plan where your agreed-upon lifestyle needs are met for the rest of your lives," he says.

2. Go on a "money date"

A plan only works if couples keep talking. And talking about money, specifically, is something many couples avoid. In fact, the Fidelity Investments Couples & Money study found that 49% of couples steer clear of financial conversations to head off arguments.

Bell’s fix is what he calls "money dates." "Get out of the house and away from all the distractions. And then talk about money," he says. "What’s working? What isn’t working? What would you like to pursue and what will it take financially to get there? Establishing the habit of talking about money will be so good for your marriage. It’ll keep you aligned and working as a team."

3. Talk about what money means, not just what it costs

As with the artistic design of dinnerware, what couples argue about is often deeper than the dollars.

"One of the biggest mistakes couples make in retirement is assuming they’re arguing about money when they’re actually arguing about what money represents," says Laura Mattia, author, CFP® and financial adviser at Wealth Enhancement. "One spouse’s desire to spend may reflect a desire for experiences, freedom or making the most of healthy years ahead. The other spouse’s reluctance to spend is often rooted in a need for security and fear of becoming financially vulnerable later in life."

The healthiest couples, Mattia says, don’t start by asking, "Can we afford it?" They start by asking, "What are we each trying to accomplish?" As she puts it: "The breakthrough happens when couples stop debating the money and start discussing the values and fears underneath it."

4. Commit to full transparency

A potential relationship killer at any stage of marriage is financial infidelity. And many people take it seriously: a Bankrate survey found 43% of U.S. adults believe keeping financial secrets is at least as bad as physical cheating. Yet nearly half of couples admit they don’t know everything about their partner’s finances.

Sebesta advocates for complete transparency, though he points out that the financial accounts themselves matter less than the openness. "You don’t have to combine every account, but both spouses should know where everything is, how the household finances work and what happens if something happens to the other," he says.

5. Build in financial margin and agree on how fast to spend it down

"How fast do we spend this down?" can become a major marital question in retirement. One spouse wants to enjoy the money now; the other fears outliving it. Even couples who've saved diligently can find themselves at odds over how to enjoy it. A Western & Southern Financial Group survey found just 43% of married Americans completely agreed on what retirement would look like.

Bell’s antidote is margin, a gap between income and essential expenses. Living primarily on one income early in his marriage created that cushion, and the same principle carries into retirement. "For anyone planning for retirement, build margin into your plan," he says. "That means creating a plan that doesn’t require everything to go perfectly. That’ll keep stress low and flexibility high."

But he cautions against being so conservative that couples miss out. "You don’t want to run out of money, but you also don’t want to die with so much in reserve that you missed out on some things that would have mattered to you," he says. One approach Bell favors is "giving while you're living," such as helping adult children with a down payment on a home so you get to enjoy watching the impact.

Mattia frames the balancing act as a shift in perspective. "Common ground emerges when couples stop treating retirement as a purely financial transition and start treating it as a life transition," she says.

6. Invest in purpose and in the marriage itself

Retirement can strip away a major source of identity and structure: work. One peer-reviewed study found that fully retired people reported a significantly lower sense of purpose than those still working or partially retired.

Bell calls lost purpose "a huge factor" in late-life struggles. His advice is to decide, before retiring, how you’ll continue to use your skills and passions. "Just because you’re no longer drawing a paycheck doesn’t mean you're not needed," he says.

The same intentionality applies to the marriage itself. "If you want to be good at marriage, do the same," he says. "Go on a marriage retreat. Read books about marriage together." He points to research suggesting that couples can get the most joy per dollar from spending on shared experiences.

Catherine Valega, CFP® and adviser at Green Bee Advisory, suggests couples map out those experiences deliberately. Do the ambitious travel while you have the energy, she advises, and plan and budget for how you’ll want to spend time with family as you age. "Think of retirement as a starting line, not an end line," she says. "You could be spending 40 years in this phase of life."

In the end, a lasting marriage is built on navigating decisions large and small, right down to the pattern on the plates. Whose turn it is to wash those plates, on the other hand, is one problem money will never solve.

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I grew up in a time when it felt possible to figure things out on your own. It was before smartphones and online tutorials. If something broke, we learned how to fix it. If we wanted to learn something, we found a way.

That mindset is still alive and well today, although we have more access to information than any generation before us. Whether we're repairing a vehicle, researching a medical diagnosis or learning a new skill, the answer is often just a few clicks away.

That same confidence has served many people well in their financial lives. They learned how to budget, save, invest and build wealth.

However, retirement introduces a different challenge altogether. The challenges of retirement can often leave someone who is typically "good with money" feeling overwhelmed and vulnerable.

Why does retirement shift the goalposts?

Many people who consider themselves financially adept have spent their working years focused on one primary objective: Growth. They have worked hard, saved consistently, invested diligently and delayed gratification.

For many, that process built on discipline, knowledge and consistency has enabled them to accumulate meaningful retirement savings, pay down debt, raise families and build successful careers.

Retirement, however, changes the approach entirely. This is the point in the journey when three financial disciplines begin to intersect: Income, investments and taxes.

During our working years, these areas often operate independently. But in retirement, when people are in the distribution phase rather than the accumulation phase, they become interconnected.

The transition from accumulating wealth to coordinating wealth is one of the most overlooked and important challenges in personal finance.

Income

Income planning in retirement asks a different question than accumulation planning. The goal shifts from maximizing account balances to answering a much more practical question: "How am I going to get paid?"

Income planning becomes essential for creating a sustainable paycheck from assets that may need to last 30 years or more.

Investments

Investment planning also changes during retirement. During the growth phase, throughout your working years, market declines can often be viewed as temporary setbacks or even opportunities to invest at a discount.

But during retirement, the timing of losses matters. The same market decline that felt insignificant at age 40 can feel very different when withdrawals are occurring simultaneously. Protecting savings becomes increasingly important when regular contributions and dollar-cost averaging are no longer part of the equation.

Taxes

Then there is tax planning. For many retirees, taxes become more complicated.

• IRA withdrawals can affect tax brackets
• Tax brackets can affect how much Social Security becomes taxable
• Income can influence Medicare premiums for several years
• Decisions made today may affect surviving spouses and even the tax burden left to children

Making the pieces fit

In retirement, a decision in one area often affects the other two.

• If you increase withdrawals, taxes may rise
• Increase taxable income and Social Security taxation or Medicare premiums may change
• Reduce investment risk and future income potential may be affected

Everything becomes connected.

I've noticed a pattern among people approaching retirement. Many arrive with spreadsheets, account statements and years of disciplined saving behind them. They know what they've accumulated, but they're uncertain about how all the pieces fit together.

Questions begin to surface, such as:

• How much can I safely spend?
• When should I claim Social Security?
• Should I prioritize reducing taxes or maximizing income?
• How much investment risk should I still be taking?
• What happens if one spouse dies first?
• How will today's decisions affect my children tomorrow?

What makes these questions so unsettling is that they rarely have simple answers. Instead, the answers come only through developing careful, intentional strategies. And the reality is, in this space, there isn't a practice round.

During our working years, progress is relatively easy to measure. We receive a paycheck. We watch account balances grow. We contributed more this year than we did last year. Success is naturally measured by accumulation.

But retirement changes the scoreboard.

The questions become less about growth and more about sustainability. Instead of asking, "How much have I saved?" people begin asking, "Will what I've saved be enough?" The focus shifts from building wealth to making decisions that support a desired lifestyle for decades.

So many decisions

For those staring into the fog of retirement, uncertainty often has less to do with the size of a portfolio and more to do with the number of decisions that suddenly appear. The closer retirement gets, the more interconnected those decisions become.

What was once a straightforward objective — save and invest — becomes a series of questions involving income, taxes, risk, healthcare costs, legacy goals and lifestyle choices.

Understanding how those pieces work together often becomes more important than any individual investment selection.

You may be "good with money," but this season of life may leave you with more questions than ever.

However, having questions and needing clarity doesn't make someone bad with money.

Rather, it is a sign that the realities of retirement are coming into focus. And at this moment, making wise decisions is paramount in preserving the income, freedom and lifestyle that often take decades to build.

Retirement asks us to think differently about wealth. It is no longer measured solely by account balances or annual returns. It is measured by the ability of our resources to support the life we want to live.

Income, investments and taxes each play an important role. Yet their true value is realized only when they work together.

Dan Dunkin contributed to this article.

This appearance in Kiplinger was obtained through a public relations 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.

When Serena Williams stepped away from tennis in 2022, she very deliberately said, writing in Vogue (paywall), that she "never liked the word 'retirement.'"

"Maybe the best word to describe what I'm up to is 'evolution.' I'm here to tell you that I'm evolving away from tennis, toward other things that are important to me," she wrote, in what served as her announcement that she was, at least temporarily, leaving the profession.

She said she was making the move because she wanted to grow her family, and, as a woman, she couldn't do that without impacting her career. She also said she was interested in trying other work, like venture capital. With that very specifically worded announcement, Williams left her industry — with the door still open for her to return.

In the four years since then, Williams did exactly what she said she would. She had a second child and ramped up her work with Serena Ventures, her investment firm. And when she wanted to, she went back to that door she'd left open, accepting a wildcard to play at Wimbledon this summer.

With that, she established what I'll call the Serena Williams Rule of Retirement: Rather than plan a black-and-white retirement, plan to give yourself options.

Let your career 'evolve'

When you've spent decades building and prioritizing your career, the idea of one day abandoning it can seem terrifying and almost nonsensical. That's true even if you've already ascended to the C-suite and built up a more-than-sufficient nest egg.

"Why are we stressing out like that?" said Pam Krueger, founder and CEO of Wealthramp and a Kiplinger contributor. "Instead, have you ever seen a dimmer switch? Forget the on-and-off; it's a dimmer switch. And that's what Serena is doing, that's what her rule is, that's what she's teaching us."

This is largely why Krueger, a financial literacy advocate, urges people of all ages to "stop planning for retirement" and instead plan for optionality.

Now, it's easy to say that of course Serena Williams can wave a magic wand for a Wimbledon wildcard and do whatever she wants after ascending to the top of her industry and making many millions of dollars. But what about us mere mortals?

Optionality means keeping multiple paths open. You might choose a phased retirement, in which you gradually scale back your hours, take on part-time work, or accept "fractional" C-suite roles. Maybe you want to shift industries or work part-time on a passion project, which can mean anything from mentoring younger professionals to working as a handyman after decades in corporate life. You could even start a new venture, whether that's launching a consulting business or selling handmade crafts.

Giving yourself these options requires both a mindset shift and practical planning. A "mindset shift" sounds easier, but in practice, this might be the harder part. We are hardwired to believe the story that you work a career for a few decades and then retire, never to do anything productive again. That's why having an icon like Williams set an example is so important, because it can challenge how we, as a society, think a career path should go.

How optionality leads to a happier life

There are many reasons why giving yourself options, rather than restricting yourself to "retired" or "not retired," can make your life easier and happier.

1. Save your savings. On the practical side, picking up some work after you stop working full-time, even if you're making a fraction of what you made, means you don't have to dip as much into your savings. That leaves more of your nest egg untouched, allowing it to stay invested and keep growing.

"The physics of money are that the more you can leave the biggest chunk of money in your retirement account to draw down less at the beginning of those years, the more you're allowing the compound interest to work for you," Krueger said.

Working a little can save your savings in other ways. Venus Williams, for example, has also never formally retired and plays tournaments a handful of times a year. Last year, she half-jokingly said during an on-court interview that she "had to come back for the insurance." Jobs, even part-time ones, can provide benefits like healthcare that can preserve your savings a little longer.

2. You give yourself purpose and fulfillment. After retiring, some people become depressed or discontent because they feel that they're no longer contributing to the world. By picking up some work or staying connected to your past industry, you can maintain that feeling of purpose and accomplishment.

3. Make use of your skills. You spent years building up skills that can be applied in different ways. Williams, for example, was obviously an athlete, but at the same time, she was learning the ins and outs of investment as she was seen as an investment by sponsors. She then applied that experience to the VC world as an investor herself.

The skills and expertise that you gained don't have to disappear once you step back from your 9-to-5. You can find other ways to use them. This is also a way for you to show respect for yourself and trust in your years of experience.

4. Learn something new. Many studies have shown that learning new things makes people happier. By trying out something different in your later years, you give yourself opportunities to keep stretching your brain, which will make you happier.

Returning to your industry

Maybe, like Williams, you want to leave yourself the option of returning after you leave full-time work. Here's what to keep in mind:

• Don't burn your bridges. Like leaving any job, ensure you are respectful as you walk out the door.
• Nurture your relationships. If you had regular golf outings with colleagues, maintain those, within reason. Make time for occasional phone calls with people in your network. These steps will ensure that if the right opportunity arises, the people who are still there will have you in mind.
• Be open about continuing work. Make it apparent that you are still open to picking up work. Sometimes that's as simple as saying exactly that when you talk to former colleagues, or, if you're doing part-time or side gig work, sharing stories about it on a network like LinkedIn. (In Williams' case, that was sharing videos of herself on courts with her family.)
• Don't expect immediate triumph. If you do return to your old work, manage your expectations. People are often brought back to manage times of crisis or to hold a boat steady between leadership, such as an interim executive. Sometimes triumph is simply keeping a ship afloat. Sometimes, like Williams at Wimbledon, the triumph is in showing up and showing it can be done.

Don't be surprised if returning to the office is a little more intimidating than you remember. Environments change and turnover happens. Just remember that you were brought back because the company or industry feels you have something to offer. Carry that confidence with you, along with an open mindset regarding changes that occurred after you left.

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For decades, financial advisers sold the same allocation: 60% stocks, 40% bonds. It was clean. It was simple. It worked.

Until it didn't.

In 2022, both sides of that portfolio got crushed at the same time. Stocks fell. Bonds fell. The supposed hedge didn't hedge. And if you go back further, the financial crisis told a version of the same story.

The 60/40 wasn't built for this environment. It was built for one that no longer exists.

The math has changed

Think about why someone would put 40% of their wealth into bonds. In the late '70s and '80s, you could buy a 30-year Treasury yielding 15%. A piece of paper backed by the United States government paying you 15% a year. Of course you'd hold that. Anyone would.

That product doesn't exist anymore.

Interest rates fell for 40 straight years. They came back up recently, but a Treasury still pays you somewhere around 4%.

Meanwhile, the state that's backing that paper isn't what it was four decades ago. U.S. debt was less than a trillion dollars then. It's north of $36 trillion now. Ask yourself how confident you are in the full faith and credit of a government carrying that balance sheet.

The yield has diminished. The security behind it has diminished. And the correlation advantage — bonds zigging when stocks zag — has broken down. Stock and bond markets move together now more often than not.

The 40% side of the 60/40 portfolio can no longer deliver its two core promises: A competitive return and real diversification.

So why are people still running it? Because it's easy to sell. And because old habits die hard.

The menu has changed

The investment universe got bigger in those same 40 years.

When the 60/40 became standard, you had stocks and you had bonds. Those were the options. Today, you have access to asset classes that used to be reserved for endowments and family offices.

Private equity. Real estate. Venture. And you don't need $5 million to get in the door.

You can buy private equity exposure through a public ETF. Tech-focused PE, real estate PE, broad diversified PE. Some for as little as $500. Twenty years ago, none of this was available unless you had eight figures and the right connections. Most individual investors haven't caught up yet.

Where I keep my wealth

I'm not going to tell you what to do with your money. But I'll tell you what I do with mine.

I run closer to 40% private markets, 40% public equities, 20% split across crypto, gold and cash. No bonds. Zero.

On the public equity side, I start and stop with the S&P 500. The idea of being a stock picker is folly at best. You're competing against algorithms and institutions with more information and faster execution than you'll ever have. Buy the index. Let the market do its job.

On the private side, some of these PE vehicles trade as ETFs now. Diversification and liquidity. That used to be a trade-off. Now it doesn't need to be.

On cash and gold, they're the ballast. Money markets are yielding roughly the same as bonds right now. So the argument for locking capital into a bond fund when you can park it in cash at a similar rate and keep full liquidity? I don't see it.

Gold is the oldest store of value on earth. I don't need it to grow. I need it to sit there when everything else gets volatile.

A word on bitcoin

Crypto may seem like the black sheep in my allocation, so here's my reasoning.

I start and stop with bitcoin. Bitcoin is a roughly $2 trillion asset that the market still can't agree on. One camp says it's the greatest Ponzi scheme ever built — the greater fool theory playing out in real time.

The other camp says it's the reserve currency of the future. When the dollar fades, and every fiat currency eventually does, it's not going to be replaced by the yen or the euro. It's going to be replaced by something digital. Bitcoin is best positioned to be that thing.

Over almost 20 years, the price has oscillated between those two stories. It's been at $300. It's been above $100,000. If I knew where bitcoin would land, I wouldn't be writing about it. But a small allocation, sized to what you can stomach losing entirely, is an asymmetric bet.

The downside is bounded. The upside, if the reserve-currency thesis plays out, is not.

The point

You don't have to run my allocation. But there's no reason to keep running a model from an era when Treasuries paid 15% and private equity required a country club membership. Times change, and so should your strategy.

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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.

Dividend stocks are an important part of most investors' portfolios, and for good reason. For one, dividend stocks can boost your total investment returns over the long run, in part because they increase the yield on your original cost basis.

Dividends also provide income for investors, which is especially important for those nearing or in retirement.

How much do you know about dividend stocks? Test your knowledge with our short quiz. And don't worry if you miss an answer or two. You can follow the links below the quiz to refresh your knowledge on dividend investing.

More on dividend investing from the Kiplinger team:

• What Are Dividend Stocks?
• Best Dividend Stocks to Buy for Dependable Dividend Growth
• Best Dividend Kings for Decades of Dividend Growth
• The Kiplinger Dividend 15: Our Favorite Dividend-Paying Stocks
• Highest-Yielding Dividend Stocks in the S&P 500
• How to Use the Barbell Rule for Dividend Investing in Retirement
• Qualified Dividends vs Ordinary Dividends: Taxing Dividends

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers pertaining to federal income tax credits, including the difference between refundable and nonrefundable tax credits. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Refundable v. nonrefundable credits

Question: What is the difference between a refundable income tax credit and a nonrefundable income tax credit?

Joy Taylor: The federal tax code generally has two types of income tax credits for individuals — refundable credits and nonrefundable credits. Refundable credits allow taxpayers with zero to little income tax liability to benefit from the credit because the credit can exceed the amount of tax liability and result in a refund. A nonrefundable credit can only offset a taxpayer's tax liability and cannot create a refund.

Examples of refundable credits include the American Opportunity tax credit, the earned income credit and the health premium tax credit. Examples of nonrefundable credits include the credit for child and dependent care expenses taken by working parents, the foreign tax credit and the now-expired tax credits for buying electric vehicles and installing eco-friendly improvements in your primary residence.

2. Expired electric vehicle credit

Question: I bought a used Tesla earlier this year for personal use. Can I claim a federal income tax credit on my 2026 Form 1040 for this purchase?

Joy Taylor: No. Unfortunately, the clean-vehicle credit for buying a new or used electric vehicle (EV) has expired. The up-to-$7,500 credit for buying new EVs and the up-to-$4,000 credit for buying used EVs ended after September 30, 2025. So you can't claim a credit for your 2026 used EV purchase. Congress chose to eliminate this credit in the "One Big Beautiful Bill" legislation that it enacted in July 2025.

3. Adoption credit

Question: I have clients who adopted a baby last year. I am now filling out their 2025 Form 1040, which they received a filing extension for, and I see that part of the adoption tax credit is now refundable. When was this change enacted?

Joy Taylor: The adoption tax credit can be taken on up to $17,670 of qualified expenses per eligible child in 2026. The 2025 amount was $17,280. Qualified expenses include adoption fees, court costs, legal expenses, travel, meals and other expenses directly related to a legal adoption. The full credit is available for the adoption of a special-needs child, even if it costs less. The credit starts phasing out for filers with 2026 modified adjusted gross incomes (AGI) over $265,080 and ends at $305,080. The 2025 figures are $259,190 and $299,190. The credit amount and the modified AGI amounts are adjusted annually to account for inflation. Parents claim the adoption credit on IRS Form 8839.

Up to $5,120 of the adoption credit is fully refundable in 2026. This new rule, which was included in the "One Big Beautiful Bill," gives adopting parents $5,120 of the credit as a refund, even if they have no income tax liability. The refundable amount is adjusted annually to account for inflation. It was $5,000 for 2025 tax returns. (The remaining portion of the credit is a nonrefundable tax credit that can be carried forward for five years).

4. Dependent care credit

Question: I work and also take care of my elderly father. I pay for his care when I am at work. Can I take the dependent care credit for him?

Joy Taylor: To claim the dependent care credit for your dad, he needs to have lived with you for at least six months during the year and be unable to care for himself. Additionally, you must provide over half of his support.

Other rules for the dependent credit must also be met. For example, expenses for the care must be incurred so you can work, and you must report the provider’s tax ID number on IRS Form 2441.

If your dad qualifies as a dependent for this purpose, you can claim a maximum dependent care credit of $1,500 for him on your 2026 Form 1040 that you file next year, depending on the amount of your income.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

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 editors and experts, in this Q&A series, 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 or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

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What do you do when you're suddenly in charge of everything?

I often point to Dorinda Medley from The Real Housewives of New York as a surprisingly relatable example. After her husband passed away, she spoke publicly about discovering just how much of the family's financial and household administration he had handled.

She has shared that she didn't even know who was paying certain bills and later uncovered investments and financial arrangements she hadn't previously been involved with.

While her circumstances involved significant wealth, the underlying challenge is one I see, as an attorney and financial professional with decades of hard-won expertise, far more often than people expect: When one spouse manages most of the financial life, the surviving spouse can find themselves trying to navigate complex decisions at the same time they are grieving.

In many households, one partner naturally becomes the person who handles the finances. They manage the accounts, coordinate with advisers and make the long-term decisions.

The other partner may understand the broader picture, but not the details — just like Dorinda.

That dynamic can work for years, until something changes. When it does, whether due to illness, loss or incapacity, the uninvolved spouse is suddenly responsible for everything.

When clients come to me in that situation, their first question is almost always the same. Where do I even start?

Looking for clarity

The answer is to focus on the information that creates the most clarity, as quickly as possible. In most cases, that starts with identifying key documents and accounts.

Tax returns are often the best entry point, because they provide a consolidated view of income, assets and the professionals involved.

From there, we work through locating bank and investment accounts, insurance policies and estate planning documents.

In many cases, this is where the first challenge appears. I have worked with clients who discovered accounts spread across five or six different institutions, with no centralized system and no clear understanding of what existed where. That fragmentation alone can make the situation feel overwhelming until it is organized piece by piece.

Once we know what exists, the next step is understanding how everything fits together. That means reviewing assets and debts, confirming how accounts are titled and, just as importantly, understanding beneficiary designations.

It is also critical to identify who has been named to act on your behalf. That includes executors, trustees and healthcare decision-makers.

We often find that just as there are gaps in account visibility, there are also gaps in these roles. Clients may not know who is listed, or those designations may be outdated. These are not abstract details. They directly affect how decisions are made and how quickly assets can be accessed.

Avoid costly mistakes

At the same time, this is where I see clients most at risk of making costly mistakes. When someone is overwhelmed, there is a natural inclination to act quickly just to regain a sense of control.

I often see people make significant changes to their investments early on or move large portions of their portfolio to cash simply because they are unsure what they own or how it is structured. While that can feel protective in the moment, it can create longer-term consequences if it is not part of a broader strategy.

There are also timing considerations that come into play. Certain benefits need to be evaluated, tax filings still need to be completed, and some decisions have deadlines attached to them.

This is why creating a clear order of operations is so important. Not everything needs to be addressed immediately, but some things do, and knowing the difference matters.

There are, of course, several priorities in the first few months.

Establishing a clear picture of cash flow is critical so that day-to-day expenses are covered without disruption.

It is also the time to evaluate any available benefits, including Social Security survivor benefits, and begin the process of updating estate documents and beneficiary designations to reflect the new reality.

One especially crucial item is ensuring that an estate tax return (Form 706) is filed within nine months of the death (or 15, if filing for an extension) in order to elect portability on a deceased spouse's unused federal estate tax exemption to retain maximum flexibility in estate tax planning.

Don't neglect the emotional side

Just as important as the technical work is the emotional side of the transition. Many uninvolved spouses feel like they should already understand these things.

I often hear clients say, "I wish I had paid more attention," or "I feel like I should know this."

The reality is, this is one of the most common situations I see. Financial confidence is not something you either have or do not have. It is something you build, and this is often where that process begins.

While much of my work is helping clients navigate this transition after the fact, I also spend time encouraging couples to plan ahead so neither partner is ever in the dark.

That does not mean both people need to manage every decision, but it does mean both should have a basic understanding of where accounts are held, who the key contacts are and what the overall plan looks like.

That level of transparency is often the difference between a difficult transition and an overwhelming one. It is what allows someone stepping into this role to move forward with clarity instead of starting from zero.

This is not a rare situation. It is something that plays out in real households every day. The goal is not just to respond well if it happens. The goal is to make sure that if it does, the person stepping in is prepared, supported and has a clear path forward.

Related Content

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• Three Ways to Help Create Financial Stability for a Widow
• Don't Let the 'Widow's Penalty' Blindside You: How to Prepare
• Five Financial Changes That Happen When Your Spouse Dies
• Social Security for Widowed Parents Falls Far Short of Need

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 easy to see why Florida is a haven for retirees. Between the year-round warm weather, miles of coastline, and zero state income tax, the Sunshine State is already home to roughly 5 million people 65 and older.

However, relocating doesn't guarantee a lower cost of living, even for those moving from high-cost northern states. Unforeseen expenses in Florida can easily derail an otherwise solid retirement budget.

"Florida is great because there is no income tax," says Andy Smith, a certified financial planner at Edelman Financial Engines. "But people have to look at the total cost of living instead of focusing on one particular tax advantage."

From HOA fees to hefty insurance premiums, before you make the move, be sure to budget for these unexpected expenses.

1. Sky-high HOA fees

Whether you live in a condo or a community, homeowner's association fees are a fact of life in many Florida communities, and that fee can get expensive.

Florida leads the U.S. with the most expensive HOA fees, with seven of its cities charging the highest HOA fees, according to Realtor.com. Take Miami, for one example. The owner of a $425,000 home in Miami pays $617 a month in HOA fees.

2. Surprise condo special assessment fees

Ever since the 2021 collapse of the Surfside condo in Miami, Florida, associations with buildings three stories or higher are subject to mandatory structural inspections and must have fully funded reserves. When condo associations don't, they can charge unit owners a one-time special assessment.

"Many of these buildings are quite old," says John Gillet, CEO and founder of Gillet Agency. "You should thoroughly investigate the condo before making a financial move."

If you can't get a sense of how the condo association is run, what the financials look like and the structure of the building and the unit, you should hire a consultant to research before buying, Gillet said. An assessment fee, if ever required, can range from a few hundred dollars to tens of thousands of dollars.

3. Rising insurance premiums

Expect to pay more than the national average for insurance in Florida, whether it's homeowners, health, or auto. That's across the board in the state, and even higher in certain metro areas. "Insurance is very, very expensive," says Michael Cabanas, a regional managing director at Fiduciary Trust and a longtime Miami resident. "If you live in a flood zone, flood insurance is required by law, and it's not cheap." The same goes for auto insurance. Florida is among the costliest states for auto insurance, according to a U.S. News & World Report ranking.

4. Year-round utility bills

Florida electricity rates are below the national average, but residents' monthly utility bills are among the highest in the country. The reason? Year-round heat and the need to stay cool.

"Instead of two or three months, you pay for eleven months out of the year," says Cabanas. "That's an expense some northeasterners may not anticipate when they move down here."

5. Lack of caregivers

Supply and demand are on display in Florida when it comes to caregiving. As retirees flock to the state, demand for caregivers is rising, driving up the cost of care. In fact, Florida ranks last in caregivers, with just 17 personal care and home health aides per 1,000 adults aged 65 and older. That compares to the national average of 65 per 1,000, according to America's Health Rankings.

6. Property tax resets

Florida caps annual property tax assessments for existing homeowners at 3%, but when a retiree buys a home, that number resets to the market rate. When they get their tax bill in year two, homeowners could be in for a big shock when their property taxes are double or triple what the previous owner paid.

Calculate everything before you make a move

Just because there are unexpected costs associated with moving to Florida doesn't mean you shouldn't make the move. Every town, city and state has different costs that may offset tax breaks. The good news is that with a little research, you can figure out what they are ahead of time and determine if the Sunshine State still makes financial sense for your retirement.

Related Content

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• Why Do People Retire to Florida? 9 Things You Must Know
• Average Spending by Age for Those 55 and Up: How Do You Compare?
• 3 Questions That Reveal if You’re Actually Ready to Age in Place

Retirees are often advised to maintain diversified portfolios while focusing on assets that can produce steady income. REITs can help in both regards.

REITs, or real estate investment trusts, are companies that operate portfolios of properties, whether it's data centers, malls, fulfillment centers, healthcare facilities, or residential complexes. They make it possible for retirees to branch out into real estate without actually having to own or maintain physical property as investments.

As of early 2024, 50% of U.S. households owned REITs, according to the National Association of Real Estate Investment Trusts. And for retirees, REITs offer a couple of distinct benefits.

REITs tend to pay above-average dividends since they're required to distribute at least 90% of their taxable income to shareholders on an annual basis. REITs also have inherent inflation protection. They often can raise rents and pass that income along to shareholders. And those higher dividends can help retirees stay ahead of rising costs.

But are REITs a retirement investment worth pursuing? Or is there too much risk involved?

There's upside, but it comes at a cost

While REITs can serve as a source of steady income for retirees, they're not without risk, says

Mike McCracken, president and founder of Wealth Guide Financial.

"REITs could be part of a diversified retirement portfolio, but I don’t think they’re as safe as many people assume," McCracken says.

"Clients have told me that they like the idea of holding real estate without the headache of tenants or repairs, and their thoughts are that REITs can satisfy that desire. That may have been the case prior to 2021, but rising interest rates have caused REITs to underperform low-cost stock portfolios over the last few years," McCracken continues.

Adam Vega, CFP and Managing Partner at Avance Private Wealth Management, warns that REITs aren't necessarily as liquid as you might think.

"Publicly traded REITs are those that trade on an exchange, like any normal stock would. You can buy it today and, through the public markets, sell it tomorrow. Private REITs do not trade on an exchange. There is no open market available, so if you bought it today, you are at the mercy of the issuer of when you might be able to sell it," he explains.

In fact, Vega cautions, "With a private REIT, it could take years to find the right buyer. This isn't inherently bad, but this should be understood, as the lack of liquidity is often what helps keep the price more stable on private REITs."

Another thing to consider is that REITs are very sensitive to interest rates.

"Rates from 1985 to 2021 generally were slowly falling, providing decent safety with investing in REITs," McCracken explains. "When rates go up, [REIT] share prices usually drop because their high dividend yields become less attractive compared to bonds."

REITs also aren't immune to sector-specific meltdowns. As McCracken points out, office REITs struggled with occupancy issues during and after the pandemic, when remote work was all the rage and companies were reluctant to renew leases and bring workers back to the office.

Other sectors could be similarly vulnerable in the future. If regulations come down the pike that crack down on data centers, REITs that operate those facilities could see their value decrease.

Have REITs become trendier?

Despite the risks, McCracken says he's seen a growing number of retirees put money into REITs.

"There has been some increased interest in REITs over the last 10 to 15 years, mostly because they are easy to buy and sell compared to owning actual real estate," he says. But that doesn't mean those people chose wisely.

As McCracken explains, many of his clients who hold REITs have been disappointed with the returns those assets produced over the past five years in particular.

"Many of them would have been better off in a simple, low-cost stock index fund," he says.

Vega, meanwhile, says he's seeing more interest in REITs despite the fact that they had a "tough 2025."

"Higher rates slowed down the sector, and as an underperforming asset, it puts it back on the radar as an opportunity to consider. For those seeking income and diversification, it is starting to look attractive again," he says.

Should REITs be a part of your retirement investment strategy?

Whether REITs are a good choice for you depends on your income needs, goals, and appetite for risk. But McCracken certainly wouldn't say they're right for everyone.

"Currently, I tell my clients that REITs have had their day and are generally underperforming the broad stock market indexes in recent years," he says. "For most retirees, I think there are simpler and more effective ways to get growth and income without adding the extra complexity or the interest rate risk that comes with investing in REITs."

Vega says many retirees like the consistency of payments REITs can provide.

They can also help with diversification. The key, he says, is to limit exposure.

"REITs should be considered part of your real estate allocation," he says. "Sticking to normal diversification rules, a good guideline is no more than 15% of a portfolio in any one sector."

Read More

• The Best REITs to Buy
• 5 Ways To Increase Your Investment Income In Retirement
• You've Mastered Asset Allocation — Now It’s Time for Asset Location
• Average Net Worth by Age

Financial literacy is the process of developing the appropriate skills to make informed decisions with the financial resources you have available. It is about more than "money management." It is about understanding how money impacts different aspects of your life.

The different components of financial literacy include:

• Understanding your earnings
• How to save and invest
• How to budget and spend
• How to properly borrow funds and take on debt

In addition to knowing how money flows, being financially literate helps build confidence, independence and resilience. When you know you can depend on yourself to make good financial decisions, you are putting yourself in a position to succeed.

Most people wait too long to learn about money. I was fortunate that my first experiences with financial management came while I was still living at home with my parents. In my junior high home economics class, we learned how to balance a checkbook.

My first experience with earnings and spending came during high school when I got my first job. I learned how to budget my expenses not based on my earnings, but on my take-home pay after taxes.

I also had to account for a monthly loan payment on my car and understand the difference between interest and principal.

Looking back has made me wonder how today's parents can help their own kids begin their own journey towards financial literacy. For many people, resources are scarce. And it may seem there isn't much to do until kids get their first job.

But there are plenty of daily activities that have some relation to financial literacy and can help parents take more ownership of their kids' financial education.

Our firm recently launched a free tool for parents called The Lern-ing Curve. Parents can use it to find age-appropriate lessons and activities that will teach kids how to become financially literate.

Beyond that, though, the real teaching happens in daily life. What that looks like changes a lot as your kids get older.

Start young: Make it a game

A lot of parents think kids need to be older to understand money and finances. While we shouldn't expect a 3-year-old to help with 401(k) allocations, there are plenty of activities parents can do with young kids.

The key is to make it fun. Playing board games with dice can help kids learn their numbers and how they apply to the real world. Sharing with siblings can also be turned into an everyday commerce situation.

Sharing and trading Halloween candy is a perfect example. One small chocolate might not be worth the same as a bag of gummy bears unless one person loves chocolate and the other loves gummy bears. If they like both equally, maybe the small chocolate can be exchanged for half a bag of gummy bears.

These are the exact types of activities that parents are likely already engaging in without even realizing they are helping their kids become more financially literate.

The preteen years: Goals and budgeting

As kids continue to grow and learn new concepts, the same games might not be as useful or engaging. During the preteen years, kids are learning more about themselves and developing their own personalities and mindsets. They are more independent thinkers and can comprehend more sophisticated concepts.

Helping them set achievable goals that are important to them boosts confidence and teaches the value of hard work.

By working on a savings plan for these goals, parents can show their kids how to achieve short-, medium- or long-term wants and needs. From a budgeting perspective, parents can show their kids how they allocate available money.

• Short-term spending can be on everyday items like groceries and gas
• Medium-term savings might be for a family trip or gifts for the holidays
• A long-term goal could be saving and investing for college

With these types of activities, kids can see in the real world how finite resources are used and can start to learn how they would want to allocate their own allowances or resources.

The teenage years: Jobs, taxes and debt

During the teenage years, kids become even more independent. They may start preparing to leave home and find their own path. This is when parents generally start trying to teach their kids about money.

Getting a job outside of school teaches kids that there's more to earning money than just wages or salary amounts. Working with your kids to understand taxes can help them learn to budget and understand their real take-home pay.

With that take-home pay, they can start setting more long-, medium-, and short-term goals.

This is also a time to learn about debt and how to use it. From finding out how credit cards work to learning about car loans, it is important that kids understand the difference between using money and borrowing money to stretch what they already have.

You may already be doing a lot of this with your kids. But by working with your adviser or visiting The Lern-ing Curve, you can take an even more proactive approach to teaching your kids the building blocks of a successful financial future.

The earlier kids start understanding how money works, the more financially literate they will ultimately be.

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

When it comes to big bank stocks for the long haul, no one beats JPMorgan Chase (JPM). Under the leadership of CEO Jamie Dimon, JPM has outperformed peers — and the broader market — even as it navigated the great financial crisis and a worldwide pandemic.

Dimon, who was named CEO at the end of 2005, spent the early years of his tenure getting the nation's largest bank by assets ready for the storm. While competitors were leveraging up on subprime mortgage-backed securities, Dimon ordered JPM to reduce its exposure. The conservative, and even contrarian, approach to risk management paid off.

When the financial system started to collapse, Dimon's "fortress balance sheet" philosophy not only allowed JPM to survive when other banks failed, it was able to come to the rescue. In March 2008, with backing from the Federal Reserve, JPM acquired Bear Stearns for a fire-sale price of $2 per share. (It was later raised to $10.) Six months later, JPM bought the banking operations of Washington Mutual — the largest bank failure in U.S. history — from the FDIC.

Not that the years after the crisis were much fun for JPMorgan Chase or its shareholders. JPM paid billions in fines, largely related to the mortgages originated by the companies it bought. A tougher regulatory landscape, Federal Reserve stress tests and limits on capital returns to shareholders were a headwind for the financial industry, and JPM was not immune.

By the late 2010s, however, JPMorgan's diversified model offering consumer banking, commercial banking, investment banking and asset management proved to be a big-time moneymaker. Rising interest rates also helped. The bottom line was that the bank was once again able to lavish cash on shareholders through aggressive stock buybacks and steadily rising dividends.

And the good times continue to roll on. The higher rate environment has done wonders for JPMorgan Chase's net interest income (NII), or the difference between what banks pay for deposits and charge for loans. In 2023, NII increased a record 34% year-over-year to more than $89.3 billion. It's currently growing at a pace of more than 3% a year, topping $95.4 billion in 2025.

The bottom line on JPM stock?

Big banks aren't sexy growth stocks. You're not betting on their shares to perform like, say, Nvidia (NVDA) or Apple (AAPL). Slow and steady is just fine — as long as they deliver market-beating returns for patient investors.

On that count, JPM has been a winner. Over its entire life as a publicly traded company, shares delivered an annualized total return (price change plus reinvested dividends) of 13.4%. The S&P 500 generated 11.2% annualized over the same period.

JPM's outperformance is even more impressive over shorter time frames, beating the broader market by wide margins over the past one-, three-, five-, 10- and 15-year periods.

Which brings us to what $1,000 invested in JPM stock 20 years ago would be worth today. Have a look at the above chart, and you'll see that a grand socked away in this Buy-rated Dow Jones stock two decades ago would today be worth about $12,500 — or an annualized total return of 13.5%.

The same amount invested in an S&P 500 ETF would be worth about $8,400, or 11.2% annualized.

As for where JPM stock goes from here, Wall Street is mostly bullish. Of the 23 analysts covering the financial stock surveyed by S&P Global Market Intelligence, nine call it a Strong Buy, three say Buy and 11 have it at Hold. That works out to a consensus recommendation of Buy, with mixed conviction.

Speaking for the bulls, Argus Research analyst Stephen Biggar, who rates shares at Buy, believes the market doesn't fully appreciate JPM's strengths.

"We like JPM among the large banks given its better lending-growth profile, strong credit-card franchise, and expected market-share gains in its capital-markets businesses," Biggar writes. "We view the current forward multiple as undervaluing the franchise."

More Stocks of the Past 20 Years

• If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have Today
• If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have Today
• If You'd Put $1,000 Into Nvidia Stock 20 Years Ago, Here's What You'd Have Today

I came across a video recently from personal injury attorney Mike Rafi that laid out one of the most blatant insurance fraud schemes I can remember seeing — minus the guy dressed in a gorilla suit tearing up a car.

It's called Operation Sideswipe, and if you're wondering why, at least in part, your insurance premiums keep going up, this case is a pretty good place to start.

Here's what happened. Going back as far as 2011, a network of people called "slammers" would intentionally crash their vehicles into 18-wheelers. These were not accidents, you see. They were staged collisions, choreographed to make it look like the truck driver was at fault. The truck drivers had no idea this was happening.

After the impact, the passengers in the slammer's car would claim they'd been injured. Then a group of corrupt personal injury lawyers would file claims, push for settlements and cash out.

Why the insurance companies would pay

The trucking companies and their insurers would pay up, because settling was less expensive than fighting every single case in court.

And it went deeper than that. Like six-feet-under deeper. In 2020, a federal witness who was secretly cooperating with the FBI was shot 10 times on his mother's doorstep just four days after his indictment was made public.

The person who allegedly paid for the hit was a disbarred attorney living in a $1.2 million home with a former Hollywood stuntwoman.

All this reads like a novel you might buy at an airport bookstore. However, by the time federal authorities finally got the case under control, 63 people had been charged, and a key witness was dead.

This went on for years. And here's the part that affects you: Every one of those fraudulent claims got paid:

• Every inflated medical bill
• Every bogus lawsuit settlement
• Every fake injury claim

That's how insurance works

The insurance companies paid it all. And when insurance companies pay out billions in fraud, they don't just absorb the loss. They raise rates.

That's not greed. That's math. That's how insurance works.

The money has to come from somewhere, and it comes from you. From me. From every honest driver who has never filed a fraudulent claim in their life.

You pay your premium every month, on time, year after year. You've never caused an accident. You've never exaggerated a claim. And yet, your rates will go up partly because a ring of crooks in New Orleans intentionally crashed cars into trucks and walked away with settlement money.

The fraud gets baked into the system. The insurers raise prices to cover the losses, and the cost spreads across the entire risk pool. You end up paying the bill for somebody else's crime.

Just imagine what we don't even know about

Now, here's the thing. Operation Sideswipe is a case we know about. But I want you to think about what I call the coconut theory.

If you're sitting on an island, and a coconut falls on your head, the chances are there are lots of coconuts falling all around that island. You were hit with just this one.

We learned about this one massive scheme because it got big enough to attract federal attention. But that means — and think about this — there are many similar scams, or even larger ones, happening all over the place that we don't know about.

Smaller operations. Individual fraudsters. Staged accidents in cities across the country that never make the news.

And I'll bet Operation Sideswipe is not the first insurance fraud case you've heard about, so plenty do make the news. Each one is a coconut hitting the insurance system, and each one costs all of us money.

If one scheme in one city involved 63 people and went on for years, how many are running right now that haven't been caught? How many fraudulent claims are being paid today that will never be investigated?

Every one of those payments ends up as part of the rate calculations that determine what you and I pay for coverage.

Insurance fraud is not a victimless crime. It's a tax on every honest driver in the country, collected one premium increase at a time.

What you can do

So what can you actually do about it? How can you help put an end to this insanity? A few things.

1. After an accident, the single most important thing you can do is document everything.

I mean everything. Not most things. Getting the hint? Everything with a capital E.

Take out your phone and take pictures and/or record video of every angle of:

• Both vehicles
• The road conditions
• The traffic signs
• The weather
• The license plates
• The other driver
• Their insurance card
• Any debris on the road
• The positions of the vehicles before they get moved

Take more pictures than you think you need. You can never go back and take the ones you missed.

2. Walk around the scene, too, recording video.

Capture the other driver's demeanor.

• Are they limping?
• Are they on the phone with someone who seems to be coaching them?
• Is there a passenger who's silent at the scene but could later claim they were thrown forward and hurt?

Record all of it. Your phone's camera is the best witness you will ever have. It doesn't forget. It doesn't get intimidated. It doesn't change its story three months from now.

3. Open the Notes app on your phone and list every detail.

• The time
• The exact location
• Which lane you were in
• What the other driver said — word for word
• The names of any witnesses
• The badge numbers of responding officers

Also, note anything that seems unusual:

• A passenger who is jumping around and yelling at the scene (they could claim later to have a broken leg)
• A driver who seems oddly calm for someone who just got rear-ended
• A car that pulls up and someone gets out who wasn't involved in the crash

Write it all down. Three months from now, when the claims adjuster asks you about the details, you might not remember, but your notes will.

Why you can't just trust the system

Is it unfortunate that we have to be this diligent? Heck, yeah. Absolutely. It would be nice to just exchange insurance information, shake hands and trust the system. But the system is being abused, and we're all paying the price, literally.

Operation Sideswipe worked because there was no evidence to contradict the fraudsters. The slammers and their passengers could say whatever they wanted, and without contradicting evidence, the system believed them.

The only reason the scam finally got exposed was that federal investigators spent years building a case with resources you and I don't have.

What we do have is a phone in our pocket that takes pictures, records video and lets us type notes.

• Every picture you take is evidence
• Every video clip is a record
• Every note you write is a real account that carries weight in a way that a vague recollection months later can't

Your evidence can help protect you from being accused of causing something you didn't cause. And it's what helps your insurance company pay the honest claims quickly and fight the fraudulent ones.

Insurance fraud costs every single one of us, every single year, in higher premiums. The best defense we have isn't law enforcement.

It's you, at the scene, with your phone out, paying attention.

Want to learn more about insurance? Visit KarlSusman.com.

Related Content

• Are You Committing Insurance Fraud Without Realizing It?
• 5 Top Insurance Scams to Watch Out For
• Making Fraudulent Insurance Claims Can Land You in Jail
• The Sneaky Scams Driving Up Every Driver's Insurance Bill
• 5 Tips to Help Avoid a Denial on Your Insurance Claim

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

A lot of people get into real estate the same way my brother Brian and I did. You buy a few properties on the side, learn as you go and assume steady growth will come from owning real estate long enough.

Before founding Roers Companies in 2012, we built a portfolio of about 20 residential and student housing properties near the University of Minnesota. It was a side venture we grew while working in finance — Brian as a CPA and me as a CERTIFIED FINANCIAL PLANNER® (CFP®).

At the time, we knew our local market well and had a strong network, but we were still thinking fairly small. We were focused on managing individual rentals instead of building something durable in the long run.

Looking back, it's clear we needed to shift our perspective on risk and growth. Investors today have less room for error than they did a few years ago, which makes long-term planning and risk management much more important.

While every investor's journey is different, these are the three lessons that shaped our approach — and that every investor should understand from the start.

1. Smaller doesn't always mean safer

A lot of first-time investors start with a single-family rental, duplex or small multifamily property because it feels manageable. There's nothing wrong with that approach, but many people assume smaller automatically means lower risk.

In practice, smaller properties can leave you more exposed. If you own a duplex and one tenant leaves, a large portion of your income stream disappears overnight.

A major repair can wipe out most of the year's profit. Even routine turnover carries more weight when there are only a handful of units supporting the property.

That was one of the first lessons Brian and I learned as we expanded beyond lease-to-own and student rentals. Larger apartment communities brought more operational complexity, but they also created more stability.

Vacancies, repairs and day-to-day issues had less impact on the overall performance of the property because the risk was spread across more units.

For individual investors, that doesn't necessarily mean jumping straight into a 200-unit development. It means understanding that larger properties tend to absorb the ups and downs of ownership differently.

When one tenant moves out or an unexpected repair comes up, those issues don't have the same impact they do when you only have a handful of units.

2. Diversification isn't just for the stock market

Buying a resilient property is one decision. Building a resilient portfolio is another.

One of the most important experiences in our early years came during the oil boom in North Dakota. At the time, demand was surging, and we were developing in markets that were growing incredibly fast to house the influx of oil workers.

In the thick of the boom, it felt as if demand would never slow down. Then conditions changed.

That experience reinforced something that applies everywhere: No market stays hot forever, and no region is immune to economic shifts.

After that, we became much more intentional about diversification. We expanded into different states and different types of housing because we didn't want the future of the company tied too closely to one local economy or industry.

For us, that meant — and still means — building a portfolio that isn't overly dependent on any one market, property type or stage of the economic cycle.

Individual investors should think the same way. Too often, people build portfolios entirely around what's familiar or close to home. That can work for a while, but it can also leave investors exposed to risks they didn't anticipate.

This is especially true as regional markets navigate the supply-and-demand resets we're seeing today.

Diversification in real estate is not only about owning more properties. It's about reducing the likelihood that all your investments are affected by the same economic pressures at the same time.

3. Long-term value is usually built through operations, not luck

Many people enter real estate assuming the biggest gains will come from appreciation alone. Sometimes that happens, but relying on market appreciation as the entire strategy can create problems. Strong operators look closely at how a property performs.

• Can expenses be managed more efficiently?
• Are there upgrades that could make the property more competitive?
• Is management helping the property operate at its full potential?

Those decisions tend to matter more over time than hoping the market keeps moving upward.

Investors today also face a more competitive environment than they did a decade ago, especially in multifamily housing. In this sector, value is closely tied to the income a property produces.

Improving operations, reducing inefficiencies and making thoughtful improvements can all strengthen performance in a way that's far more reliable than trying to predict market swings.

That shift in thinking changes how investors approach growth. Instead of waiting for the market to create value, they focus on building value through better execution and better long-term management.

Real estate can absolutely be a strong long-term wealth-building tool, and experience has taught me that success usually comes from focus more than momentum.

The investors who last are usually the ones who show grit when markets change and avoid making emotional decisions when things get uncertain.

That approach might not feel exciting in the short term, but it tends to create far more stability — and success — in the long run.

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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.