Fear gets a bad reputation in retirement planning.

We’re told not to be afraid of market volatility, not to panic when stocks fall, not to let inflation, health care costs, taxes, or Social Security headlines hijack our long-term plans.

That is good advice — up to a point.

But after decades of writing about retirement and now working as a retirement coach, I’ve come to believe that not all fear is harmful. Some fear is useful. Some fear is protective. Some fear is a signal that your financial life, family life, or future lifestyle deserves more attention. I call it "healthy fear."

The goal is not to become fearless; it’s to learn the difference between fear that paralyzes you and fear that prepares you.

Retirement is one of the few major life transitions in which people are asked to make a series of large, emotional and often irreversible decisions at almost the same time.

When should I stop working? Can I afford to spend more? Should I downsize? Should I help my children now or leave money later? What happens if one spouse needs care? What if the market falls early in retirement? What if I live to 95?

Those are not irrational questions. They are the questions serious people ask when the paycheck is about to stop.

The fear beneath the numbers

The most familiar retirement fear is running out of money. For many people, it remains powerful even when the math suggests they are likely to be fine.

Jason Dall’Acqua, founder and financial adviser at Crest Wealth Advisors in Annapolis, Md., works with many clients who have accumulated significant assets. Yet the fear of running out of money still shows up regularly.

Sometimes that fear is rooted in actual planning risk. Sometimes it comes from something deeper: a childhood where money was tight, parents never spent freely, a business setback, a divorce, a market crash, or decades of being rewarded for saving rather than spending.

Many successful retirees became successful because they were cautious. They lived below their means. They saved steadily. They avoided debt. They did not buy everything they could afford.

Then retirement asks them to reverse decades of behavior. Now the question is not "How much can I save?" It's "How much can I safely spend?"

That can be harder than it sounds.

Dall’Acqua says part of the work is helping clients see what their money can do while they are still healthy enough to enjoy it. A client may be able to afford a large family vacation, meaningful charitable gifts, or financial help for children and grandchildren. But they still may need reassurance that the plan can support those decisions.

That is where a healthy fear becomes useful. It does not say, "Never spend." It says, "Let’s understand what is sustainable."

Fight fear with facts and action

Mary Ware, managing partner and senior wealth adviser at Carnegie Private Wealth in Charlotte, N.C., puts it this way: "I try to help clients fight fear with facts and action."

Sitting in worry rarely helps. But turning worry into a planning conversation can, Ware says.

If you fear long-term care costs, start by learning what care actually costs in your area. What would in-home care cost? Assisted living? Memory care? A continuing care retirement community? How would you pay for it? From portfolio assets? Home equity? Insurance? Family support? Some combination?

If you fear burdening your children, don’t just worry privately, says Ware. Talk with them. Tell them what you want, what you are planning and what you do or do not expect from them.

If you fear market volatility, don’t move everything to cash. Ask whether your portfolio has enough liquidity to support several years of spending without forcing you to sell long-term investments during a downturn.

A little fear can lead to better questions. Better questions can lead to better planning.

Healthy fears: The 6 fears worth listening to

Some retirement fears deserve attention because they point to real planning gaps.

• Fear of outliving your money may prompt a better cash-flow plan, more realistic spending assumptions, a smarter Social Security claiming strategy or a more durable withdrawal plan.
• Fear of health care costs may prompt you to review Medicare choices annually, price long-term care options, update health care proxies and talk honestly with your spouse or adult children.
• Fear of inflation may remind you that "safe" assets are not always stable if they fail to keep up with rising costs.
• Fear of cognitive decline may push you to simplify accounts, name trusted contacts, update powers of attorney and make sure both spouses understand the household finances.
• Fear of family conflict may lead to clearer estate documents, better beneficiary designations and more transparent conversations about inheritance, charitable giving and expectations.
• Fear of losing purpose may push you to build a life before you leave a career — one with relationships, structure, health, community and reasons to get up in the morning.
  

These fears do not need to dominate your life. But they should not be ignored.

Don't let fear make the decision

The danger comes when fear stops being a signal and becomes the decision-maker.

That is when retirees go too conservative too early, hoard cash, delay retirement unnecessarily, refuse to spend, avoid family conversations, or stay in a house that no longer fits their health or lifestyle needs.

I understand the appeal of cash. It feels safe. It does not send alarming headlines to your phone. It does not drop 20% in a bear market. But too much cash can create a quieter risk: the slow loss of purchasing power.

The same is true with refusing to spend or the so-called "spending guilt." Some retirees are so focused on preserving assets that they miss the season of life when travel, family experiences, hobbies and generosity may be most meaningful.

"You can worry so much about outliving your money that you forget to enjoy your life right now," says Ware.

That does not mean spending recklessly. It means remembering that retirement planning is not only about avoiding bad outcomes. It is also about enabling good ones.

The retirement fears that arrive later

Some fears do not fully appear until after retirement begins.

At first, there may be relief. No commute. No boss. No meetings. No Sunday-night dread.

As a retirement coach, I ask clients to ponder the quieter questions. Why do I feel guilty spending money? Why do I miss being needed? Why do market headlines bother me more now? Why is my spouse adjusting differently from me? Why does every major decision — moving, helping the kids, buying a second home, joining a community — feel so permanent?

This is where retirement planning becomes more human than mathematical. A spreadsheet can tell you whether you can afford a trip. It cannot tell you whether you are emotionally ready to spend the money.

A Monte Carlo analysis can estimate the probability that your assets may last. It cannot tell you whether your adult children understand your wishes if your health changes.

A tax projection can show whether a Roth conversion makes sense. It cannot tell you whether you and your spouse have the same vision for the next 20 years.

That is why healthy fear should lead to better planning and communication, not just portfolio changes.

What healthy fear can do

When retirees take their fears seriously early enough, good things can happen. They may build a more resilient portfolio. They may create a cash reserve that helps them sleep during market volatility. They may update estate documents before a crisis. They may buy or reject insurance with clearer eyes. They may start giving money during their life instead of waiting to leave an inheritance. They may have the family meeting they have been avoiding.

They may also make better lifestyle decisions about whether to downsize, move closer to family, or take that major trip before turning 75 while they are still healthy.

These are not just financial decisions. They are life decisions with financial consequences.

Fear, in the right dose, can help you pay attention. The key is to ask: What is this fear trying to tell me?

If the answer is, "Sell everything and hide," take a breath.

But if the answer is, "Update your plan, talk to your family and financial adviser, understand your risks, protect your spouse and start living more intentionally," then maybe that fear is not your enemy.

Maybe it is one of the tools that helps you retire better.

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You've done everything right, and you're still losing ground. That's the sentiment many are feeling, as rising inflation takes bigger bites out of your paychecks when you pump gas, pay your electric bill or go to the grocery store.

It used to be that you could turn to a high-yield savings account to outpace it. Yet, with inflation at 4.20% and not likely to cool soon, most savings accounts don't earn returns keeping pace with inflation.

"It’s not just about earning interest," says Eric Bernstein, President of LendFriend Mortgage. "When your savings are sitting idle, you’re missing out on the compounding power that could strengthen your homebuying profile. For those targeting a purchase, inflation isn't just an annoyance — it's a direct reduction in your future purchasing power."

Stop letting the status quo erode your wealth. Here are three strategic pivots to shield your cash from inflation and crush your debt for good.

1. Stop chasing yields

For a long time, savings accounts offered exceptional rates of return that outpaced inflation. In the interim, likely, those days are over. The ongoing war with Iran will keep fuel prices high. And even if there is a permanent resolution soon, energy prices might not stabilize fully into 2027.

The problem is that you need a high-yield savings account as part of your financial plan. Instead of shopping around for rates every few months, I'm recommending a savings account I've found that consistently offers good returns and has no monthly fees.

Once you reach your emergency fund and short-term savings goal, you want to shift your focus away from saving.

2. The debt-first pivot

Debt robs you of future wealth, especially if you're carrying high-interest debt. Credit cards and HELOCs also feature variable rates that can compound faster than any return you would earn on a savings account.

Therefore, when you view these debts as an emergency, you restore your purchasing power and improve your monthly cash flow.

Here's a debt repayment checklist to help you devise a plan that works:

• Make a list of all your outstanding debts, including balances owed, interest rates, etc.
• Use a budgeting app or a personal banker to see if you can free up any cash in your budget or curtail spending
• Use the Debt Avalanche method (focusing on the debt with the highest interest rate) first, or do the Debt Snowball, where you tackle your lowest balance to build momentum
• Set up automatic payments to ensure you never miss one
• Allocate any surplus cash from bonuses, commissions or tax refunds to pay off the debt with the highest interest rate first
• Review goals at least quarterly to ensure you remain on track to pay off debt

Along with debt repayment, now is a vital time to reevaluate how you approach buying everyday items.

Use the tool below, powered by Bankrate, to connect with a financial professional that can help you build a plan to reach your financial goals:

3. Spend with intention

Debt repayment takes center stage, but you must also plug any spending holes you have in your budget. To demonstrate, inflation won't show up as a line item in your budget, but rising per-unit prices create stealthy paycheck erosion.

I'm going to show you a few ways to rein in spending. First, everything in life seems to revolve around subscriptions, so this is a good place to start. Look for apps or memberships you haven't used much in the past few months and pause them. If you can go a few months without them, then you won't need them back.

And if you want to save on streaming moving forward, do this:

• Use your credit card and cell phone plan perks to lower total streaming costs
• Buy annual plans around Black Friday, where deals are usually the best
• Use shopping subscriptions like Walmart+, which offers a free membership to Peacock Premium or Paramount+ Essentials plan, you can switch options every 90 days

The next area is mastering the art of grocery shopping. Instead of impulse buying, plan meals. Shop ethnic markets for produce, as they tend to be cheaper and offer better quality than most grocery stores, in my experience.

Use warehouse clubs for pantry bulk supplies, where per-unit prices are often lower than at your regular markets.

Another tip seems simple, yet it's effective. Kiplinger personal finance writer Rachael Green reached out to her service providers to ask if they could lower her bills. She saved over $700 annually, so it definitely pays to reach out.

Lastly, if you find something you want to buy that isn't essential, implement the 24-hour rule. I do this often and find that after sleeping on it, I don't really need the item. This can help you rein in impulse spending, giving you more money to devote to debt repayment.

Ultimately, inflation can erode some of your purchasing power, but you can control its impact. The key is to move away from an all-savings strategy and implement other solutions impacting your finances.

Attacking high-interest debt with urgency and treating every dollar you earn with intention helps you not only save money but also buy back your financial freedom. These small shifts can help you weather the storm of higher prices so you can reclaim the ground inflation tried to steal.

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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 married and retired 55-year-old public high school teacher in Midland County, Michigan. He reports his annual salary when he began teaching was $30,000. At retirement in 2020, it was $68,000.

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

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

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

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

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

The Basics

How did you make your first $1 million?

My wife and I hit our first million in our early 40s. In my mind, we owe a lot to a few people:

• One was a fellow teacher who, when I was a rookie, recommended a financial planner she used
• Another was a different teacher who told me to make sure I earned a master's degree
• The third was Clark Howard, whom I discovered by accident when his radio show followed a.m. radio Tigers games. Clark taught me tons in every one-hour show.

While I earned the degree and credits to "move to the right" on our school pay scale (it's an education thing), my wife worked in several different jobs, remaining in them until she either became bored/restless or saw another opportunity.

She eventually ended up at a giant chemical company in Midland for the last 17 years of her career.

What are you doing with the money?

We didn't do anything unusual. We did travel a bit on my summer breaks. We never upsized our house (paid $93,500 in 1997), never had kids (I like to say that, as a teacher, I raised other people's kids), and we drive our cars well over a decade. (Clark Howard once said that people who buy a new car every year or so end up working two years longer.)

The Fun Stuff

Did you do anything to celebrate?

Nope. Maybe a dinner out? I don't recall.

What is the best part of making $1 million?

I want to share both sides. The good is that sense of accomplishment. We both grew up in modest families: Our parents were blue-collar all the way.

It sure was nice learning that we didn't have to be "worried" about money. When our financial planner told us we could easily "self-fund" long-term care, I was shocked.

On a negative side, sometimes when I see people struggling, I do feel some guilt. If I had a different family or had gotten sick and so on, I could easily be in their shoes.

Did your life change?

I don't feel like it did in a big way, but you have to realize that we got the financial planner when we were in our mid-20s: Becoming financially secure was "part of the plan," so each year, we had a meeting with the financial planner, and we followed our progress together.

It wasn't like there was some surprise when we hit $1 million — we slowly and steadily saw it coming.

Does anyone know you're a millionaire?

No one knows for sure. I've been retired for five years (at 50), and I had a good handful of students asking me how I could be retiring before the other teachers.

I did lessons about saving and investing and being frugal and showed them spreadsheets with progressions, and the ones paying attention, I'm sure, knew or could guess.

Did you retire early?

At 50. Wife is still working, half-time, mostly for fun. She did retire from the chemical company a few years ago, but got recruited by former workmates to work for a different large agricultural/chemical company from home.

I think she's going to quit for real at 59½, which is a couple of years off.

She does something she calls "e-business." I'd try to explain it, but I don't get it.

Looking Back

Anything you would do differently?

No.

What advice would you give to your younger self?

Be open to people, usually older than yourself, who have potentially good advice. Watch out, though. How do you spot the bad advice?

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

No books. A few websites. But really, listening to Clark Howard for years allowed me to absorb more than I'd have gotten from most books.

Did you work with a financial adviser?

They recently changed their name to Rise Financial, in Mount Pleasant, Michigan. They've been incredibly important.

Did anyone help you early on?

It had to be the econ teacher I student-taught under (more about that later). He showed me how to trade stocks and connected me with a discount broker.

Yes, it did lead to my Enron loss (more on that later, too), but those experiences were extremely valuable.

Looking Ahead

Plans for your next $1 million?

None. After we hit $1 million, I honestly stopped paying attention. We might be past $2 million now; I don't know.

I do recall our financial planner showing me an extrapolation predicting we'd max out around $7 million in our late 60s, early 70s.

Will that become reality? No idea.

Having two pensions helps.

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

Slow and steady is the way. I remember during student teaching, I worked under an econ teacher who was a millionaire. He was an inspiration.

I wanted to invest in an environmentally positive company (this was before my first teaching contract and before having a financial planner), and I put about $500 into Enron. Yeah.

Anyway, let a pro manage your money. Yes, they take a slice, but it sure was nice not having to worry about stuff on my own.

When the market went down, that simply meant there were bargains out there.

Just for fun, a few years ago, I also put $500 into Canoo (electric vehicle startup). I had the chance to get out with $2,000-plus, but I hung around and watched it also disappear.

Do you have an estate plan?

We currently have a will set up, where 100% goes to three charities when we die.

We do give minor amounts annually to several animal charities, but we made the decision to save most everything, then leave it.

I've seen the "die with zero" stuff lately, but I don't know how I feel about that yet.

People don't think it'll happen to them, but things like accidents or cancer can wipe out nest eggs of many sizes. Quick, knock on wood.

What do you wish you'd known …

When you first started saving? How do you "pick" how much to save? Do you get to "pick," or is it just a matter of saving what is left over every month?

I know people who make tons more than we ever did and could easily save, but from their point of view, they don't believe they have anything "left over."

We aimed for saving 15%, and that worked out.

When you first started investing? My lesson with Enron taught me plenty. Diversify. Let a full-timer worry about it.

Before you retired? I had read many examples of folks retiring and losing their social contacts from work, so I tried to be prepared for that and have been moderately successful.

I keep socially busy enough for my liking, but I do miss a few friends still teaching.

When you first started working with a financial professional? Right away, I made peace with the amount they shaved off the top. Yes, it amounted to five figures, but I kept my eyes on the bigger picture.

Anything you'd like to add?

I never obsessed over money, but it's easy to imagine going to a dark place. … I feel like while my wife and I did work for what we have, chance was involved: We stayed healthy, never had a serious car accident, etc.

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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The aphorism "If you fail to plan, you're planning to fail" is commonly attributed to Benjamin Franklin.

Even if the words are his, he wouldn't have been thinking about income taxes when he wrote them. Those were introduced in 1862 to temporarily fund the Civil War. The 16^th Amendment made them permanent in 1913.

Today's income taxes are quite complex compared to the type of taxation people would have known in the days of the Founding Fathers. And you'll need to take an active, strategic approach to managing them if you want to optimize your financial position.

In general, for income of $150,000 or under, there are specific concerns and ways to approach the planning. For those with $500,000 and more in income, there are different concerns and approaches.

There is no doubt that proper tax planning helps at any level, but in the "messy middle," between $150,000 and $500,000, there is more complexity than necessary.

The challenges of active tax management

One of the biggest challenges in active tax management is synthesizing all the information to uncover what can reduce your tax burden as much as possible in the future, and not just in the current year.

You might be unaware of various deductions, state-specific rules and thresholds that can kick you into a higher bracket, eliminate or phase out a deduction, or cause other unforeseen expenses now or later.

It is a balancing act that is based on and informed by income sources, assets, ways assets are owned, taxation attributes of types of assets, financial goals, expectations about the future of taxes and sometimes even legacy intentions.

For many, the complexity requires a professional to dig into the details, ask the right questions and help devise the best strategy or mixture of strategies. An expert can provide objective analysis that identifies missed deductions and potential opportunities, ensures regulatory compliance, mitigates risks and increases net after-tax long-term wealth.

Whether you do your own tax planning or hire a tax professional, the important point is being intentional — making tax planning a priority in your financial plan (at the very least giving it equal importance to investment, income, legacy and protection planning) and making choices to ensure you are protecting as much of your savings and assets as possible for the long term for the best possible taxation.

Learning the tax implications of your income range

The starting point in active tax management is figuring out your likely income range and optimal tax strategies for now and for retirement. Tax rates can change in the future, but the important approach now is to identify an income range where you think you could settle tax liability at reasonable rates, avoid paying unnecessary taxes and set up a future where you have some flexibility to manage brackets later.

Let's focus on the tricky messy middle — those with between $150,000 and $500,000 in income. For the 2026 tax year, that range of income spans three tax brackets (22%, 24%, 32%) for married couples filing jointly and three for single/married filing single (24%, 32%, 35%).

That range points out the importance of active tax management not only because of the various tax rates, but also because there are numerous deduction phase-outs and additional tax triggers.

Here are just some of those (based on the 2026 tax year).

Net investment income tax (NIIT). This is an additional 3.8% federal tax on certain types of investment income. It applies to individuals with modified adjusted gross income (MAGI) exceeding $200,000 (for single filer/head of household) and $250,000 (married filing jointly/surviving spouse).

Once you cross into these ranges, every dollar of investment income becomes less efficient, making proactive tax planning significantly more valuable. The NIIT applies to income such as interest and dividends, capital gains (stocks, real estate, funds), rental and passive income and certain annuity income.

Long-term capital gains rates. Another negative impact of the NIIT: It effectively raises long-term capital gains rates to 18.8% (15% + 3.8%) or 23.8% (20% + 3.8%), depending on your filing status and income level.

Qualified business income (QBI) deduction. The QBI deduction is a tax break allowing eligible self-employed individuals and pass-through business owners (partnerships, LLCs, S corps) to deduct up to 20% of their qualified business income from their personal taxes.

In 2026, the phase-out range (for some in specified trades or businesses) is $403,500 to $553,500 for married joint filers, $201,775 to $276,775 for single filers.

Child tax credit. The phase-out starts at $200,000 for single/head-of-household filers and $400,000 for married couples filing jointly. The credit amount is reduced by $50 for every $1,000 of income above these thresholds.

Deduction for those who are 65-plus. A new $6,000 deduction for individuals aged 65-plus phases out between a MAGI of $75,000 to $175,000 for singles and $150,000 to $250,000 for married joint filers. The deduction reduces by six cents for every dollar over the limits.

State and local tax deduction (SALT). With MAGI just over $505,000, you begin to lose the increased SALT deduction, but for now, for many with income under $500,000, a higher deduction may mean itemizing for the first time in a while.

Charitable contributions. Donations are only deductible to the extent they exceed 0.5% of your adjusted gross income (AGI). For example, with an AGI of $300,000, only donations over $1,500 are deductible as an itemized deduction, and then only if you itemize. There is now a small "above the line" deduction for those not itemizing. (A note for those in the top tax bracket: A limitation on itemized deductions comes into play for you.)

Increased Medicare premium surcharges. The income-related monthly adjustment amount (IRMAA) is a surcharge added to Medicare Part B and Part D. It is based on your MAGI from two years prior. Single filers with income ranges from $109,000 to $500,000+ pay progressively higher surcharges, as do those filing married jointly from $218,000 to $750,000+.

For example, a married couple filing jointly with a MAGI of $280,000 would pay approximately double for Medicare premiums relative to those who make $215,000.

This is an especially tricky one to navigate and is not felt until two calendar years later, based on how Medicare premiums are determined. You go over a threshold by just a dollar, and it could cost you hundreds, if not thousands.

The widow's tax penalty. This is a surge in federal income tax liability and Medicare premiums that occurs when a surviving spouse shifts from married filing jointly to single status, typically one year after their spouse passes away.

For higher-income individuals, the penalty can be severe because they often have income sources (pensions, IRAs, investments) that do not decrease when a spouse dies.

Most often, the surviving spouse spends about the same money and needs the same amount of funds to accomplish that, which means the same amount of income while the brackets have been cut in half. The IRMAA charges are higher at lower income levels, too, for the surviving spouse.

Take control and reap the rewards

Active tax management is no longer beneficial for just the ultra-wealthy; it is a necessity for anyone and beneficial for those navigating the increasingly complex $150,000 to $500,000 income range.

This bracket is filled with hidden triggers, phase-outs and surtaxes that can quietly erode wealth if left unaddressed. The difference between reactive and proactive planning can mean thousands of dollars kept or lost each year and over a lifetime.

Understand what you have, what you can do now and what you can do later, so you can either defer income or settle tax liability when it makes sense. That approach allows you to optimize your current and future tax situation.

By understanding how the various ingredients and thresholds interact — and by making intentional, forward-looking decisions around income, investments and timing — you can take greater control of your financial outcomes and your net after-tax dollars.

Remember, you do not get to spend pre-tax dollars — it is only the after-tax dollars you get to spend. As the great Yogi Berra once said, "If you don't know where you are going, you'll end up someplace else."

Dan Dunkin contributed to this article.

Appearances on Kiplinger.com were obtained through a paid public relations program. The author received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

The information contained herein is for educational purposes only. It is not intended to provide, and should not be relied on for, any tax, legal or investment advice. You are advised to seek the advice of a qualified professional prior to making any decision based on any specific information contained herein. The specific tax consequences of any investment or strategy will depend on your specific tax situation.

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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.

More Americans are growing concerned about their ability to afford retirement.

A recent survey from Northwestern Mutual found that 48% of Americans believe they'll outlive their savings.

Many also believe they'll need at least $1.46 million in savings to retire comfortably in 2026, a $200,000 increase from 2025.

It can be easy to hyper-focus on having a certain amount saved before retirement, but without a strategy to turn those savings into reliable income, even the most substantial nest egg may not last.

Whenever surveys like these come out, people shut down after hearing they'll need to have a million dollars in retirement savings. What's often missing from the conversation is how that number is actually calculated.

Many pre-retirees start by estimating how much monthly income they would need to live comfortably. Others use the income replacement ratio (IRR) method, which is calculated by estimating the pre-retiree's average gross salary during their final three years of employment and assuming they'll need about 60% to 80% of that amount each year.

Pre-retirees can also use the 4% withdrawal rule, which suggests they may be able to withdrawal about 4% of their retirement portfolio in the first year of retirement, adjusting that amount for inflation each year thereafter.

Some may choose to take a more detailed approach by building a retirement budget that includes both essential expenses and discretionary spending.

It's important to note that these methods are great starting points, yet they may not take into account market downturns, long-term care needs, reduced Social Security benefits, higher taxes or taking care of adult children.

While it can give you a ballpark range to aim for, setting a target savings number doesn't account for unexpected life events, such as a medical emergency, job loss or a sudden drop in the value of investments.

Oftentimes, these estimates are based on assumptions that do not reflect real-life conditions.

The transition from earning income to living off of savings brings uncertainty regardless of how much money is sitting in retirement accounts. Instead of receiving a consistent paycheck, retirees must rely on their savings to generate income.

This introduces a new set of challenges to navigate, such as withdrawal strategies, healthcare expenses and tax management. Rather than building savings, the focus shifts to sustaining them.

When it comes to creating a withdrawal strategy that works for you, start by developing an expense and budget plan.

• Make a list of your expected annual or monthly expenses, including mortgage or rent payments, property taxes, insurance premiums, utilities, healthcare expenses as well as credit card and loan payments
• Calculate your guaranteed income from sources such as Social Security or pensions.
• Subtract that amount from your annual expenses to determine how much money you'll need from retirement savings or investments to fill that gap.

Once you know how much income your portfolio needs to generate, you can utilize investment strategies. Depending on your goals, risk tolerance and timeline, this may include a combination of income annuities, bonds, certificates of deposit (CDs), dividend-paying stocks, alternative investments, reverse mortgages or other investment vehicles.

After establishing an asset allocation strategy, you can implement a withdrawal approach that aligns with your spending needs.

A strategy that could work for you

For some, the bucket withdrawal strategy might be the best approach. This method puts your savings into short-term, intermediate and long-term spending buckets.

Others may follow the guardrails strategy, which allows retirees to increase withdrawals when portfolio values are rising and reduce them when the market is down.

The "go-go, slow-go, no-go" spending framework may also be worth considering. This method acknowledges that spending patterns often change throughout retirement, with higher spending in the earlier, more active years, followed by slower spending in the later years as one ages.

An important part of retirement planning is preparing for the unknown. Whether it's accounting for inflation, market downturns or longer life expectancies, a comprehensive retirement plan is built to withstand various outcomes.

Even with a solid retirement plan, mistakes can still happen. What's important is being flexible.

Refusing to modify withdrawal rates or adjust investment strategy as life changes can have long-term consequences that can be difficult to recover from.

Market fluctuations can also have a significant impact on retirement income, particularly in the first few years of retirement. When markets decline, many retirees panic and sell off their investments, which can lock in losses that can be difficult to recover from, especially if a withdrawal strategy is already in place.

And, as history has shown, those who leave the market when it's down often miss out on the rebound.

Building a sustainable income strategy starts with understanding monthly expenses.

Once a budget is in place, retirement income can be generated through a combination of Social Security benefits and investments, structured to provide day-to-day sustainability and future growth.

Chris Cohan is a registered representative of and conducts securities transactions through CoreCap Investments, LLC. Chris Cohan is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. RJP Estate Planning is a separate entity and not affiliated with CoreCap Investments or CoreCap Advisors.

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

Even the best-laid retirement withdrawal plans can’t foresee every expense that crops up. When you need extra cash for unforeseen costs, knowing where to turn can be paralyzing. After all, every financial move comes with tax implications that ripple well into your future.

Should you sell stocks in your brokerage account, or flip the family lake house? Is it time to finally get rid of the boat you keep meaning to take out, or should you drain a Roth IRA instead?

"When you need cash in retirement, it requires a balancing act," says Patrick Marcinko, a financial advisor at Bogart Wealth. "Don't rush. There's a timeline and a deadline, but you really need to take an objective look at all your assets and what the tax implications are."

In a perfect world, you’d have a cash reserve carved out for the unexpected. But if you don't, some assets are far better to tap than others. From brokerage accounts to lifestyle vehicles, here is a look at which assets to sell first when you need extra money.

1. Investments in your brokerage account

When withdrawing money in retirement, Marcinko says retirees must be mindful of the potential tax hit, which is why a taxable brokerage account is typically a better first choice than a traditional 401(K) or IRA. Long-term capital gains tax rates, which top out at 20% for the highest earners, are substantially lower than ordinary income tax rates, which apply to traditional retirement account withdrawals.

Taking money from the wrong bucket can easily push you into a higher bracket, triggering higher Medicare premiums and even taxes on your Social Security benefits. To avoid this, try to minimize capital gains by employing strategies like tax-loss harvesting and avoiding selling your most highly appreciated assets, says Patrick Shope, Certified Wealth Strategist and founder of Shope + Associates. It's better to pick and choose to ensure you aren't creating a bigger tax event than necessary.

2. High-fee and redundant funds, stocks and investments

If you're tapping a brokerage account for extra cash, start by trimming the fat. Sell off high-fee funds, redundant holdings and underperforming assets that could harm your overall portfolio over the long term.

However, be mindful of timing, says Marcinko. If you sell during a down market, you risk locking in losses. This causes sequence of returns risk, leaving your remaining portfolio with a smaller base to recoup those losses, which can cause a structural shortfall later in your retirement.

3. Concentrated stocks that have done well

Cutting back a very concentrated position may seem like a no-brainer, especially if you own big-name tech or AI stocks that have surged in value over the past few years. While it may make sense to sell the stock from a diversification perspective, you must carefully navigate the tax implications.

If the stock is held inside a traditional 401(k) or IRA, selling the asset won't cause an immediate tax event, but withdrawing the cash from the account will subject it to ordinary income tax. Even if the stock is in a Roth 401(k) or IRA, where withdrawals are tax-free, cashing out now permanently impacts the tax-free compounding advantage that would otherwise benefit you and your heirs. If you do sell a concentrated stock position in a taxable account, Shope suggests doing it gradually to minimize your annual tax liability.

4. Unused lifestyle vehicles (boats, RVs, motorcycles, and extra cars)

If you can't remember the last time you took your boat out on the water or your RV has sat in the driveway for years, it is safe to put those lifestyle vehicles up for sale. Finding a buyer won't always be a quick or easy way to get immediate cash, but it frees up significant equity.

Unused lifestyle vehicles represent unique vulnerabilities in a portfolio: they actively drain your cash flow through ongoing maintenance, storage and insurance expenses without bringing you actual joy.

Nonetheless, they aren't usually high on financial advisers' lists of what to tap first because they are illiquid, require work to sell, and can be emotionally hard to part with. "If it hasn't moved off the lot in 36 months, you have to commit to having more fun (with it) or selling it," says Marcinko.

5. Rentals or second homes

Real estate is another asset that isn't easy to sell. It carries substantial tax and family implications, especially if you originally planned to pass the property down to the next generation. However, it can also generate serious capital.

If you are considering selling real estate, the decision often comes down to whether the property brings you joy or stress. If it's the latter, then selling makes the most sense.

"If every time the phone rings you think something is wrong with the house, that's a lot of juice not worth squeezing," says Marcinko. "You want to get out of the real estate business and start living the retirement life."

Consider the big financial picture before selling

When selecting assets to sell, resist the temptation to just pick the stock with the biggest run this year or the fund with the highest expense ratio. Instead, put in the work and look at your entire financial picture, considering what the sale will mean from a tax and savings perspective, both now and in the future. Will it impact your Medicare premiums and Social Security benefits today? If you withdraw the money now, will you have enough to live on tomorrow?

"One of the biggest mistakes retirees make when they need cash in retirement is to sell whatever is the easiest to sell instead of what is the smartest," says Shope. "So much of it is around distribution planning, tax planning and Medicare planning. It's not just about having the money. It's about having the right money at the right time with the right tax situation."

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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 on amended returns and penalties for filing your tax return late. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Refund on amended return

Question: I filed Form 1040-X in early May to amend my 2024 federal tax return. I am expecting a refund, and I haven't received it yet. What is the delay?

Joy Taylor: I generally advise taxpayers to have lots of patience when filing an amended federal tax return with the IRS. The agency says you should allow at least 8 to 12 weeks for your Form 1040-X to be processed. However, in some cases, processing could take up to 16 weeks. Note that the IRS website also says that the Service is beginning to process paper-filed Forms 1040-X that were filed in April.

Maybe the processing speed will pick up later this year. The IRS's CEO, Frank Bisignano, testified before Congress that the IRS is using artificial intelligence to reduce processing times of amended returns to as little as three days. We'll see how this plays out over time.

You can use the IRS's "Where's My Amended Return" online tool to check the status of your amended return filing.

2. Amended return filing deadline

Question: I am thinking of amending my 2023 Form 1040, which I filed in February 2024. When is the due date for filing Form 1040-X to amend that return?

Joy Taylor: You generally have (1) three years from the due date of your original Form 1040 or (2) two years from the date you paid any tax due, if later, to amend it by filing an amended return on Form 1040-X. If you filed your original Form 1040 before its due date, it is considered filed on April 15. So, in your case, you would have to file an amended return no later than April 15, 2027.

3. Filing a late refund return

Question: I haven't yet filed my 2024 Form 1040. I plan to do so soon. I know I will get a refund when I do file. But will I have to pay any penalties for my late filing?

Joy Taylor: No, you will not have to pay any delinquency penalties for filing your 2024 Form 1040 late. That’s because taxpayers owe late-filing or late-payment penalties only if they owe tax, and you say you will receive a tax refund. Note that you must file your 2024 return by April 15, 2028, to get your refund. Otherwise, you have essentially ceded the money to the government.

4. Penalty abatement

Question: I haven't yet filed my 2025 Form 1040. I know I will owe tax, and I didn't request a filing extension nor did I pay the tax by the April 15 due date. I hope to file my return next month. This is the first time I have ever filed a late return with the IRS. How much will the agency penalize me for my late filing?

Joy Taylor: You may be in luck. The IRS has a little-known first-time penalty abatement policy. It will approve a waiver of the late-filing and late-payment penalties for filers who pay or arrange to pay the tax due and have been tax-compliant for the past three years. The penalties for late payroll-tax deposits and delinquent returns of S corporations or partnerships are also eligible for the waiver if the conditions are satisfied. But the estimated-tax penalty (also called the underpayment penalty) doesn't qualify for this penalty abatement program.

You may have to request the waiver. If you get a notice from the IRS showing a late-payment or late-filing penalty due but not abated, follow the instructions in the letter or call the phone number on the notice. The IRS has said that it will begin to automatically provide first-time penalty abatement to taxpayers who qualify for relief, starting with 2025 tax returns filed this year. But I am not sure whether the IRS has yet implemented this automatic procedure, which the agency will refer to as automatic exemption of penalties. If the IRS has implemented this program, then you should receive a letter after you file your late 2025 tax return, noting that the IRS didn't assess a penalty.

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: Deductions for Self-Employed Retirees
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Reader Questions on QCDs

Financial experts recommend setting your asset allocation and sticking to it until your life circumstances change.

You should typically split your investments among equities and fixed-income investments and perhaps a pinch of commodities.

For example, you might decide on 49% in stocks, 49% in fixed income and 2% in commodities. If stocks have a big run-up and become, say, 60% of your portfolio, you should consider rebalancing to get back to your original allocation.

What's the best asset allocation for you is highly individual and depends on many factors, including age. Most people become more conservative as they enter retirement and cut back on stocks and increase fixed-income assets, which include bonds and bank certificates of deposit (CDs).

But they aren't the only choices. As the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed and lifetime income annuities, I am a nationally recognized annuity expert and know all about those choices.

Fixed-rate deferred annuities — especially multi-year guarantee annuities, or MYGAs — provide safe, steady interest but without most of the drawbacks of bonds or bond funds. They also usually pay higher rates than CDs and are tax-advantaged.

These annuities can thus substitute for some of the bonds or CDs in your fixed-income allocation. But you need to be aware of liquidity and taxation matters before committing.

MYGAs avoid bond-market volatility

Issued by insurance companies in exchange for a single premium deposit, MYGAs share some similarities with bonds and even more with CDs. Like CDs, they earn a guaranteed rate of interest for a set period, usually two to 10 years.

But there are some key differences between bonds and fixed annuities, which have more guarantees and lower risk.

First, you can lose money in bonds. Both CDs and MYGAs guarantee interest and principal. But the market value of a bond fluctuates with changes in interest rates. If rates go up and you sell a bond prior to maturity, it will be worth less than its original cost. With an individual bond, you can avoid this problem by holding it to maturity.

Bond-fund investors don't have that option. If rates spike up after you buy a bond fund, the value will decline. Especially with a long-term bond fund, it may take many years to recover your full principal, if ever.

Second, owners of individual bonds (except Treasuries and U.S. agency bonds) also face default risk. A company or municipality may run into financial problems and fail to make timely interest or principal payments. A default means you could lose part or all of your investment.

In contrast, an annuity is guaranteed by the issuing insurance company. There is no federal deposit insurance, so buyers need to choose carefully. Insurers with strong financial ratings are considered very safe. Rating agencies like AM Best provide a letter grade to insurers.

With fixed annuities, the insurance company bears the underlying investment risk, shielding annuity owners from both bond market volatility and default risk.

Most corporate, municipal and government bonds pay out interest every six months. Normally, there's no ability to reinvest interest so that it can grow and compound at a high rate.

Bond funds let you reinvest your dividends automatically, but the price per share varies as interest rates change. You may have a gain or loss on reinvested dividends when you cash in the fund shares.

More advantages

MYGAs let you compound interest earnings. Reinvested interest gets the same rate as the base annuity, so the yield is guaranteed. Depending on the annuity, owners who need income can usually choose to receive interest earnings monthly, quarterly or annually.

Interest from corporate bonds and Treasuries is taxable in the year it's received. Annuities in nonqualified accounts (not in an IRA, a 401(k) or a similar plan) are tax-deferred.

All interest earnings left inside the annuity grow and compound tax-deferred until withdrawn, a significant tax-planning benefit. You can wait until retirement, when your tax bracket is likely to be lower, to start receiving payments. Without taxes taking a cut, your money compounds faster.

Many corporate and municipal bonds are callable. When rates are high, it may look like you nailed down a great deal. However, a few years later, when rates are lower, the issuer may call the bond back, and you'll have to reinvest the proceeds at a lower rate.

Fixed-rate annuities, like CDs, can't be called. The interest rate is set for the duration of the guarantee period.

Annuities also offer the ability to create a guaranteed lifetime income stream via annuitization. It's the only financial product that offers this option.

Liquidity and taxes

MYGAs have less unpenalized liquidity than bonds and bond funds. You can always cash them in, but you'll pay a penalty for early surrender. Second, interest earnings withdrawn from nonqualified annuities before age 59½, with a few exceptions, are subject to a 10% IRS penalty, plus ordinary income tax.

By the way, MYGAs can work very well as a fixed-income allocation in IRAs, providing "ballast" that counteracts the swings of the stock market while earning a high guaranteed rate of interest.

Because they have less liquidity than bonds, you probably wouldn't want to put all of your fixed-income investments in MYGAs. Among other things, it might limit your ability to rebalance.

But there is some liquidity. Many fixed-rate annuities let you withdraw up to 10% a year penalty-free. They're thus usually more liquid than CDs, which have stiff penalties for any early withdrawals.

Furthermore, you can stagger multiple MYGAs with different terms so that you'll have new ones coming up for renewal every year or two.

Not for everyone but maybe for you

MYGAs aren't right for everyone, but many people can benefit from their unique features. They provide steady, reliable interest that you can usually receive monthly, quarterly, semiannually or annually if you need the income. Or you can let interest accumulate in the annuity and grow tax-deferred.

MYGAs can also work very well in both IRAs and Roth IRAs.

There's nothing wrong with bonds and CDs. But take a look at MYGAs. One or more may be a good fit for you.

Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and lifetime income annuities. Ken is a nationally recognized annuity expert and widely published author. A free rate comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356. The firm also offers an income-annuity quoting service. There are no fees or charges for the firm's services; 100% of the client's money goes to work for them in their annuity.

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• What are Annuities? The Different Types and How They Work
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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.

Employees at companies that offer equity compensation have the opportunity to grow significant wealth, but it also comes with considerable risk.

Having too much of your net worth tied up in a single company makes you vulnerable to volatility and both short- and long-term losses, depending on the firm's success.

I've seen many employees with concentrated stock positions at tech companies and in other industries who feel conflicted about selling their shares. They may have an emotional attachment to the company or even feel disloyal selling off their shares.

Not to mention that selling all your shares at once can leave you with a large tax bill.

With a thoughtful approach, investors may be able to address the risks associated with a concentrated stock position over time, seek tax efficiency, and remain invested in their company and industry while managing potential downside exposure.

Stock concentration isn't always bad, but it needs a plan

Having a concentrated stock position isn't inherently bad. For many clients, that stock concentration is exactly how they built their wealth in the first place. The goal is simply to make sure your exposure is intentional and appropriate for your situation.

There's no set rule of thumb for how much of your portfolio your company stock should make up. I generally prefer people to keep their single stock concentration to less than 40% of their portfolio, but many advisers take an even more conservative approach, recommending closer to 10% or 20%. The younger you are, the higher percentage of your portfolio it can make up.

It also depends on your other assets. If you have substantial liquid assets, that 40% may be appropriate. But if you have real estate and other illiquid assets, a lower percentage is likely better.

Here are five strategies to manage your concentrated stock position:

1. Understand what you're working with

Stock compensation comes in several forms, including incentive stock options (ISOs), non-qualified stock options (NQSOs) and restricted stock units (RSUs). Each type comes with a different tax treatment, which affects your strategy.

Before you plan your next steps, you need a clear understanding of what you own, when it vests and how you'll be taxed on it.

2. If your company is still private, build your tax-loss bucket now

If your company is heading toward an IPO, you could have several years to start preparing for the large tax bill. Start creating a tax loss bucket in advance.

You can start harvesting your tax losses by selling losing positions in your investment account, capturing those losses, and reinvesting in a comparable security.

You'll slowly build up a reserve of losses you can use to offset the gains you'll earn when you eventually sell your IPO shares.

High earners with sufficient investable assets can also explore specialized investment strategies, such as direct indexing vehicles, to give you more control and help you create tax losses to offset your future gains.

3. You don't have to unwind everything at once

Many employees take one of two extremes when their company IPOs: They either sell everything right away, or they don't sell anything at all. Neither is necessarily the right option.

First, you'll typically be subject to some sort of lockup period, usually 180 days, during which you won't be allowed to sell any of your shares. But you can still use this time to prepare.

Once the lockup period ends, consider a staged selling strategy rather than selling everything all at once. You can spread your sales across multiple tax years to lower your tax bill, reduce the impact of net investment income taxes and, ideally, avoid bumping yourself into the next tax bracket.

By staging your selling over several years, you can significantly lower your tax burden and remove some of the emotional pressure that comes with trying to perfectly time your sale.

4. Consider an exchange fund for long-held stock positions

If you have a highly appreciated stock position worth at least $500,000 to $1 million, an exchange fund can help you diversify it without a large tax consequence. You exchange your concentrated stock position for a private diversified portfolio of securities contributed by other investors.

This strategy isn't appropriate for everyone, as it requires a large investment and a seven-year holding period before you can exit the fund with your holdings — an earlier exit puts you at risk of financial penalties and taxes.

However, if you're a candidate for this strategy, it can be a powerful tool to save a significant amount in taxes.

5. You can diversify without abandoning your industry

A common sentiment among employees with highly concentrated stock positions, especially in the tech industry, is a desire to remain heavily invested in the sector.

Depending on your risk tolerance, you don't have to abandon your tech holdings, but instead spread them out across more companies. You can preserve the potential upside without a single bad earnings report causing a major hit to your net worth.

The bottom line: There's no one-size-fits-all plan, but early planning is key

Stock concentration is common among employees at post-IPO firms or companies that offer equity compensation packages.

There's no one right strategy to address this situation, as it depends on your age, liquidity, risk tolerance and other key factors.

If your company is still pre-IPO, time is on your side, as you have plenty of time to plan your strategy. And if you work for a public company, you have options to exit your concentrated position with less of a tax impact.

Concentrated stock can create life-changing wealth; it's just important to have the right strategy in place to manage it.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. #2026-12426

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

As 2026 rolls on and families prepare for the upcoming school year, household budgets may face a tight squeeze.

Inflation continues to drive up everyday expenses like groceries, gas, and utilities. But for parents of young children, the most significant financial burden often comes from early childhood care.

The years from birth to age five are typically the most expensive. This is largely driven by center-based infant and preschool care, which contributes to an average annual cost of $29,325, according to a recent LendingTree study.

However, local tax structures and regional economics may influence how much you pay.

In some tax-friendly states, the average annual price of full-time care drops closer to $18,000 — roughly 38% below the LendingTree average. Yet a lower childcare price tag doesn't necessarily help if high sales taxes or the cost of living drag your budget back down.

To see how different regions balance these trade-offs, we analyzed ten low-tax states for middle-class families and ranked them by early childcare costs and cost-of-living indices.

Tax-friendly states ranked by childcare affordability

To determine the baseline for "affordability," we looked at how much families spend on state taxes as a percentage of their income (basing "middle-class" on the latest U.S. Census Bureau median household income data).

Next, center-based data from Child Care Aware® of America (CCAoA) was used to measure average annual early childcare costs for one child (ages 0 to 4) as a percentage of the median household income for a married couple.

The childcare cost calculations account for five key factors:

• Infant care pricing
• Toddler care pricing
• 4-year-old preschool pricing
• Before- and after-school care
• Summer programs

Kiplinger factored in the U.S. Bureau of Economic Analysis (BEA) cost-of-living index, which uses regional price parities (RFPs) to measure local prices for essentials like housing, food, transportation, and healthcare. On this scale, 100 represents the national average; a score of 88 means a state is 12% cheaper than average, while 102 indicates it is 2% more expensive.

Property tax figures were sourced from PropertyShark.

Yet it's important to note that family size, educational opportunities, and other factors can influence how "affordable" a state is, and "middle-class" may be subjective. Consult with a tax professional for your specific financial situation.

Note: Where before-and-after-care or summer program pricing data were unavailable, Kiplinger used a national average as a baseline.

1. South Dakota: Best overall value and lowest cost-of-living

Average annual childcare costs: $17,030

Childcare costs as a % of income: 14.2%

Cost-of-living index: 88.6

If you're a parent and you hate paying taxes, South Dakota is the most affordable state on our list for middle-class families. Everyday expenses track about 11.4% below the national average, potentially saving new parents on must-haves like formula and baby clothes.

Total annual childcare costs average around $17,030 (well below the national average, according to LendingTree), helping keep the overall income-to-cost ratio manageable at 14.2%.

Middle-class family taxes to consider:

• There is no personal income tax in South Dakota, allowing families to take home more of their earnings.
• To compensate for this, the state relies heavily on property taxes, which hover right around or above the national average, per PropertyShark data.
• Additionally, the 4.2% state sales tax applies to both groceries and diapers — everyday essentials that many other states exempt.

The bottom line? South Dakota's no-income-tax policy and low property taxes could help with your long-term family tax planning, but a large volume of goods for young children could offset some of your state tax savings.

2. Louisiana: Low cost of living and childcare costs

Average annual childcare costs: $18,252

Childcare costs as a % of income: 15.6%

Cost-of-living index: 88.2

Louisiana claims the second spot on this list thanks to its low cost of living. Average annual childcare costs total just over $18,200, consuming a modest 15.6% of median household income for married couples. Plus, the everyday living expenses — like food and gas — are 11.8% cheaper than the national average, according to the BEA.

Middle-class family taxes to consider:

• While considered a "tax-friendly" state for the middle-class family, Louisiana barely made our list, since its average combined sales tax is the highest in the nation at a whopping 10.11%.
• On the other hand, property taxes are among the lowest in the country, with a median bill of just $1,180 — significantly below the national average of $3,119.
• And the Bayou State has a low flat income tax of just 3% in 2026, among the lowest in the nation, according to the Tax Foundation.

The bottom line? If you don't mind higher sales taxes for lower property tax bills, a potentially cheaper cost of living, and reduced childcare costs compared to other states, Louisiana could be the second "most affordable" state to live in.

3. North Dakota: Average taxes, but cheaper childcare affordability

Average annual childcare costs: $21,292

Childcare costs as a % of income: 16.2%

Cost-of-living index: 89

North Dakota secures third by offering low costs and high savings. Families spend roughly 16.2% of their income on early childhood care in the Peace Garden State, a rate lower than most on this list. Plus, below-average costs for healthcare and groceries are common in the state, per the BEA.

Middle-class family taxes to consider:

• Unlike its southern neighbor, North Dakota levies a state income tax, though it's quite low, ranging from 1.95% to 2.5%.
• The state sales tax is a moderate 5%, and, importantly, groceries are state-tax exempt.
• Property taxes are also pretty average compared to the national median, according to PropertyShark data.

The bottom line? North Dakota's financial landscape may represent a stable, "middle-of-the-road" path for middle-class families, with few tax "surprises" and potentially low early childcare costs.

4. Wyoming: Low cost of living balances the national average

Average annual childcare costs: $21,080

Childcare costs as a % of income: 17.5%

Cost-of-living index: 92.7

Early childhood care costs can be low for Wyoming families. Center-based infant care averages just $13,120 annually, and summer care programs typically run below $2,400, according to the CCAoA. Plus, the overall cost-of-living index sits 7.3% below the national average.

Middle-class family taxes to consider:

• Wyoming has no state income tax, which can provide relief for middle-class paychecks.
• Also, the state features very low property taxes, with a median property tax bill of just $1,767 (significantly below the national average of $3,411), according to PropertyShark.
• On the other hand, Wyoming still taxes diapers at its moderate 4% state sales tax rate.

The bottom line? Wyoming can provide significant tax relief, especially if you hate paying high state income taxes or property taxes; daily essential costs can also remain low, unless you venture into more rural areas.

5. Alaska: High local costs drag down cost-to-salary ratio

Average annual childcare costs: $20,178

Childcare costs as a % of income: 14.7%

Cost-of-living index: 102.4

Alaska features the second-lowest childcare cost-to-income ratio on the list, requiring just 14.7% of a typical married couple's salary, per the latest data from CCAoA.

But it ranks fifth overall because its remote geography significantly inflates the cost of daily necessities like food and heating utilities, pushing its overall cost of living above the national average.

Middle-class family taxes to consider:

• Alaska is another no-income-tax state, which means capital gains, salaries, and bonuses are exempt from state tax.
• The Last Frontier also levies no statewide sales tax, according to the Tax Foundation.
• However, because Alaska doesn't collect income or sales tax, local and property taxes can vary widely by region.

The bottom line? For families who can navigate long winters and high retail prices, Alaska's early childhood programs can be affordable depending on the area and household income level.

6. Florida: Moderate costs with a higher cost-of-living

Average annual childcare costs: $19,520

Childcare costs as a % of income: 16.9%

Cost-of-living index: 103.4

It might come as a surprise that Florida lands in the bottom half of the rankings on our list.

But the Sunshine State's cost of living sits nearly 4% above the national average according to the BEA, driven up by rising costs in healthcare, food, and utilities. According to the CCAoA, childcare accounts for 16.9% of the median family income, providing some relief for middle-class budgets.

Middle-class family taxes to consider:

• All forms of personal income are state tax-free, which is one of the reasons people move to Florida.
• State officials are also looking to greatly reduce or even eliminate property taxes, though for now, the median bill is just below the national average, per PropertyShark.
• The statewide sales tax rate is relatively high, at 6%, yet diapers and groceries aren't subject to state sales taxes.

The bottom line? While the cost of living on items like groceries, home insurance premiums, and healthcare is higher in Florida than in other places on our list, middle-class families may still find early childhood care affordable in less expensive areas.

7. Arizona: Higher cost of living, but low taxes on everything else

Average annual childcare costs: $21,909

Childcare costs as a % of income: 18%

Cost-of-living index: 100.7

Arizona's placement reflects a combination of an above-average cost-of-living index and steep upfront childcare fees.

Per the CCAoA, middle-class families can expect to dedicate 18% of their annual income to early childhood care, which is only 2% below the national average. Center-based programs for infants and toddlers are more costly than other states so far, averaging $16,384 and $13,742 per year, respectively.

Middle-class family taxes to consider:

• Arizona has a flat income tax rate of 2.5%, making personal individual returns perhaps a little simpler for families.
• Plus, the Grand Canyon State has some of the lowest property taxes in the nation, with a median bill of only $1,879 — 55% below the national average, according to PropertyShark.
• At the same time, the state's 5.6% sales tax is relatively average; Arizona still taxes diapers.

The bottom line? Despite a higher cost of living, Arizona could be an affordable option for parents with slightly higher incomes who want lower property tax bills. But the overall financial and tax environment requires careful cash-flow management for growing families.

8. Tennessee: Low childcare costs except in the summer

Average annual childcare costs: $23,371

Childcare costs as a % of income: 20.8%

Cost-of-living index: 91.9

Despite boasting a relatively low cost-of-living index that is 8.1% below the national average, Tennessee ranks low on our list due to the state's shortage of licensed childcare facilities. Because of this, summer childcare costs alone can reach over $8,000, pushing total annual care to nearly 21% of a family's household income, per CCAoA data.

Middle-class family taxes to consider:

• Tennessee has no state income tax, meaning your wages, salaries, and tips are state tax-free.
• Property taxes are also among the lowest in the U.S., with a median bill of around $1,442, according to 2026 PropertyShark data.
• High sales taxes are the norm in the Volunteer State. At 7%, Tennessee's base rate is the second-highest in the nation and applies to diapers. Groceries are also taxed, although at a lower rate of 4%.

The bottom line? Tennessee's lower cost of living offers potential savings on most everyday expenses. However, middle-class families with young children should factor in the higher sales tax rates and elevated summertime care costs into their annual budgets.

9. Nevada: Middle ground cost of living, with higher childcare costs

Average annual childcare costs: $24,102

Childcare costs as a % of income: 21.1%

Cost-of-living index: 100

Nevada represents a somewhat flat baseline for everyday living, with housing, food, and medical costs landing right around the national average, according to the BEA. Yet early childcare eats up more than one-fifth (21%) of the median middle-class household income, making these costs a heavier burden than in other areas on our list.

Middle-class family taxes to consider:

• Like many other states on this list, Nevada has no state income tax, helping middle-class families keep their entire paycheck (at least from a state tax perspective).
• Per PropertyShark data, property taxes are also low, with a median bill of about $2,027.
• Sales taxes are a bit higher, around 6.85%, though Nevada doesn't tax groceries or diapers at the state level.

The bottom line? Nevada families enjoy zero state income tax and highly reasonable property taxes, which offer some relief, but the high cost of childcare means that while families keep their full paychecks, a substantial portion is immediately redirected to local care facilities.

10. Washington: Least affordable, high cost of living

Average annual childcare costs: $28,436

Childcare costs as a % of income: 19%

Cost-of-living index: 107

Washington closes out the list as the most expensive tax-friendly state for middle-class families with young children. A cost-of-living index of 107 means families pay a 7% premium on necessities like housing and utilities.

While high median incomes keep the childcare-to-salary ratio at 19%, the annual average childcare cost of $28,436 makes it the most expensive baseline care price on the list, according to the CCAoA.

Middle-class family taxes to consider:

• Though there is no personal state income tax, Washington imposes a 7% to 9.9% tax on long-term capital gains over $262,000.
• The Evergreen State also has a high sales tax, ranking among the highest in the nation.
• Property taxes, too, are expensive, with a median bill above the national average at $4,556, according to PropertyShark data.

The bottom line? Although childcare costs are comparable to a couple of other states on this list, property taxes, an elevated cost of living, and high sales taxes create significant financial hurdles for middle-class families.

Read More

• The 9 No-Income States Ranked by Cost-of-Living
• Frugal Habits People In Different States Are Using to Save in 2026
• A New Type of Trump Account Has Been Unveiled in 23 States

If you've been considering a Sam's Club membership, this may be the best deal you'll see all year.

Through July 5, new members can sign up for a standard Sam's Club membership for just $15 for the first year, a $45 discount from the regular $60 annual fee. Shoppers who want additional perks can join Sam's Plus for $50 for the first year, saving $50 off the regular price.

The promotion comes just weeks after Sam's Club raised membership prices, making the discount even more attractive for shoppers considering a warehouse club membership. Whether you're stocking up on groceries, filling up at member-priced gas stations or preparing for summer entertaining, the deal lowers the cost of trying Sam's Club while giving shoppers access to a range of member benefits.

Sam's Club membership: $15 for the first year

The standard Club membership is designed for shoppers who want access to warehouse pricing without paying for premium perks.

For $15, members receive:

• Member-only pricing throughout the warehouse
• Discounted fuel at Sam's Club gas stations
• Scan & Go checkout through the Sam's Club app
• Free curbside pickup on eligible orders
• Two membership cards per household
• Access to Instant Savings offers

If your primary goal is saving money on groceries, household essentials, seasonal items and gas, the $15 introductory offer may be all you need.

Sam's Plus membership: $50 for the first year

Frequent Sam's Club shoppers may find additional value in the Plus membership, which is currently discounted to $50 for the first year.

The Plus membership includes all Club-level benefits, plus:

• 2% Sam's Cash back on eligible purchases
• Free shipping on eligible orders over $50
• Free same-day or next-day delivery on eligible orders over $50
• Exclusive shopping hours from 8 to 9 a.m. every day
• Additional pharmacy savings
• Additional optical savings
• Tire and battery center discounts

The extra perks can help offset the higher membership cost, particularly for shoppers who regularly place online orders, use pharmacy or optical services or spend enough to earn Sam's Cash rewards.

Is the Sam's Club deal worth it?

At $15, the standard membership is one of the lowest-priced warehouse club promotions currently available and offers a low-risk way to test whether Sam's Club fits your shopping habits.

The Plus membership requires a larger upfront investment, but shoppers who frequently use delivery services, earn Sam's Cash rewards or take advantage of pharmacy and optical savings may find the upgraded membership pays for itself over the course of the year.

The limited-time promotion ends July 5 and is available only to eligible new members.

Related Content

• 5 Hidden Sam's Club Perks That Can Save You Time and Money
• Costco Vacation Deals: Are They Worth It?
• How Much You Could Save on Gas with Costco, Walmart and Other Memberships

The conventional personal finance playbook for retirees with 401(k)s is to trim exposure to stocks and dial down risk as they age. But many savers over age 70 are defying that rule, packing their 401(k)s with more stocks than experts recommend, according to Fidelity Investments.

Half of Fidelity 401(k) plan participants aged 70 or older have a "higher equity allocation than suggested," more than any other age group and well above the 34% average for all ages, according to Fidelity's 1Q 2026 retirement analysis report. Similarly, nearly four of 10 401(k) savers aged 65 to 69 also have a larger helping of stocks than investment pros recommend.

Whoa, Nellie! Is retirees' love affair with stocks a ticking time bomb that threatens to blow up their nest egg if the market tumbles? Or a shrewd financial move designed to boost returns so they don't outlive their money? Or is it simply a case of taking their eye off the ball and not keeping track of what they own and failing to regularly rebalance their 401(k) holdings?

All of the above, say financial advisors. And that's mainly because every retiree's financial situation is different.

"There's really no right or wrong answer" when it comes to the proper size of a stock weighting in a retirement portfolio, says Mike Shamrell, vice president of thought leadership at Fidelity.

Adds Jared Chase, a financial adviser at Signature Estate & Investment Advisors (SEIA): "I wouldn't want to put people into a box simply based on age." A 50% stock/50% bond portfolio, for example, might not be right for everyone. The optimal asset mix, says Chase, should be based on a retiree's goals, objectives, and risk tolerance.

Shamrell stresses that a "suggested asset allocation" is just that: a suggestion.

For its study, Fidelity compared a 401(k) saver's stock allocation in their overall portfolio with the stock weighting (e.g., equity glide path) in Fidelity's age-appropriate target-date Freedom Funds.

Consider, for example, someone who retired in 2020 at age 65 who is now 70. The total stock weighting in the Fidelity Freedom 2020 Fund (which corresponds to the investor's 2020 retirement date) is 50%. So, a 70-year-old retiree who holds a higher percentage of stocks (say, 60% or 70%) than the recommended 50% weighting in Fidelity's target-date fund is seen as having "a higher equity allocation than suggested."

As the table below shows, half of those aged 70 and older hold more equity than is recommended. By contrast, only 15% of those in their late forties are overweight in equity investments.

Source: 1Q 2026 Fidelity Retirement Analysis

Shamrell says retirement savers can use the equity weightings in age-appropriate target-date funds as a "yardstick" to estimate how much stocks are in professionally managed funds that take a saver's age and risk tolerance into account.

Fidelity conducted the asset allocation analysis as part of an awareness campaign.

"We just want everybody to be aware (of how big a stock exposure they have)," said Shamrell. "The report is sort of a trigger to check their allocation. We don't want to have a situation where individuals have more stocks than they are comfortable with in the event the market goes down. We don't want people to get caught off guard and be like, 'Hey, why did my balance drop so much?'"

Why retirees are overweight stocks

There are many reasons why a retiree in their 70s may hold a bigger-than-recommended helping of stocks, financial advisors say.

Overconfidence. It's not uncommon during bull markets, when market returns are strong, for behavioral biases to impact decision-making, says James Demmert, chief investment officer at Main Street Research. Overconfidence can cause investors to let their money ride when stocks are performing well. "As bull markets mature, investors gain more confidence," says Demmert. "Optimism turns to excitement as the market continues to go up, and they start feeling really smart."

Market appreciation. The mere fact that stock prices are rising can push a stock allocation above its recommended weighting. And if an older investor is managing their own money (which Fidelity says many do) and isn't regularly rebalancing their portfolio to keep their stock and bond weightings aligned with their financial plan, those weightings can easily get out of whack. "Just the market going up can take somebody from 50% stocks to 60% stocks," says Demmert.

Less need for income. A retiree who has a large cash hoard or ample income streams, such as a pension, Social Security and annuities, to cover most or all of their monthly living expenses can use their 401(k) money bucket for longer-term goals, says Shamrell. "If they've got a large pool of savings to fall back on, they can maybe afford to be a bit more aggressive," says Shamrell. If the market is in a steep downturn, retirees whose income needs are covered can avoid selling stocks at depressed prices to generate income.

Chasing returns. Bad investment behavior can also be to blame, says Jason Grover, a financial planning specialist at Grover Financial Services. Buying stocks just because they are going up doesn't always end well. "Chasing returns and just letting things ride, and not rebalancing portfolios," amounts to bad behavior, says Grover. "Don't look at your portfolio as if the stock market never loses."

Fear of running out of money. Retirement these days can last 20 or 30 years, placing a premium on returns that outpace inflation. Stocks fit the bill, as the long-term average annual return of equities is about 10%, handily topping inflation. "A large retirement risk for many affluent households isn't volatility, it's becoming too conservative too early (in life) and failing to maintain purchasing power," says Chase.

Putting too much money in lower-yielding assets like bonds and cash makes it harder to keep up with annual cost-of-living increases, adds Chase.

The risks of retirees loading up on stocks

Suffering outsized losses. The more stocks a retiree holds, the more money they can lose if the stock market suffers a steep decline, Demmert warns. "When these really terrible markets occur, or a bubble pops, the people that can least afford the losses — retirees — are the ones that get hurt the most," says Demmert.

Selling into a falling market. Retirees who rely on the stock portion of their 401(k) for everyday income risk having to sell their equity holdings at depressed prices to pay the bills. "The real risk isn't volatility, it is being forced to sell during volatility," says Chase. Liquidating stocks in a down market can more quickly deplete a nest egg as more shares are needed to raise cash and, as a result, fewer shares are left in the retirement account to benefit from the eventual market rebound.

3 ways retirees can dial back stock exposure

Let's say you read this story and realize that your 401(k) has more stock exposure than you are comfortable with. What can you do?

Here are some easy fixes to get your equity exposure back to where you want it to be:

1. Rebalance. If your plan calls for 50% stocks and 50% bonds and your equity weighting is now 60%, sell equity holdings and put the proceeds into bonds to get back to your preferred asset mix. "We encourage people to take a look at their asset allocation and make sure that it is at a level they want it to be at," says Shamrell. If you're unsure of how big an exposure to stocks you should have at your age, you can get a general idea by looking at the stock allocations in target-date funds that coincide with your retirement date, says Shamrell. Read our comprehensive guide on How to De-Risk Your Portfolio.

2. Sell into rallies. When trimming stock exposure, take advantage of big up days or periods when the market is climbing, says Demmert. You can also set up a regular distribution schedule, such as monthly, until your allocation is back in line with your targets. "Dollar cost average out of the market," says Demmert. This selling strategy helps smooth out market volatility, so you don't get spooked into selling at a market low. "That tends to work psychologically for most people," says Demmert.

3. Always have ample cash reserves. A stock-heavy asset allocation only hurts if you need to sell stocks to raise cash in a down market. One way to avoid that is to keep at least two years' living expenses in a liquid, cash-like account that isn't affected by market swings, says Grover.

When you have ample cash reserves, you can invest more aggressively in stocks and hold more equities without the downside risk of having to sell in a down market.

"I like the fact that retirees are taking on more equity risk in their portfolio," says Grover. "Because owning the great companies of the world is what provides growth."

And growth is good, no matter if you're a 25-year-old investor, a 45-year-old investor, or a 70-year-old investor.

Read more on managing retirement savings

• Top 4 Retirement Withdrawal Strategies to Maximize Your Savings
• The Average Gen X 401(k) Balance Kind of Bites
• How to Retire at 62 and Build a Financial Bridge to a Maxed-Out Social Security Check at 70
• The Sequence of Returns Risk Could Shrink Your Retirement Nest Egg

Is your wealth manager invested in your goals or the next commission? It's an essential question every investor should ask.

Finding the right fit amid the crowded landscape of options can feel overwhelming, especially when choosing the right partner to grow your wealth. Thankfully, some of our readers have already done the heavy lifting for you.

For the Kiplinger Readers' Choice Awards, over 4,000 readers ranked the best wealth managers based on overall satisfaction, quality of advice, retirement planning services and more categories in an online survey conducted this past winter on Kiplinger.com.

Among the standouts this year, UBS Wealth Management was the overall winner for wealth managers. Here are the reasons why our readers chose UBS as the best wealth manager.

1. A personalized approach to financial planning

Some wealth managers like to employ a one-size-fits-all strategy, tailoring solutions around higher commissions than taking your needs into account.

However, UBS takes a much more personalized approach to getting to know you. It aims to learn what wealth really means to you by asking you these five questions:

1. What do you want to accomplish in life?
2. What do you want your legacy to be?
3. How do you plan to achieve your life's vision?
4. Who are the people that matter most to you?
5. What are your main concerns?

This begins the UBS Wealth Way conversation. Once you answer these questions, UBS works with you to establish direct goals that align with your answers. Doing this gives you confidence that you have a trusted partner who not only takes the time to listen to you but who also tailors solutions that match your goals and values.

2. Expert service and advice at every life stage

Some wealth managers help you set goals, and that's where their work stops unless you contact them. UBS, on the other hand, is there to take a proactive approach in helping you reach your goals, even as your life changes. The main theme among readers' comments was how exceptional the service was, and the advice they received was excellent.

Their team of wealth experts can help you craft a full suite of goals and adjust them as your life changes. Whether you're a new investor, catching up on retirement savings or receiving a wealth transfer, their team can help you make sense of your finances and plan strategies to help you reach your goals, even after they change.

In turn, you gain a trusted partner who can scale strategies as you build your wealth.

3. Research and digital tools that empower your decisions

UBS invested in digital tools to make managing your wealth convenient. Once you become a client, you can access the online portal 24/7 to monitor your accounts.

This is essential if you're a hands-on investor who wants to review your portfolio regularly, access liquidity or pull up important tax documents. Use the UBS Advice Compass for portfolio assessments and actionable recommendations.

One way UBS excels is in its research offerings. To demonstrate, the UBS Evidence Lab is a sell-side team of research experts that collects data across more than 50 countries and 5,000 companies. In turn, their experts convert this data into actionable insights, providing you with the information you need to make informed investment decisions confidently.

While UBS took the top spot in overall satisfaction, these firms also earned high marks from our readers for their exceptional services and commitment to client success:

• Morgan Stanley Wealth Management
• Raymond James
• Fidelity Wealth Management
• Vanguard Personal Advisory Services
• Bank of America/Merrill Wealth Management Services
• Fisher Investments

Ultimately, not all wealth managers are the same. When it comes to planning for your future and maximizing wealth, lean on the experts our readers recommend the most. UBS offers the tools, resources and personalized guidance that help you feel confident about the road you're on and the direction you're heading.

Eager to see how our readers ranked your wealth manager? Visit our Kiplinger Readers' Choice best wealth managers to see the full ranking and what our readers liked about each one.

Related content

• Kiplinger Readers' Choice Awards 2026: Wealth Managers
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• 2026 Kiplinger Readers' Choice Awards

For many people, estate planning starts with a will, a durable power of attorney and a healthcare proxy.

These documents are important. They help determine who receives your property, who can make decisions for you and how your wishes are carried out if you are no longer able to speak for yourself.

But in some situations, they may not be enough.

A trust can be an important part of an estate plan, but it is also one of the most commonly misunderstood estate planning tools. As an estate planning attorney with several years of experience, I have heard a number of assumptions.

Some people assume a trust is only for the very wealthy. Others think a trust is only about taxes. Some believe that if they have a will, they have already avoided probate.

None of those assumptions is necessarily true. My job is not only to ensure an efficient and orderly transition of assets for my clients, but also to ensure that they understand why I am recommending certain documents, including a trust, as part of their estate plan.

What is a trust?

At its most basic level, a trust is a legal arrangement. Think of it as a contract between the person creating the trust and the person responsible for administering it.

The person creating the trust may be called the grantor, settlor or donor. The person responsible for managing the trust is the trustee. The people who benefit from the trust are the beneficiaries.

The trust says, in effect:

• Here are the assets
• Here are the people I want to benefit
• Here is how I want the assets managed and distributed
• And here is the person I am trusting to carry out those instructions

That trustee has a fiduciary obligation to administer the trust according to its terms and in the best interest of the beneficiaries.

Trusts are not just about avoiding probate

One of the most common reasons people consider a trust is to avoid probate. That is a valid reason, but it is not the only one.

Probate is the court-supervised process for administering assets that are part of someone's probate estate.

In Massachusetts, for example, the probate process requires forms to be filed with the court, reviewed and approved. A personal representative must be appointed.

There is also a one-year creditor period during which creditors can file claims against the estate. If assets are distributed too early and a valid creditor claim later appears, the personal representative can be responsible for that claim.

Probate can add time, expense and administrative burden at a point when families are already dealing with a loss. A trust can help avoid that process for assets that are properly transferred into the trust.

For example, if a house is owned by the trust, the trustee can administer or distribute the property according to the terms of the trust, rather than requiring the family to go through probate for that asset.

But a trust is not the only way to avoid probate. Beneficiary designations can also do a significant amount of work. A checking account, savings account, retirement account or other financial account may be able to pass directly to a named beneficiary outside of probate and accomplish much of what is needed in some circumstances.

A will does not avoid probate

Another common misconception is that having a will means your family avoids probate.

A will is important, but it does not keep you out of probate. In many cases, the will is the document that gets filed with the probate court to begin the probate process.

What a will does is provide direction. It tells the court and the personal representative how you want your probate assets distributed. It can reduce uncertainty and clarify your wishes. But the will still has to be accepted by the court, and the personal representative still has to be appointed.

A trust works differently. A revocable trust, often called a living trust or inter vivos trust, is created during your lifetime. It can hold assets while you are alive and provide instructions for how those assets should be administered after your death.

A common estate plan may include a health care proxy, durable power of attorney, pour-over will and revocable trust. The pour-over will acts as a backup, directing any assets that end up in the probate estate into the trust. The trust itself typically contains the detailed instructions for administration and distribution.

When does a trust make sense?

A house is often one of the major reasons people create a trust, because transferring the house into the trust can allow it to be administered without probate. A trust may also make sense if you want to leave assets to a minor child, niece, nephew or grandchild. Most people would not want an eight-year-old to receive a large sum outright. They also may not want the child's parent or guardian to have unrestricted control over the money.

In that situation, the trust can provide that funds be used for the child's education, health, support or other needs. It allows the person creating the trust to provide for the beneficiary while putting guardrails around how the money is managed.

Trusts can also help when a beneficiary is not great with money, has creditor issues or struggles with dependency issues. The goal is to protect the assets and provide structure. A trust can also be amended during your lifetime, if it is revocable, to reflect changing circumstances.

What about blended families?

Trusts can be especially helpful for blended families.

A person in a second marriage may want to provide for a surviving spouse while also ensuring that children from a prior relationship ultimately receive an inheritance. If everything is left outright to the surviving spouse, the surviving spouse may later change their estate plan, remarry, spend the assets or leave the remaining property to different beneficiaries.

A trust can create more clarity and help avoid conflict. It can allow assets to be used for the surviving spouse during the spouse's lifetime, while preserving what remains for children or other beneficiaries after the spouse's death.

Are trusts only for people with more than $2 million?

No. Tax planning is one of the more common reasons to use a trust, but it is not the only reason.

In Massachusetts, the state estate tax threshold is $2 million. For married couples whose combined assets exceed that amount, trusts may be used to shelter assets and defer or reduce estate tax exposure. Assets can include cash, a home, retirement accounts, bank accounts, brokerage accounts and business interests.

But many people who are below the estate tax threshold may still benefit from a trust for non-tax reasons, including probate avoidance, privacy, real estate planning, minor beneficiaries, family complexity or beneficiary protection.

What does a trust cost?

The cost varies by region, law firm and complexity. Some firms charge a flat fee. Others charge hourly. A straightforward trust may cost a few thousand dollars, while more complex planning can cost more. While that upfront cost can feel significant, for many families, it is often less than the expense and delay of probate later.

The key is to start with your goals. What do you own? Who do you want to benefit? Are those beneficiaries ready to receive assets outright? Are there family dynamics that could create conflict? Are there tax, probate or creditor issues to consider?

A good estate plan should not be more complicated than it needs to be. But it should be thoughtful enough to accomplish what you actually want. A trust can provide that structure when a will or beneficiary designation alone does not go far enough.

Related Content

• Want to Leave Money to Your Descendants But Still Keep Control? Choose Your Trustee Wisely
• Is Your Estate at Risk? The 5 Trusts You Need to Understand
• Three Legal Documents Your Child Should Sign When They Turn 18
• Where There's a Will, There's a Way Your Assets Will Be Distributed as You Wish
• I'm an Estate Planning Attorney: These Are the Two Legal Documents Everyone Should Have

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.

Something is happening in advisory practices across the country. The clients who once fit neatly into a financial planning model have changed, and the gap between what they expect and what most firms deliver is getting harder to ignore.

This trend is showing up in client conversations and retention numbers. It's also recurring in conversations I'm having with advisers who sense the model that got them here may not be enough to carry them forward.

While this shift might be concerning to some, I see it as a real opportunity — at least for advisers who are willing to see it that way.

The client has changed

The wealth management industry is in the middle of what may be the most significant client reset in decades. Clients today are approaching wealth differently than they did even a few years ago, and their expectations of the advisory relationship are evolving just as quickly.

Clients are no longer solely focused on portfolio performance. Instead, they want advice that reflects their values, goals, time horizon and definition of success. Generic strategies and one-size-fits-all portfolios are becoming increasingly out of step with what today's clients expect from a financial relationship.

Many clients are also looking for what I call Return on Time Invested, or ROTI. They want advice that buys back hours and funds experiences, not just accumulation. They're less interested in being managed and more interested in being understood.

This shift creates a meaningful challenge for advisers whose practices were built around a model designed for a different type of client. It's also a great opportunity for a reset of the adviser-client relationship itself.

Firms that don't adapt risk losing those relationships as client expectations continue to rise.

Client expectations have outpaced what most firms deliver

For most of the industry's history, the advisory model has been transactional: Win clients, manage portfolios and compete on performance and service. That model no longer matches what clients expect.

Today's clients don't experience their financial lives in silos. They don't separate their investment portfolio from their insurance coverage, estate plan or tax situation. They want someone who can see the whole picture and advise accordingly. They're looking for a better client experience.

The most successful firms are consistently delivering that experience, starting when a client first says yes and lasting throughout the duration of the relationship. They're offering proactive communication rather than reactive. They're providing tax-aware portfolio construction rather than performance-first allocation.

These firms deliver advice that is tailored to the individual, even across a large and growing client base.

Until recently, that kind of capability required infrastructure that only the largest firms could afford. While that's no longer true, it does require the right partners and a willingness to build something more intentional than most advisory practices have been in the past.

From transactions to relationships

The advisers who will thrive over the next decade aren't necessarily the ones with the most clients or highest assets under management (AUM). They're the ones who have built a systematically personalized client experience and the infrastructure to deliver it consistently.

The defining opportunity for independent advisers right now is the shift from transactions to teamwork — and it's one that plays directly to the strengths that independent firms already possess.

Independent advisers aren't steered toward proprietary products. The advice they give is genuinely theirs, and the relationships they build belong to them. As consolidation continues to reshape the industry, that clarity of purpose becomes a differentiator clients notice and value.

The question is how to build the experience that clients are looking for without losing what makes the independent model work. At AE Wealth Management, here's how we're helping advisers understand and make the shift:

• Whole-picture planning is the new standard. Clients expect their adviser to understand the full picture, not just their investment portfolio. Tools that integrate market-correlated and non-market-correlated investments, life insurance and annuities into a single planning view give advisers the ability to deliver comprehensive advice without doing all the heavy lifting themselves.
• Personalization is within reach. Direct indexing, tax-aware portfolio construction and preference-based customization used to require resources most independent firms couldn't access. The right platform partner can change that, putting sophisticated personalization tools in the hands of advisers who want to compete on depth of service rather than just breadth of offering.
• Systematization must be personal. The firms that are growing consistently have one thing in common: A repeatable, disciplined approach to the client experience. However, that doesn't mean it's generic. These firms are building processes that deliver a high-quality, personalized experience to every client, not just the top tier.
• Succession and continuity are part of the experience. Clients who trust an adviser want to know the relationship is protected over time. Advisers who think proactively about succession and preemptively design internal equity tracks and leadership development programs send a signal about the kind of firm they're building.

Consolidation is changing the competitive landscape

As I previously wrote in the article You Don't Have to Sell Out to Grow: A Case for Staying Independent as an RIA on Your Terms, private equity is reshaping the RIA competitive landscape at a speed that was hard to predict even a few years ago. Consolidation is creating real pressure on independent firms, but it's also clarifying something.

Clients are beginning to understand the difference between an adviser who is independent and one who operates inside a structure built for someone else's exit timeline. As that distinction becomes more visible, independent advisers who can clearly articulate their value and back it up with a consistently excellent client experience are gaining an edge that is difficult to replicate.

The advisers who will benefit most from the current opportunities are the ones who stop treating independence as a default and start treating it as a strategy.

Start with the client in front of you

These changes in wealth management can feel abstract until you zoom in on a single client relationship.

• What does that client expect from you today that they didn't five years ago?
• What does their next chapter look like?
• Does your practice have the tools and infrastructure to support it?

The advisers who are asking those questions and acting on the answers are the ones building something that lasts.

The client has changed. The model is shifting. The opportunity is real. The only question is what you will do with it.

This content is for informational use only and not intended as financial advice or advice designed to meet the needs of any particular situation.

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

As America gears up for its 250th anniversary this July, plans for the usual red, white, and blue spectacles are in full swing. Tall ships will sail into New York Harbor, and politicians are polishing soaring speeches to celebrate two and a half centuries of the American experiment. But a quick peek behind the fireworks reveals a striking bit of historical deja vu.

Fifty years ago, the nation marked its Bicentennial while wrestling with a very specific, stubborn set of economic headaches. Fast forward to 2026, and we are blowing out the candles next to the same triad: sticky inflation, pain at the gas pump, and a looming deadline to fix Social Security.

The real takeaway of the Semiquincentennial isn't that we are stuck in a grim rerun — it’s that these structural hurdles are uniquely resilient. As we toast to 250 years, the best way to celebrate American exceptionalism might be to finally solve the leftover homework of the 1970s.

1. Social Security insolvency — again

While Americans celebrated the Bicentennial, a flawed statutory formula enacted in 1972 to implement the Cost of Living Adjustments — indexing of benefits to protect beneficiaries from the effects of inflation — was quietly draining the Social Security Trust Fund. This has become known as the “double indexing” or “decoupling” problem. Rather than fixing the core demographic imbalance, Congress passed a minor patch in 1977.

The historic 1983 legislative rescue — which delayed cost-of-living adjustments, introduced benefit taxation, and raised the retirement age — was explicitly designed to buy 40 to 50 years of breathing room. In 2026, the borrowing time has almost run out at the same time that our population is aging.

There are approximately 62 million adults age 65 and older living in the United States, representing about 18% of the total population — a steep increase over 1976 or 1983. In 1976, the number of people 65 and older was 22.95 million or 10.4% of the population. In 1983, that number had climbed to 27.4 million, or 11.5% of the total population.

The public is less than confident that those in charge will resolve the problems without cutting benefits. Almost 70% of the adults aged 45 and older surveyed by PlanGap are not confident that the government will solve the Social Security funding challenge without reducing benefits. While 83% say that Social Security will play a major or moderate role in their retirement plan, 68% are concerned either "a great deal" or "a lot" that they won't receive the benefits that they are entitled to.

• The 1976 pre-crisis: In 1976, policymakers were concerned because a flawed benefit-indexing formula passed in 1972 was accidentally over-indexing benefits for inflation, causing the trust funds to drain faster than expected. Congress tried a temporary patch in 1977, but did not address the deeper structural demographic issues. By 1982, the Trustees warned that the system was months away from insolvency.
• The 1983 "Salvation": Enter the bipartisan Greenspan Commission. The resulting 1983 Amendments "saved" the system through a painful compromise: delaying the Cost-of-Living Adjustment (COLA), gradually raising the full retirement age (FRA) from 65 to 67, and introducing taxation on Social Security benefits for high earners. It bought the system exactly what it promised: about 40 to 50 years of breathing room.
• The 2026 reality: That 1983 clock has officially run out. We are right back in the 1976 pressure cooker. The 2026 Social Security Trustees Report currently projects that the Old-Age and Survivors Insurance (OASI) Trust Fund will hit depletion in 2032. If Congress waits until the final months to act — just like they did in 1983 — the required fixes (payroll tax hikes or benefit cuts) will have to surpass the 1983 adjustments because the demographic wave of retiring baby boomers is already fully cresting.

2. Inflation: The ghost of stagflation

The Bicentennial took place during a short-lived economic exhale. Inflation had cooled to 5.8% from its 1974 double-digit peak of 11.1%. From that point on, however, inflation rebounded, climbing every year until it reached a crushing 13.5% by 1980.

Today, the U.S. economy faces a familiar pattern. The COVID-era inflation surge peaked at an annual rate of 8.0% in 2022 — a big departure from the previous decade (2010-2020), when annual inflation averaged just 1.77%.

Now, after waking up from a post-pandemic optimism, families are confronting a sticky, resilient 4.2% inflation rate this May, proving price stability is far harder to sustain than Washington admits. Even if inflation rates fluctuate, the baked-in price increases from past inflation persist and still sting. Affordability issues won't be cured solely by a falling inflation rate.

• 1976: The mid-1970s were the cradle of modern "stagflation." While CPI had briefly dipped from its 1974 double-digit peaks down to around 5.8% in 1976, it was a false sense of security. The underlying structural drivers were left unaddressed, setting the stage for the massive second inflation wave that topped out at over 13% by 1980.
• 2026: We are living through a strikingly similar echo. After a massive post-pandemic inflation spike that peaked in 2022, prices began to moderate, giving everyone hope of a "soft landing." However, fresh energy and geopolitical shocks have driven inflation up 4.2% year-over-year in May 2026. The realization is sinking in that inflation is sticky, structural, and deeply resilient — just like it was in 1976.

3. The price of gas: geopolitical shocks and the $4 pump

By 1976, the gas lines of the 1973-74 OPEC embargo had vanished, but the era of permanently cheap fuel was over. Energy costs became an erratic wildcard that weighed on consumer confidence and squeezed household margins.

Fifty years later, the vulnerability remains unchanged. With current geopolitical friction pushing the national average past $4 a gallon, the modern consumer is learning that decades of political rhetoric cannot insulate a local gas station from overseas supply shocks.

Gas prices are dropping, but the return to pre-war levels will be slow. Continued tensions with the Iranian government, combined with low inventories and restocking demands, are expected to keep prices high for the foreseeable future.

• 1976: The country was still reeling from the psychological and economic trauma of the 1973 OPEC oil embargo. Even though the recent gas shortages are in the past, the era of permanently cheap fuel is dead. Energy costs became a volatile wildcard that dictated consumer confidence and corporate margins.
• 2026: History is repeating itself at the pump. The recent oil shock triggered by the war with Iran has driven the national average for gasoline past $4 a gallon for the first time in years. Just like in 1976, energy-driven inflation is eating directly into household budgets, proving that 50 years later, the U.S. economy remains highly vulnerable to overseas conflicts.

The present is too close to history

Every national milestone invites a backward glance, but the truest mirror for America in 2026 isn't 1776 — it’s 1976. When the nation marked its 200th birthday, the hangover of stagflation and energy shocks had left voters deeply unsettled about the future. It was also the exact moment the structural fuses on our major entitlement programs began to smoke.

Seven years later, the bipartisan 1983 Greenspan Commission enacted fixes to try to save Social Security with a cocktail of tax hikes and a delayed retirement age. It promised roughly 40 years of breathing room. Today, as we celebrate America 250, that runway has officially ended and the Social Security trust fund is projected to lapse into insolvency in 2032. The parallels between the Bicentennial and the Semiquincentennial are too close to ignore, and this time, there is nothing to celebrate about this history repeating itself.

More on America's 250th Birthday

• America is Turning 250 — But We Didn't Get Serious About Saving for Retirement Until 50 Years Ago
• America's Cost of Living at 200 vs 250: How Affordable is American Life Now?
• How Has Retirement Changed in the Last 50 Years? Take Our Quiz
• 9 Historic Sites to Visit With Your Grandkids for America's 250
• Financial Advice From America's Founding Fathers
• Which Presidents Are on the Social Security Payroll?

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New Federal Reserve Chair Kevin Warsh has a message for his fellow central bankers: You talk too much. Indeed, a change has already come to Federal Open Market Committee (FOMC) communications with the first monetary policy statement under his leadership.

But policymakers of that kind of prominence are public figures. That's just the way it is in the information age.

And Warsh knows as well as anyone that, as the 20th century bridged the 21st, Alan Greenspan established a model for the modern Fed chair, under chief executives of both parties, for better and for worse.

The new Fed chair wants "regime change." But he's confronting the work of an old Fed chair who remains an icon on Wall Street and whose legend trickles down even to Main Street.

Greenspan, who was the top policymaker at the world's most important central bank from 1987 until 2006, died on Monday at 100 years old.

Nominated by Ronald Reagan, he led the Federal Reserve under four presidents, through historic macroeconomic and geopolitical events, and was there longer than anyone but William McChesney Martin.

George H.W. Bush nominated him again in August 1991. Bill Clinton did it twice, in February 1996 for a third term and January 2000 for a fourth. George W. Bush nominated him for his fifth and final term in May 2004.

A lot has changed in the 20 years since Greenspan left the Fed. But Ben Bernanke, Janet Yellen and Jerome Powell stayed communicative throughout. And they stuck hard to the main objective: to stabilize the system.

Greenspan is survived by his wife of 29 years, the journalist Andrea Mitchell of MSNBC, with whom he formed one of the most prominent power couples of the era.

Here are five lessons we can learn from Fed Chair Alan Greenspan, a modern central banker of broad and deep experience.

1. Fedspeaking in tongues

Use your words… to the best of your ability… for the purpose you have defined.

"Since becoming a central banker," he testified to Congress in September 1987, "I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said."

It's a little bit ironic, but Greenspan instilled confidence, despite himself.

There's no question the guy was clever. And he certainly understood rhythm and timing. In his performance, Greenspan demonstrated a real grasp of where the science and the humanity of economics meet.

His actions during the dot-com era and the housing boom-bust cycle that followed suggest maybe he was a little too clever.

Something you may not know, however, is that Greenspan's Ph.D. thesis, which was compiled from some of his previously published articles and was withheld from the public at the author's request when he joined the Fed board, highlighted the impact of higher housing prices on consumer spending.

2. Black Monday

Be ready on Day One.

Little more than two months into his new order, shortly after taking his oath on August 11, 1987, Greenspan was forced to manage Black Monday, when the Dow Jones Industrial Average fell 22.6%.

That's still the biggest single-day decline in Papa Dow's 130-year history.

From October 19, Greenspan guided Washington, D.C., Wall Street and Main Street into a historic rally and an economic boom that lasted, almost uninterrupted, through the 1990s.

The Dow recovered 288 points and regained more than 57% of its Black Monday loss within two trading sessions. Papa Dow posted a 0.6% gain in 1987, and it got back to its pre-crash all-time high within 23 months, by September 1989.

3. Fed man in the bathtub

Take a bath.

Later, in December 1996, he wondered, "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions," as the dot-com era unfolded.

Now, here's the rest of the story, as told by the late Fed chair himself in his 2007 memoir "The Age of Turbulence: Adventures in a New World":

The concept of irrational exuberance came to me in the bathtub one morning as I was writing a speech. To this day, the bathtub is where I get many of my best ideas. My assistants have gotten used to typing from drafts scrawled on damp yellow pads–a chore that got much easier once we found a kind of pen whose ink doesn't run. Immersed in my bath, I'm as happy as Archimedes as I contemplate the world.

4. Everybody wants to rule the world (but few are chosen)

And you have to be flexible.

Greenspan, Treasury Secretary Robert Rubin and Treasury Deputy Secretary Larry Summers famously formed what Time magazine called the "committee to save the world" in February 1999.

Indeed, it was like they had the whole planet on their back, like the main character in the main work of Greenspan's favorite author, Ayn Rand, who celebrated Atlas and warned what would happen should he shrug.

Greenspan was an objectivist committed to hard-and-fast free market principles when he was tapped to chair the White House Council of Economic Advisors by President Gerald Ford in 1974.

By the time he was perhaps the key figure in the "age of turbulence," Greenspan was an activist focused on practical means to stabilize an ever-more complex global financial system.

5. The accountant from Ipanema

Know who you are.

Bob Woodward of The Washington Post titled his 2000 biography "Maestro: Greenspan's Fed and the American Boom."

Woodward's book was published well before Greenspan stepped away from the central bank in 2006. It also preceded the global financial crisis/Great Recession of 2007-09, a series of events that earned Greenspan another nickname, "Mr. Bubble," bestowed upon him when he no longer held any real power.

For a long time, though, Greenspan seemed to conduct financial markets and global economic activity.

"Maestro" was also a nod to Greenspan's career as a jazzman. Before he saved the world in the '90s, the future central banker played with Stan Getz and Woody Herman in the '40s. He even attended Juilliard in 1943-44.

Greenspan, who was actually from the Washington Heights neighborhood of New York City, realized he was a better bean-counter than sax-player, so he started keeping his band's books.

Held back from serving in the military during World War II because of a spot on his lung, the son of a single mother earned B.A. and M.A. degrees in economics from the New York University Stern School of Business in 1948 and 1950, respectively, and completed his Ph.D. in 1977.

As the global financial crisis devolved into the Great Recession, investors, traders, speculators and consumers started to wonder whether we need less "superhero" in our central bankers and more supervision from them.

Certainly, though, what Greenspan leaves is a worthy demonstration that a whole lot of competence and little likability can go a long way.

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Fifty years ago, planning for your "golden years" was a relatively straightforward formula: you put in your time with one company, retired at 65 with a corporate pension, and relied on Social Security to cover the rest. Fast-forward to 2026, and the retirement landscape has completely transformed into a self-funded marathon shaped by 401(k)s, IRAs and longer lifespans.

Whether you're a baby boomer who remembers the world of 1976 or a Gen Xer navigating the modern realities of 2026, take this 10-question quiz to see just how much the financial rules of retirement have shifted over the last half-century.

More from Kiplinger on Retirement Saving:

• 6 Changes to IRAs, 401(k)s and HSAs in 2026
• Roth IRAs: What They Are and How They Work
• Roth IRA Contribution Limits for 2026
• Average IRA Balance by Age and Generation
• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• What's My Social Security Full Retirement Age (FRA)?
• Presidents and Social Security: How Presidents Have Impacted America's First Social Insurance Policy
• Does Donald Trump Claim Social Security Benefits?

A lot of investors use bonds for one simple reason: to generate income with lower volatility than stocks. One of the most common ways to structure this is through a bond ladder.

A basic Treasury bond ladder might look something like this: an investor splits capital evenly across Treasury securities maturing in one, two, three, four and five years. As each rung matures, the proceeds can either be spent or rolled into a new five-year Treasury.

Bond ladders can help match future liabilities or spending needs, such as retirement withdrawals or tuition payments. They can also improve cash-flow planning and liquidity management because investors know exactly when principal is scheduled to return.

The issue is that building a ladder yourself can be cumbersome. For Treasuries, many investors use TreasuryDirect.gov, the U.S. government's platform for buying bonds directly. The website, however, has developed a reputation for its dated interface, clunky navigation and poor user experience.

Some investors may instead seek higher yields through corporate bonds issued by companies rather than the U.S. Treasury Department. While these can be purchased through brokerages, individual bond trading comes with its own challenges.

Unlike stocks, bonds largely trade over the counter rather than on centralized exchanges. Pricing can be opaque, spreads can vary significantly, and retail investors are often dealing with institutional bond desks that have more information. There is also more complexity involved. Looking at the coupon and current market price alone is not enough because bonds can trade above or below their face value.

Investors also need to understand metrics such as yield to maturity, which estimates the annualized return if the bond is held until maturity. Duration is another key concept. It measures interest rate sensitivity. All else equal, rising interest rates hurt bond prices while falling rates help them.

To simplify things, asset managers packaged bonds into exchange-traded funds (ETFs), that benefits such as monthly distributions, diversification and stock-like liquidity with transparent bid and ask pricing throughout the trading day.

Traditional bond ETFs, however, come with one major limitation. Most hold evergreen portfolios designed to maintain a constant maturity profile. As holdings age and fall outside the desired maturity range, they are replaced. That means investors cannot simply hold the ETF to maturity and automatically receive principal back the way they would with an individual bond.

To bridge this gap, ETF issuers launched target maturity bond ETFs. These income-building funds are designed to mature in a specific calendar year, similar to an individual bond, while still retaining the diversification, transparency and liquidity advantages of ETFs.

What is a target maturity bond ETF?

Target maturity bond ETFs are usually easy to identify because the maturity year is included directly in the fund's name. You will commonly see labels such as 2026, 2027, 2030 or 2040.

Unlike traditional bond ETFs, which hold an evergreen portfolio spanning many maturities, target maturity bond ETFs hold bonds designed to mature in the same calendar year. That structure makes them behave more similarly to an individual bond ladder.

When you buy one of these, you still receive the standard benefits of a bond ETF. The fund pays periodic monthly distributions rather than semi-annual coupon payments, and the ETF itself trades throughout the day with a net asset value (NAV) that fluctuates based on the value of the underlying bonds.

The key difference appears as the ETF approaches its maturity year. Instead of continuously replacing bonds to maintain a constant duration profile, the portfolio gradually winds down. The bonds mature, proceeds shift into cash and cash equivalents, and eventually the ETF itself liquidates.

From there, investors receive a final distribution based on the fund's NAV after liabilities. This process is designed to mimic the principal repayment of an individual bond at maturity. For example, according to BlackRock and its iShares iBonds lineup, an investor's total return (represented by yield to maturity) comes from two components:

1. Periodic monthly income distributions; and
2. The final end-date distribution upon ETF's termination.

These two components interact with each other. All else equal, if the ETF distributes more income along the way, the final payout tends to be smaller. Conversely, if periodic distributions are lower, more value remains for the end-date distribution.

For iShares specifically, most iBonds ETFs terminate toward the end of the designated maturity year, typically around October through December. Once the underlying bonds mature and the portfolio transitions to cash, the ETF is liquidated and shareholders receive the remaining NAV.

Importantly, target maturity ETFs can still vary substantially depending on the underlying bonds they hold. Most providers offer lineups for U.S. Treasuries and investment-grade corporate bonds, but some also offer high-yield bonds, municipal bonds and Treasury Inflation-Protected Securities (TIPS).

These categories differ in terms of credit quality, yield and volatility, allowing investors to tailor a bond ladder around their own risk tolerance. Even so, target maturity bond ETFs are still exposed to duration risk. A fund maturing in 2040, for example, will have a higher duration than one maturing in 2027.

That means changes in interest rates can still significantly impact the ETF's price before maturity. Falling rates can boost prices, while rising rates can hurt them. Matching the ETF's maturity profile to your actual time horizon for income needs remains important.

Finally, unlike owning an individual bond directly, you will pay an ongoing expense ratio. This annual fee is deducted from the fund's returns and directly reduces yield and total return over time.

For example, a target maturity ETF charging a 0.50% expense ratio would create roughly $50 in annual fee drag on a $10,000 investment. Since the 30-day SEC yield is quoted after expenses, keeping fees low is especially important for income-focused investors.

How we picked the best target maturity bond ETFs

Bond ladders are composed of multiple bonds with staggered maturities. The same principle applies when building one with target maturity bond ETFs. Because investors will typically need several ETFs rather than just one, it was not really practical to crown a single "best" ETF in this category.

In many cases, the primary distinguishing feature between funds is simply the maturity year itself. Instead, we chose to profile four of the largest providers in the space and focus on the part of each lineup that stood out the most.

1. For iShares, we focused on the iBonds Treasury target maturity bond ETFs.
2. For Invesco, we focused on its BulletShares high-yield target maturity bond ETFs.
3. For State Street, we focused on its MyIncome municipal bond target maturity ETFs.
4. For Vanguard, we focused on its investment-grade corporate bond target maturity ETFs.

For every ETF discussed, we also highlighted key metrics such as the 30-day SEC yield, expense ratio, assets under management and liquidity. For each provider, we also selected a group of ETFs that could hypothetically be combined into a three-year bond ladder suitable for an investor starting today.

Remember, this is simply an illustrative example designed to demonstrate how these ladders can be structured in practice. Actual portfolio construction will vary depending on an investor's time horizon, risk tolerance, income needs and interest rate outlook.

One advantage of this category is that many providers now offer dedicated ladder-building tools. For example, iShares offers an iBonds ladder calculator that helps investors estimate metrics such as weighted average yield to maturity and acquisition yield, while also showing how factors like premium or discount pricing and expense ratios affect expected returns.

iShares iBonds Treasury ETF Ladder

• iShares iBonds Dec 2027 Term Treasury ETF (IBTH)
• iShares iBonds Dec 2028 Term Treasury ETF (IBTI)
• iShares iBonds Dec 2029 Term Treasury ETF (IBTJ)

The Treasury component of the iShares iBonds lineup is notable for its low costs and strong liquidity. All three ETFs charge a 0.07% expense ratio, or $7 per year for every $10,000 invested, and each currently trades with a relatively tight 30-day median bid-ask spread of roughly 0.04% to 0.05%.

The funds are also well capitalized. IBTH currently holds $2.2 billion in assets under management, IBTI about $1.8 billion, and IBTJ roughly $1.3 billion. That scale materially reduces concerns around premature closure due to lack of investor interest. In terms of income, as of June 23, IBTH offered a 3.8% 30-day SEC yield, IBTI 4.0%, and IBTJ 4.0%.

U.S. Treasury securities held by these ETFs remain among the safest fixed-income instruments globally. While U.S. government debt has been downgraded from AAA to AA by some ratings agencies, Treasuries are still generally treated as effectively risk-free in practice from a default perspective.

Treasury interest also receives favorable tax treatment. Income from Treasuries is generally exempt from state and local taxes, whereas corporate bond income is typically taxed as ordinary income at both the federal and state level.

Learn more about IBTH, IBTI and IBTJ at the iShares iBonds provider site.

Invesco BulletShares High-Yield ETF Ladder

• Invesco BulletShares 2027 High Yield Corporate Bond ETF (BSJR)
• Invesco BulletShares 2028 High Yield Corporate Bond ETF (BSJS)
• Invesco BulletShares 2029 High Yield Corporate Bond ETF (BSJT)

High-yield corporate bonds, also known as junk bonds or non-investment-grade bonds, are bonds carrying ratings below BBB. Credit ratings are assessed by the three major agencies: S&P Global, Moody's and Fitch Ratings. Within the high-yield market, the highest-rated segment starts at BB, followed by single-B and then CCC or CC-rated securities lower down the spectrum.

These bonds carry materially higher credit risk than investment-grade debt. There is a greater possibility that issuers may fail to make coupon payments or repay principal at maturity. One way to measure this risk is through cumulative default rates.

According to S&P Global, BBB-rated bonds, the lowest rung of investment grade, historically showed a three-year cumulative default rate of just 0.91%. Move down to BB-rated bonds and that figure rises to 4.17%. For single-B bonds, it climbs further to 12.41%. At the CCC/CC level, the three-year cumulative default rate reaches 35.67%.

Investors are compensated for accepting that higher risk through materially higher yields. Currently, the Invesco BulletShares lineup offers sizable 30-day SEC yields: BSJR at 5.6%, BSJS at 5.7%, and BSJT at 6.5%. The longer maturities generally contribute to the higher yields in the later-dated funds.

Investors using the BulletShares high-yield lineup should also pay attention to fees and taxes. These ETFs charge a 0.42% expense ratio, which is reasonable for riskier credit exposure, but notably higher than Treasury or investment-grade target maturity ETFs.

Tax efficiency is another consideration. Because these ETFs hold corporate bonds, distributions are generally taxed as ordinary income at both the federal and state levels. For investors in higher tax brackets, particularly in states such as California and New York, this can materially reduce after-tax yield.

Liquidity is also worth monitoring. Under normal market conditions, these ETFs trade efficiently, but during periods of stress, high-yield corporate bonds can become materially less liquid than Treasuries. Investors should expect wider bid-ask spreads during periods of market turmoil.

Learn more about BSJR, BSJS, and BSJT at the Invesco BulletShares provider site.

State Street MyIncome Municipal ETF Ladder

• SPDR My2027 Municipal Bond ETF (MYMG)
• SPDR My2028 Municipal Bond ETF (MYMH)
• SPDR My2029 Municipal Bond ETF (MYMI)

For some investors, particularly those in higher tax brackets, tax efficiency can matter more than headline yield. Investment-grade corporate bonds are generally the least tax-efficient option discussed so far because their distributions are taxed as ordinary income at both the federal and state levels. Treasury bonds offer some improvement because interest is typically exempt from state and local taxes.

If your goal is avoiding federal income taxes while building a bond ladder, municipal bond ETFs may be more appealing. One option is the State Street MyIncome municipal bond lineup. A simple three-year ladder could be built by allocating evenly across MYMG, MYMH and MYMI.

These ETFs charge a 0.20% expense ratio, placing them roughly midway between the lower-cost iShares Treasury iBonds lineup and the more expensive Invesco BulletShares high-yield ETFs. Liquidity remains reasonable, as all three ETFs currently trade with 30-day median bid-ask spreads of 0.08%.

The funds are relatively new and currently modest in size, with MYMG and MYMH each holding just under $10 million in assets under management, while MYMI sits closer to $14 million. Despite the lower AUM, the risk of liquidation appears limited given State Street's scale, distribution network and brand recognition, which should support future inflows.

Headline 30-day SEC yields currently stand near 3% for all three target maturity bond ETFs. On the surface, those yields may appear lower than taxable Treasury or corporate bond ETFs, but municipal bond investors should instead focus on the tax-equivalent yield.

The tax-equivalent yield estimates the yield a taxable bond ETF would need to generate to match the already tax-free income from a municipal bond ETF. Using the highest marginal federal tax bracket, State Street estimates tax-equivalent yields of 4.8% for MYMG, 4.8% for MYMH, and 4.9% for MYMI.

Learn more about MYMG, MYMH and MYMI at the State Street MyIncome provider site.

Vanguard Target Maturity Corporate ETF Ladder

• Vanguard Target Maturity 2027 Corporate Bond ETF (VBCA)
• Vanguard Target Maturity 2028 Corporate Bond ETF (VBCB)
• Vanguard Target Maturity 2029 Corporate Bond ETF (VBCC)

Vanguard is one of the newest entrants to the target maturity bond ETF space, and so far, its lineup has focused exclusively on investment-grade corporate bonds. These are loans issued by companies rated at least BBB by the major credit agencies.

In practice, however, Vanguard's portfolios also carry substantial allocations to higher-quality A-rated debt, along with smaller allocations to AA and even some AAA-rated securities. Notably, only two U.S. companies currently maintain AAA credit ratings: Microsoft (MSFT) and Johnson & Johnson (JNJ).

In terms of yield, Vanguard's target maturity corporate bond ETFs generally sit between Treasuries and high-yield bonds of similar maturity. Currently, VBCA offers a 4.2% 30-day SEC yield, VBCB yields 4.4%, and VBCC yields 4.6%. The increase in yield across the ladder reflects the additional maturity risk investors take on with the later-dated ETFs.

This segment tends to sit in a "Goldilocks zone" for many investors. Compared to Treasuries, investment-grade corporate bonds provide meaningfully higher income. Compared to high-yield bonds, they carry materially lower default risk. That combination makes them more of a balanced, jack-of-all-trades option for ladder construction.

The trade-off is tax efficiency. Like other corporate bond funds, distributions are generally taxed as ordinary income at both the federal and state levels. While the yields are lower than high-yield bonds, taxation can still meaningfully reduce after-tax income in taxable accounts.

In classic Vanguard fashion, however, the lineup remains very inexpensive. All three ETFs charge a 0.08% expense ratio.

Learn more about VBCA, VBCB and VBCC at the Vanguard Target Maturity provider site.

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The country may be turning 250 this summer, but many Americans didn't start taking retirement savings seriously until it turned 200.

Before that, pensions and Social Security were the primary means of support in old age, but as both declined or faced financial strain, new mechanisms emerged. From the mid-1970s through today, a lot has changed in how Americans save for retirement. For good reasons: We are living longer, and retirements are stretching on for decades.

As we commemorate America's 250th or semiquincentennial birthday, here's a look at how saving for retirement has evolved over the years.

1960s-mid-1970s: Pensions are all the rage

During the 1960s, many workers stayed with one company for their entire career and, in return, received a paycheck for life once they retired. These pensions were common throughout the 1960s and early 1970s —particularly in public sector jobs and heavily unionized industries like manufacturing, automotive, and steel — and served as the primary way Americans supported themselves in retirement.

They were supplemented by Social Security payments and personal savings, which people typically put into bank savings accounts and U.S. savings bonds. Life expectancy was also around 70 in the 1960s, which meant individuals needed to save less. Plus, the cost of goods and healthcare was a lot lower than it is today.

1975-1980: Tax-deferred saving is born

By the mid-1970s, traditional pensions were on shaky ground, and Americans realized Social Security wasn't enough to live on in retirement. While some employees had access to profit-sharing or money purchase pension plans, many didn't — and employers were scaling back those offerings. Concerned that workers weren't saving enough, Congress stepped in and passed the Employee Retirement Income Security Act (ERISA) in 1974. In January 1975, the first IRA was introduced.

Initially, any individual without access to a company pension plan could contribute up to 15% of their salary, or $1,500 per year, to their IRA. They could take a deduction on their tax return, and their contribution would grow tax-deferred. If anyone withdrew the money before 59-½, they would have to pay a 10% penalty. This was designed to encourage savers to keep the money in their IRA until they reached retirement age.

Three years after the IRA was introduced came yet another way to help workers save for retirement, the 401(k). It was first introduced as a provision in the Revenue Act of 1978, allowing employees to choose to receive a portion of their income as deferred compensation, and created tax structures around it.

In 1980, Ted Benna, who is known as the "Father of the 401(k)," encouraged his consulting firm to create the first 401(k) plan for employees, and it took off from there. Over the decades, there have been changes and upgrades made to the 401(k).

Early 1990s: Set-it-and-forget-it with Target Date Funds (TDFs)

Designed as a set-it-and-forget-it type option for 401(k) participants, the first target-date funds, called LifePath, were introduced by Wells Fargo and Barclays Global Investors in March 1994. Built around a specific retirement year, these funds automatically shift toward more conservative holdings as the saver ages to protect their principal. Once the target date is hit, the portfolio permanently settles into a low-risk income allocation.

The structure has proven incredibly popular. According to Morningstar, TDF assets in the U.S. alone surged to $4.8 trillion by the end of 2025.

1989–2001: The Roth debuts

Aiming to generate immediate federal revenue while also giving everyday Americans a way to avoid future investment taxes, Senators Bob Packwood and William Roth first proposed the 'IRA Plus' plan in 1989. It allowed for after-tax contributions to an IRA that would grow entirely tax-free.

It wasn't until eight years later that the plan was codified as the Roth IRA under the Taxpayer Relief Act of 1997 and made available to the public in 1998.

While initial contributions were modest, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 substantially raised those caps, introduced catch-up contributions for savers 50 and older, and paved the way for future inflation indexing.

2006: Auto-enrollment thanks to the Pension Protection Act

Offering 401(k) plans is one thing, but getting workers to take advantage of them is another. Facing low adoption rates among employees in America, Congress tried to change that at the start of the 21st century by introducing auto-enrollment of 401(k)s.

A key provision of the Pension Protection Act of 2006, auto-enrollment allowed employers to automatically enroll new eligible employees into the company's 401(k) plan at a default contribution rate of typically 3% of their salary, unless the employee opted out.

The idea was that employees wouldn't notice a 3% deduction from their paychecks and were unlikely to opt out of their plan. As a result, auto-enrollment would force employees to save for their retirement.

Since then, 401(k) participation rates for companies utilizing this feature have jumped from roughly 44% to 86%, according to T. Rowe Price.

2010s: The DIY era

Driven by the smartphone boom and financial technology, or fintech, the 2010s democratized how everyday Americans saved for the future. For the hands-on investor, mobile trading apps made it fast, cheap and easy to build a self-directed retirement portfolio of stocks and ETFs without a financial adviser.

The decade also saw the rise of the robo-advisor. These platforms used automated algorithms to manage and rebalance a user's portfolio for a fraction of the cost of a human adviser. Spurred by a deep mistrust of traditional financial institutions following the 2008 Great Recession, and appealing to a younger generation with low minimum account requirements, robo-advisors proved that you didn't need a massive net worth to access sophisticated wealth management.

2020s: Step up savings with the Secure Act and Secure 2.0

Despite decades of efforts to get people to save for retirement, by the end of the 2010s, it was apparent that millions of Americans were still falling behind on retirement readiness, with many lacking access to a workplace retirement savings plan. People were also living longer and working later in life. To help workers shore up their retirement savings and account for the current lifespan and lifestyle of Americans, Congress passed the Secure Act and later the Secure 2.0, which addressed those retirement issues and more.

Both acts ushered in many changes to retirement savings, including:

-Pushed back Required Minimum Distributions (RMDs) from 72 to 73, with the age to reach 75 by 2033.

-Expanded catch-up limits for older workers between the ages of 60 and 63.

-Allowed employers to legally make matching contributions into a worker's 401(k) based on the employee's student loan payments, even if the worker can't afford to contribute their own salary.

-Allowed long-term, part-time employees to participate in workplace retirement plans after two years instead of three years.

-Allowed savers to withdraw up to $1,000 once per year out of their retirement accounts for an urgent personal financial emergency without triggering the traditional 10% early withdrawal tax penalty.

-Made Roth accounts within employer-sponsored workplace plans exempt from mandatory lifetime withdrawal rules.

More to come

A lot has happened to the American retirement landscape over the past few decades, and even more changes are on the horizon. Moving forward, the next era of retirement savings will likely be influenced by AI, mobile algorithms and digital assets like cryptocurrency.

As the nation steps into its next chapter, one thing remains certain: the tools we use to build our nest eggs will continue to evolve, promising many more decades of change to come.

More on America's 250th Birthday

• America's Cost of Living at 200 vs 250: How Affordable is American Life Now?
• America at 250: The 3 Economic Headaches That Haven't Changed Since 1976
• How Has Retirement Changed in the Last 50 Years? Take Our Quiz
• 9 Historic Sites to Visit With Your Grandkids for America's 250
• Financial Advice From America's Founding Fathers
• Which Presidents Are on the Social Security Payroll?

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Here at Kiplinger, we want to ensure that you have the best financial advice at your fingertips — and that you can understand the specialized terminology often used for complex topics such as investing.

That's why we put together this short quiz to test your knowledge on a handful of key investing terms. Knowing what these words and phrases mean will help you stay a step ahead in those big decisions you have to make about what's in your portfolio and why.

And don't worry if you miss an answer or two. You can follow the links below the quiz to review these investing terms and more.

More on investing from the Kiplinger team:

• Why ETFs Are One of the Easiest Ways to Start Investing
• Best Mutual Funds to Buy for 2026 and Beyond
• Is Dividend Investing Worth It? Pros, Cons and Rules to Follow
• What Is an Initial Public Offering (IPO)?
• What Is the Rule of 72 and How Can Investors Use It?
• Investing Jargon, Explained
• How Investors Can Use Cost Basis to Lower Their Tax Bill
• Dollar-Cost Averaging: How Does DCA Stock Investing Work?

"Do I have enough to retire?"

It's the question nearly every pre-retiree asks — and it's often answered with: "Do you have $1 million?"

Sometimes it is $1.3 million, and occasionally, it is even higher.

But if you have a pension, these benchmarks likely don't apply to you. In fact, retirees with pensions are in a stronger position than they realize and may not need anywhere near $1 million to retire comfortably.

Or, if they do, then they may need to find ways to spend more in retirement.

Here's why.

The $1 million rule leaves out a key piece

Most retirement guidelines are built for people without pensions. They assume your savings must generate income to replace your paycheck, which is where figures like $1 million or more can come from. These types of retirement plans are designed to produce enough annual income to support your retirement lifestyle.

A pension already does that, so when you apply the same savings target to someone with a pension, you're essentially double counting. (I wrote a book for those with pensions that you can request here.)

What is your pension really worth?

To understand how much you actually need to retire if you have a pension, you have to reframe your thinking — not in terms of account balances, but in terms of income.

Let's say you have a $70,000 annual pension. If you took $1 million and tried to replicate that same guaranteed income stream through an immediate income annuity, you may end up in a similar place: Roughly $70,000 per year for life.

A pension can be thought of as an equivalent to having a $1 million investment portfolio dedicated to producing income.

If your pension includes a cost-of-living adjustment (COLA), it may be even more valuable.

How does Social Security affect the math?

Now, let's layer in Social Security with a simple example:

• Pension: $70,000 per year
• Social Security: $36,000 per year

You're already over $100,000 in annual income before touching your investments. That's a level of income many retirees aim for with $1 million or more in savings alone.

So, the question becomes less about "Do I have enough saved?" And more about "How much do I actually need from my portfolio?"

Why retirees without pensions need more

This contrast highlights just how powerful a pension is. Without one, retirees must rely heavily on their investments, often withdrawing 4% or more annually.

That introduces real risks, especially early in retirement: Sequence of returns risk is the danger that poor market performance early in retirement, combined with ongoing withdrawals, will prematurely deplete a portfolio and jeopardize long-term financial security. I call it a double loss.

A pension helps protect you from those risks by covering a significant portion of your essential expenses with guaranteed income.

This is a main reason why studies consistently show retirees with pensions report higher confidence and even greater happiness in retirement.

So, do you actually need $1 million?

Not necessarily. If your pension and Social Security already cover most (or all) of your lifestyle needs, your investment portfolio becomes a supplement, not a necessity.

That could mean:

• You can retire with less saved than you thought
• You may be able to retire earlier
• You could have more flexibility in how you use your money

On the flip side, if you do have $1 million or more and a pension, you may be in an even stronger position than you realize.

What happens if you have both?

Let's revisit that earlier example:

• $70,000 pension
• $36,000 Social Security
• $1 million portfolio

You're already looking at more than $100,000 of guaranteed income. If your portfolio generates an additional $40,000 to $70,000 annually, you could be looking at $140,000 to $170,000 per year in retirement income.

For some people, this could be the same or more than their working income. That raises a different question entirely: "What are you going to do with all that money?"

The real shift: From accumulation to purpose

For many "Midwestern millionaires," who are hardworking, disciplined savers who didn't earn massive incomes but built their wealth steadily (I wrote a book on this that you can request here), retirement requires a mindset shift.

You've spent decades saving, and now you must decide how to use your hard-earned dollars. This mostly comes down to three choices:

• Spend it (travel, experiences, lifestyle)
• Gift it (help children or family now)
• Give it (charitable impact)

Most people haven't put a lot of thought into this, as they have been heavily focused on accumulation.

Also, remember to plan for taxes, as they are one of the biggest concerns for people in this crowd.

Don't ignore taxes and strategy

One important caveat: Having more income, especially from pensions, often means higher taxes in retirement than expected, and strategies like Roth conversions, tax diversification and income timing can help you:

• Maintain control over your tax bracket
• Reduce required minimum distributions (RMDs)
• Increase after-tax income over time

Without a plan, even strong financial positions can become inefficient.

The bottom line

If you have a pension, the traditional $1 million retirement target may not apply to you.

You may already have more than enough. The real opportunity isn't just retiring comfortably, but recognizing the strength of your position and using it intentionally.

Once your income is covered in retirement, it becomes less about hitting a number and starts being about what that number can allow you to do.

Related Content

• 5 Financial Planning Secrets of Millionaires
• If You're the Millionaire Next Door, You May Be a Terrible Spender
• Do You Have at Least $1 Million in Tax-Deferred Investments?
• The Secret to Reducing Lifetime Taxes for Retirees in the 2% Club, From a Financial Planner
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)

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 investing road to retirement can be invigorating.

You make regular contributions to an IRA or a 401(k), buy individual stocks or find other investments for your money, and you watch your portfolio's value grow.

There might be times when growth halts or you lose money. But you hold steady with your aggressive approach, a rebound happens and the dollar figure trends upward once again.

As you near retirement, however, you begin to wonder: Will I eventually run out of money?

That's a legitimate concern. Unfortunately, it's more likely to become reality if you continue the aggressive investing decisions that helped you accumulate that hefty dollar amount for your retirement. And that's all thanks to sequence of returns risk.

What is sequence of returns risk?

Put simply, sequence of returns risk is the fact that, in retirement, the overall return on your investment is less important than the order in which those returns happen.

If the market soars during your first years of retirement, you likely can withstand market losses later. But if your investment losses happen in the first five to 10 years of retirement and you are making withdrawals to live on at the same time, your portfolio balance can evaporate quickly.

When the market eventually rebounds, you could have little or nothing left in your portfolio that would allow you to capitalize on that recovery.

In other words, you are a victim of the order in which returns on investments happen.

Two retirees with the same portfolio balance, the same withdrawal rate and the same average return over a 20-year span could have very different results.

The retiree who has a strong market performance in the early years likely could weather a poor performance later. The retiree who had a poor performance early might never recover.

Where will money come from in retirement?

One way to mitigate sequence of returns risk is to ease up on your investing when you're about five years from retirement and begin planning how you can turn at least a portion of your savings into retirement income. That way, in a market downturn, you aren't forced to sell some of your investments at a loss.

The first thing to do is determine your income needs.

Someone who earned $6,000 a month during their final working days might want to continue to have that amount available in retirement. Others might decide they can get by on a little less than their final salary — say 80% or 90%.

Then you need to determine where the money will come from.

Social Security is a main source of retirement income, but it typically equals about 40% of someone's final salary. Unless you have a pension, you will need to make good use of your savings to make up the difference between that amount and your income goal.

That's where wise investing comes into play.

Previously, I mentioned that when nearing retirement, you should ease up on aggressive investments so that you don't see a volatile market swallow everything you worked so hard to save. But you can't ease up entirely. Going too conservative also has its drawbacks.

Take CDs, for example. Long ago, they could generate ample income. In the mid-1980s, you could have lived off the interest on CDs because rates rose into double figures. In those days, $500,000 deposited into a one-year CD might have generated 11% in interest, giving you $55,000 a year.

That opportunity is long gone. These days, CDs barely keep up with inflation — if that. Putting a portion of your money into CDs is fine, especially since your principal is protected, but don't count on them to produce a large amount of income for you.

The diversified income strategy

Another option is a fixed index annuity with lifetime payouts. With a fixed index annuity, you pay a premium to an insurance company, and in return, you receive a regular, guaranteed income.

Other potential income sources in retirement include dividend-paying stocks, U.S. Treasury securities, bonds and real estate investment trusts.

Ideally, you should have a diversified income strategy that balances guaranteed income sources with investment income. But don't create a strategy and think you're done. Revisit your plan about once a year to see how things are working and whether you need to make adjustments.

If you're unsure about the best investing strategy for your retirement needs, a financial professional can discuss your goals with you and help you review the options.

Ultimately, the goal is for your savings to continue to work for you, no matter how long your retirement lasts.

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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• How Will You Replace Your Paycheck in Retirement? A Financial Adviser's Tips on Income Planning

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.

Amazon Prime Day is here. This is a four-day sales event running from Tuesday, June 23, through Friday, June 26.

While many of these sales don't have deep discounts, I use them as a chance to score discounts on items that improve my home's functionality and safety. On this end, Prime Day doesn't disappoint.

But first, make sure you have an Amazon Prime membership to shop the event. If you don't have one and you're new to Prime, you can sign up for a 30-day free trial. Now, here are a few items that can give you peace of mind, improve your home's functionality and potentially save you money.

This deal protects your biggest asset

I bought an older home a few years ago, and one of my main concerns was its electrical. Then, I found out about the Ting sensor. It's a smart home sensor you plug into a wall that detects electrical irregularities that could result in a house fire.

Once you install the plug, you download the free Ting app on your phone to monitor it. You'll receive real-time alerts when it detects issues. Some issues it detects include micro-arcing, caused by faulty wiring, malfunctioning devices or loose connections.

Now, I have peace of mind knowing that if any hazards arise, I can fix them before a fire occurs. During Prime Day, you'll save $20 on a Ting sensor.

This deal adds another layer of protection to your home

Smart locks are among the smartest home security upgrades you'll make. They're easy to install. And I like them for the convenience and security they offer.

These devices typically feature a keypad for PIN codes or biometric sensors, allowing you to secure your home without fumbling for physical keys. You can install them on any entry point, such as your front door, and even assign temporary codes for guests or service providers.

Worried you didn't lock your front door when you left home? Access the app and lock it remotely, instead of driving back home. You should also look for ones, like the one I recommend here, that offer weatherproofing and battery backup, so you still have access during a power outage.

And during Prime Day, you can save up to $65 on this option:

Lower your home's energy costs with this deal

Electric bills continue to surge. With the summer months driving up demand, the average household will spend 10.5% more, per the National Energy Assistance Directors Association.

The main culprit behind your energy costs? Your air conditioner. This is where a smart thermostat helps you control costs. If you plan to be away from home for days or weeks at a time, you can set your thermostat at a higher temperature. This reduces the demand placed on your AC unit and the energy it uses.

Over time, setting your thermostat by 7 to 10 degrees warmer when you're away from home lowers your energy costs by around 10%. This could equate to hundreds of dollars per year. On top of that, you can save $50 on a new unit during Prime Day.

Ultimately, while Prime Day isn't overflowing with deep discounts, it doesn't mean you can't find good deals. Being strategic when shopping can help you find deals that add value to your home, both now and into the future. These three deals represent ways you can improve your home's functionality, ensure it remains safe and save money on energy costs.

Related content

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Think back to the summer of 1976. Sunday afternoons meant tuning in to hear Casey Kasem count down the biggest hits in the land, while neighborhood streets were filled with kids on skateboards wearing striped tube socks pulled up to their knees. It was a season steeped in a collective, slow-building excitement as the entire nation braced for its 200th birthday.

Over in Manhattan, the newly opened Twin Towers stood as shiny symbols of modern architectural ambition, serving as a soaring backdrop for the massive parade of international Tall Ships that came to celebrate America's Bicentennial as part of Operation Sail.

But if you peer past the high-gloss, star-spangled veneer of that 200th birthday, you find an American consumer operating in a completely different financial universe. As we gear up for America 250, comparing what it actually took to fund the American Dream fifty years ago reveals a stunning disconnect between historical nostalgia and modern economic reality.

Prices in 1976 vs 2026

Evaluating the modern consumer economy requires separating nominal price increases from true shifts in purchasing power. While cumulative inflation over the last fifty years sits at approximately 485%, certain core sectors have experienced hyperinflation that completely defies standard CPI metrics.

The 1970's saw the inflation rate seesaw throughout the decade. The overall inflation rate in 1976 was 5.76%, down from 9.1% in 1975. It had two double-digit peaks, hitting 11.1% in 1974 and rebounded to 11.3% in 1979. Inflation wouldn't fall below the 1976 rate until 1983, when it fell to 3.2%.

The following data highlights the gap between the 1976 dollar, its inflation-adjusted equivalent and the actual out-of-pocket reality confronting households today.

The top choices in 1976

If the financial data reminds us of what we’ve lost in purchasing power, a look back at the pop culture leaderboard reminds us of how much the American lifestyle aesthetic has evolved.

Even in the absence of Cable TV, VCRs and video games that were hallmarks of the 80s, several high-profile events in 1976 captured Americans' attention, including a visit from Queen Elizabeth to celebrate the Bicentennial and the Montreal Olympics. Bruce Jenner (now Caitlyn Jenner) won the gold medal in the men's decathlon at the 1976 Summer Olympics in Montreal with a world record-breaking point total and bested his Cold War rival, Nikolai Avilov.

From the most popular family vehicle to the top of the box office, here is a quick snapshot of 1976's cultural footprint.

Now vs then

Ultimately, a nation's true resilience isn't measured solely by the numbers on a balance sheet, but by its capacity to adapt, reinvent and progress. For the generation that celebrated the Bicentennial, that unstoppable American energy was perfectly personified by Bruce Jenner sprinting across the finish line to secure a world-record Olympic gold that glorious July.

The data from the last fifty years shows just how much the economic landscape has evolved. As we look past the easy nostalgia of 1976 and celebrate America's 250th anniversary, the true celebration lies in that timeless spirit of renewal — proving that our ability to overcome the financial obstacles of the present is exactly what paves the way for a brighter tomorrow.

More on America's 250th Birthday:

• America is Turning 250 — But We Didn't Get Serious About Saving for Retirement Until 50 Years Ago
• America's Cost of Living at 200 vs 250: How Affordable is American Life Now?
• America at 250: The 3 Economic Headaches That Haven't Changed Since 1976
• How Has Retirement Changed in the Last 50 Years? Take Our Quiz
• 9 Historic Sites to Visit With Your Grandkids for America's 250
• Financial Advice From America's Founding Fathers
• Which Presidents Are on the Social Security Payroll?

Related Content

• Flashback Finance: The Cost of Retiring the Year You Were Born
• Want To Beat Stagflation? Invest Like It's the 1970s
• The Average Retirement Savings by Age

If you have a modest nest egg, you might want to chase cheap listings so you can buy shares in larger lots. Buying stocks priced below $20 can be tempting.

But "dirt cheap" doesn’t always mean "good value." In fact, many low-priced stocks trade where they trade for legitimate reasons, among them weak earnings, heavy debt and/or broken business models that may never recover.

Still, if price alone isn't a sign of a good stock, then neither should price alone signal a bad stock. The important thing is to focus on fundamentals.

Solid companies with stocks that trade around $20 per share can generate reliable cash flows based on proven business models. Indeed, these are real reasons to invest, beyond price.

Our top picks for stocks priced under $20 per share are established are established companies with respected brands. They have market values greater than $1 billion. And their business models support stable dividends.

Ford Motor

• Sector: Consumer discretionary
• Market value: $59.6 billion
• Dividend yield: 4.3%

Ford Motor (F) is one of the oldest and most recognizable automakers in America, with a history stretching back more than a century.

Ford has invested heavily in electric vehicles and is selling almost 100,000 units annually. But business is still driven by traditional gasoline-powered models such as Ford's F-Series pickup truck, the best-selling vehicle in the U.S. regardless of powertrain.

While not immune to volatility, the consumer discretionary stock offers long-term exposure to onshore manufacturing and transportation trends that have wide support by consumers and policymakers alike.

With a generous dividend of more than 4%, there are multiple reasons to stay patient and buy and hold this low-priced stock for its long-term potential.

Huntington Bancshares

• Sector: Financials
• Market value: $34.6 billion
• Dividend yield: 3.7%

Huntington Bancshares (HBAN) is an Ohio-based regional bank that serves consumers, small businesses and commercial clients across the Midwest.

The company offers a wide range of services, including checking and savings accounts, mortgages, auto loans, credit cards and wealth management, as well as business lending.

Huntington is not exposed to global risks like Wall Street megabanks with proprietary trading desks. Like most regional banks, it generates revenue by making practical loans to households and businesses.

This is no small-fry financial stock, however, with current assets of nearly $300 billion. That's enough scale to support a reliable dividend and make HBAN a top stock trading below $20.

Newell Brands

• Sector: Consumer staples
• Market value: $2.1 billion
• Dividend yield: 5.7%

Newell Brands (NWL), a small-cap stock, isn't the most recognizable name on our list. But its products–such as Rubbermaid storage containers, Sharpie markers, Coleman camping gear, Yankee Candle scented accessories, Paper Mate pens and Graco baby gear–are very well known to consumers.

Indeed, a diversified product line is Newell's biggest strength, as it generates revenue from a collection of everyday goods rather than resting on a one-dimensional business model.

Multiple moving parts with varying exposures to the consumer economy can make it hard for the company to deliver breakneck growth.

But Newell offers a generous dividend yield, and management has spent recent years streamlining operations and reducing debt to provide long-term stability.

Nokia

• Sector: Information technology
• Market value: $80.7 billion
• Dividend yield: 1.4%

Nokia (NOK) is best known for its former dominance in mobile phones.

Today, the tech stock provides the equipment supporting fiber-optic and cloud-computing networks, as well as hardware essential for 5G infrastructure.

With a customer base that includes telecom providers, governments and large enterprises, Nokia has deep relationships with clients and expertise that's hard to match.

As demand for faster and more reliable data networks continues to grow, this telecom infrastructure company will only be more important in the years ahead. Stability makes NOK a solid low-priced stock.

Ambev

• Sector: Consumer staples
• Market value: $48.9 billion
• Dividend yield: 1.2%

Ambev (ABEV) lacks name recognition in the U.S. But the large-cap stock is one of the biggest beverage companies in Latin America. Ambev is also a majority-owned subsidiary of global brewing giant Anheuser-Busch InBev (BUD).

Ambev produces and distributes beer, but it's also licensed to make soft drinks such as Gatorade, Lipton iced tea and other products owned by PepsiCo (PEP).

Legacy soda and beer brands face headwinds in the U.S. because of changing consumer tastes. But growth is strong south of the border.

The dividend has grown more than 40% over the last five years, and Ambev is well-positioned to continue to support a generous yield.

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For decades, wealth management conversations largely centered on the question, "How much is enough?"

Today, many high-net-worth women are asking a different question: "What is this wealth ultimately for?"

That shift is helping redefine modern financial planning. Women are viewing wealth not simply as a measure of financial accumulation, but as a tool to support wellbeing, family, values and impact.

As head of Wealth Strategies & Solutions at RBC Wealth Management, I've come to call this evolving mindset "inner wealth," which describes the integration of financial success with personal fulfillment and emotional alignment.

Our recent Women and Wealth survey found that 81% of high-net-worth women prioritize values tied to "body, spirit and soul," while 80% emphasize ethics, trust and social responsibility. In other words, wealth today is increasingly being defined beyond the balance sheet.

I don't feel that this is a rejection of financial performance. Rather, it reflects a more holistic understanding of success that integrates financial security with quality of life, meaningful relationships, philanthropy and intentional living.

A new definition of wealth

Historically, wealth management often focused on returns, tax efficiency and asset growth. Those fundamentals still matter deeply. But today's clients, particularly women, want financial plans that also reflect who they are and what matters most to them.

In RBC Wealth Management's research, 58% of women identified "contribution, impact and legacy" among their most important personal values. Many also said they define financial freedom less by luxury and more by flexibility, peace of mind and the ability to spend time with loved ones.

One respondent described financial freedom as "having control over your money so it serves your life goals, not the other way around." That perspective is reshaping financial decisions across investing, estate planning and lifestyle spending.

As more women step into the role of the sole manager of their wealth, whether they are divorced, widowed or never partnered, we are seeing them shift the way they think about their wealth. They think more about the purpose and outcome of their wealth. They want to understand and have meaning in what they invest in. They want to know why they are holding the investments they own and go beyond the numbers.

Values-based planning is moving into the mainstream

Perhaps the clearest evidence of this shift is that clients are aligning money with values in tangible ways.

For some, that means incorporating philanthropy into long-term planning earlier in life. RBC's survey found that 52% of Millennial women say charitable giving is an important priority, which is nearly double the rate of Gen X women.

Many are embracing "giving while living," choosing to support causes and family members during their lifetime rather than waiting to transfer wealth later.

For others, it means pursuing investments that align with personal convictions around sustainability, governance or social impact. Investors are increasingly seeking portfolios that reflect both financial objectives and broader principles.

In daily life, intentional spending is becoming more common. Rather than spending simply for status, many wealthy women are directing resources toward experiences, wellness, family connection and personal growth.

RBC's research showed particularly strong spending interest in adventure travel, luxury travel and hobbies tied to enrichment and wellbeing.

But values-based planning does not necessarily mean sacrificing returns. That misconception has faded considerably in recent years as investors recognize that disciplined diversification, strong risk management and long-term strategic planning can coexist with purpose-driven goals.

How to align your financial plan with your priorities

For readers looking to incorporate more purpose into their own financial lives, the process often starts with reflection before action.

Ask yourself questions like:

• "What does financial freedom actually look like for me?"
• "What experiences or relationships matter most?"
• "How do I use my wealth for better outcomes for my family?"

From there, you can work with an adviser to build strategies that integrate both performance and purpose. That may include creating a philanthropic giving strategy, updating estate and legacy plans, or reviewing investment allocations through a values lens.

It could mean prioritizing wellness and lifestyle goals in retirement planning and structuring family conversations around financial values that are linked to wealth transfer along with financial education, among other important planning elements based on your life.

As women continue reshaping the financial landscape, the concept of "inner wealth" offers an important reminder: True wealth is not only measured by what we accumulate, but by how well our resources align with our values, relationships and sense of purpose. That may become the most valuable return of all.

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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 paralegal let me know I had a call waiting from a woman who teaches broadcast journalism. She wanted to discuss serious issues facing university students who find themselves caught in a trap because of the employment contract they signed when they were hired as a broadcast journalist.

I took the call, from "Rachel," who first wanted assurance that our conversation would be confidential. After I assured her it would be, she told me that she was calling about employees on the news teams of local TV stations owned by giant corporations "being forced to continue working when they want to quit.

"Viewers have no idea of this abuse, and depending on where you live and which local television stations you watch, often the nice young people — typically in their first job in TV news right after graduation — realize it isn't for them and don't want to be there, but they are, practically speaking, forced to continue working or suffer thousands of dollars in penalties.

"One of my former students is going through a serious depression as we speak, mugged financially by management at a television station she wants to leave. "Mr. Beaver, your column is popular in university mass communication departments, and you can do so many young people a great service by writing about this abuse."

So, how can this happen in today's America? Two things: Supply-and-demand and a corporate management philosophy among some broadcasters that views their employees as disposable.

It's not all glamor

If you live in almost any U.S. city with a population of less than 500,000 and watch local television, no doubt you've seen a revolving door of new "talent" delivering the news.

Every few months, new faces appear — some are absolute standouts — only to vanish, sometimes within months, for greener pastures. Often, viewers see people who just do not belong on the air. So, why have they been hired?

"There is a very good reason," Rachel explained. "There is an absolute glut of students majoring in broadcast journalism. When we ask our students why they chose this field, the most common answer comes down to their perception of television news as 'glamorous.'

"In reality, a broadcast newsroom is often one of the most toxic places in journalism, and sadly, it isn't until the graduates land jobs that the truth hits some of them.

"There is, in addition, a perception that these people we see on our local news are extremely well paid. So many students see young people like themselves on the news wearing what appears to be expensive clothing and do not realize this is fantasy."

TV reporters qualifying for food subsidies

How much would you figure is reasonable pay for a new graduate in a local television news department in cities with population of less than 500,000?

"First-job reporters in small markets are paid from $12 to $16 an hour, and many across the country (receive SNAP benefits). The low pay and exploitation in television news would shock viewers if they knew," Rachel said.

"This is a shrinking industry," she added, "with massive consolidation, layoffs and contractual traps. Sixty-five percent to 75% of broadcast graduates never enter TV news, and among the 25% to 35% who do, about 50% to 60% leave within two to three years.

"Only about 10% to 15% of broadcast journalism majors stay in TV news long term."

Reimbursement is required

Rachel sent me several employment contracts that her students have signed with a number of broadcasters. Most of them had this type of a clause:

If you quit before the expiration of your contract, we have the right to recover from you up to one half of your last six months compensation to reimburse us for publicizing you as a team member, training, clothing allowance and much more.

It isn't rocket science. From what I have seen, the repayment amounts are not tied to actual costs or a justifiable estimate of damages, and the intent appears to be to punish the employee for quitting, plain and simple.

Many of these provisions are unconscionable.

States have differing laws in the area

In California, it is illegal to require repayment of wages, and virtually none of this is legal, but that is not the case in several other states where employer rights dominate.

The effect of this language is clear: It restricts employee mobility and violates public policy in some jurisdictions.

As far back as 1911, in Bailey v. Alabama, the Supreme Court struck down a law that criminalized quitting after receiving an advance, holding that, "You cannot force someone to work or punish them for quitting in a way that effectively forces them to stay."

The court said this created a system of involuntary servitude, which, as we all know, was outlawed with slavery in 1865 when the 13th Amendment to the U.S. Constitution was ratified.

My recommendation

When offered a job and handed an employment contract, any broadcast journalism graduate — or anyone — needs to schedule a consultation with a labor and employment attorney who represents employees.

Don't just sign the contract!

Often, employers will include language in employment contracts that they know is not enforceable, hoping that, out of an applicant's desperation to get a job, they will sign anything.

For several years, I was an "action reporter" in local television and enjoyed the experience, but I know too many people who grew tired of being nomads, going from city to city every two to three years, station to station, discovering it wasn't what they'd ever expected. They opted for a more normal life with family, kids, a promise of tomorrow and a real home.

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.

Shannon Saccocia, the Chief Investment Officer–Wealth at Neuberger, an investment management firm, spoke with Kiplinger about what she's predicting for the rest of 2026, resiliency for the market and consumers, and where she sees opportunities for investors.

Kiplinger: What’s your outlook for the second half of 2026? Do you have a target for the S&P 500?

Saccocia: We don’t have price targets, but with the U.S. stock market recently trading below the peak in its price-earnings multiple, while earnings estimates have risen, could we see the S&P 500 up another 5% to 7% by the end of the year? It’s possible, even with the threat of greater market vola­tility. If you just apply the current P/E multiple to the estimated earnings for companies in the index, that translates into a potential double-digit return for the S&P 500 this year.

The broad market declined nearly 10% and then was back to record highs in no time. What accounts for the resilience in the face of a lot of geopolitical and other uncertainty?

Geopolitically driven sell-offs tend to be short-lived, with stronger returns afterward, whether you measure by three months, six months or a year. We’ve seen a very nice rebound, but there are more buyers that could come into this market. Some of the larger buyers — institutions — haven’t gotten fully back to where they were last year. But first and foremost, we remain strong on the market from a U.S. economic perspective. We came into this year anticipating 2.5% growth in gross national product, and potentially higher.

We’ve seen resiliency in the U.S. consumer for several years. Now we’re seeing manufacturing, which had more of a recessionary tone, starting to strengthen. We’ve had support from fiscal spending, increased tax refunds and lower withholding rates from the One Big Beautiful Bill Act. And our view is that the Federal Reserve will cut interest rates twice this year, a quarter point each time.

Back to consumers — can they remain resilient if oil prices stay elevated?

If that happens, perhaps the tailwind that higher tax refunds were expected to deliver to the economy won’t be as pronounced. But they’re acting as a cushion. Even though consumers were already fatigued by higher prices over the past couple of years, we haven’t seen a meaningful tick down in consumer spending.

Our view is that we’ll bump along here and start to see pressures ease on energy prices. But consumers can’t digest these higher energy prices forever.

Are you sticking with your economic growth forecast of 2.5%?

Maybe a touch lower, 2.3% to 2.5%. The risk that our original forecast was not high enough is what’s been taken off the table. We’ve seen incremental, modest pressure on discretionary consumer spending — and the consumer component is such a big part of the GDP cal­culation. But we anticipate meaningful capital-spending growth from companies this year, and at the end of the day, we don’t see evidence of widespread deceleration in economic activity.

Considering that backdrop, where do you see opportunities for investors?

Our biggest change has been to upgrade U.S. large-company stocks, based on a combination of stronger and accelerating earnings growth, along with a compression in P/E multiples. We’d already been overweight in small-cap stocks, and we remain overweight. But our view on large-cap and small-cap is now about balanced. We’ve also been constructive on global equities in general.

When I tell people that we upgraded large caps, they say, “Well, you must like technology today more than you did yesterday.” And that’s probably a justifiable conclusion given the size of the tech sector. We thought tech-stock prices were vulnerable coming into 2025; now they’re more attractive.

Energy stocks are also interesting at this juncture. There’s a bit of a war premium built into energy prices, and some of that will remain even if there’s a cease-fire and an opening of the Strait of Hormuz. We don’t feel that energy stocks have fully incorporated this longer-term impact on energy prices.

We’ve had the call on small caps for some time. But it’s no longer a “buy small caps because they’re cheaper” story, it’s an improvement-in-earnings story, and those earnings are likely to continue to accelerate through the back half of the year.

Has the war short-circuited a move toward international stocks?

I think there’s been a pause, but not a short circuit. There could be some short-term strength in the dollar, but it’s still likely to be flat-to-weaker as we move into the back half of the year, and that supports investing outside the U.S.

But the war has been a reminder of the energy dependence that many of these markets have. Europe and Japan are very dependent on energy imports, and the ability for their consumers to digest those higher prices is pretty limited. There’s a pronounced fear in the market that European central banks could make a policy mistake by raising rates — European response to prior inflationary shocks has been poor.

In international developed markets, we’re underweight Europe and more positive on Japan. Japan is clearly energy-reliant, but it has already started to see the benefits of equity market and shareholder reforms, and wage growth in Japan is supporting the consumer.

In emerging markets, we like China, where a significant amount of spending on artificial intelligence is offsetting challenges from higher energy prices and a burst real estate bubble; India; and Brazil, which is actually on the other side of the energy trade and could perhaps benefit from this environment.

What do you like in the fixed-income market?

We like Treasuries, mostly around the two-year mark. We think they’re mispriced because of an expectation for higher rates, which we don’t see. [Bond prices and interest rates move in opposite directions.] We like investment-grade corporates across the range of maturities.

We like municipal bonds and also some non-U.S. bonds from Germany and the U.K. We like emerging-markets debt, but it has performed well, so valuations are not as attractive. But it’s a great diversifier. We are neutral on high-yield bonds in the U.S.

We’ll all be talking about the midterm elections soon. What’s the likely impact on financial markets?

There’s a typical cadence to the elections. Going into July and August, we could see another pickup in volatility, which typically spikes in the weeks leading up to the election. Returns in this time frame tend to be a bit weaker, then stabilize in September and move higher through the end of the year. I don’t expect a lot of change in the policies from the Trump administration’s second term.

Tariffs are still going to be in the dialogue in some way, shape or form — there’s a need for that revenue to lessen some of the impact from increased fiscal spending. There might be some changes on the margin with a switch of party in the House, whether it’s something like funding for the Department of Homeland Security or Medicare re­imbursement rates.

I will say this: We came into this year with affordability already one of the biggest concerns. The affordability challenge is what will drive voters to the polls, and the current situation in the Middle East is complicating that challenge.

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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Disappointed with the performance of the Dow Jones Industrial Average, I decided in 2023 to reinvent the index to reflect the changing nature of the U.S. economy. I kept 11 of the Dow's 30 components and added some choices from among personal favorites, old 10 Best lists and the Wired Index, concocted by the tech magazine in 1998.

Top 30 is beating expectations. Over the past 12 months, it returned 27%, compared with 24% for the Dow itself. Total cumulative return for three years: 69% for Top 30, 54% for the Dow.

Investing lessons from the Top 30

Performance, however, isn't the only story Top 30 tells. A review of the past 12 months provides a few broad lessons on investing:

1. Even when your portfolio has a great year, you will have a lot of losers

Among my Top 30 stocks, 10 declined, four of them by more than 20% each. The Dow had seven losers in 2025 and eight in 2024. Losing is part of the game. The S&P 500, for example, has declined in 13 of the past 60 calendar years. A churning stomach is the price we all pay for the substantial returns that stocks provide.

2. Diversification is essential

When some sectors fall, others rise, mitigating losses. As I wrote when I introduced Top 30, the Dow is more akin to a quirky managed portfolio than an index. For instance, it lacks enough technology stocks, and it has no real estate or transportation stocks at all.

Top 30 better reflects the U.S. economy. Over the past year, many retailers, packaged goods and software firms suffered, but their declines were offset in Top 30 by the gains of energy companies and internet platforms.

3. Reversion to the mean is a powerful force

In its first year, Top 30 beat the Dow by 13 percentage points. Now, my aggregate lead is much thinner — and I expect it to get thinner still — but I am hoping I'll remain ahead.

4. Trust your instincts

In last year's review of the Top 30's performance, I had considered making three changes. I was worried about “management failures” at UnitedHealth Group (UNH) and had concerns about Nike (NKE) and Lululemon Athletica (LULU) because of tariffs, stronger competition and tired brands. But I decided to stay the course. That turned out to be a mistake. All three stocks declined, two by double digits, and Lululemon was my biggest loser.

Top 30 changes

1. Traded Caterpillar for Deere

My biggest winner, Caterpillar (CAT), nearly tripled in price over the past 12 months. The company increased sales of building equipment thanks to the construction boom triggered by federal infrastructure bills and data center demand. But the stock makes me nervous. Its price-to-earnings ratio (P/E) is too high, and investment research service Value Line sees revenue growth slowing from an annual average rate of 8.5% over the past five years to 6% for the next five.

I'm going to trade Caterpillar for Deere (DE), another large equipment manufacturer. It's smaller, less pricey and has been harmed by a cyclical downturn in agriculture that will inevitably reverse.

2. Swapped Lululemon for Costco

I was in love with Lululemon years ago, but its style of yoga wear now has too many imitators. Also, my list needs a big-box giant retailer. The obvious choice is Costco Wholesale (COST), a brilliantly managed company with $275 billion in revenues.

Costco keeps its prices and operating costs low and its customers happy. The stock is not going to do anything spectacular, and it's not cheap. You're paying for consistency and the ability to ride out any storm — valuable characteristics in a portfolio.

3. Substituted Nike for NextEra Energy

I actually like Nike and continue to recommend it, but I realized that I have a huge gap in the portfolio at a time when demand for electricity is rising sharply. So I am substituting a utility, NextEra Energy (NEE), with an all-of-the-above strategy to generate electricity using the gamut of resources, including renewables.

NextEra's talented CEO, John Ketchum, is projecting 8%+ annual growth in earnings over the next 10 years. No one can accurately predict that far ahead, of course, but demand for electricity is nearly insatiable. Shares are priced higher than the typical utility, as they should be.

4. Replaced UnitedHealth with McKesson

Finally, I need a large healthcare company to replace UnitedHealth. I'm shunning politically vulnerable insurers and hospitals and instead choosing a well-run company with burgeoning sales and profits and low capital-investment requirements. It's McKesson (MCK), one of three firms that control 90% of the market for the distribution of pharmaceuticals and medical and surgical products. Shares have quadrupled in five years, but when you consider that earnings are growing at 12% annually, the P/E remains reasonable.

Top 30 non-movers

Three of the four stocks I am eliminating were components of the Dow: Caterpillar, Nike and UnitedHealth. That leaves eight on the Top 30 list, and the most timely for investors is Microsoft (MSFT), which, unlike other tech trillionaires, trades at about the same price today as it did two years ago — despite revenues that rose 17% in the most recent quarter. Earnings have increased in what I call a beautiful line, up every year for more than a decade. Investors worry that Microsoft is spending too heavily on artificial intelligence and that it laid off 15,000 employees in 2025. I see an underpriced tech giant getting its house in order for a new era.

Among the other keepers, I'm especially pleased with Amphenol (APH), a maker of critical components for the telecommunications sector. It's hardly a household name, but it's the 54th-largest U.S. company in the S&P 500 by market capitalization (price times shares outstanding) and it roughly doubled in the past year.

I was also glad to see Starbucks (SBUX), under new leadership, moving up again. Alphabet (GOOGL) remains my top tech-platform choice because of its adaptation to AI and the growth of YouTube, the online video-sharing platform.

Netflix (NFLX) was among the losers this year, but never, ever sell it. Salesforce (CRM) and Automatic Data Processing (ADP) fell sharply on concerns that AI would make their services less valuable or even obsolete. I believe the negative sentiment is overdone.

The Dow is weirdly weighted by the prices of its components; a 1% move in Goldman Sachs (GS), at $927 a share, has nearly 20 times the impact of a similar move in Verizon Communications (VZ), at $47. Top 30 is equally weighted. I don't expect readers to own all 30 stocks, buying and selling to maintain a 3.33% proportion for each one in the portfolio. A smart asset manager may turn Top 30 into a fund someday, but until then, you'll likely want to use the list to glean ideas for your own purchases rather than buying the whole thing.

A final note: Readers ask from time to time why I don't own most of the stocks I recommend. Rest assured that I am not being hypocritical or unenthusiastic about companies I write about. Instead, I have grown uncomfortable with the potential conflicts in writing about what I own, so I am sticking almost exclusively to index funds. You don't have to.

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 shares in Netflix and Microsoft. You can reach him at JKGlassman@gmail.com.

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

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As Americans face rising costs on just about everything, the amount of debt they're taking on is going up, too. Credit card balances recently reached a record $1.28 trillion. And according to credit-reporting company Experian, 38% of U.S. consumers now have a personal loan, with the number of these loans on credit reports reaching 67.5 million. Both of those figures represent the highest levels since Experian started collecting data in 2017.

For some, the strain of staying afloat is becoming more evident. The financial stress index from the National Foundation for Credit Counseling (NFCC), which reflects the financial ability of consumers to repay unsecured debts, recently hit its highest level since the NFCC began tracking it in 2018.

“I'm not surprised. I see a lot of people dealing with short-term financial pressure, and it's been going on for a while,” says Leah Hadley, a wealth adviser in Cleveland. A large, unexpected bill can leave households with no choice but to take on debt if they don't have a cash buffer to absorb the extra expense. (Or they may tap their retirement savings. Last year, about 6% of eligible participants in Vanguard 401(k) plans took a hardship withdrawal — an all-time high.) And while the unemployment rate was recently a relatively low 4.3%, the average time it takes job seekers to find work is the longest it has been since 2019. During an extended bout of unemployment, families may rely on credit or retirement savings to make ends meet.

But economic challenges are only part of the picture. Even financially comfortable households are borrowing more frequently rather than paying cash, says Derik Farrar, head of everyday borrowing at U.S. Bank. Some are taking on loans strategically to fund, for example, a badly needed home renovation, while others are incurring debt to keep up with lifestyle inflation — say, upgrading to high-end cars or taking luxury vacations.

Another factor is how much easier it has become to borrow, and to borrow larger amounts, with the click of a button. Financial technology companies such as SoFi, Prosper and LendingClub, for example, let consumers take out personal loans online in as little as 24 hours, without ever speaking to a representative. Buy now, pay later (BNPL) plans from fintechs such as Affirm, Afterpay and Klarna have surged in popularity in recent years, allowing shoppers to delay payment on purchases big and small by signing up for a plan at online checkout. And major retailers, airlines and hotels tout their credit cards to customers, promising ample rewards on their spending — but with the potential to rack up high-rate debt, too.

While borrowing may be quicker and more convenient, the challenge of paying it back remains. Even a decent income isn't surefire protection against debt trouble. People seeking credit counseling now have an average household income of about $70,000, up from $40,000 before the COVID-19 pandemic, according to data from the NFCC.

Ideally, you'll have an emergency fund with at least three to six months' worth of living expenses, stored in a safe, easily accessible place, such as a bank savings account. But if you exhaust those funds — or haven't built them yet — you may have to look to other sources of cash in a pinch. Or, if you need extra money to finance a big project, such as a kitchen remodel, you may be looking to narrow down the best borrowing strategy.

If you decide to borrow, the key is understanding how the loan fits into your finances and how you'll repay it. This guide breaks down the main borrowing options and how to use them effectively.

Questions to ask before getting a loan

Before taking on a loan, step back and ask a few key questions. The answers can help you decide whether borrowing makes sense and, if so, determine how you'll repay the debt.

1. What are you borrowing for? Productive vs unproductive debt

Anytime you consider taking on debt, ask what you're getting in return and how long that benefit will last. For example, borrowing to renovate your home or launch a business can improve your finances over time, boosting your home's value or increasing your income and net worth.

Debt that covers short-term spending, such as shopping for designer clothes or going on a vacation, is less valuable and doesn't build wealth. Farrar frames the former as productive debt and the latter as unproductive, adding that unproductive debt should be minimized.

2. Can you reduce how much you need to borrow?

If you decide to get a loan, try to maximize how much of the expense you can cover yourself, limiting the amount you borrow. Even a small reduction in the loan balance can lower your monthly payments and make the loan easier to repay.

Start by reviewing your budget and identifying areas to cut back on discretionary spending, such as dining out or subscriptions. “People don't always realize how much they're spending until they actually sit down and look at their budget,” says Michael McAuliffe, president of Family Credit Management, a nonprofit debt-relief organization in Rockford, Illinois.

You can also look for ways to bring in additional income through part-time or gig work. This is especially important if you're borrowing to cover ongoing expenses. “In this situation, more loans are not the answer. People need to change their long-term habits,” says McAuliffe.

3. Can you afford to pay off the debt?

Make sure you can comfortably handle the monthly payments on any future loans. This is especially important with secured debt, which is backed by an asset; missing payments can put your home or retirement savings at risk. And keep in mind that being able to make the minimum payment doesn't necessarily mean the debt is affordable in the long run.

McAuliffe says that he has seen clients underestimate their total outstanding balances by tens of thousands of dollars. For that reason, it's important to look beyond the minimums and have a clear plan for paying down the balance. A debt-repayment calculator can help you estimate how long it will take based on your target monthly payments.

4. Are you getting the best terms?

Once you've decided to borrow, the next step is to make sure you do so on the best possible terms. A little preparation can lift your chances of approval and help you qualify for lower interest rates.

Start by checking your credit reports and making sure your accounts are in good standing. You can get your report from each of the big three credit-reporting companies (Equifax, Experian and TransUnion) weekly for free at AnnualCreditReport.com. Are there any mistakes dragging down your credit score, such as a credit card issuer reporting a missed payment that you made on time?

You'll also want to gather basic documentation, such as recent pay stubs, bank statements and tax returns, especially if you're applying with a new lender. “The more you borrow, the more you’ll need to verify,” says Farrar. Working with a bank or credit union where you’ve already developed a relationship can improve your chances of qualifying. However, check with a few other lenders to see whether any of them offer you a better rate. Some lenders also provide prequalification tools that let you estimate potential rates without undergoing a credit check.

Types of loan: Consider your options

When it comes to a loan, the right choice for you depends on how much you need, how quickly you can repay the debt and what assets you have available to borrow against. Here are some options to consider.

Zero-interest credit card offers

For short-term borrowing, a credit card with a 0% introductory interest rate on purchases can be one of the most cost-effective options. These offers typically allow you to carry a balance for 12 to 21 months without owing any interest. If you pay off the balance in full before that window closes, it’s essentially a free source of borrowing. A few of the top options include Chase Slate, U.S. Bank Shield Visa and Wells Fargo Reflect, which all offer new customers a 0% rate for 21 months.

The trade-off: If you’re still carrying a balance after the promotional period ends, interest starts up, usually at a high rate, flipping an initially attractive offer into one of the most expensive sources of borrowing. The average credit card rate is about 24%, according to LendingTree. No-interest credit card offers make sense for smaller purchases that you can pay off relatively quickly, such as car repairs or furniture.

“I don’t have a problem with 0% offers as long as you treat them as a short-term bridge,” says Hadley. “You need a plan to get rid of the debt before the deal expires.”

Home equity lending

If you own your home, you may be able to borrow against its value through a home equity loan or a home equity line of credit (HELOC). To qualify, you typically need to have equity — in other words, the difference between the value of your home and the outstanding balance on your mortgage — of at least 15% to 20%. You'll also need to provide proof of income and have a decent credit score, usually of at least 680.

Home equity loans, which provide you with a lump sum of cash up front, come with a fixed interest rate and a set schedule of monthly payments that do not change. Average home equity loan rates were recently about 8%, according to Bankrate, though your rate will depend on how much you borrow, the length of the loan term and your creditworthiness. A home equity loan can make sense for a large, one-time purchase or expense, such as a home renovation project.

A HELOC is a revolving credit line that offers more flexibility, allowing you to borrow at your convenience, repay and borrow again over time. “Even if you don't see a need right away, having a HELOC in place can give you access to cash in an emergency,” says Kenyon Sutton, a financial coach in Jacksonville, Florida. If you set up a HELOC and then lose your job, for example, you can still borrow against it. HELOCs recently had an average rate of 7%, according to Bankrate. But the rate is usually variable, meaning your monthly payment can go up and down based on market conditions.

Because your home secures these loans, they typically come with lower interest rates and open the door to larger borrowing amounts than unsecured loans. While unsecured personal loans tend to max out at $50,000, home equity lending could allow you to borrow in the six figures or higher, assuming you have the equity to back it up.

The trade-off is the level of risk. If you miss payments, you could eventually lose your home. These loans also charge up-front origination fees of around 0.5% to 1% of the borrowed amount. And you can't turn to home equity loans if you're in a hurry. They take time to launch because the lender has to evaluate your home's value.

Personal loans

With a personal loan, you get a lump sum of cash and pay back the loan on a set schedule, usually between one and five years. You can see the scheduled repayments and total cost of the debt when you apply.

On average, interest rates on personal loans (at about 12% for those with decent credit) are lower than standard credit card rates. But unlike some credit cards, personal loans don't come with an initial 0% period, so you owe interest immediately. With that in mind, personal loans often make sense for borrowing that will take a few years to pay off, such as home improvements or a new appliance. Borrowers also commonly use personal loans to pay off their high-rate credit cards, refinancing the debt at a lower interest rate. You need to show proof of income to qualify for a personal loan, so don't count on getting one to cover expenses if you lose your job.

Personal loans are widely available through both online lenders and traditional banks or credit unions. Online lenders tend to offer a faster application process and approval, with funds often available within a day or two. Banks and credit unions take longer to process loan applications, but they can offer lower interest rates. And you may have a better shot at qualifying by getting in-person assistance from a representative, especially at financial institutions where you have a long-term relationship.

“Online is faster, but there's no one to advocate for you. There's less flexibility on the borderline,” says Sutton.

Buy now, pay later plans

BNPL plans split purchases into smaller payments, typically charging no interest during this time. The standard BNPL plan lasts six weeks, though it can be stretched out to 24 months or longer for larger purchases. Used responsibly, BNPL can be a tool to spread out the cost of the occasional big-ticket purchase — say, to buy a new dishwasher after your old one breaks down. But BNPL's convenience too often leads borrowers to overuse it, spending more than they can afford on food delivery, clothes or other discretionary purchases.

“The problem isn't the first BNPL purchase, it's that they keep adding up,” says Farrar from U.S. Bank.

You also need to pay attention to the fine print. In some cases, “no interest” offers come with a catch. For example, if the balance isn't paid off in time, borrowers may owe substantial penalties or retroactive interest.

401(k) loans

If you have a workplace retirement plan, there's a good chance it allows you to borrow from your balance. Roughly 79% of 401(k) plans offer loans, according to research from John Hancock. If your plan is among them, your employer determines how much employees can borrow through the program rules, up to the IRS limit of 50% of your vested account balance (the amount you could keep after leaving the job) or $50,000, whichever is lower. You must repay the loan within five years.

Unlike many other types of borrowing, getting a loan through your 401(k) doesn't require a credit check. The interest rate depends on the plan, but typically, it's the prime rate plus one or two percentage points. Recently, that equaled 7.75% to 8.75%.

While those features might make a 401(k) loan sound like an appealing route to take if you need cash, there is a substantial downside: The money you borrow is also out of the stock market until it's repaid.

“People focus on the interest rate, but there's much more to the story,” says Hadley, the Cleveland wealth adviser. “You're missing out on any potential growth during that time.” Considering the S&P 500's average return over the past 30 years is about 10% per year, that's an additional opportunity cost of borrowing on top of interest.

There's also an added risk if your job situation changes. If you leave your employer, the loan typically needs to be repaid within a short time frame — about 90 days, depending on the plan. If it isn't, the remaining outstanding balance is treated as a withdrawal, triggering income taxes on the unpaid amount plus a 10% early-withdrawal penalty if you are younger than 59½.

Because of these risks, 401(k) loans are typically best used only if more-favorable options aren't available to you — say, because you can't qualify for other loans.

How to get on top of your debt

1. Start with a clear payoff plan

As you create a plan to whittle your debt, consider trying the “snowball” method, which involves ranking the debts by size. You make the monthly minimum payment on all of them, and any extra funds go toward the card or loan with the smallest balance. That way, you pay off one account as quickly as possible, banking a win that motivates you to continue to the second-lowest balance, and so on.

Alternatively, the “avalanche” method targets the loan with the highest interest rate first. After that, you tackle your other loans in descending order of the interest rate. This strategy saves you the most in monthly interest charges over time.

2. Consolidate cautiously

Debt consolidation involves combining multiple existing loans and credit card balances into one larger loan, with a single monthly payment and often a lower interest rate. You may, for example, use a personal loan or home equity loan to pay off multiple credit cards and other high-rate debts. But if you go this route, make sure to make changes in the spending habits that landed you in debt in the first place.

"People take out a consolidation loan, and then the credit cards are still available," says Michael McAuliffe, president of Family Credit Management.

"They don’t mean to, but they charge them back up," causing people to sink even further into debt.

3. Reach out to current creditors

Lenders may offer hardship programs, such as deferred payments or rate reductions for borrowers who have lost their jobs, face a sudden medical emergency or are dealing with other temporary setbacks.

4. Turn to credit counseling

If the situation becomes difficult to manage on your own, a nonprofit credit-counseling agency can help create a structured plan and negotiate with your creditors on your behalf to lower interest rates or get more time to pay off the debt. You make one monthly payment to the service, which uses the money to pay your creditors.

The agreement typically forces you to temporarily shut down most of your credit cards for future purchases, and enrolling in a debt-management plan can have a short-term negative impact on your ability to borrow in the future. You can find a local credit counselor through the NFCC or the Financial Counseling Association of America (FCAA).

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

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Editor's note: This is part two of a two-part series about estate planning. Part one is These Are the 3 Pillars You Need Before You Build Your Estate Plan.

In the first article in this two-part series on estate planning, I shared the three foundational financial pillars you need to have in place before creating your estate plan. This article also comes in threes — the three-step process for executing an effective estate plan.

When most people think about estate planning, they picture it as signing a will or trust and checking the box as complete. The documents are drafted, notarized and filed away, and it feels like the job is done.

In reality, estate planning is not a single event. It's a three-step process: design, structure and funding. While the first two steps get the most attention, the third is often overlooked. That's the problem, because without funding, even the most carefully drafted trust might not accomplish what it's supposed to.

Understanding how these three steps work together can mean the difference between an estate plan that functions as intended and one that only exists on paper.

Step 1: Estate design: Deciding what to do with your assets

The first step in estate planning is design. This is the vision-setting stage at which you determine what you want to happen with your assets and how you want them managed.

These conversations should focus on questions such as:

• Who should receive your assets?
• When should they receive them?
• Should distributions happen all at once or over time?
• Do you want to provide protection for beneficiaries?
• Do you want control of how money is used after you're gone?

This stage is less about legal language and more about understanding goals. It also requires a broader look at your financial life. Your investments, retirement accounts, tax considerations and long-term care planning all influence what type of estate plan makes sense.

For example, if you're someone who wants to control how assets are distributed over time, you might need a trust.

On the other hand, if you're comfortable with direct transfers, you might want to rely more heavily on beneficiary designations. These decisions shouldn't be made in a vacuum. They depend on how assets are structured and the outcomes you're trying to achieve.

Step 2: Estate structure: Putting legal documents in place

Once the estate design is in place, the next step involves how to properly structure your estate. This is typically when an attorney is called in to create the legal documents that support your goals and wishes.

These documents could include a will, a revocable living trust, powers of attorney and healthcare directives. This step puts your wishes into a definitive written plan, translating your goals into legal instructions that can be executed later.

This is also when many people must decide between a will and a trust. Though frequently used together, there are distinct differences between the two.

A will directs how assets should be distributed after death, but it must go through probate, which is the legal process that oversees the division and distribution of assets among beneficiaries.

A trust is a separate legal entity that can own assets during or after your lifetime, often avoiding probate and allowing more control of how assets are managed.

Because trusts offer additional flexibility and control, many people choose to go that route when creating their estate plans. But this is also where a common misconception begins: Signing trust documents doesn't automatically place assets into the trust.

That leads to the most critical and often overlooked step.

Step 3: Estate funding: Putting the plan into action

Funding your estate is the process of transferring assets into your trust or aligning beneficiary designations so your estate functions as intended.

Without funding, a trust can exist legally but have no authority over any assets. If that's the case, the estate plan may default to probate or distribute assets in ways that don't reflect your wishes.

Unfortunately, this happens more often than people realize. Someone might go through the effort of creating a trust, only to leave their home, bank accounts and investments titled in their individual name. When that happens, the trust doesn't control those assets. It essentially becomes a document sitting on a shelf.

Don't let missteps ruin your estate plan. Work with a financial professional who can protect and preserve your assets and help you leave a legacy for the next generation.

Funding requires action. Depending on the type of asset, this could involve changing ownership or updating beneficiaries. Assets commonly found within a trust include real estate, after-tax brokerage accounts and bank accounts. For example, if you want your home governed by your trust, the deed must be updated so the trust becomes the owner instead of you.

Other assets, such as an individual retirement account (IRA), cannot be owned by a trust. These accounts must remain in an individual's name while they're living. However, they can name a trust as a beneficiary in certain situations, allowing assets to flow into the trust upon death.

A complete estate plan requires coordination

Estate planning is most effective when all three steps — design, structure and funding are completed one after the other. The design clarifies your goals. The structure puts legal documents in place and funding is what makes the entire plan work.

Without it, your wishes might not be carried out the way you intended.

If you've already created a will or trust, it might be a good idea to review it alongside a professional to determine whether your assets are properly aligned with your wishes. A trust that owns the right assets can help ensure your plan is executed without heartache and financial hardship.

At Blue Ridge Wealth Planners, we believe everyone deserves to have their wishes respected and legacy preserved. A thoughtful and well-coordinated estate plan will help you better protect your assets, not only for yourself, but for your loved ones and the causes closest to your heart.

Blue Ridge Wealth Planners is an independent financial services firm and uses a variety of different investment strategies. This is for informational purposes only and is not intended to serve as the basis for any financial decisions, nor should it be construed as legal or tax advice.

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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.

If you're like most people, you work hard not only to cover everyday necessities, but also to prepare for a day when you don't have to work anymore.

Sadly, comprehensive retirement planning is a challenge for many workers. More than 56 million Americans don't have access to an employer-sponsored retirement plan like a 401(k),according to a 2024 Pew Charitable Trusts survey.

The good news is that a lack of an employer plan doesn't mean you can't retire successfully—you just need to take a different approach.

Why doesn't your employer offer retirement plans?

Many employers assume that offering a 401(k) is prohibitively expensive. The reality is much more encouraging. Retirement plans designed for startups are often charged on a per-participant basis, making them scalable and affordable.

Smaller businesses also may not realize they have access to SEP IRAs and SIMPLE IRAs. These plans come with lower administrative costs and fewer management burdens. They also allow business owners to make contributions toward their own retirement.

Even if you don't have employees, you have options. A Solo 401(k) allows you to invest in your retirement, potentially saving more than you could with an IRA alone.

Which self-funded plans are available?

Regardless of why a plan isn't offered, the more important question is how individuals can take control of their own retirement savings. The first place my mind goes is to individual retirement accounts, or IRAs.

Unlike a 401(k), which is always tied to your employer and offers a limited menu of investment options, an IRA can be opened and managed on your own, while providing considerably more investment options.

The tradeoff is that contributions are capped, limiting how much you can save each year.

Another excellent choice for self-funding is a taxable brokerage account. These accounts allow you to invest in mutual funds, stocks, bonds and other securities without the contribution limits of an IRA. You'll pay taxes on dividends and capital gains, but the flexibility and uncapped contributions can make a brokerage account a valuable complement to tax-advantaged retirement savings.

Beyond choosing the right accounts, consistency matters just as much. While working with clients, I've found it helpful to set up automatic contributions to their IRAs and brokerage accounts. This replicates the "pay yourself first" approach of a 401(k)—you are less likely to miss what you don't see.

Are there any non-retirement plan options?

Beyond traditional retirement accounts, other financial vehicles can bolster your retirement readiness. Health savings accounts (HSAs) are worth considering if you have a high-deductible health plan. HSAs offer three tax advantages:

• Contributions are tax-deductible
• Growth is tax-free
• Withdrawals for qualified expenses are tax-free

While you're young, these benefits can help offset healthcare costs, allowing you to shift funds toward retirement savings. After age 65, you can withdraw HSA funds for any purpose—although you'll pay taxes on nonmedical withdrawals. I like to think of it as a stealth retirement account.

Annuities can be another source of retirement income. This financial tool is a long-term contract with an insurance company—you pay money now in exchange for guaranteed, tax-deferred income later.

Annuities provide steady cash flow for a set period or for life. However, they are complex financial instruments with varying fee structures and features, so they require careful evaluation to ensure they align with your specific needs.

How can working with an adviser help?

Even with all these options, deciding how to combine them can be challenging, which is where partnering with a financial adviser can help. An adviser can help you navigate the full range of options and provide guidance to pick the strategies that work best for your situation.

Consulting with an adviser is especially important 10 years before your desired retirement. This decade-long window allows you to make meaningful adjustments to your savings strategy and investment allocation based on where you stand versus where you need to be.

If you're 50 or older, you can also take advantage of catch-up contributions that allow higher annual limits for both IRAs and 401(k)s.

What should you do first?

The absence of an employer-sponsored retirement plan is a challenge, not a dead end. Multiple paths can lead to a secure retirement.

For example, you could start by building an emergency fund to cover six months of expenses, then fund an IRA up to the annual limit and finally direct additional savings to a taxable brokerage account or HSA.

Whatever direction you take, the important thing is to explore your options as soon as possible to allow your money more time to grow. With the right mix of planning, discipline and guidance, preparing for retirement without a 401(k) isn't just possible, it can be powerful.

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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.

Americans will celebrate the 250th birthday of the country this July Fourth, but some families may also be celebrating something else: the launch of the Trump Account, a new, tax-advantaged investment vehicle for children.

Essentially a starter IRA, the account can help build long-term wealth for children, with some kids qualifying for free seed money from the federal government, employers and philanthropists.

"The main idea is to give kids a head start on retirement savings," says Judd Meinhart, director of financial planning at Modera Wealth Management in Winston-Salem, N.C. Unlike IRAs, Trump accounts, which were created under the One Big Beautiful Bill Act of 2025, don't require a child to have earned income.

Any child younger than 18 who is a U.S. citizen and has a Social Security number is eligible. Parents, grandparents, and other relatives and friends can collectively contribute up to $5,000 a year (the maximum will be indexed to inflation starting in 2028), and babies born between 2025 and 2028 get an additional, one-time deposit of $1,000 from the U.S. government to help kick-start the account. (You can sign up at TrumpAccounts.gov.)

Contributions, which must be invested in low-cost mutual funds or exchange-traded funds that track a U.S. stock index, grow tax-deferred and typically can't be withdrawn until the year the child turns 18. Earnings on money taken out after that point will be taxed as ordinary income, with a 10% penalty on withdrawals made before age 59½, unless they're used for qualified expenses such as education or a first-time home purchase. Intrigued?

Whether the accounts make sense for your family depends on your goal for the money and personal circumstances. Here's how experts suggest you make the call.

Open a Trump account if…

You can get free money to fund it. "If you qualify for free seed money, the decision is a no-brainer," says Marianela Collado, a certified financial planner with Tobias Financial Advisors in Plantation, Fla.

There are no income limits to get the $1,000 contribution from Uncle Sam to accounts opened for children born between 2025 and 2028, nor do you need to contribute yourself. Meanwhile, some big companies have pledged to match the federal gift or otherwise contribute to the accounts on their employees' behalf (maximum contribution: $2,500 a year per employee). Among them: Bank of America, Intel and Uber.

A few philanthropists are offering help with funding as well. For example, Michael and Susan Dell will donate $250 to each account opened for children 10 and younger who live in areas where the median household income is below $150,000 (see whether your neighborhood qualifies at ), and similar initiatives have been announced for Connecticut, Indiana and San Francisco. (Find a list of corporate and philanthropic programs here.)

Skip the Trump account if…

Your primary goal is to pay for college. Trump accounts work best as lifelong wealth-building tools, meant to compound for decades. Although you can withdraw money for higher education without penalty, you'll pay taxes on earnings, and it's not yet clear how these assets will impact financial aid.

For education funding, 529 accounts remain a better choice for most parents. Contribution limits are significantly higher and investment earnings and withdrawals are tax-free as long as they're used for qualified education expenses.

Your investment options are broader too, typically including target-date portfolios that shift to a more conservative investment mix to minimize losses as college approaches. "With a 529 account, you're not as limited," Meinhart says.

Consider a Trump account if…

You can afford to set aside money for your child's or grandchild's future after saving for retirement, college and other goals. The extra decades of compounding mean that even small contributions to Trump accounts could create significant wealth.

If you contribute just $1,000 a year from birth to age 18, on top of the $1,000 seed money from the government, for example, the balance could grow to nearly $1 million by the time the child reaches age 59½, assuming an 8% average annual return, according to Adam Bergman, founder of IRA Financial in Sioux Falls, S.D. Increase those contributions to $5,000 a year and the account could be worth more than $4.5 million.

Says Bergman, "It's an unbelievable golden ticket for the families who are able to make contributions consistently."

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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Is your high-yield savings account costing you money? With inflation at 4.20%, your money is losing value unless it's in an account that earns at least a rate that keeps pace with inflation.

The bad news is that many savings accounts, including high-yield savings accounts and CDs, are currently not outpacing inflation, and since the Federal Reserve is not raising interest rates, that's not likely to change very quickly.

There is good news. First, if there's a concrete end to the war in Iran, inflation could be at its peak, per David Payne of The Kiplinger Letter, meaning that you could regain purchasing power as inflation slows. Second, it takes some digging, but there are some savings accounts that earn rates to keep you on pace or ahead of inflation.

I'll start by showing you why not shopping around for better high-yield savings account rates erodes your purchasing power, and we'll find the savings account outpacing inflation. Finally, I'll outline three steps to get you back on track towards achieving your savings goals.

The savings strategy costing you money

I understand the appeal of keeping your cash in the same place. However, most savings accounts (including high-yield) or CDs don't earn rates outpacing inflation currently. It means if you're still using these accounts, you're losing purchasing power.

This is why it's important to pivot as economic circumstances change.

How much does inflation eat into your savings? If you have a high-yield savings account with $50,000 in it earning 3.50% APY, while inflation is at 4.20%, you'd effectively lose $350 a year in purchasing power by keeping it in that account.

That's why even if your high-yield savings account was doing well before, you want to re-evaluate it to find better options.

The savings solution that keeps you on pace with inflation

I review savings accounts weekly and haven't found many that keep pace with current inflation, aside from this account from Newtek Bank:

What I like about it is that it has retained higher rates even amid Fed rate cuts and inflation. It's also easy to set up an account; you don't have monthly fees, and if inflation cools and eventually lowers, your cash will have more purchasing power.

If you're looking for any savings accounts outpacing inflation, I found one more option for you.

Are there any savings accounts outpacing inflation?

While the high-yield savings account from Newtek Bank will be the best fit for cash access, CDs also offer exceptional rates. The only caveat is that you must keep your money in one until the term expires, as CDs have early-termination fees.

With inflation at 4.20%, the only CDs currently outpacing inflation are jumbo options. The best jumbo CD rates are 4.35%, but you'll need at least $50,000 to $100,000 on deposit to open one with many banks.

The good news is that maturity windows are only a year at most, allowing you to earn thousands effortlessly, while keeping ahead of rising prices.

Use this Bankrate tool to compare options fast:

The one thing to consider is that CDs have steep early-termination fees. For jumbo CDs, this could be months of earned interest, costing you hundreds to potentially thousands of dollars. Only do this approach if you're confident you won't need the money in the interim.

Meanwhile, if you're struggling to hit your savings goals, let's outline some strategies to help you get back on course.

What to try: 3 steps to maximize your savings yield

1. Audit your current APY: If you have a high-yield savings account earning less than 4.20%, you're losing ground with rising inflation. Instead, look at Newtek Bank or a jumbo CD to increase your purchasing power.
2. Designate a purpose: By setting specific savings goals, you give your cash purpose and direction.
3. Know when to shift: Once you reach your savings goals, you'll want to devote more money to paying off high-interest debt or invest it, where you could earn returns much higher than inflation.

Ultimately, where you store your cash now matters more than ever due to rising inflation. Choosing a flexible option, such as a high-yield savings account with Newtek Bank or a jumbo CD if you don't need access to your money right away, allows your cash to retain more of its purchasing power.

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The last time we checked in with Brown Capital Management International Small Company (BCSVX), the fund was reeling from a 2.3% decline in 2025 — a year when the MSCI ACWI ex USA Small Cap Growth Index gained 26%.

The fund is heavy in tech stocks, which sank, and it's light on materials and industrials shares, sectors that fueled much of the rally in 2025.

And now? Over the first four months of the year, BCSVX, a member of the Kiplinger 25, our favorite no-load mutual funds, declined another 12%, compared with an 11% climb in the aforementioned index.

That's not the whole story, however. Early 2026 has been a tale of two periods, the managers say: before the Iran war started and after.

Before hostilities began in late February, a rally in cyclical companies and a collapse in tech shares continued — and so did the fund's laggardly performance compared with the MSCI ACWI ex USA Small Cap Growth Index.

After the conflict started, though, investors did an about-face, snapping up quality companies that deliver mission-critical products and services to customers, the fund's bailiwick.

A sentiment switcheroo for this small-cap fund

In the roughly two months following the start of the conflict, International Small Company has held up better than its bogey.

Sectra AB, a Swedish medical-imaging tech company, and U.K.-based online investment platform AJ Bell have gained 27% and 21%, respectively, since late February. Camtek, an Israeli semiconductor capital-equipment firm, has been a big contributor, too. All are among the fund's top 10 holdings.

After just two months, we're wary of calling this a turnaround. But we're also a little weary of this fund's yearlong slump.

Brown Capital's International Small Company fund holds just 36 stocks. Tech and healthcare stocks make up 60% of the portfolio combined. It's a reminder that focused funds can be riskier than those that hold a bigger selection of stocks. We've identified a few potential replacements for it in the Kiplinger 25, but we're holding on for now and will check in with the fund again in a few months.

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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At both the federal and state levels, efforts are underway to give workers a retirement savings boost. In one of the latest moves, President Trump signed an executive order this spring designed to enhance the options for workers who don't have access to an employer-provided retirement plan. About 56 million workers fall into this group, or nearly half of U.S. private-sector workers ages 18 to 64, according to research from AARP.

The TrumpIRA.gov, set to launch by the beginning of 2027, will connect these workers, who often include independent contractors, small-business employees, part-time workers and self-employed individuals, to low-cost IRAs from private financial institutions. Workers will be able to compare IRAs based on cost, quality and investment options.

IRAs included on the platform will have to meet certain criteria. They can't require minimum contributions or balances, for one, and their overall net expense ratio can't exceed 0.15%. The menu of investments must include such options as target-date funds, which automatically alter their asset mix to become more conservative as the saver's retirement date approaches, and funds designed to protect principal on an ongoing basis.

The Saver’s Match

The White House initiative coincides with a government matching-contribution program that also starts next year, known as the Saver's Match, through which eligible workers can get a matching government contribution to their retirement accounts.

In 2027, you must have an annual income of less than $20,500, or $41,000 for those married filing jointly, to qualify for the maximum 50% match from the government. The match gradually phases out, and single filers who earn $35,500 or more, or joint filers who earn $71,000 or more, are ineligible for it. The income thresholds are indexed to inflation in future years. The government contribution is capped at $1,000, or $2,000 for married couples.

The Saver's Match will replace the Saver's Credit, a nonrefundable tax credit that taxpayers whose income doesn't exceed certain thresholds can take when they contribute to an IRA or workplace retirement plan. The maximum credit is $1,000, or $2,000 for joint filers.

Auto-IRAs

Some states are also taking measures to help workers who lack access to employer-sponsored retirement plans by providing automatic IRAs. Through these plans, certain employers that don't offer a retirement plan can enroll their employees to have money automatically deducted from their pay and deposited into an IRA, which is run by a state-approved financial services firm.

Employers can't contribute to auto-IRAs, but the accounts are eligible for the Saver's Match program. That could significantly increase participation in state auto-IRA programs, according to Pew Research Center, which surveyed people who don't have access to an employer-sponsored retirement plan.

At first, 84% of respondents said they were likely to participate in an auto-IRA program. That figure grew to 94% after they learned about the Saver's Match. And though 16% of respondents initially said they wouldn't likely use an auto-IRA, 52% of them expressed higher interest after they learned about the match.

States that offer Auto-IRAs

The following states have implemented or are developing automatic IRA programs, through which workers without access to an employer-sponsored retirement plan can have contributions automatically deducted from their pay and deposited into an IRA.

• California
• Colorado
• Connecticut
• Delaware
• Hawaii
• Illinois
• Maine
• Maryland
• Minnesota
• Nevada
• New Jersey
• New York
• Oregon
• Rhode Island
• Vermont
• Virginia
• Washington

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

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Dear Wealth Wise: "I’m 63 and my husband is 62. We currently have employer private insurance. Do I have to choose Medicare when I turn 65, or can I defer until he turns 65? Upon turning 65, I’m eligible for TRICARE For Life [for veterans]. I want to discontinue private insurance once I become eligible for Medicare, but that would leave my spouse without coverage. What are our options?"
— One Year Closer to 65

Dear One Year Closer to 65: You've asked a great question; many Americans struggle with healthcare decisions in their early 60s and even after Medicare kicks in at 65. You have the added complexity of being a veteran.

This question was so challenging that we interviewed multiple experts in retirement planning and federal benefits. Even if you're not a veteran, you'll find good information here on how to approach healthcare as a couple in your 60s.

What is TRICARE for Life (TFL)?

If you served in the military, you might be entitled to certain benefits long after your service ended. That includes health coverage through TRICARE For Life (TFL).

TFL acts as a secondary payer to Medicare, thereby limiting your out-of-pocket costs once you turn 65. But enrolling in Medicare and TFL can be tricky when you and your spouse aren't the same age.

If you're a year older than your spouse, you're eligible for Medicare and TFL sooner. But if you're the one whose employer provides coverage under a workplace plan, dumping that plan at 65 could leave your spouse scrambling for healthcare coverage.

That's the situation we have here. While it might seem complex at first, it could be more manageable than you'd think.

The crucial Medicare rule for veterans

When you turn 65, you officially become eligible for Medicare. While standard rules allow some working beyond 65 to delay enrollment, the strategy is different for military retirees.

Once you turn 65, you're eligible to sign up for Medicare. But that doesn't mean you have to, says Brandon Hill, senior adviser at Beckett Financial Group.

"You could maintain your employer’s private insurance at age 65 and beyond, assuming you're still working then," says Hill. (Note that if your employer has less than 20 employees, you will be required to enroll in Medicare Part B as your primary coverage.) "There is nothing that says you have to enroll in Medicare or TRICARE For Life at age 65 if you have creditable coverage elsewhere, such as an employer plan."

While delaying Medicare is perfectly legal under a large employer plan, doing so will completely freeze your veteran benefits. TRICARE For Life strictly requires active enrollment in both Medicare Parts A and B.

If you want to enroll in TFL, you also have to enroll in Medicare Parts A and B and pay the Part B premium, Hill says, which might happen automatically if you don't actively say no to that coverage.

"If you are already drawing your Social Security retirement benefits prior to age 65, then the Social Security Administration will automatically enroll you in Original Medicare, which is Part A and Part B, at age 65," Hill explains. He adds that the Part B premium in 2026 is $202.90 per month.

Your husband still has options if you drop your workplace plan

Dropping your workplace plan at 65 might make sense from a financial perspective. But that doesn't mean your husband will be out of options.

The solution for military families.

The best option for your husband's healthcare bridge to Medicare at 65 is likely a TRICARE Select or Prime plan, says Julie Mesaros, a federal benefits expert at Federal Solutions Support.

"Gaining eligibility for Medicare Part A is itself a qualifying life event for your husband," Mesaros says. "If you decide to drop your employer health plan, once you're covered by Medicare and TFL, that loss of coverage would also generally be considered a qualifying life event. That may allow your husband to enroll in another available TRICARE option, such as TRICARE Prime or TRICARE Select, if he's eligible. Either event would open a 90-day window."

Mesaros explains that from there, once your husband turns 65, he can enroll in Medicare Parts A and B and he'll transition to TFL as well.

For nonmilitary families.

For civilians who don't have access to TRICARE, Nick Punzio, wealth adviser at VestGen Wealth Partners, says that once you drop your employer-sponsored plan, there are several ways to bridge your husband's coverage gap.

"Some employers allow a spouse to remain on the plan even if the employee transitions to Medicare," Punzio says. However, he cautions, policies vary, so you'll need to check with your benefits department to see if you can do that.

Another option worth looking into is COBRA, says Punzio.

"This option lets your spouse temporarily keep the same coverage, usually for up to 18 to 36 months, though at a higher cost," he explains.

There are also Affordable Care Act Marketplace plans you can look into.

"Individual policies may be more affordable than expected, especially if your household qualifies for subsidies," Punzio says, though it's more difficult to qualify for marketplace subsidies in 2026.

You can get TRICARE while retaining your existing coverage

If you're on the fence about dropping your workplace plan entirely, there is a third path: keeping both. You might assume that you need to give up your workplace plan to enroll in TFL. But Hill says that's not necessarily the case.

"You can have both TRICARE For Life and employer coverage simultaneously," he insists. It could be worth doing to keep your spouse on your workplace plan until he's 65.

"In that situation, the employer plan would be the primary payer on claims, Medicare would pay second, and TRICARE would pay last," Hill explains.

Either way, Punzio says, you're doing the right thing by thinking about this now.

"Planning ahead ensures both partners maintain continuous, affordable coverage during the transition years before both are eligible for Medicare," he says.

How TRICARE For Life and Medicare work together

The relationship between Medicare and TFL can be complicated. The one thing Mesaros emphasizes is that TFL doesn't replace Medicare. It works with it.

"Medicare pays first, and TFL generally picks up many of the remaining eligible costs, which is one reason many retirees find the combination to be very comprehensive coverage," she says.

Mesaros also explains that a common mistake people make is treating Medicare and TRICARE as unrelated decisions.

"In reality, the timing must be coordinated because employer coverage changes can trigger a qualifying life event, and TRICARE eligibility at Medicare age depends on having both Part A and Part B. Dropping the private employer plan does not leave your husband uncovered, provided he enrolls in an available TRICARE option."

Mesaros also says that there's nothing wrong with having two different coverage arrangements within the same household.

"You may be covered by Medicare and TFL, while your husband may be covered by TRICARE Prime or TRICARE Select. That is completely normal," she explains.

Finally, Mesaros says, before initiating any moves, it's important to confirm your benefits.

"Before making any changes, I'd suggest confirming your specific situation with TRICARE and DEERS and comparing the cost of keeping your current employer coverage vs moving your husband to a TRICARE plan until he reaches age 65. That's likely where the biggest planning decision will be," she says.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

Read More

• We're 64 With $4.3 Million. I Want to Retire Now and Pay for Health Insurance Until We Get Medicare. My Wife Says We Should Work. Who's Right?
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• I'm 60 With $2.8 Million Saved. I'm Tired of Working, But Need Health Insurance Until Medicare Kicks In.
• Don't Let Health Care Costs Wreck Your Retirement: Here's How

If there's one question that keeps pre-retirees up at night, it's this: Will my money last?

For decades, the financial industry has leaned heavily on rules of thumb, such as the 4% rule, to answer that question. But real life rarely follows a straight line.

Markets fluctuate, inflation rises and falls, and unexpected expenses — especially healthcare — have a way of showing up at the worst possible times.

A more reliable approach to retirement income planning doesn't depend on guesswork. Instead, it starts with structure.

I like to think of retirement income in three distinct layers: Need, want and grow. When built correctly, this framework creates stability, flexibility and long-term resilience, regardless of market conditions.

It may not be flashy. In fact, it's intentionally a bit boring. But that's the point: A boring portfolio supports an exciting retirement.

Here's how it works.

Step 1: Guarantee your 'need'

The foundation of any successful retirement plan is ensuring that your basic living expenses are covered — no matter what happens in the markets.

Your "need" income is the amount required to maintain your core lifestyle. Think housing, utilities, groceries, insurance and other essential expenses. These are non-negotiable. They must be paid whether the market is booming or in a downturn.

The key here is certainty.

To guarantee this level of income, retirees should rely on sources that are dependable and, ideally, last for life. These typically include:

• Social Security
• Pension income (if available)
• Interest from high-quality, long-duration government bonds (such as 30-year Treasuries)
• Annuities with lifetime income riders

Each of these sources shares a common characteristic: They provide income that isn't directly tied to stock market performance.

A practical strategy is to carve out a portion of your retirement savings specifically to fund this layer. Once your need is covered by guaranteed or highly predictable income streams, you've eliminated the biggest risk in retirement: The inability to meet your basic expenses.

This step alone can dramatically reduce financial stress. When retirees know their essentials are covered, they can approach the rest of their portfolio with greater confidence and clarity.

Step 2: Protect your 'want'

Once your foundational needs are secured, the next layer focuses on enhancing your lifestyle.

Your "want" income is what allows you to enjoy retirement — not just survive it. This includes:

• Travel and vacations
• Dining out
• Hobbies and entertainment
• Gifting to family
• Experiences that make retirement meaningful

While these expenses are more flexible than your needs, they're still important. After all, retirement should be about enjoying the life you've worked hard to build.

The goal in this step is protection with moderate flexibility.

Unlike step one, this layer doesn't need to be fully guaranteed — but it should still be relatively stable and low risk. Appropriate tools often include:

• Government bond portfolios
• Fixed index annuities
• Other conservative income-oriented investments

These options typically offer a balance between safety and modest growth potential, helping preserve principal while generating income.

Again, the strategy is to allocate a portion of your retirement savings to fund this layer after step one is complete.

By doing so, you create a buffer between your lifestyle spending and the volatility of the stock market. Even during market downturns, your ability to enjoy retirement isn't immediately compromised.

Step 3: 'Grow' the rest

With your needs guaranteed and your wants protected, the remaining portion of your portfolio can be positioned for growth.

This is where you invest for:

• Inflation protection
• Future healthcare expenses
• Legacy goals
• Emergencies and unexpected costs

This portion of your portfolio is typically invested in a diversified mix of market-based assets, such as:

• Stocks
• Exchange-traded funds
• Mutual funds
• Other growth-oriented investments

The exact allocation should align with your personal risk tolerance, time horizon and financial goals.

Because your essential and lifestyle income needs are already addressed in steps one and two, this growth portion can be invested more strategically — without the pressure of needing to generate immediate income during unfavorable market conditions.

This is a critical advantage.

In traditional retirement strategies, retirees often draw income directly from market-based portfolios. When markets decline early in retirement — a phenomenon known as sequence of returns risk — this can significantly damage long-term outcomes.

By separating income needs from growth assets, you give your portfolio time to recover and compound over the long term.

How the pieces fit together

In practice, most retirees will allocate:

• 50% to 60% of their portfolio to steps one and two combined
• Up to 70% at most in more conservative income and protection strategies
• The remaining portion to growth investments

This balance creates a structured yet flexible approach to retirement income.

It's also fundamentally different from relying solely on the 4% rule.

The 4% rule assumes a consistent withdrawal rate from a market-based portfolio, regardless of market conditions. While that rule can work in favorable environments, it offers limited protection during prolonged downturns or periods of high inflation.

In contrast, the need-want-grow framework is designed to work in both good markets and bad markets.

In strong markets, your growth portfolio can flourish, supporting future needs and legacy goals.

In weak markets, your essential income remains intact, and your lifestyle is largely protected.

This reduces the emotional and financial strain that often leads retirees to make poor decisions — such as selling investments at the wrong time.

Why 'boring' works

It's easy to be drawn to complex strategies or high-return opportunities, especially after decades of saving and investing.

But retirement is about maximizing reliability and peace of mind, not maximizing returns.

A structured, layered approach may feel conservative, even boring, but that's exactly what makes it effective.

When your income plan is predictable:

• You worry less about market volatility
• You avoid emotional decision-making
• You gain the freedom to actually enjoy retirement

And that's ultimately the goal.

While an exciting portfolio might look good on paper, it's a boring, dependable one that supports an exciting life.

Final thoughts

Creating a rock-solid income in retirement doesn't require complicated formulas or blind faith in market performance; it requires clarity.

By breaking your retirement income into three distinct steps — guaranteeing your needs, protecting your wants and growing the rest — you can build a plan that is resilient, adaptable and aligned with how real life actually unfolds.

And perhaps most importantly, you can replace uncertainty with confidence. Because in retirement, the best plan isn't the one that promises the highest return; it's the one that lets you sleep at night — and wake up excited for the day ahead.

Centennial Advisors, LLC is an Investment Adviser registered with the U.S. Securities and Exchange Commission ("SEC"). Registration as an investment adviser does not imply a certain level of skill or training.

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.

Most financial plans are created with good intentions. When they're made correctly, they account for the client's goals, spending habits and savings patterns. But financial problems rarely come from a bad financial plan. They're usually the result of a plan not being implemented consistently.

Making financial changes isn't easy. Behavioral changes take time, and daily life can be distracting. Clients usually understand the recommendations being made, especially when they have a good relationship with their adviser.

But actually following the guidance requires the client to look inward and confront financial habits that may no longer work — and that can be uncomfortable.

The tasks that commonly get delayed aren't the hardest, but rather the ones that feel the least urgent. Updating beneficiaries, funding trusts or investing for retirement can easily be pushed to the side thanks to a false sense of security.

People think the future is guaranteed and waiting to act doesn't have consequences — until the unexpected happens.

Tomorrow isn't guaranteed

Earlier this year, I worked with a couple to create both a retirement and estate plan. The legal documents were drafted and a strategy was in place. The husband and wife just needed to continue funding the trust. They understood this, but it never felt urgent, particularly for the husband. He was 68 and simply thought he had more time. But he didn't.

One morning he was brushing his teeth when he suffered an aneurysm that killed him. As the trust wasn't fully funded, the estate went through probate. The wife was left with unexpected legal costs, delays and stress while mourning the sudden death of her husband.

This is a situation no one wants to go through, but believing the future is guaranteed can increase its chances of happening. Helping clients stay engaged after their financial plan is created is the most effective way to maintain momentum.

Start small

People often struggle to follow through because seeing everything that may be required to achieve their goals all at once can be overwhelming. Every recommendation, task or new strategy becomes intimidating, which feels uncomfortable. When these feelings go unaddressed, action is delayed entirely.

Rather than focusing on everything at once, pick one objective to tackle, and start with small, manageable steps. Crossing smaller action items off the list will create a sense of progress, making long-term goals feel more achievable.

Financial planning is most effective when it's viewed as an ongoing process instead of a one-time event. And progress rarely comes from one major decision. Most often, achieving long-term goals requires you to consistently follow through on the smaller ones.

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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 standard 401(k) playbook leaves high-income professionals and business owners with a planning gap that's larger than most realize. Cash balance plans, when used correctly, can help close it.

For most American workers, a 401(k) and an IRA cover the retirement bases. For successful professionals and business owners earning far above the median household income, those same vehicles may provide less retirement savings capacity and current-year tax efficiency than other qualified plan structures.

The shortfall isn't a flaw in the traditional plans but rather a planning gap — a missed opportunity to select a plan that better fits their unique circumstances.

One potential tool for addressing that gap is the cash balance plan, which remains surprisingly underused, even among households that would benefit most.

How cash balance plans work

A cash balance plan is an IRS-qualified defined benefit pension plan, but it's designed to feel and function more like a defined contribution account. Each participant has a hypothetical "account" that grows in two ways each year:

• A pay credit (a percentage of compensation or a flat dollar amount set in the plan document)
• An interest credit (a guaranteed rate, often tied to the 30-year Treasury)

The employer makes annual, actuarially determined contributions to fund those credits, and those contributions are tax-deductible for the business.

The reason the structure is attractive is the contribution ceiling. A standard 401(k) plus profit-sharing combination caps total annual employer-plus-employee contributions in the low-to-mid five figures. A cash balance plan stacked on top of that 401(k) may allow age-weighted contributions ranging from roughly $100,000 to north of $400,000 each year for older owners and key employees depending on age, compensation, plan design and actuarial assumptions.

The older the participant, the more compressed the funding window, so the IRS permits larger annual contributions to reach a defined retirement benefit. As a result of the higher limits, the tax deferral impact may exceed that of traditional plans for certain high-income households.

Is there an income threshold where these strategies start to make sense?

There's no statutory minimum, but a practical one. We generally start exploring cash balance plans when a household has consistent, predictable taxable income above roughly $400,000, has already maxed a 401(k) and profit-sharing plan, and has cash flow that can support a meaningful pension contribution for at least three to five years.

Below that level, the design and administrative costs eat into the benefit, defeating the purpose. Above that starting level, particularly above $750,000, the potential tax savings may become substantial, and the plan's tax savings may outweigh the plan's design and administrative costs for some high-income business owners.

Why these strategies tend to be underused

If cash balance plans are this effective, why don't more eligible business owners use them? In our experience, the answer is rarely about the math but rather about who's at the table.

Many advisers and firms are organized around investment management, not plan design. A cash balance plan requires coordination among an adviser, a third-party administrator, an actuary, the business's CPA and often an ERISA attorney.

That coordination is real work and falls outside the day-to-day workflow of advisers who don't specialize in business-owner planning. The path of least resistance is to recommend a SEP-IRA or a slightly larger 401(k) match and call the conversation finished.

There's also a generational gap. Defined-benefit plans developed a reputation in the 1980s and 1990s for being inflexible, expensive to maintain and risky for the sponsor.

Modern cash-balance plans have addressed many of those issues because interest credits can be structured to match plan assets and because plans can be amended or terminated when circumstances change, but the legacy perception lingers.

Overlooked advantages and common misconceptions

The first misconception we hear is that a cash balance plan "locks up" money permanently. It doesn't. Once a participant terminates participation in the plan, balances may generally be eligible to be rolled over to an IRA, just like a 401(k), subject to plan terms and applicable distribution rules.

The plan itself can also be amended, frozen or terminated if the business's situation changes, provided the IRS rules on plan permanence are followed.

The second is that these plans are "only for huge companies." In fact, the sweet spot is the opposite. A solo physician, a four-partner law firm, a small dental practice or a consulting firm with a handful of professionals can often capture more relative benefit than a large enterprise because contributions can often be weighted toward owners while still satisfying applicable nondiscrimination requirements.

The third misconception is that cash balance plans are speculative. They are not standalone investment products. They are funded pension obligations, although plan assets are invested and subject to investment risk.

The investment portfolio is typically managed to a conservative target return that matches the interest credit, which may help reduce funding volatility for the sponsor.

Professionals consistently underestimate the benefit on the tax side. A $200,000 cash-balance contribution for an owner in a combined 45% federal and state bracket isn't a $200,000 retirement deposit.

It's potentially about $90,000 in current-year tax savings plus a $200,000 retirement deposit, depending on the taxpayer's specific circumstances.

Over a five- to 10-year funding window, the cumulative effect can materially affect retirement accumulation and long-term financial planning outcomes.

Who benefits most

The strongest candidates share three characteristics:

• High, stable income
• A closely held business or professional practice
• Owners who are typically older than the rank-and-file employees

We see this structure deployed most often in medicine and dentistry, law, engineering and architecture, accounting and consulting, independent investment management and family-held operating businesses with strong free cash flow.

Solo practitioners and 1099 professionals can also use this structure. For instance, a one-participant cash balance plan is administratively simpler and often has a dramatic impact.

At the other end, partnerships and professional corporations with multiple owners can design tiered benefit formulas that direct the bulk of contributions to the partners while still meeting coverage and nondiscrimination requirements.

How to know if it makes sense for your situation

A good first conversation answers four questions:

• What is your taxable income today, and how stable is it over a three- to five-year horizon?
• Are you already fully funding a 401(k) and a profit-sharing plan?
• What does your workforce look like? Specifically, how many non-owner employees are there? What are their ages and their compensation levels?
• What is your investment return assumption, and is it compatible with the conservative funding portfolio a cash balance plan typically requires?

Those answers, paired with a feasibility study from a qualified actuary, can often determine relatively quickly whether a cash balance plan can move the needle for your household and business. They will also tell you if it doesn't make sense, which is just as valuable, since not every high earner is a fit.

The bottom line

Cash balance plans aren't a loophole, a gimmick or a one-size-fits-all answer. They are an established, IRS-qualified planning tool that may be underused or less frequently discussed in the standard retirement planning conversation.

For the right business owner facing persistent high tax bills, they may help accelerate retirement funding and reduce current-year tax liability. They may also bring clarity to the rest of their financial plan, including estate, business succession and charitable giving.

If your income has increased beyond your retirement plan, consider consulting an adviser who specializes in implementing wealth management strategies to help mitigate the tax exposure that comes with that growth.

Cash balance plans are long-term retirement vehicles that involve investment risk, ongoing administrative and actuarial costs, and required annual funding obligations. Actual tax benefits and retirement outcomes depend on factors including investment performance, business cash flow, employee demographics, actuarial assumptions, and future tax law changes. These plans are not appropriate for every business owner or high-income professional.

Investment Advisory Services are offered through Mariner Platform Solutions (MPS), an SEC-registered investment adviser. Imperio Wealth Advisors and MPS are not affiliated entities.

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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.

Many bond strategists are cautious about high-yield debt these days. It's fully valued, they say, relative to other pockets of the fixed-income market. But the Pimco 0-5 Year High Yield Corporate Bond ETF (HYS) has been a standout among exchange-traded bond funds in the Kiplinger ETF 20 in recent months.

HYS has held up well since the start of the year, and its 8.8% return over the past 12 months outpaced 59% of its high-yield bond fund peers, as well as the Bloomberg U.S. Aggregate Bond Index. (All returns are through April 30.)

The ETF's tilt toward short-term debt and its robust 6.4% yield helped. Pimco 0-5 Year High Yield boasts a short, two-year duration (a measure of interest rate sensitivity). That has been a plus in recent months as rates have inched up amid a multitude of worries, including the war in Iran and persistent inflation, says comanager David Forgash.

Bond prices and interest rates move in opposite directions; a two-year duration implies that if interest rates rise by one percentage point, the ETF's net asset value will fall by 2%. Sizable exposure to the energy sector, one of the top-performing junk sectors over the past year, has also been a boon.

HYS fund managers have a smart investing strategy

This Pimco ETF is technically an index fund, but its four comanagers combine proprietary quantitative models and the firm's big-picture views to actively select sectors and bonds for the portfolio to outperform the benchmark.

"It's about getting ahead of the market," says Forgash, adding they also "dig in deep," researching the securities they invest in to "avoid potential blowups."

Recently, the managers have been buying selectively in battered industries, including software, which cratered amid artificial-intelligence disruption worries, and building materials, which declined as rising construction costs and affordability concerns weighed on investor confidence in the sector earlier this year.

Over longer hauls, this short-term high-yield fund outpaces its peers. Its five-year return, 5.1% annualized, beat 92% of its competition.

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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When people think about moving to another country, they often picture retirees chasing warmer weather or digital nomads working from a beach somewhere. But a growing number of millionaires are packing up and relocating, too.

Around the world, wealthy individuals are increasingly choosing where they live based on such factors as taxes, business opportunities, safety and overall quality of life. Some seek a better place to grow a business. Others want a more predictable tax environment or simply a lifestyle that better fits their priorities.

While most Americans aren't planning an international move soon, it's still worth paying attention to where wealthy people are going. Their decisions often reflect broader economic trends and reveal what they value most when it comes to building and preserving wealth.

Why wealthy individuals have more flexibility to relocate

For many affluent households, location has become more of a choice than a necessity.

Technology has made it easier to run businesses remotely, manage investments from anywhere and stay connected with clients and colleagues around the world. At the same time, many countries have rolled out residency and investor visa programs designed to attract wealthy newcomers.

As a result, more high-net-worth individuals are treating relocation as part of their overall financial strategy rather than simply deciding where they'd like to retire.

What attracts wealthy residents?

Taxes often grab the headlines, but they're rarely the only reason people move. The countries attracting wealthy newcomers tend to offer a combination of financial advantages and lifestyle benefits.

Favorable tax policies

Lower income taxes or special tax programs for foreign residents can help make a country more appealing, particularly for business owners and investors.

Political and economic stability

People with significant assets generally value predictability. Stable governments, strong economies and reliable institutions can be just as important as tax savings.

Strong property rights

Whether someone owns businesses, real estate or investment assets, legal protections matter.

Access to business opportunities

Many wealthy individuals are still actively growing companies or managing investments. Being close to financial centers and global markets can be a major advantage.

Healthcare, education and quality of life

Good schools, quality healthcare, safety and overall lifestyle often play a big role, especially for families.

1. United Arab Emirates

The United Arab Emirates continues to be one of the world's biggest magnets for wealthy newcomers. A major reason is its zero personal income tax policy, which allows high earners to keep more of what they make. But taxes aren't the whole story.

Cities such as Dubai have worked hard to become global business hubs, offering modern infrastructure, investor-friendly visa programs and easy access to markets across Europe, Asia and Africa.

For entrepreneurs, investors and international business owners, the UAE offers a combination that's hard to ignore: tax efficiency, opportunity and a growing global reputation.

2. United States

Despite higher taxes than some countries on this list, the United States remains one of the most popular destinations for wealthy migrants. Why? Because America still offers tremendous opportunities to build wealth.

The U.S. is home to some of the world's largest financial markets, strongest entrepreneurial ecosystems and most innovative companies. For many investors and business owners, the opportunity to create wealth outweighs concerns about taxes.

Many wealthy people aren't just looking for a place to keep their money — they're looking for opportunities to grow it.

3. Italy

Italy might seem an unexpected addition to the list, but it's become increasingly popular among wealthy foreigners.

Part of the appeal comes from tax incentives designed to attract international residents. Lifestyle is also a major factor.

From its historic cities and world-renowned food to its slower pace of life and access to quality healthcare, Italy offers something many people are looking for as they approach retirement or seek a better work-life balance. For some wealthy families, the move is just as much about enjoying the lifestyle they’ve worked hard to create as it is about finances.

4. Switzerland

Switzerland has long been associated with wealth, for good reason. The country is known for political stability, a strong financial sector and a reputation for preserving wealth during uncertain times. Investors often view Switzerland as a safe place to store assets and navigate global volatility.

Add excellent public services, low crime rates and stunning scenery and it's easy to see why it remains a favorite destination for affluent individuals.

It's certainly not the cheapest place to live, but many residents see the stability and quality of life as well worth the cost.

5. Singapore

Singapore has become one of the most attractive destinations for wealthy individuals looking to establish a presence in Asia.

The country offers a business-friendly environment, efficient government services and a strong legal system. Its location also makes it an ideal gateway to many of Asia's fastest-growing markets.

Safety, education and financial infrastructure consistently rank among Singapore's strengths, helping attract investors, executives and entrepreneurs from around the world. For many wealthy newcomers, Singapore offers the rare combination of economic opportunity and day-to-day convenience.

What these countries have in common

While these destinations differ in many ways, they share several characteristics that wealthy individuals tend to value.

They generally offer:

• Predictable tax policies
• Stable governments and economies
• Strong legal protection
• Access to global markets
• High standards of living

What's interesting is that low taxes alone don't explain the trend. In most cases, wealthy individuals look for a complete package that combines financial opportunities with long-term stability and quality of life.

What everyday investors can learn from where the wealthy are moving

Most people aren't going to relocate to Dubai or Switzerland. There are still some useful takeaways from these migration trends.

• Look at the full financial picture: The wealthy often evaluate taxes alongside investment opportunities, business prospects and lifestyle considerations. That's a good reminder that financial decisions rarely come down to one factor.
• Don't overlook cost of living: A lower tax bill doesn't always mean you'll come out ahead if housing, healthcare and other expenses are significantly higher.
• Value stability: One thing many of these countries have in common is predictability. Building a financial plan that can weather economic ups and downs is often more important than chasing short-term advantages.
• Think about more than money in retirement: Healthcare access, housing costs, safety and lifestyle can have just as much impact on retirement satisfaction as investment returns.
• Build your plan around your goals: The wealthy aren't all moving for the same reason. Some want business opportunities, while others prioritize lifestyle or wealth preservation. The lesson is to focus on what matters most to you rather than following someone else's strategy.

It's about more than taxes

It's tempting to assume wealthy people are moving to avoid taxes, but the reality is usually more nuanced.

The countries attracting the most millionaire migrants tend to offer a mix of opportunity, stability, strong legal protections and quality of life. Taxes might help open the door, but they're rarely the only reason people choose to walk through it.

For everyday investors, the bigger lesson is knowing that successful financial planning is about balancing money, lifestyle and long-term goals in a way that works for you.

Use the tool below, powered by Bankrate, to connect with a financial professional who can help you develop a personalized plan to grow your wealth and reach your financial goals:

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Your daughter needs money for a down payment on a new house. Your son needs a loan to wipe out high-interest debt. Another child wants cash to pursue a graduate degree. As parents, it's entirely natural to want to step in and help. But if you're already retired, you need to think twice before opening your wallet. After all, you don't want to jeopardize your own financial security for the sake of theirs.

In retirement, you're living on a fixed income, which means any unplanned financial support you give your kids will come directly from your nest egg, leaving less money to fund your own lifestyle or for your estate. Even if you can comfortably afford the hit, that doesn't automatically make it the right move. Sometimes, bailing adult children out only serves to enable bad financial habits.

Mixing family and finances is always complicated. Before you sign any checks, make sure you ask yourself these three critical questions.

1. Why do they need the money?

The first question to ask is: What do they need the money for? Before you can go any further in the decision-making process, you have to determine if the reason is worthy of consideration, says John Rafferty, partner and investment advisor representative at Solomon Financial. Equally important is who is asking. Do they have a history of asking for money, and will giving it to them enable bad money habits?

If the money is for a good reason, ensure it will put them in a better situation in the future. Can your child afford the home you are giving them a down payment for? Will they incur more debt if they pay down the existing debt? Is the degree worth the ROI?

"Sometimes you think you are helping them buy a house that they can't afford, and it puts undue stress on them," says Paul Jarvis, a wealth advisor at Prime Capital Financial. "It's better to have an open and honest conversation about what the gift is meant to accomplish."

2. Can I afford it, and if not, am I willing to work or sell assets?

If you're okay with the reason your child needs money, the next question you need to ask yourself is: Can I afford it, and if not, am I willing to make sacrifices to get it?

If you can afford to help, the money will likely need to come from investments or retirement savings. Choose your funding source carefully to minimize taxes and sequence-of-returns risk. Pulling from a tax-deferred account, like a traditional IRA, will increase your taxable income, while withdrawing from a tax-free account, like a Roth IRA, means giving up years of compound growth, possibly creating a retirement shortfall.

If you can't afford it, are you willing to work part-time or take on debt to give your child money? "If I were not enabling my child, I would much rather suffer than my child," if it were an emergency, says Rafferty. "If the child is showing the propensity to ask for money, then the answers are different."

3. Will this be a gift to one child, or will I match it for the others?

Some families prefer to give equally to all their children, regardless of individual need. The thinking goes that if money is given to one kid, it should also be given to the others. If you fall into this camp, you have to ask yourself: Will this be a gift to one child only, or will I match it for the others? If the latter, how will I give them the extra money?

"Is there a way you can ensure you treat all your children the same way?" asks Rafferty. Ultimately, he notes, it is your money, so perfectly equal distribution is a choice, not a rule.

Be smart about helping

Many retirees want to help their children and have the means to do so. But before you open your wallet, think about what it means to your retirement and your kids' financial future.

Are you enabling bad financial behaviors or putting them on the path to financial freedom? Will this hinder your retirement plans or have little impact? Asking yourself those three key questions will protect your own financial security while helping, rather than hurting, the ones you love most.

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: 3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You, 3 Questions That Reveal If You're Actually Ready to Age in Place, 3 Questions That Determine If You're Actually Ready to Retire Early, 3 Questions to Ensure Your Retirement Nest Egg Is Inflation-Proof, 3 Questions to Ask Before Unretiring, 3 Questions That Help You Find Your Perfect Social Security Claiming Age and Go Ahead and Splurge, But Ask Yourself These 3 Questions First.

Related content

• 8 Boring Habits That Will Make You Rich in Retirement
• Why You May Not Want to Move Near the Grandkids in Retirement
• Baby Boomers vs Gen X: How They Approach Retirement Differently
• Go Ahead and Splurge, But Ask Yourself These 3 Questions First

If you have stellar credit, it opens a lot of doors in your financial life. It can help you qualify for credit cards and loans and snag the lowest interest rate on them. Landlords may consider your credit before offering you an apartment. Your credit health may affect your home and auto insurance premiums, too.

Your credit score is a three-digit number that gauges how well you’re managing your credit. FICO and VantageScore are the two primary companies that create credit scores, with lenders more commonly checking FICO scores before approving an application. Standard score models from both companies operate on a scale of 300 to 850; a score of 740 to 799 is typically considered very good, and a score of 800 or higher is deemed excellent.

There are plenty of sources to check your score. Credit-reporting company Experian, for example, provides a FICO score after you enroll. You could also use a credit-monitoring service like myFico, which sends you updates when there are changes. Take the steps below to give your credit score a lift — and to unlock the best terms on loans, insurance and more.

1. Pay your bills on time

Your payment history is the most influential factor in your credit rating, accounting for 35% of a FICO score. So it’s crucial to pay all of your bills by their due date.

If your credit card or loan payment is late by 30 days or more, the lender may report it to the credit-reporting companies, and that can significantly damage your score. (And if you pay just one day late, you may rack up late fees from the biller.)

Payments that are more than six months overdue may be placed in third-party collections, which is even more harmful to your score. Most negative information, including late payments and collection accounts, stays on your credit report for seven years.

Signing up for automatic payments of your bills helps ensure they are paid on time. You may also be able to set up phone or e-mail alerts to notify you when a due date is approaching.

2. Reduce your credit card balances

On credit cards, your utilization ratio — the percentage of available credit that you’re using — is another important element; how much you owe makes up 30% of your FICO score, and a key part of that is utilization, which is calculated both on individual credit cards as well as in the aggregate across all your card accounts.

You can determine your credit utilization ratio with an online calculator, such as the one from Bankrate.

Low utilization indicates that you can responsibly use credit and helps improve your credit score. A FICO study found that "high achievers" with a perfect credit score of 850 have an average revolving credit utilization rate of 4.1%. If you can’t keep your utilization below 5%, aim to limit it to 20% to 25%, says credit expert Gerri Detweiler. Paying off your credit card balance twice a month can help.

One way to decrease your utilization ratio is to get a higher credit limit, as long as you don’t increase the amount you charge on your card. For example, if you typically spend $1,000 a month on a card and your credit limit is $2,000, your credit utilization is 50%.

If your limit rises to $5,000 and your monthly spending remains at $1,000, the rate drops to 20%. Especially if your income has gone up and you’ve consistently made bill payments on time, you may be able to successfully raise your credit limit by requesting it through your credit card account online, says Detweiler.

3. Keep card accounts open (when it makes sense)

Even if you no longer use a credit card, leaving it open can help you maintain a high credit score. One reason is that if you close a card account, your overall credit utilization may rise because you’ll lose some of your available credit.

Eventually, shutting down a card could also lower the average age of the accounts on your credit report. The length of your credit history makes up 15% of your FICO score, and scoring models examine how long your oldest and newest accounts have been open in addition to the average age of all your accounts. Generally, a higher average account age is better.

For those with a perfect FICO score, the average age of their oldest account is 30 years, according to the FICO study on high achievers. After you close an account in good standing, it typically remains on your credit report for an additional 10 years. Once it’s removed, your average account age may decline.

Instead of closing a card, Detweiler recommends asking your card issuer to switch your account to a different card that better suits your needs, while preserving the entire account history on your credit report. Alternatively, you could leave your old card open and use it to make recurring payments for one or two bills so that it stays active.

But keep in mind that in some situations, closing a credit card is the best move for your overall financial health. If you’re tempted to overspend by having the card around, for example, or if you’re paying an annual fee for benefits that you don’t use enough to make the fee worthwhile, terminating the account may be the right choice.

4. Apply for new credit cards cautiously

New credit makes up 10% of your FICO score. When a creditor checks your credit file in response to your application for a new credit card or loan, a "hard" inquiry appears on your credit report.

If you apply for multiple credit cards in a short period, the resulting cluster of inquiries on your credit report can drag down your score because this behavior indicates to lenders that you may have trouble paying your bills.

That doesn’t mean you should avoid applying for new credit cards altogether; the impact of a single hard inquiry on your score is minimal. And opening a new card can improve your credit profile in the long run, as long as you make on-time payments and carry a low debt load, especially if you don’t already have any other revolving credit accounts, says Ted Rossman, principal analyst at Bankrate.

Note that if you’re shopping around for the best deal on a mortgage, car loan or student loan, newer models of the FICO score count multiple inquiries from lenders within 45 days as only a single hard inquiry, minimizing the hit to your score.

Older versions of the FICO score (which some lenders still use to evaluate applicants) have a shorter, two-week window for rate shopping.

5. Review your credit reports for mistakes often

Errors or fraudulent accounts that appear on your credit reports can hurt your score. You can request a free credit report weekly from each of the three major credit reporting companies — Equifax, Experian and TransUnion — at annualcreditreport.com.

Look for mistakes such as an incorrect balance or credit line listed on an account or a record of late payments even though you have not missed a bill. Also check for unfamiliar accounts that you never opened, a sign that an identity thief may have taken out credit in your name.

If you find a problem, file a dispute with each credit-reporting company that’s listing it, and contact the lender or other entity that supplied the erroneous information.

A financial professional can help you create a personalized plan to manage debt, strengthen your credit profile and work toward your financial goals.

Use the tool below, powered by Bankrate, to connect with a financial professional who can help you create a plan for your specific financial needs:

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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 married 83-year-old retired teacher in New York. He reports that his annual salary ranged from $5,400 in 1966 to $60,000 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?

We married in 1969, and by 1975, we had a house, three children and a stay-at-home wife. I was able to support the family on my municipal government salary, but when inflation hit and prices went up, my employer responded by freezing my salary (to keep taxes low), and I stopped getting raises.

We handled the challenging situation by cutting back (literally):

• My wife did the family hair-cutting, mending and cooking less-expensive meals, often meatless
• I was repairing our home and auto and taking care of the lawn
• We reduced heating our home, eating out and buying new clothes
• We distinguished between needs and wants

It reached the point that we were in danger of losing the house as we began to have too much month left at the end of the money and burned through our savings.

We were broke.

The youngest went off to a nursery program, and my wife went back to work.

The result of this financial stress actually made us prosperous, as we got so used to buying inexpensive foods, avoiding restaurants with tablecloths, etc., that we were able to invest much of my wife's income instead of using the extra money to "live it up."

What are you doing with the money?

We felt comfortable enough having a million in investments to take the NYC buyout with an immediate (but reduced) pension in 1996. We were 49 and 53. All of our money was already invested, mostly in our 403(b) plans.

The Fun Stuff

Did you do anything to celebrate?

No. It just sort of happened. At the time, I did a net worth total every month, and one day, there it was.

What is the best part of making $1 million?

I don't worry about money.

Did your life change?

I still dress in jeans and a flannel shirt for three seasons and jorts and a graphic tee in the summer.

We live on our reduced pensions and Social Security.

We used to invest our RMDs, but now we use them to pay for our grandchildren's college expenses.

We let the investments grow.

Does anyone know you're a millionaire?

I told my father and my children. Last Thanksgiving, my son let it slip to his children that I was in the top 1%, so the cat was out of the bag.

Did you retire early?

We retired at 49 and 53. Got into our mini motorhome and traveled for 11 months across the U.S. and Canada.

Looking Back

Anything you would do differently?

Not use a financial adviser.

What advice would you give to your younger self?

Things will get easier.

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

I read things on the internet.

Did you work with a financial adviser?

I started with a financial adviser, but learned that their interests and mine are not necessarily the same and went independent.

Did anyone help you early on?

My first post-high school employer told me when I got a 10-cent tip, "Dimes make dollars."

I later learned that if I watch the dimes, the dollars will take care of themselves.

Looking Ahead

Plans for your next $1 million?

Already here. Our net worth is about $11 million-plus: About $7.6 million in investments, about $2 million in our house and about $1.5 million in our 403(b) plans.

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

Start early and invest as much as you can. And you can live cheaper than you think.

Do you have an estate plan?

We have revocable trusts, which will pay an annual percentage to our three children and half that to each of our six grandchildren.

Twenty-five years ago, my wife and I created trusts that will pay an annual stipend to our children and grandchildren after our deaths.

A few years ago, when the eldest of our grandchildren was making college plans, we spoke with the three oldest and told them about the trust and our thinking.

Our thinking was that our trust would allow our grandchildren to major in whatever subjects gave them the most pleasure and go into careers that they liked without being concerned about remuneration, as the trust would give them a base income to augment their earnings.

My wife and I had jobs that we really liked and enjoyed going to work, but struggled financially. We wanted our grandchildren to enjoy going to work and not have to struggle.

All three, honor students, chose careers in teaching.

The trusts were also set up to pay for our grandchildren's college educations, but we've lived longer than we thought we would, so we're paying it now.

What do you wish you'd known …

When you first started saving? We didn't save — we invested.

When you first started investing? Be wary when using a financial consultant.

Before you retired? I didn't have much time to think about retirement. My employer came up with a buyout offer, and I had only about 12 weeks to decide. I was ready to go, but my wife was concerned that we'd run out of money.

I crafted a spreadsheet that covered the next 20 years, which included Social Security and RMDs.

She went along with it. If she hadn't taken the deal, I probably would not have retired until she was 55.

Anything you'd like to add?

I used to sweat the small stuff, but I have learned, after my wife and I each had a bout with cancer, it's all small stuff. And thank you, Lyndon B. Johnson, for creating Medicare.

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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For decades, older Americans could count on their monthly Social Security check arriving in the mail. But in 2025, the Social Security Administration (SSA) was ordered to move to electronic payments.

The SSA plans to complete the full transition to electronic payments for all beneficiaries this year. Payments will be delivered electronically, either through direct deposit to a bank or credit union account, or through a Treasury-approved prepaid debit card. Checks will be sent in the mail only as a last resort, and for that you'll need a government waiver.

The SSA says the goal is to improve speed, security and reliability, and the change is part of a broader, government-wide move to electronic payments.

But for those who still rely on mailed checks, the shift away from paper raises practical questions. Vulnerable older adults will now have to consider banking access, fraud prevention, family involvement, digital literacy and their comfort level with an electronic payment system.

Why this matters now

For many retirees, Social Security is their only source of income. It is the income that pays the rent, mortgage, utilities, groceries and prescriptions. Even a short delay or disruption can create real hardship.

That is why this issue deserves more attention than it has received. The end of paper checks is not simply a "technology upgrade." It is a consumer protection issue.

The people most likely to be affected include:

• Older beneficiaries who do not use online accounts
• Individuals in rural areas
• People without traditional bank accounts
• Those with cognitive decline
• Widows or widowers who relied on a spouse to manage finances
• Beneficiaries who are wary of scams or uncomfortable sharing banking information

In other words, the beneficiaries who still receive paper checks may be among those least prepared to navigate a fast-moving digital payment system without help.

What replaces the paper check?

Beneficiaries have two electronic payment options.

The first is direct deposit into a checking or savings account. Beneficiaries can sign up:

• Through their personal "my Social Security" account at ssa.gov
• On the Treasury's Go Direct website
• By calling the Treasury's Electronic Payment Solution Center (1-800-333-1795) or the SSA's national phone number (1-800-772-1213)
• At their financial institution

The second option is to use the Direct Express® Debit Mastercard®, a Treasury-sponsored prepaid debit card for people who do not have a bank account. With Direct Express, the federal benefit payment is deposited onto the card account on the payment date.

The card can be used to make purchases, pay bills or get cash, and it doesn't require a bank account.

That second option is especially important because requiring every older beneficiary to "just use direct deposit" is not always possible.

Some people are unbanked because they've had negative banking experiences or live where transportation to a bank branch is limited.

Others may be unable to maintain a bank account because of fees, overdrafts or confusion managing the account.

The identity-proofing issue

While paper checks are being phased out, the SSA has tightened identity-proofing requirements around certain benefit and payment changes:

Individuals who cannot use their personal "my Social Security" account may need to visit a local Social Security office to prove their identity for certain actions, including changing direct deposit information.

People receiving payment by paper check must visit an SSA office before changing their mailing address.

SSA is using additional fraud-prevention measures to verify bank account information connected to direct deposit changes.

Direct deposit fraud can be devastating. If a scammer diverts a retiree's Social Security payment into another account, the beneficiary may not discover the problem until the money does not arrive. By then, rent may be due and automatic payments may fail. Recovering the funds can take time.

But stronger identity rules also create friction for legitimate beneficiaries.

• A frail 89-year-old widow who no longer drives may find it difficult to visit a field office
• A beneficiary without internet access may not be able to complete online identity proofing
• A family caregiver may know exactly what needs to be done but may not have legal authority to act

That is the heart of the paper check problem: The government is trying to reduce fraud and modernize payments, but some of the people most in need of protection may also face the greatest barriers to compliance.

Watching for scams during the transition

Major government changes create openings for scammers.

Families should be alert for calls, texts, emails or letters claiming that a beneficiary's Social Security payments will stop unless they immediately provide a Social Security number, bank account number, debit card number, PIN or password.

Direct Express warns that it will never contact cardholders by phone, email or text to ask for a card number, password, PIN or security code.

The safest approach is simple: Do not respond to unsolicited messages. Instead, contact SSA, the Treasury's Go Direct program, your financial institution or Direct Express directly, using known, official contact information.

Older adults should also be warned about "helpers" who offer to set up direct deposit but ask to use their own bank account. Social Security benefits should be deposited into an account that properly belongs to the beneficiary or to an authorized representative payee.

What families can do to help

The most important first step is to identify whether an older parent, relative or client still receives a paper check. Many family members assume payments are already electronic because most beneficiaries converted years ago. That assumption may be wrong.

Next, confirm where the payment should go. If the beneficiary has a safe, low-cost checking or savings account, direct deposit may be the simplest option. If not, review the Direct Express card as an alternative.

Families should also help beneficiaries create or secure their personal "my Social Security" account, where appropriate.

This should be done carefully. The beneficiary should not share passwords casually, and family members should avoid taking over an account unless they have proper legal authority or the beneficiary is capable and has clearly asked for help.

For individuals with cognitive impairment, serious illness or declining ability to manage money, families may need to explore SSA's representative payee process.

A power of attorney may be useful for many financial matters, but SSA generally does not recognize a power of attorney for managing Social Security benefits in the same way a bank might.

When a beneficiary cannot manage benefits, SSA's representative payee rules become important.

Finally, the beneficiary should build a payment calendar showing their expected Social Security deposit date, what bills are tied to that payment, and whom to call if money does not arrive.

Electronic payments reduce mail delays and stolen checks, but they do not eliminate every possible problem.

The bigger lesson

The end of mailed Social Security checks is not just about how money moves. It is about whether older Americans can safely access the benefits they earned.

For many beneficiaries, electronic payment is faster, safer and more convenient. But for the small group still dependent on paper checks, this transition requires planning, communication and trusted support.

Families, advisers and caregivers should not wait until a payment is missed. The time to review payment arrangements, banking access, identity-proofing options and scam protections is before there is a crisis.

Social Security has always been more than a monthly benefit. For millions of retirees, it is the foundation of their financial security. Making sure that benefit arrives safely, reliably and in the right hands is now an essential part of retirement planning.

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

In the early 1980s, the 30-year Treasury yield topped 15%. Bond traders who had the foresight to lock in those coupons made the trade of a lifetime.

While everyone else chased the dot-com boom a decade later, those traders didn't need the market to cooperate. Their bonds just kept paying.

So, when the stock market went essentially nowhere from 2000 to 2013 (a flat market), many retirees who were in the market, focused on growth, struggled to maintain their lifestyle, while those who bought those bonds were able to sail through.

They didn't win because they predicted the future, but because they recognized a good rate when they saw one and acted on it.

That same logic applies to annuities today. But it didn't always.

Why I couldn't stand them (around 2015)

When I entered the financial planning industry over a decade ago, the 10-year Treasury was hovering around 2%. That's one of the benchmarks that heavily influences what insurance companies can offer in lifetime income payouts. And at 2%, the payouts were, frankly, uninspiring.

For example, I remember seeing payout rates around 4% to 5%. With inflation risk and the time needed to feel like you'd get your money back at a reasonable rate, it didn't make sense to me.

It was difficult to rationalize putting a client's money into a product that generated negligible income when other strategies could do more with less restriction (see my article 10 Ways to Generate Income in Retirement).

The math, in my opinion, didn't work. So I avoided suggesting lifetime income for years.

What changed

Today, the 10-year Treasury sits around 4.5%, which is more than double where it was a decade ago. That shift isn't cosmetic ... It's structural. The underlying rates that support lifetime income payouts have fundamentally changed what annuities can offer.

Higher rates mean higher payout factors. A product that once generated a modest income stream from a given deposit now generates a meaningfully better one. For pre-retirees concerned about outliving their money, that changes the entire conversation.

Today, I'm seeing payouts around 7% (some more, and some less). Rates are obviously subject to change, but that seems like a good deal.

This isn't about being bullish on annuities. It's about recognizing that the tool has become more effective in today's rate environment, much like those bond traders recognized a historically favorable rate and acted accordingly.

A product that finally grew up

Beyond rates, the annuity itself has evolved. The early versions of lifetime income products were clunky. High fees, restrictive surrender schedules, limited flexibility and opaque terms made them difficult to recommend.

That's no longer the case. Modern innovations like guaranteed lifetime withdrawal benefit (GLWB) riders, lower internal costs, index-linked crediting strategies and more have made today's annuities a fundamentally different product category than what existed even 10 years ago.

The industry matured, and the products improved with it.

Not all annuities are the same

One of the biggest misconceptions is that all annuities work the same way. They don't.

Here's a quick breakdown of some that are available today:

Variable annuities seem to be the poster child of what people believe an annuity is. They have higher fees, limited options and so on. Yes, they have "more upside potential," but they also have downside risk.

The fees can put a drag on the performance every year. This is where many of the horror stories are found, in my experience.

Fixed annuities offer a guaranteed interest rate for a set period, kind of like a CD. When it matures, you get your money back plus interest. This is probably the simplest annuity.

Fixed-indexed annuities offer upside potential with downside protection. Some are designed more for cash growth as a bond fund alternative, while others offer better lifetime payouts. It just depends on what you want.

Immediate annuities (SPIAs) convert a lump sum into income payments that start right away, often used for pensionlike income.

Each serves a different purpose. And none of them is universally right or wrong.

It's just a tool

Let me ask you a question: How do you feel about hammers? Probably indifferent. You like them when you need one, and you only hate them when you use one wrong, like when you miss the nail and hit your thumb.

Annuities are no different. The people who hate them usually had a bad experience with the wrong type, at the wrong time, for the wrong reason.

The people who love them sometimes overlook the tradeoffs. Both sides would benefit from a more neutral starting point.

That's exactly why I wrote The DIY Annuity Guide. I wanted to help people move past the love-it-or-hate-it reflex and figure out whether the tool actually fits their situation.

The rate environment has changed. The products have changed. Give yourself permission to check your assumptions and explore whether an annuity belongs in your plan or not.

Either answer is a good one, as long as it's informed.

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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.

Financial anxiety does not always end at retirement. For many people, it gets louder. Without a paycheck coming in, every withdrawal can feel permanent.

What separates calmer retirees from constantly worried ones is often less about how much they have and more about how they manage decisions, expectations and trade-offs.

Feelings of security are strongly linked to planning behaviors and habits, not just portfolio size.

Below are seven money habits that can help retirees feel more in control of spending.

1. They separate money into time buckets

Instead of treating their portfolio as one big pile of money, confident retirees often organize assets by when the money will be used.

Near term (one to three years). Cash and cash alternatives such as high-yield savings, money market funds and short-term CDs

Middle term (roughly years four to 10). More conservative investments such as high-quality short- or intermediate-term bonds and balanced strategies

Long term (10-plus years). Growth-oriented investments such as diversified stock exposure meant to ride through market cycles

The practical advantage is simple. If markets fall, the "spending money" for the next few years is not forced to participate in that decline.

The behavioral advantage is often bigger: It can reduce the urge to sell long-term investments at the wrong time.

One way to pressure-test this habit is to ask a basic question: "If the market dropped 20% this year, how much of my next 24 months of spending is already set aside?"

When that answer is clear, the rest of the portfolio can be managed with a longer view.

2. They follow a consistent withdrawal strategy

Stressed retirees often make withdrawals reactively: "We will take what we need and hope it works out." Confident retirees tend to choose a repeatable framework.

A common starting point is the 4% rule, which suggests withdrawing about 4% of a portfolio in the first year of retirement and then adjusting the dollar amount for inflation each year. For example, a $1 million portfolio would generate about $40,000 in year one.

The exact method matters less than the presence of a method. A withdrawal policy (whether a fixed percentage, a guardrails strategy or an approach informed by required minimum distributions) reduces second-guessing because the decision rules are clear before emotions get involved.

It also creates better conversations. When spending decisions are tied to an agreed-upon policy, choices feel less like guesses and more like trade-offs you intentionally accept.

3. They spend deliberately on what matters

Confident retirees usually do not "cut everything." They identify what makes retirement feel meaningful, then spend intentionally in those areas.

Common examples include:

• Travel that supports relationships
• Hobbies that are deeply valued
• Health and wellness spending that preserves independence

At the same time, they regularly remove spending that no longer fits their life. Subscription creep, unused memberships and maintaining a home that is too large can quietly erode confidence.

A practical habit is a simple annual "spending values" review: Keep the top three categories that genuinely improve life and challenge at least one recurring expense that has become automatic.

4. They plan for healthcare costs realistically

Healthcare uncertainty is one of the most common retirement stressors. Fidelity estimates that a 65-year-old retiring in 2025 may need roughly $172,500 for healthcare costs in retirement, not including long-term care.

Confident retirees tend to:

• Understand the basics of Medicare (Parts A, B and D)
• Compare supplemental coverage options (Medigap vs Medicare Advantage)
• Budget for premiums and out-of-pocket costs

They also address long-term care risk proactively. The "plan" might be insurance, a hybrid policy or earmarking assets, but it is rarely "we will deal with it later."

Removing uncertainty is often the biggest driver of reduced anxiety.

Even if the numbers are imperfect, a written estimate plus a funding approach is usually more calming than avoiding the topic.

5. They maintain financial flexibility

Rigid plans break when life changes. Confident retirees usually build flexibility into both income and spending.

That flexibility can look like:

• Maintaining the ability to earn some income (consulting, part-time work, seasonal work)
• Separating spending into "needs" and "wants," so discretionary categories can be adjusted in a down market
• Keeping a liquidity backstop, such as an unused home equity line of credit, to avoid selling investments during a market decline

Even if these options are never used, simply having options can reduce stress.

Flexibility can also include timing. When markets are down, delaying a large discretionary purchase, adjusting travel plans or shifting gifting schedules can protect the plan without feeling like deprivation.

6. They separate identity from net worth

A surprisingly powerful habit is psychological. Retirees who struggle often treat account balances like a scoreboard. When markets drop, it feels personal.

Confident retirees usually define what "enough" looks like in practical terms: An income plan that supports their lifestyle with an acceptable margin of safety. Once that goal is clear, day-to-day market noise carries less emotional weight.

This does not mean ignoring risk. It means remembering that money is a tool to fund life, not a measure of worth.

A helpful reframe is to focus on income durability rather than portfolio highs. The question becomes: "Is our plan still on track to fund the life we want?" Not: "Did we beat the market this quarter?"

7. They review and adjust regularly, but they do not obsess

Confident retirees tend to be consistent, not compulsive.

A reasonable rhythm might include:

• Periodic check-ins (quarterly or semi-annually)
• Rebalancing when allocations drift meaningfully from targets
• Updating the plan after major life changes (health events, relocation, widowhood, major gifts)

In contrast, constant monitoring can create anxiety and can tempt people into emotional decisions. A set review schedule and a simple dashboard of the metrics that matter (withdrawal rate, spending vs plan, asset allocation, cash reserves) is often more helpful than watching daily market moves.

If checking accounts daily is a habit, consider putting guardrails around it. For many retirees, the goal is not less awareness. It is less reactivity.

Building these habits

If retirement spending feels stressful, confidence often comes from structure:

• Organize savings into time buckets
• Choose a repeatable withdrawal policy
• Align spending with what matters and cut what does not
• Plan realistically for healthcare
• Build flexibility so you are not locked into one path

Working with a financial adviser can help connect the technical plan (cash flow, taxes, investment risk) with the behavior that makes the plan sustainable.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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• 7 Assets to Leave Out of Your Roth IRA, From a Financial Planner
• These 7 Investment Behaviors Hurt Retirees the Most, But It's Not Too Late to Change Your Ways
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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.

Two in five adults experienced some kind of financial fraud or scam during the past year, a 34% increase over the same period a year earlier, a new Bankrate survey found. What's driving this increase?

Financial scams are becoming more common because of the many different touch points you can have with scammers and the rapid proliferation of new technologies, especially artificial intelligence.

Scammers are targeting people in advanced ways using AI, so it takes a lot of awareness to avoid making a mistake. Kiplinger caught up with Sarah Foster, a U.S. economic analyst at Bankrate to dive into how fraudsters could be targeting your finances, and what you can do about it.

Kiplinger: How are fraudsters exploiting AI to scam us?

Sarah Foster: Fraudsters use AI to send messages quickly to larger groups of people to try to increase their success rate. They're using it to edit out typos and grammar mistakes, making it harder to spot fakes. Some scammers use it to create automated messages posing as your bank or other financial institutions, so you don't really know who is on the other end.

Your survey found that people 55 and older are increasingly being targeted, with half experiencing someone attempting to access their information or spending money on phony services in the past year. Why is this demographic a fraudster favorite?

There is this perception that older people are less technologically literate, so it could be that fraudsters believe by targeting them, they might have a higher success rate. There's also the fact that older generations are sitting on enormous pools of wealth, and these scammers know that. Some of these older adults might also have more touch points for scammer interaction because they are more likely to answer the phone or read an e-mail from someone not in their contact list.

But all generations are targets and fall for scams. In fact, we found that young people are the most likely to lose money from a scam.

Nearly all Americans have taken some steps to protect themselves, your survey found. What are the most common precautions taken, and what more should we do?

The most common steps are: avoiding clicking on suspicious links or e-mails, regularly checking financial accounts, and using two-factor authentication — which are all crucial. I also always recommend setting up filters so that people who aren't in your contact list cannot text or reach you, and setting up alerts on your financial accounts for specific kinds of transactions so you'll be notified anytime, say, $100 or more leaves your checking account.

Verification is also important. If someone calls claiming to be from your bank, credit card issuer or phone company, hang up and dial the public customer-service number to check that the call was legitimate. Scammers try to make you feel a sense of urgency, so if the caller is rushing you to act, that's a sign to take a step back and really think about what you're doing.

Finally, many people might not be aware of or may be fearful of using phone- or computer-generated passwords or a passkey, but those log-ins tend to be the safest ones.

What should someone do if they think they've been a victim of financial fraud?

Contact your bank, credit card company or financial institution immediately. If you've sent a scammer money or you see charges you didn't make, ask the company to reverse or stop the transaction and dispute any unauthorized changes or purchases.

Then change your passwords, and report the fraud to the Federal Trade Commission. This gives you a case number you can provide to your bank and the credit-reporting companies — Experian, Equifax and TransUnion — which could be useful.

Also contact all three credit-reporting companies and either put a freeze on your credit [which prevents new credit lines from being opened] or set up a fraud alert on your account [which tells lenders to double-check that you did actually request a new loan or credit card before opening one in your name]. Both are free.

Many people keep their credit frozen permanently, and then if they know they're going to need credit, lift the freeze. If the fraud was minor, just putting a fraud alert on your account may suffice.

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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