The 2026 midterm elections are over, though a few races have yet to be called. Now the question is: What happens next, and what could the shifts in Congress mean for your retirement?

Washington is entering a period of divided government, with Democrats in control of Congress and a Republican presidential administration. That shift could influence the direction of tax policy, federal spending, Social Security and Medicare. It could also create uncertainty about what changes may, or may not, happen before the next presidential election.

You may be thinking:

• Will taxes increase? (You can request a free copy of my bestselling book on tax planning, which features my research and what I think will happen with taxes in the future.)
• Could Social Security benefits change?
• What could happen with Medicare premiums and healthcare costs?
• Should you be doing anything differently with your investments?

These are important questions, but as the founder and CEO of Peak Retirement Planning, I believe there's one principle worth remembering: You don't have to predict what will happen in Washington to prepare for it.

Your retirement plan should be built around your goals, your income needs and the financial decisions within your control. Understanding the political landscape can help you prepare, but reacting to every headline is not a retirement strategy. As I always say, when in doubt, zoom out.

Today, I'm breaking down six areas where the changes in Congress could make a difference and what you can do to keep your retirement plan on track.

1. Major legislative changes could be more difficult

Legislation passed by Congress requires the president's signature to become law. If the president vetoes a bill, Congress needs a two-thirds majority in both the House and Senate to override it.

What does this mean for retirees? It could mean fewer sweeping legislative changes over the next two years. Democrats may introduce proposals involving taxes, healthcare and federal spending, but getting those proposals signed into law will require negotiations with the White House if Congress lacks the two-thirds needed to bypass a veto.

This doesn't mean nothing will happen. Congress still has to address annual spending bills, the federal debt limit and tax provisions scheduled to expire after 2028.

Those deadlines could create opportunities for both parties to negotiate.

For retirees, the takeaway is simple: Don't assume every proposal you hear about will become law. Pay attention to what is actually passed and how it affects your personal financial situation.

2. The national debt could put more pressure on future decisions

In August, the gross national debt passed $40 trillion. At the same time, interest payments on that debt have grown to exceed federal spending on national defense.

These numbers matter because the federal government has competing financial obligations. It must fund programs, pay interest on its debt and address long-term commitments such as Social Security and Medicare.

Why should retirees care? A growing national debt can put upward pressure on interest rates and inflation. It can also limit the government's flexibility when addressing future funding challenges.

That doesn't mean you should make dramatic changes to your retirement plan because of the national debt. But it does mean you should avoid building a plan that depends on today's tax rules and government benefits remaining exactly the same forever.

Instead, build flexibility into your strategy. Consider how your retirement income would hold up if taxes increased, inflation remained elevated or government benefits changed in the future.

3. Tax planning could become more important before 2028

Taxes are one of the most important areas for retirees to monitor, particularly if you have a pension, significant retirement savings or multiple sources of income (you can request a free copy of my bestselling book for those with pensions who are typically significantly impacted by taxes).

The 2025 One Big Beautiful Bill Act (OBBBA) made several changes to the tax code. It made the 2017 individual income tax rates and brackets permanent, increased the standard deduction and established a $15 million estate and gift tax exemption per person for 2026, adjusted for inflation.

However, "permanent" doesn't mean Congress can never change something. It simply means the provisions don't have a built-in expiration date.

Several other provisions are temporary, such as:

• The additional deduction for older people. Eligible taxpayers age 65 and older can receive an additional deduction of up to $6,000 per person, subject to income limits. This provision is scheduled to expire after 2028.
• State and local tax deduction. The higher $40,400 SALT deduction cap is scheduled to return to $10,000 in 2030.

A Democratic Congress could propose changes to tax rates, including higher rates for top earners or corporations. However, those proposals would face a likely presidential veto unless they were part of a negotiated agreement.

For now, the existing tax rules are likely to remain in place through 2028. That creates an important planning window.

For retirees, tax planning isn't just about how much you owe this year — it's about understanding how today's decisions could affect your taxes over the next 10, 20 or 30 years.

For example, a Roth conversion may make sense for some retirees who want to pay taxes on retirement savings now rather than potentially pay them later.

Qualified charitable distributions (QCDs) may also help eligible retirees manage taxable income while supporting charitable organizations.

Estate planning is another consideration, particularly for families with significant assets. The right strategy depends on your income, savings, tax bracket and long-term goals.

Work with your CFP® practitioner, CPA and estate planning professional to understand which opportunities make sense for your situation.

4. Social Security faces long-term funding challenges

Social Security is one of the biggest concerns I hear from retirees. Many people have spent decades paying into the system, and they want to know whether the benefits they've planned around will still be there.

The latest Social Security Trustees Report makes the long-term funding challenge more urgent. The retirement trust fund is now projected to run short in late 2032, when incoming payroll taxes would cover about 78% of scheduled retirement benefits.

It's important to understand what this projection means. Trust fund depletion does not mean Social Security disappears or that retirees automatically stop receiving benefits. It means the program would no longer have enough dedicated reserves to pay 100% of scheduled benefits without legislative changes.

Congress has several options to address the shortfall, including:

• Raising or eliminating the cap on wages subject to Social Security payroll taxes
• Increasing the payroll tax rate
• Raising the retirement age
• Changing the cost-of-living adjustment (COLA) formula
• Adjusting benefits for higher-income retirees

These are proposals that have been discussed for years. The challenge is finding an approach that can earn enough support to become law.

I believe it's wise to prepare for the possibility that Social Security benefits could change in the future. When building a retirement income plan, consider how your finances would look if Social Security provided less income than you currently expect.

Review when you and your spouse should claim benefits and make sure your overall plan doesn't depend too heavily on one source of income.

Hope is not a strategy. Having a plan that can withstand different outcomes is much more valuable.

5. Medicare and healthcare costs deserve your attention

Healthcare is one of the largest and least predictable expenses in retirement. It's also an area where government policy can have a direct impact on your budget.

Medicare's Hospital Insurance Trust Fund, which helps pay for Part A hospital benefits, is projected to be depleted in 2033. After that, incoming revenue would cover about 89% of hospital payments under current projections.

Medicare Part B premiums are another expense to watch. The standard monthly premium is $202.90 in 2026, and the Medicare Trustees project it could increase to $209.50 in 2027.

For people planning to retire before age 65, health insurance deserves even more attention. The enhanced Affordable Care Act (ACA) premium credits expired at the end of 2025. Benchmark marketplace premiums increased 26% for 2026, and insurers have proposed a median increase of 15% for 2027.

Democrats could propose restoring the enhanced ACA credits or expanding Medicare's drug-price negotiations.

However, those proposals would face the same challenge as other legislation: Getting agreement from the White House.

It's also worth remembering that not every Medicare decision comes from Congress. The administration plays a role in areas such as Medicare Advantage payment rates, prior-authorization rules and drug-price negotiations.

What should you do? Don't treat healthcare as an afterthought in your retirement plan. Build rising Medicare premiums and other medical expenses into your projections.

6. Don't let an election dictate your investment strategy

Whenever there's a major election, investors naturally wonder what the results will mean for the stock market. It's tempting to believe that one political outcome will be better for your investments than another.

But history suggests that reacting to election results is rarely a sound long-term strategy. Since 1970, the S&P 500 has increased during the six months following all 14 midterm elections, averaging a 15.5% gain.

Looking at the 12-month period after midterm elections dating back to 1874, the market posted a positive return after 32 of 38 elections.

These historical averages are interesting, but they don't predict what will happen next. The sample sizes are limited, and past performance never guarantees future results.

With divided government, some investors may expect fewer sweeping policy changes. But the stock market responds to much more than election results. Corporate earnings, inflation, interest rates and Federal Reserve policy have historically played important roles in long-term market returns.

My advice is to avoid making major investment decisions based solely on which party controls Congress. Instead, review your investment allocation, understand how much risk you're taking and make sure your portfolio supports the income you need throughout retirement to avoid sequence of returns risk.

Keep your retirement on track

After looking at taxes, Social Security, Medicare, the national debt and the markets, you might be wondering what you should actually do. The good news is that you don't need to have all the answers about what Congress will do next.

Here are two practical steps you can take now:

Review your goals. You created your retirement plan for a reason. Take time to make sure those goals still reflect the life you want to live. Are you planning to:

• Travel more?
• Help your children or grandchildren financially?
• Give more to charity?
• Leave a legacy?

Your financial strategy should support those priorities. If your goals have changed, your plan may need to change with them.

Stress-test your assumptions. A retirement plan should account for more than one possible future. Consider how your finances would hold up under different circumstances:

• What if tax rules change after 2028?
• What if Social Security benefits are reduced in the 2030s?
• What if Medicare premiums and healthcare costs increase faster than expected?
• What if the stock market experiences a significant decline?

And lastly, remember: When in doubt, zoom out!

Related Content

• 2026 Midterm Election Results Deliver a Split Verdict on Taxes
• 8 Retirement Tax Strategies Your CPA Won't Tell You
• A 7-Point Retirement Checklist for People Retiring With a Pension
• If You're in the 2% Club, the 'Tax-Free Retirement' Myth Doesn't Apply to You
• 10 Red Flags High-Net-Worth Retirees Should Watch for in a Financial Adviser

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

When we have introductory meetings with prospective clients, we ask them to rate themselves from one to 10 on our "Retirement Readiness Scale."

People typically think they're ready for retirement because they've been carefully saving throughout their careers and have healthy nest eggs by the time they start a conversation with us.

When we ask them to rate themselves, we explain that an eight or higher means, at minimum, you've put together a Social Security optimization strategy and built what we call a "money map" of all your financial accounts in order of planned withdrawal in retirement.

After hearing that, many rate themselves lower and ask us for help to get to the top of the scale.

These are three factors that could derail your retirement even if you've gotten ahead of the curve by having robust retirement savings. By understanding them, you can enhance your position on the Retirement Readiness Scale.

1. Buying power is likely to decrease during retirement

This year in particular, we've heard a lot about inflation. It's been so persistent that on September 16, the Federal Reserve raised target interest rates for the first time in three years.

Most people understand inflation as increasing prices, but a better way to think about it is that your buying power decreases because the value of your money goes down.

Inflation rising by 3.5% year-over-year means your buying power drops by nearly that much, meaning stashing your cash in a savings account is generally not a good idea. If your money loses value faster than you earn interest on it, you're losing purchasing power.

Inflation isn't the only factor that attacks buying power in retirement. Medical costs are skyrocketing. Based on Fidelity Investments' July 2026 Retiree Health Care Cost Estimate, the average 65-year-old could need hundreds of thousands of dollars for medical expenses in retirement. Having to spend that much to stay healthy reduces your ability to buy things you want.

Social Security is another potential buying power landmine. For years in which the economy experiences inflation, Social Security issues a Cost of Living Adjustment (COLA). But COLA usually doesn't make up for the actual increase in your cost of living. It's often eaten up by increases in Medicare premiums, which makes affording those higher medical bills even harder as the years go by.

This loss of buying power is why we often ask clients, "Do you have a portfolio, or do you have a plan?" Sound financial planning involves more than simply accumulating assets; it evaluates how factors such as inflation, healthcare expenses, investment returns and withdrawals can affect a retiree's ability to meet future spending needs. It's much easier to enjoy retirement if you aren't constantly worried about money.

2. Bad tax planning can deplete a retirement nest egg

Picture two retiree clients. Both are the same age, saved the same amount and live in the same city. You'd think they'd both have equally successful retirements.

Not necessarily. If one client strategized their retirement account taxation while the other did not, their results could be significantly different. One could enjoy a long and happy retirement while the other could end up having to exit retirement and re-enter the workforce.

Many people don't realize that different retirement accounts are taxed differently. For example, withdrawals from a traditional IRA are generally taxed as ordinary income.

A Roth IRA could contain the same assets, but qualified withdrawals from it are generally tax-free. Deposits to a traditional IRA are pretax; you don't pay taxes now on the understanding that you will pay them years later. Contributions to a Roth are taxed up front, so you typically don't owe them when you withdraw.

IRAs also carry required minimum distributions (RMDs). The IRS requires you to withdraw a certain percentage of the IRA every year starting at age 73 (75 for those born in 1960 or later), whether you need the money or not. These withdrawals are not only taxed — they're counted as income.

When combined with income streams you can't turn off, such as Social Security or pensions, those RMDs can put you into a higher tax bracket and, if not reinvested, drain your retirement savings faster than you'd like.

Properly planning for retirement taxation is key to paying only the taxes you should owe and not unnecessarily paying more.

3. Sequence-of-returns risk can threaten your retirement

Most of today's retirees remember the subprime mortgage collapse of 2008. This was a perfect, awful example of sequence-of-returns risk. The crisis caused the stock market to plummet, and many people who were in or near retirement with most of their assets in stocks suddenly found themselves much less wealthy than they had been.

Because they still had to pay the bills, they were often forced to withdraw assets whose value had collapsed in a process we call locking in losses. If they hadn't had to sell their assets, they might have been able to wait until the stock market recovered in 2013.

This is known as sequence-of-returns risk. Having to withdraw from diminished assets early in retirement meant they had much less of a nest egg to grow in the market going forward. For some, this meant having to exit retirement and go back to work.

By spreading your retirement assets into classes with higher and lower risk, you give yourself the option to withdraw from the lower-risk assets when the higher-risk ones are down, potentially giving higher-risk assets additional time to recover. Planning for sequence-of-returns risk is critical to safeguard your nest egg.

This article isn't meant to scare you, but to encourage you to work with a financial adviser who understands that retirement planning only begins with saving money; it's how you strategize what to do with it in retirement that can make or break your golden years.

Related Content

• The 3 Biggest Tax Mistakes Retirees Can Make in Their 60s: One Involves Roth Conversions
• Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely
• 3 Ways to Potentially Avoid Falling Into a Tax Trap in Retirement, From a Financial Adviser
• Claim Social Security Early at 62 or Wait Until 70? These Are the Trade-Offs
• The Great Wealth Transfer Isn't Just for Wealthy Americans: How Will You Handle Your Share?

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.

Life rarely follows a straight line. Divorce, widowhood, career changes and other major life events can quickly transform shared financial responsibilities into solo decision-making.

Nearly half of U.S. adults (46%) are single, according to the U.S. Census Bureau, and many are managing their finances on their own.

To better understand this growing segment of the population, Ameriprise Financial commissioned Flying Solo: Navigating Financial Autonomy, a study exploring how more than 3,000 single, divorced and widowed Americans approach their finances.

What we found was encouraging: Financially solo adults aren't just managing on their own, they're doing so with pride and intention. Eighty-five percent say they feel financially confident, while nine in 10 (91%) report a strong sense of accomplishment from managing their finances independently.

Their experiences offer valuable lessons for anyone, regardless of their relationship status, looking to build confidence, prepare for uncertainty and strengthen their long-term financial security.

Lesson No. 1: Don't wait for a life transition to understand your finances

One of the clearest lessons from financially solo adults is the importance of staying engaged in your finances.

When a major life event occurs, whether it's divorce, widowhood or a health challenge, financial responsibilities can shift quickly. Those best positioned to navigate these transitions are often the ones who already understand where financial accounts are held, how bills are paid, what insurance coverage exists and how key money decisions are made.

Even if you're currently part of a couple, both people should have a clear understanding of the household's financial picture. Knowing where things stand today can make an unexpected transition much easier to navigate tomorrow.

Lesson No. 2: Confidence doesn't eliminate the need to plan ahead

Many financially solo adults feel confident in how they're managing their finances, while still facing uncertainty when it comes to more complex, long-term decisions. More than eight in 10 (85%) worry about aging alone and the financial implications it could bring.

Their top concerns include running out of savings, affording long-term care and becoming a burden to loved ones. Rather than reflecting a lack of confidence, these concerns underscore the importance of thinking beyond immediate financial needs and preparing for what comes next.

Feeling good about your finances today isn't a reason to stop planning. In many cases, it's a reason to become even more intentional about the future. For many people, planning is about more than accumulating wealth. It's about preserving independence, creating flexibility and reducing uncertainty for yourself and the people you care about.

Lesson No. 3: Make sure your wishes are documented

When there isn't a built-in partner to share responsibilities or decision-making, long-term preparation becomes even more important.

Our research found many respondents have yet to complete key planning documents such as wills, healthcare directives and financial powers of attorney. Yet, these documents can be some of the most important tools available when unexpected situations arise.

Regardless of your relationship status, it's worth asking yourself a few important questions:

• Who would make financial decisions on your behalf if you couldn't?
• Who would speak for you in a medical situation?
• Have you documented your wishes?
• Would loved ones know where to find important information if they needed it?

Preparing for these scenarios in advance can provide clarity and peace of mind when they're needed most.

Lesson No. 4: Financial independence doesn't mean going it alone

Perhaps the biggest misconception our research challenged is the idea that financial independence means handling everything by yourself.

Many financially solo adults take pride in making their own financial decisions, but that doesn't mean they do so without support. Many value having a trusted sounding board to help navigate important decisions, think through tradeoffs and prepare for uncertainty.

Whether that support comes from family members, friends or a financial adviser, the lesson is the same: Seeking guidance doesn't diminish independence. In many cases, it strengthens it.

Among financially solo adults who work with an adviser, more than 80% say professional advice increases their confidence about the future. A trusted financial adviser can help bring structure to complex decisions and create a plan that aligns current priorities with long-term goals.

Life can change quickly, often when we least expect it. Whether you're managing finances on your own today or sharing responsibilities with a partner, the lessons financially solo adults have learned about preparation and long-term planning can help build greater confidence, resilience and peace of mind for whatever comes next.

Related Content

• Why Single Retirees Have It Better Than You Think
• Is Lifestyle Creep Delaying Your Retirement Timeline? Here's How to Enjoy Life Now Without Paying for It Later, From a Financial Planner
• A 5-Step Plan for Parents of Children With Special Needs, From a Financial Planner
• From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every Age
• Give Now or Leave an Inheritance? How to Balance the Options

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 1989, Honey, I Shrunk the Kids introduced moviegoers to Wayne Szalinski, an absent-minded inventor whose experimental shrinking machine accidentally reduced his children to a fraction of their normal size.

More than three decades later, many Americans may feel as though someone has aimed a similar machine at their checkbooks. The culprit, of course, is inflation.

If you've bought groceries, paid an insurance bill, eaten at a restaurant, filled your gas tank or written a tuition check recently, you don't need an economist to tell you that things cost considerably more than they did five or six years ago.

Consider what happened during and after the COVID-19 pandemic. Massive fiscal and monetary stimulus, supply-chain disruptions, labor shortages and pent-up consumer demand combined to create the highest inflation America had experienced in four decades.

For much of 2021, government and Federal Reserve officials characterized the surge in inflation as "transitory," expecting the rate of inflation to return toward normal relatively quickly. But by June 2022, the Consumer Price Index had risen 9.1% over the previous year.

While inflation has subsequently declined significantly, that doesn't mean prices have gone back to where they started.

Feeling the squeeze

Since early 2020, consumer prices have risen roughly 30%. That doesn't mean everything costs exactly 30% more. Some prices have risen much more, others less. But collectively, the purchasing power of a dollar has declined substantially.

On average, an item that cost $100 in early 2020 would cost roughly $130 today if its price rose in line with overall inflation. That helps explain why many Americans remain frustrated about the economy even though inflation has fallen dramatically from its 9.1% peak in June 2022.

The distinction between high inflation and high prices is important.

Inflation measures how quickly prices are rising. When inflation declines, prices generally don't return to where they were before. They simply rise more slowly. Think of a car traveling 90 miles per hour that slows to 30. It's still moving forward, just not nearly as fast.

Prices work much the same way.

And that means two things can be true at once: Inflation can improve significantly while consumers still feel squeezed by prices that remain substantially higher than they were several years ago.

Why even modest inflation hurts retirees

But for investors, particularly those approaching or living in retirement, there is an even more important lesson. Forget 9% inflation for a moment. Let's talk about 3%.

Three percent inflation doesn't sound particularly frightening. It certainly doesn't generate the headlines that 9% inflation does. But over a long retirement, seemingly modest inflation can quietly become one of the biggest threats to financial security.

Using the Rule of 72, an inflation rate of 3% would roughly double prices every 24 years. Imagine retiring at age 62 and living until age 86. That's 24 years. If inflation averaged 3% throughout your retirement, something costing $100 when you retired could cost roughly $200 near the end of your life.

Now apply that to a retirement lifestyle.

Suppose a newly retired couple needs $80,000 annually to maintain their lifestyle. At 3% inflation, maintaining approximately that same purchasing power 24 years later could require something approaching $160,000 annually.

No pandemic required. No 9% inflation. No oil shock. Just 3% inflation quietly compounding year after year.

That's why one of the biggest mistakes retirees can make is believing that retirement automatically means their investments should become extremely conservative.

Certainly, reducing investment risk as we age can make sense. Someone who is 70 probably shouldn't invest exactly as they did at 40. Retirement portfolios generally need appropriate reserves, income-producing investments and enough stability to help fund spending during difficult markets.

But becoming too conservative can introduce purchasing-power risk. A portfolio can appear safe on a statement while gradually losing its ability to support the lifestyle it was designed to fund.

I sometimes describe this as "going broke safely."

You can avoid much of the day-to-day volatility of the stock market by holding predominantly cash and conservative fixed-income investments. But if those assets fail to produce returns that keep pace with inflation, taxes and withdrawals over several decades, the apparent safety can become its own form of risk.

That's why retirement planning isn't simply about eliminating volatility. It is about balancing multiple risks. Market risk matters. So does inflation risk. Longevity risk matters too.

Today's retirees face an additional challenge because many may spend 20, 25 or even 30 years in retirement. A 30-year retirement isn't a short-term financial event. It is an investing lifetime of its own.

How to prepare

That means a well-designed retirement portfolio may still need meaningful exposure to growth investments, even after the paychecks stop. The appropriate balance will differ for every investor. Spending needs, Social Security, pensions, savings, taxes, risk tolerance, health and longevity expectations all matter. There is no single allocation that works for everyone.

But there is one principle that applies broadly: Retirement income should be planned in purchasing-power terms, not simply dollar terms. Receiving the same $80,000 of income 20 years from now may feel comforting on paper. But what matters is what those dollars will buy.

That may be the most important lesson from the inflation experience of the past several years. Nine percent inflation gets our attention because we can see and feel it immediately.

Three percent inflation is easier to ignore. But over a long retirement, 3% inflation quietly compounds.

And if your financial plan doesn't account for it, you may start looking around for Wayne Szalinski after discovering that someone, or something, has shrunk your checkbook.

Related Content

• How Inflation Affects Your Finances and How to Stay Ahead
• My Favorite Product Never Flies Off the Shelves, But It's Constantly Getting Pricier. Why Is That?
• The Goods That Get More Expensive as Oil Prices Rise
• Running on Empty: Why Your Retirement Plan Might Be Closer to E Than You Think
• When Will Bonds Be Loved? What the Longest Bond Bear Market in History Can Teach Investors

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 midterm election season has delivered a live demonstration of the market volatility that can emerge when investors trade elections.

The day after Democrats won control of both the House and Senate, the Dow jumped 3%, its best post-midterm day since 1982. A day later, stocks plummeted, and semiconductors plunged more than 12%, their worst day since the COVID-19 crash.

The volatility playing out in markets is not particularly abnormal, for election seasons are often erratic. In 2020, stocks posted their worst week since the March sell-off of that year the week before the election, then their best election week since 1932.

In 2022's midterm season, stocks rose before the vote, plummeted after, then rallied hard to end the week. Stocks nerves going into the 2024 election also proved fleeting, with the market staging a historically strong surge second only to the 2020 rally in the week after the election.

Investors appear to be once again falling into what has become a common pattern of allowing politics to spook their portfolio strategy, despite the fact that in all of those recent cases, investor nerves around elections proved unsupported.

A positive outlook

Stocks were up at least 15% in the year after each of the last three elections. Probabilities favor a positive outlook in general — stocks have risen in the year after elections nearly 75% of the time since 1928. Likewise, U.S. stocks tend to rise regardless of which party holds the White House or how Congress is split.

History shows sitting out of the market while one party or the other is in power is an irrational strategy, yet investors seem continually compelled to base portfolio decisions on politics.

By the end of 2024, $100 invested in the S&P 500 at the end of WWII grew to about $37,000, but if that same $100 was invested only when a Republican president was in the White House, it grew to merely $1,000. If invested only when a Democrat led the country, it rose to just $4,000.

Either way, partisan investors would have missed out on an enormous gain by investing based on politics rather than simply staying the course.

Thus, it is worth asking the question: Why, given a lack of evidence to support the notion that political change will somehow dismantle bull markets in stocks, do investors shift portfolios so much around elections?

Why elections make us want to sell stocks

The unusual volatility around elections can be largely explained by investors' fear that losses may emerge from political change. There is no evidence to support the notion that politics determine returns, but unfortunately, politics can trigger fears that often overwhelm facts and directly impact investing behavior.

Republicans and Democrats alike suggest they will shepherd markets toward better returns while the opposing party is doomed to fail, creating a fear of losses in the investing public.

Politicians, particularly those in the party that opposes the one in power, also promise an immense amount of change ahead, some of which sparks additional fear of losses.

Humans are extremely averse to loss, and the fear of it creates irrational investing behavior. Economists have shown that we hate losing money even more than we like gaining it.

We irrationally weigh our fear of loss more heavily than our desire for gains, and even though the probabilities favor staying invested, we often look to sell. This "loss aversion" is a cornerstone of Daniel Kahneman and Amos Tversky's prospect theory, which estimates that losses weigh on us roughly twice as much as equivalent gains.

Worse, other behavioral biases make us prone to selling at precisely the wrong time — in the midst of the market's relatively unusual declining phases.

The behavioral mistakes that emerge

Election weeks are a perfect storm for behavioral mistakes like recency bias, which leads us to project the latest move far into the future. One large drop or a series of volatile days starts to feel like the beginning of a crash.

Intriguingly, market history shows the opposite is more likely. High volatility tends to cluster around bottoms in equities rather than at tops.

Likewise, the availability heuristic makes vivid, constantly repeated news seem more important and more likely than it really is. Thus, when politicians repeat the message that markets are doomed under the leadership of their adversaries, investors can't help but think it true.

Finally, herding pulls us toward doing what everyone else seems to be doing. We naturally assume the crowd knows more than we do.

All of these behavioral biases were on display when stocks tanked on November 5. Trading volume hit 26.9 billion shares, well above the 20-day average of 17.7 billion, and decliners outnumbered advancers by more than 6 to 1.

That is the very definition of a crowd heading for the exit, presuming political promises were likely to become policy reality. Investors who followed the herd sold into the panic, only to subsequently see much of the damage reversed.

Politicians campaign on a dizzying number of ideas that only sometimes become policy realities, and the policies that ultimately do emerge from political change usually emerge in highly diluted form.

As a result, positioning a portfolio on the idea that campaign promises will become policies can be fraught with peril. This is an especially poignant point to consider when assessing the policy potential of promises made during midterm political races, given no single member of Congress controls whether a bill is signed into law.

Actual policy is important to understand and assess for its potential impact on portfolios. Politics are not.

Tune out the noise, stay with the plan, watch the policies

While political promises may indeed become policy realities in the year ahead, the bar for selling stocks at this point in the cycle is particularly high. Selling around a midterm can mean stepping out right before the best part of the four-year presidential cycle.

Yale Hirsch, creator of the Stock Trader's Almanac, observed that the third year of a presidential term, the year after the midterm, tends to be the strongest.

Since 1931, third-year returns have averaged nearly 14%, vs just over 6% in the other three years. The party mix hasn't spoiled that pattern. A Republican president with a mixed Congress has averaged 23.1% in year three and, with a Democratic Congress, 15.6%.

Those samples are small (two and seven instances), so they are no trading signal. But they argue strongly against the instinct to sell purely because of a change in party mix in Washington.

Election cycles are exciting times for citizens of democracies, but they are also emotionally charged, and they breed irrational behavior among investors.

Sentiment toward the economy and markets can shift dramatically with elections, but it should not spark a dramatic shift in portfolio strategy unless politics become policies that truly start to impact the outlook for economic and earnings growth.

The disciplined path is simple: Stay invested, judge policies by their effect on earnings and the economy and resist the urge to act on fear of political change.

Don't let politics haunt your portfolio.

Related Content

• 4 Historical Patterns in the Markets for Investors to Know
• 4 Technical Tools to Read Stock Market Charts Like the Pros
• Market Volatility Tests More Than Just Portfolios — It Tests Soon-to-Be Retirees' Nerves: Are You Passing?
• These 5 Steps Can Help You Keep Your Head When Market Volatility Causes Others to Lose Theirs
• When Markets Are Jumpy: A Financial Planner Explains How to Stay Grounded

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.

Artificial intelligence (AI) is no longer just a lab project or a Wall Street edge. It's the math and modeling behind the personal finance tools many of us now carry on our phones.

AI finds patterns in your financial data. It learns from your habits. And it suggests next steps that fit your life. As consumer apps have gotten better at secure bank connections and automated categorization, these capabilities have moved from niche to normal.

However, budgets are under pressure. Prices have climbed in recent years, and tracking where your money goes can mean the difference between feeling stuck and moving forward.

Making a plan and sticking to it is the foundation of financial well-being. Here's how AI can make that plan easier to follow day-to-day.

The use of AI tools for handling finances

AI-driven budgeting tools generally fall into a few buckets. Many apps blend features across them. Think of:

• Automated trackers that categorize your transactions and show you where your money actually goes, without you lifting a finger
• Predictive tools that forecast cash flow and potential shortfalls so you're not surprised two days before payday
• Smart savers that analyze your balance and move small amounts into savings automatically when you can afford it.
• Conversational assistants that answer questions like "What did I spend on dining last month?" in plain English

The core differences from a traditional spreadsheet? Speed, pattern-spotting, personalization.

A range of approaches in the market

• YNAB (You Need A Budget) is beloved for its "give every dollar a job" method and strong rule-based automation. While it's not the most AI-heavy option, its import and categorization flow can feel smart once you train it to your routine.
• Digit's autosaving technology now lives inside the Oportun app. It analyzes your spending and moves small amounts to savings when you can spare it.

Newer options like Monarch Money, Copilot Money, Rocket Money and Cleo put machine learning and conversational AI front and center for categorization. The even include insights and nudges.

For budgeting and expense tracking

When the data cleans and organizes itself, you can focus on what matters: Setting goals, weighing tradeoffs, making decisions. The day-to-day upside of AI tends to show up in a few clear ways.

Automatic categorization and dashboards make it easier to see what's happening this week, not just what happened last month. If the app expects a spike in utilities next month or notices your grocery bill creeping up, you hear about it with time to adapt.

Learn from Jeffrey Zhou, CEO and founder of Fig Loans, who sees this kind of forward-looking analysis as an important part of smarter financial management.

"AI can help people turn everyday financial data into useful signals," he says. "Rather than simply showing where your money went, these tools can highlight spending patterns and anticipate potential cash-flow gaps. They give people an opportunity to adjust before a small issue becomes a bigger financial problem."

AI tools surface the two or three categories that matter most to you and skip the noise. You're able to act on the insight rather than feeling overwhelmed. Gentle nudges, such as "your streaming stack is up $25 this quarter," can be enough to spark a quick trim that sticks.

Timely, well-designed digital nudges can improve savings rates and on-time payments across different populations.

For financial decision-making

The same data muscle that simplifies a budget also powers portfolio tools and goal planning.

Robo-advisers use algorithms to match you to a diversified portfolio. They automatically rebalance and keep taxes in mind. Useful if you'd rather not manage the moving pieces yourself. When these systems surface options in plain language, you get a cleaner set of choices.

AI-driven optimization first proved itself in manufacturing, where systems learn to predict bottlenecks and streamline processes.

Gavin Yi, CEO and founder of Yijin Solution, brings a data-driven perspective from manufacturing and industrial engineering. He notes how those same predictive principles now apply to personal financial planning.

"AI can help turn complex financial information into clearer options," he says. "When you can see patterns and understand the potential impact of a decision before acting, you're in a better position to make a thoughtful choice … rather than simply reacting to what's happening in the moment."

A few examples:

• A freelancer with inconsistent income uses a tool that forecasts quarterly tax needs and sets micro-withdrawals after each client payment. They don't feel the hit all at once, and April is less stressful.
• A family eyeing a home down payment turns on autosave for months with lower spending and gets alerts when they drift. They reach the target two months faster than expected, mostly because the app caught subscription creep and redirected the savings. These are ordinary wins that add up.

How to start with AI budgeting and decision-making

• Pick a tool that matches your goal. Want to stop overspending? Choose a strong categorizer with alerts. Want to build savings painlessly? Try an autosaver. Prefer a strict method? A rules-based tool might fit.
• Connect only the accounts you need. Start with checking and then your primary credit card. Add more once you're comfortable. For example, set two or three goals, such as pay off a card by December, save $1,000 for emergencies or cap dining out at $250 a month.
• Turn on alerts you'll actually read. Too many pings and you'll tune them out. Review weekly. Ten minutes on Sunday is usually enough: Approve categories, scan trends, tweak goals, for instance.

The real payoff comes from checking in regularly and refining your categories. Likewise, it comes from letting the system grow smarter as your habits do.

If you prefer a checklist before you connect anything, the CFPB's resource on personal financial data rights is a good sanity check. Your bank's built-in alerts for balance thresholds and large transactions also work as a backstop.

Making wise budget decisions

Budgets work best when they're simple to maintain and quick to interpret. AI helps on both counts. It automates the grunt work. It also spots trends early. And it nudges you toward the goals you care about.

Pair that with a clear understanding of privacy and a little human judgment, and you've got a setup that can adapt as life changes.

Stay curious about new tools as they roll out. Skim reputable sources for updates on data rights and security. Then run your own experiment: Try one AI-powered budgeting tool for a month, review the insights it surfaces and keep what helps.

Ultimately, that small routine can turn into a wiser way to make money decisions.

Related Content

• Finances Need a Steer? 5 Ways AI Can Take the Wheel
• 7 of the Best Budgeting Apps for 2026
• We Gave AI Chatbots 5 Financial Challenges. Here's How They Did
• How to Break the 'Just One Small Purchase' Cycle: Here's Your Practical Guide to Mindful Spending
• Are Digital Payments Making You Spend Too Much, Too Fast? These Simple 'Speed Bumps' Will Help You Slow Your Roll

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 education is having a moment.

Across the country, policymakers, educators, families and the private sector are paying greater attention to preparing young people to make informed financial decisions.

Thirty-nine states now require personal finance coursework for high school graduation — remarkable progress toward making financial education a fundamental part of growing up.

At the same time, new initiatives are creating opportunities for young Americans to begin building wealth earlier in life. Trump Accounts, for example, provide a new type of tax-advantaged investment account for children. Eligible children born between 2025 and 2028 can receive a one-time $1,000 federal contribution, creating another opportunity to introduce investing and long-term wealth building at an early age.

This is important momentum. But it also raises a larger question: How do we make sure young people don't simply learn about money, but learn what to do with it?

Sparking a conversation

For many young people, that education may have started this summer with their first experience earning money. Whether through a part-time job or an internship, there is something different about that first paycheck. Suddenly, the money isn't someone else's — it's theirs. They earned it. And now they must decide what to do with it.

Spend it? Save it? Invest some of it? Those are simple questions, but they are the start of financial education.

SIFMA Foundation's Building Financial Futures survey found that while nine in 10 parents believe their children should learn how to invest, only two in 10 feel confident in their own ability to teach the basics.

The good news is that parents don't need to be financial experts to get started. Some of the best financial lessons can begin with ordinary conversations — and a little help from educational resources that make learning about money informative and fun for the whole family.

Opportunities to talk about money habits, saving and investing are everywhere. A trip to the store can become a conversation about wants and needs, choices and trade-offs or simply why things cost what they do.

A favorite sneaker, snack or restaurant can prompt a discussion about the company behind it and what it means to own a piece of a growing business. Parents can ask their children a simple question: If someone gave you $50 today, what would you do with it?

There isn't necessarily a right answer. The value is in sparking a conversation.

These everyday moments can also introduce one of the most powerful principles of investing: Time. Adults sometimes assume children will struggle with investing concepts, but young people already understand patience and delayed gratification. They know that becoming a better athlete, musician or student doesn't happen overnight. You practice, improve and build on that progress.

Parents can reinforce that lesson by recognizing patience, helping lay the foundation for financially savvy decision-making later in life.

Let kids get hands on

Investing can work the same way. Small, consistent actions taken early can have a meaningful impact over time. Giving young people hands-on experience with saving and investing can make concepts such as compound growth, diversification and long-term investing tangible rather than abstract.

That is also part of the opportunity presented by Trump Accounts. These accounts become much more meaningful when young people understand what's happening inside them — what it means to own investments, why markets rise and fall, and how time and compounding can affect wealth over decades.

Just as important is understanding that turning 18 doesn't mean an investment account suddenly becomes spending money. After the growth period ends, Trump Accounts generally become subject to traditional IRA rules, and taking money out early for non-qualifying expenditures can result in penalties and carry tax consequences.

Helping young people understand why money invested for the long term may be more valuable left to grow is itself an important financial lesson.

The goal is to make young people comfortable asking questions, weighing choices and thinking beyond the next purchase. Financial confidence develops through repeated opportunities to make decisions, learn from the results and build knowledge. And while schools have an increasingly important role to play, learning can continue at home.

That is one reason the SIFMA Foundation created Family InvestQuest, a free online experience that gives families a way to explore these ideas together. Parents and children can see how starting early, saving consistently and allowing earnings to compound can help even relatively small amounts grow over time.

Family InvestQuest also features short videos that make financial concepts fun, engaging and easy to understand, giving families another way to learn together without making financial education feel like homework.

Financial education doesn't have to begin and end with a textbook or lesson plan. In fact, some of the most memorable lessons may start with parents asking questions around the kitchen table: Why does diversification matter? Why do markets sometimes decline? Why does starting early matter so much?

Young people don't need to know every answer. Neither do their parents. Learning how to explore those questions together — seeking reliable information, considering different choices and thinking about the long term — is itself an important financial skill.

Making progress

Initiatives such as Economic Education Month give us an opportunity to recognize how far we've come — and how much this work still matters. In 2022, just 12 states required students to take a personal finance course to graduate from high school. Today, 39 do, giving more than 13 million students access to financial education.

At the same time, nearly half of young adults ages 18 to 29 received help from someone outside their household to pay at least one expense last year, according to the 2025 Survey of Household Economics and Decisionmaking — a reminder of the real financial decisions young people face.

Now we need to make the most of that momentum. The next time a young person gets a paycheck, birthday money or an unexpected $50, ask what they plan to do with it. You may hear "new sneakers." That's OK. The important thing is that somewhere along the way, "save some" or "invest some" becomes part of the answer, too.

Related Content

• 3 Ages, 3 Money Lessons: A Parent's Guide to Raising Financially Savvy Kids
• I'm a Financial Literacy Expert: Schools Can Teach Kids About Money, But Guess Who They Learn From the Most?
• What Financial Lessons Are Your Kids Learning by Watching You? 5 Ways to Help Them Develop Healthy Money Habits
• A Crisis That's Too Big to Ignore: Financial Illiteracy Puts Our Nation at Risk
• To Close the Wealth Gap, the Starting Line Matters More Than the Finish Line: Teach Your Children Well

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.

Wise investing calls for diversifying your portfolio, so that's what people try to do.

They spread their money among several stocks. They add bonds because bonds are supposed to be the "safe" part. They toss in mutual funds and exchange-traded funds. For a little principal protection, they may include a CD and a savings account. And then they relax because they think diversification has been achieved.

But it's often an illusion.

Take a closer look at those investments and you'll see they have something in common. Other than the CD and savings account, they're all bought and sold in the same markets, priced by the same market forces and exposed to the same fundamental risk. Bonds may feel safer than stocks, but they are still market investments, with no guarantee of principal.

2022 proved the point. The S&P 500 lost roughly 18% that year, and the broad U.S. bond market fell about 13%, one of its worst years on record. Investors who counted on bonds to cushion a stock decline watched both fall together.

True diversification, in its most meaningful sense, requires assets that are not highly correlated. In other words, assets whose values do not rise and fall together in response to the same conditions.

Fortunately, there is a way to pursue true diversification: Spread your investments among three worlds — the Market World, the Protection World and the Alternative World. At our firm, we refer to this trio of options as the Triversified™ Approach.

Investing's necessary trade-off

Every investment balances three attributes. The first is reward — the potential for growth and income. The second is safety — the protection of principal and predictability of outcomes. The third is liquidity — how quickly an investment can be converted to cash without a meaningful loss in value.

No single investment can maximize all three. Trade-offs are inevitable, but you want those trade-offs to be intentional, not happenstance.

How the 'three worlds' work

Each world emphasizes two of those attributes and gives up something on the third. That's what allows them, as a group, to do what none can do alone.

The Market World. This prioritizes reward and liquidity. Investors have access to the universe of publicly traded securities: Stocks, bonds, ETFs, mutual funds and more. They can buy and sell on any trading day, and the potential for growth over the long term is significant.

What the Market World can't offer is safety in any guaranteed sense. For stocks and bonds alike, principal is always at risk and returns are never promised.

The Protection World. This prioritizes safety, along with varying degrees of liquidity. It includes FDIC-insured CDs and savings or money market deposit accounts, as well as insurance-based instruments such as annuities and certain life insurance structures.

Depending on the tool, principal can be protected by FDIC insurance or by contract, and some annuities can provide principal protection and income for life regardless of market conditions. Insurance guarantees are backed by the claims-paying ability of the issuing company.

What the Protection World demands in return is a ceiling on reward, and in some cases, limitations on liquidity.

The Alternative World. This prioritizes reward and stability. Alternative investments, such as private credit, private real estate, structured income strategies and similar instruments, operate largely outside the rhythms of public markets.

Because they aren't bought and sold on an exchange, their values tend not to swing daily with the headlines the way the market does. Their limited liquidity is precisely what makes that stability possible.

The trade-off is access to your money. Redemptions may be limited to set windows, and these investments carry their own risks, including credit risk and the potential for loss.

Breaking free of the illusion

None of these worlds is sufficient on its own.

The Market World without the Protection World leaves the investor exposed to unpredictable sequence of returns risk and without an income floor.

The Protection World without the Market World sacrifices the long-term growth that a multi-decade retirement requires.

Either world without the Alternative World leaves meaningful yield potential and higher volatility on the table.

Together, the three worlds form a more complete investment architecture, one in which every dollar has a purpose and every trade-off is intentional.

No approach can eliminate risk. But a portfolio built this way is designed to help pursue growth, generate more reliable income and protect what matters most across a wider range of economic conditions than any single world can on its own.

A successful retirement isn't achieved by finding the best stock, timing the market perfectly or discovering some market secret that few others know about. It's achieved by understanding the rules that govern how capital behaves across all three worlds and building a portfolio accordingly; one that is truly diversified, and not an illusion at all.

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.

Related Content

• The 5% Diversification Rule: Your Secret Weapon for Smarter Investing
• Investing Lessons From 'The Three Little Pigs': Ways to Help Build a Portfolio the Big Bad Wolf Can't Blow Down
• Is Your Portfolio Overweight? How to Rebalance Your Way Back to Diversification
• I'm an Investment Adviser: This Is the Tax Diversification Strategy You Need for Your Retirement Income
• 11 Stock Picks Beyond the Magnificent 7

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.

Every winter, the mail brings a 1099-DIV. It reports dividends and takes about four seconds to understand.

Another "DIV," the one that can shape a family's next decade, never arrives in an envelope. It shows up in a phone call that begins, "Something happened to dad."

That DIV is dignity, identity and vulnerability — an acronym I've developed over decades advising families through some of their most sensitive planning moments. It is a simple framework I regularly use to help families move these conversations from crisis management to thoughtful preparation.

In fact, I have rarely seen an estate plan fail because the documents were poorly drafted. I have often seen one fail because no one had the hard conversation while mom or dad was still fully in charge.

Documents don't fail families. Timing does.

You can use the same framework to help aging family members preserve their sense of autonomy. I'd urge you to address each part before a crisis forces the conversation.

Dignity

Dignity requires two conversations. The first should happen when parents are around 65 to 70 and should feel like basic housekeeping:

• Who is named under the power of attorney?
• Who is the healthcare agent or successor trustee?
• Are those people still alive, willing and right for the role?

Framed this way, the discussion is routine maintenance, like updating insurance coverage or re-registering a car. Framed as decline, it becomes a referendum on whether dad is slipping.

The second conversation, about a parent actually stepping back, is harder. It should be triggered by observed changes, not a birthday.

Families that had the first conversation early have a framework for the second. Those that skipped it may find themselves improvising in a hospital corridor.

Dignity during the second conversation is largely a matter of specificity. "We noticed the electric bill was paid three times in March" invites a shared solution. "We don't think you can handle this anymore" invites a fight.

Capacity isn't an on-off switch. It's task specific and often diminishes over time. A parent may no longer manage a complex portfolio but remain fully capable of deciding where to live, who visits and what medical care to receive.

A capacity evaluation, framed properly, is not a family giving up on a parent. It protects the parent's stated wishes from later challenge by someone who preferred a different outcome.

The transition does not have to happen all at once. Start with transaction alerts or view-only account access, then move to help with bill paying and transfer formal authority only when the facts require it. The least restrictive assistance protects the parent without ignoring real changes.

One effective approach is a low-key annual roles review. Because it is routine and applies to everyone, an eventual transition can feel more administrative than personal.

But timing is only part of it. For many parents, authority is also part of identity.

Identity

This is the part families forget. To an adult child, serving as trustee may look like paperwork. To the parent who built the business that funded the trust, signature authority may mean relevance.

Ask someone to surrender it, and the conversation is no longer about administration. You're asking that person to accept a smaller version of themselves — and to alter their perceived identity.

I have watched this play out more than once. In one family, for example, a manufacturing founder deflected succession conversations for years. We eventually stopped describing the trustee transition as "stepping down" and began calling it a promotion to chair.

The founder kept an honorary seat at the table, remained involved in the family's philanthropy and relationships, and allowed a successor trustee to handle discretionary distributions.

A respectful new role preserves identity while transferring responsibility. The arrangement must be genuine and carefully structured. A parent who retains too much control over transferred assets may create unintended tax consequences. Give your parent a title, a seat and a voice, but ask your estate attorney to define which powers stay and which go.

Even when the parent accepts a transition, the harder conflict may be among the adult children. Siblings often disagree about whether mom "still has it," with each hearing something different in the same phone call.

That is why vulnerability planning must protect the parent from outsiders and protect the family from avoidable uncertainty.

Vulnerability

Vulnerability runs in two directions. One comes from people who may take advantage of the parent. The other comes from documents so vague or rigid that the family cannot act when necessary.

Financial exploitation is the risk most families expect. It is usually closer to home than they think. The person exploiting a parent is more often someone with a key to the house than a stranger overseas.

You can improve oversight without transferring control:

• Name a trusted contact at each financial institution
• Grant a trusted second person view-only access to accounts
• Turn on transaction alerts and set them low enough to be useful
• Consider requiring a second signature above an agreed dollar amount
• Consolidate stray accounts so there is less to monitor

The legal exposure is the one families tend to discover too late. A well-drafted trust or power of attorney should contain clear, objective triggers for when a successor trustee may act.

Here's an example of why that matters. One matriarch's trust required two independent physicians to certify her incapacity before a successor trustee could take over. When her children disagreed sharply about her condition, the document made the call. No one filed for guardianship, and the siblings still speak.

Another document, drafted with more precision, required certification by a physician "board-certified in the illness causing the incapacity." The parent was later diagnosed with Alzheimer's disease, but physicians are not board-certified in Alzheimer's itself. They may be certified in neurology, geriatric medicine or psychiatry. The clause was well-intentioned but impossible to satisfy. Ultimately, the family needed a court proceeding to answer the question the document was supposed to resolve.

Functional standards travel better than clever ones. Rather than anticipating every diagnosis, a document might call for a physician with relevant expertise to evaluate the incapacity involved.

What families can do now

Read the incapacity clause in your parent's trust or power of attorney out loud.

Can you identify who makes the decision, what standard applies and how the determination must be documented? If not, the clause deserves another look.

Then take four practical steps:

1. Confirm that the named agents and successors remain appropriate

2. Add trusted contacts to financial accounts

3. Put an annual roles review on the family calendar

4. Ask not only what a parent may need to give up, but what the parent wants to keep

Technical documents matter. But in families, human issues often decide whether those documents work quietly or end up before a judge.

The best feature of this DIV is that it is declared, not received. A family gets to choose when the conversation begins.

Handled early, it may cost an awkward afternoon. Handled late, it can cost much more.

The author takes sole responsibility for the views expressed herein, and these views do not necessarily reflect the views of the author's employer or any other organization, group, or individual.

Related Content

• The Holidays Are a Time for Sharing (Your Wishes)
• Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
• How to Plan Ahead After a Loved One's Dementia Diagnosis
• A Rare Moment in Family Tax Planning Has Arrived: 3 Ways to Seize It
• Smiley Faces in Serious Places: Emoji Use Pops Up in Legal Battles Over Inheritances

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 a fan of Bravo or have watched The Real Housewives of New York, you likely know Sonja Morgan's story.

Once married to financier John Adams Morgan, a great-grandson of J.P. Morgan, she went through a high-profile divorce and has spent years navigating life on her own terms as a business owner and public figure.

It is easy to focus on the headlines, but Sonja's situation reflects a much more common reality. Divorce, especially after a high-asset marriage, does not simplify a financial life. It often makes it significantly more complex.

There may be substantial assets on paper, but those assets can come with liquidity challenges, ongoing obligations and the need to build a new financial identity.

That transition is not just about dividing assets. It is about understanding them, managing them and making independent decisions about what comes next.

As an attorney and financial planning strategist at Carson Group, when I work with clients going through a divorce like this, one of the first things we clarify is what they actually have. That sounds simple enough, but it is often far more complex than it sounds.

Figuring out how the pieces fit

Financial information may be concentrated with one partner or spread across multiple institutions. After a divorce, someone may walk away with a mix of investment accounts, real estate, business interests and support payments — but without a clear sense of how those pieces fit together.

Financial decisions may have been made jointly, delegated to one spouse or avoided altogether while the marriage remained intact. When that structure changes, everything can surface at once.

The first step is establishing a clean, accurate picture of the balance sheet. That means identifying which assets are liquid, which are not, how they are titled, their tax character and what ongoing costs or obligations come with them.

I have worked with clients who appear asset-rich on paper but are cash-constrained in practice because so much of their wealth is tied up in real estate or other illiquid investments.

This is where Sonja's story resonates. Maintaining a certain lifestyle after a divorce — especially one as fabulous as hers — can be one of the biggest challenges. She is not alone; I see this often. If the plan does not adjust, the gap between the former lifestyle and the new financial reality shows up very quickly in cash flow.

Risks of planning around assumptions

Another critical piece is understanding income. For many divorced clients, income shifts dramatically. Spousal support may change or end under the divorce agreement or applicable law.

There may also be hoped-for business income — toaster oven, anyone? — but a concept, prototype or promising launch is not the same as dependable cash flow. One of the biggest risks I see is building a plan around assumptions that may not hold over the long term.

This is also where I see one of the most common mistakes: Trying to maintain the prior lifestyle without adjusting the financial strategy to match the new reality.

Decisions are often delayed because they feel overwhelming, but delay can lead to overspending, poorly timed asset sales or unnecessary investment risk taken in an effort to generate income.

For people who are also business owners, like Sonja, there is another layer of complexity. Starting or running a business after a divorce can be empowering, but it also introduces risk.

Income is rarely consistent, and personal financial stability can become too closely tied to business performance.

Separate accounts, appropriate entity formalities, adequate insurance and careful attention to personal guarantees can help create meaningful boundaries between personal assets and business operations.

A powerful and empowering shift

At the same time, this can be a period of significant opportunity. For many people, it is the first time they are making fully independent financial decisions.

With the right structure, that can be incredibly powerful. A large part of the adviser's role is to create a framework — and a place — where decisions can be made thoughtfully rather than reactively.

We focus on building a plan that reflects the client's priorities and the life they want moving forward. That includes revisiting estate planning, powers of attorney and beneficiary designations immediately after a divorce.

A divorce decree does not necessarily rewrite every estate document or account designation, and the rules vary, so these updates should be coordinated with legal and tax advisers.

The goal is to ensure that assets pass according to current priorities, not outdated ones.

Building a new long-term plan

Women coming out of a divorce may also be navigating a meaningful shift in long-term financial security. That makes it especially important to build a plan for longevity, stability and flexibility — not simply for the next year or two.

What is often overlooked in conversations about divorce is how much clarity and confidence can eventually come from it. The transition can be difficult, but it is also a chance to create a financial plan fully aligned with one person's goals, values and priorities.

Sonja gets something important right: Rebuilding can be messy, public and imperfect and still lead to a new chapter.

The cautionary side of her story is that assets, lifestyle and entrepreneurial optimism are not substitutes for sustainable cash flow.

Her circumstances may be amplified to highlight the drama for television, but the underlying work is familiar — understand what you have, make deliberate decisions and turn it into a financial life that can last.

Related Content

• What RHONY's Dorinda Medley Can Teach Advisers About Sudden Financial Responsibility
• Five Divorce Settlement Blind Spots: An Expert's Guide to What You Can't Afford to Miss
• How to Build a Financial Plan Without Drowning in Advice
• Seven Financial Mistakes to Avoid in Divorce
• How Retirement Plans Are Divided in Divorce

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 haven't utilized any tax strategies in 2026, the clock is ticking to lower your tax liability before it strikes midnight. Once the new year hits, many of your tax-saving moves will no longer apply to 2026's tax return.

While taxes are unavoidable, retirees who are utilizing their lifelong savings and enjoying their golden years have unique opportunities to manage their money to benefit them both now and in the future.

While you still have time, it's important to evaluate your situation and determine where you can make meaningful tax moves to lower your tax liability.

Roth conversions

Roth conversions should be a key part of your end-of-year tax strategy. Roth conversions help convert tax-deferred dollars from a traditional retirement plan to a tax-free Roth IRA account. The money you convert will count towards your taxable income for 2025. Those dollars will grow tax-free and can be withdrawn tax-free in retirement.

Whether to convert into a Roth depends on your unique situation, including your current tax bracket and the amount of withdrawals from tax-deferred accounts. This can be a useful tactic if you know you'll be in a higher tax bracket in the future, which could be new retirees who haven't started taking Social Security benefits or required minimum distributions (RMDs) from these accounts, which begin at age 73 or 75, depending on which year you were born.

In addition, tax rates might be increasing in the near future with the national debt climbing and a potential Social Security shortfall on the horizon. It might make more sense to complete a Roth conversion while rates are still low to lock in today's tax rates, and enjoy the rest of your money's growth tax-free.

Tax-loss harvesting

While 2026 has been kind to our investments, that might mean you have a larger capital gains tax bill, which could be costly and dampen your return.

A common strategy to help mitigate these gains is to utilize tax-loss harvesting. This is when you offset your investments that have performed well by selling other investments at a loss. These losses are written off on your return and lower your capital gains tax liability.

Once these stocks are sold, you can buy similar investments to maintain your market position. Capital losses can be deducted for up to $3,000 for joint filers, or $1,500 if filing separately.

As we approach the end of the year, monitor your investment performance and see if there's a way to maximize your return. We recommend evaluating your investments every quarter throughout the year so you can navigate the market's ups and downs and capitalize on the performance.

It's important to note that IRAs and 401(k)s don't apply to this strategy because these accounts aren't taxable.

Keep in mind that investing can be emotional. Consider working with a financial professional if you don't have the experience managing your investments to help you maintain a big-picture view of your finances and remove emotion from your financial decisions.

Charitable giving

The holidays are a fitting time to give back to the community, and it can be a benefit to both organizations in need and your finances.

Donations to IRS-qualified 501(c)3 charities are tax-deductible, which typically includes churches, schools, research centers and many other nonprofit organizations. Writing off donations can be deducted from your yearly taxable income, which might lower your tax bracket.

There are a few ways retirees can do this. First, those who are 70½ or older can make qualified charitable distributions (QCDs) up to $111,000 directly from their IRA in 2026. Distributions are pretax and can be used to meet your annual RMD.

They can also donate appreciated long-term securities, claiming a deduction for the full value of the stock without you or the charity paying taxes on the appreciation over time. This can be beneficial for stocks that have grown significantly over time, which can make for a hefty capital gains tax bill if sold.

To make donating easier, retirees can also open a donor-advised fund (DAF) with a specific charity, which operates like a charitable checking account. You can transfer your assets into the account, which is only to be used by the charity sponsoring the account, and you can claim an upfront write-off. The money is invested and continues to grow, potentially growing your impact.

One thing to consider before donating is that you must forego the standard deduction and itemize your deductions to take advantage of these tax benefits. The standard deduction is $32,200 in 2026.

Consider professional guidance

When we evaluate a client's tax plan, we take into account their entire financial picture to determine the best course of action. Often, this involves creating a multiyear plan as part of a comprehensive retirement strategy.

After you evaluate your tax moves in 2026 and head into the new year, I encourage you to create a long-term, flexible plan for future years. If this feels overwhelming, consider working with a financial planner who can help guide you in your decision-making.

Related Content

• Just Retired? This Could Be Your Once-in-a-Lifetime Opportunity to Lower Your Lifetime Taxes
• These 2 Strategies Can Help Smart Retirees Win at Tax Planning
• From an HSA to Healthy Habits: A Financial Consultant's Guide to Slashing Healthcare Costs in Retirement
• Retirement Location, Location, Location: Can Florida Be Beaten?
• Is That Really Your Grandkid Calling, or an AI Scam Trying to Rip You Off? 3 Tips to Protect Your Money

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.

Now that it's officially fall, I know that any morning I might step outside and feel that telltale chill in the air.

As a result, if I haven't checked my favorite weather app — maybe I'm too busy or just dreading the cold start — I might dress for my day assuming the coldest.

However, by noon, the sun's come out, it's very warm, and I'm sweating — wishing I had taken the time to prepare.

It's the same mindset required when it comes to knowing your tax rate.

You ask someone what they pay in taxes, and the answer is often something ranging from "None of your business" to "I don't know … one of the top brackets."

While technically this might be true, it's also incomplete. One of the most common misconceptions in tax planning is confusing your tax bracket with the actual rate of tax you pay.

Understanding the difference between your marginal tax rate, your effective tax rate and what contributes to the difference can help you make better financial decisions, evaluate planning opportunities more accurately and avoid unnecessary anxiety about moving into a higher tax bracket.

Your bracket is not your bill

The United States uses a progressive income tax system.

Rather than taxing all your income at a single rate, your income is divided into layers, with each taxed at a different rate. Your marginal tax rate is the rate applied to your last, or highest, dollar of taxable income. It tells you how much tax you'll pay on the next dollar you earn.

Many taxpayers mistakenly believe that once their income crosses into a higher bracket, all that income is taxed at a higher rate. Fortunately, that's not how the system works. Think of it like a staircase. As your income rises, each step is taxed at a different rate. You don't retax the lower steps at the highest rate.

How it works

Suppose the taxpayer has $200,000 of taxable income, and she falls into a 24% marginal tax bracket.

A common misunderstanding is that she pays 24% tax on the entire $200,000, resulting in a tax bill of $48,000.

But really, her tax calculation works progressively.

The first portion of taxable income is taxed at 10%, the next portion at 12%, the next at 22%, and only the portion that reaches the 24% bracket is taxed at 24%.

Let's take out any variables of deductions or credits and assume her total federal income tax liability is $31,000. Her effective tax rate would be 15.5% ($31,000 divided by $200,000 equals 15.5%). In other words, while our friend is in the 24% tax bracket, her average federal tax rate is only 15.5%.

This distinction is critical, because both numbers serve different purposes.

I recognize all this requires a little bit of math … a daunting prospect for any of us. It's a great reminder that creating a solid, personal plan with a financial adviser, accountant or an attorney is critical to making smart financial decisions about your own situation.

Why your effective tax rate matters

Your effective tax rate represents the average rate of tax paid across your taxable income and is generally a better indicator of your overall tax burden than your marginal rate.

To better illustrate that point, let's walk through how two taxpayers could both earn $200,000, but have significantly different effective tax rates — one taxpayer who receives most of his income from wages, while another receives a substantial amount from qualified dividends and long-term capital gains.

Since investment income might qualify for preferential tax treatment, Taxpayer No. 2 could have a much lower effective tax rate.

Another impact is the number and amount of deductions and credits that each taxpayer has — such as charitable contributions, mortgage interest, state and local tax deductions or child and education credits.

The result is two taxpayers with similar incomes who experience very different tax outcomes.

Which tax rate?

The answer depends on the decision you make.

Your marginal tax rate is often the more useful number when tax planning.

For example:

• Should you convert funds from a traditional IRA to a Roth IRA?
• Should you make an additional charitable contribution this year?
• Does tax-loss harvesting make sense?
• What could a bonus or additional income from consulting cost you?

In each situation, the relevant question is how much tax applies to the next dollar of income — and that is your marginal rate.

Your effective tax rate, on the other hand, is often more useful for budgeting and overall financial planning. It provides a clearer picture of what percentage of your income is being paid in tax and how much remains available for spending, saving, investing or giving.

The bottom line

These are all valuable numbers, but they answer different questions.

If you've never calculated your effective tax rate, take a few minutes to review last year's tax return. You might discover that your actual tax burden is considerably lower than your headline tax bracket suggests. That understanding can lead to smarter decisions about earning, investing, saving and planning for the future.

Now, when I'm leaving the house every morning, I'm thinking a little differently about my attire, planning for the immediate need of the cool morning and the warmth of later in the day.

Thinking about football games, pumpkin drinks and my tax rates!

Related Content

• 2026 Tax Brackets and Federal Income Tax Rates: What New IRS Thresholds Mean for Your Tax Bill
• The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half
• I'm Embarrassed to Ask: What Is a Life Insurance Trust?
• Tending to Your Estate Plan This Spring? Don't Forget to Give Your IRA Some Love
• From Spare Change to a Lasting Legacy: Does Your Charitable Giving Need an Overhaul?

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.

Changing jobs can improve both your financial position and your quality of life, but making the most of a new opportunity involves more than a single decision.

It's a series of decisions and tasks that unfold before, during and after the move.

Evaluating compensation, choosing a departure date, preserving benefits and coordinating retirement plans, taxes and health coverage all require attention.

Many of these steps are easy to overlook, but as a CFP® and financial adviser at Armstrong, Fleming & Moore, I've broken the transition into stages that can make the process easier to manage.

Stage No. 1: Evaluate the opportunity

Before deciding whether to pursue a job change, develop a clear picture of what your current position is worth. Salary is the most obvious place to start, but it often represents only one part of your total compensation.

Factor in:

• Bonuses
• Stock options
• Restricted stock units (RSUs) and other incentives
• Employer contributions to a 401(k), profit-sharing plan or pension
• The portion of your health insurance premium that your company pays

Some figures will be easy to find. Others, especially variable compensation and equity awards, require a closer look at past payments and award documents.

If pay is the only reason you're thinking about leaving, first ask whether your current company is willing to address your concerns. Once you know what you receive today, you have a sound basis for comparing another position — and a clear view of what you might be giving up.

Even a small shift in your departure date can affect how much compensation you keep. Identify upcoming bonus payments, equity vesting dates and deadlines tied to company retirement contributions or other benefits.

If a bonus or vesting date is approaching, waiting until after that date could allow you to receive compensation you've already been working toward.

Review the governing documents carefully, since eligibility often depends on remaining employed through a particular date, and the rules vary by benefit.

Knowing these deadlines in advance can help you avoid leaving money on the table.

Stage No. 2: Prepare for your departure

After taking stock of your current situation, you might decide that moving on is the right choice. The next step is choosing your departure date carefully.

Most people choose their last day around a bonus, a vesting date or the need to give two weeks' notice. Yet the timing of your departure can also affect your health coverage, your ability to borrow and other financial priorities.

First, find out exactly when your health insurance ends. Depending on the policy, coverage might continue through the end of the month or stop on your last day.

If your insurance remains active through month's end, leaving near the beginning of the month could keep you covered for several additional weeks.

If you plan to take time off before starting your next position, COBRA continuation coverage can bridge the gap, though you'll generally pay the full premium yourself. Compare that cost with coverage available through a spouse's plan before deciding.

Your timeline matters for financial plans outside your employment, too. For example, a pay cut or moving from a salary to variable income could complicate a mortgage application, so talk with your lender before making the move.

If you plan to take time away from work, make sure you have sufficient cash reserves.

As you prepare to leave, gather the information and documents you'll need once you lose access to your company's systems.

• Create personal logins for company-sponsored financial accounts
• Replace your work email address on outside accounts
• Download copies of any important documents — be careful to follow company policy and avoid retaining confidential or proprietary information

Finally, identify any benefits that require action before your last day.

• Check your plan's matching and vesting rules before frontloading 401(k) contributions
• Review the exercise deadlines for stock options
• Confirm how unused sick or vacation leave will be treated
• Consider scheduling medical, dental or vision appointments before your current coverage ends, especially if a new plan would require you to switch providers

Careful preparation helps you preserve valuable benefits and retain the information you'll need.

Stage No. 3: Manage the transition

Once you start your new job, turn first to your retirement plan. Confirm when you are eligible, enroll promptly and contribute enough to receive the full employer match.

Keep in mind that the annual contribution limit applies across all your 401(k)s combined, not per employer, so check how much you contributed at your former job before choosing a new deferral rate (your new employer will not have that information).

You'll also need to decide what to do with your former employer's plan. You generally have three options:

• Leave the money where it is
• Transfer it to your new workplace plan if rollovers are accepted
• Roll it into an IRA

Each choice has different implications for fees, investment options and tax strategy.

For example, moving pretax 401(k) assets into an IRA can make future backdoor Roth conversions partly taxable under the pro rata rule.

Changing employers can also create overlooked tax and health insurance issues. In 2026, employees pay the 6.2% Social Security tax on the first $184,500 of wages. Each employer applies the limit separately, so working for multiple companies during the year sometimes results in excess Social Security tax withholding.

If that happens, you can generally claim the excess as a credit on Schedule 3 of your federal tax return.

Health benefits require similar coordination. Compare your new coverage with any option available through a spouse's plan, then check whether the change affects your eligibility to contribute to a health savings account (HSA).

HSA contribution limits generally depend on the number of months you are eligible, so a midyear coverage change might reduce your permitted contribution or require you to correct an excess contribution.

Moving forward

As we have explored, a job change can have major implications for your financial plan. Beyond the practical details, this is a good time to revisit your broader goals, priorities and strategies.

Your new income and benefits will influence your cash flow, savings strategy, investments and progress toward long-term goals. Coordinating the financial decisions that follow keeps your strategy aligned with what you want from the next chapter.

Compensation reviews, benefit deadlines and tax coordination add up to a lot to track during an already busy transition.

To make it easier for you, the checklist below walks you through each stage of the process.

Job change financial checklist

Evaluate the opportunity

☐ Calculate your current total compensation, including salary, bonuses, equity awards, retirement contributions, pension benefits and employer-paid health insurance

☐ Review past payments, award agreements and benefit documents to understand variable compensation

☐ If compensation is your main concern, ask whether your current employer is willing to address it

☐ Compare the new offer with your full current package and identify what you would give up

☐ Note upcoming bonus payments, equity vesting dates and benefit deadlines. Confirm how long you must remain employed to qualify.

Prepare to leave

☐ Choose your last day with compensation deadlines, notice requirements and health coverage in mind

☐ Confirm when your health insurance ends. Compare COBRA with coverage through a spouse, especially if you plan to take time off

☐ Speak with your lender before changing jobs if a pay cut or variable income could affect a mortgage application

☐ Build sufficient cash reserves if you plan to take time away from work

☐ Create personal logins for company-sponsored financial accounts and replace your work email address on outside accounts

☐ Download permitted records before losing system access. Do not retain confidential or proprietary information

☐ Review 401(k) matching and vesting rules before frontloading contributions

☐ Check stock option exercise deadlines and how unused vacation or sick leave will be handled

☐ Schedule medical, dental or vision care before your coverage ends if your providers or benefits might change

Manage the transition

☐ Enroll in your new retirement plan promptly, and contribute enough to receive the full employer match

☐ Check your prior 401(k) contributions before setting a new deferral rate. The annual employee limit applies across all employers

☐ Decide whether to leave your former 401(k) in place, transfer it to your new plan or roll it into an IRA. Compare fees, investments and tax consequences, including the pro rata rule for backdoor Roth conversions.

☐ Check for excess Social Security tax withholding if you worked for multiple employers during the year

☐ Compare your new health plan with coverage available through a spouse

☐ Confirm whether your new coverage changes your HSA eligibility or contribution limit

☐ Revisit your cash flow, savings, investments and long-term goals so your financial plan reflects your new position

This material is intended for informational/educational purposes only and should not be construed as investment, tax, or legal advice, a solicitation, or a recommendation to buy or sell any security or investment product.

Related Content

• How to Turn the Complexity of Your Equity Compensation Into Opportunity
• Changing Jobs and Tempted to Cash Out Your 401(k)? Read This First (Future You Will Thank You)
• Portable Retirement Plans: Switching Jobs and Keeping Your Savings Gets Easier
• What to Do With Your 401(k) When You Leave Your Job
• Losing Your Job? A Financial Planner's 6 Steps to Survive and Thrive

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.

Open enrollment season is approaching. For many employees, that means reviewing health insurance options, comparing premiums and deductibles, and making benefit elections for the year ahead.

Those decisions are important, but there's another financial planning opportunity that can easily get lost in the paperwork: A health savings account (HSA).

For those eligible to contribute, an HSA can be much more than an account for paying current medical bills. Used strategically, it can become a long-term savings and investment vehicle that helps cover healthcare expenses, which represent one of the largest outlay categories many of us will face later in life.

As you make your open enrollment elections, here are a few things to consider.

Start with the health plan, not the HSA

An HSA shouldn't be the sole reason you choose a high-deductible health plan. Start by considering which health plan makes sense for you and your family based on expected healthcare needs, premiums, deductibles and out-of-pocket costs.

For married couples, that also means making the decision together. If both spouses have access to employer-sponsored coverage, look at the options as one household rather than making two independent elections.

Consider which plan makes sense for each spouse, whether children should be covered under one parent's plan and how those choices affect your eligibility and ability to contribute to an HSA.

One often-overlooked consideration is how a spouse's flexible spending account (FSA) can affect HSA eligibility. For example, if either spouse has a general-purpose healthcare FSA that covers both spouses, neither may be eligible to contribute to an HSA, even if one is enrolled in an HSA-eligible health plan.

Limited-purpose FSAs and dependent care FSAs, however, generally don't create the same restriction.

Don't view your HSA as money you have to spend this year

The primary difference between an HSA and an FSA is that HSA dollars don't need to be spent by year-end. That creates an opportunity to think beyond this year's medical expenses.

If your cash flow allows it, consider paying current healthcare expenses out of pocket while allowing your HSA balance to remain invested.

For example, I generally advise clients to keep enough cash to cover an appropriate level of potential out-of-pocket healthcare costs, and then consider investing amounts above that threshold based on their broader investment strategy and risk tolerance.

For someone who doesn't anticipate needing those funds in the near term, there is an opportunity to invest in an HSA more like a long-term retirement account than a short-term spending account. The appropriate strategy will differ by individual, but the underlying question is the same: When do you actually expect to need this money?

That time horizon can help determine how you invest it.

Keep your receipts

This is one of the HSA features I find people often overlook, which allows for great financial flexibility into the future.

If you pay an eligible medical expense out of pocket after establishing the HSA and maintain the proper documentation, you can reimburse yourself from the HSA years later, provided you haven't already been reimbursed for or deducted that same expense.

That means someone who can afford to pay today's medical bills out of pocket can leave HSA assets invested and potentially let those dollars compound for years. Later, they retain the option to reimburse themselves for those earlier qualified expenses.

The important part is documentation. Keep receipts and records showing the eligible expenses you paid out of pocket. You can't both claim a tax deduction for an expense and later reimburse yourself for that same expense from the HSA.

Think about the healthcare expenses you'll face in retirement

The long-term value of an HSA becomes clear as retirement approaches.

Once enrolled in Medicare, you can no longer contribute to an HSA, but you can continue using accumulated HSA assets for qualified expenses.

HSA funds can be used for certain Medicare premiums, including Medicare Part B and Part D, as well as Medicare Advantage premiums, although Medicare supplemental policy premiums generally aren't eligible.

That gives savers another potential source of funds for healthcare expenses later in life, precisely when those costs can become more significant.

Make open enrollment part of your financial planning

Open enrollment is often treated as a checkbox HR exercise: Select a health plan, make a few benefit elections and move on.

I would encourage you to look at it differently. Benefits make up more than 30% of U.S. employees' overall compensation, according to data from the Bureau of Labor Statistics.

Taking the time to review your full suite of options and maximize the value of health insurance, HSAs, FSAs and other workplace benefits can have a tangible impact on your broader financial life.

The right decisions will depend on your family's healthcare needs, cash flow, taxes, investment strategy and long-term goals. But these decisions should be made with care.

Related Content

• Buying Your Own Health Insurance? Bronze and Catastrophic Plans Now Open the Door to HSAs
• An HSA Sounds Great for Taxes: Here’s Why It Might Not Be Right for You
• How to Use Your Health Savings Account in Retirement
• Now Is the Best Time to Make These 6 Financial Moves (You'll Thank Yourself in December)
• I'm a Financial Planner: Trump Accounts Are a No-Brainer if You're Eligible (How to Apply)

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.

Right now, investors are getting two very different messages.

On one hand, there are a record number of 401(k) millionaires. For someone who has spent decades saving, that's worth celebrating.

On the other, major financial institutions have been warning investors to take a hard look at how much risk they're carrying.

Should you be celebrating or worrying?

For investors in their 50s and 60s, I think there's a better question: What would a 30% market decline do to your life?

I'm not asking whether you think the market is going to crash. I don't know if it will. Neither does anyone else.

I'm asking what happens if it does.

A 30% drop means different things at age 35 vs 55

If you're 35 years old and your 401(k) suddenly drops 30%, you probably won't be thrilled. But you have something a 60-year-old doesn't have: Time.

You're still contributing to your retirement account. You're not depending on that money to pay next month's mortgage. A major decline could mean your future contributions are buying investments at lower prices.

At 55 or 60, the conversation changes.

If you're nearing retirement and your portfolio falls 30%, you don't have decades to recover. Worse yet, you might soon need to start taking money out of that portfolio.

That's when a market decline can become a retirement problem.

That's why I don't want people trying to predict the next 2008. I want them to understand who they are as an investor.

You might own more of the market than you think

Diversification is a term that's thrown around a lot in financial circles, but it's often misunderstood.

Someone might own 15 mutual funds, 10 ETFs and several different accounts. Sounds diversified, right?

Not necessarily.

When you look through those funds at the individual stocks they own, you can find significant overlap.

I recently saw a portfolio in which an investor believed they were extremely diversified, but after looking through their holdings, we found they effectively owned one popular technology stock dozens of times. The same thing was happening with other major tech companies within their portfolio.

Now, there's nothing wrong with owning those companies. The problem was that the investor had no idea how concentrated their portfolio really was.

You can own several funds and still be making essentially the same investment over and over again. That's not true diversification. That's called hidden concentration.

Who are you?

There's one exercise I'd like every investor approaching retirement to do.

Imagine you wake up tomorrow and the market is down 30%. Which one of the following people are you?

Investor No. 1: 'It doesn't change my life.'
You have enough pension, Social Security, rental income, cash and other reliable income to keep paying your bills.

Investor No. 2: 'I'll wait it out.'
You don't need to sell investments, so you can leave the portfolio alone and give it time.

Investor No. 3: 'I'd probably start selling.'
You know yourself well enough to admit that watching your portfolio fall would cause you to take action.

Investor No. 4: 'I'd have to change my lifestyle.'
The market decline would mean postponing travel, cutting spending or changing plans for your family.

Investor No. 5: 'I'd panic.'
You know a 30% decline would be so uncomfortable that you'd want out.

There's nothing wrong with any of these answers, but there is something dangerous about not knowing which answer is yours.

Don't let the market decide for you

A market correction isn't necessarily a death sentence. Markets go up and down. That's investing.

The problem comes when you need to sell investments when they're down because you don't have another way to fund your life.

That's why retirement planning isn't simply about asking, "How much money do I have?"

It's asking, "How much of my lifestyle depends on that money to continue growing?"

• Could you cover essential expenses for several years without selling investments after a major market decline?
• Could you take the vacation you've dreamed about?
• Could you help support your family?
• Could you sleep at night?

Those are very personal questions, and the answers should drive our planning — not what your adviser wants, what Wall Street wants or what the market happens to be doing this week.

You don't need to predict the next crash. You need to know what happens if you're wrong.

The worst time to discover your portfolio was carrying too much risk isn't before a market decline. It's in the middle of one.

Related Content

• Most Investors Aren't as Diversified as They Think: Are You?
• Your Diversified ETF Isn't as Diversified as You Think — and Here's the $700 Billion Reason Why
• Investing Lessons From 'The Three Little Pigs': Ways to Help Build a Portfolio the Big Bad Wolf Can't Blow Down
• Use This Stock Market Recipe for a Well-Diversified Portfolio
• You Might Be Retired, But You Still Need a Paycheck — Here's How to Create One

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.

Artificial intelligence can do some remarkable things.

It can write software, generate images, analyze data, answer customer service questions and perform tasks that once required highly trained professionals.

As AI technology improves, investors are understandably spending a lot of time thinking about which businesses will benefit — and which ones might eventually find themselves obsolete.

But there's another way to think about investing in the age of AI.

Instead of asking only what AI can do, consider asking what it can't replace.

• A cruise through the Caribbean
• Seeing your favorite band in concert
• Riding a roller coaster with your kids
• Skiing down a mountain
• Spending a weekend in Las Vegas

AI could change how these businesses market to customers, set prices, manage staffing or operate behind the scenes. But it's unlikely to replace the fundamental experience they're selling.

That makes the experience economy an interesting hunting ground for investors concerned about technological disruption.

AI-resilient doesn't mean risk-free

Before going further, an important distinction is necessary.

These businesses can still have bad years. Weather matters; so do gas prices, airfare, consumer confidence, labor costs and the health of the overall economy.

But those are very different risks from technological obsolescence.

A ski resort can have a bad year because it doesn't snow enough. That's very different from waking up one morning and discovering that a new technology has made skiing obsolete.

For long-term investors, I think that distinction is increasingly important.

Here are five areas of the experience economy worth understanding.

1. Cruises: A vacation you can't download

Few industries were hit harder by the pandemic than cruise lines. Ships stopped sailing, revenue disappeared, and operators took on enormous amounts of debt simply to survive.

What happened next has been striking.

Cruise demand didn't merely return; in many respects, it came roaring back. Carnival recently reported record second-quarter revenue, record net yields and an all-time high $9 billion of customer deposits. Royal Caribbean has similarly reported strong demand, record pricing and bookings running ahead of last year's levels.

That recovery says something about the value consumers place on experiences.

A cruise combines lodging, dining, entertainment, recreation and travel into a single vacation. AI might help cruise companies market cabins more effectively, personalize offers or operate ships more efficiently. It's much harder to imagine AI replacing the reason people take cruises in the first place.

Investors looking to understand the space will quickly come across the three major publicly traded operators: Royal Caribbean Group (RCL), Carnival Corp. (CCL) and Norwegian Cruise Line Holdings (NCLH).

Cruise lines still have traditional industry risks. Fuel prices matter, geopolitical conflict can disrupt itineraries, airfare affects the cost of reaching departure ports, and ships require enormous capital investment.

But those are familiar risks investors can analyze. The core experience itself remains difficult to replicate.

2. Theme parks: Technology can improve the ride, not replace it

Theme parks might be an even easier example to understand.

Disney can use technology to improve reservations, reduce wait times, personalize offers and manage its parks more efficiently. But no chatbot is going to replace taking your kids to the Magic Kingdom.

The same is true for SeaWorld, Busch Gardens or Universal Studios.

For investors, Walt Disney (DIS) offers exposure to some of the world's best-known theme parks, although its much larger business also includes entertainment, sports and streaming.

Comcast (CMCSA) participates through Universal, although theme parks represent only one part of the company.

United Parks & Resorts (PRKS), the parent of SeaWorld and Busch Gardens, offers more concentrated theme-park exposure.

Recent results also provide a useful reminder that technological resilience is not the same thing as business immunity.

Weather, airfare, gas prices and household budgets can all affect park attendance. Operators must also continue investing in attractions, labor and the overall guest experience.

Those are meaningful considerations.

But AI does little to diminish the underlying appeal of spending a day at a theme park.

3. Ski resorts: Sometimes the problem really is the weather

If there is one business that makes the thesis especially tangible, it might be skiing.

There is no digital substitute for standing at the top of a mountain on a beautiful winter morning and skiing to the bottom.

Vail Resorts (MTN) is the most recognizable publicly traded way for investors to gain exposure to the industry, with a portfolio that includes Vail, Breckenridge, Park City, Whistler Blackcomb and other resorts.

Vail has also recently provided a perfect example of the distinction we are making.

The company described the most recent western U.S. ski season as one of the most challenging winters in history, with poor snowfall hurting visitation at resorts in Colorado, Utah and Lake Tahoe.

That can be painful for shareholders.

But again, consider the nature of the problem.

A ski resort can have a bad year because it doesn't snow enough. That's very different from waking up one morning and discovering that a new technology has made skiing obsolete.

4. Live entertainment: Being there still matters

Music provides an interesting contrast between digital and physical experiences.

Technology has repeatedly transformed how we consume recorded music — from vinyl to CDs, downloads and streaming. AI might represent the next major change, making it easier than ever to create and distribute digital content.

Yet people continue paying substantial sums to see musicians perform live.

Live Nation Entertainment (LYV), which owns Ticketmaster and promotes concerts around the world, reported that nearly 49 million fans attended its shows during the second quarter, up 10% from the prior year. More than 143 million tickets for 2026 shows had been sold through mid-July.

Live Nation CEO Michael Rapino summed up the appeal particularly well when the company reported second quarter results:

"In a world of endless screens and AI-generated everything, the one thing that can't be copied is being there."

I rarely build an investment argument around somebody else's quote, but this one gets directly to the heart of the thesis.

AI can create a song.

It can't recreate standing in a packed stadium while 50,000 people sing the same song together.

For investors, Live Nation is the clearest publicly traded way to study this theme, with exposure spanning concert promotion, venues, festivals and ticketing.

Ticket affordability, artist availability, cancellations and regulation still matter. But strong demand for live events suggests that an explosion in digital entertainment has not diminished the value consumers place on physically being there.

Perhaps in some cases, the more time people spend looking at screens, the more valuable an experience away from them becomes.

5. Casinos: Own an operator — or be their landlord

Casinos provide another variation on the theme.

Modern destination casinos are much more than places to gamble. Las Vegas properties combine hotels, restaurants, nightclubs, concerts, conventions, sports and gaming into enormous entertainment complexes.

Investors interested in the operators have several familiar choices, including MGM Resorts International (MGM), Caesars Entertainment (CZR) and Wynn Resorts (WYNN).

These companies give investors direct exposure to the operating economics of the experience itself — room rates, gaming volumes, entertainment demand, conventions, restaurants and nightlife.

There is also another way to participate.

VICI Properties (VICI) is a real estate investment trust that owns many of the most recognizable experiential properties in the country, including Caesars Palace, MGM Grand and the Venetian on the Las Vegas Strip. Its broader portfolio includes gaming, hospitality, wellness, entertainment and leisure assets.

Rather than operating most of these businesses itself, VICI generally owns the properties and leases them to operators under long-term agreements.

That creates a different risk-and-return profile.

A casino operator participates directly in changes in room rates, gaming volumes and operating margins. A landlord such as VICI is more focused on rent collection, tenant credit quality, interest rates, leverage and deploying capital intelligently.

Neither model is inherently superior. They simply represent different ways for investors to participate in the same broad experiential theme.

And that leads to an important point.

Finding the right industry is only the beginning

Identifying industries that appear resilient to AI disruption can be a useful starting point.

It's not an investment strategy by itself.

Two companies operating in the same industry can have dramatically different balance sheets, management teams, valuations and growth prospects. One might be appropriate for an investor seeking long-term capital appreciation while another might better suit someone prioritizing income or lower volatility.

Price matters, too.

A wonderful business can still be a poor investment if investors pay too much for it.

That means the next step is evaluating the individual opportunities within attractive industries and understanding the role each investment would play within a broader portfolio.

For investors who don't have the time, resources or inclination to do that work themselves, this is one area in which a thoughtful adviser can add value.

At Meristead Wealth, we start by understanding each client's goals and financial situation. From there, we determine an appropriate mix of investment strategies, choose the industries and individual exposures within those strategies, and actively manage them as conditions change.

That last part matters: Markets change; businesses change; valuations change. Clients' lives change too.

The fact that an investment appears resilient to one particular threat doesn't mean it should be owned at any price, in any amount or at all times.

Invest in what still requires showing up

AI is likely to create enormous opportunities. It will also create disruption. Investors should spend time understanding both.

Amid all the excitement about what AI might eventually be capable of doing, it's worth remembering that people still like to travel, gather, explore, celebrate and experience things together.

• We still want to ride the roller coaster
• We still want to ski the mountain
• We still want to see the concert

Sometimes, one of the most useful questions an investor can ask isn't what will be replaced by a new technology.

It's what probably won't be.

Related Content

• Diversification: An Investment Adviser's Guide to Why You Need It and How to Achieve It
• How AI Is Changing the Way Americans Spend on Live Events
• The SKI Travel Trend Is Reshaping Retirement Spending
• I'm a Portfolio Manager: Silver Has Lost Its Shine — and That's Why I'm Interested
• I'm a Portfolio Manager: This Is Why Energy Resiliency and Oilfield Service Stocks May Represent a New Growth Opportunity

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

I lived in divorce court for more than 30 years. It was that area of law that troubled me more than any other.

The overwhelming sadness of what divorce does to the actors in this human tragedy — especially to children — should never be minimized. Nor should the reality of becoming a single parent — something few people ever think of while standing in line to obtain a marriage license or screaming at each other in front of their kids.

When friends get divorced, we all ask, "What happened? What went wrong? Could it have been prevented?"

Nevada family law Judge Stacy Rocheleau and her husband, divorce attorney Rock Rocheleau, reply, Yes, "if they know what leads to conflict and how to avoid it."

I asked them to describe some of the factors that go well beyond the commonly heard "communication issues" that can contribute to a marriage's destruction.

But first, if you or someone you know is facing the reality of becoming a single parent, you might want to check out The Field Guide for Single Parents: Practical Tips to Gain Control of Your Life by Pat Hankin and Jessica Ames.

I wish this 2025 book had existed when my office staff were helping to put back together the fractured lives of our clients who did not know where to begin as newly single parents.

The Field Guide for Single Parents is a user's manual for survival in a role no one prepares for and also can help keep a parent out of financial and emotional trouble. When friends ask, "How can I help you?" this book could prove to be a lifesaver.

The view from the Rocheleaus

The Rocheleaus note that the seeds of a failed marriage are planted early. And while there are many reasons why a couple might get divorced, the Rocheleaus are sharing some specific insights based on their careers in divorce court. These aren't intended to diagnose or minimize anyone's marriage troubles.

"Who is the last person on earth whose feelings you want to hurt?" Stacy asks. "It is your best friend. Friendship takes time to develop. Rushing into intense romance too soon — while exciting — masks incompatibilities.

"So, in family law, we see the results of couples who literally did not know each other before they decided to marry, and when issues arise, they become overwhelmed."

Rock shares the recipe for a failed marriage:

• Combine a lack of tolerance with a short fuse — for example, failing or refusing to respect your spouse's parenting style.
• Add a large measure of "my way or the highway"
• Bake for months or years
• Garnish with disrespect

Rock adds, "When clients say, 'But he was never like that before,' I ask, 'How long did you know each other before getting married?' Often, the answer is, 'Not long enough to see how either of us would handle conflict.'"

Be a partner in all ways

The Rocheleaus also note that unequal sharing of household duties can make a relationship tense.

"Failure to be a partner in all aspects of your relationship creates resentment," Stacy says. "This includes the daily, practical things, like doing the laundry and the many small tasks required when two or more people live under one roof."

Similarly, pulling your weight financially can be a huge issue. "There is nothing acceptable, especially in these days of sky-high prices, for one spouse who is capable of working just staying home and doing nothing but watching Netflix," Stacy points out.

Financial issues on one partner's part should also be a red flag in the early days of a relationship. "Were they financially responsible?" Stacy asks. "Did they give in to impulse and buy things they could not afford?"

Looks matter?

While his take might not be palatable to some, Rock notes that in his practice he's seen plenty of couples choose to divorce because one partner didn't maintain their "physical attractiveness."

"I can't tell you how many couples divorce because one or the other says to themselves, 'I got him/her and how I look doesn't matter anymore.' It does! We are attracted to each other physically, and that is not something that simply vanishes after the wedding cake is sliced."

Don't forget to show your appreciation

"When we compliment our kids for doing well on a test, or how nicely they've cleaned their room," Stacy says, "they feel validated and appreciated. It's the same thing with our partners in life." She suggests sharing pats on the back such as:

• Dinner was great — thanks
• The lawn looks amazing
• You're lovely in that outfit
• Thanks for getting the oil changed
• I love cuddling with you
• Being with you makes me happy
• I appreciate all the things you do for our family

Such comments cost nothing, but they're priceless. They convey the sentiment "I love you and want to always be with you because you are my world."

My interview with Stacy and Rock was one of the most enjoyable in recent months. In family law, it is easy to become cynical and embittered. But this couple have not.

Their middle initials should be P for Positive. They really are unicorns in this negative field of law, and it is so refreshing. They care and tell it like it is.

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.

Related Content

• Why a Supportive Marriage May Matter More Than Money in Retirement
• Before You Remarry: 10 Important Things to Consider
• How the Billable Hour Can Break Even a Strong Moral Compass: This Marriage Is at Risk
• 6 Divorce Tips From a Financial Adviser Who's Also a Certified Divorce Financial Analyst
• Can a Judge Tell a Father to Avoid Risky Triathlons for His Sons?

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.

Recently, an actuary for a major insurance company reached out to me to run a Social Security analysis. He'd been calculating lifespans for three decades and was now focused on his own.

Mark was 63, and his wife, Susan, recently turned 61. Both retired from long careers a few months earlier with no wages or self-employment income. Their teenage daughter, Lily, a 15-year-old cheerleader, had just begun her first year of high school.

Mark had studied the Social Security Administration (SSA) website and pored over his Social Security estimates with the mindset of a cautious actuary.

He said, "Ray, everything points to both of us using our savings to bridge the next seven years and waiting until age 70 to file. What do you think?"

In our Zoom meeting, I said, "If it was just you and Susan, I'd tend to agree. But let's run the numbers, because I believe Lily might bring some cheer to your household income."

Lily could qualify for a benefit on Mark's earnings record once he claims Social Security.

I gave Mark a quick summary of the SSA's rules: "Eligible children of a worker entitled to retirement benefits can generally receive payments while unmarried and under 18, with continuation for qualifying full-time elementary or secondary students, until 19."

(Different rules can extend eligibility for a disability that began before age 22, but Lily does not have a disability.)

Mark responded, "But, Ray, by the time I turn 70, Lily will be 22. She won't be eligible."

I then walked Mark through a very familiar subject: Math. Many times, in my practice, the person without a retirement statement can change the math.

A child can put a deadline on the calculation

Lily's math was simple. Her benefit was based on half of Mark's $3,200 full retirement age benefit: $1,600 a month. Over 36 months, that would add up to $57,600 before applying the family maximum.

There was more math to consider. Susan could collect a child-in-care spousal benefit while Lily was under 16, even before Susan turned 62. That would add about $800 a month to the family's income until Lily turned 16.

Using a $5,600 family maximum for our example, Mark would receive $2,400 starting on his 63rd birthday. Susan and Lily would each receive $1,200. That put the family total at $4,800 a month.

Mark responded, "Ray, even with a maximum, your new math beats mine every day. I didn't even think my daughter factored into my retirement decision."

One filing decision can affect three people.

Susan has two different interests in this decision

Mark's wife, Susan, needs to understand spousal benefits while Mark is alive and survivor benefits if he dies first.

A regular spousal benefit can be up to 50% of Mark's Social Security full retirement age (FRA) amount, with reductions for early claiming and other eligibility rules.

Mark's previous plan to wait until 70 doesn't increase that 50% base. Nor would Susan earn delayed retirement credits on a spousal benefit by waiting beyond her own full retirement age.

Susan's own retirement benefit, if she has one, is a separate calculation. SSA coordinates the benefits; it doesn't simply add two full checks together. Assuming both spouses should wait until 70 skips these distinctions.

Survivor benefits work differently. Delayed retirement credits earned by Mark can increase Susan's eventual widow's benefit. That can make delaying the higher earner valuable protection for a younger spouse.

Susan could receive up to 100% of the applicable survivor amount at her full retirement age for survivor benefits, subject to the rules. But her own retirement payment and the survivor payment aren't added together.

When one spouse dies, a household often loses one Social Security check. Unfortunately, the roof doesn't become 50% smaller. The property tax doesn't observe a mourning period.

The question for Susan is how much income she would have after Mark's death and how much she would still need.

Earlier payments change later income

Lily's potential benefits don't settle the case for claiming immediately.

For someone with a full retirement age of 67 (the FRA for those born in 1960 or later), starting at exactly 63 reduces the worker's benefit by 25%. Mark's illustrative $3,200 would become $2,400, before later adjustments. That lower starting benefit matters long after Lily's payments end. Early claiming can also affect Susan's eventual survivor income.

Parents who are still working have another issue to check: Their earnings can cause benefits for themselves and family members to be withheld.

The comparison therefore needs a household timeline. Model the years while Lily qualifies, the years after her benefits end and the years Susan might spend as a widow. Test a long life for each spouse.

Compare Mark claiming now, at full retirement age and at 70. Coordinate Susan's available benefits with each alternative. Count the savings used during any delay, along with the larger retirement and survivor payments that waiting might produce.

Ask who belongs in the analysis

Your household might have no teenagers. A former spouse, an adult child with a disability or a spouse with a very different earnings history can still change the answer.

Before filing, identify everyone who could qualify on the relevant work records, the dates their eligibility begins or ends and the income the household would retain after a death.

Mark can then decide whether the later increase is worth the payments his family would pass up now. He will be comparing actual alternatives instead of choosing the biggest number on one statement.

The Social Security application might have Mark's name at the top, but Susan and Lily still belong in the calculation.

Related Content

• Social Security Family Maximum Benefits: Are You Eligible and How Much Can You Receive?
• When Should You Start Social Security Benefits? It Depends
• 9 Changes Coming to Social Security in 2027
• When the Biggest Social Security Check Is Not the Best Choice
• Are You Much Older Than Your Spouse? Sorry, But Your Social Security Decision Isn't About You

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 artificial intelligence infrastructure boom has delivered significant valuation surges in stock prices for the last few years.

Along with that growth, a major debate has taken hold between those who believe we are in an unsustainable AI bubble that is destined to pop and those who believe stocks are attractively priced.

It's common to evaluate this economy against past cycles, with the dot-com era as the one most often invoked. A recurring argument from major investment houses and everyday investors is that the earnings of the AI companies justify these current valuations.

However, I have doubts about the durability of those profits and believe the risk of an "earnings bubble" is higher than some give credit for.

P/E ratios of dot-com and AI eras

During the dot-com era, P/E ratios rapidly increased. Stock prices shot up without a corresponding growth in profits, resulting in very high P/E ratios. When it became clear that earnings growth was not coming at the level the market had assumed, price had nowhere to go but down. This was a "price bubble."

Currently, P/E ratios are nowhere near the levels of the early 2000s. Prices have gone up, but earnings have also seen an equally impressive increase. This has led many to conclude that we aren't in a bubble.

But what if what we're seeing is an "earnings bubble"? Unlike in the dot-com bubble, price would not drop rapidly to get back in line with net income, but price and earnings would find themselves falling instead.

Three major reasons I'm concerned with earnings sustainability are hyperscalers' free cash flows, alleged accounting adjustments and circular financing.

Free cash flow

Hyperscalers are the large-scale technology companies that provide cloud computing and are leading this AI buildout. They have been free cash flow (FCF) machines for years. These hyperscalers have now gone FCF negative, spending more than they are bringing in.

That cash is now going to the semiconductors whose chips are powering the data centers. Earnings have skyrocketed for these semiconductors, leading many to theorize that the rapid increase in stock prices for these semiconductor companies is justified owing to their higher earnings.

If the hyperscalers don't recognize enough AI revenue to justify their investment, that spending will eventually significantly slow. That slower spending then hits the semiconductor earnings, causing a quick and large deflation in earnings and price.

As I'll explain, the current gap between hyperscaler spending and realized AI revenue leaves little margin for error.

Alleged accounting adjustments

Beyond negative FCFs, the quality of reported tech earnings has come under question. Hyperscalers have been accused of lengthening the assumed useful life of their servers and networking hardware from three or four years to five or six.

Spreading the cost of high-end AI infrastructure over a longer horizon would artificially depress annual depreciation expenses, resulting in higher, and questionable, reported operating profits.

And constantly swapping out hardware while income statements drag out the cost over five to six years would effectively hide the true cost of the buildout and inflate near-term earnings.

Nvidia has pushed back on the allegations, stating that "customers depreciate GPUs (graphics processing units) over four to six years based on real-world longevity and utilization patterns."

Circular financing

Critics argue that circular financing leads to artificially increased revenue and earnings. It occurs when a company uses its financial leverage to invest in the very companies that purchase its products.

One example of circular financing in the AI sector is illustrated by Nvidia investing billions of dollars into cloud provider Nebius.

In return, Nvidia gets an equity stake in Nebius and enables Nebius to immediately turn around and spend billions on Nvidia GPUs, which Nvidia then logs as top-line revenue. The return of Nvidia's cash causes an increase in its revenue and earnings. This arrangement is going on throughout the AI ecosystem.

This closed loop is further amplified by Nvidia's equity stake in Nebius. As Nebius' valuation increases, Nvidia's shares of the company further increase its financial metrics, making Nvidia look even more attractive.

This circular financing replaces organic market growth with supplier-funded capital, making it difficult to determine how much of the earnings is genuine and sustainable.

The bottom line

AI appears to be transformative technology in the long term. However, the earnings growth seen the last few years does not, as some argue, decrease the risk of a bubble. Many great technological innovations resulted in bubbles, including railroads and the internet.

For AI to avoid a bubble, hyperscalers will need to start seeing revenue that justifies their cost of capital. They have a long way to go, though. In mid-2026, estimates put the AI revenue-to-capex ratio at 4% ($25 billion/$660 billion). That is AI revenue, not profit. It doesn't mean it won't happen, but the risks are highly elevated until it does.

Related Content

• Worried About an AI Bubble? Here’s What You Need to Know
• Amid Mounting Uncertainty: Five Forecasts About AI
• AI Is a Supply Chain Rather Than an Industry: Here's Why
• The AI Bubble May Burst: 5 Ways Retirees Can Protect Their Portfolios
• There's a New AI Bubble No One Is Talking About: What Companies Can Do to Keep Up

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 fastest way to find out if your affairs are in order is to experience bad turbulence on a flight. Your mind immediately goes to that list of unfinished business you've been meaning to get to.

So why did a man in his 60s, with a fully completed and updated estate plan, his affairs in order as they say, tell us he realized there was still something missing?

Trust and estate planning conversations with professionals are spent almost entirely on tax, legal and financial work: Who gets what, when and under what conditions.

If the estate plan is like building a house, then legacy is like decorating the house, filling it with pictures and memories and turning it into a home.

Part of the confusion is the word "legacy" itself. Merriam-Webster defines it as something willed to someone by a person who has died: A bequest, as in "she left us a legacy of a million dollars."

Cambridge says something similar: Money or property received after someone dies. But Cambridge has a second definition, closer to the truth: Something that is part of your history or that remains from an earlier time.

That second definition holds up better. A legacy reaches further than a family: The people who mattered to you, the people who knew you, the people whose lives you shaped.

I have little kids at home. One of them is scared of the dark, and he asked me how dads can be so brave. I borrowed a line from Andy Weir's Project Hail Mary: "You just need to find someone to be brave for."

That's how legacy works.

Legacy belongs to the family

A trust document can name who inherits the lake house. It can't explain why the lake house was built in the first place, who was the best at Family Olympics or why everyone still talks about the weekend the power was out and Nana made everyone play gin rummy by candlelight.

Families spend plenty of time and money getting the legal and financial plan right, and they should. But they often assume the legacy work will happen on its own, through osmosis, around enough holiday dinners. It doesn't. Stories get lost, conversations never get had, and memories fade.

This work doesn't require a law degree, a fortune or a weekend retreat at a lodge. It requires a willingness to start.

Every family already has a legacy

One reason families put this off is a quiet myth: Legacy work is only for the ultra-wealthy, the kind of family with a name on a building. It isn't, and the numbers back that up.

More than half of Americans, 53%, can't name all four of their grandparents, according to a 2022 survey from Ancestry. That gap shows up in every kind of family, rich or not. Wealth doesn't create a legacy. It just changes how many resources a family has to invest in preserving one.

Think about family photography. There was a time when capturing a memory meant hiring a portrait painter or, later, a professional photographer for a few occasions a year. It was an expense most families couldn't bear.

Today, nearly every parent carries a camera in their pocket that holds several thousand family photos. Families didn't suddenly become more deserving of memories. The friction of preserving them just disappeared.

Legacy is on the same path. The stories worth telling, the letters worth writing, the traditions worth naming were always there. What's changing is how much friction stands between a family and doing something about it.

Four questions beyond the estate plan

Family wealth expert James E. Hughes has spent six decades arguing that a family's balance sheet has five kinds of capital, not one:

• Financial
• Human
• Social
• Intellectual
• Cultural

Financial capital is the will, the trust and the estate plan. That part is important. The other four are where legacy work starts, and working with an adviser who understands this can be a real help.

Here are four questions, one for each capital. Answer them yourself, or ask them at your own kitchen table. None needs a long answer. Give yourself a limit, somewhere between 150 and 500 words, and write it down.

• Human capital. What advice do you have for getting through the tough days?
• Cultural capital. What are your top three movies, and why?
• Intellectual capital. Where did you grow up, and how did that shape you?
• Social capital. What is the best decision you ever made, and why?

That's enough to start. The point isn't to produce a polished document. It's to get something true on paper before it lives only in memory.

Progress over perfection

Families stall on legacy work for understandable reasons. They're busy. A new season of something started on Netflix. They assume it's for someone wealthier.

Or, more often, no one has ever invited them into the conversation. If you're the one reading this, maybe you should be the one to start the work.

I've read a lot of legal documents in this line of work and a lot of eulogies. I learn more about who someone was from the eulogy, every time.

Your estate plan tells people what they'll receive. Your legacy is much bigger than that, so don't wait until you hit turbulence to define it.

Related Content

• Wealth Transfer Is About More Than Just Money
• Don't Wait for a Crisis to Have These Conversations With Your Aging Parents
• Leave Your Life Story as a Legacy for Your Heirs
• Want to Create a Lasting Legacy? Four Issues to Address
• What Will They Remember About You? It's Not Just About Your Money

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.

Investors often worry about stock market swings derailing their financial well-being. But over time, two quieter risks can do far more damage to your financial plan: Inflation and longevity.

Rising prices erode purchasing power year after year. At the same time, longer lifespans mean your money needs to last longer — making inflation an even bigger threat.

That raises an important question: How do you protect your portfolio from these two retirement derailers?

There isn't a single solution. Instead, it's about combining different tools — each with strengths and tradeoffs — to build resilience.

Here are four considerations for each.

1. Directly invest in inflation

One of the most common ways to beat inflation is to buy Treasury Inflation-Protected Securities (TIPS), which are bonds that are tied to inflation. TIPS have been around for decades and offer a direct hedge against inflation by adjusting for the Consumer Price Index (CPI) over time.

The caveat is that the principal value of TIPS is what is adjusted, not the interest payment. As an example, if you buy TIPS with a maturity value of $1,000 and an interest payment of 2% or $20, and the CPI goes to 5%, the final maturity of your TIPs will be $1,050 while still receiving 2% on this adjusted value.

One of the key features of TIPS is that they pay a real (inflation-adjusted) interest rate. This is essentially what you're locking in, and this real rate represents the difference between inflation and the equivalent Treasury bond.

In times when inflation is very high and interest rates rise, as in 2022, TIPS perform extremely poorly and had steep losses, as the sensitivity to rates overwhelmed the inflation adjustment.

Additionally, TIPS are based on the CPI, which is a basket of prices that might or might not be relevant to you personally.

As an example, the CPI might be moderate, but your biggest cost might be healthcare, which can have a much higher inflation rate. While TIPS have their role in portfolios, it's important to understand their mechanics and advantages.

One final point on TIPS: The principal adjustment creates "phantom income" in that it's taxable in the year it happens, even though you don't receive the marked-up principal until the end.

2. Commodities/gold

Gold and other precious metals tend to hold their value over time while directly investing in commodities provides investors access to some of the key components of inflation, such as energy or food.

This allows investors to participate in the price movements of items they consume every day and possibly protect themselves from price spikes. Commodities such as oil are typically accessed through futures markets (not many people want to take possession of a barrel of oil).

Futures are contracts with set expiration date that offer a number of complexities such as margin requirements and managing roll yield (the cost of selling one contract and acquiring another). They're often best done through managed investments such as ETFs or mutual funds.

The biggest risk, however, comes from the make-up of the investments themselves. You could buy individual commodities such as oil or corn investments, which makes you subject to the whims of that market.

Gold and precious metals offer a store of value in that they're scarce and tend to appreciate with inflation over time. Many investments that track gold also have access to physical bars (held in trust) and minimize risks with roll yield, although virtually all of them still use at least some futures.

The primary issue with gold is that it also serves other purposes. A good example is happening now: Gold prices are down despite higher inflation because many governments accumulated gold reserves and are spending them down to meet funding needs, i.e. selling gold to buy oil.

In this way, both gold and commodities share an issue with TIPS; they might not be a hedge against an investor's actual experienced inflation. As with TIPS, these investments can play an important role in portfolios, but it's important to consider how they're undertaken and their cons.

Commodities can help hedge against inflation shocks but might not truly reflect sustained rising inflation.

3. REITS/infrastructure/stocks

Real estate investment trusts (REITS) are investments in companies primarily in the business of real estate either through owning buildings or dealing with real estate activity such as mortgages.

The idea behind REITs as an inflation hedge is that rents are a key component of inflation, and in an inflationary economy rents, will typically rise. That means REIT earnings and therefore, dividends, will also likely rise. However, as rates rise, as when inflation is high, the appeal of REITs diminishes.

Infrastructure investing is a broad term that encompasses many types of investments, ranging from pipelines to data centers. Master limited partnerships (MLPs), pay high dividends and are often pipeline companies that serve as toll roads for energy. Data centers offer both cash flow and the possibility of long-term gains.

These businesses can be capital intensive and subject to economic activity, so higher interest rates are a distinct threat. It's also a newer asset class that hasn't been truly tested by a downturn.

Stocks historically have been a good inflation hedge, but that doesn't mean they always perform well when inflation is high. If you have inflationary shocks, it can be bad for the stock market. While long-term stocks have inflation-hedging properties, there are any number of risks that can influence their prices.

Ultimately, these assets offer some protection against rising inflation but will be sensitive to the broader economic cycle, making them less of a true hedge.

4. Cash

This is perhaps the most controversial inflation hedge when discussing options and is often maligned as inflation erodes its value.

Cash held in such instruments as money market funds or T-bills tend to produce a real return overtime. Furthermore, because they're short-term in nature, they have low-interest rate risk.

It's important to draw a distinction against cash held in a piggy bank or a checking account that pays no interest. I'm specifically speaking about high-yield options.

The challenge for investors is that virtually all inflation hedges share a common risk: Higher interest rates. High rates weigh on equity valuations, make bond prices go down, dull the luster of income investments such as REITs and can influence how much you may pay for commodity futures.

There is no one perfect inflation hedge, and a prudent approach is to use a combination of these tools to enhance inflation protection while minimizing exposure to rising interest rates.

Related Content

• How to Inflation-Proof Your Retirement Without Cutting Costs (You Can Even Take Your Dream Vacation)
• Can Your Nest Egg Survive Rising Costs? Ask Yourself These 3 Questions to Find Out
• Inflation Is the New Fixed Expense in Retirement: 5 Things That Actually Work to Address It (and What Doesn't)
• An Investment Strategist Takes a Practical Look at Alternative Investments
• Preparing for the Worst: Retirement During a Recession

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.

Think about the last time someone urged you to get your estate plan in order. The conversation probably started with a worst-case scenario: What happens to your family if you die tomorrow? Who takes over if you become disabled?

For as long as I have practiced law, my industry has led with fear, and death, dying and disability have been its default talking points. Those scenarios create urgency, which is why the industry leans on them.

After nearly three decades of advising families, many with $10 million or more in complex, multigenerational assets, I've also seen what that approach costs the families it claims to serve.

How fear became the default

Fear is only half the problem, and the other half is sameness. For too long, estate planning has placed clients in a box and encouraged them to design something similar to what their siblings or parents did.

The result is a plan built around what could go wrong, using a template designed for somebody else. It activates on the day you're gone and says little about your values, your guiding principles or the wisdom you would want the next generation to carry forward.

What fear-based planning costs your family

When planning is framed entirely around your own death, it becomes easy to put off, and the cost of waiting can be steep. If you become unable to manage your own affairs and the right legal authority isn't in place, you can be declared incapacitated in a public proceeding.

If no qualified family member is available, the court appoints a member of the bar who visits once a month and knows nothing about you, your family or your customs.

I served for eight years as the court-appointed guardian for my uncle, who had never put the simple documents in place before he began showing signs of dementia. Guardianship of an adult is nothing like raising a child, because you're managing the financial, medical, relational and social decisions of someone who already had a whole life.

Fear-based planning also tends to produce a plan that gets signed, filed and forgotten. A plan lives and breathes. If you don't revisit it as your life and your beneficiaries' lives change, it's just a piece of paper.

A better starting point

I stopped opening client conversations with ,"When you are no longer here." Instead, I ask clients to imagine they're having a procedure and will fully recover in three or four months. Who is managing their finances and healthcare during that window?

That question gets people comfortable starting with the basics, such as a power of attorney, before moving into more comprehensive planning. It also reflects a deliberate shift I made to talk about planning as a way to take control and be empowered. Preparation keeps decisions about your care inside your family.

What families need instead: Planning with intention

The approach I use, which I call Legacy on Purpose®, starts with intentionality about your living legacy and your lasting legacy. It means clarifying your values, guiding principles and wisdom, then transferring them through a plan built specifically for you.

This matters because you're also transferring fiduciary roles to human beings. If the next generation has not embraced its role as stewards, the plan derails no matter how well it's drafted.

One family I worked with shows what that looks like. Elders in a coastal Southeast community that had grown into a major tourism destination had built significant land holdings and businesses over decades. Their children and grandchildren were scattered across the country with careers of their own. They were not going to move back simply out of commitment to what the elders had built.

Instead of forcing the issue, we met with several dozen family members and spouses and built a one-week-a-year apprentice program. Anyone considering a role could test it out, meet vendors and customers and let the elders observe them without upending their existing lives.

Several families have since relocated and taken on roles.

Families that hold together make room for how each generation needs to arrive at the decision.

Steps you can take now

Start with the near-term scenario. Decide who would manage your finances and healthcare if you were sidelined for a few months. Put a power of attorney and healthcare documents in place.

Name your values before your beneficiaries. Ask each family member, separately and without conferring, to name their top three values and guiding principles. I've watched a 7-year-old and a 90-year-old in the same room do this, and their answers aligned. That is where honest conversation begins.

Design a plan that fits your family. What worked for your parents or siblings was built around their lives.

Explain your decisions while you can. If one beneficiary receives cash and another receives a business interest, tell them why. Once you're gone, assumptions fill the silence, and that's where turmoil comes from.

5. Give the next generation a way in. Create opportunities for heirs to step into stewardship roles before a crisis forces them to learn on the job.

Estate planning will always involve hard subjects. My purpose is to help build stronger, better family teams, and that work begins when a family decides to plan with clarity and a sense of control. Legacy on Purpose® begins the moment you decide to claim it.

Related Content

• Estate Planning Checklist: 13 Smart Moves
• 5 Key Components of an Estate Plan — and 7 Others to Consider
• An Expert's Guide to the Estate Planning Documents Everyone Needs
• 7 Mistakes to Avoid When Choosing a Beneficiary for Your Estate Plan
• I'm an Attorney: This Is Why Legal Documents Alone Won't Preserve Your Family's Wealth

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 Americans spend decades asking one financial question: How much can I accumulate for retirement? We contribute to 401(k)s, fund IRAs, watch the markets, celebrate the good years and complain about the bad ones. Then retirement arrives, and the question changes: How do I take the money out?

I once met a man who proudly told me he had beaten the market for 30 years. I congratulated him. Then he showed me his withdrawal plan, and I stopped congratulating him. He had built a race car and installed bicycle brakes.

He isn't unusual. Nearly everything on a financial statement measures growth; almost nothing tells you how efficiently that money can become income. Accumulation gets the headlines. Distribution determines your lifestyle.

The number on your statement isn't necessarily the number you can spend

Imagine a retiree with $100,000 in each of three accounts: A traditional IRA, a taxable brokerage account and a Roth IRA. On paper, she has $300,000. In practice, those balances are worth very different amounts.

Every dollar that leaves the traditional IRA is taxed as ordinary income. In the 22% federal tax bracket, that $100,000 is closer to $78,000 of spending money, before state tax. Part of the account effectively belongs to the IRS; she just doesn't know yet how large its share will be.

In the brokerage account, only the growth is taxed, and long-term gains get preferential rates — as low as 0% for retirees whose taxable income stays below certain thresholds. The Roth, if the rules are followed, is hers in full.

Think of them as three orchards. One produces fruit that can be harvested tax-free. One creates a tax bill only when gains are realized. The third lets you postpone the tax until the government eventually collects its share. Owning all three gives you flexibility. Knowing when to harvest each is what turns that flexibility into money.

Withdrawal order matters

I once worked with a retired plant manager whose records were immaculate. His plan was to draw from whichever account had the largest balance and keep everything roughly even. It was simple. It was also potentially expensive. He wasn't making an investment mistake; he was making a withdrawal order mistake.

The popular rule of thumb — spend taxable money first, then tax-deferred, then Roth — isn't a cure-all either. Followed rigidly, it can leave a retiree with almost no taxable income in the early years, wasting low brackets that won't come around again, then bunch income together later.

Often a blend works better — drawing just enough from tax-deferred accounts each year to fill a lower bracket, and covering the rest from taxable or Roth money. The question isn't only, "How much should I withdraw?" It's also, "Where should that withdrawal come from this year?"

Don't confuse paying less tax today with paying less tax

One retiree I worked with was determined to avoid taxable withdrawals early in retirement. For several years, his returns looked terrific. Then required minimum distributions (RMDs) began (at 73 for people born from 1951 through 1959, and 75 for those born in 1960 or later) and stacked on top of Social Security and his pension. His taxes and Medicare premiums ended up higher than under the staged-withdrawal strategy we had modeled. He hadn't eliminated the tax bill; he had postponed and possibly enlarged it. He avoided the sprinkle and ran into a thunderstorm.

The storm can grow. When one spouse dies, the survivor generally files as a single taxpayer, with brackets roughly half as wide, while the RMDs stay about the same. And traditional IRAs left to adult children must generally be emptied within 10 years, often during the heirs' peak earning years.

That's why the years between retirement and RMDs deserve careful attention. With paychecks gone and Social Security perhaps not yet started, many retirees sit in the lowest brackets they'll see for decades. That makes those years a window for deliberate withdrawals or partial Roth conversions. There is no universal sequence, and generating taxes for their own sake is never the goal. The point is to judge your strategy across many tax returns rather than one.

Medicare can make tax decisions more expensive

Medicare Part B and Part D premiums rise at higher incomes through surcharges known as IRMAA, based on your tax return from two years earlier. The surcharges work like cliffs: Exceed a threshold by a single dollar and you owe the full surcharge for that tier. The retiree who takes an extra IRA distribution for a new car, a kitchen remodel or a child's down payment may see the bill arrive two years later. Roth conversions count, too.

The lookback cuts both ways. If your premiums are being set by income from your final working years, you can ask Social Security to use your current income by filing Form SSA-44 and citing work stoppage.

A withdrawal affects taxable income. Taxable income can affect Medicare premiums. Social Security can affect taxable income. RMDs can affect both. One gear moves another.

Social Security is part of the withdrawal strategy, too

People often ask me the best age to claim Social Security. I don't believe that can be answered intelligently without seeing the rest of the plan.

Up to 85% of benefits can be taxable. In certain income ranges, each additional IRA dollar pulls more of your benefit into taxable income, pushing your effective marginal rate well above your bracket. Delaying Social Security while living on IRA withdrawals can help on several fronts at once:

• It shrinks the balance that will drive future RMDs.
• It replaces fully taxable IRA income with benefits that are at most 85% taxable.
• It locks in a larger check: 8% more for each year you wait past full retirement age, up to 70. A surviving spouse can keep that check if it's the larger of the two.

Delay isn't right for everyone; health and cash needs matter. But it shows why claiming and withdrawals are one decision, not two.

The bottom line

Retirement income works best when you stop asking, "How can I pay the least tax this year?" and start asking, "How can I manage taxes over my entire retirement — and my spouse's and heirs' lives, too?"

You don't necessarily need a more complicated plan. You need a coordinated one, built before withdrawals are forced on you and revisited every year. After 40 years building the race car, don't wait until retirement to think about the brakes.

Related Content

• Which of These Four Withdrawal Strategies Is Right for You?
• A Retirement Plan Isn't Just a Number: Strategic Withdrawals Can Make a Huge Difference
• The 3 Biggest Tax Mistakes Retirees Can Make in Their 60s: One Involves Roth Conversions
• Don't Let a Market Crash Crush Your Retirement
• How to Structure Retirement Income to Tamp Down Taxes

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.

Life tends to happen all at once.

I was recently sitting in a doctor's office when my wife texted to say she was driving our 3-year-old to the emergency room. Our daughter had tumbled into a coffee table, leaving a gash on her ear. Everyone is fine, and she now tells everyone that she got her ears pierced.

With open enrollment season upon us, the timing was a fitting reminder of why I encourage clients to send me their benefits packets every fall.

For many families, open enrollment is simply an exercise in checking boxes. Review the premiums, confirm the dependents and click "same as last year."

However, your financial situation might not be the same as last year. Changes will impact how you protect yourself and your family. In some cases, your financial success might open the door to new opportunities.

When savings change the math A big deductible looks different when you have a cushion. When a client has spent the year automatically sending money into a taxable investment account, I pat them on the back.

Then we talk about what the account makes possible. With savings ready to cover an emergency room visit, a high-deductible health plan moves onto the table.

Consider a hypothetical family choosing between two plans:

• A traditional plan with a $1,500 deductible
• A high-deductible plan with a $5,000 deductible and premiums that are $250 a month lower

The premium difference alone saves $3,000 a year. Add $9,000 in health savings account (HSA) contributions through payroll, and a family in the 22% federal bracket skips roughly $2,670 more in income and payroll taxes.

In a quiet year, the family comes out about $5,670 ahead. In a year with an ER visit and a few follow-up appointments, the family pays $3,500 more toward the deductible, and the premium savings cover most of the gap.

Co-insurance and out-of-pocket maximums vary by plan, and a family managing an ongoing condition may still be better served by the traditional option.

My favorite account

Anyone who's spent five minutes with me knows I have a soft spot for HSAs. I'd argue they are the most attractive accounts available in personal finance because of their unique triple tax advantage.

Payroll contributions skip federal income tax plus Social Security and Medicare taxes. The balance grows untaxed, and withdrawals for qualified medical expenses come out untaxed, too.

For 2027, families can contribute up to $9,000, including any employer money, and savers 55 or older can add $1,000.

Most people spend an HSA as fast as they fund one, paying for checkups and stitches as the bills arrive. Once the balance covers a year's deductible, many plans let you invest the rest, and the growth stays untaxed as long as the money eventually pays for medical care.

After 65, withdrawals for other purposes count as ordinary income, much like a traditional IRA, without the 20% additional tax younger account holders pay. HSA investments can lose value, so the money set aside for this year's deductible belongs in cash.

The lines on your pay stub

Group legal coverage and supplemental policies tend to renew year after year without a second look. Each might still earn a spot, and open enrollment is the window to decide on purpose.

The flexible spending account deserves the hardest look. A general-purpose health flexible spending account (FSA) can't be paired with an HSA, so a move to the high-deductible plan also ends the December scramble to spend whatever balance remains.

Open enrollment takes most people five minutes: 30 minutes with the packet and a clear look at your savings shapes the next 12 months of paychecks — and makes the next surprise trip for stitches a lot easier to absorb.

Related Content

• Your Guide to Open Enrollment and Health Insurance for 2027
• Find the Right Health Plan During Open Enrollment
• Buying Your Own Health Insurance? Bronze and Catastrophic Plans Now Open the Door to HSAs
• Gen Z Thinks They Need $9.5 Million to Be Successful. Here's What Healthy Money Habits Actually Look Like
• You Really Need to Do This Before You Act on What the Chatbot Told You

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

For decades the message to American workers has been consistent: Contribute to a 401(k), capture the match, leave it alone.

Millions did exactly that, rolling old plans into IRAs and sitting through three or four bear markets to build the balances pensions used to provide.

Then, somewhere in their early 70s, the rules changed. The account they spent a career filling comes with a withdrawal schedule they didn't write. That's the paradox of required minimum distributions (RMDs).

The better you are at saving inside a tax-deferred account, the more likely your RMD becomes a tax problem rather than a paycheck.

Calculate your first RMD now, even if it's a decade away

RMDs generally begin at 73 for people born from 1951 through 1959, and at 75 for those born in 1960 or later. (PDF) You don't have to wait to see the number. Take your current traditional IRA and 401(k) balances, divide by 26.5 (the IRS Uniform Lifetime Table factor for age 73), and you have a working estimate of your first required distribution: roughly 3.8% of the balance.

On $2 million, that's about $75,000 of taxable income in your first RMD year, whether you spend it or not.

Then do the second half of the math, which most people skip. Write down what you actually need each year, and subtract. A retiree who needs $80,000 and is required to take $120,000 isn't $40,000 richer; the surplus lands in a brokerage account, and the tax return counts it as income anyway.

That gap is the number to manage, and it widens with age. The table factor falls to 12.2 by 90, so the same balance throws off about 8.2% a year instead of 3.8%.

Find out which threshold you'll cross first, then aim below it

Rather than tracking every rule, identify the one that catches you soonest. Put your projected income at RMD age next to these four numbers and see which is closest:

• $44,000 joint, $34,000 single. Above that combined income, up to 85% of your Social Security is taxable. The lower tier starts at $32,000 and $25,000. These base amounts are fixed in statute rather than indexed, so a rising RMD walks you up the scale permanently.
• $150,000 joint, $75,000 single. Above that modified adjusted gross income, the new deduction for older adults starts to phase out: An extra $6,000 per person 65 and older, or $12,000 for a couple in which both qualify, available for 2025 through 2028. It's the threshold most retirees don't yet know exists.
• $218,000 joint, $109,000 single. Cross it, and your Part B premium goes from $202.90 a month to $284.10, plus a Part D surcharge. Call it $975 per person for the year.

The action item is narrower than it sounds: In any year you control your income, target a number just under the nearest threshold instead of trying to minimize taxes generally. Coming in $2,000 under $218,000 is worth more than shaving $2,000 off a bracket in the middle of a range.

Watch the calendar at 63, and take your RMD before you convert

The Medicare surcharge runs on a two-year lookback, set from the return filed two years earlier. That makes age 63 a real deadline: the income you report that year determines your premium at 65.

If a large Roth conversion or a property sale is coming, doing it at 62 rather than 63 can keep it out of the calculation entirely.

Roth conversions are the main tool for shrinking future RMDs, since Roth IRAs aren't subject to distributions during the original owner's lifetime. But the conversion is taxable income in the year you do it, so it can trip every threshold above. Two rules make it manageable.

• First, size the conversion to a threshold, not to a goal: "convert as much as possible" is how people buy themselves a surcharge.
• Second, once you're subject to RMDs, take the distribution before you convert, because an RMD isn't eligible for rollover or conversion.

If you give to charity, donate from the IRA instead of your checkbook

In 2026 you can direct up to $111,000 per person from an IRA to a qualified charity as a qualified charitable distribution, available from age 70½, counted toward your RMD, and excluded from income rather than deducted.

The exclusion is the point: Because the money never enters your adjusted gross income (AGI), it doesn't push you toward the thresholds above, which a cash donation and a deduction won't do for you.

Two mechanics matter. The transfer has to go directly from the custodian to the charity, and donor-advised funds don't qualify. Tell your custodian in the fall, not in late December.

Run the survivor's tax return before you need it

Take this year's income and refile it mentally as a single taxpayer: one Social Security benefit instead of two, single brackets and Medicare thresholds at half the joint amounts. The IRA balance and the RMD barely change when a spouse dies, so the survivor often pays a higher rate on less income.

If that exercise moves the survivor into a higher premium tier, you've found a concrete argument for converting more now, while joint brackets and joint thresholds are still available. That's a decision to make in your 60s, not a discovery to make in your 80s.

A $3 million IRA looks better than $2 million on a statement. But if the larger balance produces bigger forced distributions, more taxable Social Security and higher Medicare premiums, the balance alone doesn't tell you much.

The 401(k) generation was measured on what it could accumulate. In retirement, the number that matters is how much of it you keep.

Related Content

• Stop Treating Your RMD Like It's a Chore: The Smartest Way to Handle It This Year
• Got $2.5 Million Saved for Retirement? Here Are the Huge RMDs You Must Take at 73, 75, 80 and 85
• The 7 RMD Tax Traps Waiting for You in Your 70s — and How to Start Disarming Them in Your 60s
• How to Calculate RMDs (Required Minimum Distributions) for IRAs
• 5 Costly RMD Mistakes That Will Put a Dent in Your Savings (and How Early Planning Can Help)

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

You spend most of your working life answering one retirement question: Am I saving enough?

Then you retire, and the questions change. Where will your monthly income come from, and which accounts should you tap first? How much should you set aside for taxes? When should you claim Social Security? What happens if the market drops right after you retire?

I've worked with plenty of people who spent years preparing financially for retirement but hadn't thought nearly as much about how they would manage their money once they got there.

Your first year of retirement is when you start getting some of those answers. Here are five decisions I'd focus on.

1. Decide where your retirement paycheck will come from

For most of your career, money showed up in your checking account every couple of weeks. In retirement, you're responsible for creating that paycheck yourself.

Start with how much you need to cover your regular expenses each month. Subtract Social Security and any other reliable sources of income, such as a pension. What's left is the amount you'll need to cover from savings and investments.

Then decide where that money should come from. You might have cash savings, a taxable brokerage account, a traditional IRA or 401(k) and Roth accounts. Withdrawing $50,000 from one of those accounts instead of another can have very different tax consequences.

Withdrawals from traditional retirement accounts are generally taxed as ordinary income. In a taxable brokerage account, you generally owe tax only on realized gains, not the entire amount you sell. Qualified Roth withdrawals are tax-free.

There's no withdrawal order that works for everyone. In some years, it might make sense to use more from a taxable account. In others, deliberately taking money from a traditional IRA could make sense.

If your income is lower in the years between retiring and claiming Social Security, for example, deliberately taking IRA withdrawals or carrying out Roth conversions could reduce future required minimum distributions (RMDs) and give you more control over taxable income later.

Boldin's retirement planning tool can help you compare different withdrawal strategies side by side and see how each one affects your taxes and how long your savings last. (Note: I'm head of support and a financial planning educator for Boldin.)

The important part is having a reason for where the money is coming from, rather than withdrawing from whichever account happens to be most convenient.

Once you've decided, you can set up regular transfers to your checking account. Many retirees like keeping the same rhythm they had while working, with a set amount arriving each month.

2. Figure out your new tax routine

Taxes can be one of the bigger adjustments during the first year of retirement.

While you're working, your employer withholds taxes from each paycheck. Once you retire, you may have several sources of income, each with different tax treatment and withholding options:

• Pension income and withdrawals from pretax retirement accounts are generally taxable
• Investment income and realized capital gains can add to your tax bill
• Depending on your other income, up to 85% of your Social Security benefits may be taxable at the federal level

You still need to pay taxes throughout the year. That might mean withholding from pension payments or IRA distributions, making estimated tax payments or using a combination of the two.

Pay particular attention if you retire partway through the year. Someone who retires in June might have six months of salary, a bonus or unused vacation payout, followed by retirement account withdrawals for the rest of the year. Add Social Security or investment income and that first tax year can look very different from the years that follow.

That higher income can also show up later. Medicare premiums are based on your income from two years earlier, so a big income year can mean IRMAA surcharges once you're on Medicare. Retirement or a reduction in work can qualify as a life-changing event, however, so you may be able to ask Social Security to base the surcharge on your more recent, lower income.

Estimate your tax liability before the end of the year. It's much easier to adjust your withholding or make an estimated payment than to find out the following April that you significantly underpaid. Taxes withheld from an IRA distribution are generally treated as paid evenly throughout the year, so a withdrawal late in the year can help cover a shortfall.

Once you've filed your first tax return as a retiree, review it. You'll have a much better picture of how your new sources of income are actually being taxed.

3. Decide when Social Security should start

Your retirement date doesn't have to be your Social Security claiming date, and treating them as the same decision can be expensive.

The difference in monthly income is significant. For anyone born in 1960 or later, full retirement age is 67. Someone with a $2,000 monthly benefit at 67 would receive about $1,400 by claiming at 62, or about $2,480 by waiting until 70. Because benefits are adjusted for inflation each year, that gap tends to widen in dollar terms over a long retirement.

If you retire before 70 and have enough savings to cover your expenses, you have a real choice. You could claim now and withdraw less from your portfolio. Or you could draw more from savings in the early years and let your benefit keep growing. Delaying can also create a window of lower-income years that works well for the Roth conversions and bracket planning covered earlier.

For married couples, this is a household decision. When one spouse dies, the survivor keeps the larger of the two benefits. That means the higher earner's claiming age affects not just their own income but how well the other spouse is protected later, potentially for decades.

A few first-year details are worth knowing:

• If you claim before full retirement age and retire partway through the year, a special monthly rule may let you receive full benefits for months you're no longer working, even if your earlier salary exceeded the annual earnings limit.
• If you claim and then change your mind, you can withdraw your application within 12 months. You'll have to repay what you received, and you can only do this once.
• If you've already reached full retirement age, you can voluntarily suspend your benefit to earn delayed retirement credits.

Health, longevity and cash flow all belong in this decision. What shouldn't drive it is timing alone. Claiming the month you retire shouldn't be an automatic decision. Run the numbers first.

4. Decide how you'll cover healthcare

For many people, health insurance is the biggest open question when they leave work. How you handle it depends largely on whether you retire before or after 65.

If you retire before 65, you'll need coverage to bridge the gap until Medicare. Common options include retiree coverage from a former employer, joining a working spouse's plan, continuing your employer plan through COBRA or buying a plan through the Affordable Care Act marketplace.

COBRA keeps your current coverage in place, but you'll generally pay the full premium yourself, which can come as a shock.

Marketplace coverage ties directly back to your withdrawal strategy because premium tax credits are based on your household income. Taxable traditional IRA withdrawals, Roth conversions and realized capital gains can all increase that income. The accounts you draw from in those early years can meaningfully change what you pay for health insurance.

If you're 65 or older, Medicare becomes the center of the decision. Your initial enrollment period runs for seven months around your 65th birthday. If you don't have qualifying coverage from current employment, missing it can lead to late enrollment penalties that last as long as you have Medicare.

This applies even if you've delayed Social Security, since enrollment in Medicare won't happen automatically in that case.

Ask yourself:

• What will my premiums, deductibles and out-of-pocket costs realistically add up to each year?
• If I'm choosing Medicare, do I want original Medicare with a Medigap and Part D plan, or a Medicare Advantage plan?
• Do I have health savings account (HSA) money I can use for qualified medical expenses?

Whichever route you take, ensure you're building healthcare into your budget as its own line item.

5. Decide what you'll do during a bad market

A market decline feels different when you're retired and withdrawing money from your portfolio.

Say you retire with $1 million and plan to withdraw $50,000 during your first year. Then a significant market decline occurs, and your portfolio is down to $850,000. You still need money to live on, but now you're taking withdrawals from a smaller portfolio. Selling investments after they've fallen also leaves less money invested to participate in a recovery.

Poor returns early in retirement can be particularly damaging when combined with ongoing withdrawals. This is known as sequence of returns risk, and it's worth planning for before it happens.

Ask yourself:

• How much of my near-term spending do I want in cash or other relatively stable investments?
• Which assets will I sell to fund withdrawals, and can those sales also help rebalance my portfolio?
• Which of my expenses are actually flexible?

Housing, utilities and groceries probably aren't going away because the market had a bad year. A major vacation, new car or large home project might be easier to delay.

You don't need to change your spending every time the market falls. Having some flexibility just gives you more options if a significant downturn happens early in retirement.

Replace assumptions with real numbers

A retirement plan you build while you're working is based largely on assumptions about a life you haven't lived yet. Your first year is when those assumptions start meeting reality.

After six months or a year, compare your actual spending with what you planned. Don't worry too much about individual months. Look for patterns.

If you planned to spend $80,000 a year and you're on pace to spend $95,000, figure out what's driving the difference. If you're consistently spending less than planned, you may have more room than you thought.

Look beyond spending, too:

• Are your taxes coming in where you expected?
• Are your withdrawals and cash reserves holding up?
• Are healthcare costs in line with your budget?
• If you delayed Social Security, does that decision still make sense?

Then update your plan with the real numbers and see whether you're still on track. If you're not, catching it after the first year gives you far more options than discovering it several years later.

Related Content

• 3 Options for Setting Up Your Retirement Paycheck: Choose the One That Suits You
• Five Mistakes to Avoid in Your First Year of Retirement
• 7 Money Habits of Retirees Who Never Stress About Spending
• Retirement Milestone Ages Most People Miss (And What to Do About Each One)
• I'm a Financial Planner: These 4 Spending Mistakes Can Derail Your Retirement Plan

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

For decades, the standard retirement playbook has been simple: Max out your traditional 401(k), take the upfront deduction and let the IRS wait. Watching your taxable income shrink feels like an immediate win.

But follow that path for 30 years and you may arrive at retirement with an unwelcome discovery. A portfolio that is almost entirely pretax isn't just a nest egg. It's an income tax bill in waiting, and you don't get to decide when it comes due.

I see this pattern often among successful savers. The problem isn't that they saved too little. It's that they saved in only one kind of account.

How a pretax nest egg becomes a tax trap

Every dollar you withdraw from a traditional 401(k) or IRA is taxed as ordinary income. Once required minimum distributions (RMDs) begin, at 73 for most of today's retirees and 75 for those born in 1960 or later, the IRS no longer waits for your permission.

Consider a married couple, both 75, with $4 million in traditional IRAs. Their RMD comes to roughly $163,000. Add $80,000 in Social Security benefits, up to 85% of which becomes taxable, and their modified adjusted gross income lands around $230,000. That's above the $218,000 threshold that triggers Medicare's IRMAA surcharges in 2026, raising Part B and Part D premiums for both spouses.

If one spouse dies, the RMDs keep coming, but the survivor files as single, with narrower brackets and an IRMAA threshold of just $109,000. This "widow's penalty" hits pretax-heavy portfolios hardest.

Heirs feel the pressure too. Since the SECURE Act eliminated the "stretch IRA" for most non-spouse beneficiaries, heirs generally must empty an inherited IRA within 10 years. A child who inherits a $1.5 million IRA at 50 could add $150,000 or more to their taxable income each year, right in their peak earning years.

The goal isn't to minimize taxes this year. It's to minimize them over your lifetime, and sometimes that means paying a bit more now to avoid paying far more later.

The case for three tax buckets

Because no one can reliably predict future tax brackets, markets or policy, the more durable approach is tax diversification: Spreading savings across three buckets.

Tax-deferred accounts, such as traditional 401(k)s and IRAs, lower your tax bill during peak earning years. Later withdrawals are taxed as ordinary income.

Taxable accounts, including individual, joint and trust brokerage accounts, are funded with after-tax dollars. They offer flexibility, with no early-withdrawal penalties, long-term capital gains rates and a step-up in cost basis for heirs.

Tax-free accounts, namely Roth IRAs, Roth 401(k)s and health savings accounts, are funded after tax, but qualified withdrawals are tax-free. Roth accounts carry no RMDs for the original owner, and heirs inherit them income-tax-free.

Holding all three gives you something a single-bucket strategy can't: Control. In the years between retirement and claiming Social Security, you can draw from pretax accounts deliberately, filling lower brackets without spilling into higher ones.

Large purchases get easier, too. If you're in the 24% federal bracket and need $100,000 for a new roof, you'd have to withdraw roughly $132,000 from a traditional IRA to net that amount after federal tax, which could push you into an IRMAA tier. Blending the withdrawal across all three buckets keeps both your effective rate and your Medicare premiums in check.

What I tell savers to do now

Split your contributions. If your employer plan offers a Roth 401(k), consider directing a portion of your contributions there. The 2026 employee limit is $24,500 across traditional and Roth combined. Starting this year, workers 50 and older who earned more than $150,000 in FICA wages the prior year must make catch-up contributions on a Roth basis, so many high earners are getting a Roth bucket whether they planned for one or not.

Use the back door. Direct Roth IRA contributions phase out in 2026 between $242,000 and $252,000 of modified AGI for joint filers ($153,000 to $168,000 for single filers). Above that, a backdoor Roth IRA remains available, and if your 401(k) permits after-tax contributions and in-plan conversions, a mega-backdoor Roth can move far larger sums.

Find your conversion window. The years after you stop working but before RMDs and Social Security begin are often your lowest-income years. Converting pretax dollars to Roth during that stretch, up to the top of a target bracket, locks in today's known rates.

Build the taxable bucket. A brokerage account alongside your 401(k) gives you access to funds before 59½ and a step-up in basis for heirs.

What not to do

Don't convert without a plan. A large Roth conversion can push you into a higher bracket and, if you're 63 or older, raise your Medicare premiums, since IRMAA looks back two years. And when you can, pay the conversion tax with outside cash rather than from the IRA itself to preserve more tax-free growth.

The bottom line

A lifetime tax projection doesn't require a crystal ball. If nearly all of your savings sit in pretax accounts, consider taking steps today to diversify across all three tax buckets.

Even modest changes, such as redirecting part of your 401(k) contributions to Roth or opening a taxable brokerage account, can give you far more control over your tax bill in retirement and leave a cleaner legacy for your heirs.

Related Content

• Strong Tax Strategies Deal With the Next Few Decades, Not the Next Deadlines
• 5 Tax-Saving Strategies That Can Help You Have a Better Retirement, From a Financial Planner
• I'm a Financial Adviser: This Is the Retirement Tax Assumption That Could Cost You
• Our Taxpaying 'Golden Hour' Won't Last: These 4 Urgent Moves Can Help Insulate Your Wealth Before It's Too Late
• As the Ultra-Rich Build Mega-IRAs, Is It Time to Reposition Large Growth Assets?

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

For many years, sunshine, sandy beaches, great golf courses, warm year-round weather and exclusive luxury communities drew an influx of new residents to Southwest Florida and Tampa Bay.

It has also become more than just a paradise for sun seekers. The "best" coast is now one of the most desirable destinations for high-net-worth individuals looking to relocate — not only for its exceptional lifestyle but for financial reasons, as well.

This area of Florida has emerged as a strategic destination for wealth preservation and long-term financial planning. Favorable tax policies, strong asset protection laws and a business-friendly environment are attracting entrepreneurs, executives, investors and multigenerational families, seeking to optimize both their quality of life and financial future.

No state income tax

Florida has welcomed more than 2 million new residents in the past decade, which has led to significant job growth and created a powerful influx of capital, entrepreneurship and wealth migration.

The state's absence of a personal income tax continues to be a significant driver of relocation decisions, particularly among individuals whose income is derived from asset growth, liquidation events and investment returns.

As many affluent families evaluate their income tax exposure and state of residency, this can have a meaningful impact on overall wealth preservation and financial planning.

For investors, this tax advantage can enhance cash flow, improve capital retention and provide greater flexibility when pursuing investment opportunities, charitable giving and succession planning.

Homestead exemption can save thousands

If someone is considering making Florida their domicile state, there are several financial advantages to consider.

Residents of all states are subject to federal income tax, but Florida residents enjoy no state income tax, estate tax, inheritance tax or intangible tax. This usually means tax savings on IRA withdrawals, pensions, annuities and employment income. However, if you own assets or derive income in or from another state, you might still be subject to income and estate tax in that state.

For example, a Wisconsin resident making more than $280,950 pays a state income tax of 7.65% over and above the federal income tax. A Florida resident's savings in this case is more than $20,000. IRA withdrawals are considered income, too.

Florida residents also enjoy property tax savings and Florida homestead creditor protection. Making your Florida home your homestead with the property tax assessor can lead to a $50,000 reduction in the taxable assessed value of your home.

In addition, the Save Our Homes Property Assessment Cap (PDF) limits the increase in your home's assessed value to no more than 3% annually — regardless of that year's actual appreciation. There are even portability provisions if you sell your home and acquire a new one.

More money to heirs

For high-net-worth families, Florida's absence of a state estate tax and inheritance tax can offer a significant advantage in preserving and transferring wealth. Florida permits a greater portion of a family's wealth to pass to beneficiaries without state-level taxation, which can be particularly valuable for families with substantial investment portfolios, business interests, real estate holdings and other significant assets.

The resulting tax efficiency can also support long-term portfolio growth by allowing more capital to remain invested rather than being directed toward state tax obligations. Over multiple generations, these savings might compound substantially, enhancing overall family wealth and providing greater flexibility in estate and succession planning.

The Florida wealth management industry is well equipped to assist families with sophisticated investment management, trust administration, financial planning, wealth transfer strategies and multigenerational guidance.

A strong housing market

Tampa Bay and Southwest Florida are attractive locations for long-term real estate investments. Several factors driving high-net-worth individuals to invest in real estate include:

Continued population growth. From Tampa to Marco Island, the broader Gulf Coast corridor has experienced substantial population growth during the past decade, with six regional counties collectively increasing from roughly 3.2 million residents in 2015 to more than 4.0 million in 2025 — an increase of approximately 25%.

Limited coastal land. As affluent individuals and businesses continue relocating to the region, demand for premium properties is increasing while available land remains constrained. This supply-demand imbalance can support long-term property appreciation, pricing strength and wealth preservation for strategically positioned investors.

Strong tourism and rental demand. Despite several hurricanes, tourism numbers have increased significantly since COVID. Southwest Florida International Airport (RSW) reported a record 11.15 million passengers in 2025, marking the busiest year in the airport's history.

Ongoing redevelopment and reinvestment. Southwest Florida continues to appeal to affluent buyers because of its new luxury residences, upgraded properties and modern community amenities, which elevate market desirability. Meanwhile, infrastructure improvements can strengthen resilience to climate-related risks. These enhancements might also support long-term property appreciation, premium rental rates and stronger demand from financially stable, long-term tenants.

The bottom line

Florida's Central and Southwest Florida coastlines have evolved into far more than premier lifestyle destinations. They offer a distinctive combination of financial, legal and lifestyle advantages that resonate with high-net-worth individuals and families.

The absence of a state income tax, favorable estate planning environment, robust homestead protections and strong real estate fundamentals create a compelling framework for wealth preservation and long-term financial stewardship.

Coupled with a desirable quality of life and an increasingly sophisticated business and investment ecosystem, the region has established itself as a leading destination for those seeking to align their personal, family and financial objectives within a single strategic location.

Hood Craddock, CPA, is director of family office services at Florida Trust Wealth Management in Tampa Bay and relationship manager for many families. He specializes in serving clients with complex estates, alternative and special assets and real estate investments including development.

James McArthur is executive vice president on the family office services team at Florida Trust Wealth Management in Tampa Bay. He has more than 30 years of experience in management consulting, family office counseling, restructuring, special situations, turnarounds and commercial finance.

Related Content

• Florida Tax Guide
• The Real Cost of Retiring in Florida: Insider Tips for Newcomers From a Wealth Adviser Who Lives There
• Why Do People Retire to Florida? 9 Things You Must Know
• Thinking of Retiring to Florida? These Hidden Costs Could Drain Your Budget
• Retirement Location, Location, Location: Can Florida Be Beaten?

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.

Editor's note: This article is the second in a three-part series on the benefits of taking a more thoughtful and proactive approach to financial planning. Part one is Protecting Family Wealth Means Allowing Your Kids to Get Involved — and Letting Them Make Some Mistakes. Here's Why.

In the first article of this series, I wrote about a quiet transition moment that happens as children move from financial dependence toward financial awareness and responsibility.

The next quiet transition moment is in the opposite direction, when we recognize that our aging parents may one day need help managing the lives they have spent decades building.

There is rarely a single moment when this shift begins. Your parents may be retired but still independent and active — traveling, volunteering and enjoying life. Nothing appears to require immediate attention, yet this is the best time to start planning.

As a member of the "sandwich generation," I know that caring for aging parents while juggling your own family's needs and your career can be challenging.

You'll need to have the right legal structures and documents in place, as well as an understanding of available resources. But the first step is to create continuity without making parents feel that their independence is being questioned or taken away.

Start with permission, not an account statement

Adult children often approach this conversation by asking for information: Where are the accounts? What are the balances? Is there a power of attorney? Those are important questions, but they may not be the best place to begin.

To a parent who has managed the family finances for decades, a request for information can sound like a request for control and signal distrust. The child intends to help, but the parent may hear, "You can no longer handle this."

A better opening is to ask what the parent wants for themselves. For example, ask your parents: If you ever needed help, who would you want to be involved? What would you want that person to know? What would make it easier for someone to carry out your wishes without disrupting your life?

This reframes the conversation around preserving independence. Good planning helps a parent remain in control for as long as possible and ensures that, if help is needed, it arrives on the parent's terms.

Build a roadmap, not a balance sheet

Adult children don't necessarily need to know their parents' net worth or see every account balance. Instead, what's important is how to find the right information when the time comes.

That roadmap might identify:

• Financial institutions and insurance policies
• Debts and recurring obligations
• Trusted advisers
• The location of important records

It should also address digital access. Increasingly, the missing information is a password, an authentication device or an online account that no one else knows exists.

Imagine trying to reconstruct a parent's financial life from a hospital waiting room. That is not the moment to learn that no one knows where the original documents are stored or whom to call about an investment account.

A plan should be reviewed periodically because advisers change, accounts move and instructions become outdated. A plan that can't be found or followed isn't much of a plan.

Make sure authority matches responsibility

Information alone doesn't give someone the legal authority to act. A parent may say, "If anything happens, you know what to do," but good intentions don't grant access to an account or the legal ability to make a decision.

Powers of attorney, healthcare directives and estate documents should be addressed while parents have the capacity and time to make thoughtful choices. The rules vary by state, so families should work with qualified legal counsel.

The conversation should go beyond signing documents. Does the appointee understand the role? Is the document structured to work when needed? Do relevant family members know whom the parent selected and why?

In my experience, the "why" matters the most. For example, if one sibling is selected and another isn't, the decision can be misread as a judgment about love, trust or competence. Meanwhile, the child who is selected may not even want the responsibility or have the time or expertise to fulfill it.

Responsibilities can also be divided, or an independent professional or institution may be appropriate. The desire to treat children equally does not always require identical roles. The key is communication because, as we all know, people tend to fill unexplained differences with their own stories.

Create a succession plan for the family

Business owners understand that an organization shouldn't depend indefinitely on one person holding all the knowledge. Families should apply the same principle to their own financial lives.

In many households, one spouse manages investments, the other pays household expenses, and only one knows the advisers. That system may work for decades. The vulnerability becomes clear when the person holding that knowledge can no longer manage it.

Ask yourself a simple question: Who is the backup?

The answer doesn't require an immediate handoff. An adult child might join an annual meeting with the parents' adviser. A spouse who hasn't managed the investments might receive a plain-language overview. A trusted person might know where the roadmap is stored without having access to use it today.

As in business succession, the objective isn't to push out the current leader. It's to protect what that leader built and make an eventual transition less disruptive.

Plan for life, not only for death

Estate planning often focuses on what happens after death. Aging raises equally important questions about the years before it.

• Where would your parents want to live if maintaining their home became difficult?
• Would they prefer help at home, a move closer to family or a community with increasing levels of care?
• Who will coordinate appointments, finances and caregivers?
• What resources are available?
• How might care affect both the parents and their children?

These are not only financial questions; they also involve housing, health, time, dignity and family relationships. Money creates choices, so the conversation should begin with the life the parents want to preserve. Only then can the family determine whether the legal and financial plan supports it.

Life doesn't unfold as a neat sequence of transactions. Parents may remain independent for many years, or circumstances may change suddenly. The objective is not to predict the precise moment when help will be needed but rather create enough clarity and continuity that the family can adapt when it is.

If your parents are healthy and managing everything well, this conversation can understandably feel premature. Yet, in many ways, that is exactly the point.

In the final article of this series, I will turn to another kind of quiet planning moment: The major life events that never happen. This includes a long-term partnership without marriage, a business that never got sold, and caring for loved ones falling outside the traditional definitions of family.

Related Content

• How to Talk to Your Parents About Money Without Overstepping
• How to Talk About Touchy Subjects With Loved Ones, Before a Crisis Turns 'Ifs' Into Reality
• How to Tackle Digital Estate Planning in Four Easy Steps
• Caring for Aging Parents Takes Planning Ahead and Patience
• Come as You Are: Wealth Management for Gen X

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.

Retirees wondering where to invest their money should keep this in mind: Investments don't happen in a vacuum. Every investment has a role to play, whether that's providing short-term income or long-term growth.

This means you have plenty of questions to consider as you review the options. Not everyone will have the same questions, but some that my clients have raised recently include:

• What's happening with interest rates, and how should that affect the investing choices you make?
• Is the commodities market worth a look? Those considering making gold and silver a part of their portfolios must weigh whether to buy and, if they do, how much.

As you look for answers, the goal should be to find strategies you can use to take advantage of market upsides while limiting losses on the negative side of the ledger.

Of course, while some investments are safer than others, retirees shouldn't eliminate all risk. If they do, their portfolios could come under assault from inflation, which is a risk in itself.

If all of this sends your head spinning, don't let it. With the right plan, you can both diversify your investments and ladder them, drawing from some accounts now to live on while allowing others to grow over time.

This approach can help improve the odds of a successful retirement.

Exploring options and strategies

Let's explore some of those questions to get a feel for the approaches you should be taking.

We remain in a rising interest rate environment, with interest on debt eating into our quality of life. It might be a long time before we see deflation.

For decades, there has been a 4% rule for withdrawing money from retirement accounts. Essentially, this rule said that in the first year of retirement, you would withdraw 4% from your accounts. Then each year afterward, you would withdraw 4% plus a little more to cover inflation. The theory was that, with this approach, your money would last about 30 years.

There's a problem with this 4% rule, though. It came about in the 1990s when interest rates were declining but still higher than today, allowing a larger return on investments. Also, life expectancy has increased since then, which affects how long retirees need their money to last.

This means you may need to reconsider whether the 4% rule still works for you or whether a different plan for withdrawals from savings should come into play.

Many people wonder whether they should include commodities, such as gold and silver, in their portfolios. The short answer to that is yes, but with the usual caveat. Commodities can be a nice hedge against inflation and a way to further diversify your portfolio.

But don't go overboard, placing too much of your faith and your money in an investment that might not provide the returns other investment options produce.

Gold and silver don't pay dividends the way stocks do. And like many other investments, they come with risk. Their value can drop, which means you should be careful about allowing commodities to occupy too large a percentage of your portfolio.

Of course, that's true for many investments. Diversification remains a key to avoiding disaster when markets don't cooperate as we'd like.

Planning for the future

So, what's a good approach to making the most of your money over the course of what could be a long retirement, enjoying life now while doing all you can to make sure your money lasts another three decades or so?

Imagine investments as a group of race cars revved up and ready to explode from the starting line. You might place a bet on one of those cars and live and die with the results. But what if you didn't have to choose just one car? What if you could take a more flexible approach and own a share of each race car, benefiting from the different advantages each can provide in its own short-term or long-term lane?

In many ways, this reflects the approach our firm takes to retirement income planning. We divide a client's assets among four buckets, each with a different time horizon and purpose. Because the money is not all needed at the same time, each bucket can be positioned differently based on the client's income needs, goals and tolerance for risk.

The objective is to provide dependable income for today while allowing the assets intended for later years to remain invested for long-term growth.

The first bucket is designed to fund approximately the first five years of retirement. Because this money may be needed soon, the priority is stability and liquidity, not maximizing returns. It might include cash, money-market funds or other conservative holdings.

The second bucket is intended for the following five years. With a longer time horizon, it may include instruments such as CDs, fixed annuities or high-quality bonds that seek to provide predictable interest while limiting market exposure.

The third bucket is positioned for income needs approximately 10 to 20 years into retirement. It may include a combination of equities and a fixed index annuity, providing greater growth potential while incorporating some protection against market downturns.

The fourth bucket is the long-term growth bucket. Because these assets may not be needed for 20 years or more, they can generally accept greater market risk in pursuit of the growth needed to help offset inflation and support income later in retirement.

By matching each investment strategy to the period when the money will be needed, clients are less likely to depend on volatile investments for near-term income. The result is a retirement plan designed to balance current income, stability, flexibility and long-term growth.

Conversation with a professional

Many people planning for retirement yearn for safety and eschew risk as much as possible.

This is where they'd benefit from a conversation with a financial adviser. While there are strategies that can produce income with minimal risk, playing things too close to the vest can limit flexibility and hurt a portfolio over the long term.

An adviser can help you determine your risk tolerance, explain the consequences of being too risk averse and help you create a retirement plan that will work best for you.

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.

Related Content

• The Best Inflation-Proof Investments for Your Portfolio
• The 'Ultra-Low-Risk Portfolio': A Good Choice for Wary Retirees?
• Best Conservative Investments for Retirees in Search of Simple Safety
• Longevity Is Your Greatest Asset in Retirement: If You Know How to Use It to Your Advantage
• Retirement Is Coming: This Is How to Conquer It, 'Game of Thrones' Style

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 an incentive to save for retirement, many employers offer to match employees' retirement contributions up to a certain percent.

Now the federal government is getting on board, launching a new program called the Saver's Match.

Starting in 2027, the government will match retirement contributions up to 50% of the first $2,000 for qualified low- and moderate-income workers. Understanding how it works now can give potential participants time to figure out if they qualify and how much they might be able to realistically save once the program begins.

The program replaces the Saver's Credit, which offered a nonrefundable tax credit to lower-income earners who made eligible contributions to employer-sponsored retirement accounts, IRAs or an Achieving a Better Life Experience (ABLE) account. As a result, someone with little to no federal income tax liability could have received little to no benefit from the credit.

However, the Saver's Match is different. Under this program, the federal government deposits the contribution directly into an eligible retirement account, giving qualified workers the benefit even if they owe little to no federal income tax.

Who qualifies

To be eligible for the Saver's Match, participants must be at least 18, cannot be claimed as a dependent on another person's return and cannot be considered a student as defined by the IRS. Workers must also make contributions to their retirement plans, although no minimum amount is required. However, there are income limits.

The IRS uses your income and tax filing status to determine eligibility and the size of the match. For example, a married couple who earns up to $41,000 per year, and files jointly, could receive the full 50% match.

Partial matches will be given to qualified couples who file jointly, earning from $41,001 to $70,999 per year. If both spouses qualify and each contributes at least $2,000 to an eligible account, the couple could receive a combined $2,000 federal match.

For single filers, a full match will be given to those earning up to $20,500 and $30,750 for the head of the household. As income increases, match rates decrease.

In addition to meeting the income and eligibility requirements, workers must also make contributions to qualifying retirement accounts, such as traditional and Roth IRAs, 403(b)s, governmental 457(b) plans and other employer-sponsored accounts. Contributions must also be new, meaning trustee-to-trustee transfers or rollovers don't count.

Although the maximum match is based on $2,000 in annual contributions, workers don't have to save that amount to benefit. Even smaller contributions can qualify for a match.

For example, someone who qualifies for the 50% match can only afford to contribute $20 per month. Over 12 months, that adds up to $240. With the match program, the government will also contribute $120, bringing the total to $360 in retirement savings that year.

For workers who already receive an employer match, an additional federal match only furthers the incentive to save for retirement. Since the two incentives are separate, qualified workers can benefit from both. When calculating the Saver's Match, only the employee's contributions will be considered.

Check your budget

While the Saver's Match program offers another incentive for people to save for retirement, maximizing the benefit might not make sense for every household. Those who have little to no emergency savings, are struggling to cover bills, or have high-interest credit card debt, might need to balance these priorities with saving for retirement.

Rather than focusing on getting the full match, workers should consider how much they can realistically afford to contribute without creating another financial challenge.

Although the Saver's Match doesn't take effect until next year, workers can prepare now. Start by determining whether household income is expected to fall within the eligibility limits.

Review retirement plans offered through your employer and determine if they offer a match. If your employer doesn't offer a retirement plan, explore opening an IRA.

As you plan for the program, review your current household budget and determine how much you could realistically contribute each month starting in January.

For someone expecting to qualify for the full 50% match, saving around $167 per month adds up to slightly more than $2,000, meaning you could earn the maximum $1,000 federal match.

The bottom line

Unlike the Saver's Credit, the Saver's Match could give qualifying workers a valuable opportunity to increase retirement savings.

Taking full advantage of the program doesn't mean you have to contribute the maximum amount. The goal is to find a contribution amount that fits within your budget while continuing to work on current financial priorities.

By understanding the eligibility requirements, reviewing existing employer retirement plans and determining an affordable amount to contribute each month, workers can enter 2027 with a plan for the new program.

Related Content

• Americans Need Help Saving for Retirement: Will the New IRA Program (and a $1,000 Contribution) Be Enough?
• Your State (and Trump) Wants to Help You Save for Retirement. Here's How
• How Auto-IRA Programs and the Saver's Match Could Be Retirement Game Changers
• How Auto-IRA Programs and the Saver's Match Could Be Retirement Game Changers
• SIMPLE IRA: What It Is and How It Works

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

When a loved one begins showing early signs of memory loss or cognitive decline — such as repeating questions, missing bill payments, or getting confused about appointments — most families' primary concern is medical care. That instinct isn't wrong, but it's incomplete.

Some of the most important decisions a family will make in the months that follow the symptoms or diagnosis of cognitive decline or dementia are financial, not medical, and the window to make them correctly and thoroughly tends to be shorter than people expect.

We've developed five basic steps that you can take — as part of a process starting at home and eventually involving your financial advisers — to ensure your loved one will be financially supported and that their intentions are known and carried out.

None of these steps can predict what the future holds, but taken together, they can create a comprehensive, flexible framework to help families make the hardest decisions with greater confidence.

I'm not just speculating — I've witnessed this as a professional who walked beside families who find themselves at this critical juncture.

Step No. 1: Compile information and write a plan

A physical and cognitive evaluation is an important first step, but so is understanding the full financial picture: Cash flow, insurance coverage, legal documents, the living situation and who is available to help.

This is also the moment to build a care team — close family or friends, a physician, a financial adviser and an attorney — so when decisions need to be made, the right people are in the room.

Gathering the information for a full financial picture and a care team might feel frightening or overwhelming, but uncertainty is almost always more expensive than clarity.

Step No. 2: Clarify your goals

What does "independence" mean to your loved one? Is staying in their own home the priority, or is proximity to family, social connection or freedom from home maintenance more important?

These are deeply personal questions, and the answers should come from early conversations, not assumptions made under pressure later.

It's also worth pressure-testing the financial assumptions behind those preferences — aging in place isn't automatically the cheaper option once home modifications, caregiving labor and ongoing support are factored into the plan.

Step No. 3: Make documentation current and bring in financial professionals

Conversations establish wishes. Documentation ensures those wishes are carried out.

Review healthcare and financial powers of attorney, advance directives, beneficiary designations and account records with your loved one and with their adviser or other financial professionals and confirm they're up to date.

Waiting too long to put these documents in place is one of the most common — and most avoidable — mistakes families make, because a loved one might know exactly what they want and still be unable to act on it without the proper legal authority.

Bringing a registered investment adviser (RIA) into the conversation and process early, alongside other credentialed professionals such as Certified Financial Planners (CFPs), certified public accountants (CPAs), and estate attorneys, helps ensure nothing falls through the cracks.

Step No. 4: Prepare to provide support

Once your loved one's priorities are known and documented, the next step is to tend to the practical realities of providing support.

On the safety side, that can mean home modifications, transportation alternatives, meal delivery or companion care — small, often lower-cost measures that meaningfully reduce the risk of a fall, a missed medication or financial exploitation.

On the financial side, it means understanding that healthcare coverage and long-term care are not the same thing. Medicare might cover medically necessary services, but the custodial, day-to-day care many people suffering from dementia eventually need — help with bathing, dressing, preparing and eating meals and medication reminders — generally falls outside that coverage and is usually paid out of pocket.

Reviewing costs, insurance benefits, and personal resources before this type of care becomes urgent avoids a painful surprise later.

Step No. 5: Revisit the plan frequently and adapt as needed

Even the most thoughtfully constructed and thorough financial plan isn't permanent. Health changes, family relationships and dynamics change, and a home or arrangement that works well today might not work in five or 10 years.

Planning ahead doesn't mean committing to one path for good — in many ways, it means the opposite: revisiting the plan periodically and ensuring decisions remain aligned with a loved one's intentions as circumstances evolve.

Start the conversation before a crisis

Every family, diagnosis and financial picture is different, which is why these conversations shouldn't be delayed until they become urgent.

Families who navigate planning for loved ones experiencing cognitive decline with the least stress are usually the ones who started talking — with one another and with trusted medical, legal and financial professionals — while they still had the luxury of time.

Sometimes the best place to begin is also the simplest: In your home with the family members and friends who care most. Expand the conversation to the financial professionals who have the best interests of your loved one, and your family, at heart.

Related Content

• No One Wants to Ask Their Aging Parents About Their Finances, But Here's How
• Caring for Your Aging Parents: A Seven-Step Guide
• As a Financial Adviser, I've Spent 30 Years Helping Clients Make Tough Choices for Aging Loved Ones. Now It's My Family's Turn — and This Is What I've Learned
• The Great Wealth Transfer is Creating a New Generation of Family CFOs
• Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain

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

For many individuals and families, purchasing life insurance can be an effective way to provide financial security for loved ones.

However, buying the policy is only part of the planning process. An equally important question is, "Who should own the policy?"

While many people own life insurance personally, high-net-worth families may also consider using an irrevocable life insurance trust (ILIT) to own and manage life insurance.

When structured properly, a life insurance trust can provide significant estate planning, asset protection and wealth transfer benefits.

What is a life insurance trust?

A life insurance trust is a legal entity created to own a life insurance policy on the insured's life. Rather than owning the policy personally, the trust becomes the owner and beneficiary of the policy.

Upon the insured's death, the life insurance proceeds are paid into the trust, and the trustee distributes or manages those assets according to the instructions contained in the trust document.

The estate tax advantage

One of the primary reasons affluent families use life insurance trusts is estate tax planning.

When an individual owns a life insurance policy personally, the death benefit is generally included in that person's taxable estate. For larger estates, this can increase federal and state estate tax exposure.

If an ILIT owns the policy, the death benefit may be excluded from the insured's taxable estate, potentially preserving a greater portion of the proceeds for heirs.

This can be especially valuable when life insurance death benefits reach several million dollars.

Example: Consider an insured with a $20 million estate that includes ownership of a $5 million life insurance policy. Under current estate tax law ($15 million exclusion in 2026), an estate tax may be assessed at death.

If, however, an ILIT owns the policy, the death benefit may be excluded from the estate, potentially reducing estate taxes and increasing the amount the beneficiaries ultimately receive.

Maintaining control over the distribution of assets

Many parents worry about leaving a large lump-sum inheritance directly to children.

A life insurance trust allows the grantor to establish rules regarding when beneficiaries receive funds, how funds may be used, whether distributions are made outright or in stages, protection against spendthrift behavior and long-term management for future generations.

For example, a trust may provide one third of assets at age 30, one third at age 35 and the remainder at age 40. Alternatively, the trustee may retain discretion to distribute funds for health, education, maintenance and support.

Protecting beneficiaries

Depending on applicable law, life insurance trusts can help protect inherited assets from various risks, including creditor claims from:

• Lawsuits
• Divorce settlements
• Financial mismanagement

Rather than distributing a large inheritance outright, trust assets can remain under the supervision of a trustee who manages distributions according to the trust's terms.

For families concerned about preserving wealth across generations, this protection can be invaluable.

Providing liquidity when it's needed most

Even when estate taxes aren't a concern, many estates face liquidity challenges.

Assets such as real estate, businesses, investment partnerships and family vacation properties may be valuable but difficult to sell quickly.

Life insurance proceeds held in a trust can help provide liquidity to help pay estate settlement costs, cover taxes, equalize inheritances among children, preserve a family business and prevent the forced sale of family assets.

Planning for blended families

Life insurance trusts can also serve an important role in blended family situations.

For example, an individual may want to:

• Provide income for a current spouse
• Preserve assets for children from a prior marriage

A trust can establish clear instructions regarding how and when proceeds are distributed, reducing the potential for disputes and helping to ensure the insured's wishes are carried out.

Important considerations

While life insurance trusts offer significant benefits, they aren't appropriate for everyone.

Some considerations include:

Irrevocability. An ILIT is intended to be irrevocable. The policy owner gives up direct ownership and control of the policy.

Administrative requirements. Trusts require ongoing administration, including trustee oversight, annual notices to beneficiaries (commonly known as Crummey notices) and proper documentation and recordkeeping.

Professional guidance. Because trust design, tax rules and estate planning objectives can be complex, it is important to work with qualified legal, tax, and financial professionals when evaluating whether an ILIT makes sense.

The bottom line

Purchasing life insurance is an important step in protecting your family's future. However, for many individuals, especially those with significant assets, the ownership structure of the policy can be just as important as the policy itself.

A properly designed life insurance trust may help:

• Reduce estate taxes
• Protect beneficiaries
• Control distributions
• Preserve family wealth
• Provide liquidity at death
• Support multigenerational planning goals

For families seeking to maximize the impact of their life insurance strategy, a life insurance trust can be a powerful planning solution that extends well beyond the death benefit itself.

Related Content

• Five Strategies to Keep Your Heirs From Blowing Their Inheritance
• 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
• Irrevocable Trusts: So Many Options to Lower Taxes and Protect Assets
• 8 Estate Planning Secrets You Can Borrow from the Ultra-Wealthy

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

When wealth transfer is discussed, people often focus (perhaps understandably) on the numbers: How much of our family's wealth will pass from this generation to the next? How should we divide those assets?

But that focus obscures how complicated and personal the transfer process can be. The process involves discussions about sickness and death, and about how equipped your children are to receive assets or take on responsibilities.

It means confronting questions many would rather put off:

• Who gets the vacation house?
• Who will take over the family business?
• Who will care for you when you cannot?

But procrastination carries financial and emotional costs.

According to a recent Bank of America survey, only 36% of ultra-high-net-worth respondents believe their heirs are very prepared to handle an inheritance, and 40% have experienced or expect family tension around inheritance.

These challenges aren't limited to the ultra-wealthy, as the results of the recent Kiplinger-Morning Consult survey show. Whatever the numbers, all families will benefit from starting preparations sooner rather than later.

A successful wealth transfer is an ongoing and complex process that requires more than moving assets from one generation to another. Knowledge, values and responsibilities are also being passed down. Yet I see far too many families focusing solely on the financial handoff.

Information must be passed down, too

The first step in any generational transfer is passing on information, and too many donors keep their heirs in the dark without realizing it. Unless you've explained how the family's financial life is managed today, your children may not know how to step in tomorrow.

Take a moment and consider who in your family knows:

• Where important financial and estate documents are kept (hint: don't put them in a safety deposit box no one can access but you)
• Which institutions hold the family's bank, investment and retirement accounts
• How to contact the family's accountant, attorney or financial adviser
• What bills and other recurring financial obligations need to be handled
• Who has authority to manage finances if a parent becomes incapacitated
• Who will coordinate caregiving, if needed

If circumstances permit, it's best to walk your heirs through at least some of this while you have the opportunity. Whatever discomfort that may create will pale in comparison to them having to perform forensics on your life in the middle of a health crisis or while grieving.

Prepare heirs before the transition

A perfectly documented estate plan doesn't prepare your heirs to step into the roles they may inherit. They need opportunities to understand the responsibilities before they're expected to assume them.

This can start with small steps:

• Tell heirs where your important documents are stored
• Introduce heirs to advisers and consider letting them sit in on meetings
• Show them how you expect your estate plan to flow — with or without numbers
• Educate your family about finances, trusts and other foundational concepts
• Explain why family finances are structured the way they are

You might eventually consider involving them in consequential conversations and decisions.

This gives heirs an opportunity to gain experience in the roles they may eventually assume. Importantly, it creates an opening to explain why you have made certain choices.

If there is a family business, consider explaining the values that shaped how the company was built and operated. If there is a vacation property you want to remain in the family, talk about why that matters to you and find out whether your heirs share that goal.

Those conversations can reveal misaligned expectations and goals early, when there is still time to adjust the plan rather than leaving the next generation to sort it out later.

The important part is beginning while the transitioning generation can still teach, listen and adjust.

Every family has a handoff to plan for

Succession issues are something everyone should consider, even if you're not handing off an operating company or a nine-figure estate. Of course, those families have lots of decision points, but all families must decide who will manage household finances, coordinate care and communicate with financial or healthcare professionals when parents are no longer able.

More time means more choices

No matter what or how much is being transferred, the best advice for every family is to start thinking about these issues early.

Unspoken assumptions are the root of many succession problems. Your children may have different expectations about who should take care of their parents or how much money they will receive. You may assume you know which child should handle the investments or business, only to be surprised that child has little interest in the responsibility.

These unmanaged expectations can lead to tension if the plans aren't discussed in advance.

Families who start early will have more time to communicate what's needed, to consider what structures best reflect their intentions and to decide who should take on which responsibilities.

That doesn't mean you have to give every detail about your financial picture or your estate plan (which may change over time). But by equipping your family with the tools they need to step into the roles you intend them to assume, you will also give them the confidence to handle those responsibilities.

Related Content

• How to Talk About Touchy Subjects With Loved Ones, Before a Crisis Turns 'Ifs' Into Reality
• Is Your Will Actually Fair? Why Estate Planning Isn't Just About the Math
• 4 Practical Ways to Prepare Your Children for Their Inheritance
• I'm an Estate Planning Attorney: These Are the Estate Plan Details You Need to Discuss (And What to Keep Private)
• These 5 Wealth Transfer Mistakes Can Wipe Out Everything You Worked a Lifetime to Build

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.

Every amateur golfer knows the moment. The ball keeps finding the trees, and somewhere on the back nine, a thought creeps in: Maybe I need new clubs.

You buy the latest driver and walk to the tee convinced this round will be different. It usually isn't. The clubs were never the problem. The swing was.

Artificial intelligence is the shiny new club of personal finance, and it's genuinely impressive. Ask it to model a Roth conversion or compare two funds and you get an answer in seconds that once took an analyst an afternoon.

I'm not here to talk anyone out of using it. I use technology every day, and the math these tools do is remarkable.

But a tool only answers the question you ask, and in financial planning, knowing what to ask is the entire game. If you don't know what to ask for, you get an answer that looks confident and complete while leaving the most important decisions untouched.

These tools also sometimes fabricate answers outright, a failure the industry politely calls a hallucination.

It's not the answer, it's the question

Type "What should I invest in?" into any AI tool, and it will hand you a portfolio. What it won't ask first is the part that determines whether you keep what you make.

• Where should that investment live: a taxable account, a Roth, a trust, an entity?
• Should the business you built be held personally, in an S Corp, or in a structure that shields it from a lawsuit that hasn't happened yet?
• When you buy the next property, do you use your own capital or borrow, and what does that choice do to your taxes, liquidity and estate a decade from now?