For many retirees, a pension is one of the greatest financial assets they have.

It provides predictable income, reduces the stress of market volatility and creates confidence that monthly expenses will be covered regardless of how their investments are doing.

But that guaranteed income comes with a trade-off that many people don't anticipate: Taxes. Much of the retirement advice you'll find online assumes retirees have little taxable income beyond Social Security and occasional withdrawals from savings. That's often not the case for pension recipients.

I know this because, as a CERTIFIED FINANCIAL PLANNER® and the founder and CEO of Peak Retirement Planning, I specialize in serving those with pensions. Between pension payments, Social Security and required withdrawals from retirement accounts, many retirees discover they're paying more in taxes than they ever expected.

The good news is that these challenges can often be managed with thoughtful planning (I wrote a book for those with pensions, The 2% Club, that you can request for free here).

Below are 13 ways a pension can reshape your retirement tax strategy.

No. 1: Your pension may keep you in a higher tax bracket

Many workers assume they'll automatically move into a lower tax bracket once they retire, and while that can be true for some households, retirees with pensions often experience something different.

Consider these three primary sources of retirement income:

• Pensions
• Social Security benefits
• Withdrawals from traditional retirement accounts such as 401(k)s, IRAs, TSPs, 403(b)s or deferred compensation plans

Each source may seem manageable on its own, but combined, they can produce enough taxable income to keep retirees in the same tax bracket, or even a higher one, than during their working years. That's why retirement tax planning should begin well before required distributions begin.

No. 2: Required minimum distributions can make the problem worse

Many retirees focus on today's tax bill but overlook how their taxes could evolve over the next 20 or 30 years. Required minimum distributions (RMDs), which generally begin at age 73 or 75, depending on your birth year, force you to withdraw a portion of your tax-deferred retirement savings annually.

Those required withdrawals typically increase as you age. If your investments continue growing over time, your account balances might also increase, resulting in even larger RMDs later in retirement.

This creates more taxable income, potentially pushing you into higher tax brackets, increasing Medicare premiums and affecting other aspects of your retirement plan.

No. 3: Retirement income is more connected than you think

Many retirees think about each income source independently, but in reality, every piece of your retirement income affects the others.

Your pension provides guaranteed income. Social Security may become taxable depending on your total income, and withdrawals from traditional retirement accounts add even more taxable income to the equation.

Because of the way these income sources interact, one decision can create a ripple effect throughout your tax picture. Coordinating them instead of managing each in isolation leads to better long-term outcomes.

No. 4: Higher income can increase capital gains taxes

Taxes in retirement aren't limited to ordinary income. Long-term capital gains have their own tax rates, currently 0%, 15% and 20%, but your taxable income determines which rate applies.

For retirees with substantial pension income, qualifying for the 0% capital gains rate might be difficult.

In addition, RMDs that aren't needed for spending are sometimes reinvested in taxable brokerage accounts, where future appreciation can generate additional capital gains taxes.

Understanding how investment income fits into your broader tax strategy can help reduce unnecessary taxes over time.

No. 5: Your pension may cause more of your Social Security to be taxable

One of retirement's biggest surprises is that Social Security isn't always tax-free. Depending on your overall income, up to 85% of your Social Security benefits may become taxable.

For retirees with sizable pensions, this often isn't a temporary issue. Pension income alone can push total income high enough that most or all of Social Security remains taxable throughout retirement.

While you might not eliminate this entirely, planning the timing of retirement account withdrawals and other income sources can sometimes reduce the overall tax burden.

No. 6: Medicare premiums are also affected by income

Taxes aren't the only expense influenced by retirement income. Medicare uses your modified adjusted gross income to determine whether you'll pay the income-related monthly adjustment amount (IRMAA), which increases premiums for Medicare Part B and Part D.

Higher pension income, larger RMDs and significant retirement account withdrawals can all contribute to crossing an IRMAA threshold. Even modest planning several years before Medicare enrollment could help reduce these additional healthcare costs.

No. 7: Don't overlook the widow's penalty

Retirement tax planning shouldn't stop with today's circumstances. When one spouse dies, the surviving spouse often experiences what financial planners call the widow's penalty. The surviving spouse generally:

• Loses one Social Security benefit
• Files taxes as a single taxpayer rather than married filing jointly
• Receives a smaller standard deduction
• Faces narrower tax brackets

This typically results in higher taxes despite having less household income.

Preparing for this possibility before it occurs can make a significant difference in a surviving spouse's financial security.

No. 8: Roth conversions may be especially valuable for pension holders

Because pension recipients often expect higher lifetime taxable income, Roth conversions frequently become an important planning tool.

A Roth conversion moves money from a traditional IRA or similar retirement account into a Roth IRA. Taxes are paid on the amount converted today, but future qualified growth and withdrawals are generally tax-free. Conversions can also reduce future RMDs.

The objective isn't necessarily to pay the least tax this year. Instead, it's to pay the lowest taxes possible over your lifetime, and in many cases, paying a reasonable tax rate today could help avoid larger tax bills decades later.

No. 9: There's no universal Roth conversion formula

A misconception about Roth conversions is that everyone should convert the same amount each year. The appropriate strategy depends on several factors, including:

• Your current tax bracket
• Expected future tax brackets
• Future RMD projections
• Medicare premium thresholds
• Social Security taxation
• Potential widow's penalty
• Estate planning goals
• Future tax law changes

Looking only at this year's tax return might lead to missed opportunities, and long-term projections often provide a clearer picture of whether a conversion makes sense.

No. 10: Tax diversification creates more flexibility

Many retirees have accumulated most of their savings inside tax-deferred retirement accounts. While those accounts provide valuable tax savings during working years, relying exclusively on them in retirement can limit your flexibility.

Creating a mix of assets in traditional retirement accounts, Roth accounts and taxable brokerage accounts gives retirees more choices when determining where to draw income, and that flexibility can make it easier to manage tax brackets from year to year.

No. 11: Where you hold investments matters, too

Asset location can be just as important as asset allocation. Different investments might be better suited for different account types.

For example, investments with higher long-term growth potential could benefit from being held inside Roth accounts, where future appreciation can occur tax-free.

Meanwhile, taxable brokerage accounts can offer favorable capital gains treatment and potential step-up-in-basis benefits for heirs.

Matching investments with the most appropriate account type can improve after-tax outcomes without changing your investment strategy.

No. 12: Pension distribution decisions have tax consequences

Some pensions offer a choice between receiving lifetime monthly income or taking a lump-sum distribution. While taxes shouldn't be the only factor in that decision, they deserve careful consideration.

Evaluating how each option affects future taxable income, Roth conversion opportunities, survivor benefits and long-term retirement goals can help retirees make a more informed choice.

No. 13: Charitable giving can reduce taxes

For retirees who regularly support charitable organizations, philanthropy can become part of an effective tax strategy. Qualified charitable distributions (QCDs) allow individuals age 70½ and older to donate directly from an IRA to qualified charities. Those distributions can satisfy charitable goals while reducing taxable income.

Donor-advised funds (DAFs) may also benefit retirees who wish to bunch charitable deductions, donate appreciated investments or simplify future giving.

These strategies can support causes you care about while improving tax efficiency.

Your taxes in retirement shouldn't be an afterthought

Many people build retirement plans around investments, income and spending, and taxes are often addressed only after those decisions have been made.

For retirees with pensions, that approach can leave meaningful planning opportunities on the table.

Taxes influence nearly every aspect of retirement, from investment withdrawals and Medicare premiums to Social Security, estate planning and charitable giving. Viewing taxes as the foundation of your retirement strategy, rather than an annual exercise, can help you make more informed decisions over the course of retirement.

After all, it's not simply about reducing this year's tax bill. It's about creating a retirement income strategy that remains efficient, flexible and sustainable for decades to come.

Related Content

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• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
• This Changes Your Social Security Decision (Especially if You're in the 2% Club)
• Do You Need $1 Million-Plus to Retire if You Have a Pension?
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)

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

People other than spouses who inherit annuities can be hit hard with taxes. But there are ways to lessen the blow.

Here's the background.

Unlike qualified financial accounts such as IRAs and 401(k)s, most nonqualified accounts don't provide tax deferral. A nonqualified deferred annuity, however, allows earnings to accumulate tax-deferred.

This is a major benefit of annuities because deferral lets your money compound faster without taxes eroding your returns.

Generally, only a surviving spouse can inherit a "nonqualified annuity" and enjoy full tax deferral for their lifetime, assuming no interest withdrawals are made.

But the IRS and state tax collectors eventually will take their share of all the accumulated taxes that were put off. The "nonspouse" beneficiaries will pay those taxes.

If a beneficiary takes the proceeds as a lump sum or large distributions over a few years, they might get kicked into a higher tax bracket. For an annuity with a large untaxed gain, a lot of the money would go to the taxman.

Fortunately, a nonspouse beneficiary can spread out payments and taxes to ultimately net more money:

• Annuitization is one way
• The annuity stretch is another way, if your annuity company offers it

The default method can cause a tax bomb

The default way is the five-year rule. Nonspouse beneficiaries can always take up to five years to receive the proceeds. They can take them gradually or in a lump sum anytime up until the fifth anniversary of the owner's death.

Spreading proceeds over five years sounds good, but there's a problem: An annuity normally includes both reinvested gains and nontaxable principal. The gains are distributed first.

Consider an annuity with $100,000 in gains and $100,000 in principal. The beneficiary won't receive the tax-free principal until after receiving all of the gains.

Someone who inherits this annuity and takes proceeds evenly over five years would still have $40,000 of additional taxable income in year one, which would likely result in a higher federal income tax bracket and perhaps a higher state tax rate.

Someone who waits five years would have that $100,000 taxable gain plus any additional interest earned in the interim.

For some people, however, delaying can pay off. For instance, in year one, the individual could be working and in a high tax bracket, but in year five, they could be retired and in a lower tax bracket.

Annuitization: More tax deferral

The other option that's usually available is annuitization. Here, the nonspouse beneficiary directs the insurer to annuitize the proceeds: Turn the money into a stream of income for either a set period of time or a lifetime. Nearly all insurers provide an annuitization option.

Besides guaranteed monthly income, annuitization offers continuing partial tax deferment. Each payment includes both taxable gains and nontaxable return of premium (the "exclusion amount").

Annuitization can be a great choice, but you give up flexibility. Once you've annuitized, there's no cash value. You've traded that for long-term income.

I'm a big advocate of having a lifetime annuity. It offers guaranteed income you can't outlive — your own private pension that serves as longevity insurance.

But I recognize that many are unwilling to exchange cash liquidity for future income.

Stretching it out without annuitizing

The stretch method is more complex but worth considering. Here, the beneficiary receives monthly, quarterly or annual payments based on his or her life expectancy according to an IRS table.

Since the payments are spread out over the life expectancy, annual income tax bills are smaller. And the additional taxable income is far less likely to push the recipient into a higher tax bracket than a lump sum.

The money remaining in the annuity continues to grow tax-deferred.

Flexibility is another plus. Many insurers allow the beneficiary to stop the scheduled payments and take the remaining balance as a lump sum.

What happens if the beneficiary dies prematurely? Suppose the beneficiary's life expectancy was 20 years, but he or she dies after just 10 years. Most insurers permit a properly named successor beneficiary (such as a grandchild of the original owner) to continue receiving the remaining payments. This is an important advantage of the stretch option.

Not so fast!

Unfortunately, a beneficiary often can't use the stretch plan because the issuing insurance company has to be willing to support it. My ballpark estimate is that perhaps only 15% to 20% of companies do.

Nonspouse beneficiaries generally have one year from the death of the annuity owner to set up the stretch distribution. Only people — not trusts or charities — can choose it. Only nonqualified annuities are eligible.

When available, the stretch option can be applied to a multi-year guarantee annuity (MYGA), which behaves much like a bank certificate of deposit, or an indexed annuity.

Ask questions

No one distribution method is best across the board. Fortunately, if there are multiple beneficiaries, each one is free to choose the option that is best for them.

If you're an annuity buyer, ask your agent if the issuing insurer offers a stretch option if that's important to you.

If you're a nonspouse beneficiary, consider your tax situation and financial needs and compare your two or three distribution options before you decide on one.

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

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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 financial decision, from paying the monthly bills to investing for retirement, contributes to a larger picture of long-term financial health.

While markets, tax laws and economic conditions continue to evolve, the habits that most often determine financial success remain remarkably consistent. The difference between staying on track and falling behind is often shaped by a handful of everyday decisions that compound over time.

Building wealth is about establishing strong financial habits, planning for the unexpected and making intentional choices with the resources you have today, not about finding the perfect investment or following the latest financial trend.

By recognizing some of the most common money mistakes and understanding how to avoid them, you can create a stronger foundation for both your current financial well-being and your future goals.

Mistake No. 1. Focusing on small expenses while ignoring the big ones

Many budgeting conversations center on cutting out lattes or canceling streaming subscriptions, essentially finding ways to save a few dollars here and there.

While those habits can help, they often distract from larger expenses, such as housing, transportation and food, that have a much greater impact on long-term financial health. These typically consume the largest portion of a household budget and offer the greatest opportunity for meaningful savings.

By downsizing a home, choosing a less expensive vehicle, utilizing public transportation or reducing restaurant and delivery spending, you can have a far greater financial impact than trimming minor discretionary purchases.

As a general guideline, housing costs should ideally remain at or below 30% of your gross monthly income.

Overall fixed expenses, such as housing, utilities, debt payments and food, should generally fall within 50% to 60% of your gross income to maintain financial flexibility and avoid living paycheck to paycheck.

Mistake No. 2. Avoiding financial conversations and planning

Money remains one of the most uncomfortable topics for many families and couples. Avoiding these conversations often leads to unclear goals, inconsistent saving habits and conflicting financial priorities.

Without defined objectives, it's difficult to create a road map for the future. You may focus exclusively on current spending needs while neglecting long-term goals such as retirement, education funding or debt reduction.

Additionally, many people focus heavily on investing while overlooking the foundational elements of financial security, like emergency savings, insurance and estate planning.

An emergency fund can help prevent a temporary setback from becoming a long-term financial crisis. Unexpected expenses such as job loss, medical issues or family changes can quickly force people into high-interest debt if adequate reserves are not available.

Disability insurance, umbrella liability coverage and appropriate health, auto and homeowners insurance help protect against risks that could otherwise derail years of financial progress.

Younger people may assume they don't need these protections quite yet, putting them off until they are "ready," but unexpected events rarely arrive on schedule.

Securing reliable insurance can protect you from draining your finances in a catastrophic situation or taking on a massive amount of debt.

Likewise, estate planning, including having a basic will, powers of attorney, beneficiary designations and trust planning, where appropriate, can give you peace of mind, ensuring that assets transfer in the appropriate way while reducing unnecessary complications for loved ones.

Working with a financial planner can help bring structure and accountability to the process. Beyond investment advice, a qualified adviser can assist in developing these foundational elements, as well as help establish goals, educate you on key financial topics, facilitate family discussions and create financial plans designed to support both short- and long-term objectives.

Mistake No. 3. Losing track of financial accounts and investments

As career paths become increasingly dynamic, people often find themselves with retirement accounts from several employers. Failing to monitor old employer-sponsored plans, such as 401(k)s and 403(b)s, can result in forgotten assets and missed opportunities.

Before leaving an employer, you should evaluate whether it makes sense to leave assets in the current plan, roll them into a new employer's plan or transfer them to an IRA. You could also withdraw the assets as cash, though that would not be recommended because you may owe taxes and a potential 10% penalty.

Equally important, you'll want to ensure that assets are actually invested. Many rollover accounts default to cash-like holdings until investment elections are made. Investors can unknowingly miss years of market growth simply because they assumed their money was already invested.

Even automatic enrollment features deserve periodic review. While they are highly effective at encouraging participation, default contribution rates and target-date funds may not align with an individual's actual goals, risk tolerance or retirement timeline.

Mistake No. 4. Ignoring the impact of taxes

Taxes play a significant role in long-term wealth accumulation, yet they are often treated as an afterthought.

Decisions regarding retirement accounts, investment account types and withdrawal strategies can have a meaningful impact on after-tax outcomes.

For example, some investors may benefit from contributing to Roth accounts and paying taxes today, while others may get more value from traditional pretax contributions.

Maintaining a mix of taxable, tax-deferred and tax-free accounts can create flexibility in retirement and help manage future tax uncertainty.

While no one can predict future tax law changes, investors can still make informed decisions based on today's rules.

Mistake No. 5. Using debt to finance lifestyle purchases

The rise of Buy Now, Pay Later programs and easy financing options has made it possible to borrow for nearly any purchase.

While debt can be a useful tool for major purchases such as a home, education or transportation, it becomes far more problematic when used to fund discretionary spending.

Financing concert tickets, furniture, electronics, vacations or everyday wants can create a cycle of payments that limits future financial flexibility and increases overall costs through interest charges and fees.

Before financing a purchase, individuals should ask whether the item is a need or simply a want. In many cases, creating a savings plan or paying cash is the more financially responsible approach.

Financial success is rarely determined by a single decision. Instead, it is shaped by the cumulative effect of everyday choices.

By focusing on major expenses, preparing for unexpected risks, staying organized, investing thoughtfully, managing taxes strategically and using debt responsibly, you can avoid many of the most common mistakes that continue to hold many people back.

The goal should be to create a financial plan that supports both your current lifestyle and your future goals.

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

A few years ago, a couple came to me after losing their adult daughter. They had millions of dollars in low-basis stock mutual funds sitting in their accounts, money they didn't need and never would for their own living expenses.

What they needed was a way to honor their daughter's memory. As a wealth adviser with 33 years of experience, I helped them open a donor-advised fund (DAF), moved the appreciated shares into it and started directing gifts to causes tied to her life.

Their two surviving sons got involved in choosing where the money went. What began as a tax strategy became something the whole family looked forward to discussing every year.

If you're sitting on appreciated stock, that same option is available to you. Unfortunately, most people never get there, simply because they don't know the option exists.

The mistake I see constantly

Here's a conversation I see play out over and over: Someone mentions they wrote a check to their favorite charity. I ask where the money came from. They tell me they sold some stock that had done well and donated the proceeds.

It sounds generous, and it is, but it's also the expensive way to give.

When you sell appreciated stock first, you owe capital gains tax on the growth before a dollar reaches the charity.

Donate the stock directly instead, and you skip that tax bill entirely while still claiming a deduction for the full fair market value. You also free up cash you'd otherwise have spent, since the stock itself becomes the gift.

In my years doing this work, I've watched six to eight new families discover this strategy for the first time over just the past five years, usually after their previous adviser never mentioned it.

In my opinion, it's the lowest-hanging fruit in the entire charitable planning world, and most people just don't know it's there.

The 'family charitable checkbook'

The easiest way to put this into practice is through a DAF. I describe it as a family's charitable checkbook.

You fund the account with the "currency" of appreciated stock, mutual funds or ETFs, transferred directly from your brokerage account to the fund.

From there, you "spend" the balance over time by recommending grants to the causes you care about. You don't have to distribute the full balance in the year you fund it, though I encourage the families I work with to do exactly that when they can.

Once the account is open, funding it is simple. Most custodians, like Schwab, have an online process for opening and contributing to a DAF, and moving shares in typically takes a matter of days.

One thing worth knowing going in: A gift to a DAF is irrevocable. You get the deduction the year you fund it, and from that point on, the money belongs to the fund. You only recommend where it goes.

There's also a tax-timing move worth knowing: Bunching. Instead of donating a similar amount every year, you concentrate two years' worth of giving into one, fund the DAF heavily that year to clear the itemization threshold, then skip funding it the following year.

Fund again in year three to cover years three and four, and repeat. You still distribute money to charities on your normal schedule. You're just timing the tax deduction more efficiently.

For high-net-worth families, a private family foundation is sometimes floated as an alternative. I'm not against them, but I haven't had a client start one in three decades, mainly because the setup costs and annual administrative burden rarely pencil out against what a DAF accomplishes for a fraction of the cost.

Where the real value shows up

The tax efficiency is what gets families in the door. What keeps them engaged is what happens at the kitchen table afterward.

I encourage older generations to give each family member — children and grandchildren alike — a budget they can direct through the fund.

The catch: Each person must explain what organization they want to support and why. That single requirement turns a financial transaction into a conversation.

Grandchildren ask their grandparents how they built the wealth in the first place. Parents and grandparents get a natural opening to talk about the sacrifices that got them there.

I've watched these conversations surface a level of gratitude in younger family members that a will or a trust document never will.

Before you open an account, talk as a family about what you value and want to support. That conversation matters more than the mechanics of the fund itself.

Where to start

If you're holding low-basis stock, mutual funds or ETFs you don't need for living expenses, don't sell them to fund your giving. Log into your brokerage account and look up the process for opening a DAF.

It's a shorter process than most people expect, and it's available at nearly every major custodian.

You already have a valuable asset in that appreciated stock. Don't sell it and lose part of it to taxes before you've considered the alternative sitting right in front of you.

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

Just as quickly as summer arrived, it seems to be nearing an end.

Soon, the piecemealing of childcare and the cost of summer camps will ease. The normal routine will resume (whatever normal looks like, that is).

Now is the time to refocus on the expenses that come with back-to-school planning. Tuition, school supplies, assistive technology, housing and transportation are at the forefront.

• How do you best plan and save for these expenses?
• Which accounts should you use to cover them?
• What can you do to protect any government or community-based benefits along the way?

Three of the main savings vehicles to consider are ABLE accounts, 529 plans and special needs trusts. Coordinating across these accounts could provide flexibility and efficiency in your plan.

It's worth spending time with a financial planner who focuses on special needs planning to understand how to best utilize each of these tools in coordination with one another.

For example, if your child has a 529 plan, you might consider rolling funds directly into an ABLE account, creating more flexible, broader use of funds for your child.

ABLE accounts may offer certain tax advantages and savings while maintaining benefits for your child. We'll focus on how to take advantage of this tool, which tends to be underutilized.

The priority for many families is to support their child's academic and developmental opportunities without jeopardizing benefits such as SSI, Medicaid and potentially housing and transportation resources. ABLE accounts can be a great tool to accomplish this goal when used properly.

Withdrawals used for qualified disability expenses (QDEs) aren't counted as resources when determining eligibility for government benefits. The key is that the expenses are tied to maintaining or improving health, independence or quality of life, a standard that's applied broadly.

Payments can be made directly from the ABLE account to the institution for ease of tracking and annual reporting. Keep a file or folder with invoices, payment records, expense receipts and proof of enrollment.

Contributions and gifting

The annual contribution limit for an ABLE account is $20,000 in 2026. Existing 529 plans can be rolled into the ABLE account, providing greater flexibility in how money is used. Loved ones can also contribute annually as part of their gifting strategy.

Keep in mind that the annual contribution limit includes new money or gifts, inheritance and rollovers. There are additional ways to add funds beyond this limit, including through the beneficiary's earned income.

Investment allocation

Generally, ABLE accounts may offer tax-deferred growth and tax-free withdrawals for QDEs, potentially enhancing the compounding benefits of investing. Balances that will be used for near-term educational expenses could be invested conservatively.

Longer-term goals such as graduate school or career development can have a growth-oriented strategy. The overall allocation within these accounts should be revisited annually to help stay aligned with the timing of upcoming expenses.

Qualified disability expenses

The definition of a QDE is broad, allowing these funds to cover many everyday expenses, including back-to-school costs. These costs include:

• Tuition such as at community colleges, universities or technical schools
• Adaptive technology, including speech-to-text software or specialized equipment
• Housing costs, on or off campus
• Coaches, tutors and academic specialists
• Transportation expenses, including ride services or modified vehicles

An ABLE account is a tool that can foster independence, growth and protection. It allows beneficiaries to pursue education and career development without impacting their government benefits.

As you think about back-to-school planning, consider incorporating a strategy that integrates the ABLE account, 529 plans and special needs trusts.

Work closely with your special needs attorney and financial advisor to incorporate these tools into your overall financial plan and ensure you are protecting benefits.

This type of coordinated approach can offer greater flexibility in education funding, smarter gifting strategies, an enhanced quality of life and improved tax efficiency.

To compare state ABLE programs side by side before opening or funding an account, the ABLE National Resource Center's state review tool is a good place to start.

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

It seems that not a day goes by that we do not see a court ridiculing attorneys for filing frivolous cases in bad faith, clearly aware that what they are doing isn't supported by facts or the law.

In other words, they're doing things that they know are wrong and violate our ethical obligations as lawyers — often while under pressure to follow orders.

While violations of legally mandated professional ethical and moral codes are common in many professions, today's story stems from an email from a young lawyer. "Ruby" was debating whether she should remain married and wanted to know "what the psychological mechanism is that transforms a fair-minded person into someone I do not know anymore."

In the beginning, he despised lawyers who frustrate fair resolutions

"(My husband and I) got married when we were in law school," Ruby wrote. "Ben would get visibly upset when professors discussed insurance defense firms that, instead of fairly resolving claims and lawsuits, did everything possible to frustrate a resolution just to build up more billable hours. They'd drag cases out, doing bad things for a buck," which Ben agreed was awful.

"After graduation, an insurance defense firm made him a great offer — and agreed to hire me as well — to establish a wills and estate planning department.

"At first, they gave Ben run‑of‑the‑mill, small cases to handle and settlement authority — which he enjoyed using. Then increasingly complicated ones came along with a long list of work to be done. He admitted that, often, much of it was completely unnecessary as the matters could have been settled promptly, saving the clients thousands of dollars.

"Mr. Beaver, one night after Ben drank too much wine, the expression in vino veritas was proven true — he blurted out, 'I do not care that these cases involve people who were injured through no fault of their own. They are money makers for the firm, and I don't give a damn about putting them through the wringer, as this increases my billable hours. And, besides, how do I know they aren't faking it?'

"Could you do a story about how someone can go from wanting to do good and help people to becoming weak, collapsing morally and doing bad things? I want to confront my husband with what he has become, and unless he gets back to his former self, I cannot remain in this marriage."

Moral disengagement in the professions

I forwarded Ruby's email to a friend of this column, psychology professor Dr. Luis Vega at California State University, Bakersfield. Vega teaches a fascinating course there, called The Psychology of Good and Evil.

"Ruby is describing something far more than simply individual weakness," Vega said. "Ben is caught in a system that reshapes a person's ethics, a psychological transformation of values under chronic pressure found in high-pressure professional cultures, known as moral disengagement/corruption of the soul.

"It is affected by the powerful virus of apathy, profit-making and feeding greed at any cost. People like Ben are engulfed in a justification of their actions, a self‑persuasion process of believing the 'victims' deserve what comes to them, and an 'I know better' attitude.

"Psychologists and marriage counselors find that spouses of lawyers and other professionals often articulate a profound moral disconnect as a reason for divorce. Notably, caving in to pressure from management to earn the firm more money — performing unjustified work that ramps up billable hours — while losing their ethical compass."

Vega added, "It doesn't happen overnight, but with gradual — required — repeated behavioral adjustments that make prior unacceptable actions seem quite normal. Ben might not be aware of what has happened, while Ruby sees the change because she knows who he was before being 'reprogrammed' by the firm.

Vega set out a road map for how moral disengagement silences an individual's conscience, driving wrongful and unethical conduct in professional settings. This leads to them conforming to the norms of the group for income, status and identity, a step-by-step process in which:

• Senior partners model the behavior that teaches associates that promotions depend on compliance. They learn that dissent will have personal, negative economic and employment consequences.
• Principles and values that were once deeply held are transformed, not because the lawyer wants to be unethical, but because the cost of resisting the group becomes unbearably high.
• When unethical behavior becomes habitual, it can destroy personal relationships through a rationalization process. Spouses become emotionally detached by continually hearing, "Everyone at the firm does it, and clients never know. Anyway, my job is to save the insurance company money, and being fair has nothing to do with the practice of law."

What makes this possible?

The following mechanisms combine to produce a husband Ruby no longer recognizes:

Cognitive dissonance reduction. Ben initially wanted to practice law economically, but his firm requires maximizing billable hours, which creates dissonance (discomfort) that the brain rationalizes so that Ben now believes, "I am being thorough, not doing unnecessary work or dragging the case out."

The slippery slope. Losing one's values happens gradually, with one legal, ethical or moral compromise after another, resulting in medical overtreatment, corporate and political scandals and lawyers who build a reputation for doing anything when the price is right.

Identity drift. Ben began his life as a lawyer with strong ethical and moral values. His work environment has become so dominant that his professional identity has replaced his personal identity. Ruby says to herself, "He is not the same Ben I married. What happened? This is not the same, wonderful guy I fell in love with."

What should Ruby do?

Vega said, "Ruby needs to say, 'Ben, if I turned into the total opposite of the person you married, would you want to stay with me? I am losing you to this law firm that has corrupted your soul. I love you, Ben. Please come back to me, back to us.'"

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

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

Many successful families have a high degree of confidence in their financial plans. They've saved well, invested thoughtfully, purchased insurance, built equity in a home, created an estate plan and worked hard to provide stability for the people they love.

But there is one area that can still catch even the most prepared affluent families off guard: The cost and complexity of future care.

The issue is not simply whether a family has enough assets. The real question is whether those assets are organized, accessible and structured in a way that can support care decisions if health, mobility or cognitive capacity changes.

Waiting until care is needed can limit options, increase stress and force families into decisions they might not have made with more time and planning.

Future care planning isn't just a health care issue. It's a family financial planning issue.

Healthcare and custodial care are not the same thing

One of the most common misunderstandings that families have is the difference between medical care and custodial care.

Medical care generally involves doctors, hospitals, prescriptions, surgeries, rehabilitation and treatment for illness or injury. Most people expect Medicare or health insurance to play a role in those costs, depending on the situation and coverage.

Custodial care is different. It generally refers to help with the activities of daily living, such as bathing, dressing, eating, moving around the home, using the bathroom or managing basic day-to-day needs. This care might be provided at home, in an assisted-living setting, in a memory care community or in a nursing facility.

That distinction matters because standard health insurance and Medicare generally don't cover long-term custodial care in the way many families assume they will. Medicare might cover certain short-term skilled care needs under specific circumstances, but it's not designed to fund years of ongoing assistance with daily living.

For families that haven't planned for this distinction, the realization often comes at the worst possible time; when a parent has fallen, a spouse has received a diagnosis, or adult children are trying to determine what level of care is needed and how it will be paid for.

One of the most common, and potentially costly assumptions families make is believing that Medicare will pay for help at home with activities such as bathing, dressing or other daily needs. In most cases, when that assistance is the only care someone needs, Medicare doesn't cover it.

The same misunderstanding often applies to assisted living: Medicare doesn't pay for the room, board and ongoing custodial care associated with assisted living, although Medicare coverage might still apply to separately covered medical services a resident receives. Families who assume otherwise can find themselves facing significant expenses they never built into their financial plan.

The cost is not just financial

When families think about future care, they often focus on the dollar amount. That is important, but the cost of care is broader than the monthly bill.

There is the emotional cost of making decisions under pressure. There is the logistical cost of coordinating care among family members, physicians, facilities, aides and financial professionals. There is the opportunity cost for adult children who might need to step away from work or their own families. There is the relationship cost when siblings disagree about what should happen or who should pay.

There is also the cost of uncertainty.

If no one knows where accounts are held, whether long-term care insurance exists, who has power of attorney, what income is available or what a parent's wishes are, every decision becomes harder. A family that is already dealing with a health event might also be forced to reconstruct an entire financial life at the same time.

That is why future care planning should begin with organization.

Review income, assets and liquidity before care is needed

A strong care plan starts with a clear picture of the resources available.

Families should review income sources such as Social Security, pensions, retirement plan distributions, annuity income, investment income and business or rental income.

They should also understand major expenses, including property taxes, mortgages, insurance premiums, charitable commitments, family support obligations and lifestyle spending.

From there, the question becomes: If care were needed, how would it be funded?

• Would the family draw from taxable investment accounts?
• Retirement accounts?
• Cash reserves?
• Home equity?
• Would selling a second home or investment property be considered?
• Are there assets that are illiquid or emotionally difficult to sell?
• Are there trusts or estate planning structures that could complicate access to funds?
• Is one spouse financially secure if the other needs care for an extended period?

For wealthier families, the issue might not be whether the money exists. It could be whether using that money for care disrupts other goals, such as supporting a surviving spouse, leaving assets to children, preserving real estate, funding charitable commitments or maintaining flexibility in the estate plan.

This is where planning matters. Families should understand not only what they own, but how those assets could be used under different care scenarios.

Understand what long-term care insurance actually provides

Some families purchased long-term care insurance years ago and have not reviewed the policy since. Others assume they don't need it because they've accumulated significant wealth. Both assumptions can create blind spots.

If a policy exists, it's important to understand the details.

• What triggers the benefit?
• How many activities of daily living must someone be unable to perform?
• Is there an elimination period before benefits begin? How much does the policy pay per day or per month?
• Is there an inflation rider?
• How long do benefits last?
• Does the policy cover home care, assisted living, nursing home care or memory care?
• Are there shared benefits for spouses?

These details matter because a long-term care policy might not fully cover the level of care a family wants. It could provide meaningful support, but still require additional personal resources.

For families without coverage, the planning conversation is different. They might need to decide whether they're comfortable self-funding care, whether hybrid insurance solutions make sense, or whether assets should be repositioned to create more liquidity and flexibility.

The right answer varies. The important thing is not to make assumptions.

Look beyond premiums when evaluating Medicare coverage

Long-term care is not the only health-related expense families should consider. Medicare coverage decisions themselves can also have significant financial implications, particularly when someone develops a serious illness and requires extensive treatment.

Under Medicare, Part B generally leaves beneficiaries responsible for 20% of the Medicare-approved amount for many covered outpatient services after the deductible is met. Medicare also has no annual out-of-pocket limit unless the individual has supplemental coverage. During a long course of treatment, those costs can become significant at precisely the moment a family is focused on a health crisis rather than a financial one.

That is one reason the choice of Medicare coverage deserves more than a simple premium comparison. Medigap policies are designed to help cover some of the coinsurance, co-payments and deductibles left by Medicare, while Medicare Advantage plans have annual out-of-pocket limits for covered Medicare services but might use provider networks and require prior authorization for certain services. The trade-offs are different, and the least expensive option upfront might not necessarily be the best fit for every family.

Families should also understand that Medicare decisions made at 65 could become more difficult to change later. Depending on the circumstances and state law, someone who later wants to move from Medicare Advantage to original Medicare with a Medigap policy might face limited enrollment opportunities or medical underwriting.

For families building a future care plan, Medicare coverage is another variable worth reviewing early, alongside long-term care insurance, liquidity and estate planning, rather than revisiting it after a serious diagnosis.

Consider the home as both an asset and a care decision

For many families, the home is central to future care planning.

Most people would prefer to remain in their homes as long as possible. That can be a wonderful goal, but it requires planning.

• Is the home safe for aging in place?
• Are there stairs, bathrooms or entryways that may become difficult?
• Could in-home care be brought in?
• Would one spouse be isolated if the other passed away? Would adult children be nearby enough to help?

Aging in place might also be more expensive than families expect, particularly if around-the-clock care becomes necessary.

On the other hand, downsizing, moving closer to family or transitioning to a senior living community might offer more support but can involve emotional and financial trade-offs. Families might need to weigh property taxes, maintenance, capital gains issues, estate goals and the emotional attachment to a long-time home.

This is not merely a real estate decision. It is a lifestyle, safety, liquidity and family decision.

Know when elder law planning might be relevant

Elder law planning could become important when families are concerned about asset protection, Medicaid eligibility, incapacity planning or the legal authority needed to act on someone's behalf.

Affluent families sometimes assume elder law planning doesn't apply to them. In reality, it can be highly relevant, especially when care needs are complex, family dynamics are sensitive or assets include real estate, trusts, business interests or illiquid holdings.

An elder law attorney can help evaluate powers of attorney, healthcare proxies, Medicaid planning options, asset titling and legal strategies for preserving flexibility. This should be coordinated with the family's financial adviser, CPA and estate attorney so decisions are not made in silos.

That coordination is critical. A decision that appears beneficial from one perspective could create tax, estate, liquidity or family consequences elsewhere.

Waiting limits your choices

The biggest mistake families make is waiting until care is needed.

By then:

• The preferred care community might have a waitlist
• The home might not be safe
• Insurance options may no longer be available
• Legal documents could be outdated
• A parent might no longer have capacity to make changes
• Siblings might disagree
• Assets could be difficult to access quickly

Planning earlier creates choices.

It allows families to:

• Clarify wishes
• Review resources
• Update documents
• Understand insurance
• Identify trusted decision-makers
• Discuss how care would be funded before emotions are running high

That is not pessimistic planning. It's empowering planning.

The goal is not to predict every health event or future care need. No family can do that. The goal is to build a roadmap so that if circumstances change, the people you love aren't left guessing.

For families that have spent decades building wealth, future care planning is one of the most important ways to protect not only the assets, but the dignity, independence and peace of mind those assets were meant to provide.

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• You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term Care

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

In the past three to four decades, many successful real estate developers, sponsors, syndicators and operators have built substantial portfolios of commercial real estate using high-net-worth investor capital.

Through careful acquisitions, development expertise, market appreciation and operational oversight, these sponsors have amassed portfolios worth tens or even hundreds of millions of dollars.

While this success story is one that many real estate entrepreneurs aspire to achieve, it often creates an entirely new set of challenges later in life.

Ironically, some of the industry's most successful real estate developers, syndicators and operators eventually find themselves facing one of the most difficult decisions of their careers: How to transition out of highly appreciated real estate without creating significant tax consequences for themselves and their investors.

The hidden challenge of success

For many sponsors, years of success have resulted in a substantial portion of both their personal net worth and their investors' net worth becoming concentrated in a relatively small number of assets. What began as a strategy for creating wealth can eventually become a concentration risk.

A real estate developer might find that the majority of their wealth is tied up in a handful of apartment communities, retail centers, industrial properties, hotels or other commercial real estate assets.

Likewise, many of their investors could have significant portions of their investment portfolios tied to the same properties.

This creates a dilemma. On one hand, the assets have performed extremely well and continue to generate income. On the other, the sponsor and investors might have become heavily concentrated in a single asset class, geographic region or investment strategy.

It's not an easy solution

The obvious solution might seem simple: Sell the properties and diversify. Unfortunately, it's rarely that easy.

Many assets have appreciated substantially over decades of ownership. In addition, years of depreciation deductions have created significant depreciation recapture liabilities.

For many real estate developers and their investors, an outright sale could trigger capital gains taxes and depreciation recapture taxes that — depending on their tax situation and state of residence — could consume 30% to 40% or more of their equity proceeds.

Faced with that reality, many sponsors begin considering a 1031 exchange. However, this exchange often introduces another challenge.

The aging real estate developer problem

When these properties were originally acquired, the sponsor might have been in their 30s or 40s. Today, many of these same sponsors are in their 60s, 70s or beyond.

The question becomes: Do they really want to continue operating, managing and overseeing large real estate portfolios for another decade or two?

Many no longer desire the day-to-day responsibilities that come with active real estate ownership. Leasing, property management oversight, lender negotiations, capital projects, tenant issues and operational challenges can become increasingly burdensome.

At the same time, selling and paying the taxes might not be an attractive option.

As a result, many sponsors find themselves caught between two undesirable outcomes:

• Continue owning and managing increasingly demanding assets
• Sell and incur substantial tax liabilities

The capital expenditure challenge

Adding to the complexity, many long-held assets eventually require significant capital expenditures — roofs must be replaced, parking lots resurfaced, mechanical systems upgraded, interiors renovated and brand standards maintained.

For aging sponsors, writing large capital expenditure checks while simultaneously managing complex projects can become increasingly less appealing. The assets that once generated wealth might now require substantial reinvestment simply to maintain competitiveness.

A real-world case study

Kay Properties, where I am the CEO, recently worked with a large real estate operator facing this situation. Over several decades, this client had successfully developed and acquired a portfolio of about 20 hotels throughout the Midwest.

The portfolio had been built using high-net-worth investor capital and had generated significant wealth for both the sponsor and his investors.

However, time had changed the equation. The sponsor was well advanced in age, and many of his investors were also nearing retirement or already retired. The portfolio had appreciated significantly, making an outright sale highly unattractive due to the substantial capital gains and depreciation recapture taxes that would result.

At the same time, another major issue was looming. The hotels were approaching the point at which they would need to complete property improvement plans (PIPs) to maintain their national hotel brands and flags.

Depending on the property, these PIPs were estimated to cost from $1 million to $4 million per hotel. Across about 20 hotels, the required capital infusion represented an enormous financial commitment.

The sponsor ultimately tasked his CFO with identifying a solution that would address the following challenges:

• Avoid a substantial tax burden
• Reduce concentration risk
• Eliminate the need for active management
• Address aging ownership concerns
• Avoid massive upcoming capital expenditure requirements
• Continue generating potential income for investors

Exploring the options

After extensive discussions with the Kay Properties team, along with the sponsor's CFO and legal counsel, the group determined that selling the portfolio to a large institutional buyer and completing a 1031 exchange into a diversified portfolio of Delaware statutory trust (DST) investments offered a compelling solution.

Following the sale, about $65 million of 1031 exchange equity was exchanged into a portfolio of roughly 30 different DST investments sourced from multiple DST sponsor companies.

Rather than remaining concentrated in one asset class — hotels — the sponsor and investors were able to diversify across multiple property sectors, including:

• Multifamily apartments
• Industrial properties
• Medical real estate
• Retail properties
• Student housing
• Other institutional-quality commercial real estate assets

The result was exposure to thousands of underlying units and properties across numerous markets and asset classes.

Solving multiple problems with one strategy

This DST investment strategy addressed several major concerns simultaneously.

First, it significantly reduced concentration risk by moving from a portfolio concentrated entirely in hotels in a limited geographic area to a broadly diversified portfolio spanning multiple property sectors.

Second, it allowed the sponsor and investors to defer a very large amount of capital gains taxes and depreciation recapture through the 1031 exchange process.

Third, it eliminated the burden of active property management that the developer had borne for many years. As passive owners in DST structures, the developer no longer had responsibility for day-to-day operations, leasing, maintenance oversight or capital project management — those responsibilities now rested with the DST sponsor companies.

Fourth, it addressed the looming capital expenditure requirements associated with the hotel portfolio's Property Improvement Plans.

Finally, the DST portfolio provided the potential for ongoing monthly cash flow distributions from a diversified collection of institutional-quality real estate assets.

The bigger picture

As the real estate industry continues to mature, more real estate developers are likely to face this same exit strategy conundrum.

The challenge is not simply about selling assets. It's about balancing taxes, diversification, legacy planning, investor relationships, operational responsibilities and lifestyle considerations.

For many aging real estate developers and their investors, the question is no longer how to build wealth through real estate, but how to preserve that wealth, diversify it, simplify ownership and transition into the next chapter of life without unnecessarily sacrificing a significant portion of their equity to taxes.

While every situation is unique and requires careful legal and tax analysis, DST investments have emerged as a viable solution that could help address these competing objectives for certain larger investors pursuing a 1031 exchange strategy.

To view available DST investments through Kay Properties and access due diligence materials on current DST properties, investors can register at www.kpi1031.com. The Kay Properties marketplace is unique in that there are typically 25 or more DST sponsor companies with between 25 and 50 different specific DST investments posted on the platform at any given time.

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

It can feel like every day brings a fresh batch of headlines about the financial promise of artificial intelligence. But alongside that excitement is a growing concern: What if we're in an AI bubble?

The question isn't just for investors who own AI-specific stocks. The Magnificent Seven — virtually all of whom are making massive investments in AI — now account for roughly one-third of the S&P 500's value.

With Americans holding a record 33% of their wealth in stocks, and a relatively small group of tech companies driving an outsized share of returns, you may be invested in AI without even realizing it.

Fortunately, caution doesn't necessarily require abandoning the stock market or avoiding AI altogether. The goal is to build a portfolio that can benefit from the technology's growth potential without tying your financial future too closely to a single trend.

Why some investors are concerned about an AI bubble

Many investors see echoes of the dot-com era in today's AI boom. In the late 1990s, internet stocks soared as investors rushed to profit from a world-changing technology. But when the market bubble burst, many companies failed and investors suffered steep losses.

This story contains an important lesson for today: Investors can be right about a technology and still lose money.

Remember, you can't "bet" on artificial intelligence itself. Some companies involved in AI may have the potential to become long-term winners, while others may never generate the profits some investors might currently expect.

That doesn't mean there is definitely an AI bubble. But it does mean investors should be mindful of how much of their portfolio depends on a relatively small number of companies and distant expectations.

Five ways to manage AI risk in your portfolio

Whether AI is in a bubble is ultimately beside the point. Investors don't need to predict when enthusiasm has gone too far. The aim is to participate in the technology's potential for upside without becoming overly dependent on it.

Here are five considerations to help guide your investment decisions:

1. Understand your real AI exposure

Many investors own AI-related companies through S&P 500 funds, Nasdaq funds, growth funds, technology ETFs and employer stock. You might think you have a diversified portfolio, when in reality you could be invested in the same handful of large technology companies across separate funds.

2. Consider prioritizing companies with strong current profits

Valuations are often just expectations of future growth, not evidence of current earnings. Investors concerned about volatility may also favor lower-beta stocks, which tend to be less sensitive to broad market swings and speculative enthusiasm.

3. Consider AI infrastructure instead of AI speculation

Investors might consider companies that support the broader AI ecosystem — including semiconductor manufacturers, data-center operators, power providers and enterprise software firms. These businesses stand to benefit from AI adoption regardless of the form it ultimately takes.

4. Consider diversification beyond AI

Even if you're optimistic about AI's long-term potential, it shouldn't necessarily become the defining driver of your portfolio. Exposure to a variety of other sectors and asset classes can help reduce dependence on a single theme.

5. Consider rebalancing rather than trying to time the market

Review asset allocations regularly, consider trimming positions that have grown disproportionately large and possibly reinvesting in underrepresented areas. Rebalancing can help manage risk no matter where the market turns, but keep in mind that rebalancing, asset allocation, and investment diversification do not guarantee a profit or protection against loss in a declining market.

You don't need to know whether AI is a bubble

No one knows whether today's AI boom will end in a bubble or continued growth. But investors don't need to predict the outcome to be prepared.

By understanding their exposure and avoiding excessive concentration, they can participate in AI's potential upside without tying their financial future to the possibility of success of a handful of companies.

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

A few weeks ago, when I took a look at my retirement accounts, I felt good. My wife, Liz, and I were on target for our retirement strategy.

Our retirement plan has us both working for an additional three to five years or so. Working later has been part of our retirement strategy so we can support our children more now, rather than through an inheritance later on.

We want to cover medical school tuition for our son for another couple of years. We paid for vet school for our daughter and want to pay for her upcoming wedding.

We're also renovating a beach cottage for our retirement home.

Even with these expenses, we were on track.

Recently, after almost 45 years at her company, Liz, at age 64, was told her position had been eliminated. Now, everything feels different.

This was not the plan

We don't know yet if Liz will retire or take on a new job. We aren't in trouble financially. We have always lived within our means and been diligent savers, and we have some of our IRAs invested in annuities with guaranteed income options.

This wasn't the plan, though, and we don't want to rush into any decisions. We're meeting with our financial professional soon to discuss our options.

I have talked for years about the risk of an early retirement as part of my job working with financial professionals. Yet, I hadn't seriously considered the possibility that our retirement wouldn't happen on our timeline, even though it is common.

It's common to leave the workforce earlier than you thought, especially for reasons outside of your control. About two in five (42%) of Americans retire earlier than expected, often for reasons outside of their control, according to the 2026 Annual Retirement Study from the Allianz Center for the Future of Retirement.

Unexpected job loss was the second-most-common reason to retire earlier than anticipated after health issues that prevent performing their job.

We all need to think about this

So, now I get it. We all need to seriously think about the risk of an early retirement.

Beyond the financial impact, an unexpected early retirement can take an emotion toll as well. It can have a psychological impact on both the individual and their family. Liz describes it as a grieving process.

As we make financial decisions, it's important to recognize these emotions and avoid making major financial moves based on them. This is where our financial professional will become an invaluable partner.

Here are the five areas that anyone nearing retirement should be thinking about now, not later, to understand the risk of early retirement.

1. Can you actually afford to stop working?

Considering if you can stop working is complicated. In our situation, we've gone from two incomes to one. Her severance gives us some breathing room. We need to evaluate if we can afford for her to not work again and still achieve our financial goals now and for retirement.

Starting over again late in your career can also be daunting. It's even more daunting for Liz, who worked for the same company for more than 40 years.

It often also takes longer for older workers to find a new job. On average, workers over age 65 spend 39 weeks unemployed, and workers between ages 55 and 64 are unemployed for 36.9 weeks, according to the U.S. Bureau of Labor Statistics.

Younger Americans are unemployed for shorter durations.

2. How will your savings change?

If we're living on one income and covering the same expenses, something has to give. And it may be our ability to keep saving — at the time when saving matters most.

Our plan assumed we'd keep contributing to our 401(k)s for a few more years. Many people do this since these are typically some of your highest-earning years.

I've been making catch-up contributions to boost our retirement savings while we still could. Now, I'm not sure we can keep doing that.

The closer you get to retirement, the more valuable those final contributions can be. Catch-up contributions are designed for this stage of life — to help you make up ground and take advantage of tax-advantaged growth when time is limited.

We're now asking:

• Do we keep prioritizing savings, or preserve cash flow?
• Do we reduce contributions to maintain flexibility?
• How does stopping now affect our long-term outlook?

When retirement happens earlier than expected, time can be a big constraint. You don't have as many years left to contribute or recover from changes.

3. When should you claim Social Security?

We hadn't planned to claim Social Security anytime soon. Like a lot of people, we assumed we had time to figure that out. Now, we don't.

I've reached my full retirement age, so I could claim my full benefit today, and it would not be reduced since I've reached full retirement age — but that would prevent me from receiving delayed retirement credits.

Liz could claim as well, but her benefit would be reduced if she starts before her full retirement age. If she starts Social Security and then does end up going back to work, she may have her benefit reduced if she earns over the maximum allowed while on Social Security before your full retirement age.

All of this leaves us weighing a real tradeoff: Should I file for benefits now or wait for higher benefits later?

Social Security is often the foundation of retirement income since it provides a guaranteed income stream that lasts for life and typically increases with cost-of-living adjustments.

But when you claim has a big impact on your retirement income strategy. Claiming early can reduce benefits by as much as 30%, while delaying can increase them by about 8% per year until age 70.

For couples, there's another layer. The survivor benefit is based on the higher earner's benefit. Claiming early could permanently reduce income for whoever lives longer.

This decision connects to everything else — how much we withdraw from retirement accounts, how we manage taxes and whether Liz goes back to work. The right decision for you depends on your savings, your health and your income needs.

4. Where will your health insurance come from?

The only thing more expensive than health insurance is not having health insurance.

When you lose your job, you often lose your health insurance. Liz is eligible for Medicare in a few months. That leaves a short, but potentially costly, period of time when she will need medical coverage.

Fortunately for us, since I am working, Liz can get health coverage through my employer.

There is no such thing as claiming Medicare early. So if we were younger, and I did not have health coverage through my employer, this could be a significant extra expense we would have to cover.

Health expenses will likely increase in retirement as you find yourself needing more healthcare services. Don't underestimate the potential cost of healthcare in retirement.

5. How will your tax strategy change?

Most of our retirement savings are in tax-deferred accounts. That has helped us lower our taxable income while working and let those investments grow tax-deferred. But now, those deferred taxes are coming due.

Every dollar we withdraw to fund our lifestyle counts as taxable income. We have after-tax investment accounts and small Roth IRAs, so we need to incorporate those into our strategy as well.

That means we're not just deciding how much to take out — we're deciding how much of it we'll actually get to keep.

You need to calculate how much to withdraw in order to fund your level of spending after taxes.

You also have to be deliberate about how and when you take money out. Those withdrawals can push us into a higher tax bracket, increase how much we pay for Medicare and affect how much of our Social Security is taxed.

We had planned on converting a portion of our IRAs into Roth IRAs over a period of time before our required minimum distributions (RMDs) begin. We are not sure we can still afford to do that — yet another question for our financial adviser.

Taxes don't go away in retirement — they just show up differently.

Liz and I are now personally experiencing the reality that retirement rarely unfolds exactly as planned. We know we are more fortunate than others, but part of it was due to planning, keeping a budget and trying to avoid extravagant expenses while still enjoying our lifestyle.

Flexibility is just as important as discipline when it comes to retirement planning. By thinking through the what-ifs now and seeking trusted guidance, we can make more confident decisions in moments of uncertainty.

Even for those of us who prepare carefully, timing can change overnight.

Allianz Center for the Future of Retirement® conducted the 2026 Annual Retirement Study in January 2026 with a nationally representative sample of 1,000 respondents age 25+ with an annual household income of $50K+/$75K+ (single/married) OR investable assets of $150K+.

The Allianz Center for the Future of Retirement® produces insights and research as a part of Allianz Life Insurance Company of North America.

Allianz Life Insurance Company of North America and Allianz Life Financial Services, LLC do not provide financial planning services.

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

Estate tax planning is crucial if you want your beneficiaries to inherit as much of your wealth as possible. Without a solid tax plan, part of your estate might be lost to liabilities that could have been prevented.

The SECURE Act generally requires most non-spouse beneficiaries to fully withdraw inherited retirement account assets within 10 years of the original owner's death, eliminating the "stretch IRA" that allowed lifetime payouts.

One of the largest tax hits for an estate can be retirement accounts such as traditional IRAs and 401(k)s. Beneficiaries must pay standard income taxes on those withdrawals based on their income tax brackets.

State inheritance and estate taxes can vary depending on where the deceased lived or owned real estate. State laws may apply an estate tax, which is levied on the overall estate, or an inheritance tax, which impacts the beneficiary receiving the assets.

Some states have much lower exemption thresholds than the federal government, resulting in unexpected tax bills for moderate estates.

Capital gains tax is another area of estate planning that requires careful consideration. This tax can be triggered if the asset appreciates after the date of the decedent's death and before it is sold.

An estate going through probate or administration may also generate its own income through stock dividends, interest on estate bank accounts or rent on properties. The estate's executor is responsible for paying taxes on that income during the probate process.

Surviving spouses may also face the "widow's tax" or "widow's penalty" — a higher federal income tax burden, usually starting the year after their partner dies, when they switch from "married filing jointly" to "single" filer status.

Even though total income is often reduced (due to the loss of one Social Security benefit, usually the lower one), the tax rate applied to the remaining income is higher, and the standard deduction is 50% lower than it is for married filing jointly status.

Required minimum distributions (RMDs) from retirement accounts can also add to taxable income, potentially pushing a surviving spouse into a higher tax bracket.

Advantages of thorough estate tax planning include:

• Liquidity management. Planning ensures the estate has enough cash to pay taxes without forced sales of property or family businesses.
• Controlling asset distribution. Proper documentation ensures assets are distributed according to your wishes rather than state intestacy laws.
• Avoiding probate. Tools such as trusts and beneficiary designations bypass the lengthy, public and costly court-supervised probate process.
• Protecting beneficiaries. Trusts can protect inherited assets from creditors, lawsuits or mismanagement by heirs.

Strategies for mitigating estate-related taxes

Estate tax planning involves proactive legal and financial strategies to minimize estate and gift taxes on wealth transferred to heirs. It is essential to preserve your legacy, prevent a significant portion of your assets from going to the government and ensure your loved ones receive their intended inheritance smoothly.

Here are some key components of estate tax planning:

1. Trusts

Specialized trusts can shift taxable assets out of your estate, provide ongoing management or cover estate tax costs. Examples include irrevocable life insurance trusts (ILITs) and spousal lifetime access trusts (SLATs).

An ILIT removes assets from your taxable estate, effectively freezing their value for estate tax purposes. A SLAT allows one spouse to make gifts to an irrevocable trust for the other spouse, removing assets from both estates while retaining access to the funds.

2. Lifetime gifting strategies

Using the annual gift tax exclusion (which allows transferring a set amount to as many people as you want, tax-free), you can reduce the overall size of your taxable estate.

For the 2026 tax year, the limit is $19,000 per recipient. Married couples can split gifts and give up to $38,000 per recipient.

3. Charitable giving

Directing assets to qualified charities through charitable remainder trusts (CRTs), donor-advised funds (DAFs) and qualified charitable contributions (QCDs) can reduce the taxable estate while providing income or tax deductions.

With a CRT, you can donate stock or real estate to charity while generating an income stream for yourself or your beneficiaries for life or a set term. Along with providing a partial tax deduction, it defers capital gains taxes and passes the remaining assets to charity.

A DAF is a specialized giving account allowing a person to make a charitable contribution, receive an immediate tax deduction and recommend grants from the fund to eligible charities.

A QCD allows people 70½ or older to transfer up to $111,000 ($222,000 for a married couple) annually from a traditional IRA to a qualified charity, tax-free. The amount counts toward RMDs but is excluded from taxable income.

QCDs can be made from traditional IRAs and inherited IRAs. The donation must be made directly from the IRA custodian to the charity; the donation cannot go to a private foundation or donor-advised fund.

4. Roth IRA conversions

Converting traditional IRAs and 401(k)s to Roth IRAs leaves your beneficiaries a tax-free inheritance of your retirement accounts. This is especially important given that non-spouse beneficiaries are generally required to empty inherited retirement accounts within 10 years.

Roth IRAs are not subject to RMDs. And by paying the income tax on the converted amount during your lifetime, the size of your taxable estate is reduced.

5. Business succession planning

This strategy minimizes the taxable value of your business. For valuation discounts, you transfer partial shares to family members. Establishing a family limited partnership (FLP) or transferring growing assets to trusts removes future business appreciation from your estate.

6. Step-up in basis

Step-up in basis is a tax provision that adjusts the cost basis of an inherited asset to its fair market value on the date of the previous owner's death. All unrealized capital gains accrued during the original owner's lifetime are erased, reducing or eliminating the capital gains tax a beneficiary owes when they sell.

Due to the step-up rule, it's often more tax-efficient to leave appreciated assets to beneficiaries by a will or trust instead of gifting them while you're alive.

Clarity and financial stability for loved ones

Estate tax planning is ultimately about more than reducing taxes — it is about creating clarity, protecting the people you care about and preserving the values you want your wealth to support.

Without a thoughtful strategy, families can face unnecessary tax burdens and financial complications during an already emotional time.

By proactively addressing retirement accounts, estate taxes, capital gains exposure and income tax considerations for surviving spouses, you can help ensure that more of your assets pass efficiently to your loved ones.

Dan Dunkin contributed to this article.

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

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

Over the coming decades, a significant transfer of wealth is expected to take place, shaping how Americans spend, invest, and plan for long-term financial security. Commonly referred to as the Great Wealth Transfer, this shift will move substantial assets from baby boomers to younger generations.

Today, baby boomers hold approximately $85 trillion in assets — more than half of the total wealth in the United States. This is expected to pass to millennials and Gen Z over time.

While 55% of millennials and 41% of Gen Z expect an inheritance within the next five years, nearly three-quarters of Americans report feeling unprepared to manage a significant financial windfall.

This transition carries important personal and financial considerations. Families who plan intentionally can help preserve financial, relational, and legacy capital, while those who do not may face unnecessary tax consequences, strained family dynamics, or diminished long‑term wealth.

Navigating the Great Wealth Transfer requires more than just a legal checklist — it calls for an intentional approach that emphasizes preparation, communication, and responsibility.

To bridge the gap between expectation and readiness, families should consider a set of practical steps designed to protect both financial outcomes and family relationships.

By focusing on a few core best practices, families can turn what may feel like an overwhelming transition into a clear, structured process. Below are several ways families can prepare for the road ahead.

1. Set the stage for inheritance with financial literacy

The transfer of assets is not just a single moment in time — it is a long-term process that unfolds over many years. Effective preparation begins with instilling financial responsibility and education early in life.

Start with the basics. Teach children the purpose of saving and the fundamentals of budgeting, connecting these lessons to real-life practice through allowances, goal-setting and spending decisions.

While ensuring they understand the fundamentals of money may seem elementary, it lays the foundation for how they will perceive, manage and respect wealth throughout their lives.

Equally important is modeling financial transparency — speaking openly and regularly about family finances in age-appropriate ways. Establishing a culture of communication around money helps remove confusion while reinforcing shared values and long-term vision.

When heirs grow up in an environment where financial decisions are normalized, they develop both confidence and alignment with the family's mission and objectives. This is not just a habit to build, but a lasting family practice that will lay the foundation for life's major financial decisions.

2. Establish the framework before engaging heirs

Before wealth is shared, intent should be defined. Many clients come to us grappling with how much to leave to their heirs. Often, this concern stems from parents' desire to empower their children rather than undermine their drive. I often hear people say they want to leave their

children enough wealth to give them freedom and opportunity, but not so much that it removes their motivation or sense of purpose. At its heart, wealth planning isn't just about transferring assets — it's about passing on opportunity and responsibility in equal measure.

One effective way to clarify this balance is by creating a family mission statement. This document outlines your values and purpose, providing future generations with clear context for the role wealth is meant to play in their lives.

By putting your "why" in writing, you establish a shared reference point that helps guide decision-making over time.

Once your mission is clear, the next step is ensuring the financial plan supports it. Working with an advisor, families should:

• Audit the inventory. Review every asset, title and beneficiary designation to ensure no detail is left to chance.
• Close the gaps. Scrutinize estate documents for "loose provisions" or ambiguities that could later spark conflict or confusion among heirs.
• Develop the road map. Create a cohesive distribution strategy, providing your family with a vetted, actionable plan rather than a collection of disconnected documents.

Once your internal strategy is set, the next natural question is: "When do I involve my children?" While there is no universal timeline, their college years are often an ideal entry point.

At this stage, heirs are facing real financial decisions, making legacy conversations more tangible and relevant.

3. Let heirs learn in practice

The ultimate measure of success is observing whether preparation translates into wise financial stewardship. To bridge the gap between theory and practice, many families use annual exclusion gifts as "practice capital."

This approach provides heirs with a meaningful but measured opportunity to make financial decisions with real-world consequences. Rather than waiting for a massive, one-time inheritance event, it allows families to observe decision-making patterns over time.

As they reach specific milestones, responsibility scales, often by granting them shared control as a co-trustee or encouraging them to talk directly with family advisors.

This approach provides valuable insight into an heir's underlying financial philosophy by answering key questions:

• Do they make smart financial decisions?
• Do they seek professional counsel?
• How do they evaluate risk?
• Can they balance long-term opportunity with immediate gratification?

The patterns that emerge are the single greatest predictors of whether an heir is truly ready to safeguard the family legacy.

4. Maintain a trusted advisor relationship

As heirs become more involved in the transfer process, a financial advisor often plays a central role in helping families communicate clearly and stay aligned. This role becomes increasingly important as the plan grows in complexity and additional family voices enter the conversation.

An advisor's primary task is to translate technical details into clear, actionable guidance, helping the family align expectations and manage diverse perspectives. Specifically, they work hand-in-hand with families to help navigate the following pillars of wealth management:

• Tax implications. Advisors clarify how income, capital gains and estate taxes may impact the net value of an inheritance, explaining the triggers and strategies used to mitigate these costs.
• Asset structure and liquidity. Not all assets are created equal. Advisors help heirs distinguish between liquid and illiquid holdings, ensuring they understand the unique constraints and timelines associated with different types of wealth.
• Trust and estate vehicles. Since many transfers occur through complex structures, advisors educate inheritors on how specific trusts function and the distinct roles and responsibilities required by each.
• Philanthropy and values. While heirs may be aware of a family's charitable heart, they often don't understand the mechanics. Advisors explain the nuances of donor-advised funds, charitable trusts and community partnerships to ensure the family's impact continues.
• Governance and decision-making. When wealth is shared, leadership roles must be clearly defined. Advisors help heirs understand their rights and responsibilities within family governance structures to prevent friction.

A proactive partnership with an advising team helps mitigate generational risk and grants heirs the time and tools necessary to prove themselves as capable stewards. By bridging the gap between complexity and clarity, a dedicated advisor provides the peace of mind that a legacy is not just being passed down, but is being set up to thrive.

While the scale of the Great Wealth Transfer is significant, the principles behind successful stewardship are familiar. By defining your mission, educating your heirs through phased practice, and leveraging the expertise of a dedicated advisor, you ensure that your wealth remains a catalyst for opportunity rather than a source of conflict.

Ultimately, proactive planning transforms a complex financial event into a lasting family success story where your values remain the most significant legacy you leave behind.

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

This year marks two meaningful milestones in my life: 30 years of marriage and 30 years in business with our financial services firm.

Those anniversaries have made me more aware of how quickly life changes. Two people close to me — one on my side of the family and one on my wife's — have been facing ongoing challenges involving health, independence and long-term care.

Watching these situations unfold has changed the way I think about this topic, both as a family member and as a financial adviser.

Over the past 30 years, I have helped many families prepare for retirement and make difficult decisions involving aging parents. As our clients have aged — and as these issues have become more personal — the importance of planning before a crisis has become increasingly clear.

Families often imagine predictable progression: A loved one lives independently, eventually needs more help and then moves permanently into assisted living or a nursing facility.

Real life is rarely that orderly.

A person may move from independent living to a hospital, rehabilitation center or long-term-care facility and later return home. A temporary arrangement can become permanent. A plan that worked several months ago may no longer be safe or affordable.

Many families hold off on planning until they feel certain about what lies ahead. That certainty rarely arrives. A better approach is to create a plan that can adjust as health, independence and care needs change.

Here are five places to begin.

1. Discuss care before there is a crisis

These conversations are uncomfortable because they involve aging, independence, money and mortality. That is also why families tend to postpone them.

Do not begin by telling a loved one where they should live. Start by asking:

• What would be most important to you if you needed help?
• Would you prefer to remain at home, even if outside care were required?
• Who would you trust to make financial or medical decisions?
• What would make you feel that independent living was no longer safe?

The goal is not to settle every future decision. It is to understand the person's wishes while they can still participate fully.

Waiting until a hospitalization may force a family to make major decisions in only a few days.

2. Make sure the legal authority exists

Being a son, daughter, spouse, niece or nephew does not automatically give someone the authority to manage another person's finances or make medical decisions.

Families should review whether the individual has an updated financial power of attorney, health-care proxy or medical power of attorney, living will and HIPPA authorization permitting medical information to be shared.

The people named in those documents should understand their responsibilities and know where the documents are stored.

Financial institutions may also have their own procedures for recognizing powers of attorney. Addressing those requirements in advance can prevent delays during an emergency.

Because laws vary by state, an estate-planning or elder-law attorney should review the documents, particularly after a move or major change in health or family circumstances.

3. Understand what Medicare does — and does not — cover

One common misunderstanding is that Medicare will pay for long-term custodial care.

Medicare may cover qualifying short-term skilled nursing or rehabilitation following an illness or injury. It generally does not cover ongoing help with activities such as bathing, dressing, eating or using the bathroom when custodial care is the only need.

Some Medicare Advantage plans now offer limited supplemental benefits, such as personal care visits or minor home modifications, so it is worth checking the specific plan rather than assuming traditional Medicare rules apply across the board.

Families can be caught off guard when a covered rehabilitation stay ends but their loved one still cannot safely return home.

Potential funding sources may include income, savings, retirement accounts, long-term-care insurance, home equity, veterans benefits or Medicaid for those who qualify.

Medicaid rules differ by state. Before transferring assets, changing ownership or making large gifts, speak with an elder-law attorney. A well-intentioned decision can create unintended consequences.

4. Build a flexible cash-flow plan

Long-term-care planning should not assume one setting at one fixed cost.

Consider several possibilities:

• Help from family
• Part-time or full-time home care
• Independent or senior living
• Assisted living
• Memory care
• Skilled nursing care

Estimate how income and assets would support each option. Identify which accounts might be used first and consider the tax impact of withdrawals from IRAs or other retirement accounts.

Maintain enough accessible cash for deposits, moving expenses, home modifications or private caregivers.

The plan should be revisited after every major transition. A budget created for independent living may no longer work after assisted living begins. Someone returning home may need funds redirected toward caregivers, transportation or home safety.

5. Divide responsibilities before one person becomes overwhelmed

In many families, one person gradually becomes the default caregiver, financial organizer and emergency contact. That person may also be working, raising children or managing other responsibilities.

Discuss who will handle specific tasks. One person might communicate with doctors, another manages bills and insurance, and another coordinate transportation or facility visits.

Create a secure list containing important contacts, medications, insurance information, advisers, attorneys, account locations and recurring expenses.

Families should also identify signs that the current arrangement needs to change. Repeated falls, missed medications, unpaid bills, unsafe driving, poor nutrition or caregiver exhaustion may signal the need for more support.

The goal is not to take away independence prematurely. Sometimes preserving independence requires accepting help.

Planning cannot remove emotion

Even the best financial plan will not make these decisions easy.

Family members may disagree. A loved one may resist help. Health can improve and then decline again. Families may wonder whether they are doing too much, too little or making the wrong decision.

After 30 years in financial planning, I have learned that the most important conversations are not always about investments. They are often about independence, dignity, family responsibilities and how financial resources can support the people we love.

Planning cannot remove the uncertainty. It can give families a framework for responding to it.

You may not know what kind of care a loved one will need, when it begins or how long it will last. But you can make sure the right conversations have occurred, the legal documents are in place, the financial resources are understood, and the responsibility does not fall unexpectedly on one person.

When an aging family member's needs keep changing, the plan must be able to change with them.

Securities and advisory services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®. CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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

You might know that certain ages matter in retirement planning: 59½, 62, 65 … these numbers come up in articles, in conversations, in the back of your mind when you're wondering whether you're on track.

Knowing a number exists and knowing what to do with it are different things.

I've worked with many people in their 50s and 60s who pay close attention to their finances for the first time, or finally getting serious after years of unmet intentions.

What I've consistently found, as a financial planner and educator with more than a decade of experience, is that the milestones themselves aren't the hard part; it's that nobody lays them out in order.

Here's my attempt to do that.

Age 50: The catch-up window opens

Turning 50 unlocks one of the first major financial planning opportunities you might not be fully taking advantage of, and I say that having watched plenty of people sail right past it.

Once you reach age 50, you can make catch-up contributions to your retirement accounts, putting away more than the standard annual limit.

For 2026, the standard 401(k) contribution limit is $24,500. At 50, you can add an additional $8,000, bringing your total to $32,500 per year.

For IRAs, the 2026 limit is $7,500, with a $1,100 catch-up for those 50 and older, for a total of $8,600.

If you feel behind on retirement savings, this is the moment to recalibrate. The math of compounding can still be significant in your 50s. Extra contributions in your 50s still have 10 to 15 years to grow before you need them.

Age 55: The HSA catch-up and the rule of 55

Two useful planning tools arrive at age 55.

If you're enrolled in a high-deductible health plan, you become eligible for a $1,000 catch-up contribution to a health savings account (HSA).

For 2026, the standard HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. The catch-up brings your individual limit to $5,400 and family limit to $9,750 if age 55 or older.

An HSA is one of the most tax-efficient accounts available for retirement: Contributions are pretax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free as well.

You must be enrolled in an HSA-eligible high-deductible plan to contribute, and you generally can't make HSA contributions for any month you're enrolled in Medicare.

The second tool is the Rule of 55. If you separate from service during or after the calendar year in which you turn 55, you might be able to take penalty-free withdrawals from your current employer's 401(k) or 403(b).

This rule doesn't apply to IRAs, and your plan must permit these distributions, so confirm the rules with your plan administrator before relying on this strategy.

Age 59½: Penalty-free withdrawals begin

If you think 59½ is too old to celebrate a half birthday, think again.

At age 59½, you can begin taking withdrawals from your IRAs and 401(k)s without the 10% early withdrawal penalty. You'll still owe income taxes on pretax distributions, but the penalty disappears.

Many people are better off leaving retirement assets untouched as long as possible. Reaching 59½ doesn't mean you should start withdrawing. It means you have flexibility you didn't have before.

I've had clients who spent years feeling trapped by the penalty, not realizing how close they were to having real options. Knowing the gate is open changes how people think about their plan, even when they have no intention of walking through it yet.

Age 60: A different door for surviving spouses

Most people assume their own Social Security benefits can't start until age 62. For widows and widowers, there's an earlier option.

Surviving spouses can begin collecting Social Security survivor benefits as early as age 60. Claiming at age 60 generally means accepting a permanently reduced survivor benefit, so the timing deserves careful consideration.

The planning angle that's often missed is this: Survivor benefits aren't subject to deemed filing. A surviving spouse might be able to claim survivor benefits first and let their own retirement benefit continue growing, then switch later at 70 for a higher amount. The reverse approach works, too.

I've heard from widows who had no idea this flexibility existed and had already left significant money on the table by defaulting to whatever Social Security suggested at the window.

The difference between a thoughtful strategy and a default one can add up to tens of thousands of dollars in lifetime income.

If you've lost a spouse and haven't had this conversation with a financial planner or a Social Security specialist, have it before you file anything.

Ages 60 to 63: The super catch-up

The SECURE 2.0 Act introduced a higher catch-up limit for people in this specific age range, and most haven't heard of it yet.

Individuals age 60, 61, 62 and 63 who participate in a 401(k), 403(b), governmental 457 plan or the federal Thrift Savings Plan are eligible for a super catch-up contribution.

For 2026, that limit is $11,250, which is significantly more than the $8,000 catch-up available at 50. Someone in this window can contribute up to $35,750 to their 401(k) in 2026 alone.

For anyone trying to maximize retirement savings in their final working years, this four-year window can be one of the most valuable opportunities to accelerate tax-advantaged savings.

One important planning note: If your prior-year FICA wages from your current employer exceeded $150,000 in 2025, SECURE 2.0 generally requires your catch-up contributions to be made as Roth contributions using after-tax dollars.

Not every employer plan has implemented these changes in the same way, so it's worth confirming with your plan administrator how your plan handles catch-up contributions.

Age 62: Early Social Security

At age 62, you can begin claiming your own Social Security retirement benefit.

Claiming before your full retirement age reduces your monthly benefit permanently, and the reduction can be substantial depending on how early you file.

Meanwhile, delaying benefits until age 70 results in a higher monthly benefit because delayed retirement credits stop accruing at age 70.

For most people in good health, the math tends to favor patience, but longevity, cash flow needs and your overall plan factor into the right answer.

Age 63: Watch your income for Medicare's sake

This is the one that tends to sting the most when people find out about it too late.

Medicare uses a two-year lookback to set your premiums, which means your income at 63 directly affects what you'll pay when you first enroll at 65. If your income exceeds certain thresholds in those lookback years, you'll owe IRMAA, or the income-related monthly adjustment amount, an additional surcharge on top of your standard Medicare Part B and Part D premiums.

In 2026, IRMAA kicks in at $109,000 in modified adjusted gross income for single filers and $218,000 for married couples filing jointly.

The surcharges operate as cliffs, not gradual phase-ins. Crossing a threshold by even a dollar triggers the full surcharge for that tier, which can add thousands per year to your Medicare costs.

Before generating a large amount of additional income, such as from a Roth conversion or significant capital gains, estimate both the income tax consequences and any potential IRMAA surcharge. Looking at only the tax bill can lead to expensive surprises two years later.

Not sure if you're going to be impacted by IRMAA? Take advantage of a retirement planning tool to project your income sources and see for yourself. (Note: I am head of support and a financial planning educator at Boldin.)

Age 64 and 9 months: Start your Medicare clock

For most people, Medicare's initial enrollment period opens three months before your 65th birthday and closes three months after the month you turn 65.

Missing this window can result in late enrollment penalties that stay with you permanently. Set a reminder now.

Medicare's rules are complex enough that it pays to spend some time with a specialist before the window opens, not after.

Age 65: Medicare begins, HSA contributions end

At age 65, you're eligible for Medicare. Once you're enrolled in any part of Medicare, you generally can't make HSA contributions for any month you're covered by Medicare.

Funds already in the account remain yours to use for qualified medical expenses tax-free, and you can use the money for any expense without penalty, though non-medical withdrawals will be taxed as ordinary income.

Many people contribute aggressively to their HSAs in their late 50s and early 60s specifically to cover healthcare costs in retirement. If that's your strategy, plan around the contribution cutoff.

Age 70½: Qualified charitable distributions

At age 70½, a valuable tax planning opportunity becomes available for people who are charitably inclined and own an IRA.

A qualified charitable distribution allows you to direct up to $111,000 per year (in 2026) from your IRA directly to a qualified charity, and if you're married, your spouse can do the same from their own IRA, for a combined total of $222,000.

If you're already subject to required minimum distributions (RMDs), the amount counts toward satisfying your RMD for the year while remaining excluded from your taxable income. This is a useful tax planning tool, particularly for people who take the standard deduction.

Ages 73 to 75: RMDs

At some point, the IRS requires you to start withdrawing from tax-deferred retirement accounts regardless of whether you need the money. RMDs catch more people off guard than almost anything else in retirement planning.

When RMDs begin depends on your birth year. If you were born from January 1, 1951, to December 31, 1959, they start at 73. If you were born on or after January 1, 1960, they begin at 75.

Failing to take your RMD results in a 25% penalty on the amount that should have been withdrawn. The penalty might be reduced to 10% if the mistake is corrected in a timely manner and other IRS requirements are met.

The real issue is that large RMDs can push you into a higher tax bracket, make more of your Social Security taxable, and trigger IRMAA surcharges you weren't expecting.

Planning around RMDs in advance, through Roth conversions, charitable giving or careful withdrawal sequencing, is one of the most underrated conversations in retirement planning.

These milestones don't exist in isolation

Every conversation I have with someone approaching retirement eventually comes back to the same point: These decisions don't happen in a vacuum.

How you handle catch-up contributions in your 50s affects your tax situation in your 60s, which affects your Social Security timing, which shapes your RMD exposure a decade later. The decisions compound over time in both directions.

You don't have to figure this out alone. Whether you work with a financial planner or use retirement planning software, mapping these milestones in advance and testing different scenarios can help turn a long list of rules into a coordinated retirement planning strategy.

The more decisions you make proactively, the fewer costly surprises you're likely to face later.

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• 5 Habits to Help Make Your Retirement Planning Highly Effective

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.

After 43 years advising families through nearly every kind of wealth transfer imaginable, I've noticed something.

The families who struggle almost never struggle because of the tax plan. They struggle because nobody had a real conversation before the money moved.

That's not how most coverage of the Great Wealth Transfer sounds. Trusts, tax brackets and estate structures dominate the conversation — and for good reason.

An estimated $124 trillion is projected to change hands in the U.S. over the next two decades, and a lot of it runs through complicated legal and tax mechanics. Getting those right matters.

But mechanics aren't what decides whether a family holds together or comes apart once the money actually moves. I've watched technically flawless estate plans blow up because the heirs were blindsided by decisions they'd never once discussed.

I've also watched messier, less elegant plans work just fine, because the family had already done the harder work of talking to one another.

Here's something that should concern every family with real assets on the line. The Federal Reserve's Survey of Consumer Finances found that the average inheritance families actually received came in well below what they expected to receive, and the gap was largest among the wealthiest families surveyed.

Most people read that as a planning or market-timing issue. I read it as a symptom. If your family's expectations and the actual plan don't match, it's a sign the plan was never really discussed out loud. The dollar figure is just the first thing to surface.

The conversation that gets skipped

Early in my career, I learned a set of principles from my mentor, Joe Gabriele, that I've carried ever since. Chief among them: Attack problems head-on, with complete transparency. That applies to markets. It applies just as much to families.

Most parents I work with have a will. Many have trusts. Far fewer have ever sat their adult children down and explained why the plan looks the way it does, what they'll be responsible for or what the family actually expects of them once the money arrives.

I had a client years ago, a business owner worth several million dollars, who built a detailed estate plan and never once discussed it with his three kids.

When he passed, one child assumed the family business would be split evenly. Another had quietly been promised it outright, years earlier, in a conversation nobody else knew about.

The estate plan was airtight. The family took over a year to speak to one another again.

Money didn't break that family. Silence did.

What I ask families to do instead

I don't tell clients to simply "loop in the kids." That's not specific enough to be useful, and vague advice rarely survives contact with an actual family.

What I ask them to do is sit down, together, and walk through these questions before a single dollar moves:

• What is each person actually going to inherit? In plain terms, not legal language.
• Why was the plan structured this way? What was the reasoning?
• What responsibilities come with it? A business, a property, a caregiving role for a sibling?
• What does the family want this money to accomplish two generations from now?

None of these require a lawyer in the room. They require the parents to be willing to have an uncomfortable conversation while they're still healthy enough to lead it.

I've sat in on dozens of these meetings. They're rarely as bad as clients fear, and the families who have them almost never end up blindsided later.

Why this matters more for advisers, and for families, than people realize

I'm at a stage in my career where I think about succession constantly, not just for my clients but for my own practice. My son and business partner are actively involved in the business today.

What I've learned firsthand is that transferring a book of business is the easy part. Transferring the judgment, the relationships and the reasons behind decades of decisions is the hard part.

It has to be modeled and explained. It can't just be inherited by default.

Families face the same challenge with wealth. A trust document tells your heirs what they'll receive. It doesn't tell them why, and it doesn't prepare them to carry it forward responsibly.

That gap is where families come apart, and it's entirely preventable.

Where to start

If you're in the position of planning a transfer, start smaller than you think you need to. Pick one conversation, maybe the reasoning behind your estate plan, and have it this year.

If you're an adult child who suspects your parents haven't had these conversations, you can be the one to raise it. In my experience, most parents are relieved when their kids ask.

The tax and legal mechanics of the Great Wealth Transfer will get sorted out. That's what estate attorneys and advisers are for.

The part that actually determines whether your family thrives afterward is the conversation nobody wants to schedule. Schedule it anyway.

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

You faithfully pay your recurring bills (such as utilities and insurance) with automatic payments set up from your credit card to simplify your life. Shouldn't you take advantage of that card usage beyond convenience?

Credit cards can make life easier and, when properly managed, can certainly provide some impressive perks. From purchase protection to rental car coverage, the right credit card can save you money when used responsibly.

With the right strategy and a rewards program, credit card spending can be turned into free travel in the form of flights, hotel rooms and more. This is how to do it — and how I've done it, as a wealth adviser and financial planner with more than two decades of experience.

Get to know your credit card rewards

If you already have a rewards card, you might not fully understand the rewards program and potential benefits. Start by auditing your rewards program to better understand how you earn rewards and how you can redeem them.

Whether it's free travel, travel upgrades or cash back, rewards can often outweigh the cost of the annual fee that most rewards cards have.

For example, my wife and I used our Delta Air Lines points to cover the cost of our plane tickets for a vacation in Aruba, then used our Platinum Medallion status to get us a better baggage allowance, Comfort Plus seating on the aircraft and a hot breakfast at the airport.

Had we not understood how to use our points effectively, we would have paid for these expenses out of our own pockets.

Understanding the rewards program is half the battle, as we were able to strategize to further utilize points on our trip using our American Express card, which we used to cover our hotel stay, breakfast each morning, a spa visit, discounted beach hut rental and an additional $50 credit on our American Express bill.

Choosing the right rewards card

If you don't have a rewards card, shop around for one from which you'll get the most benefit. Start with cards offering perks you know you'll use.

For example, if you take frequent trips to visit family and typically use the same airline, you might want to start with a rewards card that is specific to that airline or at least to travel.

Likewise, if you have a cause that's near and dear to your heart, you might want to investigate a card that gives rewards in the form of charitable donations.

Even if you're getting fantastic rewards, you should still consider the card's terms and conditions. Will you earn enough rewards to justify the annual fee? If the fee exceeds the perks you'll receive, or if the interest rate is significantly higher than what other cards offer, it might not be worth it overall.

If you already have credit cards with rewards, examine how you might combine or transfer your rewards as I did for my family's trip to Aruba to get all available benefits.

According to the Consumer Financial Protection Bureau, billions of dollars of credit card rewards go unused annually, demonstrating how important it is to understand and utilize your rewards instead of allowing them to expire.

Rewards are a perk, not a purpose

Research suggests that people tend to spend more when using credit cards but adding reward points to the mix makes some people spend more to earn more.

A Bankrate survey revealed that around 70% of credit cardholders carrying a balance continue to use the card in an effort to earn more rewards. Even though they're paying interest charges, they continue to add to the balance, because they're trying to rack up more points or cash back.

Notably, that same survey revealed that more than half of credit cardholders carrying a balance say that it's become harder to pay off credit card debt in the last year.

Functional magnetic resonance (fMRI) studies conducted by MIT Sloan further revealed that credit cards exploit the reward networks in the brain, providing a signal of pleasure when purchases are made using a card.

Combine that with the gamification of cards through earning or unlocking rewards, and it's easy to see how reward programs might encourage people to spend more than they should.

To be clear, when I talk about using credit card rewards to earn perks such as free travel, I'm not talking to cardholders who struggle to make their monthly payments.

I suggest taking advantage of credit card rewards if you successfully manage your cards and would like to get something extra out of your usage.

Use credit card reward programs as a tool to earn the perks you want, not as a justification to spend more.

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

Financial conversations can be difficult and uncomfortable, leading many Americans to neglect them altogether.

Whether it's debt, retirement, investing or estate planning, more than 80% of people intentionally avoid discussing financial topics with family and friends, according to a report from the Consumer Financial Protection Bureau.

While skipping these conversations may seem harmless, the silence isn't neutral. Delaying these discussions often means delaying important financial decisions, too. As time passes, those missed opportunities can compound, sometimes creating more financial stress than if they had been addressed from the beginning.

We all procrastinate from time to time, especially when confronting something that takes us out of our comfort zone. But avoiding it doesn't make it go away.

The same is true when it comes to your finances. Telling yourself you'll make a plan to pay off debt next month or wait until you're making "enough" money to start investing may bring you peace in the moment, but those decisions carry consequences that continue to grow the longer you wait to deal with them.

Interest continues to accumulate on debt, investment opportunities get missed, and conversations can feel more uncomfortable the longer you put them off. That's because financial decisions tend to build on one another.

Delaying one conversation or decision leads to another, making it harder and harder to catch up down the line. What may have started as a small challenge can snowball into a much larger issue over time.

So why are people so afraid to confront these issues head on?

For many of us, financial avoidance isn't a result of lacking motivation, but rather, lacking confidence. If you don't understand the basics of credit, debt management and investing, it's easy to make mistakes in the very beginning.

This can lead to feelings of embarrassment or the fear of making another wrong decision, causing many people to walk away from the subject entirely.

However, avoiding the problem doesn't make it go away. Oftentimes, it makes the problem more prevalent in your life.

The less involved you are in your finances, the less confident you'll feel when making future decisions, creating a cycle that can be hard to break.

Aside from feelings of embarrassment, the CFPB also found 51% of Americans believe financial matters should stay private. And for many, this means managing financial affairs alone.

In my experience, many clients mistakenly equate financial independence with self-reliance. They assume asking for guidance or discussing their situation with someone they trust means they're less capable of managing their money when that's not the case.

Financial independence and financial isolation are two separate things.

Being financially independent doesn't mean you have to figure out everything on your own. It's about taking ownership of your financial future. Seeking advice from trusted family members or financial professionals doesn't mean you have to lose your independence. It can actually build accountability, give you a new perspective or provide you with more information to make a more informed decision.

To begin building that support system, ask yourself:

Who are the trusted people in my life?

Think about family members, friends or mentors who've demonstrated responsible financial habits and can share their perspective on important financial decisions.

Am I working with a financial professional who can provide guidance when things get complex?

Whether it's retirement planning, learning how to invest or developing a plan to pay off debt, working with a qualified professional who can act in your best interest, can give you the tools needed to make the most informed decision with confidence.

Do I communicate the current financial situation with my loved ones on a regular basis?

Scheduling periodic check-ins with your spouse or other trusted family members can help you stay accountable, discuss future goals or identify areas for improvement.

Am I willing to continue learning and ask for help when needed?

Financial literacy isn't learned overnight. Like anything else, it's a skill that takes time and effort to develop. Building and maintaining financial independence is achieved with the help of a trusted team.

Having a trusted support system gives you the opportunity to ask questions, gain confidence and ultimately address concerns before they get worse. Often, those conversations are what help people transition from financial avoidance to financial independence.

Making the choice to avoid your finances can compound just as powerfully as choosing to take action. The only difference is that one builds opportunity, while the other creates obstacles.

Your financial future is shaped by your decisions. Starting the conversation, asking questions and building a reliable support system are choices that will help move you closer to true financial independence.

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

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

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

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

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

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

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

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

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

In reality, this is a false dichotomy.

The actual range of options is much wider.

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

The full range of options, from most work to least

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

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

• Tenants
• Repairs
• Vacancies
• Taxes
• Insurance

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

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

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

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

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

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

The trade-off, of course, is control.

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

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

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

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

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

The lesser-known middle-ground options

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

• Property taxes
• Insurance
• Maintenance

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

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

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

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

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

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

Weighing your options: Two questions to answer

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

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

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

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

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

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

Related Content

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• A Cautionary Tale: Why Older Adults Should Think Twice About Being Landlords
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• Should I Sell or Rent My House When I Relocate for Retirement?
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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

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

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

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

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

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

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

Assess your business

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

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

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

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

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

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

Where to start

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

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

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

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

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

Businesses should also confirm compliance with applicable data privacy laws.

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

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

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

Close the gaps before a buyer finds them

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

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

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

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

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

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

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

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

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

Start building your team 12 to 24 months out

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

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

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

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

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

Preparation is what separates a closed deal from a missed opportunity

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

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

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

Related Content

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• For Business Owners, Estate and Exit Planning Join Forces

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

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

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

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

From gatekeeping to empowerment

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

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

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

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

The promise — and limits — of artificial intelligence

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

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

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

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

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

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

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

Beyond the headline technology

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

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

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

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

Where human judgment remains irreplaceable

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

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

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

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

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

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

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

A more useful question

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

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

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

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

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

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

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

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

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

What are the benefits of contributing to a Trump Account?

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

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

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

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

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

What are the downsides of contributing to a Trump Account?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Are there other strategies they can put into play?

To reject or not

There are things to mull over here.

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

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

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

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

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

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

A case study

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

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

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

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

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

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

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

If necessary, seek assistance

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

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

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

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

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

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

Ronnie Blair contributed to this article.

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

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

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

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

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

That habit is where the money leaks.

By September, you can see most of the year:

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

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

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

Recalculate the number — don't repeat it

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

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

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

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

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

Know the number that protects you

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

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

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

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

A few numbers worth keeping in mind:

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

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

Use withholding as a late-year fix

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

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

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

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

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

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

Make September 15 a checkpoint, not just a payment

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

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

So before September 15, ask your CPA three questions:

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

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

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

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

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

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

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

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

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

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

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

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

Look at the entire financial impact

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

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

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

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

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

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

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

About depreciation

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

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

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

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

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

Another misunderstood area

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

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

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

Consider the big picture

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

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

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

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

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

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

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

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

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

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

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

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

Markets rise

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

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

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

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

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

Markets also decline

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

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

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

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

What are defined outcome ETFs?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Related Content

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• The Best Hedged ETFs for Lower-Risk Investors and Retirees
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• How to Use the Dividend Barbell Rule in Retirement With ETFs

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

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

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

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

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

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

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

How digital payments make spending feel less real

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

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

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

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

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

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

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

What this means for your money

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

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

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

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

Practical ways to make digital spending more visible:

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

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

The role of financial institutions and tech providers

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

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

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

The bottom line

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

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

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

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

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

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

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

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

1. Start small

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

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

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

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

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

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

2. Automate your savings

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

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

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

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

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

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

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

3. Invest in a high-yield account

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A real concern

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

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

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

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

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

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

A cornerstone of our legal system

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

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

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

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

How a law office functions

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

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

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

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

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

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

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

In most offices, lawyers do not work alone

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

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

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

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

What a receptionist needs to know

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

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

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

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

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

Present and potential clients are covered by the privilege

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

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

When privilege does not apply

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

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

What was Kenny so worried about?

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

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

"Pornography?" I asked.

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

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

And the call was disconnected.

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

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

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

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

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

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

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

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

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

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

It isn't.

What the delay costs

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

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

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

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

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

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

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

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

Why capable people still wait

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

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

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

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

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

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

A framework for anyone weighing this decision

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

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

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

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

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

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

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

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

Competence fears are solvable.

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

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

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

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

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

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

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

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

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

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

New hurdles for retirees

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

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

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

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

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

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

A big mistake

One of the biggest mistakes I see retirees make is assuming the investment strategy that helped them build their nest egg will work the same once it's time to live on it. When you're working, market volatility is easier to recover from because you're actively earning income, and you have the time to recover from downturns.

However, once your portfolio becomes your main source of income, you might need to make withdrawals regardless of where the market stands. For some, this could mean selling investments at a lower value to meet income needs.

Over time, this can strain your savings, potentially depleting your portfolio prematurely.

Generating income from your investments involves much more than taking out money when you need it. Traditional IRAs, Roth IRAs, brokerage accounts, Social Security benefits and pensions, if you have one, are all taxed differently.

Without a coordinated withdrawal strategy, you could unintentionally pay more in taxes or miss opportunities to make savings work more efficiently.

One coordinated strategy

Instead of viewing retirement accounts as separate buckets of money, a retirement income plan allows you to manage withdrawals, taxes and income needs under one coordinated strategy.

Unfortunately, many people wait until they're in retirement to start thinking about their retirement income strategy.

In addition to prioritizing growth, the time leading up to retirement can also be used to start planning for how those assets will be used.

Estimating future income needs, reviewing healthcare costs, coordinating retirement accounts and understanding how they'll work together in retirement will make the transition much easier when that time comes.

Saving for retirement is crucial, but the financial planning doesn't end once your golden years begin. The transition from earning income to living off retirement savings requires a different mindset and a new approach.

Developing a retirement income plan that addresses how income will be generated, how withdrawals will be taxed and how your savings will support future spending needs can help ensure the nest egg you've spent decades building serves you throughout retirement.

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

With the stock market trading near record highs, confidence is soaring, and investors are increasingly buying into the good vibes.

Many people think the bull market will continue indefinitely. They reason that President Donald Trump's pro-growth policies will create a durable expansion, with deregulation and decreasing oil prices and mortgage rates fueling the surge.

Market forecasters have no crystal ball, but history teaches us important lessons, such as: The good times don't last forever, and sometimes the warm glow of summer optimism in the market fades into a long, cold winter of harsh economic reality.

Maybe this era will defy history and the economy will have several more years of solid economic growth. But investors nearing retirement should ask a different question: What if it doesn't?

History shows that periods of confidence often create the conditions for complacency, which can be expensive.

Middle-class realities

After enduring inflation, rising interest rates, regional banking concerns and geopolitical uncertainty, markets have proven remarkably resilient. The S&P 500 has more than doubled from its October 2022 lows, rewarding investors who stayed invested through volatility.

There's a belief among many market experts that any pullbacks will be shallow, and if markets decline, many investors assume recoveries will be swift because that's largely been their recent experience — their recency bias (which we'll explore later). But they're overlooking two important realities:

• The middle class is struggling
• Debt — both personal and the national debt ($40 trillion) — keeps climbing

Those factors could help trigger a prolonged or extreme market pullback.

One challenge in interpreting today's economy is recognizing that experiences vary dramatically. The economy is stronger only for a small percentage of people.

For example, only 3.2% of American retirees have at least $1 million or more in retirement savings. But for many people, their financial situation in today's economic climate isn't so great.

• According to the Federal Reserve Bank of New York, household debt reached about $18.8 trillion in early 2026, an all-time high.
• Getting an affordable mortgage is difficult and burdensome. Mortgage balances, credit card debt, auto loans and student debt have all expanded meaningfully in the last several years.
• Consumers are increasingly relying on loans and debt to cover the rising costs of daily expenses and sustain their lifestyles.

Debt works wonderfully when times are good. But it becomes unforgiving when economic conditions deteriorate.

The danger of recency bias

Some investors and market experts believe that a market pullback will be a 20% to 30% decline at the maximum, and that the recovery will happen within a year.

They have recency bias pointing to recent pullbacks and recoveries, such as events that occurred in 2020, 2022 and 2025. But they fail to consider what happened in the 2007-2009 Great Recession and before that, in the technology crash in 2001.

They've forgotten or never experienced previous bear markets during the 1950s, 1960s, 1970s, the early 1980s and Black Monday of 1987.

This isn't even to speak of the Great Crash of 1929 and the Great Depression of the 1930s. Most people don't believe those events will ever happen again.

The scary part for many investors is that they have an investment and retirement plan that assumes economic recessions will be short-lived, market downturns will be shallow, and the recovery will be quick.

But what if that doesn't happen? Investors must contemplate that question and plan for it.

Prudent investors need to ask these uncomfortable questions:

• What if growth slows unexpectedly?
• What if inflation proves stickier?
• What if deficits eventually pressure interest rates?
• What if consumers begin pulling back?
• What if the next bear market looks more like 2000 or 2008 than 2020?

For those in retirement or nearing it, how do they prepare? They shouldn't ignore the realities of the past. As the famous maxim goes, "History doesn't repeat exactly, but it often rhymes."

Have peace of mind by creating your own economic reality

There are so many factors out of our control that will often give us reasons to worry — wars, politics, inflation, interest rates, market headlines, etc.

But financial confidence doesn't come from predicting the future correctly. It comes from preparing thoughtfully. Focus on what you can control — your spending, debt, tax-mitigation strategies, market risk exposure and income planning.

Just as in proper business planning, you should consider the worst-case scenario and develop a contingency plan. Create your own economic reality by building a retirement framework that will protect you in a market pullback, a framework that prevents you from having to adjust your lifestyle.

Because eventually, another prolonged downturn will arrive. No one knows when. But history suggests it will happen again.

Stress-test common retirement assumptions. Ask yourself:

• "If markets fell 35% and remained down for three years or more, would my plan still work?"
• "In the event of a market decline, can my lifestyle be sustained, or might I be forced to reduce spending or not travel as desired?"
• "If inflation remained elevated, would my income sustain my lifestyle?"
• "Could I maintain peace of mind regardless of market headlines?"

These questions matter — especially when retirement shifts from the accumulation stage to the distribution stage.

It's not the time for a high-risk, high-reward approach

Savings goals for many people are way ahead of schedule. Protect the harvest you enjoy now and store up for a long winter, so when the market is disrupted for a lengthy period, you have what you need and can help family members and others, too.

The most successful retirees we meet are rarely the ones who took the greatest risks. Often, they are the ones who planned thoughtfully.

• They retired earlier than expected because their conservative plans exceeded expectations
• Their spending confidence increased because reality exceeded assumptions
• They were able to travel more, give more, help family members more and enjoy life more — not because they chased the upside of the market, but because they built margin into their lives

Others implemented tax-efficient strategies that allowed more of their wealth to remain invested. Some created robust income streams that were less dependent on daily market fluctuations.

A comfortable retirement in these uncertain times requires reducing your risk and taking a conservative approach.

You've spent decades working, saving, investing, sacrificing and delaying gratification. You built wealth so that one day your money could begin working for you.

Don't leave that next chapter to chance. Plan carefully enough that if markets disappoint, your lifestyle remains intact, your confidence remains strong and your peace of mind remains unmoved.

That might ultimately be the greatest return an investment plan can provide.

Dan Dunkin contributed to this article.

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

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

The past few years gave many investors exactly what they hoped for — and also set them up for some major risks.

If you bought the right stocks and held them through the volatility of the past few years, your positions have grown substantially. The problem is that "substantial" and "safe" are not the same thing.

We talk to a lot of clients who have watched a single holding climb to 20, 30 or even 40% of their net worth. Sometimes it's a tech stock they've owned for a decade, or a company stock that has accumulated through a career of compensation packages. Either way, they're sitting on significant gains.

Many investors recognize the risks of holding too much in a single stock — they just don't act.

Investors who struggle in retirement are often the ones who held for so long that the decision was eventually made for them, whether by a market correction, an estate situation or the realization that the tax bill they were trying to avoid had grown far larger than if they'd started earlier.

The position that built your wealth doesn't have to be the one that defines your retirement. Getting there is mostly a matter of being willing to ask the question.

The attachment problem

When a stock has been good to you for a long time, it starts to feel like a relationship. Clients who've held Nvidia (NVDA) or Apple (APPL) or Microsoft (MSFT) through multiple cycles have watched those stocks get them through a lot. The idea of selling feels like betrayal. It isn't rational, but human nature rarely is.

That attachment compounds over time. The longer a position has outperformed, the more convinced investors become that it will keep outperforming. We don't want the discomfort of being wrong after so many years of being right.

Consider this: If you didn't already own this stock, would you choose to put 35% of your retirement savings into it today? For most people, the honest answer is no.

At a certain point, the conversation ought to shift from maximizing returns to protecting what you've already built. Unlike institutions, individual investors don't have the benefit of perpetuity — there's a finite window to use and enjoy wealth.

The tax trap

Many advisers recommend reducing concentrated positions. The problem is, most people know that intellectually, but as soon as advisers bring it up, all the client hears is "taxes." They're not entirely wrong to do so.

Investors often let the tax tail wag the dog — prioritizing the avoidance of a tax bill over making decisions that better align with their long-term goals.

A position worth $1 million with a $100,000 cost basis carries $900,000 in embedded gains. In higher-tax states, the combined federal and state rate could reach 37.1%, meaning selling could result in a tax bill of more than $330,000.

So investors hold. They tell themselves the position is still performing. They say they'll deal with it later. But deferring a decision is still a decision, just not a conscious one.

Eventually, "later" becomes "now." The closer a client is to retirement, the more that tax liability weighs on their financial decisions. Spending decisions, income planning and even how much they let themselves enjoy retirement all get filtered through the same question: What will it cost me in taxes?

People end up taking the minimum required by their RMDs and missing the years when they actually have the energy and desire to use their wealth. The government's distribution schedule isn't designed around your travel plans.

Building a way out

The good news is that selling everything at once is rarely the right answer anyway. There are structured approaches that can gradually reduce concentration, spread tax consequences over time and preserve flexibility.

The most straightforward is staged selling across multiple tax years, which allows an investor to recognize gains in manageable increments rather than all at once.

Paired with detailed cash flow modeling in retirement, this approach can actually free people up to spend more by making the tax exposure visible and predictable.

For investors who want to build a more systematic tax strategy, they can offset their gains through tax-loss harvesting.

Direct indexing strategies have also evolved considerably. The newer long/short variation is particularly relevant for people dealing with concentrated positions.

These methods are designed to generate losses over time, which may help offset gains as a concentrated position is gradually reduced. The goal isn't to predict market direction, but to create flexibility and improve after-tax outcomes.

Another option worth serious consideration, especially in the current interest rate environment, is the charitable remainder trust.

The core appeal is simple: An investor contributes appreciated stock to the trust, and the trust sells the stock tax-free and reinvests the full proceeds.

The investor receives an income stream from the trust over their lifetime, and the tax liability on the original gain is spread across those payments rather than being due all at once.

With current interest rates, distribution rates from these trusts may exceed 10%, and the deduction generated can be paired strategically with Roth conversions in the years before RMDs begin.

None of these strategies requires perfection or a full exit. What they do require is a willingness to start. A conversation with your financial adviser is a meaningful way to get the ball rolling.

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

For decades, you've saved in tax-deferred retirement accounts, watching your balance compound untaxed. Then you turn 73, and the IRS comes calling.

Required minimum distributions (RMDs) force you to begin withdrawing and paying taxes on those savings — whether you need the money or not.

What many retirees don't realize until it's too late is that RMDs don't just create a tax bill. They trigger a cascade of consequences that can raise Medicare premiums, subject Social Security to taxation, push you into higher brackets and affect your estate planning.

Understanding these traps before your first RMD can save you thousands over your retirement.

1. The Medicare premium surcharge trap

One of the most common surprises hits retirees in their monthly Medicare bills. Part B and Part D premiums are income-based, with higher earners paying more through income-related monthly adjustment amounts (IRMAAs).

The trap: IRMAA is based on your modified adjusted gross income (MAGI) from two years prior, so a large RMD in 2025 raises your premiums in 2027.

For 2026, surcharges begin at $218,000 for joint filers. At the highest tier, Part B premiums reach $689.90 per month per person, versus the standard $202.90.

A $1 million account generates an RMD of roughly $37,736 at age 73. If that pushes you just over an IRMAA threshold, you could pay an extra $2,000 to $5,000 a year in premiums — money that never shows up on your tax return but flows directly from your RMD.

2. The Social Security taxation trap

Up to 85% of your Social Security benefits can become taxable depending on your combined income (adjusted gross income, tax-exempt interest and half of your benefits). The thresholds are surprisingly low: $32,000 for joint filers and $25,000 for single filers.

Large RMDs push many retirees over these thresholds, turning tax-free Social Security income into taxable income. Consider a couple with $40,000 in Social Security and $30,000 in pension income.

Without RMDs, they might owe minimal tax, but add a $50,000 RMD and suddenly $34,000 of their Social Security becomes taxable (85% of $40,000), sharply raising their bill.

The math gets worse because the effect is marginal. In the phase-in range, every additional dollar of income makes 85 cents of Social Security taxable.

3. The tax bracket cascade

RMDs don't just add to your taxable income — they can push you into higher tax brackets, where each additional dollar is taxed at a higher rate. The 2026 federal brackets create several danger zones where modest RMDs trigger significant tax increases.

For married couples filing jointly, the jump from the 12% to 22% bracket occurs at $100,800 of taxable income. The next jump to 24% happens at $211,400. These thresholds are inflation-adjusted annually, but RMD amounts grow faster as you age and your life expectancy decreases on the IRS tables.

The hidden trap: Many retirees assume they'll be in a lower bracket in retirement. But combine RMDs with Social Security, pensions and perhaps part-time or investment income, and your marginal rate can exceed what it was in your working years.

4. The net investment income tax trap

Once your MAGI exceeds $250,000 (joint) or $200,000 (single), you face the 3.8% net investment income tax (NIIT) on interest, dividends and capital gains.

The indirect trap: RMDs don't count as net investment income themselves, but they raise your MAGI. If that pushes you over the NIIT threshold, your investment income becomes subject to the extra 3.8% tax.

For retirees with substantial taxable accounts, this can add thousands to the annual bill.

5. The charitable deduction trap

Many retirees donate to charity and assume they can deduct it. But the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction to $31,500 for joint filers in 2025, making itemizing unnecessary for most households.

The trap: if you take the standard deduction, your charitable contributions provide zero tax benefit, while your RMD increases your taxable income. The solution is a qualified charitable distribution (QCD), but many retirees don't learn about it until after they've already taken their RMD and made separate gifts, missing the chance to lower their taxable income.

QCDs let retirees 70½ and older transfer up to $111,000 annually, directly from an IRA to charity. The distribution counts toward your RMD but doesn't appear in taxable income, effectively making your giving tax-deductible even if you take the standard deduction.

6. The state tax trap

While the federal consequences of RMDs are widely discussed, state treatment varies dramatically. Some states fully exempt retirement distributions, others tax them at ordinary income rates, and a few have special provisions.

In high-tax states, RMDs can trigger substantial bills. California's top rate is 12.3% (plus a 1% surcharge over $1 million), and New York's reaches 10.9%. A $100,000 RMD could generate $10,000 or more in state taxes alone.

The trap: Retirees who move to low- or no-income-tax states, such as Florida, Texas and Nevada, can avoid this. Those who delay the move may pay substantial state taxes on RMDs for years.

7. The widow's penalty

When one spouse dies, the survivor faces a particularly painful RMD trap. Joint filers enjoy wider brackets and higher standard deductions than single filers. After the year of death, the survivor must file as single, with brackets roughly half the width of joint ones.

Yet the RMD continues at nearly the same level, based on the account balance and the survivor's age, not filing status. This combination often pushes widows and widowers into significantly higher brackets, a phenomenon planners call the "widow's penalty."

How to minimize RMD tax traps

While you can't avoid RMDs entirely once you reach the required age, several strategies can reduce their tax impact.

Roth conversions before RMDs begin. Converting traditional IRA funds to Roth IRAs in your 60s and early 70s lets you control the timing and amount of taxable income. Roth IRAs have no RMDs during the owner's lifetime, and qualified withdrawals are tax-free.

Strategic timing of other income. Delay Social Security or spread capital gains across multiple years to create lower-income years for Roth conversions or to minimize the impact of early RMDs.

Qualified charitable distributions. Use QCDs to satisfy RMD requirements while reducing taxable income if you're charitably inclined.

Asset location planning. Keep tax-efficient investments (index funds, municipal bonds) in taxable accounts and high-income holdings (REITs, bonds) in Roth accounts where possible.

The key is planning ahead. By the time you face your first RMD, many of the most effective strategies are off the table. Working with a financial adviser in your 60s to model scenarios can help you avoid these hidden traps before they cost you.

Related Content

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• Got $2.5 Million Saved for Retirement? Here Are the Huge RMDs You Must Take at 73, 75, 80 and 85
• 5 Costly RMD Mistakes That Will Put a Dent in Your Savings (and How Early Planning Can Help)
• 7 Assets to Leave Out of Your Roth IRA, From a Financial Planner
• 7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial Planner

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

Medical billing mistakes are an expensive epidemic in American healthcare.

Studies consistently show that a staggering majority of hospital invoices contain errors, ranging from double billing to miscoded procedures.

For decades, consumer advocates have given the same advice: Request an itemized statement and review the codes. But for the average patient, staring at a sheet of five-digit current procedural terminology (CPT) codes is like trying to read hieroglyphics.

Fortunately, the balance of power is shifting. Generative artificial intelligence (AI) tools such as OpenAI's ChatGPT and Google's Gemini have emerged as powerful personal finance assistants.

By feeding cryptic billing logs into these AI platforms, consumers can instantly break down complex medical jargon, verify insurance logic and pinpoint specific overcharges that human eyes routinely overlook.

The AI audit in action: A case study

To understand exactly how this works, let me share a real-world analysis related to Mohs surgery I underwent earlier this year. Upon receiving my itemized statement from my medical provider, I compared it with my insurer's explanation of benefits (EOB).

The sticker price was a dizzying $3,802, loaded with confusing five-digit codes and multiple offsetting entries, and my insurance covered just $1,390, leaving me responsible for $2,412 out-of-pocket.

That's when I turned to Gemini.

I snipped the detailed information from my bill and saved it as a PDF, keeping my personal information private. I uploaded the document to Gemini with the following prompt: Analyze this bill and tell me what the codes mean and assess whether the insurance coverage is correct.

Gemini systematically untangled each line item to explain each in easy-to-understand terms.

The AI discovery: The consultation trap

Beyond mapping codes to plain English, AI's real value lies in its ability to cross-examine billing logic against standard insurance rules. AI successfully verified that the provider was treating me as an "in-network" patient due to the presence of "Code 3000-Contractual Write-Offs" across seven distinct entries.

The AI mathematically validated that the write-offs properly reduced the gross retail price to an allowed contract amount.

But critically, AI flagged a glaring systemic discrepancy that I should inquire about, in this case an office consultation fee. AI flagged that there was a very high probability that this consultation line was being contested or denied entirely by the insurance provider.

Insurance companies generally bundle the initial evaluation into the surgical procedure if they happen on the same day, unless the doctor evaluated a separate, unrelated medical issue during that same visit.

In my situation, there was no such "consultation." I had been referred to the Mohs surgeon by my regular dermatologist after a biopsy.

Because the itemized bill split the write-offs across multiple entries for "technical" and "professional" components, it effectively masked whether the core consultation line was rejected and pushed directly onto my out-of-pocket responsibility.

After calling the provider and disputing the charge, they removed the office consultation fee of $269.

Your step-by-step guide to auditing bills with AI

If you want to put ChatGPT or Gemini to work on your medical bills, follow this strategic blueprint to ensure accuracy and protect your financial interests:

Secure an itemized bill. Don't rely on the summary invoice that simply demands a "balance due." Call the provider's billing office or log into your patient portal and request an itemized statement showing CPT codes, revenue codes and logged contractual write-offs.

Redact sensitive information. Before uploading any document or typing text into an AI model, scratch out your name, Social Security number, address and policy ID number to protect your medical privacy.

Deploy a structured audit prompt. Feed the text or a clear image of the bill into the AI. Use a direct prompt such as: "Act as an expert medical billing advocate. Decode these CPT codes, explain what procedures were done, calculate the total write-offs, and check for standard insurance logic errors."

Cross-reference with your EOB. Never pay a hospital bill until you match it against the explanation of benefits (EOB) mailed by your health insurer. If the AI identified a contested line — such as the 99243E consultation fee — verify if your insurer passed 100% of that charge onto you.

Arm yourself for the dispute. If the AI spots a bundling error or an overcharge exceeding the allowed contract threshold, call the medical provider's billing office.

If appropriate, you can ask them to apply a specific modifier to prove the consultation was distinct from the surgery, or dispute the charge entirely if no separate consultation took place. Know that mistakes can occur in coding that cause insurers to not cover otherwise covered procedures.

The bottom line

Artificial intelligence won't write a check for you, but it acts as a free, highly trained financial advocate.

Spending 10 minutes running your medical invoices through an AI model can prevent you from paying hundreds of dollars in automated administrative errors.

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

There's a conversation that comes up in the mortgage business more than you'd think.

Consider a retired couple, financially comfortable, with no substantial debt, a home they own outright and brokerage and retirement accounts that have been accumulating wealth for 30 years.

They want to buy a place in Florida, move closer to grandchildren or downsize and free up some equity. They apply to get preapproved to buy a home with financing — and get denied by the lender.

The issue isn't their credit score, nor is it their ability to afford the payments. It's their income. It doesn't meet the threshold the lender is looking for.

That experience is more common than most people realize, and it points to something worth understanding before you find yourself in the same position.

Traditional mortgage guidelines weren't built for most retirees

Mortgage qualification in the United States runs on a single central question: How much verifiable income comes in every month?

That question made sense when the dominant borrower was a salaried employee in their 30s or 40s, with pay stubs, W-2s and a tidy debt-to-income (DTI) ratio. The whole underwriting framework, from DTI calculation to income documentation requirements to approval logic, was calibrated around that person.

Retirement changes the picture entirely. Social Security counts. Pension income counts. Required minimum distributions (RMDs) from an IRA count, provided they've already started, count.

But a brokerage account with $900,000 in it? That's negligible. A paid-off home worth $700,000? That can't show up as income.

In conventional underwriting, home value doesn't service a mortgage.

According to research from the Center for Retirement Research at Boston College, rejection rates rise consistently with age. Borrowers ages 60 to 69 are 1.54% more likely to be denied than younger applicants. Past 70, that gap reaches 2.7%.

Wealth is not the problem. The mismatch between where that wealth lives and what lenders are looking for is.

Asset depletion as a workaround

A methodology called "asset depletion" — you might also hear it called "asset-based qualification" or "asset dissipation" — exists specifically to bridge that gap. It's been around for a while, and most lenders are aware of it.

The issue is that not all offer it, and among those that do, the version available through conventional channels often doesn't produce enough qualifying income to matter. That distinction is worth understanding before you start shopping.

Here's the basic idea. A lender totals your eligible liquid assets (checking, savings, taxable brokerage accounts and retirement accounts after a standard discount for taxes and market risk) and runs a calculation.

Under conventional mortgage standards, the total gets divided across the remaining loan term to produce a synthetic monthly income figure. That number goes into the DTI calculation alongside whatever documented income you're already receiving. If the math works, you qualify.

To put some numbers to it: Say a retiree has $2 million in a brokerage account and wants to buy a home in Boca Raton, Florida. Under conventional asset depletion guidelines, that $2 million gets discounted roughly 30%, then divided across 360 months, producing about $3,900 a month in qualifying monthly income.

Combined with Social Security, that might not be enough to qualify for a home at the price point they're looking at in that market.

The same $2 million run through a non-QM, or non-qualified mortgage, framework, where lenders can divide by as little as 60 months rather than 360, produces closer to $23,000 a month in qualifying income.

That's a different conversation entirely. Instead of being ineligible to purchase a home, the buyer can easily qualify to buy a home in excess of $1 million. It's a huge part of why lender selection matters. While the assets didn't change, the calculation changes the qualification.

What counts as eligible is key. Liquid, accessible accounts generally do. A paid-off home doesn't since equity isn't income until you tap it.

Business assets, illiquid investments, and anything pledged as collateral typically get excluded. The discount applied to retirement accounts varies by lender, with most taking somewhere from 30% to 40% off the top to account for the tax liability and withdrawal timing.

What to do before you apply

Most big banks and conventional lenders don't offer asset-based qualification, or they offer a narrow version of it that doesn't serve most retiree profiles well.

The Fannie Mae and Freddie Mac framework for asset depletion divides eligible assets over 360 months, regardless of the actual loan term.

For most retirees, the monthly income figure that process produces is too compressed to move the needle on a purchase loan. If you're working with a lender whose only option is conforming underwriting, you might be hearing "no" when a different lender would have said "yes."

Portfolio lenders, meaning institutions that hold loans on their own books rather than selling them into the secondary market, can offer asset-based qualification, but they tend to carry higher rates than lenders operating in the non-QM wholesale space.

Non-QM lenders set their own underwriting guidelines rather than following Fannie or Freddie's framework, and because they distribute through wholesale channels, the pricing is generally more competitive.

Non-QM is not a synonym for high-risk. For a retiree with substantial assets and clean credit, it's often the channel that produces the best combination of qualification flexibility and rate.

The catch is that most consumers don't have direct access to these lenders, and the ones they can access typically have higher rates.

Working with a mortgage broker rather than going directly to a bank or portfolio lender matters here more than in most borrowing situations because you get more access to lenders, and more options often mean lower rates as lenders compete for your business.

Brokers have wholesale relationships across multiple investors and underwriting frameworks and can match your financial profile to the product built for it.

On the documentation side: Be ready. Lenders using asset depletion typically want two to three months of statements across every eligible account, proof of ownership and, sometimes, a written explanation for any large deposits or transfers in the recent statement period.

If your accounts are spread across four or five institutions, start gathering statements early.

One thing worth saying plainly: Drawing down the assets you use to qualify affects the financial picture those assets were meant to support long term. This decision sits at the intersection of mortgage strategy and retirement income planning.

A conversation with a financial adviser before you apply will help you think through whether the structure makes sense for your situation.

Who you talk to determines your ability to buy a home

Getting this right has less to do with how much you have than with understanding, before you walk into anyone's office, that the conventional mortgage path wasn't built for your financial profile.

The borrowers who find their way through it are usually the ones who went looking for lenders equipped to work with them.

Remember, a denial is not a verdict.

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• High Mortgage Rates Are Holding My Retirement Hostage: Can I Still Downsize and Retire?

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

I grew up in a time when it felt possible to figure things out on your own. It was before smartphones and online tutorials. If something broke, we learned how to fix it. If we wanted to learn something, we found a way.

That mindset is still alive and well today, although we have more access to information than any generation before us. Whether we're repairing a vehicle, researching a medical diagnosis or learning a new skill, the answer is often just a few clicks away.

That same confidence has served many people well in their financial lives. They learned how to budget, save, invest and build wealth.

However, retirement introduces a different challenge altogether. The challenges of retirement can often leave someone who is typically "good with money" feeling overwhelmed and vulnerable.

Why does retirement shift the goalposts?

Many people who consider themselves financially adept have spent their working years focused on one primary objective: Growth. They have worked hard, saved consistently, invested diligently and delayed gratification.

For many, that process built on discipline, knowledge and consistency has enabled them to accumulate meaningful retirement savings, pay down debt, raise families and build successful careers.

Retirement, however, changes the approach entirely. This is the point in the journey when three financial disciplines begin to intersect: Income, investments and taxes.

During our working years, these areas often operate independently. But in retirement, when people are in the distribution phase rather than the accumulation phase, they become interconnected.

The transition from accumulating wealth to coordinating wealth is one of the most overlooked and important challenges in personal finance.

Income

Income planning in retirement asks a different question than accumulation planning. The goal shifts from maximizing account balances to answering a much more practical question: "How am I going to get paid?"

Income planning becomes essential for creating a sustainable paycheck from assets that may need to last 30 years or more.

Investments

Investment planning also changes during retirement. During the growth phase, throughout your working years, market declines can often be viewed as temporary setbacks or even opportunities to invest at a discount.

But during retirement, the timing of losses matters. The same market decline that felt insignificant at age 40 can feel very different when withdrawals are occurring simultaneously. Protecting savings becomes increasingly important when regular contributions and dollar-cost averaging are no longer part of the equation.

Taxes

Then there is tax planning. For many retirees, taxes become more complicated.

• IRA withdrawals can affect tax brackets
• Tax brackets can affect how much Social Security becomes taxable
• Income can influence Medicare premiums for several years
• Decisions made today may affect surviving spouses and even the tax burden left to children

Making the pieces fit

In retirement, a decision in one area often affects the other two.

• If you increase withdrawals, taxes may rise
• Increase taxable income and Social Security taxation or Medicare premiums may change
• Reduce investment risk and future income potential may be affected

Everything becomes connected.

I've noticed a pattern among people approaching retirement. Many arrive with spreadsheets, account statements and years of disciplined saving behind them. They know what they've accumulated, but they're uncertain about how all the pieces fit together.

Questions begin to surface, such as:

• How much can I safely spend?
• When should I claim Social Security?
• Should I prioritize reducing taxes or maximizing income?
• How much investment risk should I still be taking?
• What happens if one spouse dies first?
• How will today's decisions affect my children tomorrow?

What makes these questions so unsettling is that they rarely have simple answers. Instead, the answers come only through developing careful, intentional strategies. And the reality is, in this space, there isn't a practice round.

During our working years, progress is relatively easy to measure. We receive a paycheck. We watch account balances grow. We contributed more this year than we did last year. Success is naturally measured by accumulation.

But retirement changes the scoreboard.

The questions become less about growth and more about sustainability. Instead of asking, "How much have I saved?" people begin asking, "Will what I've saved be enough?" The focus shifts from building wealth to making decisions that support a desired lifestyle for decades.

So many decisions

For those staring into the fog of retirement, uncertainty often has less to do with the size of a portfolio and more to do with the number of decisions that suddenly appear. The closer retirement gets, the more interconnected those decisions become.

What was once a straightforward objective — save and invest — becomes a series of questions involving income, taxes, risk, healthcare costs, legacy goals and lifestyle choices.

Understanding how those pieces work together often becomes more important than any individual investment selection.

You may be "good with money," but this season of life may leave you with more questions than ever.

However, having questions and needing clarity doesn't make someone bad with money.

Rather, it is a sign that the realities of retirement are coming into focus. And at this moment, making wise decisions is paramount in preserving the income, freedom and lifestyle that often take decades to build.

Retirement asks us to think differently about wealth. It is no longer measured solely by account balances or annual returns. It is measured by the ability of our resources to support the life we want to live.

Income, investments and taxes each play an important role. Yet their true value is realized only when they work together.

Dan Dunkin contributed to this article.

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

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

For decades, financial advisers sold the same allocation: 60% stocks, 40% bonds. It was clean. It was simple. It worked.

Until it didn't.

In 2022, both sides of that portfolio got crushed at the same time. Stocks fell. Bonds fell. The supposed hedge didn't hedge. And if you go back further, the financial crisis told a version of the same story.

The 60/40 wasn't built for this environment. It was built for one that no longer exists.

The math has changed

Think about why someone would put 40% of their wealth into bonds. In the late '70s and '80s, you could buy a 30-year Treasury yielding 15%. A piece of paper backed by the United States government paying you 15% a year. Of course you'd hold that. Anyone would.

That product doesn't exist anymore.

Interest rates fell for 40 straight years. They came back up recently, but a Treasury still pays you somewhere around 4%.

Meanwhile, the state that's backing that paper isn't what it was four decades ago. U.S. debt was less than a trillion dollars then. It's north of $36 trillion now. Ask yourself how confident you are in the full faith and credit of a government carrying that balance sheet.

The yield has diminished. The security behind it has diminished. And the correlation advantage — bonds zigging when stocks zag — has broken down. Stock and bond markets move together now more often than not.

The 40% side of the 60/40 portfolio can no longer deliver its two core promises: A competitive return and real diversification.

So why are people still running it? Because it's easy to sell. And because old habits die hard.

The menu has changed

The investment universe got bigger in those same 40 years.

When the 60/40 became standard, you had stocks and you had bonds. Those were the options. Today, you have access to asset classes that used to be reserved for endowments and family offices.

Private equity. Real estate. Venture. And you don't need $5 million to get in the door.

You can buy private equity exposure through a public ETF. Tech-focused PE, real estate PE, broad diversified PE. Some for as little as $500. Twenty years ago, none of this was available unless you had eight figures and the right connections. Most individual investors haven't caught up yet.

Where I keep my wealth

I'm not going to tell you what to do with your money. But I'll tell you what I do with mine.

I run closer to 40% private markets, 40% public equities, 20% split across crypto, gold and cash. No bonds. Zero.

On the public equity side, I start and stop with the S&P 500. The idea of being a stock picker is folly at best. You're competing against algorithms and institutions with more information and faster execution than you'll ever have. Buy the index. Let the market do its job.

On the private side, some of these PE vehicles trade as ETFs now. Diversification and liquidity. That used to be a trade-off. Now it doesn't need to be.

On cash and gold, they're the ballast. Money markets are yielding roughly the same as bonds right now. So the argument for locking capital into a bond fund when you can park it in cash at a similar rate and keep full liquidity? I don't see it.

Gold is the oldest store of value on earth. I don't need it to grow. I need it to sit there when everything else gets volatile.

A word on bitcoin

Crypto may seem like the black sheep in my allocation, so here's my reasoning.

I start and stop with bitcoin. Bitcoin is a roughly $2 trillion asset that the market still can't agree on. One camp says it's the greatest Ponzi scheme ever built — the greater fool theory playing out in real time.

The other camp says it's the reserve currency of the future. When the dollar fades, and every fiat currency eventually does, it's not going to be replaced by the yen or the euro. It's going to be replaced by something digital. Bitcoin is best positioned to be that thing.

Over almost 20 years, the price has oscillated between those two stories. It's been at $300. It's been above $100,000. If I knew where bitcoin would land, I wouldn't be writing about it. But a small allocation, sized to what you can stomach losing entirely, is an asymmetric bet.

The downside is bounded. The upside, if the reserve-currency thesis plays out, is not.

The point

You don't have to run my allocation. But there's no reason to keep running a model from an era when Treasuries paid 15% and private equity required a country club membership. Times change, and so should your strategy.

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

What do you do when you're suddenly in charge of everything?

I often point to Dorinda Medley from The Real Housewives of New York as a surprisingly relatable example. After her husband passed away, she spoke publicly about discovering just how much of the family's financial and household administration he had handled.

She has shared that she didn't even know who was paying certain bills and later uncovered investments and financial arrangements she hadn't previously been involved with.

While her circumstances involved significant wealth, the underlying challenge is one I see, as an attorney and financial professional with decades of hard-won expertise, far more often than people expect: When one spouse manages most of the financial life, the surviving spouse can find themselves trying to navigate complex decisions at the same time they are grieving.

In many households, one partner naturally becomes the person who handles the finances. They manage the accounts, coordinate with advisers and make the long-term decisions.

The other partner may understand the broader picture, but not the details — just like Dorinda.

That dynamic can work for years, until something changes. When it does, whether due to illness, loss or incapacity, the uninvolved spouse is suddenly responsible for everything.

When clients come to me in that situation, their first question is almost always the same. Where do I even start?

Looking for clarity

The answer is to focus on the information that creates the most clarity, as quickly as possible. In most cases, that starts with identifying key documents and accounts.

Tax returns are often the best entry point, because they provide a consolidated view of income, assets and the professionals involved.

From there, we work through locating bank and investment accounts, insurance policies and estate planning documents.

In many cases, this is where the first challenge appears. I have worked with clients who discovered accounts spread across five or six different institutions, with no centralized system and no clear understanding of what existed where. That fragmentation alone can make the situation feel overwhelming until it is organized piece by piece.

Once we know what exists, the next step is understanding how everything fits together. That means reviewing assets and debts, confirming how accounts are titled and, just as importantly, understanding beneficiary designations.

It is also critical to identify who has been named to act on your behalf. That includes executors, trustees and healthcare decision-makers.

We often find that just as there are gaps in account visibility, there are also gaps in these roles. Clients may not know who is listed, or those designations may be outdated. These are not abstract details. They directly affect how decisions are made and how quickly assets can be accessed.

Avoid costly mistakes

At the same time, this is where I see clients most at risk of making costly mistakes. When someone is overwhelmed, there is a natural inclination to act quickly just to regain a sense of control.

I often see people make significant changes to their investments early on or move large portions of their portfolio to cash simply because they are unsure what they own or how it is structured. While that can feel protective in the moment, it can create longer-term consequences if it is not part of a broader strategy.

There are also timing considerations that come into play. Certain benefits need to be evaluated, tax filings still need to be completed, and some decisions have deadlines attached to them.

This is why creating a clear order of operations is so important. Not everything needs to be addressed immediately, but some things do, and knowing the difference matters.

There are, of course, several priorities in the first few months.

Establishing a clear picture of cash flow is critical so that day-to-day expenses are covered without disruption.

It is also the time to evaluate any available benefits, including Social Security survivor benefits, and begin the process of updating estate documents and beneficiary designations to reflect the new reality.

One especially crucial item is ensuring that an estate tax return (Form 706) is filed within nine months of the death (or 15, if filing for an extension) in order to elect portability on a deceased spouse's unused federal estate tax exemption to retain maximum flexibility in estate tax planning.

Don't neglect the emotional side

Just as important as the technical work is the emotional side of the transition. Many uninvolved spouses feel like they should already understand these things.

I often hear clients say, "I wish I had paid more attention," or "I feel like I should know this."

The reality is, this is one of the most common situations I see. Financial confidence is not something you either have or do not have. It is something you build, and this is often where that process begins.

While much of my work is helping clients navigate this transition after the fact, I also spend time encouraging couples to plan ahead so neither partner is ever in the dark.

That does not mean both people need to manage every decision, but it does mean both should have a basic understanding of where accounts are held, who the key contacts are and what the overall plan looks like.

That level of transparency is often the difference between a difficult transition and an overwhelming one. It is what allows someone stepping into this role to move forward with clarity instead of starting from zero.

This is not a rare situation. It is something that plays out in real households every day. The goal is not just to respond well if it happens. The goal is to make sure that if it does, the person stepping in is prepared, supported and has a clear path forward.

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• Social Security for Widowed Parents Falls Far Short of Need

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

Financial literacy is the process of developing the appropriate skills to make informed decisions with the financial resources you have available. It is about more than "money management." It is about understanding how money impacts different aspects of your life.

The different components of financial literacy include:

• Understanding your earnings
• How to save and invest
• How to budget and spend
• How to properly borrow funds and take on debt

In addition to knowing how money flows, being financially literate helps build confidence, independence and resilience. When you know you can depend on yourself to make good financial decisions, you are putting yourself in a position to succeed.

Most people wait too long to learn about money. I was fortunate that my first experiences with financial management came while I was still living at home with my parents. In my junior high home economics class, we learned how to balance a checkbook.

My first experience with earnings and spending came during high school when I got my first job. I learned how to budget my expenses not based on my earnings, but on my take-home pay after taxes.

I also had to account for a monthly loan payment on my car and understand the difference between interest and principal.

Looking back has made me wonder how today's parents can help their own kids begin their own journey towards financial literacy. For many people, resources are scarce. And it may seem there isn't much to do until kids get their first job.

But there are plenty of daily activities that have some relation to financial literacy and can help parents take more ownership of their kids' financial education.

Our firm recently launched a free tool for parents called The Lern-ing Curve. Parents can use it to find age-appropriate lessons and activities that will teach kids how to become financially literate.

Beyond that, though, the real teaching happens in daily life. What that looks like changes a lot as your kids get older.

Start young: Make it a game

A lot of parents think kids need to be older to understand money and finances. While we shouldn't expect a 3-year-old to help with 401(k) allocations, there are plenty of activities parents can do with young kids.

The key is to make it fun. Playing board games with dice can help kids learn their numbers and how they apply to the real world. Sharing with siblings can also be turned into an everyday commerce situation.

Sharing and trading Halloween candy is a perfect example. One small chocolate might not be worth the same as a bag of gummy bears unless one person loves chocolate and the other loves gummy bears. If they like both equally, maybe the small chocolate can be exchanged for half a bag of gummy bears.

These are the exact types of activities that parents are likely already engaging in without even realizing they are helping their kids become more financially literate.

The preteen years: Goals and budgeting

As kids continue to grow and learn new concepts, the same games might not be as useful or engaging. During the preteen years, kids are learning more about themselves and developing their own personalities and mindsets. They are more independent thinkers and can comprehend more sophisticated concepts.

Helping them set achievable goals that are important to them boosts confidence and teaches the value of hard work.

By working on a savings plan for these goals, parents can show their kids how to achieve short-, medium- or long-term wants and needs. From a budgeting perspective, parents can show their kids how they allocate available money.

• Short-term spending can be on everyday items like groceries and gas
• Medium-term savings might be for a family trip or gifts for the holidays
• A long-term goal could be saving and investing for college

With these types of activities, kids can see in the real world how finite resources are used and can start to learn how they would want to allocate their own allowances or resources.

The teenage years: Jobs, taxes and debt

During the teenage years, kids become even more independent. They may start preparing to leave home and find their own path. This is when parents generally start trying to teach their kids about money.

Getting a job outside of school teaches kids that there's more to earning money than just wages or salary amounts. Working with your kids to understand taxes can help them learn to budget and understand their real take-home pay.

With that take-home pay, they can start setting more long-, medium-, and short-term goals.

This is also a time to learn about debt and how to use it. From finding out how credit cards work to learning about car loans, it is important that kids understand the difference between using money and borrowing money to stretch what they already have.

You may already be doing a lot of this with your kids. But by working with your adviser or visiting The Lern-ing Curve, you can take an even more proactive approach to teaching your kids the building blocks of a successful financial future.

The earlier kids start understanding how money works, the more financially literate they will ultimately be.

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

I came across a video recently from personal injury attorney Mike Rafi that laid out one of the most blatant insurance fraud schemes I can remember seeing — minus the guy dressed in a gorilla suit tearing up a car.

It's called Operation Sideswipe, and if you're wondering why, at least in part, your insurance premiums keep going up, this case is a pretty good place to start.

Here's what happened. Going back as far as 2011, a network of people called "slammers" would intentionally crash their vehicles into 18-wheelers. These were not accidents, you see. They were staged collisions, choreographed to make it look like the truck driver was at fault. The truck drivers had no idea this was happening.

After the impact, the passengers in the slammer's car would claim they'd been injured. Then a group of corrupt personal injury lawyers would file claims, push for settlements and cash out.

Why the insurance companies would pay

The trucking companies and their insurers would pay up, because settling was less expensive than fighting every single case in court.

And it went deeper than that. Like six-feet-under deeper. In 2020, a federal witness who was secretly cooperating with the FBI was shot 10 times on his mother's doorstep just four days after his indictment was made public.

The person who allegedly paid for the hit was a disbarred attorney living in a $1.2 million home with a former Hollywood stuntwoman.

All this reads like a novel you might buy at an airport bookstore. However, by the time federal authorities finally got the case under control, 63 people had been charged, and a key witness was dead.

This went on for years. And here's the part that affects you: Every one of those fraudulent claims got paid:

• Every inflated medical bill
• Every bogus lawsuit settlement
• Every fake injury claim

That's how insurance works

The insurance companies paid it all. And when insurance companies pay out billions in fraud, they don't just absorb the loss. They raise rates.

That's not greed. That's math. That's how insurance works.

The money has to come from somewhere, and it comes from you. From me. From every honest driver who has never filed a fraudulent claim in their life.

You pay your premium every month, on time, year after year. You've never caused an accident. You've never exaggerated a claim. And yet, your rates will go up partly because a ring of crooks in New Orleans intentionally crashed cars into trucks and walked away with settlement money.

The fraud gets baked into the system. The insurers raise prices to cover the losses, and the cost spreads across the entire risk pool. You end up paying the bill for somebody else's crime.

Just imagine what we don't even know about

Now, here's the thing. Operation Sideswipe is a case we know about. But I want you to think about what I call the coconut theory.

If you're sitting on an island, and a coconut falls on your head, the chances are there are lots of coconuts falling all around that island. You were hit with just this one.

We learned about this one massive scheme because it got big enough to attract federal attention. But that means — and think about this — there are many similar scams, or even larger ones, happening all over the place that we don't know about.

Smaller operations. Individual fraudsters. Staged accidents in cities across the country that never make the news.

And I'll bet Operation Sideswipe is not the first insurance fraud case you've heard about, so plenty do make the news. Each one is a coconut hitting the insurance system, and each one costs all of us money.

If one scheme in one city involved 63 people and went on for years, how many are running right now that haven't been caught? How many fraudulent claims are being paid today that will never be investigated?

Every one of those payments ends up as part of the rate calculations that determine what you and I pay for coverage.

Insurance fraud is not a victimless crime. It's a tax on every honest driver in the country, collected one premium increase at a time.

What you can do

So what can you actually do about it? How can you help put an end to this insanity? A few things.

1. After an accident, the single most important thing you can do is document everything.

I mean everything. Not most things. Getting the hint? Everything with a capital E.

Take out your phone and take pictures and/or record video of every angle of:

• Both vehicles
• The road conditions
• The traffic signs
• The weather
• The license plates
• The other driver
• Their insurance card
• Any debris on the road
• The positions of the vehicles before they get moved

Take more pictures than you think you need. You can never go back and take the ones you missed.

2. Walk around the scene, too, recording video.

Capture the other driver's demeanor.

• Are they limping?
• Are they on the phone with someone who seems to be coaching them?
• Is there a passenger who's silent at the scene but could later claim they were thrown forward and hurt?

Record all of it. Your phone's camera is the best witness you will ever have. It doesn't forget. It doesn't get intimidated. It doesn't change its story three months from now.

3. Open the Notes app on your phone and list every detail.

• The time
• The exact location
• Which lane you were in
• What the other driver said — word for word
• The names of any witnesses
• The badge numbers of responding officers

Also, note anything that seems unusual:

• A passenger who is jumping around and yelling at the scene (they could claim later to have a broken leg)
• A driver who seems oddly calm for someone who just got rear-ended
• A car that pulls up and someone gets out who wasn't involved in the crash

Write it all down. Three months from now, when the claims adjuster asks you about the details, you might not remember, but your notes will.

Why you can't just trust the system

Is it unfortunate that we have to be this diligent? Heck, yeah. Absolutely. It would be nice to just exchange insurance information, shake hands and trust the system. But the system is being abused, and we're all paying the price, literally.

Operation Sideswipe worked because there was no evidence to contradict the fraudsters. The slammers and their passengers could say whatever they wanted, and without contradicting evidence, the system believed them.

The only reason the scam finally got exposed was that federal investigators spent years building a case with resources you and I don't have.

What we do have is a phone in our pocket that takes pictures, records video and lets us type notes.

• Every picture you take is evidence
• Every video clip is a record
• Every note you write is a real account that carries weight in a way that a vague recollection months later can't

Your evidence can help protect you from being accused of causing something you didn't cause. And it's what helps your insurance company pay the honest claims quickly and fight the fraudulent ones.

Insurance fraud costs every single one of us, every single year, in higher premiums. The best defense we have isn't law enforcement.

It's you, at the scene, with your phone out, paying attention.

Want to learn more about insurance? Visit KarlSusman.com.

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• Making Fraudulent Insurance Claims Can Land You in Jail
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• 5 Tips to Help Avoid a Denial on Your Insurance Claim

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

A lot of people get into real estate the same way my brother Brian and I did. You buy a few properties on the side, learn as you go and assume steady growth will come from owning real estate long enough.

Before founding Roers Companies in 2012, we built a portfolio of about 20 residential and student housing properties near the University of Minnesota. It was a side venture we grew while working in finance — Brian as a CPA and me as a CERTIFIED FINANCIAL PLANNER® (CFP®).

At the time, we knew our local market well and had a strong network, but we were still thinking fairly small. We were focused on managing individual rentals instead of building something durable in the long run.

Looking back, it's clear we needed to shift our perspective on risk and growth. Investors today have less room for error than they did a few years ago, which makes long-term planning and risk management much more important.

While every investor's journey is different, these are the three lessons that shaped our approach — and that every investor should understand from the start.

1. Smaller doesn't always mean safer

A lot of first-time investors start with a single-family rental, duplex or small multifamily property because it feels manageable. There's nothing wrong with that approach, but many people assume smaller automatically means lower risk.

In practice, smaller properties can leave you more exposed. If you own a duplex and one tenant leaves, a large portion of your income stream disappears overnight.

A major repair can wipe out most of the year's profit. Even routine turnover carries more weight when there are only a handful of units supporting the property.

That was one of the first lessons Brian and I learned as we expanded beyond lease-to-own and student rentals. Larger apartment communities brought more operational complexity, but they also created more stability.

Vacancies, repairs and day-to-day issues had less impact on the overall performance of the property because the risk was spread across more units.

For individual investors, that doesn't necessarily mean jumping straight into a 200-unit development. It means understanding that larger properties tend to absorb the ups and downs of ownership differently.

When one tenant moves out or an unexpected repair comes up, those issues don't have the same impact they do when you only have a handful of units.

2. Diversification isn't just for the stock market

Buying a resilient property is one decision. Building a resilient portfolio is another.

One of the most important experiences in our early years came during the oil boom in North Dakota. At the time, demand was surging, and we were developing in markets that were growing incredibly fast to house the influx of oil workers.

In the thick of the boom, it felt as if demand would never slow down. Then conditions changed.

That experience reinforced something that applies everywhere: No market stays hot forever, and no region is immune to economic shifts.

After that, we became much more intentional about diversification. We expanded into different states and different types of housing because we didn't want the future of the company tied too closely to one local economy or industry.

For us, that meant — and still means — building a portfolio that isn't overly dependent on any one market, property type or stage of the economic cycle.

Individual investors should think the same way. Too often, people build portfolios entirely around what's familiar or close to home. That can work for a while, but it can also leave investors exposed to risks they didn't anticipate.

This is especially true as regional markets navigate the supply-and-demand resets we're seeing today.

Diversification in real estate is not only about owning more properties. It's about reducing the likelihood that all your investments are affected by the same economic pressures at the same time.

3. Long-term value is usually built through operations, not luck

Many people enter real estate assuming the biggest gains will come from appreciation alone. Sometimes that happens, but relying on market appreciation as the entire strategy can create problems. Strong operators look closely at how a property performs.

• Can expenses be managed more efficiently?
• Are there upgrades that could make the property more competitive?
• Is management helping the property operate at its full potential?

Those decisions tend to matter more over time than hoping the market keeps moving upward.

Investors today also face a more competitive environment than they did a decade ago, especially in multifamily housing. In this sector, value is closely tied to the income a property produces.

Improving operations, reducing inefficiencies and making thoughtful improvements can all strengthen performance in a way that's far more reliable than trying to predict market swings.

That shift in thinking changes how investors approach growth. Instead of waiting for the market to create value, they focus on building value through better execution and better long-term management.

Real estate can absolutely be a strong long-term wealth-building tool, and experience has taught me that success usually comes from focus more than momentum.

The investors who last are usually the ones who show grit when markets change and avoid making emotional decisions when things get uncertain.

That approach might not feel exciting in the short term, but it tends to create far more stability — and success — in the long run.

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

You've probably spent real time getting your investment costs down. You moved out of a high-fee mutual fund years ago. You watch your expense ratios. That instinct has served you well.

However, here's the uncomfortable math: Shaving another 0.10% off an already-cheap portfolio might save you a few hundred dollars a year. A poorly timed Roth conversion, a missed tax-loss harvesting opportunity or a Medicare premium surcharge you didn't see coming can cost you thousands in a single year, and the damage can compound for the rest of your retirement.

Most investors have optimized fees about as far as they can go. Few have done the same with taxes. That gap is where a lot of your wealth is quietly leaking out, and unlike a fund's expense ratio, nobody sends you a clear, itemized bill for it.

Why fees got all the attention

Fees became the focus because they're easy to see and easy to act on. Pull up two funds, compare the expense ratio, pick the cheaper one. Index funds and ETFs have pushed costs for diversified portfolios down to a few basis points, and that progress is real.

Taxes don't work that way. The cost is spread across decisions made in different years, different accounts and sometimes different tax codes entirely. There's no ticker symbol for "the Roth conversion you should have done in 2024." That makes tax inefficiency much easier to ignore, even though it's often the bigger number.

Here are eight places where that money tends to disappear, and what you can do about each one.

1. Your asset location may be backward

Asset allocation (how much you hold in stocks versus bonds) gets all the attention. Asset location (which accounts hold those assets) usually gets none.

Say you hold $200,000 in taxable bonds throwing off 5% interest, or $10,000 a year, inside a regular brokerage account taxed at your 24% tax bracket. That's $2,400 a year in tax you wouldn't owe if those bonds sat in your IRA instead.

Meanwhile, the tax-efficient index fund sitting in that IRA would have cost you almost nothing in a taxable account.

Swap the two and you keep that $2,400 every year going forward. That's usually a one-time fix you can make in an afternoon with your statements in front of you.

2. You're skipping your cheapest years to do Roth conversions

If you retired before claiming Social Security and your required minimum distributions (RMDs) haven't kicked in, you may be living through the lowest-tax years of your entire retirement, often sitting comfortably in the 12% or 22% bracket.

That window typically closes once RMDs begin, sometimes pushing you into a higher bracket for the rest of your life.

Converting traditional IRA assets to a Roth during these lower-income years, even in modest annual amounts, can lock in today's tax rate instead of tomorrow's higher one. Run the numbers with your tax preparer before year-end, since this window doesn't reopen.

3. Your mutual fund just sent you a tax bill for a year it lost money

If you've ever opened a 1099 and found a capital gains distribution on a fund that actually dropped in value that year, you've felt this one. It happens because the fund manager sold winning positions inside the fund, and the tax bill gets passed to everyone holding shares, regardless of when they bought in.

Let's say you have a $150,000 position in an actively managed fund and it distributes a 6% capital gain, which is a fairly ordinary distribution in an up market. That's $9,000 in gains landing on your return and, at a 15% capital gains rate, a $1,350 tax bill on a fund that may have actually lost value during your holding period.

ETFs are structured to largely avoid this. If you're holding actively managed mutual funds in a taxable account, check whether the same strategy is available in ETF form, or move that holding into your IRA where the distribution doesn't matter.

4. You're pulling money from the wrong account first

Most retirees draw down whichever account feels easiest to tap rather than the one that's most tax-efficient.

Spend down a $500,000 taxable account too fast in your 60s, for instance, and you may enter your 70s relying heavily on traditional IRA withdrawals just as RMDs force even more income out at the same time, pushing what could have been a 22% bracket year into the 24% bracket.

Leave your Roth untouched until you don't need it and you waste years of tax-free growth it could have provided.

The right order depends on your brackets, balances and timeline, but it's worth building a multi-year withdrawal plan rather than deciding year by year.

5. You're not harvesting losses when the market gives you the chance

Tax-loss harvesting means selling an investment at a loss to offset gains elsewhere in your portfolio, or up to $3,000 of ordinary income each year, then reinvesting in something similar so you stay in the market.

If a market downturn leaves one holding down $8,000, selling that loss to offset $8,000 of gains elsewhere saves you roughly $1,200 to $1,920 in tax, depending on whether it offsets short-term or long-term gains.

It costs nothing but attention, and most taxable investors never bother unless their adviser automates it.

6. Medicare could quietly double your premium

The income-related monthly adjustment amount (IRMAA) adds a surcharge to your Medicare Part B and Part D premiums once income crosses certain thresholds, based on your tax return from two years earlier.

In 2026, that surcharge kicks in above $109,000 for single filers and $218,000 for joint filers, pushing your total Part B premium as high as $689.90 a month, with Part D adding up to $91 more.

Because of the two-year lookback, a large Roth conversion, a property sale or a big capital gains year can trigger a surcharge you won't see until the notice arrives. What's more, crossing a threshold by even a dollar triggers the full surcharge for that tier.

If you're approaching Medicare age or planning a big income event, model the IRMAA impact two years out before you pull the trigger.

7. Your estate plan may be built for rules that no longer apply

If you did your estate planning in the past few years, you likely did it under the assumption that the federal estate tax exemption was about to be cut roughly in half. That didn't happen.

The One Big Beautiful Bill Act (OBBBA), signed in July 2025, permanently raised the federal exemption to $15 million per individual, or $30 million for married couples using portability.

For most families, that removes federal estate tax as a concern entirely. However, several states, including New York, Massachusetts and Oregon, still tax estates at thresholds far below the federal level, so you can owe a state estate tax with an estate nowhere near large enough to trigger the federal one.

If your plan hasn't been reviewed since the law changed, it's worth a checkup, both to avoid over-optimizing for a tax you no longer owe and to catch a state tax you still do.

8. Your retirement move may cost more than you think

If moving to a new state is in your retirement plan, the tax bill deserves the same scrutiny as the cost of the house. In addition to income tax, different states tax Social Security, pensions and retirement assets differently.

As of 2026, just eight states still tax Social Security at all: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. The other 42, plus Washington, D.C., don't touch it.

Take a retired couple collecting $40,000 a year in Social Security and $30,000 from a 401(k). In a no-tax state such as Florida or Tennessee, none of that income is taxed at the state level.

In Colorado, retirees 65 and older can deduct all their federally taxed Social Security, so that part is sheltered, but the $30,000 in 401(k) withdrawals is still taxed at Colorado's flat 4.4% rate, about $1,320 a year.

In a state without that deduction, a meaningful share of the Social Security itself could also be taxed, adding hundreds more.

Picking a state based on weather or family without running the numbers first can mean paying more, or less, than expected, often by more than any fee you've ever paid on your portfolio.

The bottom line

It's important to keep an eye on your fees, but that work is mostly done. However, if you haven't reviewed your asset location, your Roth conversion timeline, your withdrawal order, your loss-harvesting opportunities, your Medicare exposure, your estate plan and your state tax footprint in the past year or two, that's almost certainly where your next real savings are sitting.

Unlike fees, tax efficiency isn't a one-time fix. The rules change, your income changes and your balances shift every year, which is exactly why this gets neglected.

Set aside one afternoon a year, ideally with your adviser and tax preparer in the same conversation, to go through this list. It will likely do more for your bottom line than any fund swap you make this year.

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

Usually, there are crosscurrents in financial markets, but today's seem particularly demanding.

The war in Iran seems always there, affecting short-term policies while being a longer-term problem. We don't know where it will go, just that the on-again, off-again intensity of the war affects the stock and bond markets.

Adding to this scenario is AI. Artificial intelligence is very promising, but it's hard to determine who the big winners are. The staggering sums of money that companies are investing in AI is worrying many investors, while the earnings that AI-related companies are reporting are impressive.

But will that growth continue and at what pace? This clouds the longer-term outlook.

Some investors are throwing their hands in the air and selling all or some of their equity holdings.

Here's an option: Fixed income

Meanwhile, fixed income is attractive, with rates having risen. For example, the 30-year Treasury bond is back up to about 5%, a number that hasn't been seen except for brief periods since July 2007.

The U.S. Treasury securities market has grown substantially, and individual investors have participated in its growth. Treasuries carry the U.S. government guarantee of timely payment of principal and interest. The interest that U.S. Treasuries pay is exempt from state and local taxes. This makes them the highest-quality investment of their type.

So, what is the best way to buy Treasury securities?

The go-to way to trade Treasuries used to be to visit TreasuryDirect.gov, but not anymore. The much larger Treasury market has flooded TreasuryDirect and made it impossible for the site to keep up with demand.

There are many reasons for this growth, including the increased share of insurance companies, money market instruments and broker-dealers buying Treasuries; the Federal Reserve shrinking its balance sheet; and pension funds and other institutions increasing their holdings.

The result is that the site recently reported delays in its response to fill mail requests. Among other delays, it could take nine months to complete converting paper savings bonds into electronic bonds. To cash paper savings bonds could take at least three months.

And requests to find lost, stolen or missing savings bonds would take a minimum of 11 months to process.

More bond trading

Bond trading volume is probably going to increase. Kevin McPartland of Crisil Coalition Greenwich reported in April that corporate bond market trading hit an average of $65 billion traded per day in March.

This was a record, surpassing the volume of the previous month, which was also a record.

Also, on the last day of March, $108 billion was traded, a single-day record for bond trading.

McPartland also pointed out that this higher bond volume was partly being facilitated by the advanced electronics used by institutional traders.

Another factor is that developed execution management systems are being employed, along with more standardized post-trade processes.

He pointed out that even though the systems and tools are more advanced, good people handling the processes are still needed. "Traders want a human element even when trading electronically," he wrote.

How to buy and sell fixed income, including Treasuries

Brokerage firms have always offered fixed-income securities, including Treasuries, but they have improved the ways for investors to buy and sell, even for small amounts. For example, the electronic trading platform Public has secondary market liquidity, an easy-to-navigate interface and other advantages.

Although bonds usually trade in $1,000 increments, Public trades corporate bonds and Treasuries in as few as $100 increments.

Investors can also build ladders at Public, spreading maturity dates to match investor needs. This can be done with Treasuries or bonds. Investors can call Public anytime, day or night, for support.

Another broker, Charles Schwab, advises that certificates of deposit (CDs) and Treasury bonds are two of the safest fixed-income investments you can make. And both can add diversity to your portfolio, generate income and protect principal. (Schwab also points out that investors can lose money in these securities.)

Schwab, like other brokerages, has fixed-income specialists available for calls from investors, as well as in-house traders who can be contacted either by phone or online. Schwab additionally builds taxable and tax-free Treasury and bond ladders for investors.

Fidelity Investments created a fixed-income site that offers a wide range of bonds, Treasuries and other offerings — 75,000 to 100,000 new issues and secondary securities are offered.

Fidelity charges only $1 markup or markdown for bonds traded in the secondary market; it charges no fee for online U.S. Treasuries.

For qualified clients, it offers help from fixed-income specialists and provides a high-net-worth desk to help investors with bonds and CDs.

Interactive Brokers (IBKR) is another broker committed to upgrading bond trading to a new standard and doing it on a worldwide basis.

On its platform, investors can invest globally in many financial securities, including equities, options, currencies, futures, bonds and funds. Accounts can be funded in many currencies, and trades can be denominated in different currencies. Market data can be accessed six days a week, 24 hours a day.

Thomas Frank of IBKR said, "We aim to provide our clients with the most flexible and comprehensive trading environment possible."

To that end, IBKR offers over 1 million corporate, municipal, non-U.S. sovereign bonds and Treasuries. These are offered without markups or built-in spreads.

ETFs that are unique

The professionals at investment management firm F/m Investments believe that investors have sent a clear message — they want safety, and they want to be shielded against inflation.

According to F/m, that's why investors poured $25 billion into ultra-short-duration U.S. Treasury ETFs. The funds started coming into the ETFs — BIL, SHV, SGOV and TBIL — at the outset of the Iran conflict and took only six weeks to be deposited.

The reason for the investment surge, according to F/m, is that these ETFs pay an attractive rate.

Also, if the conflict raises inflation further, these ETFs can reset soon to receive higher yields. And principal is protected because these securities will fall less than longer-term bonds as a reaction from the market adjustment to the higher rate.

F/m offers investors its single-maturity Treasury ETFs, called the U.S. Benchmark Series. The series makes it possible to buy Treasury ETFs during stock market hours and lock in the current on-the-run yield. On-the-run refers to the securities most recently auctioned. The securities are held only until the next auction, and they are sold, with the proceeds being used to buy a new series being auctioned.

The U.S. Benchmark Series is available in the full maturity range of Treasury bills, bonds and notes. This includes all securities from the 3-month Treasury bill ETF (TBIL) to the 30-year Treasury bond ETF (UTHY).

Treasury yields are attractive, even at the short maturity end: The TBIL yield is 3.54%; UTHY is 4.85%. This yield will change throughout the trading day; the market price will price in changes. The market price of publicly traded Treasuries and other income securities, in an ETF structure or individual securities, will fluctuate, and money can be made or lost.

The U.S. Benchmark Series offers maturity date diversification. As interest rates fluctuate between the series offerings, investors can switch into a higher-yielding Treasury or stay where they are.

The ETF series attempts to pay interest monthly, another advantage over holding individual Treasuries. The expense ratio is reasonable at 0.15% per annum.

Navigating today's volatile markets requires staying informed and being flexible, but whether you choose to buy individual Treasuries through a brokerage or opt for the simplicity of ETFs, there are reliable tools to help you protect your capital and generate steady income.

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

Retirement has a lot of moving parts, and planning for them can be overwhelming.

Taxes, investments, Social Security, estate planning, healthcare and income strategies all compete for attention, and many retirees end up postponing important decisions because they aren't sure where to start.

As a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that the good news is that not every improvement requires a complete overhaul of your financial plan.

In fact, some of the most impactful retirement moves can be implemented relatively quickly.

While no single strategy is a silver bullet, taking action on a handful of key areas today could improve tax efficiency, simplify your finances and create more flexibility later in retirement.

Below are 10 retirement fixes worth considering.

1. Review whether Roth conversions make sense

For many retirees and pre-retirees, Roth conversions remain one of the most powerful tax-planning opportunities available (I talk about Roth conversions more in depth in my bestselling book I Hate Taxes, which you can request for free here).

The basic Roth conversion concept is straightforward: Move money from a traditional IRA into a Roth IRA, pay taxes on the converted amount today and enjoy tax-free withdrawals in the future.

This strategy can be especially attractive for retirees who expect a higher future taxable income from pensions, required minimum distributions (RMDs) and Social Security. By paying taxes now, while rates remain historically low, you could reduce future tax burdens and create greater flexibility later.

That said, Roth conversions are rarely as simple as they appear. They can affect Medicare premiums, Social Security taxation and other aspects of your tax return.

Before making a move, it's important to run the numbers and look at them carefully.

2. Take advantage of available charitable tax benefits

Many retirees are charitable by nature, yet they often miss opportunities to maximize the tax benefits of their giving. Recent tax law changes have expanded charitable deduction opportunities for some taxpayers, even those who don't itemize deductions.

A little organization today could result in significant tax savings when it's time to file.

3. Improve your tax location strategy

Most investors focus heavily on asset allocation. Far fewer pay attention to asset location.

Asset allocation determines what you own, but asset location determines where you own it.

For example, growth-oriented investments might be more valuable inside Roth accounts because future appreciation could be tax-free.

Meanwhile, more conservative holdings could be appropriate inside tax-deferred retirement accounts.

Two investors can own identical portfolios yet experience very different tax outcomes depending on how their investments are positioned across account types.

Reviewing account placement might not require changing your investments at all, but it can have a meaningful impact over time.

4. Maximize retirement account contributions

Many workers increase their salaries over time but forget to increase their retirement contributions. If you're still employed, review your current contribution levels to workplace plans, IRAs and health savings accounts (HSAs).

Contribution limits often increase, and individuals age 50 and older may qualify for additional catch-up contributions.

A small adjustment to your payroll deductions today could translate into thousands of additional dollars for retirement down the road.

5. Reevaluate where excess cash is sitting

Many retirees and near-retirees accumulate large balances in savings accounts or taxable brokerage accounts while underutilizing tax-advantaged retirement vehicles.

If you have excess cash and are eligible to contribute to retirement accounts, consider whether those dollars could be working harder in a Roth IRA, Roth 401(k), traditional IRA or HSA.

In many cases, repositioning existing assets can improve long-term tax efficiency without changing your overall investment strategy.

6. Become more tax-efficient in taxable accounts

For investors with substantial brokerage accounts, tax management can be just as important as investment management.

One opportunity many people overlook is tax-loss harvesting, which involves realizing investment losses to offset gains or reducing taxable income. Over time, these tax savings can add up significantly.

Investors with larger taxable portfolios could also benefit from strategies such as direct indexing, which can provide additional opportunities to harvest losses while maintaining market exposure.

Even modest improvements in tax efficiency can create significant long-term value.

7. Audit your mutual funds

Many investors continue to hold mutual funds purchased years ago without reviewing whether those holdings remain appropriate. Some mutual funds carry higher internal expenses than comparable ETFs or index funds, and others may generate taxable distributions that create unexpected consequences in brokerage accounts.

Conducting a mutual fund audit doesn't necessarily mean replacing every holding.

However, reviewing expenses, tax efficiency and performance relative to alternatives can help identify opportunities for improvement.

8. Update your estate planning documents

This might be the least exciting item on the list, but it could be among the most important.

Wills, trusts, powers of attorney and healthcare directives are foundational components of a retirement plan, and yet, most Americans either don't have these documents or haven't reviewed them in years.

Life changes. Laws change. Family circumstances change. If your estate plan hasn't been updated recently, now may be the time to revisit it.

Equally important, make sure beneficiary designations on retirement accounts and insurance policies align with your overall plan and goals.

9. Simplify and consolidate accounts

Many retirees accumulate accounts over decades of employment. A former 401(k) here. An IRA there. A brokerage account somewhere else. Before long, keeping track of everything becomes unnecessarily complicated.

Consolidation might not improve investment returns, but it can make your finances easier to track.

It could also simplify tax reporting, improve organization and reduce confusion for spouses or heirs if something happens to you.

Sometimes the greatest benefit isn't financial performance; it's peace of mind.

10. Don't forget to enjoy the money

This final fix may be the most challenging one for diligent savers. Many successful retirees spent 30 or 40 years accumulating wealth and have developed strong saving habits, avoided lifestyle inflation and consistently prioritized financial security.

The challenge is that those same habits can make it difficult to spend money in retirement. Retirees still need a plan to avoid overspending, but many aren't in danger of running out of money; they're in danger of never fully enjoying what they've worked so hard to build.

Whether it's traveling with family, helping children and grandchildren, supporting charitable causes or simply creating memorable experiences, retirement isn't just about preserving assets; it's about using those assets to support the life you want to live.

After all, while running out of money is a legitimate concern, running out of time might be the greater risk.

The most successful retirement plans balance both sides of the equation: They protect your future while giving you permission to enjoy the present.

Related Content

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

Everywhere you look, there's a monthly plan. TV, movies and music. Software and cloud storage. Meal kits, pet supplies, workout apps, even car features.

Subscription culture has moved from a niche corner of entertainment into everyday life, and that shift changes how we spend and save. Rather than asking, "Should I buy this?" we're asking, "Does it fit into my monthly budget?"

It's not just one industry either. Streaming platforms changed how we watch TV. Software as a service (SaaS) flipped how we pay for business software. Health and fitness apps rely on recurring fees. Retail has boxes for everything: Razors, snacks, skincare — you name it.

So how can you stay in control of your spending when subscriptions seem to make life so easy?

Why the subscription economy is booming

At its core, the subscription economy trades ownership for ongoing access, and that trade shapes spending. You pay a recurring fee, and the service keeps flowing. Think of content updates, software features, product deliveries and perks layered on over time.

It's built on predictable revenue for companies and personalized experiences for users.

The subscription model has also reshaped business operations. Instead of making long-term hiring commitments for every administrative need, some companies now subscribe to virtual assistant services to handle recurring administrative work.

This reflects the same shift toward predictable, ongoing service models that has transformed software and other subscription-based industries.

The numbers show just how fast it's grown. Companies in Zuora's Subscription Economy Index have experienced an 11% faster revenue growth rate compared to the broader economy (represented by the S&P 500) over the past two years.

Why does it land so well with people? Because it lowers the friction around spending.

For example, people who take regular medication can use online subscriptions for convenient access to consultations and deliveries, which they can pay for through a predictable monthly plan.

That convenience is a big reason subscription services continue to grow across many industries.

Impact on personal spending habits

There's an art to spending money, and subscriptions are part of that. Here's how they affect your personal spending habits.

The upside to subscriptions is predictability. You can plan for costs that hit on the same day each month. The downside is spending invisibility: Those small charges add up faster than we expect. One or two are nothing. Ten or 12? They start to crowd out real goals.

Autopay makes this easier to miss. You don't feel the pain of paying, so you keep the service around "just in case." That's different from a one-time purchase that you feel and remember. Annualized thinking matters here. A $12 subscription is $144 a year. Maybe worth it, maybe not.

There's also the broader budget picture. Recurring costs nudge us to build spending "floors" that keep rising. Add a new platform here, tack on a premium feature there, and total costs can escalate.

C+R Research suggests the average American now spends $219 each month on subscriptions.

Subscription creep happens. That's the disconnect between what you think you're getting from a subscription and how much you actually use it.

Subscription culture across key sectors

Media and entertainment. Streaming changed everything. We moved from buying albums and DVDs to paying for libraries we can dip into anytime. Deloitte's Digital Media Trends research shows people are juggling multiple subscriptions and regularly reconsidering lineups as content moves around and prices shift.

Tech and software. In software, the one-time purchase is nearly extinct. Everything from the tools we work in to the apps on our phones now runs on a subscription. It guarantees updates and continuous service.

However, it also means customers are effectively renting the essentials they once bought and kept forever.

Retail and consumer goods. Subscription boxes promise convenience and delight. Think of razors that show up before you run out, or coffee that lands on your doorstep.

For some, it's a time-saver. For others, it drifts into overconsumption. The best services now let you pause or skip.

Financial services. Fintech has entered the fray. Robinhood Gold is one example of a paid tier that bundles research and a high-yield cash program. Budgeting tools like these can pay for themselves if they help you save more than they cost. But they can also become another unexamined line item.

Potential downsides and consumer awareness

When everything is a subscription, fatigue sets in. It's not just the money. It's the mental load of keeping track. Companies that design smooth sign-ups but maze-like cancellations make it worse. The FTC has flagged these "dark patterns" and is pushing for click-to-cancel options.

A few practical ways to keep control:

• Make a subscription list. Consider what it is and why you have it. Factor in the monthly and annual cost and the renewal date.
• Review your online subscriptions. Check your app store and card-on-file portals (retail sites where you've stored your credit or debit card details) for hidden or inactive subscriptions.
• Have calendar reminders. Set them seven to 10 days before annual renewals or a trial.
• Rate usage monthly. Use a simple scale (0–3). Anything at zero or one for two straight months gets paused or canceled.
• Bundle intentionally. If you're already deep into an ecosystem, a bundle like Apple One can cut net costs compared with paying piecemeal.
• Rotate streaming. Keep two "must-have" services and a shortlist of "rotate-in" options. Make sure to switch monthly.
• Annualize everything. If the yearly total makes you pause, that's useful friction.

The bottom line

Subscriptions aren't going away. For many of us, they make life easier, and they can be a smart way to spread out costs. However, the same features that make them convenient can blur our view of what we're actually spending.

That said, take an hour to list what you pay for and what you truly use. Keep the services that pull their weight, and pause those that don't. Ultimately, every subscription should earn its place in your budget, month after month.

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

One of the most enjoyable aspects of retirement for married couples is finally having more time to spend together and the financial freedom to maximize those years.

That's possible because during their working years and into retirement, they've had a unified financial structure that's worked well — filing taxes jointly and budgeting based on their combined income.

But eventually, they must plan for the time when one of them is alone and make sure the survivor will be as financially protected as possible. Most married couples do not plan for that clearly enough.

When a spouse dies, the surviving spouse may still need much of the same income for the usual expenses — the house, property taxes, utilities, insurance, medical costs, family support and lifestyle.

But their tax structure changes, and they may be subject to the "widow's penalty" when their tax filing status changes from married filing jointly to single. Suddenly, tax brackets compress, the standard deduction changes and income that once fit comfortably inside a married tax structure may become more heavily taxed.

Picture a surviving spouse sitting at the kitchen table, looking at the same accounts, needing the same dignity but having less tax room to work with. No one wants to think about that. This is where many retirement plans fail emotionally, not just mathematically. They may protect the portfolio, but they do not protect the person who is left behind.

A new tax world for a surviving spouse — and its cascading effects

I remember when this issue first became real to me. It was years ago, when a longtime client — widowed a little more than a year — came into my office with her tax return and asked a question that seemed simple: "Why did my tax bill go up after my husband died?"

Her household income had gone down. Her husband's Social Security check was gone. Certain expenses had changed. Emotionally, she was still trying to adjust to life alone.

But financially, something did not add up. She had less income than before, yet her tax situation felt worse.

That is the widow's penalty. And once you understand it, you begin seeing it everywhere.

After one spouse dies, the surviving spouse often moves into a very different tax world. The tax code treats married couples filing jointly more generously than single filers.

• The brackets are wider
• The standard deduction is larger
• Medicare income thresholds are higher
• Long-term capital gains thresholds can be more favorable
• The net investment income tax (NIIT) threshold is also higher

For the 2026 tax year, a married couple filing jointly does not enter the 24% marginal income tax bracket until their taxable income exceeds $211,401 (the ceiling for that bracket is $403,550). But the single threshold is roughly half the joint threshold. A single filer for 2026 reaches the 24% bracket once taxable income exceeds $105,700 (up to $201,775).

The standard deduction compresses, too. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. The surviving spouse may still have the same expenses and lifestyle needs they did when their spouse was alive, but has less tax room to absorb the income that funds them.

A surviving spouse may lose one Social Security check but typically keeps the larger of the two benefits. Pensions with survivor elections may continue. Required minimum distributions may continue. Portfolio income may continue. Rental income, annuity income and investment distributions may continue.

The survivor may end up retaining 70%, 80% or even 90% of the household income but lose the joint tax structure entirely.

For example, a couple with $140,000 of taxable retirement income may sit comfortably in the 22% bracket, but a surviving spouse with $115,000 of taxable income — less income than the couple had together — can suddenly be pushed into the 24% bracket. Over 15 or 20 years, the lifetime cost can become substantial.

Medicare adds another layer. For 2026, Medicare Part B IRMAA surcharges begin when modified adjusted gross income exceeds $109,000 for an individual, versus $218,000 for a married couple filing jointly. The premium is simply higher because income now lands on the single-filer scale.

That is where many widows and widowers get blindsided. They expected grief, paperwork and adjustment. They did not expect the tax code and Medicare rules to make retirement feel financially tighter at the exact moment life became harder.

How to use a Roth conversion efficiently

If you are already widowed and reading this, the situation is not hopeless. Meaningful planning may still be available. Roth conversions during widowhood can still make sense in some cases, even inside single tax brackets, if the alternative is allowing a large traditional IRA to compound into larger future RMDs.

Qualified charitable distributions (QCDs) can become powerful after age 70½. Asset-location changes, tax-efficient withdrawal sequencing and Medicare-income management can still reduce future drag.

But if you are still married, the best planning window may be before widowhood.

For many couples, the richest tax-planning window occurs after retirement but before RMDs begin. That may be five to 10 years, or sometimes less.

The core strategy often involves multiyear Roth conversion planning while both spouses are alive and still filing jointly. The goal is not to convert blindly but to use available joint brackets intentionally, reduce future tax-deferred concentration and give the surviving spouse more tax-free flexibility later.

The math requires discipline. Each year, evaluate how much traditional IRA money can be converted without creating unnecessary tax damage. You pay tax at known joint rates today to potentially reduce larger future taxable distributions later.

Repeat the analysis annually and stop when the math no longer supports it. Document the plan clearly so the surviving spouse is not left guessing.

The long-term care effect

Long-term care can destroy the planning runway.

Consider this scenario. One spouse becomes ill. The healthy spouse becomes the caregiver. Assets may be spent faster than expected. IRA withdrawals may increase. Roth conversion planning gets delayed. Tax planning gets pushed aside because the family is dealing with doctors, facilities, medications, stress and exhaustion.

Then, after months or years of care, the healthy spouse becomes the surviving spouse and may inherit a weaker financial structure with fewer clean choices.

Wade Pfau, author of the Retirement Planning Guidebook and a professor at The American College of Financial Services, has described long-term care as one of retirement's most unpredictable risks.

The cost data explains why. CareScout's 2025 Cost of Care Survey reported national median annual costs of $74,400 for assisted living, in excess of $114,000 for a semi-private nursing home room and more than $129,000 for a private nursing home room.

Those are not just care costs; they are tax-planning costs. If the money comes from an IRA, the withdrawal may create taxable income. If that income pushes the household across Medicare thresholds, the cost can compound.

If the healthier spouse is left with fewer assets and less flexibility afterward, the widow's penalty becomes more painful.

IRAs and 401(k)s: A structural blind spot in retirement planning

IRA guru Ed Slott, founder of IRAHelp.com, has spent years warning that tax-deferred retirement money is not tax-free money. That warning becomes especially relevant here. The surviving spouse may inherit the same IRA or 401(k) balance, but under compressed single-filer brackets.

The mistake is not having an IRA or 401(k). The mistake is assuming they behave the same way after the first spouse is gone. They do not.

If you are wondering why this may not already be in your plan, the answer is not necessarily that anyone has been negligent. For three primary reasons, the widow's penalty sits in a structural blind spot across much of retirement planning.

• Many plans focus heavily on the retirement date, not the surviving-spouse phase.
• Most people do not enjoy a planning conversation that says, "Pay taxes voluntarily today to potentially reduce a larger tax problem later." Not having the conversion often feels better in April. It may feel much worse 10 years later.
• Many reviews are organized around investments, not the household tax structure after the first death.

Understand the potential stakes. The table below is only a simplified illustration. It assumes the surviving spouse retains a high percentage of joint retirement income, which can happen when income is driven by pensions, RMDs and portfolio distributions rather than mostly by Social Security.

These estimates may include federal income tax and Medicare surcharge effects. They do not include state income taxes, the net investment income tax or other household-specific factors. The point is not that every household will match the table but that the annual cost can become a six-figure lifetime issue if it persists for 10, 15 or 20 years.

A surviving-spouse tax map

Married couples with meaningful IRA balances, pensions, taxable investment income, deferred compensation or future RMD exposure should not guess. The next practical step is specific: Ask for a surviving-spouse tax map.

That map should show, in dollars, what happens to income, taxes, Medicare premiums, IRA withdrawals and cash flow after the first spouse dies.

A useful version of that analysis can often start with last year's joint 1040. Run the same income through the single-filer tax structure, compare the result and then project the difference over 10 to 20 years with RMDs, Medicare thresholds and Roth conversion options included.

If the exposure is small, you should know that. If it is large, you should know that, too, while both spouses are still here, while both can still make decisions together and while the cleanest planning years may still be available.

The window closes a little further with every tax year that passes. You should at least know what is inside it.

Dan Dunkin contributed to this article.

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

Related Content

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• The Financial Effects of Losing a Spouse
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• Six Ways to Prepare for Widowhood and Protect the Surviving Spouse
• Your Retirement Plan Looks Watertight, But Have You Checked for Tax Leaks?

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 debate about whether Americans should be allowed to hold private-market assets in their retirement accounts has, once again, produced more heat than light.

Critics of recent proposals to open 401(k)s to alternatives such as private equity, private credit and real estate warn of systemic risk and suggest that ordinary savers can't be trusted with anything more complex than an index fund. They're solving the wrong problem.

The question has never been whether Americans should have access to alternatives in their retirement accounts. Under existing tax law, they already can. Self-directed IRAs and Solo 401(k)s have permitted investments in real estate, private equity, private credit, precious metals and digital assets for decades. The infrastructure exists.

What Congress has done

The legal framework was settled in 1974. When Congress created IRAs and 401(k) plans under ERISA, it deliberately chose to allow retirement accounts to be invested in both traditional and alternative assets.

That was not an oversight. Congress could have easily restricted retirement vehicles to conventional holdings, as it later did with 529 education savings plans. It chose not to.

Pension plans, endowments and individual retirement investors were meant to have the ability to diversify across asset classes. That original intent has never changed.

The real question is whether we extend that access responsibly to everyone or continue reserving it for those wealthy enough to know it exists.

That's the two-tiered system critics should be concerned about. Today, institutions and high-net-worth investors allocate heavily to private markets, capturing illiquidity premiums, diversification and long-term return profiles that public markets increasingly can't offer.

Who gets to access what

For years, Yale's endowment, the model every sophisticated allocator studies, has invested more than 60% of its portfolio in alternatives.

Meanwhile, ordinary retirement savers get a menu of mutual funds and target-date vehicles, most anchored to the same handful of large-cap tech stocks. The diversified portfolio is already available. The question is who gets to access it.

This concentration risk is not theoretical. American retirement investors exclusively in traditional assets are, in practice, not well diversified. Their life savings are heavily exposed to a narrow set of equities, and that concentration is far riskier than a portfolio that includes a measured allocation to alternatives.

The argument that alternatives introduce undue risk ignores the risk already embedded in a retirement account that rises and falls with a handful of stocks.

In 2022, the market made this imbalance impossible to ignore. Stocks and bonds declined simultaneously, exposing the structural vulnerability at the heart of the traditional 60/40 portfolio.

In a high-inflation, rising-rate environment, fixed income lost its cushion precisely when investors needed it most. Alternatives, real estate, private credit and hard assets held value. The investors who owned them were protected. Everyone else absorbed the full impact.

This doesn't imply that a free-for-all is the way. Structured access allows us all the best path forward.

Access with guardrails

Everyday retirement savers should have access to professionally managed, fiduciary-governed exposure to private markets, with clear guardrails around fees, liquidity, custody, investor education and suitability.

The concern that unsophisticated investors will be handed illiquid, higher-fee private equity funds with no understanding of what they own is legitimate. The answer to that concern is smarter regulatory frameworks, not a blanket prohibition.

It's also worth noting that retirement accounts might be among the most appropriate vehicles for alternative investments. Retirement funds and 401(k) plans are generally locked up for years or decades. That illiquidity is a feature, not a flaw.

Many alternative assets — private equity, real estate, hedge funds — share that same long time horizon.

Investors who hold illiquid alternatives in retirement accounts are positioned to capture the illiquidity premium and patience premium these assets typically generate, the higher returns that compensate long-term holders for forgoing liquidity.

A natural alignment

The structure of a retirement account and the structure of a private market investment are, in many respects, naturally aligned.

The accredited investor rules that already exist provide meaningful guardrails for investors seeking exposure to alternatives outside retirement accounts. Those rules serve an important function, and there is a strong case for the SEC to expand the definition of accredited investor to allow more Americans access to private markets and better diversification.

But those guardrails aren't an argument for keeping alternatives out of retirement accounts entirely. They're evidence that thoughtful, structured access is achievable. That same spirit of structured access can and should extend to the broader retirement market.

Complex rules with thoughtful integration

Building successful self-directed platforms requires thoughtfully integrating complex tax and ERISA rules into systems and processes that investors, advisers and planners can use confidently and effectively in the long term.

Compliance isn't an obstacle to access. It's what makes access durable. Prohibited transaction rules, disqualified person restrictions, custody requirements, reporting obligations — these aren't bureaucratic annoyances.

They're the guardrails that keep the system honest. The right policy goal is to extend those guardrails to the broader 401(k) market, not to wall off private markets entirely and call it protection.

The Department of Labor's recent proposal to provide plan fiduciaries a clearer safe harbor for adding certain alternative assets to 401(k) lineups is a meaningful step in this direction.

Plan sponsors have long avoided alternatives not because they're inherently inappropriate but because the legal exposure of offering them was unclear

A safe harbor built around diversification, fee transparency and liquidity requirements doesn't invite abuse. It eliminates ambiguity and legal uncertainty. That's how you expand access without abandoning responsibility.

Protection vs preservation

Critics who argue alternatives don't belong in retirement accounts are, in practice, arguing they should remain exclusive to those wealthy enough to access them elsewhere.

That's not a protection argument. It's a preservation argument, preserving a system in which the sophisticated investor has options, and the ordinary saver does not.

Americans deserve a retirement system built for the economy they actually live in, not the one that financial institutions find easiest to administer.

That means access to a broader opportunity set, delivered through structures that protect investors rather than simply exclude them. It means fiduciary oversight without fiduciary paralysis, and better rails rather than narrower choices.

The debate is not about whether to protect retirement savers. Everyone agrees they should be protected.

The debate is about whether protection requires keeping them permanently locked out of the same assets that have built generational wealth for institutions and individuals who already have enough. It does not.

The work is building the infrastructure that makes broader access safe. With that work well underway, it's time that policy catches up.

Related Content

• An Investment Strategist Takes a Practical Look at Alternative Investments
• Is Private Equity Behind the Scenes in Your 401(k)? Here's What That Could Mean for Your Retirement
• Why the 60/40 Portfolio Is Flatlining: This Is How Alternatives Can Resuscitate It
• How Alternative Assets Are Reshaping the IRA: The Rise of Self-Directed Retirement Investing
• Trump Accounts Are a Great Start, But They Could Be Better

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 are being billed by the hour for professional services, now is the time to renegotiate, as AI has put the billable hour on life support.

In January 2024, during his recuperation from surgery and radiation treatment of thymoma — an extremely rare cancer — Los Angeles-based attorney Aaron Shechet, "wanted to do something for my wife and law partner, Leigh, who proved what being there 'for better or for worse' means. She said, 'Make an app that helps me bake better sourdough.'

"So I built an app to take pictures of her sourdough bread — AI analyzes the picture and tells how to improve it. It came out so good that I released it on Android and Apple."

Then an idea came to Shechet. "What if I could develop a platform that helps service providers, accountants, lawyers and other professionals use AI programs that would save them hours and result in significant cost savings to their clients?"

Veilgrid was the result. "It is a platform that creates custom AI-powered tools tailored to specific business activities," he notes, "such as drafting contracts, leases, various sorts of documents and automating related office functions, saving upwards of 75% of the time required to do the same work manually."

AI impacts professionals and their clients/customers

Shechet has been a mediator and fee arbitrator in Los Angeles for years, and he has impressed me with his concern for clients trapped in billable-hour spirals. He sees a tsunami coming to those professions that view efficiency as their mortal enemy.

"Billable hours reward lawyers, accountants, management consultants — to list just a few — for spending more time on a task," he says. "Faster work — efficiency — directly reduces total revenue, as you can't bill a whole lot of hours.

"With AI, the incentive is to be more efficient, as you will invoice on the completion of work, not the hours to do the work."

He adds, "Clients do not care how the final product was produced — they just want results, the more economical the better. And they know that AI saves an enormous amount of time in producing reproducible items, such as contracts, leases, tax returns and so much more."

A new standard of care

Shechet strongly believes that the new standard of care for law and other professions, figuratively speaking, will be a $5 charge with "AI quality," instead of hundreds of dollars an hour with potentially less quality.

"What clients pay must come down," he says. (For the record, AI is wrong sometimes, so someone still needs to check the work to make sure it's accurate.)

He lists tasks where AI is most effective in law that would take hours to do manually and cost clients hundreds to thousands of dollars:

• Anything written, including contract drafting, pleadings, motions and discovery
• Summaries of depositions for senior partners that can be generated in minutes
• Legal research that requires dramatically reduced time
• Tasks that once took teams of junior associates weeks can now be completed by a single attorney in a few hours or even seconds

AI also works 24 hours a day. It doesn't have student loans or employment insurance, it doesn't complain, and it doesn't face employee lawsuits.

New billing methods

Shechet and many other observers expect to see subscription models where a lawyer, accountant or other professional is on call to handle all the matters a client needs for a flat monthly fee.

"We should also see more per-job and contingency fees," he notes, adding, "AI is no longer in the experimental stages for many professions. It is being widely adopted. Clients need to ask their lawyers, accountants and other professionals who bill by the hour, 'Are you using AI to save me money? And if not, why not? Why does this professional service cost so much?'"

What's the impact on lawyers?

I asked Shechet what impact AI will have on the human side of the legal profession.

"There will be little justification," he says, "for massive law firms — that have been compared to pyramid schemes — to reward senior partners while demanding impossible 2,000 yearly billable hours from junior lawyers. That (practice) has invited decades of bill-padding and outright fabricated work and destroyed marriages and families.

"The need for lawyers will shrink, and hopefully, the ability to go home at 5 p.m. and have dinner with the family and have a life will return to the legal profession."

For anyone considering law as a career

Shechet cautions that law can no longer be recommended as a safe, automatic path to a high-income career.

"But if law is pulling you, go for it. Follow your instincts, but do not expect the profession to look the way it did 20 years ago. Veilgrid came from following what presented itself: I built it for our practice, then other lawyers, then other professions, and finally, it became a platform.

And he cautions, "Anyone considering law should think very carefully about debt. Do not borrow an enormous amount of money because this seems like a safe profession. The supposedly safe, predictable part of legal work is exactly the part AI is commoditizing most quickly."

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

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

For many adult children, one of the hardest conversations to have is with their parents about finances.

• Do Mom and Dad have updated estate documents?
• Who would make financial or health care decisions if one of them became incapacitated?
• Where are the accounts, insurance policies, passwords and key documents?
• Have they thought about whether they want to age in place, downsize or move closer to family?
• Are they vulnerable to scams?
• Is one spouse carrying all the financial knowledge while the other remains largely uninvolved?

These are practical questions. But inside a family, they rarely feel that way.

For parents, the conversation can feel like a threat to independence. For adult children, it can feel like overstepping, prying or implying that a parent is no longer capable.

Add sibling dynamics, second marriages, privacy concerns and years of family history, and it's easy to understand why so many families avoid the conversation altogether.

The problem is that silence doesn't preserve independence. In many cases, it puts it at risk.

When families wait until a health event, cognitive issue, hospitalization, death of a spouse or financial emergency forces the conversation, decisions often must be made quickly, emotionally and with incomplete information.

Adult children might not know where assets are held, whether estate documents exist, who the attorney is, how bills are paid or what their parents wanted.

A better approach is to reframe the conversation entirely. This is not about taking control. It's about helping parents remain in control for as long as possible and making sure their wishes are known, documented and respected.

Start with values, not account balances

One of the biggest mistakes adult children make is starting with the numbers.

"How much money do you have?" or "Where are all your accounts?" might be well-intentioned, but those questions can feel invasive. A more productive entry point is to start with values, preferences and peace of mind.

For example:

• "I don't need to know every financial detail, but I want to make sure I would know how to support you if something happened."
• "If there were ever a medical emergency, I would want to be certain I was helping make decisions in the way you would want."

This shifts the tone from investigation to support. It also makes clear that the goal is not to take over, but to understand the plan.

In my experience, families make more progress when the first conversation is about wishes.

• Where do your parents want to live if their health changes?
• Who do they trust to make medical decisions? Who should be contacted first in an emergency?
• What would comfort, dignity and independence look like to them?

Those answers can open the door to the more technical planning that needs to follow.

Consider a scenario we see more often than families expect. A spouse passes away after decades of careful saving. He was an electrician who built nearly $3 million through discipline and frugality, but managed everything himself.

The surviving spouse discovers accounts scattered across multiple banks, IRAs she can't access, missing passwords and a life insurance policy with no instructions on how to claim it. She doesn't know what her income will be, how to manage the investments or even how to pay the electric bill.

He meant well. But what he intended as good stewardship became an avoidable burden for the person he loved most.

That is what this conversation is really about.

Make the conversation smaller

Another common mistake is trying to solve everything at once.

Aging, estate planning, long-term care, digital access, beneficiary designations, powers of attorney and family roles are too much for one discussion. When adult children try to cover every topic in a single sitting, parents can feel overwhelmed or defensive.

Instead, think of this as a series of smaller conversations.

• "Do you have the right documents in place, and does someone know where they are?"
• "Have you thought about where you would want to live if staying in the house became difficult?"
• "Would you be comfortable introducing me to your adviser, attorney or accountant so I know who to call in an emergency?"

Smaller conversations reduce pressure. They also make the topic feel like part of normal family life rather than a one-time intervention.

Focus on organization before decision-making

Many families don't realize how much stress can be avoided simply by getting organized.

At a minimum, every aging parent should consider creating a central financial life organizer. This doesn't have to include every dollar amount, but it should tell trusted family members where to find essential information if needed.

That might include:

• A list of financial institutions and account types
• Retirement accounts, pensions and Social Security information
• Insurance policies, including life, home auto and long-term care
• The location of wills, trusts, powers of attorney and health care directives
• Names and contact information for the financial adviser, CPA, estate attorney and insurance professionals
• Mortgage, property tax, utility and recurring bill information
• Beneficiary designations and trusted contacts
• Key digital accounts and legacy access instructions

This kind of organization can be especially important when one spouse has historically managed the household finances. The surviving spouse might be fully capable, but if he or she does not know where things are, who to call or how bills are paid, the transition can become unnecessarily stressful.

A financial life organizer isn't just an administrative tool. It's a gift to the people who might one day have to step in.

Be careful with the word 'help'

Adult children often say, "I just want to help." Parents often hear, "You think I can't handle this anymore."

That disconnect can derail an otherwise important conversation. A better approach is to ask permission.

• "Would it be helpful if we sat down together and made sure everything is organized?"
• "Would you be open to walking me through who I should contact if there were ever an emergency?"
• "Would it give you peace of mind if we made sure your documents and beneficiaries still reflect your wishes?"

The difference is subtle but important. Asking permission preserves dignity. It allows parents to remain the decision-makers.

Bring in the right professionals

Some families are comfortable having these conversations on their own. Others benefit from involving a neutral professional.

A financial adviser, estate attorney, elder law attorney, CPA or geriatric care manager can help separate the emotional family dynamics from the technical planning. They can also help identify gaps that family members might not know to look for.

For example, an estate plan might exist, but beneficiary designations on retirement accounts or life insurance policies may be outdated.

A parent could have a power of attorney, but the named agent might no longer be the right person.

A parent might want to age in place, but the home could need modifications, additional support or a plan to fund future care.

The right professional team can help families move from vague concern to specific action.

Don't ignore fraud and exploitation

Another reason these conversations matter is financial safety.

Older adults are frequent targets for scams involving fake government agencies, tech support schemes, romance scams, grandparent scams and urgent requests for money. The most dangerous scams often involve fear, secrecy and pressure to act immediately.

Families can create a simple rule: No major financial decision, wire transfer, unusual payment or urgent request should be acted on without first speaking to a trusted family member or adviser.

That rule can prevent significant financial harm.

Keep the conversation going

The goal is not to have one perfect conversation; it's to normalize the topic.

Plans change. Health changes. Laws change. Family dynamics change. Documents that were appropriate five years ago might no longer reflect a parent's wishes today.

A brief annual family check-in can help keep everyone aligned. It doesn't need to be formal, and it does not require parents to disclose every financial detail. But it should confirm that key documents are current, trusted contacts are still appropriate, family members know who to call, and parents' wishes are understood.

The families that navigate aging and wealth transitions best are not the ones that avoid hard conversations. They're the ones that learn how to have them with respect, patience and love.

Talking to parents about money doesn't have to mean taking away their independence. Done well, it can do the opposite, preserving their voice, protecting their dignity and giving the entire family greater confidence about the road ahead.

Please see important disclosure information at opalwealthadvisors.com/disclosure.

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

Whenever I meet with new investors, one of their first questions is, "What are your fees?"

While this might seem like a natural question, it's often misguided and asked too early in the process. Before you ask about an adviser's fees, you should first want to know what services they can provide.

When I was in college, I ran a house-painting franchise. Every spring, homeowners would collect bids and try to decide who to hire. This is when I discovered that a price is comparable only after you define the job.

One painting crew might scrape, sand, prime, caulk, protect landscaping and do two coats, with a written warranty. Another might spray on a quick coat and disappear.

If all customers did was compare two quotes that were only a couple of hundred dollars apart, they weren't comparing value; they were merely comparing the costs of vastly differing services.

Choosing an investment professional works the same way. As one SEC article notes, "Just as a grocery store offers more products than a convenience store, some investment professionals offer a wide range of products or services, while others offer a more limited selection."

The key is to work with one that fits you well and can deliver advice specific to your needs and wants.

So instead of leading with a question about fees, here's the sequence that makes fees meaningful and helps you avoid paying for the wrong thing.

1. Name the job

One of the biggest mistakes people make when seeking financial advice is failing to clearly define what they need.

When I ask someone what they want from an adviser, the answer is often something vague like "to do better," "to get the highest rate of return" or "to make sure I'm on track for retirement." Those are ambiguous goals, not a clear job description.

Before you compare advisers, decide what problem you want solved. Do you need:

• A one-time second opinion?
• A written, comprehensive and holistic financial plan that connects retirement income, taxes and investments?
• Ongoing portfolio management?
• A "quarterback" relationship where one adviser helps coordinate investing, tax strategy and estate planning?

2. Understand what the adviser does for you

If you walk into a meeting and ask an adviser, "What are your fees?" and they say, "1%," what exactly does that number mean? What will you compare it to? Another adviser might also say 1%, but the two of them could provide completely different services.

One might be building a comprehensive, written retirement plan, coordinating tax strategies, helping with estate considerations and managing your investments. Another might simply be recommending funds from a menu their company provides.

The price might be identical, but the work behind it could be completely different. The depth and breadth of each adviser's capabilities would, in many cases, yield vastly disparate results.

If you only compare the cost, you may think you are comparing identical services when you are not. That is why the better question early in the conversation is not, "What do you charge?" but, "What exactly do you do for clients like me?"

Once you understand the services, the process and the expertise being offered, the fee discussion finally has context. And that is when you can decide whether the price is fair for the value being provided.

3. Determine adviser licensing, designations and background

Knowing what licensing and certifications your prospective adviser carries is critical to differentiating between professionals you may wish to engage. A narrow range of licensing may indicate both limited experience and limited access to industry products, services or strategies.

Also, certifications, such as the CERTIFIED FINANCIAL PLANNER® designation, may indicate the extent of training, depth and professional standards your practitioner brings to the table.

This can come into play when you notice an adviser does not use or recommend (or even denounces) certain financial instruments, which they are also conveniently not licensed to recommend or provide.

Unless you are aware of their licensing and certification, or even company affiliation, you may not be able to determine whether the advice you are seeking may have significant limitations.

The SEC's Investor Bulletin on using Investor.gov's Investment Professional Search tool suggests always researching an investment professional, including confirming registration and checking for disciplinary events, before deciding to work with them.

If your professional is licensed in the brokerage business, you can also use FINRA BrokerCheck. It's a free tool to research the professional backgrounds of investment professionals and firms.

You're not hunting for "gotchas." You're looking for patterns — repeat customer complaints, repeated job-hopping or disclosures that don't match the story you're being told. If you find something you are curious about, make sure you ask the adviser about it.

Ask for the documents that put fees and any conflicts of interest in writing. If an adviser is truly transparent, they'll gladly show you the paperwork that regulators care about.

If you'd like a ready-made interview script, the SEC's "Questions to Ask when Hiring an Investment Professional" bulletin includes practical questions that turn fuzzy conversations into measurable answers.

4. Now talk fees

Only after you've defined the scope and read the disclosures does "What are your fees?" become a useful question.

Since fees that look small can still have a major impact over time, ask what you will pay in year one and what you'll pay in a typical ongoing year.

Then ask what you can expect for those dollars, such as meeting cadence, written deliverables, tax coordination, rebalancing discipline and how recommendations will be documented.

Making better decisions

The real goal isn't simply to find the lowest fee. It's to find the right experience, the right process and the right fit for the problem you're trying to solve.

Once you know the job, understand the services and confirm the credentials, the conversation about price finally becomes meaningful.

When you follow this order, you don't just get clearer answers about fees. You make better decisions about the advice itself, and that's what ultimately protects your money and gives you clarity about your financial future.

Ezra Byer contributed to this article.

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

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