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

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

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

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

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

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

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

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

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

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

Source: 1Q 2026 Fidelity Retirement Analysis

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

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

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

Why retirees are overweight stocks

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

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

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

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

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

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

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

The risks of retirees loading up on stocks

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

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

3 ways retirees can dial back stock exposure

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

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

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

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

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

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

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

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

Read more on managing retirement savings

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

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

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

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

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

1. A personalized approach to financial planning

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

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

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

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

2. Expert service and advice at every life stage

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

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

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

3. Research and digital tools that empower your decisions

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

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

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

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

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

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

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

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

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

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

But in some situations, they may not be enough.

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

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

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

What is a trust?

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

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

The trust says, in effect:

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

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

Trusts are not just about avoiding probate

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

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

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

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

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

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

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

A will does not avoid probate

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

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

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

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

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

When does a trust make sense?

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

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

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

What about blended families?

Trusts can be especially helpful for blended families.

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

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

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

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

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

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

What does a trust cost?

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

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

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

Related Content

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

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

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

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

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

1. Social Security insolvency — again

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

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

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

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

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

2. Inflation: The ghost of stagflation

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

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

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

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

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

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

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

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

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

The present is too close to history

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

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

More on America's 250th Birthday

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

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

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

More from Kiplinger on Retirement Saving:

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

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

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

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

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

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

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

1975-1980: Tax-deferred saving is born

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

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

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

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

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

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

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

1989–2001: The Roth debuts

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

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

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

2006: Auto-enrollment thanks to the Pension Protection Act

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

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

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

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

2010s: The DIY era

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

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

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

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

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

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

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

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

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

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

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

More to come

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

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

More on America's 250th Birthday

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

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• A Guide to the Best and Worst States to Visit on Your Road Trip This Summer
• Presidents and Social Security: How Presidents Have Impacted America's First Social Insurance Policy
• 8 Boring Habits That Will Make You Rich in Retirement

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

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

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

More on investing from the Kiplinger team:

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

"Do I have enough to retire?"

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

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

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

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

Here's why.

The $1 million rule leaves out a key piece

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

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

What is your pension really worth?

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

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

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

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

How does Social Security affect the math?

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

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

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

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

Why retirees without pensions need more

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

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

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

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

So, do you actually need $1 million?

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

That could mean:

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

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

What happens if you have both?

Let's revisit that earlier example:

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

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

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

The real shift: From accumulation to purpose

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

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

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

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

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

Don't ignore taxes and strategy

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

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

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

The bottom line

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

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

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

Related Content

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

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

The investing road to retirement can be invigorating.

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

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

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

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

What is sequence of returns risk?

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

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

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

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

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

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

Where will money come from in retirement?

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

The first thing to do is determine your income needs.

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

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

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

That's where wise investing comes into play.

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

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

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

The diversified income strategy

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

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

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

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

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

Ronnie Blair contributed to this article.

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

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

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

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

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

Prices in 1976 vs 2026

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

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

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

The top choices in 1976

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

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

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

Now vs then

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

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

More on America's 250th Birthday:

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

Related Content

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

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

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

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

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

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

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

A new definition of wealth

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

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

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

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

Values-based planning is moving into the mainstream

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

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

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

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

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

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

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

How to align your financial plan with your priorities

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

Ask yourself questions like:

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

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

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

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

Related Content

• How Women Can Handle Their Growing Wealth Like a Pro
• An Estate Planning Guide for Women: 5 Essential Moves to Prepare for When Life Happens
• Your Family Money Values Matter: How to Get on the Same Page
• How to Plan for Your Three Acts of Retirement
• Retirees: Want to Keep Your Money? Make a Tax Plan

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

Editor's note: This is part two of a two-part series about estate planning. Part one is These Are the 3 Pillars You Need Before You Build Your Estate Plan.

In the first article in this two-part series on estate planning, I shared the three foundational financial pillars you need to have in place before creating your estate plan. This article also comes in threes — the three-step process for executing an effective estate plan.

When most people think about estate planning, they picture it as signing a will or trust and checking the box as complete. The documents are drafted, notarized and filed away, and it feels like the job is done.

In reality, estate planning is not a single event. It's a three-step process: design, structure and funding. While the first two steps get the most attention, the third is often overlooked. That's the problem, because without funding, even the most carefully drafted trust might not accomplish what it's supposed to.

Understanding how these three steps work together can mean the difference between an estate plan that functions as intended and one that only exists on paper.

Step 1: Estate design: Deciding what to do with your assets

The first step in estate planning is design. This is the vision-setting stage at which you determine what you want to happen with your assets and how you want them managed.

These conversations should focus on questions such as:

• Who should receive your assets?
• When should they receive them?
• Should distributions happen all at once or over time?
• Do you want to provide protection for beneficiaries?
• Do you want control of how money is used after you're gone?

This stage is less about legal language and more about understanding goals. It also requires a broader look at your financial life. Your investments, retirement accounts, tax considerations and long-term care planning all influence what type of estate plan makes sense.

For example, if you're someone who wants to control how assets are distributed over time, you might need a trust.

On the other hand, if you're comfortable with direct transfers, you might want to rely more heavily on beneficiary designations. These decisions shouldn't be made in a vacuum. They depend on how assets are structured and the outcomes you're trying to achieve.

Step 2: Estate structure: Putting legal documents in place

Once the estate design is in place, the next step involves how to properly structure your estate. This is typically when an attorney is called in to create the legal documents that support your goals and wishes.

These documents could include a will, a revocable living trust, powers of attorney and healthcare directives. This step puts your wishes into a definitive written plan, translating your goals into legal instructions that can be executed later.

This is also when many people must decide between a will and a trust. Though frequently used together, there are distinct differences between the two.

A will directs how assets should be distributed after death, but it must go through probate, which is the legal process that oversees the division and distribution of assets among beneficiaries.

A trust is a separate legal entity that can own assets during or after your lifetime, often avoiding probate and allowing more control of how assets are managed.

Because trusts offer additional flexibility and control, many people choose to go that route when creating their estate plans. But this is also where a common misconception begins: Signing trust documents doesn't automatically place assets into the trust.

That leads to the most critical and often overlooked step.

Step 3: Estate funding: Putting the plan into action

Funding your estate is the process of transferring assets into your trust or aligning beneficiary designations so your estate functions as intended.

Without funding, a trust can exist legally but have no authority over any assets. If that's the case, the estate plan may default to probate or distribute assets in ways that don't reflect your wishes.

Unfortunately, this happens more often than people realize. Someone might go through the effort of creating a trust, only to leave their home, bank accounts and investments titled in their individual name. When that happens, the trust doesn't control those assets. It essentially becomes a document sitting on a shelf.

Don't let missteps ruin your estate plan. Work with a financial professional who can protect and preserve your assets and help you leave a legacy for the next generation.

Funding requires action. Depending on the type of asset, this could involve changing ownership or updating beneficiaries. Assets commonly found within a trust include real estate, after-tax brokerage accounts and bank accounts. For example, if you want your home governed by your trust, the deed must be updated so the trust becomes the owner instead of you.

Other assets, such as an individual retirement account (IRA), cannot be owned by a trust. These accounts must remain in an individual's name while they're living. However, they can name a trust as a beneficiary in certain situations, allowing assets to flow into the trust upon death.

A complete estate plan requires coordination

Estate planning is most effective when all three steps — design, structure and funding are completed one after the other. The design clarifies your goals. The structure puts legal documents in place and funding is what makes the entire plan work.

Without it, your wishes might not be carried out the way you intended.

If you've already created a will or trust, it might be a good idea to review it alongside a professional to determine whether your assets are properly aligned with your wishes. A trust that owns the right assets can help ensure your plan is executed without heartache and financial hardship.

At Blue Ridge Wealth Planners, we believe everyone deserves to have their wishes respected and legacy preserved. A thoughtful and well-coordinated estate plan will help you better protect your assets, not only for yourself, but for your loved ones and the causes closest to your heart.

Blue Ridge Wealth Planners is an independent financial services firm and uses a variety of different investment strategies. This is for informational purposes only and is not intended to serve as the basis for any financial decisions, nor should it be construed as legal or tax advice.

Related Content

• Beneficiary Designations: 5 Critical Mistakes to Avoid
• Is a Living Trust the Right Choice for Your Estate Plan?
• The 4 Estate Planning Documents Every High-Net-Worth Family Needs (Not Just a Will)
• I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth Transfer
• The Middle Wealthy Are the Goldilocks of Retirement, But Where Do You Find the Financial Advice That's 'Just Right'?

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

If you're like most people, you work hard not only to cover everyday necessities, but also to prepare for a day when you don't have to work anymore.

Sadly, comprehensive retirement planning is a challenge for many workers. More than 56 million Americans don't have access to an employer-sponsored retirement plan like a 401(k),according to a 2024 Pew Charitable Trusts survey.

The good news is that a lack of an employer plan doesn't mean you can't retire successfully—you just need to take a different approach.

Why doesn't your employer offer retirement plans?

Many employers assume that offering a 401(k) is prohibitively expensive. The reality is much more encouraging. Retirement plans designed for startups are often charged on a per-participant basis, making them scalable and affordable.

Smaller businesses also may not realize they have access to SEP IRAs and SIMPLE IRAs. These plans come with lower administrative costs and fewer management burdens. They also allow business owners to make contributions toward their own retirement.

Even if you don't have employees, you have options. A Solo 401(k) allows you to invest in your retirement, potentially saving more than you could with an IRA alone.

Which self-funded plans are available?

Regardless of why a plan isn't offered, the more important question is how individuals can take control of their own retirement savings. The first place my mind goes is to individual retirement accounts, or IRAs.

Unlike a 401(k), which is always tied to your employer and offers a limited menu of investment options, an IRA can be opened and managed on your own, while providing considerably more investment options.

The tradeoff is that contributions are capped, limiting how much you can save each year.

Another excellent choice for self-funding is a taxable brokerage account. These accounts allow you to invest in mutual funds, stocks, bonds and other securities without the contribution limits of an IRA. You'll pay taxes on dividends and capital gains, but the flexibility and uncapped contributions can make a brokerage account a valuable complement to tax-advantaged retirement savings.

Beyond choosing the right accounts, consistency matters just as much. While working with clients, I've found it helpful to set up automatic contributions to their IRAs and brokerage accounts. This replicates the "pay yourself first" approach of a 401(k)—you are less likely to miss what you don't see.

Are there any non-retirement plan options?

Beyond traditional retirement accounts, other financial vehicles can bolster your retirement readiness. Health savings accounts (HSAs) are worth considering if you have a high-deductible health plan. HSAs offer three tax advantages:

• Contributions are tax-deductible
• Growth is tax-free
• Withdrawals for qualified expenses are tax-free

While you're young, these benefits can help offset healthcare costs, allowing you to shift funds toward retirement savings. After age 65, you can withdraw HSA funds for any purpose—although you'll pay taxes on nonmedical withdrawals. I like to think of it as a stealth retirement account.

Annuities can be another source of retirement income. This financial tool is a long-term contract with an insurance company—you pay money now in exchange for guaranteed, tax-deferred income later.

Annuities provide steady cash flow for a set period or for life. However, they are complex financial instruments with varying fee structures and features, so they require careful evaluation to ensure they align with your specific needs.

How can working with an adviser help?

Even with all these options, deciding how to combine them can be challenging, which is where partnering with a financial adviser can help. An adviser can help you navigate the full range of options and provide guidance to pick the strategies that work best for your situation.

Consulting with an adviser is especially important 10 years before your desired retirement. This decade-long window allows you to make meaningful adjustments to your savings strategy and investment allocation based on where you stand versus where you need to be.

If you're 50 or older, you can also take advantage of catch-up contributions that allow higher annual limits for both IRAs and 401(k)s.

What should you do first?

The absence of an employer-sponsored retirement plan is a challenge, not a dead end. Multiple paths can lead to a secure retirement.

For example, you could start by building an emergency fund to cover six months of expenses, then fund an IRA up to the annual limit and finally direct additional savings to a taxable brokerage account or HSA.

Whatever direction you take, the important thing is to explore your options as soon as possible to allow your money more time to grow. With the right mix of planning, discipline and guidance, preparing for retirement without a 401(k) isn't just possible, it can be powerful.

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

At both the federal and state levels, efforts are underway to give workers a retirement savings boost. In one of the latest moves, President Trump signed an executive order this spring designed to enhance the options for workers who don't have access to an employer-provided retirement plan. About 56 million workers fall into this group, or nearly half of U.S. private-sector workers ages 18 to 64, according to research from AARP.

The TrumpIRA.gov, set to launch by the beginning of 2027, will connect these workers, who often include independent contractors, small-business employees, part-time workers and self-employed individuals, to low-cost IRAs from private financial institutions. Workers will be able to compare IRAs based on cost, quality and investment options.

IRAs included on the platform will have to meet certain criteria. They can't require minimum contributions or balances, for one, and their overall net expense ratio can't exceed 0.15%. The menu of investments must include such options as target-date funds, which automatically alter their asset mix to become more conservative as the saver's retirement date approaches, and funds designed to protect principal on an ongoing basis.

The Saver’s Match

The White House initiative coincides with a government matching-contribution program that also starts next year, known as the Saver's Match, through which eligible workers can get a matching government contribution to their retirement accounts.

In 2027, you must have an annual income of less than $20,500, or $41,000 for those married filing jointly, to qualify for the maximum 50% match from the government. The match gradually phases out, and single filers who earn $35,500 or more, or joint filers who earn $71,000 or more, are ineligible for it. The income thresholds are indexed to inflation in future years. The government contribution is capped at $1,000, or $2,000 for married couples.

The Saver's Match will replace the Saver's Credit, a nonrefundable tax credit that taxpayers whose income doesn't exceed certain thresholds can take when they contribute to an IRA or workplace retirement plan. The maximum credit is $1,000, or $2,000 for joint filers.

Auto-IRAs

Some states are also taking measures to help workers who lack access to employer-sponsored retirement plans by providing automatic IRAs. Through these plans, certain employers that don't offer a retirement plan can enroll their employees to have money automatically deducted from their pay and deposited into an IRA, which is run by a state-approved financial services firm.

Employers can't contribute to auto-IRAs, but the accounts are eligible for the Saver's Match program. That could significantly increase participation in state auto-IRA programs, according to Pew Research Center, which surveyed people who don't have access to an employer-sponsored retirement plan.

At first, 84% of respondents said they were likely to participate in an auto-IRA program. That figure grew to 94% after they learned about the Saver's Match. And though 16% of respondents initially said they wouldn't likely use an auto-IRA, 52% of them expressed higher interest after they learned about the match.

States that offer Auto-IRAs

The following states have implemented or are developing automatic IRA programs, through which workers without access to an employer-sponsored retirement plan can have contributions automatically deducted from their pay and deposited into an IRA.

• California
• Colorado
• Connecticut
• Delaware
• Hawaii
• Illinois
• Maine
• Maryland
• Minnesota
• Nevada
• New Jersey
• New York
• Oregon
• Rhode Island
• Vermont
• Virginia
• Washington

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

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Dear Wealth Wise: "I’m 63 and my husband is 62. We currently have employer private insurance. Do I have to choose Medicare when I turn 65, or can I defer until he turns 65? Upon turning 65, I’m eligible for TRICARE For Life [for veterans]. I want to discontinue private insurance once I become eligible for Medicare, but that would leave my spouse without coverage. What are our options?"
— One Year Closer to 65

Dear One Year Closer to 65: You've asked a great question; many Americans struggle with healthcare decisions in their early 60s and even after Medicare kicks in at 65. You have the added complexity of being a veteran.

This question was so challenging that we interviewed multiple experts in retirement planning and federal benefits. Even if you're not a veteran, you'll find good information here on how to approach healthcare as a couple in your 60s.

What is TRICARE for Life (TFL)?

If you served in the military, you might be entitled to certain benefits long after your service ended. That includes health coverage through TRICARE For Life (TFL).

TFL acts as a secondary payer to Medicare, thereby limiting your out-of-pocket costs once you turn 65. But enrolling in Medicare and TFL can be tricky when you and your spouse aren't the same age.

If you're a year older than your spouse, you're eligible for Medicare and TFL sooner. But if you're the one whose employer provides coverage under a workplace plan, dumping that plan at 65 could leave your spouse scrambling for healthcare coverage.

That's the situation we have here. While it might seem complex at first, it could be more manageable than you'd think.

The crucial Medicare rule for veterans

When you turn 65, you officially become eligible for Medicare. While standard rules allow some working beyond 65 to delay enrollment, the strategy is different for military retirees.

Once you turn 65, you're eligible to sign up for Medicare. But that doesn't mean you have to, says Brandon Hill, senior adviser at Beckett Financial Group.

"You could maintain your employer’s private insurance at age 65 and beyond, assuming you're still working then," says Hill. (Note that if your employer has less than 20 employees, you will be required to enroll in Medicare Part B as your primary coverage.) "There is nothing that says you have to enroll in Medicare or TRICARE For Life at age 65 if you have creditable coverage elsewhere, such as an employer plan."

While delaying Medicare is perfectly legal under a large employer plan, doing so will completely freeze your veteran benefits. TRICARE For Life strictly requires active enrollment in both Medicare Parts A and B.

If you want to enroll in TFL, you also have to enroll in Medicare Parts A and B and pay the Part B premium, Hill says, which might happen automatically if you don't actively say no to that coverage.

"If you are already drawing your Social Security retirement benefits prior to age 65, then the Social Security Administration will automatically enroll you in Original Medicare, which is Part A and Part B, at age 65," Hill explains. He adds that the Part B premium in 2026 is $202.90 per month.

Your husband still has options if you drop your workplace plan

Dropping your workplace plan at 65 might make sense from a financial perspective. But that doesn't mean your husband will be out of options.

The solution for military families.

The best option for your husband's healthcare bridge to Medicare at 65 is likely a TRICARE Select or Prime plan, says Julie Mesaros, a federal benefits expert at Federal Solutions Support.

"Gaining eligibility for Medicare Part A is itself a qualifying life event for your husband," Mesaros says. "If you decide to drop your employer health plan, once you're covered by Medicare and TFL, that loss of coverage would also generally be considered a qualifying life event. That may allow your husband to enroll in another available TRICARE option, such as TRICARE Prime or TRICARE Select, if he's eligible. Either event would open a 90-day window."

Mesaros explains that from there, once your husband turns 65, he can enroll in Medicare Parts A and B and he'll transition to TFL as well.

For nonmilitary families.

For civilians who don't have access to TRICARE, Nick Punzio, wealth adviser at VestGen Wealth Partners, says that once you drop your employer-sponsored plan, there are several ways to bridge your husband's coverage gap.

"Some employers allow a spouse to remain on the plan even if the employee transitions to Medicare," Punzio says. However, he cautions, policies vary, so you'll need to check with your benefits department to see if you can do that.

Another option worth looking into is COBRA, says Punzio.

"This option lets your spouse temporarily keep the same coverage, usually for up to 18 to 36 months, though at a higher cost," he explains.

There are also Affordable Care Act Marketplace plans you can look into.

"Individual policies may be more affordable than expected, especially if your household qualifies for subsidies," Punzio says, though it's more difficult to qualify for marketplace subsidies in 2026.

You can get TRICARE while retaining your existing coverage

If you're on the fence about dropping your workplace plan entirely, there is a third path: keeping both. You might assume that you need to give up your workplace plan to enroll in TFL. But Hill says that's not necessarily the case.

"You can have both TRICARE For Life and employer coverage simultaneously," he insists. It could be worth doing to keep your spouse on your workplace plan until he's 65.

"In that situation, the employer plan would be the primary payer on claims, Medicare would pay second, and TRICARE would pay last," Hill explains.

Either way, Punzio says, you're doing the right thing by thinking about this now.

"Planning ahead ensures both partners maintain continuous, affordable coverage during the transition years before both are eligible for Medicare," he says.

How TRICARE For Life and Medicare work together

The relationship between Medicare and TFL can be complicated. The one thing Mesaros emphasizes is that TFL doesn't replace Medicare. It works with it.

"Medicare pays first, and TFL generally picks up many of the remaining eligible costs, which is one reason many retirees find the combination to be very comprehensive coverage," she says.

Mesaros also explains that a common mistake people make is treating Medicare and TRICARE as unrelated decisions.

"In reality, the timing must be coordinated because employer coverage changes can trigger a qualifying life event, and TRICARE eligibility at Medicare age depends on having both Part A and Part B. Dropping the private employer plan does not leave your husband uncovered, provided he enrolls in an available TRICARE option."

Mesaros also says that there's nothing wrong with having two different coverage arrangements within the same household.

"You may be covered by Medicare and TFL, while your husband may be covered by TRICARE Prime or TRICARE Select. That is completely normal," she explains.

Finally, Mesaros says, before initiating any moves, it's important to confirm your benefits.

"Before making any changes, I'd suggest confirming your specific situation with TRICARE and DEERS and comparing the cost of keeping your current employer coverage vs moving your husband to a TRICARE plan until he reaches age 65. That's likely where the biggest planning decision will be," she says.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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• Don't Let Health Care Costs Wreck Your Retirement: Here's How

If there's one question that keeps pre-retirees up at night, it's this: Will my money last?

For decades, the financial industry has leaned heavily on rules of thumb, such as the 4% rule, to answer that question. But real life rarely follows a straight line.

Markets fluctuate, inflation rises and falls, and unexpected expenses — especially healthcare — have a way of showing up at the worst possible times.

A more reliable approach to retirement income planning doesn't depend on guesswork. Instead, it starts with structure.

I like to think of retirement income in three distinct layers: Need, want and grow. When built correctly, this framework creates stability, flexibility and long-term resilience, regardless of market conditions.

It may not be flashy. In fact, it's intentionally a bit boring. But that's the point: A boring portfolio supports an exciting retirement.

Here's how it works.

Step 1: Guarantee your 'need'

The foundation of any successful retirement plan is ensuring that your basic living expenses are covered — no matter what happens in the markets.

Your "need" income is the amount required to maintain your core lifestyle. Think housing, utilities, groceries, insurance and other essential expenses. These are non-negotiable. They must be paid whether the market is booming or in a downturn.

The key here is certainty.

To guarantee this level of income, retirees should rely on sources that are dependable and, ideally, last for life. These typically include:

• Social Security
• Pension income (if available)
• Interest from high-quality, long-duration government bonds (such as 30-year Treasuries)
• Annuities with lifetime income riders

Each of these sources shares a common characteristic: They provide income that isn't directly tied to stock market performance.

A practical strategy is to carve out a portion of your retirement savings specifically to fund this layer. Once your need is covered by guaranteed or highly predictable income streams, you've eliminated the biggest risk in retirement: The inability to meet your basic expenses.

This step alone can dramatically reduce financial stress. When retirees know their essentials are covered, they can approach the rest of their portfolio with greater confidence and clarity.

Step 2: Protect your 'want'

Once your foundational needs are secured, the next layer focuses on enhancing your lifestyle.

Your "want" income is what allows you to enjoy retirement — not just survive it. This includes:

• Travel and vacations
• Dining out
• Hobbies and entertainment
• Gifting to family
• Experiences that make retirement meaningful

While these expenses are more flexible than your needs, they're still important. After all, retirement should be about enjoying the life you've worked hard to build.

The goal in this step is protection with moderate flexibility.

Unlike step one, this layer doesn't need to be fully guaranteed — but it should still be relatively stable and low risk. Appropriate tools often include:

• Government bond portfolios
• Fixed index annuities
• Other conservative income-oriented investments

These options typically offer a balance between safety and modest growth potential, helping preserve principal while generating income.

Again, the strategy is to allocate a portion of your retirement savings to fund this layer after step one is complete.

By doing so, you create a buffer between your lifestyle spending and the volatility of the stock market. Even during market downturns, your ability to enjoy retirement isn't immediately compromised.

Step 3: 'Grow' the rest

With your needs guaranteed and your wants protected, the remaining portion of your portfolio can be positioned for growth.

This is where you invest for:

• Inflation protection
• Future healthcare expenses
• Legacy goals
• Emergencies and unexpected costs

This portion of your portfolio is typically invested in a diversified mix of market-based assets, such as:

• Stocks
• Exchange-traded funds
• Mutual funds
• Other growth-oriented investments

The exact allocation should align with your personal risk tolerance, time horizon and financial goals.

Because your essential and lifestyle income needs are already addressed in steps one and two, this growth portion can be invested more strategically — without the pressure of needing to generate immediate income during unfavorable market conditions.

This is a critical advantage.

In traditional retirement strategies, retirees often draw income directly from market-based portfolios. When markets decline early in retirement — a phenomenon known as sequence of returns risk — this can significantly damage long-term outcomes.

By separating income needs from growth assets, you give your portfolio time to recover and compound over the long term.

How the pieces fit together

In practice, most retirees will allocate:

• 50% to 60% of their portfolio to steps one and two combined
• Up to 70% at most in more conservative income and protection strategies
• The remaining portion to growth investments

This balance creates a structured yet flexible approach to retirement income.

It's also fundamentally different from relying solely on the 4% rule.

The 4% rule assumes a consistent withdrawal rate from a market-based portfolio, regardless of market conditions. While that rule can work in favorable environments, it offers limited protection during prolonged downturns or periods of high inflation.

In contrast, the need-want-grow framework is designed to work in both good markets and bad markets.

In strong markets, your growth portfolio can flourish, supporting future needs and legacy goals.

In weak markets, your essential income remains intact, and your lifestyle is largely protected.

This reduces the emotional and financial strain that often leads retirees to make poor decisions — such as selling investments at the wrong time.

Why 'boring' works

It's easy to be drawn to complex strategies or high-return opportunities, especially after decades of saving and investing.

But retirement is about maximizing reliability and peace of mind, not maximizing returns.

A structured, layered approach may feel conservative, even boring, but that's exactly what makes it effective.

When your income plan is predictable:

• You worry less about market volatility
• You avoid emotional decision-making
• You gain the freedom to actually enjoy retirement

And that's ultimately the goal.

While an exciting portfolio might look good on paper, it's a boring, dependable one that supports an exciting life.

Final thoughts

Creating a rock-solid income in retirement doesn't require complicated formulas or blind faith in market performance; it requires clarity.

By breaking your retirement income into three distinct steps — guaranteeing your needs, protecting your wants and growing the rest — you can build a plan that is resilient, adaptable and aligned with how real life actually unfolds.

And perhaps most importantly, you can replace uncertainty with confidence. Because in retirement, the best plan isn't the one that promises the highest return; it's the one that lets you sleep at night — and wake up excited for the day ahead.

Centennial Advisors, LLC is an Investment Adviser registered with the U.S. Securities and Exchange Commission ("SEC"). Registration as an investment adviser does not imply a certain level of skill or training.

Dan Dunkin contributed to this article.

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

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

Most financial plans are created with good intentions. When they're made correctly, they account for the client's goals, spending habits and savings patterns. But financial problems rarely come from a bad financial plan. They're usually the result of a plan not being implemented consistently.

Making financial changes isn't easy. Behavioral changes take time, and daily life can be distracting. Clients usually understand the recommendations being made, especially when they have a good relationship with their adviser.

But actually following the guidance requires the client to look inward and confront financial habits that may no longer work — and that can be uncomfortable.

The tasks that commonly get delayed aren't the hardest, but rather the ones that feel the least urgent. Updating beneficiaries, funding trusts or investing for retirement can easily be pushed to the side thanks to a false sense of security.

People think the future is guaranteed and waiting to act doesn't have consequences — until the unexpected happens.

Tomorrow isn't guaranteed

Earlier this year, I worked with a couple to create both a retirement and estate plan. The legal documents were drafted and a strategy was in place. The husband and wife just needed to continue funding the trust. They understood this, but it never felt urgent, particularly for the husband. He was 68 and simply thought he had more time. But he didn't.

One morning he was brushing his teeth when he suffered an aneurysm that killed him. As the trust wasn't fully funded, the estate went through probate. The wife was left with unexpected legal costs, delays and stress while mourning the sudden death of her husband.

This is a situation no one wants to go through, but believing the future is guaranteed can increase its chances of happening. Helping clients stay engaged after their financial plan is created is the most effective way to maintain momentum.

Start small

People often struggle to follow through because seeing everything that may be required to achieve their goals all at once can be overwhelming. Every recommendation, task or new strategy becomes intimidating, which feels uncomfortable. When these feelings go unaddressed, action is delayed entirely.

Rather than focusing on everything at once, pick one objective to tackle, and start with small, manageable steps. Crossing smaller action items off the list will create a sense of progress, making long-term goals feel more achievable.

Financial planning is most effective when it's viewed as an ongoing process instead of a one-time event. And progress rarely comes from one major decision. Most often, achieving long-term goals requires you to consistently follow through on the smaller ones.

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

The standard 401(k) playbook leaves high-income professionals and business owners with a planning gap that's larger than most realize. Cash balance plans, when used correctly, can help close it.

For most American workers, a 401(k) and an IRA cover the retirement bases. For successful professionals and business owners earning far above the median household income, those same vehicles may provide less retirement savings capacity and current-year tax efficiency than other qualified plan structures.

The shortfall isn't a flaw in the traditional plans but rather a planning gap — a missed opportunity to select a plan that better fits their unique circumstances.

One potential tool for addressing that gap is the cash balance plan, which remains surprisingly underused, even among households that would benefit most.

How cash balance plans work

A cash balance plan is an IRS-qualified defined benefit pension plan, but it's designed to feel and function more like a defined contribution account. Each participant has a hypothetical "account" that grows in two ways each year:

• A pay credit (a percentage of compensation or a flat dollar amount set in the plan document)
• An interest credit (a guaranteed rate, often tied to the 30-year Treasury)

The employer makes annual, actuarially determined contributions to fund those credits, and those contributions are tax-deductible for the business.

The reason the structure is attractive is the contribution ceiling. A standard 401(k) plus profit-sharing combination caps total annual employer-plus-employee contributions in the low-to-mid five figures. A cash balance plan stacked on top of that 401(k) may allow age-weighted contributions ranging from roughly $100,000 to north of $400,000 each year for older owners and key employees depending on age, compensation, plan design and actuarial assumptions.

The older the participant, the more compressed the funding window, so the IRS permits larger annual contributions to reach a defined retirement benefit. As a result of the higher limits, the tax deferral impact may exceed that of traditional plans for certain high-income households.

Is there an income threshold where these strategies start to make sense?

There's no statutory minimum, but a practical one. We generally start exploring cash balance plans when a household has consistent, predictable taxable income above roughly $400,000, has already maxed a 401(k) and profit-sharing plan, and has cash flow that can support a meaningful pension contribution for at least three to five years.

Below that level, the design and administrative costs eat into the benefit, defeating the purpose. Above that starting level, particularly above $750,000, the potential tax savings may become substantial, and the plan's tax savings may outweigh the plan's design and administrative costs for some high-income business owners.

Why these strategies tend to be underused

If cash balance plans are this effective, why don't more eligible business owners use them? In our experience, the answer is rarely about the math but rather about who's at the table.

Many advisers and firms are organized around investment management, not plan design. A cash balance plan requires coordination among an adviser, a third-party administrator, an actuary, the business's CPA and often an ERISA attorney.

That coordination is real work and falls outside the day-to-day workflow of advisers who don't specialize in business-owner planning. The path of least resistance is to recommend a SEP-IRA or a slightly larger 401(k) match and call the conversation finished.

There's also a generational gap. Defined-benefit plans developed a reputation in the 1980s and 1990s for being inflexible, expensive to maintain and risky for the sponsor.

Modern cash-balance plans have addressed many of those issues because interest credits can be structured to match plan assets and because plans can be amended or terminated when circumstances change, but the legacy perception lingers.

Overlooked advantages and common misconceptions

The first misconception we hear is that a cash balance plan "locks up" money permanently. It doesn't. Once a participant terminates participation in the plan, balances may generally be eligible to be rolled over to an IRA, just like a 401(k), subject to plan terms and applicable distribution rules.

The plan itself can also be amended, frozen or terminated if the business's situation changes, provided the IRS rules on plan permanence are followed.

The second is that these plans are "only for huge companies." In fact, the sweet spot is the opposite. A solo physician, a four-partner law firm, a small dental practice or a consulting firm with a handful of professionals can often capture more relative benefit than a large enterprise because contributions can often be weighted toward owners while still satisfying applicable nondiscrimination requirements.

The third misconception is that cash balance plans are speculative. They are not standalone investment products. They are funded pension obligations, although plan assets are invested and subject to investment risk.

The investment portfolio is typically managed to a conservative target return that matches the interest credit, which may help reduce funding volatility for the sponsor.

Professionals consistently underestimate the benefit on the tax side. A $200,000 cash-balance contribution for an owner in a combined 45% federal and state bracket isn't a $200,000 retirement deposit.

It's potentially about $90,000 in current-year tax savings plus a $200,000 retirement deposit, depending on the taxpayer's specific circumstances.

Over a five- to 10-year funding window, the cumulative effect can materially affect retirement accumulation and long-term financial planning outcomes.

Who benefits most

The strongest candidates share three characteristics:

• High, stable income
• A closely held business or professional practice
• Owners who are typically older than the rank-and-file employees

We see this structure deployed most often in medicine and dentistry, law, engineering and architecture, accounting and consulting, independent investment management and family-held operating businesses with strong free cash flow.

Solo practitioners and 1099 professionals can also use this structure. For instance, a one-participant cash balance plan is administratively simpler and often has a dramatic impact.

At the other end, partnerships and professional corporations with multiple owners can design tiered benefit formulas that direct the bulk of contributions to the partners while still meeting coverage and nondiscrimination requirements.

How to know if it makes sense for your situation

A good first conversation answers four questions:

• What is your taxable income today, and how stable is it over a three- to five-year horizon?
• Are you already fully funding a 401(k) and a profit-sharing plan?
• What does your workforce look like? Specifically, how many non-owner employees are there? What are their ages and their compensation levels?
• What is your investment return assumption, and is it compatible with the conservative funding portfolio a cash balance plan typically requires?

Those answers, paired with a feasibility study from a qualified actuary, can often determine relatively quickly whether a cash balance plan can move the needle for your household and business. They will also tell you if it doesn't make sense, which is just as valuable, since not every high earner is a fit.

The bottom line

Cash balance plans aren't a loophole, a gimmick or a one-size-fits-all answer. They are an established, IRS-qualified planning tool that may be underused or less frequently discussed in the standard retirement planning conversation.

For the right business owner facing persistent high tax bills, they may help accelerate retirement funding and reduce current-year tax liability. They may also bring clarity to the rest of their financial plan, including estate, business succession and charitable giving.

If your income has increased beyond your retirement plan, consider consulting an adviser who specializes in implementing wealth management strategies to help mitigate the tax exposure that comes with that growth.

Cash balance plans are long-term retirement vehicles that involve investment risk, ongoing administrative and actuarial costs, and required annual funding obligations. Actual tax benefits and retirement outcomes depend on factors including investment performance, business cash flow, employee demographics, actuarial assumptions, and future tax law changes. These plans are not appropriate for every business owner or high-income professional.

Investment Advisory Services are offered through Mariner Platform Solutions (MPS), an SEC-registered investment adviser. Imperio Wealth Advisors and MPS are not affiliated entities.

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

Your daughter needs money for a down payment on a new house. Your son needs a loan to wipe out high-interest debt. Another child wants cash to pursue a graduate degree. As parents, it's entirely natural to want to step in and help. But if you're already retired, you need to think twice before opening your wallet. After all, you don't want to jeopardize your own financial security for the sake of theirs.

In retirement, you're living on a fixed income, which means any unplanned financial support you give your kids will come directly from your nest egg, leaving less money to fund your own lifestyle or for your estate. Even if you can comfortably afford the hit, that doesn't automatically make it the right move. Sometimes, bailing adult children out only serves to enable bad financial habits.

Mixing family and finances is always complicated. Before you sign any checks, make sure you ask yourself these three critical questions.

1. Why do they need the money?

The first question to ask is: What do they need the money for? Before you can go any further in the decision-making process, you have to determine if the reason is worthy of consideration, says John Rafferty, partner and investment advisor representative at Solomon Financial. Equally important is who is asking. Do they have a history of asking for money, and will giving it to them enable bad money habits?

If the money is for a good reason, ensure it will put them in a better situation in the future. Can your child afford the home you are giving them a down payment for? Will they incur more debt if they pay down the existing debt? Is the degree worth the ROI?

"Sometimes you think you are helping them buy a house that they can't afford, and it puts undue stress on them," says Paul Jarvis, a wealth advisor at Prime Capital Financial. "It's better to have an open and honest conversation about what the gift is meant to accomplish."

2. Can I afford it, and if not, am I willing to work or sell assets?

If you're okay with the reason your child needs money, the next question you need to ask yourself is: Can I afford it, and if not, am I willing to make sacrifices to get it?

If you can afford to help, the money will likely need to come from investments or retirement savings. Choose your funding source carefully to minimize taxes and sequence-of-returns risk. Pulling from a tax-deferred account, like a traditional IRA, will increase your taxable income, while withdrawing from a tax-free account, like a Roth IRA, means giving up years of compound growth, possibly creating a retirement shortfall.

If you can't afford it, are you willing to work part-time or take on debt to give your child money? "If I were not enabling my child, I would much rather suffer than my child," if it were an emergency, says Rafferty. "If the child is showing the propensity to ask for money, then the answers are different."

3. Will this be a gift to one child, or will I match it for the others?

Some families prefer to give equally to all their children, regardless of individual need. The thinking goes that if money is given to one kid, it should also be given to the others. If you fall into this camp, you have to ask yourself: Will this be a gift to one child only, or will I match it for the others? If the latter, how will I give them the extra money?

"Is there a way you can ensure you treat all your children the same way?" asks Rafferty. Ultimately, he notes, it is your money, so perfectly equal distribution is a choice, not a rule.

Be smart about helping

Many retirees want to help their children and have the means to do so. But before you open your wallet, think about what it means to your retirement and your kids' financial future.

Are you enabling bad financial behaviors or putting them on the path to financial freedom? Will this hinder your retirement plans or have little impact? Asking yourself those three key questions will protect your own financial security while helping, rather than hurting, the ones you love most.

Editor's note: This article is part of an ongoing series looking at three questions to ask yourself before making a major financial or lifestyle decision. The other stories in the series are: 3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You, 3 Questions That Reveal If You're Actually Ready to Age in Place, 3 Questions That Determine If You're Actually Ready to Retire Early, 3 Questions to Ensure Your Retirement Nest Egg Is Inflation-Proof, 3 Questions to Ask Before Unretiring, 3 Questions That Help You Find Your Perfect Social Security Claiming Age and Go Ahead and Splurge, But Ask Yourself These 3 Questions First.

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• Why You May Not Want to Move Near the Grandkids in Retirement
• Baby Boomers vs Gen X: How They Approach Retirement Differently
• Go Ahead and Splurge, But Ask Yourself These 3 Questions First

For decades, older Americans could count on their monthly Social Security check arriving in the mail. But in 2025, the Social Security Administration (SSA) was ordered to move to electronic payments.

The SSA plans to complete the full transition to electronic payments for all beneficiaries this year. Payments will be delivered electronically, either through direct deposit to a bank or credit union account, or through a Treasury-approved prepaid debit card. Checks will be sent in the mail only as a last resort, and for that you'll need a government waiver.

The SSA says the goal is to improve speed, security and reliability, and the change is part of a broader, government-wide move to electronic payments.

But for those who still rely on mailed checks, the shift away from paper raises practical questions. Vulnerable older adults will now have to consider banking access, fraud prevention, family involvement, digital literacy and their comfort level with an electronic payment system.

Why this matters now

For many retirees, Social Security is their only source of income. It is the income that pays the rent, mortgage, utilities, groceries and prescriptions. Even a short delay or disruption can create real hardship.

That is why this issue deserves more attention than it has received. The end of paper checks is not simply a "technology upgrade." It is a consumer protection issue.

The people most likely to be affected include:

• Older beneficiaries who do not use online accounts
• Individuals in rural areas
• People without traditional bank accounts
• Those with cognitive decline
• Widows or widowers who relied on a spouse to manage finances
• Beneficiaries who are wary of scams or uncomfortable sharing banking information

In other words, the beneficiaries who still receive paper checks may be among those least prepared to navigate a fast-moving digital payment system without help.

What replaces the paper check?

Beneficiaries have two electronic payment options.

The first is direct deposit into a checking or savings account. Beneficiaries can sign up:

• Through their personal "my Social Security" account at ssa.gov
• On the Treasury's Go Direct website
• By calling the Treasury's Electronic Payment Solution Center (1-800-333-1795) or the SSA's national phone number (1-800-772-1213)
• At their financial institution

The second option is to use the Direct Express® Debit Mastercard®, a Treasury-sponsored prepaid debit card for people who do not have a bank account. With Direct Express, the federal benefit payment is deposited onto the card account on the payment date.

The card can be used to make purchases, pay bills or get cash, and it doesn't require a bank account.

That second option is especially important because requiring every older beneficiary to "just use direct deposit" is not always possible.

Some people are unbanked because they've had negative banking experiences or live where transportation to a bank branch is limited.

Others may be unable to maintain a bank account because of fees, overdrafts or confusion managing the account.

The identity-proofing issue

While paper checks are being phased out, the SSA has tightened identity-proofing requirements around certain benefit and payment changes:

Individuals who cannot use their personal "my Social Security" account may need to visit a local Social Security office to prove their identity for certain actions, including changing direct deposit information.

People receiving payment by paper check must visit an SSA office before changing their mailing address.

SSA is using additional fraud-prevention measures to verify bank account information connected to direct deposit changes.

Direct deposit fraud can be devastating. If a scammer diverts a retiree's Social Security payment into another account, the beneficiary may not discover the problem until the money does not arrive. By then, rent may be due and automatic payments may fail. Recovering the funds can take time.

But stronger identity rules also create friction for legitimate beneficiaries.

• A frail 89-year-old widow who no longer drives may find it difficult to visit a field office
• A beneficiary without internet access may not be able to complete online identity proofing
• A family caregiver may know exactly what needs to be done but may not have legal authority to act

That is the heart of the paper check problem: The government is trying to reduce fraud and modernize payments, but some of the people most in need of protection may also face the greatest barriers to compliance.

Watching for scams during the transition

Major government changes create openings for scammers.

Families should be alert for calls, texts, emails or letters claiming that a beneficiary's Social Security payments will stop unless they immediately provide a Social Security number, bank account number, debit card number, PIN or password.

Direct Express warns that it will never contact cardholders by phone, email or text to ask for a card number, password, PIN or security code.

The safest approach is simple: Do not respond to unsolicited messages. Instead, contact SSA, the Treasury's Go Direct program, your financial institution or Direct Express directly, using known, official contact information.

Older adults should also be warned about "helpers" who offer to set up direct deposit but ask to use their own bank account. Social Security benefits should be deposited into an account that properly belongs to the beneficiary or to an authorized representative payee.

What families can do to help

The most important first step is to identify whether an older parent, relative or client still receives a paper check. Many family members assume payments are already electronic because most beneficiaries converted years ago. That assumption may be wrong.

Next, confirm where the payment should go. If the beneficiary has a safe, low-cost checking or savings account, direct deposit may be the simplest option. If not, review the Direct Express card as an alternative.

Families should also help beneficiaries create or secure their personal "my Social Security" account, where appropriate.

This should be done carefully. The beneficiary should not share passwords casually, and family members should avoid taking over an account unless they have proper legal authority or the beneficiary is capable and has clearly asked for help.

For individuals with cognitive impairment, serious illness or declining ability to manage money, families may need to explore SSA's representative payee process.

A power of attorney may be useful for many financial matters, but SSA generally does not recognize a power of attorney for managing Social Security benefits in the same way a bank might.

When a beneficiary cannot manage benefits, SSA's representative payee rules become important.

Finally, the beneficiary should build a payment calendar showing their expected Social Security deposit date, what bills are tied to that payment, and whom to call if money does not arrive.

Electronic payments reduce mail delays and stolen checks, but they do not eliminate every possible problem.

The bigger lesson

The end of mailed Social Security checks is not just about how money moves. It is about whether older Americans can safely access the benefits they earned.

For many beneficiaries, electronic payment is faster, safer and more convenient. But for the small group still dependent on paper checks, this transition requires planning, communication and trusted support.

Families, advisers and caregivers should not wait until a payment is missed. The time to review payment arrangements, banking access, identity-proofing options and scam protections is before there is a crisis.

Social Security has always been more than a monthly benefit. For millions of retirees, it is the foundation of their financial security. Making sure that benefit arrives safely, reliably and in the right hands is now an essential part of retirement planning.

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• Filed for Social Security Too Soon? 2 Ways to Get a Do-Over

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

In the early 1980s, the 30-year Treasury yield topped 15%. Bond traders who had the foresight to lock in those coupons made the trade of a lifetime.

While everyone else chased the dot-com boom a decade later, those traders didn't need the market to cooperate. Their bonds just kept paying.

So, when the stock market went essentially nowhere from 2000 to 2013 (a flat market), many retirees who were in the market, focused on growth, struggled to maintain their lifestyle, while those who bought those bonds were able to sail through.

They didn't win because they predicted the future, but because they recognized a good rate when they saw one and acted on it.

That same logic applies to annuities today. But it didn't always.

Why I couldn't stand them (around 2015)

When I entered the financial planning industry over a decade ago, the 10-year Treasury was hovering around 2%. That's one of the benchmarks that heavily influences what insurance companies can offer in lifetime income payouts. And at 2%, the payouts were, frankly, uninspiring.

For example, I remember seeing payout rates around 4% to 5%. With inflation risk and the time needed to feel like you'd get your money back at a reasonable rate, it didn't make sense to me.

It was difficult to rationalize putting a client's money into a product that generated negligible income when other strategies could do more with less restriction (see my article 10 Ways to Generate Income in Retirement).

The math, in my opinion, didn't work. So I avoided suggesting lifetime income for years.

What changed

Today, the 10-year Treasury sits around 4.5%, which is more than double where it was a decade ago. That shift isn't cosmetic ... It's structural. The underlying rates that support lifetime income payouts have fundamentally changed what annuities can offer.

Higher rates mean higher payout factors. A product that once generated a modest income stream from a given deposit now generates a meaningfully better one. For pre-retirees concerned about outliving their money, that changes the entire conversation.

Today, I'm seeing payouts around 7% (some more, and some less). Rates are obviously subject to change, but that seems like a good deal.

This isn't about being bullish on annuities. It's about recognizing that the tool has become more effective in today's rate environment, much like those bond traders recognized a historically favorable rate and acted accordingly.

A product that finally grew up

Beyond rates, the annuity itself has evolved. The early versions of lifetime income products were clunky. High fees, restrictive surrender schedules, limited flexibility and opaque terms made them difficult to recommend.

That's no longer the case. Modern innovations like guaranteed lifetime withdrawal benefit (GLWB) riders, lower internal costs, index-linked crediting strategies and more have made today's annuities a fundamentally different product category than what existed even 10 years ago.

The industry matured, and the products improved with it.

Not all annuities are the same

One of the biggest misconceptions is that all annuities work the same way. They don't.

Here's a quick breakdown of some that are available today:

Variable annuities seem to be the poster child of what people believe an annuity is. They have higher fees, limited options and so on. Yes, they have "more upside potential," but they also have downside risk.

The fees can put a drag on the performance every year. This is where many of the horror stories are found, in my experience.

Fixed annuities offer a guaranteed interest rate for a set period, kind of like a CD. When it matures, you get your money back plus interest. This is probably the simplest annuity.

Fixed-indexed annuities offer upside potential with downside protection. Some are designed more for cash growth as a bond fund alternative, while others offer better lifetime payouts. It just depends on what you want.

Immediate annuities (SPIAs) convert a lump sum into income payments that start right away, often used for pensionlike income.

Each serves a different purpose. And none of them is universally right or wrong.

It's just a tool

Let me ask you a question: How do you feel about hammers? Probably indifferent. You like them when you need one, and you only hate them when you use one wrong, like when you miss the nail and hit your thumb.

Annuities are no different. The people who hate them usually had a bad experience with the wrong type, at the wrong time, for the wrong reason.

The people who love them sometimes overlook the tradeoffs. Both sides would benefit from a more neutral starting point.

That's exactly why I wrote The DIY Annuity Guide. I wanted to help people move past the love-it-or-hate-it reflex and figure out whether the tool actually fits their situation.

The rate environment has changed. The products have changed. Give yourself permission to check your assumptions and explore whether an annuity belongs in your plan or not.

Either answer is a good one, as long as it's informed.

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

Financial anxiety does not always end at retirement. For many people, it gets louder. Without a paycheck coming in, every withdrawal can feel permanent.

What separates calmer retirees from constantly worried ones is often less about how much they have and more about how they manage decisions, expectations and trade-offs.

Feelings of security are strongly linked to planning behaviors and habits, not just portfolio size.

Below are seven money habits that can help retirees feel more in control of spending.

1. They separate money into time buckets

Instead of treating their portfolio as one big pile of money, confident retirees often organize assets by when the money will be used.

Near term (one to three years). Cash and cash alternatives such as high-yield savings, money market funds and short-term CDs

Middle term (roughly years four to 10). More conservative investments such as high-quality short- or intermediate-term bonds and balanced strategies

Long term (10-plus years). Growth-oriented investments such as diversified stock exposure meant to ride through market cycles

The practical advantage is simple. If markets fall, the "spending money" for the next few years is not forced to participate in that decline.

The behavioral advantage is often bigger: It can reduce the urge to sell long-term investments at the wrong time.

One way to pressure-test this habit is to ask a basic question: "If the market dropped 20% this year, how much of my next 24 months of spending is already set aside?"

When that answer is clear, the rest of the portfolio can be managed with a longer view.

2. They follow a consistent withdrawal strategy

Stressed retirees often make withdrawals reactively: "We will take what we need and hope it works out." Confident retirees tend to choose a repeatable framework.

A common starting point is the 4% rule, which suggests withdrawing about 4% of a portfolio in the first year of retirement and then adjusting the dollar amount for inflation each year. For example, a $1 million portfolio would generate about $40,000 in year one.

The exact method matters less than the presence of a method. A withdrawal policy (whether a fixed percentage, a guardrails strategy or an approach informed by required minimum distributions) reduces second-guessing because the decision rules are clear before emotions get involved.

It also creates better conversations. When spending decisions are tied to an agreed-upon policy, choices feel less like guesses and more like trade-offs you intentionally accept.

3. They spend deliberately on what matters

Confident retirees usually do not "cut everything." They identify what makes retirement feel meaningful, then spend intentionally in those areas.

Common examples include:

• Travel that supports relationships
• Hobbies that are deeply valued
• Health and wellness spending that preserves independence

At the same time, they regularly remove spending that no longer fits their life. Subscription creep, unused memberships and maintaining a home that is too large can quietly erode confidence.

A practical habit is a simple annual "spending values" review: Keep the top three categories that genuinely improve life and challenge at least one recurring expense that has become automatic.

4. They plan for healthcare costs realistically

Healthcare uncertainty is one of the most common retirement stressors. Fidelity estimates that a 65-year-old retiring in 2025 may need roughly $172,500 for healthcare costs in retirement, not including long-term care.

Confident retirees tend to:

• Understand the basics of Medicare (Parts A, B and D)
• Compare supplemental coverage options (Medigap vs Medicare Advantage)
• Budget for premiums and out-of-pocket costs

They also address long-term care risk proactively. The "plan" might be insurance, a hybrid policy or earmarking assets, but it is rarely "we will deal with it later."

Removing uncertainty is often the biggest driver of reduced anxiety.

Even if the numbers are imperfect, a written estimate plus a funding approach is usually more calming than avoiding the topic.

5. They maintain financial flexibility

Rigid plans break when life changes. Confident retirees usually build flexibility into both income and spending.

That flexibility can look like:

• Maintaining the ability to earn some income (consulting, part-time work, seasonal work)
• Separating spending into "needs" and "wants," so discretionary categories can be adjusted in a down market
• Keeping a liquidity backstop, such as an unused home equity line of credit, to avoid selling investments during a market decline

Even if these options are never used, simply having options can reduce stress.

Flexibility can also include timing. When markets are down, delaying a large discretionary purchase, adjusting travel plans or shifting gifting schedules can protect the plan without feeling like deprivation.

6. They separate identity from net worth

A surprisingly powerful habit is psychological. Retirees who struggle often treat account balances like a scoreboard. When markets drop, it feels personal.

Confident retirees usually define what "enough" looks like in practical terms: An income plan that supports their lifestyle with an acceptable margin of safety. Once that goal is clear, day-to-day market noise carries less emotional weight.

This does not mean ignoring risk. It means remembering that money is a tool to fund life, not a measure of worth.

A helpful reframe is to focus on income durability rather than portfolio highs. The question becomes: "Is our plan still on track to fund the life we want?" Not: "Did we beat the market this quarter?"

7. They review and adjust regularly, but they do not obsess

Confident retirees tend to be consistent, not compulsive.

A reasonable rhythm might include:

• Periodic check-ins (quarterly or semi-annually)
• Rebalancing when allocations drift meaningfully from targets
• Updating the plan after major life changes (health events, relocation, widowhood, major gifts)

In contrast, constant monitoring can create anxiety and can tempt people into emotional decisions. A set review schedule and a simple dashboard of the metrics that matter (withdrawal rate, spending vs plan, asset allocation, cash reserves) is often more helpful than watching daily market moves.

If checking accounts daily is a habit, consider putting guardrails around it. For many retirees, the goal is not less awareness. It is less reactivity.

Building these habits

If retirement spending feels stressful, confidence often comes from structure:

• Organize savings into time buckets
• Choose a repeatable withdrawal policy
• Align spending with what matters and cut what does not
• Plan realistically for healthcare
• Build flexibility so you are not locked into one path

Working with a financial adviser can help connect the technical plan (cash flow, taxes, investment risk) with the behavior that makes the plan sustainable.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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.

There's a lot of chatter about the Great Wealth Transfer — as much as $124 trillion that’s predicted to pass between generations over the next couple of decades. And much of that is likely to end up in the hands of women.

If you’re fortunate enough to inherit a windfall, be prepared to be patient. For starters, it can take time to gather the necessary documentation and navigate the legal niceties of inheritance (see our article on where to start if you've received an inheritance). And once you have the money in hand, "rule number one is don’t go out and spend it all," says Alexandra Armstrong, a certified financial planner and author of On Your Own: A Widow’s Guide to Emotional and Financial Well-Being.

Among people who inherit, there’s a tendency to want to do one of two things, says Armstrong: pay off the mortgage on the house or take your dream vacation. But before you do anything, consider the tax implications. For instance, if you have a low-interest-rate mortgage that’s tax-deductible, you may be better off keeping it and putting the bulk of your inheritance to work in other ways. If you inherit your spouse’s IRA, you can roll the money into your own IRA. But if anyone other than a spouse inherits an IRA — say, an adult child or a sibling — the money must be withdrawn over 10 years, and payouts are taxable.

Getting guidance from a tax adviser or other financial professional should be high on your to-do list. A third party can also act as a buffer between you and other family members and friends who’d like a share of the windfall.

Also, you may not get immediate access to your inheritance. “You can usually count on at least six to nine months to settle even a quick estate,” says Armstrong, and even longer if you inherit something like real estate that must be sold and possibly divided among several heirs.

Take your time: Unless there’s a legal or tax urgency, give yourself time to think through all the variables.

"Don’t make any permanent decisions for at least a year or even longer,” advises Natalie Colley, partner and senior lead adviser at Francis Financial in New York City. Park the money in a money market fund, or leave it in existing investments until you come up with a strategy, says Colley. “Give yourself permission to change your mind."

That’s particularly true of assets with sentimental value, says Elizabeth Zelinka Parsons, author of Encore: A High Achiever’s Guide to Thriving in Retirement. "It might be easier to sell the family home or Dad's art collection in year three,” says Parsons.

Getting a windfall can be especially challenging for women who have never played a role in handling their family’s finances. Even women who are involved in day-to-day money management often lack confidence when it comes to long-term investment planning, says Colley. Her advice: "Break it down into bite-sized pieces that you can digest. Repetition helps build confidence and competence."

Bottom line: Any preparation you can do now, either as a giver or a potential beneficiary, will yield a big payoff when the time comes. Take this advice from reader Judith Meservey, a widow who offers support to other widows in her active adult community. Writes Meservey: "I see quite a range of preparedness among the women. I try to encourage couples to be interchangeable when it comes to financial and estate matters, encouraging them both to know how to pay bills, where the assets are and what the passwords are. In my case, I created a document 20 years ago with key information that I update each year for my sister in case something happens to me. It would help someone step in with ease and confidence."

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

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If you're in the home stretch of saving for retirement, you'll generally hear that your shift into more stable assets like bonds should be gradual, and that you should continue to lean on stocks for the strong returns they've historically been known to deliver. In fact, if you're about a decade away from retirement, you may be inclined to keep a good chunk of your money in a broad mix of stocks to hit your target savings number and wrap up your career with a clear head.

But investors hoping for an upcoming period of strong returns may be in for disappointment. Some experts have been sounding the alarm that the stock market is in for a lost decade — meaning a decade of flat or considerably lower-than-average returns.

If you're banking on stock market growth to get to your retirement finish line, that's clearly bad news. Let's explore why the fear of a lost decade exists and whether you should or shouldn't believe the hype.

Stock values are super high

In late 2024, Goldman Sachs estimated that over the following 10 years, the S&P 500 would deliver an annualized nominal total return of 3%. When adjusted for inflation, that 3% drops to 1% in real terms.

Since then, experts have been on high alert for a decade of stagnant returns. And recent CAPE ratio values do paint a somewhat alarming picture.

The cyclically adjusted price-to-earnings (CAPE) ratio, also known as the Shiller P/E ratio, measures the value of the S&P 500 relative to the average of the previous 10 years of reported earnings, with those earnings adjusted for inflation. In contrast to the traditional P/E ratio, which relies on a single year of earnings, the CAPE ratio reduces the impact of short-term fluctuations, providing investors with a more stable and reliable view of the market.

In a nutshell, a higher CAPE ratio suggests the market is overvalued. A lower CAPE ratio suggests there's room for growth.

As of this writing, the CAPE ratio sits at roughly 42. The last time it rose that high was in the late 1990s, ahead of the dotcom peak.

Many investors remember the stock market imploding in 2000. But what's equally significant is that, following that crash, investors experienced a "lost decade" during which the S&P 500 produced little to no net growth. And given where the CAPE ratio is today, there's fear of a repeat.

Some of the fear may be unfounded

The idea of seeing little or no growth in your retirement portfolio can be scary. But before you panic, it's important to dig deeper.

Matthew Dicken, founder and CEO of Strategic Wealth Designers, makes the important point that concerns about high market valuations aren't exactly new, yet the market has continued to gain value.

"High valuations increase risk and may lower future returns, but they don't tell us when markets will reprice," he says.

Dicken also points out, "Markets rarely move in a straight line… A decade that ultimately produces average or below-average returns can still include periods of significant gains, corrections, and recoveries."

Frank Davis, President at New Era Financial, points out that while the CAPE ratio has historically been a useful indicator of future long-term returns, today's market is different from the one investors experienced in 2000.

"Many of the companies driving today's market gains are highly profitable businesses with strong balance sheets, substantial cash flow, and competitive positions, unlike the technology companies of the dotcom era, which were overhyped on the speculative immediate need," he explains.

Think back to the year 2000, when Pets.com became the symbol for burning millions on marketing without a clear path to profitability. The company went from a multi-million dollar Super Bowl ad to liquidation in under a year.

"Today's market leaders are generating real earnings and returning capital to shareholders," Davis continues, making them far less speculative than the internet darlings of the late 1990s.

What to do if retirement is 10 years out

A potentially overvalued stock market doesn't necessarily change the game plan for retirement savers who are only a few years or even a decade or so into their investing journeys. If you're roughly 10 years away from retirement, it's a different story.

But that doesn't mean you should resign yourself to a decade of absent returns or, worse yet, dump your stocks in a panic.

"The danger is that investors hear 'lost decade' and make drastic allocation changes that end up causing more harm than the risk they're trying to avoid," Dicken says. "No one has a crystal ball that works, so investors should focus on being properly diversified."

Davis agrees.

"Investors should not ignore today’s current valuation concerns," he says. "Too often, savers who are within 10 years of retirement lack diversification and are taking more sector risk than they should. The greatest risk may not be a major market crash, but rather a prolonged period of mediocre returns after a correction in one sector."

Dicken recommends constructing a portfolio that goes beyond stocks and bonds across various market sectors.

"Proper diversification includes other assets such as alternatives like private equity and private credit, annuities, precious metals, cash, and sometimes real estate," he says.

Dicken also says investors who are about a decade out from retirement may benefit from exposure to areas of the market that are trading at more reasonable valuations, including international stocks.

A holistic approach is best

If you're banking on your stock portfolio to deliver returns that mimic the past decade, it may be time to reset some expectations, Dicken says.

"Retirement plans built on 10% annual returns may need to be stress-tested using more conservative assumptions," he insists.

That said, Dicken thinks the best approach for the next 10 years isn't to predict market performance so much as to control the variables you can.

"That includes increasing savings rates, reducing unnecessary debt, maintaining adequate cash reserves, and ensuring [your] portfolio diversification extends beyond a handful of stocks and bonds," he explains.

Dicken also highlights the importance of preparing for an early market crash, known as the sequence of returns risk.

"A major downturn in the years immediately before or after retirement can have an outsized impact on portfolio longevity," he explains. "That's why investors should gradually build a portfolio designed not just for growth, but also for resilience."

Davis agrees, and thinks it's wise to maintain a reserve of conservative assets that could help reduce the impact of poor market performance.

Don't assume all is lost

All told, Davis says, there's no reason to assume the next 10 years will be a wash for stock market investors. Though history suggests that periods of lower returns are a normal part of the investment cycle, particularly when starting valuations are overly high, that doesn't mean the market is guaranteed to grossly underperform.

That said, Davis insists that successful retirement plans are not built on forecasts.

"Rather than attempting to predict the market's next big win, retirement savers are often better served by building a financial plan capable of weathering both strong and weak market environments," he says.

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Today's couples often build deeply intertwined lives long before, after or without marriage. They share homes, combine expenses, raise children, support aging parents and make long-term financial decisions together.

What often lags behind is the planning structure to support that life. Day-to-day systems can work smoothly for years, obscuring the fact that many legal and financial defaults still hinge on marital status, formal ownership and written authority.

LGBTQ+ couples have long navigated this gap firsthand, offering a clear example of why intentional financial planning matters.

Who has legal and financial authority?

One of the most overlooked planning gaps is authority during incapacity. Without explicit documentation, an unmarried partner may have no legal right to receive medical information, make treatment decisions or manage finances — even if they share a life in every practical sense.

LGBTQ+ financial planning frameworks underscore the importance of healthcare proxies, powers of attorney and account access as foundational elements of a sound plan.

For modern couples, these documents help ensure the most trusted person can act when decisions need to be made quickly, rather than defaulting to state law or next-of-kin rules that may not reflect reality.

Do beneficiaries match intent?

Beneficiary designations often override wills and estate documents, yet they are easy to overlook during major life changes. Career moves, new relationships, children or second marriages can leave outdated beneficiaries quietly in place for years.

LGBTQ+ planning conversations consistently highlight this risk because beneficiary alignment is one of the simplest ways to avoid unintended outcomes.

Regular reviews of retirement accounts, insurance policies and payable-on-death accounts can help ensure assets pass as intended — without confusion, delay or conflict during emotionally charged moments.

How is property actually owned?

Modern couples often co-own homes or contribute differently to shared property. One partner may provide the down payment, while the other covers monthly expenses or renovations.

Without clarity, it can quickly become unclear whether those contributions should be treated as gifts, reimbursements or equity.

A more disciplined planning approach aligns property titling with written agreements, such as cohabitation or marital agreements, so ownership and exit terms are clear.

LGBTQ+ households often adopt this discipline early, recognizing that intent alone does not determine legal outcomes when property must be divided or sold.

Are insurance and liquidity aligned with risk?

Life, disability and liability insurance are often purchased reactively — or not revisited as circumstances change. Yet, for modern couples, particularly those with children, businesses or income asymmetry, insurance plays a critical role in protecting both partners.

Insurance supports continuity, not just loss replacement. Adequate coverage can reduce the risk of forced asset sales, protect surviving partners and create breathing room during periods of loss or transition. Maintaining liquid reserves serves the same purpose.

Does the estate plan reflect the family?

Estate planning gaps are amplified for modern couples because default intestacy laws — which govern asset distribution when someone dies without a will — rarely account for blended families, unmarried partners or chosen-family structures.

These laws typically prioritize legal spouses and biological relatives, not the people most involved in daily life. Delaying planning can result in outcomes that conflict sharply with a couple's values and expectations.

LGBTQ+ planning checklists place particular emphasis on coordinating wills, trusts and guardianship provisions so that children, partners and extended family members are treated intentionally.

For modern couples, estate planning is not just about wealth transfer but also about clarity, dignity and control.

Turning intent into protection

What LGBTQ+ households demonstrate especially clearly is that good intentions are not a substitute for structure. A disciplined planning approach creates a repeatable way to align how couples live with how financial and legal systems recognize them — and turns abstract conversations into concrete decisions.

For modern couples, this process is not about anticipating failure. It is about reducing uncertainty when life changes — through illness, career shifts, separation or death — and ensuring decisions reflect shared values rather than outdated defaults.

Planning for the life you're already living

Modern couples are redefining partnership, commitment and family. LGBTQ+ households, having navigated these realities without built-in protections for years, offer a useful lesson: Planning works best when it is intentional, documented and regularly revisited.

A simple, disciplined framework can close the gap between how couples live and how outcomes are determined — protecting both partners and the life they have built together.

Related Content

• Three Financial Planning Tips for the LGBTQ+ Community From an LGBTQ+ Financial Adviser
• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth Transfer
• An Estate Planning Attorney's Guide to the Importance of POAs
• Is Spring Fever Compelling You to Refresh Your Portfolio? 3 Ways You Could Be Acting Impulsively

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've been saving in a traditional 401(k) or IRA, you've probably heard of required minimum distributions or RMDs. These are withdrawals you're required to take every year after you turn 73. It's a way for the Internal Revenue Service to get paid back for all that tax-free income you've saved over the years.

While there are strategies to avoid and reduce RMDs, for many retirees, it's just a part of life once you hit 73. But that doesn't mean it's one of those things you shouldn't give too much thought to. Your RMDs are treated as ordinary income, which means you must pay taxes on your withdrawals.

It's important to withdraw the correct amount each year. If you take out too little or forget to take RMDs altogether, you could face a penalty of as much as 25%.

If you go overboard and withdraw too much, you could face a shortfall later in your retirement, especially if the withdrawals happened during a downturn in the stock market. That's known as a sequence of return risk, and it's something retirees should try to avoid.

Calculating your RMDs

It's important to know how much your annual RMDs should be. The good news is it's easy to calculate. RMDs are determined by a straightforward formula that takes into account your account balance and life expectancy factor. Your life expectancy factor is obtained from the IRS's Uniform Life Table (PDF), which is the go-to chart that the majority of retirees are required to use, regardless of their actual health status.

The life expectancy factor takes into account actuarial data that re-estimates your remaining lifespan with every birthday you celebrate. The older you get, the lower your life expectancy is and the more you face in RMDs. The IRS doesn't want you to die without paying them back.

The formula is the following:

Account Balance/Life Expectancy Factor = RMD

A $1 million retirement balance is common among retirees in America. As of the end of 2024, Fidelity Investments found that 41% of all 401 (k) millionaires were baby boomers. Generation X — or those ages 45 to 60 — accounted for 57% of all 401(k) millionaires. If you're among them, here's how much you need to withdraw in RMDs across different ages:

Be aware of taxes

For savers, RMDs can prove particularly problematic because of the tax treatment. If you're required to withdraw $40,000 in one year because you have a $1 million IRA, that extra income could trigger a sizable tax bill.

While you can't avoid the taxes altogether, you can employ strategies to lower the burden. For instance, you can convert some of the money into a Roth IRA in low tax years. With a Roth IRA, you aren't required to take RMDs.

You can also begin taking withdrawals before age 73 to lower your total balance and prevent a bump up in your income tax bracket. A financial adviser can help you devise a strategy in which your higher growth assets are in a Roth IRA, and your conservative investments are in a traditional retirement account.

If you're charitably inclined, you can use a qualified charitable distribution to direct up to $111,000 (in 2026) of your IRA RMDs to a charity of your choice.

Planning is the best protection

You can't completely avoid RMDs, but they don't have to catch you off guard.

By projecting what your mandatory distributions will look like on a $1 million nest egg, you can make moves now to lower your overall tax hit. RMDs are a fact of life, but the amount you hand to the IRS doesn't have to be.

Editor's note: This article is part of a series that looks at RMDs by age and retirement balance. The previous story is: Got $5 Million Saved for Retirement? Here Are the Huge RMDs the IRS Makes You Take at Ages 73, 75, 80 and 85.

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While the daily news cycle can make anyone feel anxious about their nest egg, a quiet and highly strategic shift is underway within American retirement accounts. Rather than running to the sidelines or moving to cash when things get bumpy, seasoned savers are building up their balances and locking in long-term security.

The latest data from Fidelity’s Q1 2026 retirement analysis shows that today's preretirees are moving away from emotional, knee-jerk decisions and instead focusing on steady discipline and smart tax planning.

“Retirement savers started the year strong with record-high savings rates and contributions, reflecting the long-term approach they’re taking with retirement preparedness," said Sharon Brovelli, president of Workplace Investing at Fidelity Investments.

According to Fidelity's analysis, which tracks more than 54 million accounts across IRAs, 401(k)s and 403(b)s, American workers have entered an era of financial discipline. Rather than surrendering to market fluctuations, retirement account holders are locking in long-term positions and building structural financial defenses.

The sentiment vs behavior divergence

A gap has emerged between negative economic sentiment and the actual financial behavior of experienced savers. While broader economic indicators have generated widespread uncertainty, total savings rates surged to historic highs in the first quarter.

The combined employee and employer contribution rate for employer 401(k) accounts reached an unprecedented 14.4%, moving closer to Fidelity's recommended 15% target. At the same time, 403(b) workplace savings rates reached 12%.

Individual investors also expanded their independent safety nets; total IRA contributions surged 29% year-over-year, supported by a 28% increase in the number of individual accounts actively contributing. Roth accounts were the most popular, accounting for 67% of IRA contributions.

Managing what you can control to beat market drops

This steady cash inflow from contributions has created a short-term disconnect between what savers can control and immediate market returns. During the first quarter, brief market volatility caused average account balances to decline slightly on a quarter-over-quarter basis.

Specifically, the average IRA balance fell 4% from Q4 2025 to $131,380 in Q1. Workplace 401(k) accounts averaged a slightly higher $141,000, which was also down 4% from the previous quarter. Considering the longer-term trend, however, 10-year balances are up 46% for IRAs and 61% for 401(k)s, according to Fidelity.

In previous decades, shrinking balances often sparked emotional panic, prompting investors to freeze their contributions. However, in this period, investors took the opposite approach. Nearly one in five plan participants (18%) successfully increased their savings rates during this period, while asset-allocation adjustments remained near historic lows at 5.7%, down from 6.0% a year prior.

Keeping asset allocation steady regardless of market fluctuations is a strategy that has been rewarded in the long term; despite minor quarterly fluctuations, average 401(k) and 403(b) balances increased 7% and 11%, respectively, above their 2025 levels.

The shift to tax-free growth

Perhaps the most strategic behavior highlighted in the data is the massive acceleration into post-tax accounts. Roth accounts dominated the market, representing a staggering 67% of all Q1 IRA contributions. More remarkably, Roth conversion transactions escalated by 41% year-over-year.

A Roth conversion requires an investor to pay ordinary income tax on assets immediately, out of pocket, at current tax rates. Choosing to take a definitive, immediate cash-flow hit during an uncertain economic landscape suggests investors are heavily prioritizing future tax flexibility and predictability over immediate liquidity.

Automated inertia

As the data show, the primary reason contribution rates went up isn't that millions of Americans suddenly found the collective willpower to log into their accounts and manually increase their savings during a turbulent quarter. They did it because of auto-escalation features built into their workplace retirement plans.

When a system automatically bumps a worker's contribution rate by 1% every year, inertia becomes a superpower. Because it takes manual effort to log in and stop the increase, most people just let it ride.

For the portion of the data that was manual — specifically the 29% surge in IRA contributions and the 41% spike in Roth conversions — we're seeing the reality of a much more financially literate investing public.

Long-time savers have finally internalized a lesson that financial planners have been preaching for decades: Market downturns are a buying opportunity. In this case, these savers "bought" a tax-free stream of income and fewer RMDs.

Long-term vision over short-term noise

For decades, economists worried that emotional panic would always be the Achilles' heel of the individual investor. However, Fidelity’s Q1 2026 analysis reveals a different story. The latest retirement trends show that the modern pre-retiree is becoming a more resilient saver.

By maintaining a steady approach that has brought average savings rates close to the recommended 15% benchmark, investors have largely avoided the psychological traps of market volatility — at least in the first quarter.

This stability has allowed them to focus on what matters most for the next chapter: capitalizing on temporary market dips to execute strategic Roth conversions.

By accepting an upfront tax hit today, these savers are mitigating the risk of future tax hikes and building more predictable financial security for themselves and their heirs.

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Imagine spending 40 years meticulously building a legacy, only to have it dismantled in 40 days because of a single, outdated signature.

For many high-net-worth individuals (HNWIs), their estate plans are often their "set-it-and-forget-it" documents, and only a few realize that this is a remarkably costly oversight.

It's true that the initial signing of a will or trust feels like the end game, but a legacy plan actually functions like a high-performance engine that requires consistent tuning so it remains operational.

Ultimately, the plan's legal power is only as effective as your most recent and updated signature.

When we look at American wealth management, the gap between life changes and legal updates is jarring. A 2024 survey sponsored by Bank of America found that only 27% of legal and financial clients update their plans every one to four years.

What's even more concerning is that 39% of the demographic do so only every five to nine years.

This delay creates a dangerous administrative lag between your current status and your legal instructions.

As we get older, family dynamics shift rapidly, but the documents governing life transitions often remain frozen. If your plans aren't current after a major milestone, you are proactively leaving behind a ton of legal disputes and increased tax burdens to your loved ones.

That could even lead to the very real possibility that your hard-earned wealth could end up in the hands of the wrong people.

Protecting your youngest heirs from 'accidental' probate

The birth of a child or grandchild is a moment of profound joy, but it also fundamentally changes the math of your estate. A common mistake many make is assuming that "natural heirs" are automatically covered under general language.

However, unless your plan is specifically updated to reflect a new beneficiary, that child may not have the legal protections they deserve.

This is especially critical for naming guardians. If your plan is not current, the decision about who raises your child may be left to a judge, and that is every parent's nightmare.

An updated estate plan should also lay out how and when a child receives an inheritance. For younger beneficiaries, that may mean naming a trustee to manage assets until they reach the legal age of majority. Normally, that age is 18, though it can vary by state.

For adult children, a structured distribution plan can offer added protection from lawsuits or other financial risks.

The necessity of a post-divorce estate audit

Divorce can change an entire estate plan in a lot of surprising ways, and they aren't always immediately obvious.

Technically, the court decree divides marital property. The problem is, it does not always automatically update every individual account or legal instrument.

That means any non-probate assets, including insurance policies and certain bank accounts, often pass outside the probate process and go directly to the beneficiary named on the account or policy.

In that case, you would need a comprehensive review as soon as possible. If beneficiary forms remain unchanged, an ex-spouse could maintain a valid legal claim to some of your most significant assets, regardless of what your current will states.

In many jurisdictions, a single forgotten designation can legally override your intended distribution.

The risks extend to your primary decision-making documents as well. For instance, an outdated power of attorney or healthcare directive can still give an ex-spouse the legal authority over your finances or medical care when you become incapacitated.

Outdated guardianship provisions can create the same kind of risk.

In a nutshell, if every designation still reflects your life before the divorce, they can trigger legal conflict and cause emotional and mental distress to your children at the very moment they need stability the most.

Why remarriage needs a plan overhaul

Remarriage certainly introduces a distinct set of complexities that can trigger "accidental disinheritance."

Without immediate and precise revisions, a new spouse might be left with no legal claim to your estate, and that often results in sudden financial hardship.

Conversely, when your entire estate is left to a current spouse, it can inadvertently disinherit children from a prior marriage.

Let's say that the spouse passes away later without their own updated plan, or is not on good terms with your kids — those assets may never reach your children as you originally planned.

In these blended family scenarios, assets are frequently distributed unevenly or unfairly, and that happens in real life.

So, an immediate review allows you to establish trust structures, such as a QTIP trust, that provide for a surviving spouse during their lifetime while ensuring the remaining principal eventually goes to your biological children.

Also, this secures that the new branch of your family tree is nurtured without starving the original roots.

The urgency of alignment

The moment a child is born, a marriage dissolves or a family blends, your existing estate plan becomes a historical document instead of a functional legal shield. Failing to act immediately creates a dangerous window where your legacy is governed by outdated (or malicious) intentions.

Life is unpredictable, so if a crisis occurs before your designations are updated, the law will not take your current intentions into account. It will follow the signature on file, even if that signature belongs to a life you no longer recognize.

The urgency here is not merely administrative. You want to ensure an ex-spouse does not inherit a retirement account by default, or a newborn is not left without a court-vetted guardian, or a new partner is not sidelined by rigid probate laws.

These life transitions move with incredible speed, and your legal framework must move faster to ensure your wealth serves your current family and circumstances.

Utilizing modern tools ensures that these vital updates are both signed and immediately accessible.

In estate planning, the only thing more costly than a mistake is a delay.

I would urge you not to wait for the "perfect time" to reconcile your documents with your life. By then, it may already be too late.

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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.

"Fiduciary" may be one of the most overused words in the world of financial advisor marketing.

Consumers hear it everywhere: Advisor websites, television ads, matching services, professional designations and trade association campaigns. The message sounds reassuring: "Trust me. I am a fiduciary."

But consumers should slow down. The word "fiduciary" does not always mean what you think it means.

A legal fiduciary relationship for investment advisers is governed by federal or state law. The SEC says an investment adviser's fiduciary duty under the Investment Advisers Act of 1940 includes both a duty of care and a duty of loyalty.

But many advisors and marketing platforms use the word more loosely, blending legal obligations, professional ethics and marketing language into one trust-building slogan.

That creates confusion.

Three different kinds of 'fiduciary'

Consumers should understand that the word can be used in at least three different ways.

A moral fiduciary is someone who tries to do the right thing because of personal character.

An ethical fiduciary is someone who agrees to follow a professional code, oath or set of standards.

For example, the National Association of Personal Financial Advisors (NAPFA) has a Code of Ethics that requires its fee-only financial advisor members to act with honesty, objectivity, competence, confidentiality and fiduciary responsibility by always placing the client's interests first.

Certified Financial Planners also must act as ethical fiduciaries when providing financial advice under the CFP Board's standards.

A legal fiduciary is someone subject to fiduciary obligations under federal or state law, typically because they are acting as an investment adviser or investment adviser representative.

Those three fiduciary obligations are not the same thing.

Credentials do not automatically create a legal fiduciary relationship

A financial advisor may have completed fiduciary training, signed an oath or earned a professional designation. That may be valuable. But it does not necessarily mean the advisor is acting as a legal fiduciary at all times, for all advice, for all clients.

For example, the Accredited Investment Fiduciary® designation reflects fiduciary-related training, an exam and an ethics requirement.

That education provided by the Center for Fiduciary Studies may be useful, but consumers should not assume a professional designation alone creates a legal fiduciary relationship.

The same caution applies to other professional credentials. Passing an exam, joining a professional association or signing an ethics statement may indicate training or commitment. It does not automatically answer the consumer's most important question: What legal fiduciary standard applies to this advisor's advice to me?

The better question: How are you paid?

Consumers should not stop at, "Are you a fiduciary?"

Ask instead: "Are you legally required to act as a fiduciary at all times, for all advice, for all clients?"

Then ask: "How are you compensated?"

That second question may be even more revealing. Fee-only financial planners are paid directly by clients and do not receive sales commissions or compensation tied to the sale of financial products.

NAPFA defines fee-only advice as compensation paid solely by the client, with no commissions, referral fees or other compensation contingent on product sales.

That is a much clearer consumer test than vague fiduciary marketing.

Don't be sold by a marketing buzzword

The financial services industry has discovered that fiduciary is a powerful marketing word. But a consumer should treat that word the way they would treat a car salesperson saying, "Trust me, I'm giving you a great deal."

Maybe true. Maybe not. Verify it.

Before hiring an advisor, ask for written answers to these questions:

• Are you fee-only as defined by NAPFA?
• Do you sell financial products?
• Do you receive sales commissions, referral fees or revenue sharing?
• Are you legally required to act as a legal fiduciary to me at all times?
• Will you put that legal fiduciary commitment in writing?
• Do you provide comprehensive financial planning, or only investment management?

The word fiduciary still matters. But it is not enough.

Consumers need more than a marketing slogan. They need clear answers, transparent compensation and objective financial advice.

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

Shopping for furniture or a new car is fun, or at least it can be. Shopping for long-term care insurance is, well, less fun.

But it's an exercise you may need to go through eventually, given that Medicare won't cover the cost of long-term care. And if you don't buy insurance, you could face very high costs, depending on the type and amount of care you need.

Data from CareScout puts the yearly median cost of a non-medical in-home caregiver at $80,080 in 2025. For assisted living, you may be looking at $74,400 a year.

Gasping already? Wait, it gets worse.

If you end up needing a nursing home, you could be looking at $114,975 a year for a shared room and $129,575 per year for a private room. And these are just typical costs.

Reading between the lines, if you want a few extra amenities at a nursing home or assisted living facility, you could pay even more. You might also pay more by virtue of your ZIP code.

That's why it's a good idea to put long-term care insurance in place. But it's also important to buy it at the right age and approach that decision strategically at different ages.

Buying long-term care insurance at 50

Age 50 marks a major retirement-planning milestone: you can start making catch-up contributions to an IRA or 401(k). Reaching that age might also prompt you to consider long-term care insurance. But you may have one big question on your mind: Am I starting too soon?

Michael Murray, AIF, CPFA, and President at Peabody Wealth Advisors, says no.

"The window between 50 and 60 is really the sweet spot for long-term care planning," Murray insists. "You're still insurable, premiums are manageable, and you're making a proactive decision rather than a reactive one."

Phillip Battin, President and CEO of Ambassador Wealth Management, agrees.

"Consumers in their early 50s are generally in the best position to secure coverage because premiums are lower and underwriting is more favorable," he says. "At that stage, buyers should focus on affordability over the long term and whether inflation protection is sufficient to keep pace with rising care costs decades into the future."

Inflation is an extremely important factor to be mindful of when buying long-term care insurance at or around 50, since healthcare costs can rise faster than average costs. CareScout found that the median cost of assisted living rose 5% between 2024 and 2025 alone.

When reviewing your policy options, check for an inflation rider or cost-of-living adjustment. Just know that the more generous the inflation adjustment, the higher your premiums might be.

Of course, the tricky thing is that at 50, you may be in good enough health that it's hard to imagine ever being in a position where you'd need long-term care. But Murray says that attitude could lead you to delay an extremely important financial decision.

"Many Gen X families are already experiencing long-term care firsthand, helping aging parents while still supporting their children," he says. "Most people don’t think about long-term care until they’re in the middle of it with a parent or loved one. By then, the options are usually more limited and more expensive."

Buying long-term care insurance at 55

Many Gen Xers in their mid-50s are already facing an uphill battle with retirement planning. A good 54% think they won't be financially prepared to stop working when the time comes, according to Northwestern Mutual.

Given that only 16% of Gen Xers feel they've saved enough for retirement, according to Schroders, this cohort generally isn't in a strong position to self-insure for long-term care. So if you've reached your mid-50s without a particularly robust nest egg, it's important to look at long-term care insurance options sooner rather than later, Murray says.

"Gen X is arguably the most exposed generation when it comes to long-term care," Murray explains. "They have fewer pensions, less margin for error, and more competing financial priorities."

Even scarier is that Murray is seeing more and more cases where just a few years of care can erase decades of savings.

On a positive note, age 55 is by no means "late" in the context of buying long-term care coverage. In fact, Battin calls it the “sweet spot."

"Prospective buyers should ask themselves an important question," Battin says. "If they delay another five or 10 years, will coverage still be affordable, or obtainable at all? Health changes can quickly impact eligibility, and delaying the decision can significantly increase premiums."

Findings from the American Association for Long-Term Care Insurance (AALTCI) underscore the importance of signing up early.

The group found that in 2024, the average annual premium for a $165,000 policy with no inflation adjustment was $950 for a single male when purchased at age 55. That same policy purchased at age 60 carried a $1,200 premium instead. At 65, it spiked to $1,700.

Buying long-term care insurance at 60

At age 60, long-term care premiums can start to soar. But it's certainly not too late to buy a comprehensive policy, Battin insists.

At that point, though, Battin says the conversation shifts from optimization to risk management.

"Underwriting standards typically become more stringent, premiums increase significantly, and buyers may be forced to balance desired coverage levels with overall affordability," he cautions.

Battin also says that some buyers at 60 may want to consider hybrid life and long-term care policies.

"These products appeal to many consumers because they address the use it or lose it concern associated with traditional standalone long-term care insurance," he explains. "If care is needed, the policyholder can access benefits to help cover expenses. If not, beneficiaries still receive a death benefit."

As with buying a traditional long-term care policy, if you're considering hybrid coverage, Battin suggests favoring insurance that offers an inflation rider.

Even at 60, "Without that protection, policyholders risk purchasing coverage today that may be inadequate when they actually need care," he insists.

Buying long-term care insurance at 65

If you're first starting to shop for long-term care insurance at 65, you may be a little late to the party.

As Battin explains, "By age 65, long-term care insurance becomes a far more selective and expensive purchase. Approval is no longer guaranteed, and many applicants face significantly higher premiums or outright declines due to health conditions."

Battin also warns that if you're buying long-term care coverage for the first time at 65, you may end up "forced into partial self-funding strategies or reduced coverage levels."

That may explain why only 15% of U.S. adults ages 65 and over have long-term care insurance, according to the Center for Retirement Research at Boston College. That's a problem, because an estimated 70% of adults who reach age 65 end up needing some type of long-term care.

The AALTCI also reports a denial rate of about 38% among people who apply for long-term care insurance between ages 65 and 69.

"Unfortunately, this is also the age when the financial consequences of inaction become most apparent," Battin says. But that doesn't mean it isn't worth applying at 65. You may just need to gear up to pay more.

The bottom line: apply sooner if you want that coverage

Although buying long-term care insurance in your 50s means paying those premiums for more years, waiting is clearly risky. If you've saved millions and can fall back on self-insuring, you might consider waiting. Otherwise, you may want to make long-term care insurance shopping a priority during the first half of your 50s, along with boosting retirement plan contributions and paying off debt.

"Long-term care planning is one of the most overlooked components of retirement preparation, and, if ignored, can also be one of the most financially disruptive," Battin says. "The cost of waiting is often far greater than the cost of planning."

Read More

• How to Pay for Long-Term Care
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• Healthcare Costs in Retirement: Budgeting for a Healthy Future

In TV and movies, retirement magically falls into place. After years of loyal work for one company, an employee signs off for a carefree retirement of traveling, golfing and spending time with grandchildren. The end.

It's debatable whether this was ever an accurate depiction, but one thing is certain: Retirement has clearly shifted over the past few decades. People are working longer and hold several jobs over the course of a lifetime.

According to the Bureau of Labor Statistics, late Baby Boomers (those born between 1957 and 1964) will hold an average of 12.9 jobs from age 18 to 58. Younger Americans are expected to have even greater job mobility.

These changes can pose hidden costs in the form of increased tax liabilities.

However, the good news is, even though work and retirement may have grown more complex, Americans have a lot of options at their disposal.

Here are five strategies that will help you keep more of what you've earned over your lifetime.

1. Start planning early

It's never too early to start planning for retirement. But ideally, you should start having extensive discussions with your adviser roughly 10 years before you expect to stop working.

The more time you give yourself, the more carefully you can consider cash flows and ways to optimize your tax liabilities throughout retirement.

2. You can't 'set and forget' a 401(k)

For most people, the biggest ticking time bomb in their retirement is their pretax 401(k)s. Many people assume they'll be in a lower tax bracket when they retire. But because a growing number of retirees are taking part-time work, consulting, starting businesses or growing their other investments, they often find themselves in their highest-earning years right when they hit the required minimum distribution (RMD) age, which is 73 (rising to 75 for those born in 1960 and later).

Though you can avoid taking RMDs if you're still employed by the company where you have your 401(k), this only postpones the inevitable. Also, since people tend to move jobs throughout their lives, there's a good chance that you may also have IRA rollovers that will require RMDs.

3. Consider a Roth conversion

Financial advisers often urge young people to invest in a Roth IRA, as this strategy leverages their longer time horizon to achieve tax-free growth. But the Roth IRA strategy is also effective for older people who may have graduated into higher income through their RMD years.

Your financial adviser can use a tool to measure all income sources — RMD and non-retirement withdrawals, Social Security income, qualified distributions and Roth conversions — over a projected 25-year retirement to determine how to deliver the greatest tax efficiency. This can help save retirees tens of thousands in lifetime taxes.

4. Avoid inheritance complications

The ticking time bomb element of a pretax 401(k) not only affects retirees, but can also pose problems for their heirs. Once portfolios are passed on, children must take minimum distributions and then deplete the full account by the end of year 10.

This can create further complications for heirs who are often at their peak earning years, forcing them to withdraw at a higher tax bracket. When you convert into a Roth IRA, heirs also inherit tax-free.

5. Maximize different phases of retirement

Retirees should consider converting to a Roth IRA in the early years of their retirement, before RMDs are in effect, as this can allow you to leverage a lower tax bracket.

For example, some people decide to take early retirement (at 60 to 62) before they are eligible for Social Security. They may have some savings on the side coupled with a part-time job that they use primarily for health insurance.

You can leverage this early period to complete the Roth conversion while your income is still low.

Your Hollywood ending

If you're invested in a 401(k) plan, congratulations. Only 59% of U.S. adults are invested in some form of retirement account. But investing into a 401(k) without planning for retirement could mean you're setting yourself and any heirs up for a potentially hefty tax bill.

By starting the planning process well before your 65^th birthday and then taking advantage of the different phases of retirement, you can keep more of what you've earned, enjoy a long and fulfilling old age, and even leave a legacy to your loved ones. That's the real happily ever after.

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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 financial professionals who contribute to Kiplinger's Adviser Intel are always here to make sure you have the information you need to make critical decisions about your retirement planning, estate planning and tax planning.

They've recently written about the growing number of Americans working past retirement age — and why the consequences can be more complicated than you might think in terms of Social Security, healthcare and tax.

This quiz is designed to test what you've learned. Let's see what you know! (And don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Please note that this quiz has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or financial advice.

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Mixing business with friendship is always risky, but it can get messy when it involves your life savings.

Consider a common dilemma: You hire a financial adviser who moves in your social circle. She’s responsive, kind, and a great friend of a friend — but in the last five years, your portfolio has consistently lagged behind the market. You want to walk away, but you dread the awkwardness at the next gathering.

If you find yourself wanting some financial planning help, you aren't alone. As of mid-2024, about 27% of Americans were working with a financial planner or adviser, according to a YouGov survey. As more older Americans start to pass down wealth, that percentage could climb.

One reason some people might hesitate to use a financial professional is fear of being scammed or upsold. If you've managed to find an adviser who's a friend of a friend and shares a social circle, that might seem like a win. Someone you know on a personal level might be less likely to take advantage of you and purposely steer you in the wrong direction.

What happens when your portfolio continuously trails the market? You might want to switch advisers, but that can be tricky when there's a risk of social backlash.

Here is how to handle the situation while keeping your financial best interests a priority.

Mixing finances and your social life isn't the best idea

While it's easy to see why working with someone you know socially might seem like a safe pick for managing your money, Bryan Kuderna, CFP and founder of Kuderna Financial Team, says it could be a recipe for disaster.

"Mixing feelings of social obligation with financial matters is not advisable," he insists. "If the client and adviser are purely able to look at the portfolio and business relationship as strictly business, separate from their social lives, then it's fine. But if there's hesitation or potential feelings of awkwardness, then it's not ideal."

As Kuderna explains, when there's a social component or obligation, "both sides may not be fully acting in the client's best interests, which voids the fiduciary standard every professional should seek." Keep in mind that not all advisers operate as fiduciaries; some might adhere to lower standards of "suitability," so make sure you understand your adviser's approach.

John Gillet, CEO and founder of Gillet Agency, also agrees that things could get tricky if your financial adviser is someone you have a social connection with, even though there could be some positives.

"When someone is in your inner circle, you're more likely to treat them with kid gloves," he says.

"You know that relationships and social market capital are paramount to your business. Therefore, that adviser is much more likely to answer your calls or respond to emails, providing you with a more personalized experience."

Nonetheless, Gillet says, you deserve to feel confident in your broad financial plan. If that's not something you're experiencing, you should discuss your concerns with your adviser immediately.

You don't necessarily have to cut ties

If you generally like working with your adviser and the issue you're having concerns recent portfolio performance, the relationship might still be salvageable, provided you prefer to continue despite the potential social complications. But in that case, Gillet says, it's important to be clear that you're not happy with the state of your portfolio.

"Give [your adviser] a chance to recalibrate the relationship with you, your money, and your plan," he says. "You've obviously established a connection with this adviser, which deserves respect, and at the very least a conversation expressing your grievances."

Kuderna says that no matter who you work with, your adviser should be able to communicate what you can expect in terms of both service and performance.

"If there's been chronic underperformance," he says, "then it's worth a discussion," noting that five years is a reasonable timeframe to make that assertion.

Kuderna also says that there might be ways for you and your adviser to work together without them charging you a fee that's calculated as a percentage of assets under management, which is a common structure for financial professionals.

"The adviser or client could suggest a consultation fee to take back control of managing their own assets but retaining financial advice," he says.

That said, Kuderna cautions, "This can muddy the waters, as the adviser is not fully in control of the financial plan." As he puts it, "It's like driving the car with one eye closed."

Remember that performance is relative

Another thing to keep in mind is that when it comes to an investment portfolio, underperformance can be subjective, Kuderna says.

"That is why it's so important that the adviser clearly communicate what the client should expect," he says.

When Kuderna works with clients, he asks them to assess their risk tolerance so he can use that information to help put together a plan that works for them individually. For clients with a very limited appetite for risk, their portfolio growth may be slow and steady.

"[Risk-averse investors] should then understand that the goal is not to get the same upside of the market, but acceptable returns that are less volatile," says Kuderna. "Their time horizon also plays a large factor in how conservative or aggressive they may be."

Knowing when to move on

Portfolio performance aside, it's important to feel like you can express yourself honestly to your adviser at all times. As Gillet says, "You chose this adviser as an accountability partner. That relationship requires communication."

If you communicate your dissatisfaction and your adviser can't adequately address your concerns, you should consider moving on, whether that means managing your portfolio on your own or finding another firm.

In that case, Gillet says, all you should need to do is explain to your adviser that you found better alignment with your financial goals elsewhere.

"If they are a part of your circle, I'm sure you'd both handle that transition with respect and courtesy," he says.

Kuderna agrees that being able to communicate openly is key.

"If they can't have a real discussion regarding fees, performance and expectations moving forward, then they know right there they have no business being in a business relationship," he says.

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In my years as a writer and editor for Kiplinger Personal Finance, I frequently advised readers to prepare for substantial out-of-pocket healthcare costs after they retire. Fidelity Investments estimates that a 65-year-old who retired in 2025 will spend an average $172,500 in healthcare and medical expenses in retirement. In a recent column, I discussed my out-of-pocket dental costs, which elicited a lot of interesting feedback from readers who have successfully lowered their dental expenses.

But while I was prepared to pay for expenses that aren't covered by Medicare, I was taken aback by the cost of Medicare itself — specifically, Medicare Part B, which covers doctor's visits and other outpatient services. While Part A, which covers hospitalization, is free to most beneficiaries, retirees pay a monthly premium for Part B. I also pay for Part D, which covers prescription drugs.

In 2026, most beneficiaries pay $202.90 a month for Part B. But a small subset of retirees pay a high-income surcharge, also known as the income-related monthly adjustment amount (IRMAA). IRMAA premiums range from $284.10 to $698.90 this year, depending on your modified adjusted gross income, which is your AGI plus adjustments, including tax-exempt interest on your investments. For 2026 premiums, the IRMAA kicks in at a MAGI of more than $109,000 for single filers or $218,000 for those married filing jointly.

Even though I retired from full-time work early last year, I'm subject to the surcharge because Medicare uses your household income from two years prior to calculate the IRMAA. So the surcharge I'm paying in 2026 is based on what my husband and I earned in 2024, when we were both working full-time. I also pay a high-income surcharge for Part D. While I have self-employment income now, I'm not earning as much as I was two years ago.

Requesting an adjustment

The good news is that you can ask Social Security, which determines Medicare premiums, to reduce or waive the surcharge based on specific life-changing events. Those events include marriage, divorce, death of a spouse and, crucially, retirement. Since I'm no longer working full-time and my husband retired this spring, I plan to request an adjustment in my premiums on Form SSA-44. The form allows you to ask for a redetermination based on an anticipated reduction in income or one that has already occurred. I plan to do the former.

That's going to require some legwork, because I will have to estimate the amount of income we'll receive in 2026 from self-employment, required minimum distributions, investments and other sources. I'll also have to gather some documents, and veterans of this process say more is better. I'll provide letters confirming that we'll both be retired for most of 2026, as well as anything else I can find to confirm an expected decline in our income.

Because I'm basing my appeal on an anticipated drop in income, rather than one that I can prove has already happened, I'm prepared for it to be rejected. But appealing the IRMAA won't cost anything but my time, so I don't see any downside to filing the request.

There's no limit on the number of times you can request a reconsideration, so I can submit a second request after I file our 2026 tax return, which will show how much our income has actually declined. I'm also prepared to make an appointment at a Social Security office — I've been told that an in-person visit is sometimes necessary to achieve an IRMAA reconsideration. If my request is approved, Social Security will credit the premiums I overpaid and apply them to future premiums.

I'll keep you posted on my results. If you've successfully appealed a high-income Medicare surcharge, I'd love to hear from you.

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

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For most of my life, I've worked as an innovator in the financial services space, with a particular focus on life insurance and annuity products.

For 40 years, that was my job and specialty. One of my "first of a kind" product inventions — the Accumulator — offered downside protection on the income that a variable annuity could provide and eventually created a $1 trillion industry.

In my current role as an investment adviser focused on retirement planning, my innovations address the current needs of retirees regarding greater longevity, concern about Social Security, high inflation, taxes and increasing medical and long-term care costs. As this survey of retirees by Schroders details, those are the top concerns of many people in retirement.

The concerns about costs of long-term care are about to increase even further, with a new federal Medicaid rule that, beginning in 2028, will cap allowable home equity at $1 million. This will most directly affect middle-class homeowners in high-cost markets.

Under current rules, states set the amount of equity that a homeowner could maintain and still qualify for Medicaid LTC coverage. It ranged from about $750,000 to $1.13 million — and it was adjusted every year for inflation. In 2028, the allowable equity will be $1 million for everyone (except farm families), and it will not be indexed for inflation.

Of course, there are other related costs that Medicaid will not cover, like assisted living or services like a home aide, unless the retiree satisfies a means test.

Change in retirement planning is necessary

As it happens, I've been working on a new design for retirement planning that addresses long-term care costs. It does require, among other things, a breakdown of the silos between investments, annuities and housing wealth.

This design change doesn't focus on wealthy or lower-income retirees, but rather, the broad group of so-called mass affluent. The most popular planning approach for this group of retirees is to invest in different investment portfolios and withdraw 4% to 5% per year, increasing by inflation.

Intuitively, most retirees know that they can do a lot better not only in the level of income, but also in the reduction of risk and taxes, and in greater liquid savings.

On the other hand, most don't fully appreciate the potential costs of long-term care. Not surprisingly, those who live longer are more likely to need long-term support and services like nursing home care.

One interesting statistic is that 50% of retirees age 85 and over will need long-term-care services, which are in the $80,000-to-$150,000-per-year range, with a historical increase rate of 3% to 5% per year.

Our analysis suggests these costs may represent nearly 25% of the average $2 million in net worth split between a rollover IRA and value of a home. Without planning for those costs in advance, the sale of the home, with the related closing costs and taxes, may be required.

Here are the retirement planning design changes we developed.

Consider all major asset classes, including housing wealth and lifetime annuities

In figuring out a solution to these retirement challenges, whether or not Medicaid is an option, it made sense to look at all of a client's net worth. That struck a chord when housing wealth was reported as 50% of our sample retired client's wealth.

Importantly, the innovations needed to be doable with no regulatory change or product refinement — and simply in the retirement planning space. It had to be accomplished through our planning algorithm and executed by an adviser through partnering with different product providers.

The first step was how to include housing wealth in the planning. The second was the integration of the most logical but underutilized retirement product — lifetime annuities.

The key for me was to consider them together rather than separately. Why together?

That togetherness answers the following key objections that often are raised about each product individually (also, see my article Transform Your Retirement Plan With This Powerful Combo):

Housing wealth. If using a reverse mortgage such as a home equity conversion mortgage (HECM) to unlock this wealth, the objections are the costs — and the risks if you borrow too much. (See my article How Your Home Can Fill Gaps in Your Retirement Plan.)

Lifetime annuities. A qualifying longevity annuity contract (QLAC) can help define a better retirement by deferring taxable IRA distributions and delivering guaranteed lifetime income at an age you select. (See A QLAC Does So Much More Than Simply Defer Taxes.)

Despite a lifetime payout for a 67-year-old man of, say, $50,000 per year on a $100,000 premium, retirees often object to the lack of liquidity.

In our development phase, we said, "HECM, meet QLAC." Individually, both HECM and QLAC can be helpful in their own ways.

Together, we call it HomeEquity2Income, and the combination can help you stay in your home as you build liquidity for possible long-term care costs, as well as boost income.

It also means you don't have to spend down the savings in your rollover IRA to qualify for Medicaid.

Here's how we put them together:

1. Set up a line of credit through HECM and purchase QLAC from rollover IRA savings:

2. Analyze standard configurations under HECM and QLAC and why they may not work for your retirement plan. The charts below demonstrate results from both a HECM and a QLAC on a stand-alone basis, as often presented to retirees.

In our view, while both are reasonable designs, they are not used most effectively for retirement purposes.

3. Use a new algorithm for a combination of a HECM and a QLAC (HomeEquity2Income, or H2I) to meet twin retiree objectives of increasing income and increasing liquid savings. At the same time, establish a building block for your retirement plan.

Testing H2I for legacy and historical rates

While income and liquid savings are two important elements of H2I, retirees may also consider the effect of H2I on the legacy they're providing to their spouse and other family members.

Also, the broad message for planning is not to try to predict the exact amount of savings or legacy for each homeowner, but to demonstrate the possible impact of the market performance on your own plan.

The illustrations above were based on industry standard fixed rates but, as covered in my article Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record, we believe it important to be able to Illustrate benefits based on historical performance.

By using historical rates, we are looking at the interplay of various product elements with real-world performance.

Looking at the expanded example of this combination, here's what we learned about each component:

• HECM's liquid savings grow dramatically when you stop drawing down from a line of credit and use a part of QLAC income to pay down the loan balance
• QLAC may be purchased in a laddered format to create increasing income before age 85. In limited situations, QLAC income may be accelerated before its original income start age
• And in combination, HECM and QLAC offer significant tax advantages, particularly in early retirement years

Use H2I as building block in a retirement plan with other savings

With H2I in place, the question becomes how we might further combine it with other retirement savings. Let's look at adding to H2I our sample retiree's rollover IRA savings ($800,000 after QLAC premium), personal savings ($1 million) and Social Security payments ($36,000 starting at 67).

While portfolio allocation is often a very personal decision, here's what our starting plan reflects:

• Allocation of $800,000 in IRA between stocks (growth) and bonds in a balanced portfolio
• Allocation of $1 million in personal savings among stocks (high dividends), bonds, and SPIA (single-premium immediate annuity)

What is the starting income this plan will support? Using H2I as a building block and the Go2Income planning algorithm, the starting income is $133,000. The plan assumes that income will grow at 2% per year.

With the $36,000 of Social Security benefits, the total starting income is $169,000. The retiree can, of course, refine the plan to increase income and lower the substantial amounts of legacy and liquid savings.

Long-term care scenario testing

The next step in the process was to test various H2I scenarios as they related to covering long-term care. That's particularly timely with greater longevity and increased responsibility of retirees, leading to coverage of more long-term care costs.

• The economic return for H2I in the 3.5% to 4.5% range is attractive, recognizing the major asset is the housing wealth, assuming a growth rate of around 4%. In one sense, the higher crediting rate on a QLAC is offsetting the higher HECM interest rate.
• In the scenarios above, we are able to generate additional income and cover $100,000 in LTC costs over five years from age 85 to 89. We would need to do some stress-testing for larger or different patterns of LTC expense. Of course, we should consider the resources from other retirement savings.
• The income tax effects are quite positive with all HECM drawdowns tax-free, QLAC income deferred until received and LTC costs being tax deductible. (See my article The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half.)

H2I for this sample investor can cover a reasonable amount of LTC costs while delivering higher income. The final planning steps include further testing to confirm results. Including a measure of income taxes, market risk and IRR (internal rate of return) before and after tax, we look at three qualities of the plan in our evaluation:

• Inflation protection
• After-tax income
• Stock market risk

For retirees, it means they no longer need to keep an eye on new caps for home equity or spend down all their other assets to qualify for Medicaid's LTC benefits.

Even for those who never considered Medicaid as an option, H2I provides an easier way to create wealth from retirement savings while aging in place.

Unlike product innovation in the past, these design changes don't require regulatory change, product pricing or design changes, or special servicing. Just stack these building blocks and assemble them as the plan instructs. Visit Go2Income, where you can start building your own plan.

Related Content

• The 75% Safety Net: How All-Asset Retirement Planning Helps Reduce Your Investment Risks
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• Does Your Retirement Plan Ignore Half of Your Net Worth?
• The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half

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 years, the narrative around life insurance went something like this: Buy protection while you're young to replace your income so your family doesn't struggle if something happens to you.

And that message has clearly resonated. A good 51% of American adults say they have some life insurance coverage, according to LIMRA.

When it comes to buying life insurance, you have a choice. You could opt for a term life policy that offers limited coverage and no cash value accumulation. Or, you could buy whole life insurance, a type of permanent insurance that covers you for life and includes a cash value component. (Other forms of permanent insurance include universal and variable.)

While term life insurance holds appeal as the less expensive option, there's an inherent risk in buying it. In a nutshell, if you don't pass away by the end of your policy's term, you'll get nothing out of all of those premiums you paid (though you'll still be alive, so there's that).

With whole life insurance, you're guaranteed a payout. You can reserve the policy's death benefit for your loved ones upon your passing or tap your cash value for supplemental income in retirement.

In fact, you'll often hear whole life insurance touted as a useful retirement savings tool. But is it worth getting for that purpose?

Financial security that comes at a price

Life insurance is an inherently useful and important financial tool. But for many people, term life insurance can get the job done at a fraction of the cost.

Policygenius says that a healthy 30-year-old who doesn’t smoke might pay an average of $26 per month for a 20-year term life policy with a $500,000 payout. That same applicant would be looking at $450 per month for a whole life policy with the same benefit.

For this reason, proponents of whole life insurance tend to look beyond the "insurance" angle and incorporate whole life policies into the retirement planning equation. But while whole life insurance can provide policyholders with retirement income, it may not be the most efficient way to get there.

Whole life insurance lacks flexibility and efficiency in retirement planning

There are some use cases for whole life insurance in retirement planning. But Alex Langan, Chief Investment Officer and financial adviser at Langan Financial Group LLC, says point blank, "For most people in most situations, whole life insurance is not the right primary retirement savings vehicle. That's not a disclaimer. That's our honest assessment after working with clients across a wide range of financial situations."

For disclosure purposes, Langan Financial Group offers whole life insurance as part of its planning work, and in certain circumstances, advisers at the firm may be compensated for those recommendations.

The reason Langan doesn't usually recommend whole life insurance boils down to what the product is designed to do versus what long-term planners actually need.

"Whole life is built first around a permanent death benefit, with a savings component attached to it," Langan says. "Retirement planning is fundamentally about growth, flexibility, liquidity, and tax efficiency over time. Those aren't the things whole life is optimized for."

As Langan explains, whole life policies tend to grow more slowly than market-based alternatives. And since the costs are significant, especially in the early years, that's money that could instead go into an investment portfolio and generate stronger returns.

Derrick Schuler, CFP at Schuler Wealth Planning, agrees.

"Using whole life insurance as a retirement savings tool isn’t necessarily a waste of money, but there are much more efficient ways to save for retirement," he says.

Schuler formerly sold whole life insurance but no longer does. He makes recommendations on whole life insurance for clients, based on how it fits into their overall financial plan.

Schuler says that while whole life insurance accumulates a cash value that grows tax-deferred over time, "there are a lot of insurance costs, administrative expenses, and commissions built into the policy that can reduce the overall return on the cash value."

If retirement savings is the primary goal, says Schuler, then most people are usually better off first maximizing contributions to employer retirement plans, IRAs, and HSAs.

"These accounts generally offer lower costs, greater flexibility, and higher long-term growth potential than a whole life policy," Schuler insists.

Accessing funds from a whole life policy can be complicated

Another issue with using whole life insurance as a retirement savings tool, says Langan, is that accessing the cash value through policy loans or withdrawals comes with real trade-offs.

"Policy loans accrue interest and reduce the net death benefit while the loan is outstanding," he says. "If the loan is repaid in full, the policy can be restored to its original state. If it isn't repaid, the outstanding balance plus accrued interest is deducted from the death benefit paid to your beneficiaries."

Withdrawals work differently. They permanently reduce both the cash value and the death benefit and don't need to be repaid.

But, Langan cautions, "neither option works the way a straightforward account withdrawal does, and that matters when you're planning for retirement income flexibility."

There's also a timing issue Langan raises.

"Because of the way commissions and insurance costs are structured in permanent policies, it can take a meaningful number of years before the cash value exceeds what you've paid in," he explains. "That lag represents a real cost compared to other vehicles where contributions are working from day one."

When can whole life insurance actually make sense?

Langan says there are some scenarios where whole life insurance does make sense in the context of financial planning.

"The first is someone who has genuinely maximized every other tax-advantaged savings option available to them and is looking for additional ways to grow assets in a tax-efficient structure," he says. "At that point, the comparison set changes and whole life becomes more competitive relative to fully taxable alternatives."

Langan also says whole life insurance can fit into estate planning and legacy situations where a permanent death benefit is the actual objective.

"If someone needs a guaranteed death benefit regardless of when they die, and wealth transfer is a primary goal, permanent insurance makes structural sense because it's doing exactly what it was designed to do," he says.

Additionally, Langan says that whole life insurance could make sense as part of business planning. In that context, there are situations in which the guaranteed nature of the policy serves a specific functional purpose.

Of course, there's also a behavioral use case for whole life insurance.

"Some people know themselves well enough to recognize that they won't invest the difference between a term premium and a whole life premium," Langan says. "If the realistic choice is between a whole life policy that forces consistent contributions and builds cash value over time versus doing nothing because the money will otherwise be spent, a whole life policy is better than nothing."

But, Langan says, it's important to recognize that this still doesn't make using whole life insurance as a retirement savings vehicle an optimal financial strategy. Rather, he says, "It's a reasonable solution to a real behavioral challenge. There's a difference, and clients deserve to know which one applies to them."

Ultimately, Schuler says, it's important for savers to understand what life insurance is supposed to do — protect income, pay off debts, and provide for loved ones if something happens to them during their working years. Term life insurance can often provide that coverage at a fraction of the cost.

"For the average person looking to build wealth for retirement," Schuler says, "term insurance combined with disciplined investing will typically provide more insurance protection, more flexibility, and a larger retirement nest egg over time."

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If you have retirement savings in an IRA or 401(k), Uncle Sam is your partner on that money because every dollar you pull out of it is taxed.

Consider this common scenario: One spouse in a retired household passes away and the surviving spouse becomes a single taxpayer, which affects their overall tax liability, even though their income goes down.

Let's say the couple's total income was $200,000 a year. While they were married, this meant they had an effective tax bracket of about 15%.

When the husband passes away, the wife's income goes down to $180,000 because she loses the smaller of their two Social Security checks. But going forward, she will file as a single taxpayer, so she is now in the 20% tax bracket.

Additionally, if her RMDs and her income grow each year, her tax rate could keep climbing. And that doesn't even factor in future tax increases. (It's unlikely taxes will stay as low as they are now, considering our nation's debt of $39 trillion.)

Proactive tax planning could have helped protect her from the impact of higher taxes after losing her partner.

For retirees in higher tax brackets looking to help their spouse (or adult children) avoid this kind of tax trap in the future, partial Roth conversions now can help.

1. Protecting the surviving spouse

If you're a married couple, you're in a joint taxpayer bracket. And once both spouses reach age 65, you become eligible for specific additional tax benefits.

For example, with a taxable income of $148,300, you fall within the 12% tax bracket for married couples filing jointly after the deductions.

The $148,300 figure includes a $32,200 standard deduction based on your filing status. You would also receive the $3,300 additional standard deduction for both being over age 65 – this consists of $1,650 for each spouse, as determined by the One Big Beautiful Bill for taxpayers over 65. On top of this, there is an additional $12,000 bonus deduction for those over age 65 (up to a certain income limit).

However, when one spouse dies, the surviving spouse (usually the wife) jumps up to the 24% tax bracket.

If your income is higher, it's an even larger jump in taxes for the surviving spouse.

For example, if your taxable income as a married couple is $250,000 a year, you can see on the chart below that you're in the 24% tax bracket because you're "married filing jointly."

However, if the husband dies first, the surviving spouse is now a "single filer" with taxable income of $250,000. You can see she has now jumped up into the 32% tax bracket.

A Roth IRA may help protect the surviving spouse from higher taxes as a single taxpayer because you already paid the taxes while you were both alive as joint taxpayers.

2. Protecting non-spouses

When you die and leave your IRA to your children, they only have 10 years to empty your IRA completely.

Let's assume the IRA you leave to your children will earn 4% annual returns over the 10-year period after you leave it to them. This means that your children will have to take out approximately 14% of the IRA balance every year.

This would allow them to take out the 4% annual earnings along with 10% of the principal, so the entire IRA is drained over that 10-year period without a potential big tax hit in year 10.

However, this 14% annual IRA withdrawal could put your heirs in a higher tax bracket.

While a Roth conversion would mean paying income tax now, that could be a bargain compared to the potentially higher income tax brackets your heirs might have to deal with after you're gone — and any state income taxes they may also have to pay.

Additionally, if your children live in a state that has a state income tax (such as New York, which has a 10.9% top state tax bracket), they may be subject to federal income taxes and up to an additional 10.9% in state income taxes as well.

We use software called Holistiplan that helps identify the maximum amount to withdraw year by year to take advantage of today's tax brackets, and will work alongside an accountant or a tax professional.

When appropriate, we recommend our Strategic Roth Integration (SRI) plan to clients so that they can take advantage of today's income tax rates and never pay taxes on their Roth IRA again.

If you'd like to learn more, check out my new book, IRA Owners: Help Defuse Your Ticking Time-Bomb, co-authored with Steven Kao.

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.

Editor's note: This is part one of a two-part series about estate planning. Part two will explore the three-step process for designing your estate plan.

When most people think about estate planning, they think about a will. It's often framed as a final step, a document that ensures your wishes are carried out and your assets are distributed properly.

While that's important, it misses a much bigger point: A will governs only what's left.

The real question is, will there be anything left to govern?

That's where many people get it wrong. They focus on planning for their death without fully planning for their life. The financial decisions you make while you're living — how you invest, how you manage taxes and how you prepare for major risks — are what ultimately determine the size and strength of your estate.

In other words, estate planning shouldn't start with documents. It should start with building a financial life worth protecting.

The difference between estate planning and life planning

At its core, estate planning is about transferring assets after death. Life planning is about making sure those assets last throughout your lifetime.

The distinction matters more than most people realize.

If your financial plan doesn't account for income needs, market risk, taxes and unexpected expenses, your estate plan might never have the chance to work as intended. A will can't fix a portfolio that runs out of money, and a trust can't undo years of unnecessary taxes or cover the cost of long-term care.

What happens during your lifetime directly impacts what you leave behind. That's why a strong estate plan is built on a solid financial foundation, one that prioritizes sustainability, efficiency and protection.

The three pillars that support every estate plan

Before drafting legal documents, it's critical to address three foundational financial areas: your investment strategy, your tax strategy and your long-term care plans. Together, these pillars determine whether your estate will be preserved and protected.

1. Investment strategy: Sustaining income without running out

Your investment strategy isn't just about growth; it's about sustainability.

Growing your assets matters, but as you approach retirement, the focus shifts. Your portfolio now has to do two things at once: Continue to grow and provide reliable income.

That balance is where things can become tricky.

If you take on too much market risk while also withdrawing more income than your portfolio can support, you create a scenario in which your assets can be depleted faster than expected. Market downturns combined with withdrawals can accelerate losses, increasing the risk of running out of money.

If that happens, your estate plan could suddenly be in jeopardy.

A well-designed investment strategy accounts for both growth and income, ensuring that your assets can support your lifestyle over time, not just in ideal market conditions.

2. Tax strategy: Keeping more of what you earn

Taxes are one of the most overlooked threats to retirement and long-term wealth.

Over the course of your lifetime, inefficient tax planning can erode a substantial portion of your assets. That's money that could support your lifestyle or be passed on to future generations, which is why tax planning shouldn't be reactive. It should be proactive and forward-thinking.

Strategies such as Roth conversions and tax diversification can help reduce your lifetime tax burden while also creating more flexibility in retirement. They can also improve the tax efficiency of what you leave to your heirs.

The key message is: It's not about how much you accumulate over your lifetime; it's about how much you get to keep. What you keep plays a major role in what you ultimately pass on.

3. Long-term care: The risk that can undo everything

Long-term care is one of the largest financial landmines people face in retirement and, unfortunately, one of the least planned.

Whether it's in-home care, assisted living or a nursing home, the cost can be substantial. Without a plan, those expenses often come directly from your assets, quickly reducing the value of your estate.

There are generally two approaches: Self-insuring by relying on your own assets or transferring some of that risk through insurance-based solutions, such as life insurance policies with long-term care benefits. Either way, the key is having a plan.

Without one, even a well-built portfolio and solid tax strategy can be undone late in life. Long-term care costs have the potential to drain assets when you least expect it and when you're least likely to recover from the impact.

Build the life first, and the legacy will follow

These three pillars don't just support your financial life; they determine the outcome of your estate plan. They answer some of the most important questions: Will your assets last? How much will be left? Will it be transferred efficiently?

Legal documents don't create wealth; they organize it. If the underlying financial plan isn't strong, even the most carefully drafted estate documents won't achieve their intended purpose. In many cases, a lack of planning during your lifetime can lead to the very worst-case scenarios people try to avoid in the first place.

Estate planning is often framed as preparing for the inevitable, but it's about something much bigger. It's about making thoughtful and intentional decisions throughout your life so that your money supports you the way it should, so that when the time comes, there's something meaningful to pass on.

A will can distribute your assets, a trust can control them, but neither can replace a well-planned financial life. If you want to leave a lasting legacy, start by building a plan around your life. The rest will follow.

Conversations around your finances and estate should never occur separately. At Blue Ridge Wealth Planners, we take the complexity out of financial planning, helping clients create a plan for everything, from investments, income, taxes, healthcare and your legacy.

In the next article of this series, I'll explain the three-step process (Design, Structure, Funding), highlighting the critical but often-missed "Funding" step to make a trust legally effective.

Blue Ridge Wealth Planners is an investment adviser registered with the Securities and Exchange Commission. SEC registration is not an endorsement by the SEC nor does it imply a certain level of skill or training.

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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've worked with enough successful business owners to know that almost every one has the same gap in their plans.

Take a scenario I see all the time: Dave built a widget company from nothing into a $30 million business. He's sharp, disciplined and completely focused on growth.

But when I ask him what his plan looks like after the company's sale, he stares at me like I've asked him to solve a riddle in an unknown language.

Dave isn't unusual. Most successful entrepreneurs pour every ounce of energy into building a business and almost none into planning for what happens when it turns into liquid wealth.

It's not carelessness. Building the company is the priority. If it doesn't succeed, there's nothing for which to plan.

The problem is that by the time the exit is real and there's a signed contract and a closing date, the biggest wealth-building opportunities have already passed. The cost of that timing gap can run well into the millions.

Three things business owners aren't considering

The same three blind spots come up again and again:

• The first is business structure. How the company and the owner's personal stake are organized for tax purposes. Whether you're a C corp, S corp, LLC or LLP affects not just annual income taxes but the tax treatment of any future sale. Get this wrong at formation, and you could be locked in for decades.
• The second is succession planning. For a business to command a strong valuation, it needs to be transferable. This means there is management in place, client relationships are institutional rather than personal, and operations can run without the founder. Buyers pay a premium for businesses they can take over immediately.
• The third is exit and estate planning. This one costs families the most money. A successful sale creates a massive tax event. Without years of advance planning, your options to reduce that burden shrink dramatically.

Why the math gets worse as the business grows

Valuation multiples expand as revenues grow. A company with $200,000 in EBITDA might sell for five times, or $1 million. Scale to $3 million in EBITDA and a 10-times multiple puts the value at $30 million. At $35 million in EBITDA, a 20-times multiple can push it to $700 million.

Industry and revenue quality directly impact these numbers, but the pattern holds: The bigger the exit, the bigger the tax event.

The federal estate tax rate above the exemption is 40%. The current lifetime exemption is $15 million per person ($30 million per couple), which is the most generous in U.S. history.

But Congress can change that number. A sale that pushes your estate above the exemption can trigger an enormous tax bill for your heirs if you haven't planned ahead.

What early planning looks like

If a business owner shows up with a signed purchase agreement and asks what can be done to reduce the tax hit, the honest answer is: Not much. The valuation is set. The structure is locked. The die has been cast, as we say.

The difference between the business owner who plans five years out and the one who plans five months out can easily be eight figures.

Let's revisit Dave's scenario. Five years before his planned exit, we started working on a strategy. Dave created an irrevocable trust for the benefit of his wife and children and transferred 50% of his company, valued at $15 million at the time, into that trust.

When the company sold for $60 million, the trust's half was worth $30 million, and that $30 million was outside Dave's taxable estate.

He paid long-term capital gains of 20% on the sale rather than ordinary income rates of 37%, and by moving assets out of his estate at a much lower valuation years earlier, he avoided what could have been $12 million in estate taxes on the growth alone. All told, early planning saved Dave's family north of $20 million.

Two types of trusts come up most often in these conversations:

• A spousal lifetime access trust (SLAT) is an irrevocable trust that names the spouse as beneficiary during their lifetime, then passes to children and grandchildren. It works well when the business owner might still need access to income or assets from the trust.
• An intentionally defective grantor trust (IDGT) skips the spousal access and goes directly to children and grandchildren.

Both of these options share the same critical advantage: The assets are valued when they go into the trust. For a growing business, that means transferring at a relatively low valuation years before the exit and letting all that appreciation happen outside the taxable estate.

Charitable strategies can strengthen the plan further. Donating appreciated stock to a donor-advised fund — or, for private company shares, to an organization that accepts them — delivers meaningful tax benefits over donating cash. These tools work best when built into the strategy early.

Four things to do now

If you own a business and think you might sell it someday (even if "someday" feels like a decade away) here's where to start.

1. Find the right wealth manager. Look for someone who works specifically with business owners and can help you build a long-term plan that connects your business goals to your personal financial picture. This isn't a one-meeting exercise, it's an ongoing relationship.

2. Assemble your full team and get them on the same page. Alongside your wealth adviser, you also need an attorney and an accountant, all working from the same playbook. These professionals shouldn't be operating in silos. The value comes from coordination. To ensure this, I encourage you to ask your team four questions:

• What is the plan?
• How are we going to get there?
• Who else needs to be involved?
• What are we not thinking about? This is the one most people forget.

3. Start three to five years before any potential sale. This is the window when the most powerful strategies, including trust planning, ownership restructuring, estate tax reduction, are still available to you. If you wait until a deal is on the table, most of those doors close.

4. Execute aggressively. An unexecuted plan is worthless. Once the strategy is in place, move on it. Every year of delay is a year that asset values grow inside your taxable estate instead of outside it.

The future will arrive faster than you think. Time is your single greatest ally in wealth planning but only if you use it.

The entrepreneurs who start early, build the right team and execute with urgency are the ones who keep the wealth they spent a career creating.

The ones who wait? They pay for it.

Related Content

• 4 Retirement Risks Business Owners Often Overlook
• When Starting a Business, the End Is a Very Good Place to Start
• The Entrepreneur's Exit: How to Sell (or Pass on) Your Business Without Losing the Family
• Planning to Leave Your Business? How to Find the Right Buyer
• To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around You
• The Most Important Number for a Business Owner Considering a Sale

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

Dear Wealth Wise: As a retired 66-year-old, I find plenty of guidance on portfolio allocation but very little on asset location — how investments should be divided among taxable accounts, traditional IRAs/401(k)s, and Roth IRAs/401(k)s.

Many experts suggest a portfolio split such as 50% stocks (mostly U.S., with some international exposure) and 50% more conservative investments, such as bonds and money market funds. But there's far less discussion about where those assets should be held to maximize after-tax returns. I feel undereducated on the topic of asset location and would like more guidance on how retirees can optimize investments across accounts with different tax characteristics.
— Where Should I Stash My Assets?

Dear "Where Should I Stash My Assets?": Asset allocation is an important part of retirement planning. And you, as a 66-year-old retiree, seem well informed about how much of your portfolio should go into aggressive holdings like stocks versus stable or income-producing assets like bonds.

But your question is one that's not raised often enough — where do the assets actually go?

Mark Sanaiha, CFP, founder and wealth advisor at Macallen Capital, says he likes to tell clients to follow a simple rule.

"Put your least tax-efficient assets where the IRS can't touch them, and your most tax-efficient assets where they're built for low taxes."

Let's dig deeper into that strategy to answer the burning question of how to find the right home for your various retirement assets.

Assets that belong in a traditional IRA or 401(k)

Traditional IRAs or 401(k)s offer the benefit of tax-free contributions and tax-deferred gains while you're in the process of building wealth. In retirement, though, they become less tax-efficient, since withdrawals are taxable and required minimum distributions (RMDs) eventually kick in.

Cody Garrett, CFP, owner and financial planner at Measure Twice Financial, says, "Traditional pre-tax retirement accounts should generally hold tax-inefficient assets, such as taxable bonds, money market funds, REITs, and BDCs."

As Garrett explains, these assets tend to distribute ordinary income rather than qualified dividends and can have higher yields than equities.

Garrett also says that for many retirees, it makes sense to allocate most or all of their bond holdings to traditional retirement accounts. Doing so could shelter your bond interest from immediate taxes, which is important, since bond interest is taxed at ordinary income rates.

Assets that belong in a Roth retirement plan

Roth accounts are often touted as a shining example of tax efficiency. Though contributions are made with after-tax dollars, gains are completely tax-free, as are withdrawals. There are also no RMDs to worry about.

Because assets held in a Roth IRA or 401(k) aren't subject to tax gains, Garrett says, "Roth accounts are often best used for assets with the highest expected long-term growth."

If you have U.S. or international stock market funds and other growth-oriented equity investments, you may want to load them into your Roth.

Sanaiha says, "Your Roth IRA is your growth engine, … so don't waste that on cash or money markets."

Sanaiha also cautions that while it often makes sense to hold international funds in a Roth IRA, it depends on the fund.

"In some cases, the tax drag is comparable to a value fund, so we'll then consider traditional or Roth IRAs for placement," he says.

Assets that belong in a taxable account

With a taxable account (such as a standard, non-retirement brokerage account), there's no IRS benefit when you're contributing funds and building wealth. But there's flexibility. You don't have to worry about annual contribution limits, early withdrawal penalties, or RMDs. Still, it's important to choose the right assets for these accounts.

"Taxable accounts favor tax-efficient investments that produce little taxable income each year and receive long-term capital gains tax treatment on qualified dividends," Garrett explains. "Examples include low-turnover equity funds, such as U.S. stock market index funds. These investments often generate modest dividend income."

Garrett says taxable accounts can also be appropriate for holding crypto ETFs and other volatile assets.

"Investors can harvest capital losses if values decline, while long-term capital gains from securities held longer than a year receive favorable tax treatment," he says. "Many crypto investors instinctively place speculative assets in Roth accounts hoping for tax-free growth, but taxable accounts provide useful tax benefits if the investment performs poorly."

That said, many retirement investors may prefer to skip highly speculative investments like crypto, even with the tax-loss harvesting benefit.

Another attractive option to balance tax efficiency and liquidity needs is municipal bonds or muni market funds, which are exempt from federal income tax. Sometimes they may also be exempt from state or local taxes if they are for in-state bonds.

Assets that belong in an accessible bank account

Retirees are often advised to maintain a hefty cash cushion to cover emergency expenses or buy themselves the flexibility to leave their investment portfolios untapped during periods of market decline. This helps avoid locking in permanent portfolio losses.

Garrett says that from a tax-efficiency perspective, cash and money market funds are best suited for traditional retirement accounts since interest is taxed at ordinary income rates.

"That said, many retirees still prefer to maintain one to two years of liquidity in checking, savings, and other taxable accounts, sacrificing tax optimization for peace of mind," Garrett explains.

Your strategy may shift over time

It's good to go into retirement with a general framework of where to house your various assets. But Sanaiha says that just as your asset allocation might change over time, so too might some of your asset location decisions.

For example, since our reader is 66 years old, their RMDs will start at age 75 under the SECURE Act 2.0. They will have nine years to plan Roth conversions to reduce the risk that RMDs will force them into higher tax brackets.

Moreover, a retiree's asset locations will need to shift as asset allocations change. As you spend down your accounts, using the bucket or other retirement withdrawal strategies, your overall asset allocation will shift. If you spend all your taxable cash first, you may need to rebalance other accounts, which could trigger taxes.

"Asset location decisions should always be made in the context of your overall tax situation, RMDs, Social Security timing, and legacy goals," he says. "What's optimal at 66 may shift significantly by the time RMDs begin."

An evolving strategy, Sanaiha insists, could help you generate retirement income more efficiently while keeping the most money away from the IRS.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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For retirees and those closing in on retirement, understanding how to manage required minimum distributions (RMDs) is essential.

These government-mandated withdrawals must be taken from tax-deferred retirement accounts, such as traditional IRAs and 401(k)s, starting at age 73. Yet, as a longtime financial adviser, I've learned that many investors nearing that age aren't familiar with how RMDs work or prepared to deal with the extra taxes they can trigger.

Even those who know something about RMDs aren't always aware of recent rule changes or useful strategies that might help reduce their RMD tax burden. That means they could easily make costly missteps that impact their retirement savings.

What are RMDs?

The IRS doesn't allow retirement savers to keep money stashed in their tax-deferred accounts indefinitely. Once you turn 73, you must begin withdrawing a minimum amount annually (based on an IRS formula) and pay ordinary income taxes on that amount.

These mandated withdrawals are called required minimum distributions. And failing to take the appropriate distribution at the correct time can result in a hefty penalty.

The RMD rules apply to all tax-advantaged plans except Roth IRAs because those account owners have already paid taxes on their contributions.

Common mistakes with RMDs

1. Taking RMDs without advance tax planning

RMDs start at age 73 for most people born between 1951 and 1959. And those born in 1960 or later will start at age 75. But I recommend planning for these complicated withdrawals long before you're required to take them.

When you hear retirees complain about paying much more in taxes than they expected in any given year, it's often because they weren't ready for how RMDs would affect their taxable income.

For example, your RMD could push your income past the IRS threshold that determines whether your Social Security benefit will become taxable and at what percentage it could be taxed.

Your withdrawal could also trigger the income-related monthly adjustment amount (IRMAA), a surcharge on your Medicare premiums. Planning ahead could help you avoid these and other RMD-related tax traps.

2. Waiting until the last minute to take your first RMD

RMDs generally must be completed by December 31 of the current calendar year. In the year you turn 73, however, you'll have the option to delay taking your RMD until April 1 of the following year. (For example, if you're turning 73 in 2027, you'll have until April 1, 2028, to take your first RMD.)

But there can be consequences for postponing. If you decide to make two withdrawals in one year, your taxable income will likely be higher for that year, which could mean facing a steeper tax bill. Before you decide to double up, you may want to run the numbers to be sure it makes sense.

In fact, waiting until the last minute in any year could cause problems if you suddenly get busy, can't afford or simply forget to take your RMD.

If you haven't withdrawn the full RMD amount by the deadline, you could face a 25% penalty on the amount you haven't withdrawn. (That drops to 10% if the RMD is corrected within two years.)

If you decide to wait until the RMD deadline, you also may have to sell investments in a down market. Spreading out your withdrawals could help reduce market risk.

3. Forgetting inherited IRA rules

Planning to leave what's left in your accounts to your beneficiaries? They, too, will have to take distributions based on IRS rules. And they, too, could face a penalty if they don't correctly calculate and take their required withdrawals at the proper time.

The rules for when account beneficiaries must take RMDs vary based on the inheritor's relationship to the original account holder. A spouse who inherits a retirement account usually has more flexibility, for instance, when it comes to determining how soon RMDs will begin and how they'll be calculated.

But most non-spouse beneficiaries are required to empty their inherited account and pay taxes on this income within 10 years of the original account holder's death. Which means adult children often end up having to take RMDs from an inherited account during their highest-earning years.

If you expect to leave money in a 401(k) or similar account to your loved ones, it's important that they have a chance to do their own tax planning. Your financial adviser should be able to suggest strategies to help them maximize your generous gift.

4. Missing out on qualified charitable distribution opportunities

It may be difficult to predict exactly how much your RMDs will be from year to year — or how much they might impact your taxes. But just knowing they're coming will give you an opportunity to prepare.

If charitable giving is part of your financial plan, a qualified charitable distribution (QCD) can help you further your philanthropic goals and reduce the tax hit from your RMDs.

QCDs allow individuals age 70½ and older to make tax-free donations directly from an IRA to a qualified charity, potentially satisfying all or part of the annual RMD amount due from their eligible accounts.

A QCD doesn't offer a tax deduction, but the amount of your QCD won't be included in your taxable income. And you can make a QCD from several different types of tax-deferred retirement accounts — although there are rules regarding using a SIMPLE or SEP IRA, and you can't make a charitable contribution from a workplace retirement plan, such as a 401(k).

5. Ignoring Roth conversion strategies before RMD age

Converting a traditional IRA to a Roth IRA can help you avoid RMDs altogether — or at least lower the amount you'll have to withdraw each year.

Unlike traditional IRAs, Roth IRAs don't require that you take RMDs during your lifetime. This means you can keep your money invested for as long as you want, allowing it to grow tax-free. And if you pass on a Roth IRA to your heirs, they can take their RMDs tax-free.

Of course, you'll have to pay taxes on the amount you convert, so timing — and planning well in advance of your RMD age — is important. Minimizing your income sources in the year you plan to do the conversion can help keep your tax liability as low as possible.

Many retirees find the "sweet spot" for completing a conversion is after they've stopped working but before they begin receiving Social Security benefits or pension payments.

Your adviser can help you determine if and when a Roth conversion makes sense for your needs.

Don't put off RMD planning

If you expect to withdraw the IRS's required amount — or more — each year to cover your living expenses in retirement, RMDs may not be a concern for you. But if RMDs will impact your income, tax and estate planning, you may want to seek guidance.

The rules are complex, and making a mistake can be expensive.

The IRS website offers basic information regarding the overall RMD regulations. But if you want more specific advice and ongoing support, consider talking to a financial adviser ASAP.

Kim Franke-Folstad 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 estate planning field has developed an impressive sophistication when it comes to carrying out a person's final wishes.

Virtually without fail, estate planning documents work as intended, accounts transfer, and instructions are followed to the letter.

When it comes to the orderly dispersal of a person's estate, lawyers and estate planners almost always have the process well in hand. But what they might not fully understand is the reasoning behind the directives.

When a loved one passes, his or her directives might be followed to the letter. But it's not uncommon for family members to be confused about the thinking behind those directives. Why was an asset allocated in a certain way? What priorities shaped those choices?

While the written directions might be clear, the thinking behind those directions could be murky, even hurtful.

So much more to account for today

For decades, estate planning has focused, appropriately, on the orderly transfer of assets, even as the process has grown more complex. Today's plans must account not only for bank accounts and property, but also for online financial tools, subscription services, digital files and, increasingly, cryptocurrency holdings.

In response, a range of tools has emerged to handle those new logistics, such as Apple Digital Legacy and Google Inactive Account Manager allow designated individuals to access accounts after a period of inactivity or death.

Digital vaults and estate organization platforms help centralize passwords, documents and key information.

These are important advances that help loved ones find and manage assets that have been left behind.

While those tools work as intended, they fail to make clear what the deceased person might have been thinking when he or she prepared the final will. I've seen families receive everything they need to administer an estate, but struggle to make sense of it.

The legal framework might be intact, but the human context is missing. Without that context, even well-designed plans can create confusion, tension or second-guessing among those left behind.

This is what I think of as the "context gap" in estate planning.

Why were certain choices made?

A will can distribute assets, but it rarely conveys the reasoning behind those decisions. A trust can outline conditions, but not the personal considerations that shaped them. Even the most detailed plan can't fully capture a person's intentions, relationships or values.

As a result, families are often left to interpret those decisions on their own. Sometimes that interpretation is straightforward. Other times, it isn't.

Siblings might wonder why certain choices were made. Executors could feel uncertain about how much discretion they should exercise. Adult children might struggle to reconcile what they see in documents with what they believed about a parent's wishes.

These are not failures of planning. They are limitations of the tools we've traditionally used.

Even so, estate planning is beginning to evolve into two parallel tracks. The first is the familiar transfer of assets, the management of taxes and the legal structures that ensure everything is handled properly.

The second is communication of intent. This includes messages people might want to leave behind — explanations of key decisions, expressions of gratitude, guidance for future choices or simply words that help loved ones understand not just what was done, but why.

Preserving the meaning behind estate planning

Up to now, people have tried to address this informally. Some have written letters to be opened after death. Others recorded videos or left notes with attorneys or family members.

But these have often been inadequate. They have been difficult to update, and they have not always delivered their messages at the right time — or even at all.

New tools are attempting to address this need more systematically. Platforms focused on what is sometimes called "digital inheritance" aim to complement traditional estate planning by preserving not just assets, but the meaning behind it.

Systems such as OneFinalMessage.com allow individuals to store messages alongside important documents and update them as circumstances change.

Features make it possible to ensure such messages reach the intended recipients when they're needed and not be overlooked or lost. These new products are aimed at recognizing that a complete estate plan may require more than legal precision.

For individuals, this raises a simple but important question: If something were to happen tomorrow, would the people who matter most understand not just what you left them, but why?

For financial advisers and estate planning professionals, all this suggests an opportunity to broaden the conversation. It encourages planners to ask clients how they want to be understood, and whether their plans reflect that.

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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 planning tends to get treated as a math problem: Should we retire with $2 million or $3 million? Can we spend $7,000 a month or $9,000 a month? Should we claim Social Security at 62 or 67?

Those questions matter. After years of helping people work through retirement plans, though, I've noticed that the couples who struggle most aren't always the ones who got the math wrong. They're the ones who never had the harder conversations.

They assumed they were on the same page about the big money decisions. Then, with retirement suddenly in view, they discovered they had completely different pictures in their heads.

One partner was imagining travel and adventure. The other was counting on staying close to family. One had already mentally quit their job. The other assumed they'd both work part-time for years. None of it surfaced until it was almost too late to plan around.

A few meaningful conversations, well before you hand in your notice, can change that. Not just for your relationship, but for the quality of your financial plan. When you and your partner understand each other's priorities, the plan you build can reflect what both of you want, not just what one of you assumed.

1. What does retirement look like for you?

Start here, before you analyze a single number.

Ask each other: What does a great day look like once we're not working? What do we want most in the first ten years of retirement? What do we want to make sure we don't miss?

In my experience, couples are often closer on this than they expect. I've sat with partners who came into the conversation thinking they wanted completely different retirements. One wanted adventure and outdoor travel. The other wanted family time and one meaningful trip each year.

When they finally talked it through, the overlap was bigger than either had assumed. They agreed on more travel early, especially with family while everyone was still healthy, then a slower rhythm later.

That shared picture became the foundation for everything else.

If you haven't had this conversation yet, have it before you do any serious retirement modeling. The numbers should serve the vision, not the other way around.

2. How do you and your partner think about money?

Money values don't always surface until markets drop or a major financial decision lands on the table. In retirement, that's too late to be caught off guard.

A lot of those values trace back further than most couples realize. Someone who grew up in a household where money was tight, where a job loss or medical bill created real hardship, often carries a deeply cautious relationship with spending and risk. Their instinct is to protect what they have.

Someone who grew up in a more financially stable environment, or where conversations around money were fruitful, may feel far more comfortable letting a portfolio ride through volatility.

I've seen couples who had managed their finances together for decades suddenly disagree sharply when markets fell 20%. One wanted to pull back and preserve what was left. The other wanted to stay the course and let the portfolio recover.

The disagreement wasn't really about the market. It was about two very different relationships with financial security, shaped long before they ever met each other.

Ask each other:

• How much of a cash cushion would help you sleep at night?
• How flexible are you willing to be with spending if things get tight?
• How much financial risk are you willing to accept in exchange for a potentially higher income in retirement?
• If one of us wanted to make a large unplanned purchase, how would you want to handle that conversation?

A partner who is naturally conservative with money and one who is comfortable with more equity exposure can absolutely build a plan together. They just need to have talked about it first.

This is also a conversation where working with a financial professional can help. Sometimes it takes an outside expert to help two people with different money values land on a plan they both feel comfortable with.

3. When do you really want to retire?

This is often where fear and anxiety show up. One partner worries they're retiring too soon. The other wonders if they'll ever get to stop working. The conversation feels loaded, so couples tend to avoid it.

The better approach is to be direct: When do you picture leaving full-time work? Does part-time feel right as a transition? What makes you nervous about the timing, and what makes you excited?

I worked with a couple, both in their early sixties, who had never really compared notes on retirement timing. He assumed they'd both work until 65. She had quietly been hoping to stop at 62. Neither had said it out loud. When they finally did, they realized they were close enough to build a real plan around.

They modeled retiring at 63 and 61, with the husband doing some part-time consulting for one year as a transition. Their Boldin plan showed a very strong chance of success (often referred to in the financial planning industry as a Monte Carlo score).

They ran a second version with no part-time income at all. That scenario still came back above 80%. To them, a one-in-five chance of ever needing to make a modest planning adjustment, like trimming discretionary spending during a rough stretch in the market, felt entirely manageable. What had originally felt like a daunting conversation became a confident plan in a single afternoon.

That's the value of running the numbers. When couples can see what different timing scenarios look like, the fear tends to give way to something more useful: A real decision they can act on.

4. Where do you want to live?

Where you live in retirement touches almost everything: Lifestyle, cost of living, proximity to family, state income taxes and emotional ties to a community you may have spent decades building.

Ask each other:

• Do you want to stay where you are?
• Would downsizing make sense?
• Is there somewhere else you've always wanted to live, or a second home worth exploring?
• If moving closer to family becomes a priority, when would that realistically happen?

This conversation can carry more emotional weight than couples expect. The family home means something. So does the idea of being nearby when grandchildren start arriving.

I've seen couples who were completely settled on staying put change their thinking the moment a grandchild entered the picture. Suddenly, the question wasn't whether to move, but when. That shift has real financial implications worth planning around before the emotions of the moment make the decision for you.

Moving to a different state, for instance, can have a significant impact on how retirement income is taxed. Some states exempt Social Security, pension income or IRA withdrawals entirely. Others tax all of it. A move that feels modest on paper can look very different once you account for those differences.

If there's a potential move in the back of either partner's mind, whether that means downsizing, relocating or buying a second home, surface it now. Treating it as a real option in your planning, even a tentative one, gives you a much clearer picture of what retirement could look like.

5. How do you protect each other later in life?

I saved this one for last, because it's usually the conversation couples save for last, if they have it at all.

Nobody wants to sit across from their spouse and talk about who's likely to outlive whom. The financial decisions you make now, around longevity and Social Security, will determine how well the surviving spouse is protected when that happens.

Start with longevity assumptions. There are several life expectancy tools that factor in family history, health habits and current age. Use them as a starting point, then consider building in a scenario where one partner's longevity is shorter than expected.

Not because you're planning for the worst, but because you want to understand the financial impact on whoever might be left with a longer retirement ahead.

Next, look carefully at Social Security timing. Most couples default to claiming at full retirement age without running the numbers on what delaying might do. Waiting to claim until 70 can significantly increase the monthly benefit and provides a stronger guaranteed income stream for whoever lives longer. When one spouse passes, the surviving spouse keeps the higher of the two benefits. That decision is one of the more powerful tools available for protecting each other.

Long-term care is the other piece most couples avoid. Roughly 70% of people turning 65 today will need some form of long-term care during their lifetime, whether that's in-home assistance, assisted living or memory care.

The costs can be significant, and they tend to arrive at exactly the moment a portfolio can least afford a large, unplanned withdrawal. Some couples self-fund by setting aside a dedicated reserve. Others explore long-term care insurance or hybrid life insurance policies with a long-term care benefit.

What matters most is having the conversation before a health event forces it.

Start the conversation, then build the plan

These can be some heavy conversations, so don't feel the need to tackle them all in one sitting. Starting with these five, though, gives you a strong foundation and a shared sense of direction.

When you know where each of you stands, the retirement plan you build reflects both of you, not just a set of numbers one partner entered into a planning software or spreadsheet.

For couples, retirement planning should not be a solo endeavor. The plan that holds up isn't the one with the biggest portfolio. It's the one both partners built together.

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

At some point in the future, somebody is going to go through all your stuff and throw out most of it. If you don't do it while you're still in good health, someone else will, after you suffer a medical emergency or you pass away. Do your heirs a favor and reduce your own stress by culling your possessions now.

It isn't easy. Discarding things that remind us of loved ones often brings up grief and guilt. And it's maddening to realize that the nice couch or rug we splurged on has no monetary value. Sociologist David J. Ekerdt at the University of Kansas, whose team interviewed more than 100 Americans over the age of 60 for his book Downsizing: Confronting Our Possessions in Later Life, says his research showed “it is an act of courage and of prudence” to confront the thousands of possessions we've accumulated over decades.

With that, here are 10 tips to get started.

1. Set your goal. Matt Paxton, author of Keep the Memories, Lose the Stuff, has his decluttering clients write their goal on a card, which he tapes on a wall. And he sets a deadline. When one client said she wanted her home tidy enough to have friends visit, he had her invite friends for dinner three weeks from that date. “Decluttering is like dieting or fitness. It's very easy to quit,” he says.

2. Don't buy those cute storage bins yet. Aspiring declutterers can be led astray by social media pictures of beautifully lit homes in which all the toys, towels or cleaning supplies are artfully stored in handsome baskets, says Jill Quigley, a professional organizer in Omaha. Some start decluttering by buying bins, which just creates more clutter. Instead, begin by organizing and reducing your stuff. Then, shop for storage solutions that fit your smaller stockpile.

3. Get help. Ekerdt says downsizing works better when you have help. If you're looking for more than just an extra pair of hands, expect to pay between $60 to $200 an hour for an organizing professional. Not only will they keep you motivated and focused, but many specialize in disposal — knowing which items to sell and where to sell them, and which organizations will take donations of non-sellable stuff.

Try searching for locals through professional organizations such as the National Association of Productivity & Organizing Professionals (NAPO) or the National Association of Senior & Specialty Move Managers. Erin Hayes, a professional organizer in New York City, says finding someone who is emotionally attuned to you is crucial, because deciding to toss beloved items can lead to anger and tears.

4. Categorize. Before you start tossing things, put them into categories. "I put like with like so you can see that you have three can openers or nine white tank tops," says Quigley. That makes it easy for clients to get rid of duplicates.

Categorization gets more challenging when it comes to knickknacks, but Kelly Brask, a professional organizer in Chicago and president of the Board of Certification for Professional Organizers, a division of NAPO, tries separating items according to the memories they inspire. That way, people can see how many things they are keeping to, say, remember a grandmother, and consider whether only one or two items are enough for that purpose.

5. Start small. Professional organizers suggest beginning with small, easy tasks. Hayes starts her clients with areas unlikely to spark memories or emotions, such as junk drawers or tool closets. Once they see those cleaned up and organized, they have more confidence to tackle bigger projects, she says. To prevent burnout, she limits decluttering to six hours a day.

6. Beware the "purger's high." Liberating yourself from clutter can feel so good that some people get into a tossing frenzy, says Cristiane Sgrott, an organizer in the Washington, D.C., area. Professional declutterers like herself shake every book, check every pocket and open every teapot. Sgrott has stopped clients on what she calls a "purger's high" from tossing out oven mitts and old shirt boxes where someone had hidden cash.

She also discourages clients from throwing potentially sensitive paperwork or electronics into trash bins. Instead, many businesses and community services offer shredding and secure recycling, she says. "You should be ruthless but not reckless."

7. Don't expect a windfall. One barrier to downsizing: Accepting the reality that you won't recoup much for things you paid a lot for. As baby boomers age and downsize, they're creating a flood of furniture and collectibles, says Julie Hall, director of the American Society of Estate Liquidators.

For realistic value estimates, view prices on sold items on eBay, or try pricing services such as WorthPoint, author Paxton suggests. Selling items yourself through a garage sale or online postings takes a great deal of time and effort, and typically yields comparatively little. Paxton prefers auction houses that handle all the work and offer both in-person and online bidding, such as Everything But The House, MaxSold and Bid-Rush. Such platforms typically take 30% to 40% of your earnings. “The 60% you will receive from the auction house is larger than the 100% you would get on your own,” says Paxton.

Don't expect much of a tax write-off for donating your stuff, either. Charities have become pickier about what they'll accept, and recent changes to tax law limit noncash contribution write-offs.

8. Leave a legacy of love. “You don't want to leave your friends and family with a house full of crap and a bunch of work. You want to leave a legacy of love,” says Brask. “Make sure they know what was important to you and why.” So pare your legacy down to a few meaningful items, and explain the stories behind those things, she says.

Take pictures of items to be discarded, and display those on an electronic frame or in a scrapbook. Paxton recommends an app such as Artifcts, which allows you to make and share videos about items. For a more formal memory handoff, consider setting up a show-and-tell video call or an in-person gathering of loved ones, he suggests.

9. No "maybe" pile, no storage. Declutterers typically sort their things into "keep," "sell," "give" and "trash" categories. Don't add a "maybe" pile, says Mary Kay Buysse, co-executive director of the National Association of Senior & Specialty Move Managers. "The 'maybe pile' is going to do you in, because that is what goes in storage units," she says. By renting a storage unit, you can end up paying thousands of dollars to store things you aren't even sure you want.

10. Avoid re-cluttering. Set up ongoing systems. Sgrott helps clients create labeled baskets, bins or shelves so everyone in the house knows where, say, shoes, batteries or charging wires go.

While many declutterers try to maintain practices such as "one in, one out" for any new possessions, T.K. Coleman, cohost of the Minimalist podcast, suggests a psychological approach. "I want to understand why I am in this position," says Coleman.

He asks, for example, "Am I using impulse purchases to compensate for loneliness?" Coleman tries to remind himself that "saying 'yes' to something you don't want is saying 'no' to something else," such as a clean table and a calm mind.

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

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Even in the best of times, it can be challenging to switch gears from saving money to spending it in retirement and making the most of the wealth you've taken a lifetime to build. And these, a growing number of retirees agree, are not the best of times.

More than one-fourth of retirees, some 27%, now say they aren't confident they have enough money to live comfortably throughout their retirement as concerns about inflation, health care costs and Social Security rise. That's a five-point drop over the past year, according to a recent survey from the Employee Benefit Research Institute (EBRI) and Greenwald Research. Fewer than half of the respondents describe their standard of living in retirement as "very good" or "excellent," and four in 10 worry that their Social Security and Medicare benefits will drop in value at some point in the future.

No wonder, then, that many retirees at all levels of wealth are pulling the reins tighter on spending these days — exacerbating an already well-documented reluctance to tap savings in retirement. One recent study by two research fellows at the Retirement Income Institute found, for example, that 65-year-old retirees are spending, on average, only about 2% of their savings. That's just half the commonly recommended 4% "safe" initial withdrawal rate and much lower than the 5% to 6% rate that many advisers now suggest may be a more reasonable starting point.

Experts have a name for this resistance to spending among retirees of all ages. They call it "the retirement consumption puzzle" or, more simply, FORO: Fear of Running Out.

"Retirees are really apprehensive about touching their money. The fear of maybe one day becoming a homeless person, or dependent on their children or society, runs deep," says Robert Laura, president and CEO of the Wealth and Wellness Group in Brighton, Mich., and cofounder of the Retirement Coaches Association. "That's true even if, on paper, they clearly have enough — $1 million, $2 million, $3 million or more — and even if they're working with a financial adviser and are financially savvy themselves."

The disquiet over spending is fueled in part because so much about retirement is uncertain, experts say. You don't know how long you're going to live, what your health care needs will be as you age, or how the economy and financial markets will fare. Then too, after a lifetime of being urged to save, save and save some more, it's tough to suddenly flip a switch and spend freely instead.

"When you've been conditioned for decades to measure success by how much your account balances are rising, it's painful and unsettling to see the numbers go down," says certified financial planner Dana Anspach, founder and CEO of Sensible Money in Scottsdale, Ariz., and author of Living Off Your Acorns: Your Guide to the Four Phases of Retirement. "But if you've done the math and you have enough to see you through, you don't want anxiety about running out of money to prevent you from enjoying what you've spent a lifetime saving and building toward."

Here's how experts suggest you can meet the challenges of moving from saving to spending and enjoy your money to the fullest in retirement.

Why spending is so hard

Just how little are retirees spending? In some cases, very little indeed, research shows— so much so that a lot end up with more money in savings many years into retirement than they had when they first left the workforce.

Consider, for instance, another EBRI study released this spring that looked at asset decumulation, a fancy term for how people spend the money they've saved for retirement. It found that six in 10 retirees who had $500,000 or more saved when they quit full-time work still have at least 80% of their assets intact a decade into retirement, and 45% have more money than they started with. Even after 22 years, 42% still had most, all or more than all of their original savings left. And many households with lesser levels of wealth also had a significant portion of their savings left many years into retirement.

True, the stock market's robust returns lately have helped retiree account balances stay steady or grow. But research predating the past few years of double-digit returns shows the same pattern of lower-than-expected spending at various levels of wealth. One 2009 study, for instance, estimated that by the time middle-income retirees hit their eighties, they still had not touched about three-fourths of their savings. Meanwhile, research from 2016 published in the Journal of Financial Planning found that wealthier retirees were the most reluctant spenders — a result replicated often in other studies.

Why are retirees so determined to hang on to their savings and not spend as much as they can afford? Uncertainty about various aspects of retirement, such as your longevity or health, is the most frequently cited explanation. But that tells only part of the story, as evidenced by a working paper published this year by professors at the University of California–Irvine and the State University of New York at Albany that aimed to strip those unknowns from the question of how much to spend in retirement.

In a controlled experiment with people ages 45 to 55 that was designed to mimic the spending decisions retirees face, participants were told they had ample assets to cover their living expenses in retirement, health problems were taken off the table, they had detailed information about their risk of dying, and they were told Social Security would remain solvent. But just like retirees in real life, the "retirees" in the experiment spent less than they could afford, preferring to live off Social Security, dividends and interest rather than dip into the principal of their savings, and many ended up with more wealth by the end of their "retirement" than the amount they had to start.

Other research confirms that how you get your money in retirement makes a dramatic difference to how much you may be willing to spend. If you tap savings to pay for what you want, chances are you will spend a lot less than if you can rely more on guaranteed sources of lifetime income, such as Social Security, pensions and annuities.

"If you have to physically take action to withdraw from savings every time you need money, that's painful, it hurts," says David Blanchett, head of retirement research at Prudential Financial. "Guaranteed income like Social Security and pensions feels more like a paycheck, the way you received money when you were working. And people are much more comfortable spending that."

How much more? A study that Blanchett coauthored last year with Michael Finke, a professor of economic security at The American College of Financial Services, found that retirees, on average, spend about 80% of the money they receive from lifetime income sources but approximately half the amount they have available to spend from investment accounts and other assets.

Their analysis of data from the Health and Retirement Study, an ongoing nationally representative survey of some 20,000 Americans older than age 50 conducted by the University of Michigan, also found that retirees spend a higher rate of their savings once they have to take required minimum distributions (RMDs) from a 401(k), traditional IRA or other tax-deferred retirement savings account (at age 73 for those born between 1951 and 1959, rising to 75 for those born in 1960 or later).

"When it's mandated that they have to take money from savings, people spend it, possibly because it feels more like income than a voluntary withdrawal does," Blanchett says. But, he notes, those retirees have missed out when "they could have enjoyed spending more in the younger, go-go years of retirement."

Another reason experts believe retirees often don't draw from savings: It's just too complicated to figure out how much to safely take.

New research from Morningstar found that half of retirees with investable assets at or above median level rely on simple, hands-off strategies to guide how much they spend, such as using RMDs or drawing only from dividends and interest. These approaches, the researchers found, require little engagement or complex decision-making but may result in retirees spending less than they can comfortably or optimally afford.

"This may happen as a result of our natural aversion to losses, which loom larger in retirement when you are living on a fixed income," says Samantha Lamas, a senior behavioral researcher at Morningstar and a coauthor of the study. "The endowment effect, where you value something more highly because you own it, may also be a factor. Once you retire, you're pulling money out of your own pocket for spending. It's not coming from your employer, and it feels so much more real and painful."

Experts worry that the problem of underspending may get worse as fewer retirees have access to pensions and the RMD age rises — or if stock prices tank.

"The markets have been able to shrug off bad news and deliver consistently good returns. But at some point, that will end for a while and, given the unusual number of years returns have been good, it could be a prolonged slump," Blanchett says. "That creates added urgency to set up a thoughtful spending strategy now."

How to loosen the purse strings

"I don't need to spend more; I'm comfortable as I am." That's the standard response planner Dana Anspach says she gets from some of her retired clients when she tells them they can easily afford to spend more than they currently are.

"If you've built a good level of assets because you were frugal and had disciplined savings habits, you don't like to see that number go down because of what may seem like unnecessary or even frivolous spending," she says. "But people often mistakenly think they have plenty of time to have the experiences they'll savor as memories when they're older, given that retirement may last 20 or 30 years or more. In reality, though, you may only have a dozen years or so when your health and energy allow you to travel and pursue other activities that could make your retirement more enjoyable."

Mark Stancato, a CFP and founder of VIP Wealth Advisors in Decatur, Ga., recalls a couple who retired in their early sixties and were initially reluctant to spend beyond their regular expenses despite his assurances that they could easily afford to do more. By their late sixties, they were eager to travel. But by then, one spouse had developed back problems, and the other had heart issues. Their mobility was limited, they couldn't stray far from their doctors, and the trips were no longer viable.

"So many people do an amazing job in the accumulation phase of retirement planning, but no one teaches them the decumulation phase," he says. "It's hard to go from a scarcity mind-set to an abundance mind-set after 40 years of working and saving."

Retirement coach Laura puts it this way: "People worry too much about running out of money and maybe not enough about running out of time."

To make sure neither outcome happens to you, here's what experts recommend.

1. Run the numbers

Getting yourself to spend what you can comfortably afford in retirement is typically less of a math problem and more of a mind-set challenge, experts say. But numbers are the starting point. If you don't know how much money you'll have in retirement from all sources, the income those assets will generate, what your fixed expenses are and what bumps in the road might cost you, it's tough to get past the fear of running out of money — or make adjustments if your concerns have some justification.

Yet many people aren't clear on this front. Research by J.P. Morgan Asset Management shows that 56% of workers don't know their savings target for retirement. And few people have a strategy for drawing down their assets once they get there, a Texas Tech University study found. Among those who do, less than one-third think it's a good plan.

The bottom line: If you're winging it when it comes to figuring out how much you need or are nervous about your plan, you're likely to err on the side of caution in terms of spending.

"Even if you have a very meaningful amount of wealth, you still need a plan to spend it down," says Michael Conrath, chief retirement strategist at J.P. Morgan Asset Management. "Otherwise, when you see that account value go down, the emotions kick in, and you start to pull back on the reins."

You can work with an adviser to devise a plan (find candidates via a directory such as napfa.org, letsmakeaplan.org or garrettplanningnetwork.com). Or you can do it yourself using planning software, such as Boldin (free for basic; $12 a month for advanced features), MaxiFi ($109 a year for a standard plan; $149 for premier) or WealthTrace ($229 a year, standard; $289, deluxe).

Whichever route you choose, experts say the plan should be dynamic, stress-testing various scenarios and accounting for how spending may change from year to year and through the various phases of retirement, from most to least active, as your health and energy level dictate.

Says Stancato, "The point of the exercise is to provide clarity that you will be okay."

2. Duplicate a paycheck

What would make you feel more comfortable spending money on pleasurable activities in retirement — say, to take a vacation or go out to dinner with friends: receiving an extra $10,000 a year, guaranteed, for life or getting a one-time lump sum of $140,000?

That's the question Blanchett and Finke put to more than 2,000 Americans in a 2024 study. If you're like most of the respondents, you probably chose that guaranteed 10 grand a year, even though the amounts are actually equivalent — $140,000 is about how much it costs to buy an annuity that would generate $10,000 in income annually for the rest of your life. But the form the money comes in makes all the difference to your comfort spending it.

Analyzing data from the Health and Retirement study, the two researchers also found that retirees with assets that generate steady, guaranteed income that essentially mimics a paycheck — think Social Security benefits as well as pensions and annuities — spend twice as much as retirees with an equivalent amount in savings. In a study this year, J.P. Morgan similarly found that among retirees with comparable levels of total wealth, those with 60% to 80% of that wealth coming from guaranteed sources of income spent significantly more than people who held most of their money in retirement accounts — 44% more, in the case of households worth $1 million to $3 million.

"Generally speaking, as humans, if we have a paycheck coming in, we're somewhat wired to spend it," Conrath says. "The components of wealth dictate our behavior."

If your Social Security benefits and any pension income you get don't cover your essential expenses, advisers say you might consider buying an annuity to close the gap. If you've kept some of your savings in a former employer's 401(k), look first to see whether the plan offers an annuity option. An estimated 14% now do.

Or you can purchase an annuity on your own. Financial experts suggest favoring plain-vanilla, low-fee immediate annuities from highly rated insurers such as Guardian and New York Life. Comparison shop for the best payouts and terms at sites such as ImmediateAnnuities.com and BlueprintIncome.com.

3. Press the easy button

One drawback to annuitizing income: In a world where retirees crave simple strategies, the setup isn't easy. The buying process can be overwhelming, and taking a large sum from savings for the investment can feel painful.

An easier alternative, perhaps, is to set up regular, automated withdrawals from savings to checking or whatever financial accounts you prefer — say, every two weeks or bimonthly, just as many people received their paycheck by direct deposit during their working years. In effect, the system is like a reverse 401(k). You can determine the amount and intervals that make sense, with the help of a financial adviser or a planning tool, and revisit and adjust periodically as needed.

"Essentially, you're applying the same process — automation — that we've learned works successfully to build savings in the accumulation phase of retirement planning to the decumulation phase," says Blanchett. "And because it feels like a paycheck, you're in effect giving yourself a license to spend that money."

4. Leverage mental accounting

Stancato takes the process a step further with some of his clients and splits withdrawals from retirement savings among a few separate accounts, earmarked for specific types of guilt-free spending. "We might label one 'travel,' another 'family experiences' and another one 'fun,' " he says.

The process takes advantage of a behavioral concept called mental accounting. If you designate a certain pool of money for a particular purpose such as travel, you're more likely to use it for trips and not for, say, grocery shopping or to pay your property taxes. "It helps with the psychological barriers to spending, almost like you're giving people permission to spend on the stuff they'll enjoy," Stancato says.

You can also use this kind of bucketing strategy to help address any specific worries you have about money in retirement that may hold you back from spending, Laura says. Anxious about how you'd pay for long-term care if you need it one day? Laura recommends putting enough money in a separate, dedicated account to cover a year's stay in a nursing home — about $120,000, or as close to that as you can manage — so you know you have that expense covered.

Similarly, he says, setting aside enough money in a separate cash account to cover your essential expenses for 12 to 18 months, when combined with other income — about how long a typical market downturn lasts — gives you the peace of mind that you won't need to pull money from your investments at exactly the wrong time if stock prices plummet.

"Segregating assets or being intentional with allocations reduces anxiety and allows you to spend the rest of your money more freely knowing you've got your personal worst-case scenarios covered," Laura says.

5. Aim for no regrets

Laura has a "reframing regrets" exercise that he uses with clients to help direct their discretionary spending to what matters most to them. He asks: What do you want to avoid regretting over the next one, three, five and 10 years?

Inevitably, he says, the answers center around health and family, and on experiences, not possessions. "They'll say, I'd regret not exercising more or taking better care of myself; I'd regret not going on that riverboat cruise with my spouse or taking the grandkids to Disney or renting an Airbnb in Florida or Arizona and flying the whole family in to be together," Laura says. Then he helps them turn the thought into an intentional goal, including a plan to pay for it.

"The idea is to create a no-regrets retirement," Laura says.

Lamas says that kind of introspection — a personal conversation with yourself or a trusted confidante or adviser about what a life well lived looks like for you — helps align your spending with your values. She suggests putting a date on the calendar, once a year, when you take yourself to a coffee shop for a couple of hours and map out your goals for the 12 months ahead, thinking about what activities best reflect your values and how much income you can contribute to the process.

"Many people view retirement as the end point, but that does everyone a disservice," Lamas says. "A lot of our initial goals for retirement — a bucket-list trip, renovating the house, playing more golf — are one-time, big-ticket items that can be accomplished in the first year or lose their gleam after a while. It's important in retirement to keep on dreaming."

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

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Will you live to 100, or do you think you're more the mid-80s type? What about full retirement age? Will you make it there?

Who knows, but judging from the numerous articles, podcasts, TV shows and books about longevity, it sure looks like we are supposed to know or at least have a good sense of how long we're likely to live. If we get the math wrong, we face a retirement shortfall — or we pass away before ever enjoying the money we sacrificed to save.

To play it safe, most financial advisers suggest saving as if you'll live to age 92 for men and 94 for women. However, that baseline doesn't help you decide when to claim Social Security or whether to take a pension as a lump sum vs lifetime payments. It also won't tell you if life insurance is really worth the cost. That's why longevity is such a huge topic; without knowing your own, you're essentially flying blind when it comes to planning for your retirement.

"What happens if you die too soon? You want to have something to cover your family and loved ones when you are no longer here," says Kristin Cook, chief underwriting officer at National Life Group. "Or what if you live too long? How much do you really need to live the type of lifestyle in retirement you want to have?"

How can you tell if you have longevity on your side? From your family tree to your daily habits, here are four ways to know.

1. Your parents and grandparents lived long, healthy lives.

When determining longevity, one of the first things financial advisers, actuaries and underwriters look at is your family tree, which includes information about your parents, grandparents and siblings.

"The overall health of your parents and grandparents plays into a lot of important health factors," said Cook. "Indicators of mortality are genetically based. Cancer, any cardiac risk, high blood pressure and high cholesterol can be passed on from generation to generation."

Other hereditary factors that can influence longevity include:

• Family history of Type 2 diabetes and metabolic diseases
• Genetic predispositions to Alzheimer's disease or dementia
• Autoimmune disorders like rheumatoid arthritis or lupus
• Inherited longevity genes, such as those affecting cellular repair and inflammation

2. You prioritize clean eating and daily movement

Even if your parents and grandparents lived until 100, that doesn't guarantee you will too. Genetics plays a big role in longevity, but so does lifestyle.

According to a study published in the journal Science, roughly 50% of lifespan is determined by lifestyle and environmental choices.

"Are you eating steak and drinking whiskey every night?" said Eric Ludwig, director of the American College of Financial Services Center for Retirement Income. "You have to consider your lifestyle choices" when thinking about longevity.

Some of the lifestyle factors that can influence your longevity include:

• Diets high in saturated fats and ultra-processed foods
• A chronic lack of physical activity and sedentary habits
• High levels of unmanaged stress, which elevate long-term cortisol
• Heavy alcohol consumption, drug use or tobacco use

"Certainly, a person's health matters. Are you active or obese? Do you take care of yourself? What kind of retirement lifestyle are you living?" said Kelly Regan, a Vice President and financial planner at Girard Advisory Services.

"The previous generation sat in their recliners and watched daytime shows and led a non-active lifestyle," she said. "A lot of people live more active lifestyles now and have better brain and body health."

3. You have strong social connections

Loneliness can kill, which is why it's a factor that impacts longevity. Studies have consistently shown a clear correlation between early death and a lack of social connections.

"I find that clients who struggle (with social connections) tend to live shorter lives," said Regan.

Some of the effects of loneliness on longevity, according to the World Health Organization, include:

• Risk of stroke
• Heart disease
• Diabetes
• Cognitive decline
• Premature death

On the flip side, the WHO says social connections can protect your health across your lifespan by reducing inflammation, lowering your risk of serious health problems and fostering positive mental health.

4. You get a good night's sleep and move during the day

Do you toss and turn all night? Do you spend your working days sitting at a desk? If you answer yes to one or both of these questions, you could be shortening your lifespan.

"Sleep is a really big factor," said Cook. Plus, "there have been many studies that sitting all day is just as bad as smoking a pack of cigarettes."

Sleep is particularly important for your body to repair. But just how crucial is sleep for longevity? A recent study of 172,000 adults found that men who got enough sleep lived five years longer than men who didn't. For women, getting enough sleep gave them two additional years of life. How much sleep is ideal? About seven hours, experts say.

Getting too little sleep can impact your longevity in the following ways:

• Disrupted cellular and DNA repair, which accelerates biological aging
• Chronic systemic inflammation, which is a known cause of cardiovascular disease
• Impaired brain toxin clearance, which increases long-term risks for neurodegenerative diseases like Alzheimer's
• Metabolic dysfunction, which increases the chances of developing Type 2 diabetes

Inactivity during work can impact longevity in the following ways, according to the Mayo Clinic:

• Lead to obesity
• Raise the risk of death from heart disease and cancer
• The same risk of dying as smoking
• Causes metabolic syndrome

The good news is you can mitigate some of the negative impact by standing at intervals during the workday and getting 60 minutes of daily exercise.

Live but be aware

Longevity is important to financial planning, but nobody knows for sure how long they will actually last on this earth. That's why understanding these biological and lifestyle factors is so integral.

Understanding your own capacity for longevity can help you find a balance between planning for a lifetime and living like there's no tomorrow.

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More and more retirees are "retiring" from retirement.

Data from the National Institute for Occupational Safety and Health shows the number of retirement-age Americans in the workforce is growing.

And in a survey by Asset Preservation Wealth & Tax, 51% of respondents who'd reached retirement age said they plan to work indefinitely.

The reasons for retirees planning to work into their later years vary. Some simply have to from a financial perspective, while others want to live an active, purposeful life.

However, working during retirement brings challenges and trade-offs, especially when it comes to Social Security benefits, taxes and healthcare. The decisions you make about when to start claiming Social Security and whether you plan to keep working can have lasting consequences.

The pitfalls of claiming Social Security too early

A common phrase we hear is, "I'll just take my Social Security benefits at age 62." While it's true this is the first age you can start claiming benefits, doing so can backfire, particularly if you keep working.

If you claim and continue working before reaching your full retirement age, which is between 66 and 67 depending on your birth year, a portion of your benefits may be temporarily withheld owing to Social Security earnings limits.

For 2026, you can earn up to $24,480 before benefits will be withheld. In the year you reach full retirement age, the earnings limit increases to $65,160. After you reach your full retirement age, there are no earnings limits.

Upon reaching full retirement age, your benefit amount will be recalculated to give you credit for any benefits reduced and withheld.

Additionally, once you've started collecting Social Security, stopping and starting benefits is complicated and can permanently reduce your lifetime payments. It's not a switch you can easily flip on and off.

Bridging the healthcare gap: Age 62-65

Another major issue for people who claim Social Security benefits early is healthcare. Medicare eligibility doesn't begin until age 65, so if you leave your employer's health plan and retire at 62, you'll need to find coverage on the open market, which can get expensive.

Working part-time may provide access to employer healthcare, but that could put you at risk of exceeding the Social Security income limits. You could turn to private insurance, but the premiums can easily use up a large portion, or even all, of your Social Security check.

The three-year gap between age 62 and 65 is one of the most overlooked in retirement planning. I recommend sitting down with a financial adviser to go through all of your options before claiming early and potentially setting yourself up for financial failure, watching sky-high out-of-pocket premiums drain your savings faster than expected.

Income, taxes and the cost of working in retirement

Even after reaching full retirement age, when the Social Security earnings limit no longer applies, income from work can still impact your finances. That's because it depends on your total income.

If you're single and your combined income, the sum of your adjusted gross income (AGI), non-taxable interest and half of your Social Security, exceeds $25,000, or $32,000 for married couples, up to 85% of your Social Security benefits may be taxable.

In other words, the more you earn from working, the more you may have to give back in taxes. It's not necessarily a reason to stop working, but it does highlight the importance of strategically coordinating your income sources.

Knowing when to claim

Many people think waiting to claim Social Security until age 70 is always the best option, since benefits grow by about 8% each year after full retirement age until age 70. While that may maximize the amount you receive every month, it's not right for everyone.

For some retirees, the time value of money may matter more. For example, some may start taking benefits at 67 or 68 and use that income strategically by reinvesting it, reducing portfolio withdrawals or using it to strengthen their overall retirement cash flow.

There's also a break-even point, where the total amount collected by claiming early can surpass what you'd get by delaying. For married couples, it often makes sense to strategically stagger claims, with one spouse claiming earlier and the other delaying for a higher survivor benefit.

At the end of the day, there's no one-size-fits-all when it comes to claiming Social Security. It all comes down to finding the right balance of longevity, income needs and your overall financial plan.

Social Security should supplement, not replace, your income

Social Security was never designed to be the sole source of retirement income. It was meant to supplement, not replace, your paycheck.

You will likely need around 70% of your pre-retirement income to maintain your current lifestyle, and Social Security was only meant to cover about 40% of that.

That isn't to say Social Security doesn't matter. After all, those benefits come from decades of contributing payroll contributions. It's money you've earned. While the benefit may not be life-changing, it can still help cover major expenses, such as housing, travel or healthcare.

The importance of having a plan for claiming Social Security

Working in retirement can be incredibly rewarding, personally and financially. But it also requires strategic planning, especially if you plan to claim Social Security early.

Deciding when and how to claim Social Security is one of the most important financial choices retirees make because reversing your initial decision can be complicated and costly.

Before you claim, make sure you understand how your job, income and healthcare could affect your benefits. Working with a financial professional who can help you strategize Social Security with your overall financial plan can make a big difference. The right timing and strategy can help you keep more of what you've earned and lead to a more confident 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.

As children reach adulthood, many parents assume they'll still be able to step in when needed. In reality, that dynamic often changes quickly. Once a child turns 18, parents can lose both visibility and influence in ways they may not expect.

That's why I suggest having two difficult conversations that can make a meaningful difference: The first helping your children build financial literacy, and the second ensuring you can support them effectively in a medical emergency.

Neither is especially comfortable, but both are far easier to have now than after something goes wrong.

Conversation one: Talk openly about money

Parents are often reluctant to be transparent about money with their children. Some think they're shielding their kids from stress; others are just trying to practice good manners. But in practice, silence creates confusion.

When parents don't explain what's happening financially, children tend to fill in the gaps on their own. And those assumptions are often negative.

In my work with clients in their 20s and 30s, I see the long-term effects of this all the time. Some develop a persistent fear that they'll never be financially secure, even when they're doing well. Others assume a certain lifestyle is easily attainable, only to find themselves living far beyond their means.

Much of this comes down to a lack of context. Income and lifestyle are not always aligned in obvious ways. Some high earners live modestly, while others stretch their budgets to maintain a certain standard of living. Without visibility into the numbers behind those choices, children can develop a distorted understanding of what things actually cost.

That's why it's important to start talking about money earlier, and more specifically, than many families are comfortable with. If you start with simple conversations in the early teenage years, and let the discussions become more detailed as the child grows up, they should have a working understanding of how money functions in day-to-day life by the time they prepare to leave for college or turn 18.

That may include not just opening a bank account, but also:

• How to use debit or credit cards responsibly and build strong credit
• How to budget for fixed and variable expenses
• How student loans, interest and repayment work
• The importance of saving early and how compounding works
• The difference between gross and net pay (including taxes and benefits)

This doesn't mean sharing every detail, but it does mean giving your children a clearer picture of how financial decisions are made. That can include discussions around income ranges and career paths, the cost of housing and day-to-day expenses, savings and investment priorities and trade-offs, and financial setbacks.

Be candid about the full picture, and your children will begin to develop a more intuitive understanding of how money works.

You might also consider bringing a third party into the conversation. If you work with a financial adviser, your child could sit in on a meeting. Hearing these discussions from an objective professional can make the information feel less charged and more credible than when it comes directly from a parent.

Over time, this kind of exposure can reduce anxiety and build confidence. Instead of reacting to money problems with fear or avoidance, your children can begin to see it as something they can understand and manage.

Conversation two: Prepare for a medical crisis

Once your child turns 18, you may assume you'll still be able to step in if something goes wrong. Legally, that's no longer the case.

Under federal privacy laws, doctors and hospitals generally cannot share medical information with you without your child's written consent. That means parents can find themselves in the ER unable to get updates, speak with physicians or understand what's happening in real time.

Consider an unfortunately common scenario: A student experiences a severe mental health episode away from home. Without prior authorization, parents may not be able to speak with providers, review treatment plans or even confirm what care is being given. But with the right documents in place, they can stay informed and provide support when it matters most.

This is why the conversation needs to happen early. You might even make it part of the college send-off, alongside setting up a bank account.

The most important step here is signing a Health Insurance Portability and Accountability Act (HIPAA) authorization form, which authorizes medical providers to share information with you. While HIPAA is a federal law, the specific forms and requirements can vary by state, so it's also important to confirm local requirements.

But remember that this is a conversation. Your adult child may have their own concerns about privacy or independence. Framing this as a way to support them, not control them, can make the discussion more productive.

Don't wait until something goes wrong

These are not conversations you want to delay until something goes wrong. Financial habits are far easier to build early than to correct later, and in a medical crisis, preparation may determine whether you can step in at all.

Discussing both proactively can give your children a stronger foundation for navigating adulthood. These conversations may feel uncomfortable in the moment. But they are far less difficult than the confusion and stress that can arise when these issues are left unaddressed.

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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 people don't begin planning for retirement until later in life. Saving earlier can feel financially difficult or secondary to more immediate priorities.

But delaying retirement investing comes at a significant cost: time.

Even modest investments made early can grow substantially through compound returns. The longer money remains invested, the greater the opportunity for growth and long-term financial security in retirement.

Household wealth in the United States is highly concentrated. The top 10% of households hold most household wealth, while the bottom half own only a small share.

One major driver of this divide is access to assets early in life and the long-term power of compounding investments. These differences often begin in childhood.

Children who grow up with savings or investment accounts are more likely to learn the basics of managing and investing money. They might hear conversations about markets at the dinner table or learn early how compound growth works. Over time, those experiences can shape confidence, financial habits and long-term participation in investing.

Many children, however, don't have those advantages. They enter adulthood without access to financial assets or foundational financial education.

As a result, many begin working without understanding the value of a 401(k), long-term investing or how small, consistent contributions can grow over decades. The result is a head start for some and a delayed starting line for others.

That is why proposals for child investment accounts are generating renewed conversation around early wealth-building and financial capability.

The Trump Accounts or 530A accounts create $1,000 pre-seeded investment accounts for children at birth. The broader principle behind them is straightforward: The earlier investing begins, the more powerful its long-term impact can be.

Educational tools should accompany these accounts. Free educational programs such as the SIFMA Foundation's Family InvestQuest™ and Summer Stock Market Game™ can help families build financial knowledge alongside saving and investing habits.

The power of time in investing

One of the simplest truths in finance is also one of the most important: Time is an investor's greatest advantage. The reason is compound growth — investment returns generating additional returns over time.

Consider a simple example. If $1,000 were invested at birth and earned an average annual return of 7%, that single deposit could grow to roughly $3,400 by age 18 without adding another dollar.

If family members contributed an additional $50 per month, the account could grow to about $25,000 by age 18.

If those contributions continued into adulthood, the balance could grow to more than $500,000 by age 59½.

The lesson is clear: Starting early often matters more than investing large amounts later.

But access to that early starting point is not equal for all families.

The growing conversation around early asset-building

Policymakers and financial educators have increasingly explored ways to expand access to investment accounts earlier in life.

Proposals for child investment accounts are built around a simple concept: Create an investment account at birth, provide an initial deposit and allow families, friends or employers to contribute over time.

Similar programs have been tested in several states and cities. Research highlighted by the Milken Institute suggests these child savings accounts or child development accounts are associated with improved financial security, stronger educational outcomes and higher long-term earnings potential.

Children with savings accounts are more likely to attend college, develop stronger savings habits and build greater financial confidence as young adults.

Even relatively small balances can grow meaningfully over nearly two decades. But the benefits might extend beyond the dollars themselves.

When children grow up knowing they have an investment account, they could begin to see themselves as participants in the financial system and future long-term investors.

Access and education must go hand in hand

Expanding access to investment opportunities is only part of the equation. Financial education is equally important.

Through programs such as the SIFMA Foundation's Summer Stock Market Game™ and Family InvestQuest™, families can learn the fundamentals of investing — including diversification, market volatility and long-term planning — in an engaging and accessible way.

Participants manage simulated portfolios using real market data while learning concepts such as asset allocation, risk management and long-term investing.

Research on SIFMA Foundation's financial education programs has found that participants demonstrate improved financial knowledge, greater confidence in investing and stronger engagement with economic concepts.

Such experiences can help demystify investing and prepare young people to make informed financial decisions and avoid when they begin managing real assets.

Financial education can also help young people understand the long-term impact of compounding and the value of beginning retirement investing early.

A step toward a more inclusive financial future

No single policy will close the wealth gap or solve decades of structural inequality. Financial security depends on many factors, including education, income stability, savings habits and access to financial tools.

But initiatives that encourage early asset-building and financial education represent a meaningful step forward. They expand participation in investing, introduce financial concepts earlier and allow time — one of the most powerful forces in wealth creation — to work in the next generation's favor.

For families, the lesson is simple: The earlier conversations about saving and investing begin, the greater their long-term impact can 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.

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at five tax questions on inherited property, including the tax basis upon death. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Inheriting gold and silver

Question: I own highly appreciated gold and silver bars and coins. When I die, will my children get a stepped-up basis in this property?

Joy Taylor: Under the tax law, a decedent’s unrealized gains aren’t hit with federal income tax at death, and heirs step up or step down their basis in the assets they receive, equal to fair market value on death. So yes, your children would take a stepped-up tax basis to fair market value in the gold and silver bars and coins that they inherit from you.

2. Inheriting property with a built-in loss

Question: I own stock that currently has a built-in loss, meaning I paid more for the shares then what they are now currently worth. If I die tomorrow, what tax basis will my heirs take in the stock?

Joy Taylor: Under the tax law, a decedent’s unrealized gains aren’t hit with federal income tax at death, and heirs step up or step down their basis in the assets they receive, equal to fair market value on death. Not many people are aware that when they inherit loss property, they take the lower fair market value at the time of death as their tax basis in the property. That's because most estate planners and tax advisers focus on stepped-up basis for appreciated inherited assets.

If you die tomorrow, your heirs' basis in the stock would be the fair market value of those shares upon your death, which would be a lower tax basis then what you actually paid for the stock. This means that the built-in capital loss in your shares is gone forever. You may want to think about selling the loss property before you die, so that you can take advantage of the capital loss, especially if you have other capital gains that the loss could offset.

3. Tax rules for a jointly-owned home

Question: My spouse and I jointly own our home, which has substantially appreciated. How do the tax basis rules work if one of us dies?

Joy Taylor: With regards to your house, which has appreciated, if you don’t live in a community property state, half of the home will get a step-up in basis upon the death of the first-to-die spouse. The rules are more generous if the house is held as community property. The entire basis is stepped up to fair market value when the first spouse dies.

4. Inheriting rental property

Question: I own rental property that has appreciated since I first bought it. When I die, I plan to leave it to my child. Does he get a step up in basis in the property upon my death? Also, what happens to the depreciation that I had previously deducted on the property?

Joy Taylor: The answer to your first question is yes, your beneficiary would take a stepped-up tax basis in the rental property when you die. That means your child's basis in the inherited property would be its fair market value on the date of your death.

I haven't looked at the depreciation issue before, but it is my impression that your depreciation essentially disappears when you die. Again, your beneficiary takes a stepped-up tax basis in the property. If he decides to keep renting the property, he would depreciate it over 27.5 years, beginning in the year he inherited it and using the stepped-up tax basis.

5. Tax rules for co-owned stock

Question: My mother bought shares in a company in 1987 for $2300. The stock is now worth over $400,000. At some point between 1987 and 1997, she added my name to the shares as joint tenancy. She died last month, and now I own all the shares. What is my cost basis in the shares?

Joy Taylor: I don't know for certain, but I will give you my thoughts. I think when your mom added your name to the shares as joint tenancy, it is treated for tax purposes as if your mom made a gift of half of the stock to you. If it is considered a gift, then I would think your tax basis in the shares equals half of your mom's original cost basis plus half the value of the shares on your mom's date of death.

About Ask the Editor, Tax Edition

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

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

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

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