Roth conversions have recently become one of the most popular retirement tax planning strategies. Financial headlines often promote them as a way to create tax-free income, reduce future required minimum distributions (RMDs) and leave a more tax-efficient legacy to heirs.

For many retirees, those benefits are real.

But Roth conversions aren't a one-size-fits-all solution. In fact, as a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that converting retirement assets at the wrong time can result in paying more taxes than necessary and reduce your long-term wealth.

The key question isn't whether Roth conversions are good or bad; it's whether paying taxes today will save you on taxes in the future (I wrote a bestselling book all about taxes — you can request a free copy here).

Below are six situations where retirees may want to think twice before converting.

1. You don't have a pension

One of the biggest factors in determining whether a Roth conversion makes sense is your expected future tax bracket. For retirees without a pension, their future taxable income is often lower than it was during their working years, as many rely primarily on Social Security and modest withdrawals from retirement accounts.

As a result, they could remain in relatively low tax brackets throughout retirement.

Today's tax code also includes a generous standard deduction (up to $32,200 for 2026). For some retirees, that deduction might shelter most or even all of their taxable income.

If you expect to stay in a lower tax bracket for life, voluntarily accelerating taxes through a Roth conversion might not provide as much benefit.

By contrast, retirees with substantial pensions often face a different reality. Pension income can create a permanent tax floor that follows them throughout retirement, making Roth conversions far more attractive in certain cases.

2. You have less than $500,000 in tax-deferred accounts

Your account size matters. When evaluating Roth conversions, it's important to consider future RMDs. Starting at age 73 (or 75 for many younger retirees), the IRS requires withdrawals from traditional IRAs and other tax-deferred retirement accounts.

However, smaller account balances produce smaller RMDs.

For example, a retiree with $500,000 in a traditional IRA might have an initial RMD of roughly $20,000. Combined with the standard deduction and other available tax benefits, that withdrawal could have little impact on their overall tax situation.

If your retirement savings aren't large enough to create a meaningful future tax burden, converting assets today could mean paying taxes earlier than necessary without generating significant long-term savings.

3. Your tax rate today is higher than it will be in retirement

At its core, a Roth conversion is a tax-rate arbitrage decision. You're choosing to pay taxes now because you believe you'll pay the same or even a higher rate later. This strategy falls apart if the opposite is true.

Consider someone in their peak earning years who is currently in the 32% federal tax bracket. If they have no pension and moderate retirement savings, they may eventually find themselves in the 12%, 22% or even lower brackets after they retire.

In that scenario, converting assets while working could mean prepaying taxes at a significantly higher rate than what would have been owed later.

Before converting, retirees should estimate their likely retirement income rather than assuming their future tax rate will automatically be higher.

4. You're planning to retire early

One reason not to do Roth conversions today is that you could have a better opportunity later. Early retirement often creates what planners call a "tax window": A period after earned income stops but before Social Security, pensions and RMDs begin.

For example, someone retiring at age 58 might have several years when taxable income drops dramatically. During those years, they can often perform Roth conversions in much lower tax brackets than they could while working.

This window can be particularly valuable because it could allow retirees to:

• Convert assets before Social Security becomes taxable
• Avoid increasing Medicare premiums tied to higher income
• Fill lower tax brackets more efficiently
• Reduce future RMDs

Rather than converting aggressively during high-income working years, some retirees may benefit from waiting until these lower-income years arrive.

5. Your children might be in lower tax brackets than you

Many Roth conversion discussions focus on leaving tax-free assets to heirs. This can be an advantageous legacy planning strategy, but it isn't always the right answer.

Today's inherited IRA rules generally require most non-spouse beneficiaries to empty inherited retirement accounts within 10 years. Because of this rule, many parents assume they should convert everything to Roth accounts, but there are considerations to think about.

The better question is: What tax bracket will your children be in when they inherit the money?

If your children have higher incomes than you, significant retirement savings of their own or expect to remain employed during those 10 years, Roth conversions may make more sense because each of these could result in your children paying more taxes down the road than you would have paid.

But if they're likely to be in lower tax brackets than you, allowing them to inherit traditional IRA assets could result in a lower tax bill being paid across generations.

Legacy planning shouldn't focus only on your tax rate, but should also account for the tax situation of the people who will ultimately receive the assets.

6. You're single today but expect to marry

Tax brackets are not static. A single retiree who expects to get married in the near future could gain access to larger tax brackets and a higher standard deduction through married-filing-jointly status.

In some situations, waiting until after marriage to perform Roth conversions can create additional flexibility and allow larger conversions at lower effective tax rates.

This isn't a common planning strategy, but it's one that can be overlooked when evaluating conversion opportunities.

Bonus consideration: You're moving to a lower-tax state

State taxes can significantly influence the math behind a Roth conversion. Someone working in a high-tax state, such as California, may pay an additional 7% to 10% or more in state income taxes on converted dollars.

If that same person plans to retire in Florida, Tennessee or another state with no income tax, waiting would likely generate sizable tax savings.

In some cases, the difference between converting before and after a move can amount to tens of thousands of dollars.

The bottom line

Roth conversions can be an incredibly effective tool, especially for retirees with pensions, large tax-deferred balances and concerns about future taxes. But the goal isn't to convert simply because Roth accounts sound attractive. The goal is to minimize your lifetime taxes.

Related Content

• If You're Converting to a Roth IRA, Don't Do It Like This
• 5 Reasons Roth Conversions and Pensions Work Well Together
• This Changes Your Social Security Decision (Especially if You're in the 2% Club)
• 7 Times to Dip Into Your Roth IRA if You Have a Pension (and When to Leave It Alone)
• 3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You

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

"I feel like we'll never actually retire."

"We make good money. But what retirement? It keeps moving further away."

"I don't want to abandon my kids. But I also don't want to work until I'm 67 to make sure they're OK."

These aren't quotes from struggling households. They're what I hear regularly from Gen X professionals, dual-income earners in their late 40s and early 50s with real portfolios and real incomes.

They're high earners with strong intentions — and a quiet but growing line item that almost none of them budgeted for: The Bank of Mom and Dad.

Picture this household: Both spouses are 49 with a combined income of $400,000 and an investment portfolio of $1.5 million. They want to retire at 60 to live on $175,000 a year in retirement, but feel as if they've finally earned the life they've been building.

Yet, $50,000 a year is quietly flowing out of that household to support two adult children, $25,000 each.

• One is 22, in her final year of college and living on campus but relying on her parents for tuition, a car, insurance and everyday expenses.
• The other is 27, recently engaged, living at home, needing help with a wedding and, eventually, a home down payment.

Neither child is a failure. Both parents are generous. But without a plan, that $50,000 is on its way to $70,000. In the 11 years before this couple wants to retire, that unstructured support will cost them far more than money.

People in these circumstances feel behind because they are. It's not because they failed, but because no one helped them plan for this.

The situation is fixable, but only if it changes before the window closes.

The Gen X retirement squeeze is real and getting worse

Research by the Alliance Retirement Income Institute found that Gen X is the least financially prepared generation for retirement by nearly every measure. While Baby Boomers dominate the headlines, Generation X faces an even greater retirement crisis.

In 2025, the eldest Gen Xers entered their 60s, with multiple studies highlighting their lack of retirement preparedness, compounded by their status as a sandwich generation simultaneously caring for aging parents and supporting young adult children.

Meanwhile, roughly one in three adults ages 18 to 34 in the U.S. live with a parent, according to 2025 Census data, up slightly from the year before. A growing share aren't just living at home; they're financially dependent, sometimes deeply so.

For the theoretical household described above, the $50,000 in annual support isn't the only problem. It's what that number becomes. If support continues growing with life events, the wedding, the down payment, extended college costs, ongoing lifestyle needs, that figure reaches $70,000 per year with no defined exit point.

Over the 11 years before their target retirement at 60, unchecked support will have redirected hundreds of thousands of dollars that could have been compounding in retirement accounts, brokerage investments, and tax-advantaged savings.

That's not a small gap. That's a retirement.

One question before we run the numbers

I want to start where I start with every client, with a question I've asked clients for years: "Are you content with the financial and emotional investments you have placed into your adult children thus far?"

If the answer is yes, that doesn't mean you continue indefinitely. It gives you permission to transition from guilt to intention, moving from reactive support to aligned support.

If the answer is no, that doesn't mean you've failed. It means you have clarity.

This question is the foundation of my work on boomerang parenting and what it costs Gen X families, and I've explored it in depth in my Bank of Mom and Dad planning guide.

What I've found across thousands of conversations is that most parents aren't irresponsible. They're unresolved. They haven't yet asked the question that turns support from a reflex into a plan.

What the numbers show

To fund $175,000 annually in retirement, using a 4% withdrawal rate as a planning baseline, this couple need about $4.375 million at age 60. They have $1.5 million today. That leaves a gap of roughly $2.875 million to build in 11 years, achievable with disciplined savings and compounding, but only if their dollars are pointed in the right direction.

Currently, $50,000 per year is flowing to adult children. If the 22-year-old transitions to financial independence after graduation but the 27-year-old's needs continue to grow through wedding costs, a down payment, ongoing lifestyle support after marriage, that figure reaches $70,000 or more per year with no defined end.

Ameriprise Financial found that working parents contribute 2.3 times more to their adult children than to their own retirement accounts each month. For this household, that ratio is quietly becoming true.

Just as the structure of an adviser's fee can quietly compound against retirement outcomes over time, so can unstructured household outflows. The Bank of Mom and Dad is one of the largest untracked line items in a Gen X financial plan.

The compounding cost of that drift is measurable. Here's the planning illustration:

That $510,000 to $625,000 difference is not a rounding error. It's the gap between retiring at 60 and working until 63 or 64. It is the gap between retiring with confidence and retiring with the same anxiety that followed this household through its peak earning years.

"We don't want to abandon them. We just don't know how to stop."

That's a conversation worth having before the numbers get worse.

The catch-up window: Use it or lose it

What makes the next decade specifically critical for this Gen X household is that the tax code is actively rewarding people in their situation, if they act.

For 2026, participants in most 401(k), 403(b), governmental 457 plans and the federal government's Thrift Savings Plan who are 50 and older can generally contribute up to $32,500 each year. That's a $24,500 base contribution plus an $8,000 catch-up for those 50 and older.

The SECURE 2.0 Act introduced super catch-up contributions for those ages 60 to 63. For 2026, the super catch-up limit is $11,250, higher than the standard $8,000 catch-up available to those 50 and older, and designed to help those closest to retirement maximize their savings in the final stretch.

For a dual-income household, this is significant. If both spouses contribute maximally in their 50s and into their early 60s, the combined annual contribution capacity in employer-sponsored plans alone exceeds $65,000 per year, before IRA contributions and brokerage investments.

One note for high earners: Starting in 2026, if you earned more than $150,000 in FICA wages in the prior year, catch-up contributions in employer-sponsored plans must be made on a Roth after-tax, basis.

For a $400,000 dual-income household, this almost certainly applies. This isn't a penalty. Roth contributions build tax-free retirement wealth, but it requires coordination with your plan and your adviser.

Every dollar redirected from unstructured adult-child support into catch-up contributions is a dollar that compounds tax-advantaged for 10 or more years and avoids taxation in retirement. For high earners in peak earning years, this is one of the most direct financial moves available.

The five-step plan for Gen X parents running the bank

Step 1: Get aligned with your spouse or partner first.

Before any conversation with your adult children, get aligned emotionally and financially with each other. Conflicting messages, one parent holding firm while the other quietly supplements, destroy planning integrity and create resentment in both directions.

This alignment conversation covers three questions:

• How much can we afford annually without compromising our retirement security?
• What are we willing to support?
• What's the exit strategy?

Unity is not about being harsh. It's about being honest with each other before you can be honest with your children.

Step 2: Audit the real numbers.

Many parents are genuinely surprised when they total what they're spending on adult children annually. Housing, food, cellphone plans, car insurance, credit card transfers, tuition extensions, medical costs and emergency payments that recur like clockwork all add up to a real line item. For this example household, $50,000 is only the beginning of an honest audit.

Compare that number with current retirement contribution rates, brokerage account contributions, debt-reduction acceleration and lifestyle goals that have been postponed. Seeing trade-offs clearly, in actual dollars, removes guilt and restores agency.

Step 3: Distinguish between support types and set a timeline.

Not all support is equal. A 22-year-old in her final year of college has a clear exit point. A 27-year-old recently engaged and still living at home, needing wedding funds and a down payment, represents a much longer and more open-ended financial commitment if left unstructured.

Ask explicitly: Is this support a bridge or a baseline?

• Time-limited essentials cover final semester costs, a specific medical event or a relocation deposit. These have natural endpoints. Fund them clearly and close the chapter.
• Intra-life transfers are intentional gifts toward wealth-building milestones such as a home down payment or an emergency fund. These can be profoundly impactful and might carry more meaning than a post-death inheritance. They should be deliberate, budgeted and non-recurring.
• Lifestyle subsidies include ongoing rent, car payments, credit card transfers and recurring lifestyle support. These are the most consequential category because they rarely have a defined exit and tend to grow, not shrink, over time.

For the 27-year-old in this household, a one-time, clearly bounded contribution toward a wedding or down payment with a specific ceiling is fundamentally different from continuing open-ended household support into the couple's first years of marriage. Define it now, before the number drifts.

Step 4: Redirect with intention.

If this household redirects $20,000 annually of unstructured support into retirement and after-tax accounts, starting in year three when the 22-year-old finishes college and becomes self-supporting, the compounding difference in the following eight years is substantial.

If both spouses max out 401(k) contributions including catch-up provisions starting at age 50, the annual retirement contribution capacity climbs well above $60,000 per year, enough to put the $4.375 million retirement target within reach.

An after-tax brokerage account deserves focused attention. Unlike retirement accounts, brokerage accounts provide liquidity before age 59½, flexible withdrawal options and the ability to fund retirement expenses from ages 60 to 72 before required minimum distributions begin. For a household targeting retirement at 60, this account isn't optional; it's essential.

Step 5: Have a compassionate, adult conversation.

The financial plan is only as effective as the conversation that introduces it.

With the 22-year-old, the conversation is relatively direct: There is a clear graduation date, and with graduation comes a transition to financial independence. You're there for genuine emergencies, a health crisis or an unexpected job loss, not ongoing lifestyle support. This is not rejection; it's the clearest expression of belief in her capability.

With the 27-year-old, the conversation requires more care. He's newly engaged, wants to build a life, and has been living inside the support structure of his parents' home. Be clear about what you can offer — perhaps a defined contribution toward a wedding or down payment with a specific amount and a specific end date — and equally clear that ongoing housing and lifestyle support has a sunset.

Frame it as preparation, not withdrawal. The boundaries you set today protect both your retirement and his long-term resilience.

Support without structure breeds resentment. Structure without compassion breeds distance. The goal is neither.

What intra-life transfers can do that inheritances can't

The most meaningful financial gifts you can give your adult children might be the ones you give while they're in their 20s and 30s, when a down payment helps them build equity for 30 years, or when early retirement account seeding gives compound growth decades to run.

In my experience, both parents and their adult children often say the same thing when this comes up: They would rather the money have meaning now, when it can change the trajectory of a young family's life, than arrive later as part of an estate settlement.

The key is intentionality. An intra-life transfer that is bounded, purposeful and budgeted into your financial plan is fundamentally different from ongoing support that grows without definition or consent.

For the 27-year-old preparing to buy a home, a structured gift of $20,000 to $25,000 toward a down payment, planned, finite and clearly communicated, might do more lifetime good than a far larger sum left in an estate. It also carries more meaning to both the giver and the receiver when it's given with intention rather than obligation.

Aligned generosity and aligned retirement savings are not in conflict. Your financial decisions should reflect how you actually want to live, not just how you feel in the moment.

Related Content

• How to Help Your Adult Kids Without Hurting Your Retirement
• The Real Cost of Funding Adult Children: Postponing Retirement
• Before You Give Money To Your Kids, Ask Yourself These 3 Questions
• High-Income But Low Confidence? This 5-Point Plan From a Financial Planner Can Fix That
• Why Flat Fees for Financial Advice Work When They're Tied to Value Rather Than Portfolio Growth

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.

Long-term care can become one of the biggest expenses in retirement. Yet, traditional long-term care insurance doesn't fit everyone's budget or needs.

Rising premiums and stricter underwriting have pushed many people to seek more flexible ways to protect their savings and future care choices.

We'll cover what you need to know about long-term care insurance alternatives with modern strategies for wealth protection.

What long-term care policies cover

Long-term care insurance (LTCI) helps pay for the kind of support many people need as they age. Think of assistance with daily activities such as bathing, dressing, eating, walking and buying groceries.

Policies typically reimburse a daily or monthly amount for such services as in-home aides, adult day care, memory care and skilled nursing. The goal Is to preserve assets and give families options when health needs change.

Bryan Henry, president of PeterMD, recommends looking beyond conventional insurance and finding alternatives for long-term care.

"Traditional LTCI has become harder to buy and harder to keep," Henry says. "Premiums run high, which can be unpredictable. Policy language is dense. Benefits can be limited or exclude certain situations.

"Many insurers have left the market over the past decade, and those remaining often require strict medical underwriting. That's why more people are now looking for flexible alternatives."

Here are some strategies to consider.

Long-term care insurance

Hybrid insurance products

Hybrid insurance policies combine life insurance or annuities with long-term care benefits. If you need care, the policy accelerates benefits to cover it. If you don't, your heirs receive a death benefit, or you can access the cash value.

These policies typically come with guaranteed premiums or at least more predictable funding than stand-alone LTCI.

On the tax front, many hybrid benefits are treated as tax-free when used for qualified long-term care under federal rules. See IRS guidance related to qualified LTC benefits and Form 1099-LTC.

Some policyholders use a tax-free 1035 exchange from an existing life insurance policy or annuity to fund a new hybrid contract. Check FINRA's overview of 1035 exchanges.

Annuities with long-term care riders

Annuities can be customized with riders that boost income, or they can provide extra benefits if you become chronically ill. You're essentially building a baseline retirement paycheck with an added layer that helps cover care if needed.

Some riders multiply your monthly benefit for a set period if you need assistance with the activities of daily living. Others waive certain fees during a qualifying care event.

These designs vary widely by carrier, so, you need to understand the contract language, such as how benefits trigger and what counts as covered care.

Health savings accounts (HSAs)

If you're covered by a high-deductible health plan, an HSA can be surprisingly powerful for future care.

HSAs come with a rare triple-tax advantage:

• Contributions might be deductible or pretax
• Funds can be invested and grow tax-free
• Withdrawals for qualified medical expenses are tax-free

Long-term care services and a portion of LTC insurance premiums might qualify as deductible under IRS rules. See IRS Publication 969 and Publication 502.

As contribution limits change each year, check the current numbers before you automate deposits.

Alternative investment strategies

Self-funding and portfolio diversification

Some households prefer to self-fund care. That doesn't mean ignoring the risk; it means creating a dedicated long-term care reserve in your financial plan and investing it thoughtfully.

You might segment a portion of your portfolio as a long-term care reserve sized to your goals and family health history. Match some of that reserve to inflation-protected assets or short-duration bonds to reduce sequence risk.

A TIPS ladder or a balanced mix of stocks and bonds can help keep pace with rising care costs. Keep cash for the first six to 12 months of potential care, then invest the rest for growth and resilience.

You can also add stopgaps (such as a smaller hybrid policy) to cap worst-case scenarios while still relying on investments to cover the bulk of expenses.

Real estate investment

Real estate can serve two purposes: An income source now and a fallback for care later. Here are some potential investments:

• Rental properties can generate predictable cash flow
• Real estate investment trusts (REITs) offer a simpler way to access the sector without being a landlord
• A reverse mortgage can turn home equity into tax-free loan proceeds to pay for in-home help or facility care, but you need to understand interest accrual and repayment rules before signing

Jeffrey Zhou, CEO and founder of Fig Loans, notes that alternative investment strategies work best when real estate and self-funding are integrated into a broader retirement plan. He emphasizes that both portfolio-based funding and property assets can complement each other in managing long-term care costs.

"A well-structured approach that combines diversified self-funding strategies with real estate can provide steady cash flow in retirement," Zhou explains. "This helps offset rising care costs while preserving the underlying assets as part of long-term wealth."

This perspective highlights how a balanced mix of liquid investments and property income can improve financial resilience. It ensures retirees are not overly dependent on any single source of funding for healthcare and long-term care needs.

Government programs and community resources

Medicare and Medicaid

This is where confusion often creeps in. When it comes to government programs, there's a line drawn between the two:

• Medicare covers medical care, not custodial long-term care. It might pay for limited, short-term skilled nursing or rehab after a qualifying hospital stay. However, it's not going to help with activities of daily living that most people eventually need.
• Medicaid does cover long-term care, but only for people who meet strict income and asset rules, which often means spending down savings first. There's also a five-year look-back period on asset transfers in most states, plus complex spousal protections to navigate.

Proper planning helps you qualify for benefits when needed while protecting your life savings and your home. The key is understanding these programs' rules well before you need care.

Local and community resources

Don't overlook your local support network:

• Area agencies on aging can connect you with home-delivered meals, transportation, caregiver respite and benefits counseling. Eldercare Locator is a perfect example of this alternative access for older people.
• Nonprofits and faith-based groups often offer volunteer services. They provide older people with long-term care.
• Large organizations, such as AARP Caregiving, maintain extensive caregiver guides and checklists you can use right away.

There are more choices than there used to be

Traditional long-term care insurance isn't your only option. With rising longevity and rising costs, planning ahead makes sense, and you have more choices than you used to.

That's why you should consider hybrid life policies, annuities with care riders, HSAs, a thoughtful investment reserve and even targeted real estate. They can work together to protect both your care choices and legacy.

The sooner you prepare for future care costs, the more financial stability you're likely to have later.

Related Content

• This Trust Can Protect Your Assets From Long-Term Care Costs
• Planning for Care If You Can No Longer Care for Yourself
• I'm a Financial Planner: Here Are 3 Ways to Plan for the Soaring Cost of Long-Term Care
• Four Tax-Friendly Ways to Pay for Long-Term Care Insurance
• How to Negotiate to Lower Your Medical Bills: These Strategies Can Help Reduce Your Costs

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

When our children were little, we taught them how to cross the street, brush their teeth and say "please" and "thank you." Many people started the kids doing chores and earning an allowance. We understood that those conversations were part of raising responsible adults.

Then they turned 18.

Somewhere along the way, many parents assumed that talking about money should stop because their children were now adults. Nothing could be further from the truth.

In fact, adulthood is when the most important financial conversations begin.

The American Dream has changed

Today's young adults are navigating a financial landscape unlike any previous generation. Student loan debt, soaring housing costs, rising insurance premiums, inflation, volatile markets and an uncertain job market have changed the traditional path to financial independence.

Many are delaying marriage, homeownership and having children — not because they lack ambition, but because the economics are dramatically different.

What does this all mean? Almost 80% of baby boomers own homes vs only 26% of Generation Zers being able to or choosing that path of homeownership.

And baby boomers are trying to ease their kids' pain (and perhaps creating more pain for themselves) — about 50% of these parents are helping to offset money pressures for their adult children.

Things aren't rosy for any generation

Meanwhile, older parents are facing their own financial realities. Many are working longer than expected, caring for aging parents while helping adult children and worrying whether their retirement savings will last 30 years or more.

In fact, among Americans 65 and older, about one in five is still in the labor force. And many more have odd jobs or are gig workers.

That creates a generation caught in the middle — and a lot of silence.

Silence is not golden

Silence is expensive.

I elevated the topic of teaching kids about money in the 1980s. I have taught families the lessons of finance for decades, and one truth remains constant: Families who talk openly about finances make better decisions together. Those who avoid the subject often create misunderstandings, unrealistic expectations and emotional landmines.

The goal isn't to lecture your adult children. It's to have a conversation between equals.

Start with your own story

Many parents hide financial struggles because they want to protect their children. Others hide financial success because they don't want to create entitlement. Others carry the baggage from when they grew up that the biggest secrets in the household related to money issues.

None of these approaches helps. Adult children benefit from understanding how their parents made financial decisions, overcame setbacks and learned from mistakes.

Tell your offspring about the first house you couldn't afford. The investment that didn't work. The credit card debt you finally paid off. The promotion that changed everything. How you had to take your Social Security early to make ends meet later in life.

Money stories teach lessons that spreadsheets never can.

Be honest about your retirement

One of the biggest misconceptions adult children have is assuming Mom and Dad will always be financially available. They may quietly assume you'll help with a home down payment, pay for grandchildren's education or leave a substantial inheritance.

Those assumptions can create disappointment —or, worse, poor financial decisions — based on deceit.

A healthier conversation sounds like this: "We've worked hard to secure our retirement because we don't ever want to become a financial burden to you."

That's one of the greatest gifts parents can give.

If you plan to help your children financially, explain what that help looks like. Is it a loan? A gift? A one-time opportunity?

What are the expectations? Clarity prevents conflict.

Discuss inheritance before it's necessary

No family enjoys talking about death. But avoiding estate conversations doesn't protect anyone.

Adult children should know:

• Where important documents are located
• Who has financial and healthcare powers of attorney
• Whether there is a will or trust
• Who the executors are
• The family's overall wishes — not necessarily for every dollar, but the overall plan

Surprises after a death rarely strengthen families. Money issues and unclear expectations can tear a family apart. Do you really want that to be your legacy?

Set boundaries without guilt

Many parents continue financially rescuing adult children well into their 30s and 40s. Sometimes that help is appropriate. Sometimes it delays independence.

Before doling out the next pot of money, ask yourself: "Am I solving a temporary problem or creating a permanent dependency?"

Financial assistance should come with conversations, not conditions. Explain why you're helping, how often you're willing to help and what success looks like. Healthy boundaries strengthen relationships.

Respect your kids' financial choices

Your adult children grew up in a different economy. They may prioritize experiences over possessions, rent instead of buy or work remotely instead of climbing a traditional corporate ladder. That doesn't mean they are being financially irresponsible.

Instead of criticizing, ask questions:

• "What made you choose that?"
• "How does that fit into your long-term goals?"

Curiosity builds trust. Judgment shuts conversations down.

The best financial conversations happen long before anyone needs money. Don't wait until there's a medical emergency, job loss, divorce or estate settlement.

Instead, create a family tradition. Have a semiannual "money dinner," where you:

• Review major life changes
• Discuss family goals
• Celebrate financial wins
• Update important documents

Make money as normal to discuss as your vacation plans.

The greatest inheritance

Many parents focus on leaving wealth. I believe our greatest inheritance is wisdom. Money can be spent. But values compound.

If your children inherit confidence, sound judgment, healthy financial habits and the ability to have honest conversations about money, you've already given them something priceless.

The question isn't whether your family should talk about money.

It's whether you'll begin the conversation before life forces you to. Because the families who talk together today are often the families who stay together tomorrow.

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.

Most people have never heard of a "mega backdoor Roth" — and that could prove costly, as it can allow some retirement savers with strong cash flow to save more money each year in a tax-free Roth account.

The mega backdoor Roth is a retirement savings strategy that lets some workers — typically high earners who can save more — contribute more to a Roth account than the normal annual Roth IRA or Roth 401(k) deferral limits allow. "It's a way to put tens of thousands of dollars into a Roth account that you wouldn't otherwise be eligible to do," says Tim Steffen, director of advanced planning at Baird.

This strategy is only available to savers in employer-sponsored retirement plans that include key features that permit it. The catch? Not all 401(k) plans are set up to enable savers to take advantage of a mega backdoor Roth.

A mega backdoor Roth is a two-step process

Whether you are eligible for a mega backdoor Roth depends on the specifics of your workplace retirement plan.

"To do a mega backdoor Roth, an employer has to offer two things to their employees," says Steffen.

First, they must allow the saver to make after-tax contributions to the 401(k) plan. This type of contribution allows you to save more than your plan's annual contribution limit for pre-tax or Roth 401(k) contributions.

Second, the employer must have a Roth 401(k) option that allows the saver to make an in-plan Roth conversion or to take in-service withdrawals to facilitate a rollover to a Roth IRA.

"If your employer doesn't allow both of those things, it's a moot point — you're not allowed to do a mega backdoor Roth," says Christian DiRusso, senior financial adviser at Altfest Personal Wealth Management.

Just one in four (24.1%) workplace 401(k) plans administered by Fidelity Investments give savers the ability to make after-tax contributions to the plan, according to the 1Q26 Fidelity retirement analysis. And only half (50.7%) of plans offer in-plan Roth conversions.

Know the contribution limits

So how does the strategy work? Savers in 401(k) and 403(b) plans who have already maxed out their regular contributions can make additional "after-tax" non-Roth contributions to their employer plan and then move, or convert, those dollars into a Roth 401(k) account offered by the employer via an in-plan Roth rollover or a Roth IRA rollover.

While most savers know their basic annual 401(k) contribution limits, many don't realize that the IRS allows far higher total limits when employer matches and after-tax contributions are factored in. Here is a summary of those 2026 limits:

• Under 50: $24,500 regular limit and $72,000 total limit
• Ages 50–59: $32,500 regular limit (with $8,000 catch-up) and $80,000 total limit
• Ages 60–63: $35,750 regular limit (with $11,250 catch-up) and $83,250 total limit

In 2026, for example, the total an individual under 50 can sock away in a workplace plan is $72,000, according to the IRS 415 annual limit rule. Savers 50 and up can contribute up to $80,000, and those 60, 61, 62 or 63 have a total limit of $83,250.

How a mega backdoor Roth works in practice

Here's a simple example of how the strategy works. Say a worker under 50 maxes out her $24,500 401(k) contribution limit and receives a $5,500 matching contribution from her employer. Her total contribution is $30,000, which allows her to contribute an additional $42,000 in after-tax pay to her 401(k), bringing her total contributions to the allowable limit of $72,000. That extra $42,000 in after-tax savings would then be either moved to the employer's Roth 401(k) plan or rolled over into a Roth IRA.

Wall Street dubs it a "mega" backdoor Roth because a regular backdoor Roth, which starts with making a nondeductible traditional IRA contribution and ends with a Roth conversion, has much lower contribution limits than the mega backdoor Roth. The 2026 max for standard IRAs is $7,500 for savers younger than 50 and $8,600 for those 50 and older, which pales in comparison to the $72,000 and $80,000 respective maximum contributions for a mega backdoor Roth.

Keep an eye out for taxes

Be aware of taxes on the conversion, however. "Whether you convert to a Roth IRA or Roth 401(k), you will need to pay taxes on any earnings included in the conversion (you will not generally need to pay taxes on after-tax contributions you convert, as those amounts have already been taxed)," according to Fidelity Investments.

To avoid taxes, convert after-tax contributions to a Roth account as quickly as possible.

Once those after-tax dollars are moved into a Roth account, they accrue all the benefits of a Roth: tax-free growth, tax-free withdrawals, and no required minimum distributions (RMDs), says Tara Lawson, wealth strategist at U.S. Bank Private Wealth Management.

Who should consider a mega backdoor Roth

High earners. This strategy heavily favors high earners who are locked out of regular Roth IRAs due to income limits but who still want to maximize their tax-free savings. It also works for those who have maxed out their ordinary workplace plan, or who simply want to save more in a Roth. "It's a good strategy for people who have extra money to save," says Lawson. "If you're going to do these after-tax contributions, it's going to be over and above your normal contributions to your 401(k)."

Executives. It's a commonly used strategy for corporate executives, CEOs, and small business owners whose 401(k) plans allow for it, personal finance pros say.

Windfall recipients. The mega backdoor Roth strategy could also be a useful tool if you receive a large bonus or a cash windfall outside of work, such as an inheritance, that allows you to forgo a larger portion of your salary and instead put it toward retirement.

Future high-tax retirees. Getting more retirement savings into the tax-free Roth bucket is particularly beneficial for savers who expect to be in a higher tax bracket in retirement than they are now.

Pros and cons of a mega backdoor Roth

Tax diversification. Executing a mega backdoor Roth boosts the tax diversification of retirement accounts, which gives retirees more flexibility when making withdrawals. It's good to have a bucket of Roth money you can tap tax-free, a bucket of traditional 401(k) dollars that gives you a tax deduction in your peak earnings years, and a bucket of taxable brokerage account funds that are taxed at lower long-term capital gains rates ranging from 0% to 20%.

"Tax diversification is certainly an added benefit of the mega backdoor Roth," says DiRusso.

Cash flow issues. However, DiRusso says the strategy is less attractive for lower earners who may run into cash flow problems by committing too much of their pay to fund retirement savings or people who need access to their money in a few years for, say, a down payment on a home, and don't want their money tied up in a tax-deferred retirement account.

"I recommend the strategy to anyone operating with a big cash flow surplus," says DiRusso. "As long [as a mega backdoor Roth] aligns with their long-term goals and they have the cash to support it, it's something we would advise on doing."

Complexity. You may face hefty tax penalties if you fail to follow the proper steps of a mega backdoor. Work with a financial planner or tax expert to avoid pitfalls.

Should you consider a mega backdoor Roth?

If you're interested in doing a mega backdoor Roth, step one is to check whether it is allowed under your 401(k) plan, financial advisers say.

Remember, this powerful tool is only available to people whose 401(k) plans allow it. But if you get the green light and have extra cash to put to work in a Roth account, it's a winning retirement savings strategy.

Read More About Roth Conversions

• Should You Convert a Traditional IRA to a Roth after 60?
• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
• Quiz: Understanding Roth Conversions

Tax planning for executives can look very different from standard financial advice. The reason? Your compensation package likely includes a complex mix of salary, bonuses, company stock and deferred compensation — all of which involve tax considerations.

Last year's One Big Beautiful Bill Act (OBBBA) introduced new "tax traps" specifically targeting the executive suite.

In 2026, a $75,000 bonus could lower your net take-home pay if it triggers the wrong phase-out. At this level, what matters isn't what you earn, but what you keep.

The good news from the OBBBA

The OBBBA resolved much of the uncertainty surrounding the expiration of the Tax Cuts and Jobs Act. For high-income earners, there are a few permanent victories:

• Top-rate stability. The 37% top tax rate is now permanent. Without this legislation, the rate was set to revert to 39.6% in 2026.
• QBI deduction. The 20% qualified business income deduction for pass-through entities (S corps, LLCs, partnerships) no longer has an expiration date.
• Estate exemption. The exemption is $15 million per person ($30 million for married couples) in 2026 and is locked in through 2033.
• Bonus depreciation. 100% first-year bonus depreciation has been restored permanently, allowing for the immediate deduction of business equipment costs.

The tax traps to watch out for

While the wins are significant, several new provisions act as a "stealth tax" on executive income.

1. The SALT phase-out.

The OBBBA raised the state and local tax (SALT) cap to $40,400 for joint filers, but it comes with a catch: It only applies to those with a modified adjusted gross income (MAGI) under $505,000.

Above that, the benefit phases out entirely, reverting to the old $10,000 cap by the time you reach $600,000.

Pro tip: Participation in deferred compensation can reduce current-year taxable income.

2. The 2026 AMT reset.

The alternative minimum tax (AMT) is set to kick in harder this year. For married filers, the exemption resets to $140,000 (down from 2025 levels), and the phase-out rate doubles from 25% to 50%.

If you plan to exercise incentive stock options (ISOs) in 2026, you should run an AMT projection first to avoid an unpleasant tax surprise next April.

3. The charitable "cover charge."

Starting in 2026, charitable contributions face a new floor: You can only deduct gifts that exceed 0.5% of your AGI. On income of $800,000, your first $4,000 in donations provides zero tax benefit.

Strategy: Use bunching. Instead of annual gifts, contribute a larger sum (e.g., $50,000) to a donor-advised fund (DAF) in a single high-income year to clear the floor for a meaningful deduction.

4. The 2/37ths deduction limit.

If you're in the 37% bracket, the OBBBA now caps the value of your itemized deductions at 35 cents on the dollar.

This 2% gap makes above-the-line deductions — such as 401(k) contributions and health savings account (HSA) funding — far more valuable because they reduce your income before this cap is applied.

Equity compensation: Where strategy makes the biggest impact

Company stock is often the largest component of executive pay and the primary source of complexity:

Restricted stock units. RSUs are taxed as ordinary income at vesting. If you have the cash to cover the taxes, holding the shares allows future growth to be taxed at lower long-term capital gains rates.

Stock options. Nonqualified stock options (NQSOs) generate ordinary income at exercise. Incentive stock options (ISOs) offer potential capital gains treatment, but the lower 2026 AMT thresholds make them "riskier" than in years past.

Too often, executives, especially those deemed control persons subject to Section 16 reporting, overconcentrate their wealth in company stock.

In addition, there's often internal pressure from the C-suite for high-level executives of publicly traded companies to retain their stock. This can create difficulties in adequately diversifying one's wealth while still indicating confidence in the company.

Advanced executive moves

To maximize efficiency, executives should look beyond the basic 401(k) limits:

The mega backdoor Roth. If your plan allows for after-tax contributions, you can potentially funnel an additional $47,500 into a Roth 401(k) for 2026 (up to the total $72,000 IRS limit), where it grows tax-free.

The PTET workaround. If you're a small-business owner or have consulting income, the pass-through entity tax (PTET) election allows your business to pay state taxes at the entity level. This bypasses SALT income thresholds and remains a key tax strategy under the OBBB.

Deferred compensation (nonqualified deferred compensation or NQDC). These plans allow you to delay income — and the 37% tax hit — until retirement, when you might be in a lower bracket.

However, they're governed by strict Section 409A rules. One wrong move can trigger a 20% excise tax penalty.

Distribution elections under deferred compensation are critical — it makes sense to consult with an adviser to determine how much to defer and what distribution election is most advantageous.

The bottom line

Most executives leave money on the table because their equity, retirement and charitable strategies aren't managed in concert with one another.

In the OBBBA era, these elements are interconnected. Success requires a coordinated look at how a move in one area changes the math in another.

Related Content

• How High Earners Can Get Through the Income Tax Maze
• Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for Retirement
• Should Your Asset Allocation Change When You Retire?
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• This Is How the 'Brady Bunch' Safety Net (aka a QTIP Trust) Protects Your Kids' Inheritance

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

As the saying goes, "You're only as happy as your least-happy child." Any parent or grandparent knows how true that feels.

We may spend a lifetime building financial security, saving for retirement, buying insurance and drafting detailed estate plans. Some families even create spreadsheets spelling out who gets the wedding ring, the family home, the brokerage account, the antique table or the emerald earrings.

All of that planning matters.

But deep down, we do not simply want our children to inherit our assets. We want them to be happy, capable and grounded. That desire is not just emotional — it is deeply human. We are wired not merely to pass on our DNA, but to protect, nurture and help our children thrive.

That is why the greatest legacy we leave may not be financial wealth. It may be what I call "wisdom wealth" — the judgment, values, self-knowledge and purpose that help the next generation use money well and live well.

Financial wealth is what you own. Wisdom wealth is what you have learned.

Financial wealth includes your home, portfolio, retirement accounts, business interests, insurance proceeds and personal property.

Wisdom wealth includes your values, judgment, resilience, faith, gratitude, mistakes, life lessons, decision-making habits and your understanding of what money is actually for.

One can be transferred with documents. The other must be transmitted through lived experience, conversations, examples and intention.

And that is where many families fall short.

The most ignored inheritance

The coming decades will bring one of the largest transfers of wealth in history. Much of that discussion focuses on dollars: Who will inherit, how much they will receive and how taxes can be minimized.

These are important planning questions, but they are not the whole story.

Many families are prepared to transfer assets, but not wisdom.

• Parents may leave behind a well-funded trust, but no explanation of the values that shaped it
• They may leave a brokerage account but never explain how they handled fear during market declines
• They may leave real estate, but never talk about the sacrifice, discipline and patience that made ownership possible

The result is that children may inherit the money without inheriting the mindset that created it. That gap can turn a generous inheritance into confusion, conflict or missed opportunity.

Here are five ways to transfer wisdom wealth while you are still living.

1. Turn family time into wisdom time

In the age of TikTok, Instagram and constant distraction, wisdom is rarely transferred through formal "sit-down talks." It is transferred in ordinary moments, a long walk, a family dinner, a car ride, a vacation, a holiday gathering or a conversation after everyone else has left the room.

One of the most practical things parents and grandparents can do is create recurring time with their adult children and grandchildren. This may mean a combination of weekly dinner, Sunday breakfast, a monthly family gathering or an annual vacation.

Occasions such as birthdays, anniversaries, graduations and promotions are valuable opportunities to get together and celebrate. The tradition matters more than the venue.

Longer trips can be especially powerful. When families travel together, they are removed from daily distractions. Conversations become deeper. Grandchildren see how grandparents make decisions, handle inconvenience, express gratitude, treat strangers and spend money. These experiences often teach more than any planned speech.

If you have the resources, helping pay for these gatherings can bring joy to the entire family and support the transfer of wisdom wealth.

2. Share the stories behind the money

Many children know what their parents own, but not what their parents endured. They may see the house, the portfolio, the business or the retirement account, but not the years of discipline, risk, sacrifice, delayed gratification, mistakes and recovery that created them.

Parents should share the stories behind the wealth. Talk about the first job, the bad investment, the business risk that failed or almost failed, the home you stretched to buy, and the market decline that tested your nerves. Share memories about the period when money was tight, the career decision that changed your life, the opportunity you missed, the mistake you would not repeat.

These stories are not self-promotion. They help the next generation understand that wealth is not magic. It is usually built through compounding, patience, work, judgment, resilience and sometimes luck.

Do not share only victories. Share failures, heartbreaks and the difficulty of accepting what you could not control. In many families, children inherit a sanitized and polished version of their parents' lives. But wisdom often comes from the real and unpolished chapters — the moments of fear, regret, humility and growth.

A child who understands how you stood back up after a mistake is far better prepared to stand back up after their own.

3. Create a family investment conversation

One practical way to transfer wisdom wealth is to involve children in real financial decisions early, long before they inherit significant assets.

Parents can help children fund investment accounts and discuss the difference between saving and investing. They can explain why diversification matters, review basic asset allocation and talk about how emotions affect decisions during market declines.

These investments can open the door to important life and money lessons. Why did the portfolio rise or fall? Why avoid panic selling? How do taxes and risk affect long-term returns? How do you balance enjoying life today with preparing for tomorrow? How much to save and how much to give?

The purpose is not to make children investment experts. It is to deepen relationships, enhance financial literacy and help them build a calm, informed relationship with money before they are responsible for larger sums.

4. Help them build real-life capability

Financial help can be generous, but it is most powerful when it builds capability.

Helping an adult child buy a first home can be more than a gift. It can become a lesson in budgeting, mortgage payments, property taxes, insurance, maintenance, neighborhood selection and the discipline of ownership.

Helping with education can include conversations about career choice, debt, income potential and purpose. Helping with a business idea can include discussion of risk, cash flow, customers, failure and persistence.

The key is to pair financial support with financial education and a deeper relationship. Instead of simply writing a check, explain the thinking behind the help. What is the purpose? What responsibility comes with it?

The goal is not dependency. The goal is capability, the confidence to make good decisions long after your help is no longer needed.

5. Explain how and why your beliefs and values have evolved

Most of us do not see the world at 60 the same way we saw it at 30. Our views about success, money, marriage, parenting, faith, health, ambition, status, generosity and happiness often change through experience, but many parents never explain that evolution to their children.

Tell them what you once believed and what life taught you.

• Maybe you once thought success meant income, but later realized it also required health and relationships
• Maybe you once chased status, but now value peace
• Maybe you once feared risk, but learned that some risks are necessary
• Or perhaps your faith, gratitude or sense of purpose has shifted or deepened through hardship

These conversations give children something more valuable than advice. They give them perspective.

Wisdom wealth is not the claim that parents have all the answers. It is the humility to say: "Here is what I learned. Here is where I was wrong. Here is what mattered more than I expected. Here is what I hope you discover earlier than I did."

The best legacy is more than money

A good estate plan can transfer assets efficiently. A good family legacy can transfer values, judgment and purpose. Both matter.

But if we leave our children money without wisdom, we may leave them resources without direction.

Financial wealth can change a child's balance sheet. Wisdom wealth can help guide them toward a joyful, meaningful life supported by financial security.

Your children may inherit your financial wealth. The deeper question is whether they will also inherit your wisdom wealth.

To learn more about legacy, personal transformation and other related topics, you can order my new book (out today!), The Wisdom and Wealth Solution.

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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 picked up Strangers: A Memoir of Marriage by Belle Burden expecting a juicy divorce memoir. What I got was a thoughtful, sometimes uncomfortable look at how a marriage can unravel so gradually that, by the end, the person you've shared your life with feels almost unrecognizable.

Burden's memoir has all the ingredients of a page-turner: Wealth, privilege, beautiful homes, family dynamics, betrayal and a divorce that becomes increasingly contentious.

More than once, I found myself staying up later than I should have, telling myself I'd read just one more chapter.

As a financial adviser, however, I found myself reacting to different parts of the story than most readers probably would.

At one point, I wanted to reach through the pages and yell, "No! Do not take your money out of your separate property trust and put it into a jointly owned home!"

That's what made the book so compelling to me. Beneath the story of a marriage ending was another story unfolding quietly in the background: The financial decisions being made along the way.

The danger of disengaging with your finances

Burden's story reminded me how easy it is for intelligent, capable people to become passive participants in their financial lives. Not because they lack the ability to understand money, but because life is busy.

Careers demand attention. Children need to be raised. Marriages operate on trust. One spouse naturally takes the lead in certain areas, and before long, financial decisions become something that simply happens in the background — often brushed aside with a comment like, "This is all too complicated for you to understand, anyway."

Most of the time, that arrangement works just fine … until circumstances change.

The reality is that many of the financial pitfalls people encounter aren't obvious. Few people wake up worrying about how property is titled, whether inherited assets have been properly protected, whether a prenuptial agreement still reflects their current situation, or whether beneficiary designations are consistent with their wishes.

Yet these are precisely the kinds of issues that can have life-changing consequences.

What makes Strangers particularly powerful is that Burden doesn't portray herself as a victim of circumstance. Near the end of the book, she reflects on a series of decisions involving her prenuptial agreement, property ownership and her level of involvement in the family's financial affairs.

Reading those reflections, I found myself thinking less about the divorce itself and more about the dozens of moments along the way when a different conversation, a second opinion or a deeper understanding of the financial implications might have altered the outcome.

That's a lesson I see play out frequently in my profession.

Many people assume the greatest financial risks they face involve the stock market. They worry about whether they should buy a particular fund, invest in international stocks or wait for a market correction.

In reality, some of the most consequential financial decisions have little to do with investing. They happen when we sign legal documents we don't fully understand, make changes to ownership structures, neglect to update estate plans or assume someone else is paying attention to details that affect our future.

The value of expert financial advice

This is one of the reasons I believe comprehensive financial planning is so valuable. A good financial adviser doesn't simply manage investments. They help clients identify risks they may not even realize exist.

Sometimes the most important question in a planning meeting isn't, "What should I do?" but rather, "What haven't I thought about?"

And yes, you can use AI chatbots to answer questions, but you need to know what to ask them.

An experienced adviser, however, can prompt the questions that haven't yet occurred to you:

• What happens if circumstances change?
• Does this legal agreement still reflect our intentions?
• Have we unintentionally exposed assets we meant to protect?
• Is the financial structure of our lives still aligned with the reality of our lives?

Those aren't questions most people ask regularly. They're certainly not questions people ask when they're in love. Yet they're often the questions that matter most.

The power of staying engaged

That's ultimately the financial lesson I took away from Strangers. Burden's story is deeply personal, and every marriage is different. But her reflections serve as a reminder that financial security isn't created by avoiding difficult conversations. It's created by having them early, revisiting them often and staying engaged in the decisions that shape your future.

By the end of the book, I wasn't thinking about the divorce anymore.

I was thinking about all the people sitting across from me every year who assume nothing will change.

Most of the time, they're right.

The problem is not planning for the possibility that they're wrong.

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• Estate Planning for Women: Married, Single or Divorced

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 readiness is rarely a feeling. It's a numbers game. Yet many Americans approaching retirement age struggle with a nagging sense of uncertainty, even when their financial house is in order.

According to NerdWallet research, only 23% of Americans evaluated their progress toward retirement savings goals in the past year, leaving the vast majority in the dark about where they stand.

The disconnect between financial reality and emotional confidence is more common than you might think. Vanguard's 2025 Retirement Outlook found that more than four in 10 Americans are on track to maintain their lifestyle in retirement yet many of these same individuals express doubt about their preparedness.

I'm a financial planner with nearly two decades of experience, and if you've been questioning whether you can afford to leave the workforce, these seven concrete indicators suggest you might be more ready than you realize.

1. Your retirement savings meet or exceed age-based benchmarks

Financial planners use age-based milestones to gauge retirement readiness. Fidelity recommends saving 10 times your annual income by age 67, with incremental goals along the way: One times your salary by 30, three times by 40, six times by 50 and eight times by 60.

If you've met or exceeded these benchmarks, you're likely in strong shape. These guidelines account for a retirement lifestyle that maintains your pre-retirement standard of living, assuming you'll need 70% to 80% of your preretirement income annually.

2. You have multiple income streams in place

Financial experts consistently point to diversified income as a hallmark of retirement readiness. Relying solely on Social Security or a single pension creates vulnerability to policy changes or plan failures.

Strong candidates for retirement typically have three or more income sources: Social Security benefits, retirement account distributions (401(k)s, IRAs, Roth IRAs) and potentially pension income, rental property revenue or part-time work.

This diversification provides both financial security and flexibility to adjust withdrawal strategies based on market conditions and tax planning opportunities.

3. Your debt is eliminated or manageable

Carrying significant debt into retirement dramatically increases the income you'll need to maintain your lifestyle. Most financial advisers recommend entering retirement either debt-free or with only low-interest, manageable debt remaining.

If you've paid off your mortgage (or will within the first few years of retirement) and carry no high-interest credit card balances, you've cleared one of the most significant obstacles to retirement security.

The exception: Strategic debt like a low-rate mortgage that allows you to keep more funds invested might make sense depending on your tax situation and investment returns.

4. You've stress-tested your retirement budget

Wishful thinking has no place in retirement planning. If you've created a detailed retirement budget that accounts for essential expenses (housing, healthcare, food, insurance) and discretionary spending (travel, hobbies, entertainment) and your projected income covers these costs with a buffer, you're demonstrating the kind of preparation that indicates true readiness.

Financial planners suggest running multiple scenarios: One for your expected lifestyle, one for a reduced spending scenario if markets underperform and one for increased healthcare costs or other contingencies.

If your retirement income comfortably covers your baseline expenses across multiple scenarios, you're likely ready.

5. Your healthcare strategy is funded and understood

Healthcare represents one of the largest and most unpredictable retirement expenses. If you're under 65, the gap between retirement and Medicare eligibility requires a solid plan, whether that's COBRA coverage, marketplace insurance or a spouse's employer plan.

Research shows that financially prepared retirees have not only identified their healthcare coverage strategy but have also funded it. This includes understanding Medicare parts A, B, D and potential Medigap or Medicare Advantage coverage, plus maintaining an emergency fund specifically for out-of-pocket medical expenses.

If you've modeled healthcare costs into your retirement budget and have a clear coverage plan, this uncertainty is behind you.

6. Your portfolio is positioned for distribution, not just accumulation

The shift from saving to spending requires a different investment approach. If you've worked with an adviser to restructure your portfolio for retirement (creating a more conservative allocation, establishing a withdrawal strategy and potentially creating a bucket approach with short-term cash reserves), you've done the strategic work that separates hopeful retirees from prepared ones.

This includes understanding the tax implications of your withdrawal strategy. Smart retirees consider which accounts to tap first (taxable, tax-deferred or tax-free) to minimize lifetime tax liability and avoid pushing themselves into higher brackets or triggering additional Medicare premiums.

7. You can articulate your Social Security strategy

Social Security claiming decisions have lifetime implications, yet many people approach this choice casually. If you've analyzed your break-even points, considered spousal benefits and survivor benefits, and made a deliberate decision about when to claim (whether at age 62, full retirement age, or age 70), you're exhibiting the kind of strategic thinking that characterizes successful retirees.

Delaying Social Security until age 70 increases benefits by roughly 8% per year after full retirement age, a guaranteed return that's difficult to replicate elsewhere. Understanding this trade-off and how it fits your overall income plan is a sign of readiness.

The confidence gap

If you've checked most or all these boxes but still feel uncertain, you're not alone. The psychological transition to retirement often lags the financial reality. Consider working with a financial adviser to run a comprehensive retirement analysis, which can provide objective validation of your preparedness.

Remember that retirement readiness isn't about achieving perfection. It's about having sufficient resources to maintain your desired lifestyle with acceptable risk.

Vanguard's research shows that younger generations are on track to be better prepared for retirement than current retirees, thanks to improved access to workplace retirement plans and stronger plan design.

The question isn't whether you feel ready. It's whether your numbers say you're ready. If the financial indicators are in place, your hesitation might be the natural anxiety that comes with a major life transition, not a reflection of insufficient preparation.

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

One of the most common questions I hear from clients approaching retirement is also one of the most emotionally loaded: "Should I pay off my mortgage before I stop working?"

The honest answer is: Sometimes.

That's not a cop-out. It's the only answer that respects both sides of this decision.

Paying off a mortgage is not just a math problem. It's a cash-flow problem, a tax problem, an investment problem — and, for a lot of people, a peace-of-mind problem.

The mistake is assuming there's one universal rule. There isn't. The right answer for a homeowner carrying a 2.875% mortgage, a solid brokerage account and a reliable pension looks very different from the one facing someone with a 6.5% loan heading into heavy IRA withdrawals.

Two recent changes make the math worth revisiting.

• Freddie Mac's weekly survey puts the average 30-year fixed rate at 6.51% as of late May 2026.
• The SALT deduction cap increased to $40,000 under the One Big Beautiful Bill Act, with phaseouts starting above $500,000 in modified adjusted gross income.

Both shift the calculus for retirees in ways that weren't in play two years ago.

Start with where you are in your mortgage

By the time most clients ask this question, they're in the last quarter or third of their loans. That matters more than people realize.

Early in a mortgage, your payment is mostly interest. Later, it flips — you're paying far more principal than interest. The amount of interest you'd avoid by paying off early is probably smaller than you expect.

Here's a concrete example. Take a married couple with an original $350,000 mortgage at 6.5% and $111,000 still owed at year 26. Their annual payment runs about $26,547, but only $6,767 of that is interest. The total interest remaining in the next four years is roughly $19,670.

Compare that with the cost of paying off the loan by pulling from retirement accounts. Assuming a 24% federal bracket and 5% state tax, they'd need to withdraw approximately $140,845 to net the $111,000 after taxes, generating about $7,042 in state taxes and $33,802 in federal taxes.

That's more than $40,000 in taxes to eliminate $19,670 in interest. The numbers don't hold up.

The SALT change and why your state tax burden matters

For years, the $10,000 SALT cap made itemizing difficult for most homeowners. The new $40,000 limit changes that, particularly in higher-tax states such as Connecticut, New York or California.

At our firm, a large share of clients come from Connecticut, and this is the kind of question in which having accountants on staff pays off. The answer depends on whether you're itemizing, which depends on your full tax picture.

If you can now itemize under the new cap, your mortgage interest carries more federal tax value. That doesn't automatically mean you should keep the mortgage. It means you should compare your mortgage rate with your investment returns on an after-tax basis, not gross.

Don't drain your liquidity to feel debt-free

This is where a spreadsheet can mislead you.

Say you owe $300,000 and have $350,000 in taxable savings. Paying off the loan might feel like the right move. But if it leaves you with $50,000 outside your retirement accounts, you've traded one risk for another.

Retirees need accessible cash for home repairs, health costs, long-term care planning, tax bills, and market downturns. If paying off the mortgage means pulling more aggressively from IRAs later, you could end up with higher taxable income, steeper Medicare premiums and more of your Social Security subject to tax.

A paid-off house is comforting. But you can't spend your kitchen.

A practical framework for making the call

If your mortgage rate is below 4%, you're taking the standard deduction, and your portfolio is diversified, keeping the mortgage often makes more financial sense.

If your rate is above 6%, you get little or no tax benefit from the interest deduction, and if you have enough liquid assets remaining after payoff, paying it down becomes more compelling.

If you're somewhere in between, run four numbers before deciding:

• The after-tax cost of your mortgage (not the stated rate)
• Realistic after-tax portfolio return expectations
• Remaining liquidity after payoff
• The tax bill from withdrawing retirement funds to make the payoff

The best retirement decisions come from coordinating taxes, income and investments together. A mortgage decision is no different.

The real answer isn't "always pay it off" or "always stay invested." It's: Pay it off when the numbers work, your cash reserves stay healthy, and the peace-of-mind benefit is genuinely worth what you might be giving up.

Sometimes it is. And sometimes the spreadsheet makes that clear before your gut does.

Related Content

• Can You Get a Mortgage In Retirement? And Should You?
• A Different Way to Approach Your Mortgage in Retirement
• Should You Pay Off Your Mortgage Before Retirement?
• Sell, Borrow or Stay? How to Use Home Equity in Retirement
• High Mortgage Rates Are Holding My Retirement Hostage: Can I Still Downsize and Retire?

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

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Got a question? See below for how to send it to us.

Dear Wealth Wise: I have two grown children. Both were self-sufficient until recently. I'm still working, but my small business income has declined. I had a major home maintenance project and a low-mileage car that was totaled in an accident. My son was laid off from his municipal job and my daughter went back to graduate school. My children need help. What can I afford to give them without overly compromising my income needs? My savings are modest, and I'm afraid I'll run out of money. My home is worth $700,000, and I had hoped it would be a legacy vacation home for my family. — The Perfect Storm

Dear Perfect Storm: Today's economy looks strong on paper. In May, the U.S. labor market added 172,000 nonfarm jobs, and the unemployment rate was only 4.3%. But those numbers don't tell the whole story.

The Center for American Progress says that despite a relatively low unemployment rate, a growing number of Americans are underemployed. The share of workers not currently in the labor force who want a job rose in 2025 and currently sits above pre-pandemic levels.

This could help explain why young adults are increasingly leaning on their parents for financial support, otherwise known as "subsidized adulting."

As of late 2025, a good 75% of U.S. parents were supporting at least one adult child financially, according to a recent AARP survey. Thrivent's fifth annual Boomerang Kids Survey, meanwhile, found that 44% of parents with a child ages 18 to 35 had one move back home at some point.

If you find yourself in this reader's shoes — wanting to help your family but watching your own income slide — you're facing a tough balancing act. You're clearly hesitant to tap the equity in your home or to downsize, and would rather pass the home down as an inheritance.

It's a tough situation, but it's not uncommon today. Here's what the experts suggest.

Only provide the financial help you can afford

As a parent, it's natural to want to do what you can for your children, even if they're old enough to be self-sufficient. But if you're going to provide help, you need to put your own needs first.

"Helping adult children is one of the most difficult retirement planning decisions because it is a financial and emotional one," says Doug Carey, CFA, founder and owner of WealthTrace. "The question is not 'How much do my children need?' It's, 'How much can I give without putting myself in a position where I later need financial help?' "

Carey recommends totaling your required expenses, including housing costs, property taxes, insurance, utilities, food, healthcare, transportation, debt payments, and taxes. Don't forget retirement plan contributions. From there, you can see how much money you might have left to help your children.

To make this exercise easier, Carey suggests using a budgeting app to track your recurring expenses. He also recommends planning for the worst if your business has not been doing well.

"It would also be a good idea to assume your income will be lower in the future as a safety buffer," he says.

Have money in reserve

The fact that you recently had a major home repair and car loss should serve as a wake-up call, says Carey, that you need cash reserves.

"You don't want to use any of the money from a reserve fund for children since you might need it soon for emergencies," he explains.

Given that your business income has been slowing, you might want to set aside at least six months of living expenses in case things get worse and you need to dip into your savings to cover your basic needs. Having that money in a high-yield savings account could help you avoid tapping your IRA or 401(k) prematurely, allowing those investments to keep growing.

Family support should be temporary

If you have limited financial resources, it's important that any help you give your children not be open-ended, Carey insists.

"Make it very concrete, such as contributing $1,000 per month [toward your kids' expenses] for three months to start. Then review after that," he says. "It is also a good idea to pay specific bills if you can rather than just giving money."

Be very careful with tapping home equity

Your $700,000 home might be your largest financial asset. But Carey says you should be extremely cautious before doing things such as taking out a home equity loan or HELOC.

"Home equity is a great source of emergency money for those in retirement," Carey explains. "If the markets have several bad years or there is a serious medical emergency where you need to use those funds, you might not have enough if you use [that money] for children."

As it is, only 64% of Americans feel confident they have enough money to retire comfortably, according to recent data from the Employee Benefit Research Institute. If you're behind on savings, you don't want to do anything in the near term to reduce the equity you have in your home.

If you have to say no, say no

Saying no to your kids when they need financial help is not easy. But Georgia Bruggeman, Founder and CEO at Meridian Financial Advisors, says you absolutely need to take care of yourself first.

"Your kids are young and have time on their side to figure things out," Bruggeman says. "Bailing them out will not help them learn financial resiliency."

Bruggeman says that if graduate school has become too expensive, you could suggest that your daughter take a break or talk to the school about other options for moving forward.

While you can't snap your fingers and magically get your son a job offer, government layoffs are often more cushioned than private sector ones. Municipal jobs often come with specific severance packages, unused paid time off payouts or solid unemployment benefits. Your son should check his civil service options or look into other government agencies that value his experience.

"You need to be an example to your kids and show them that taking care of yourself is not selfish," Bruggeman insists.

Carey agrees. While you might have some room to offer support, it's crucial to prioritize your financial well-being.

"Do not compromise your own retirement to solve a temporary problem for your children," he says. "You can help support them, but make sure you are financially secure first."

A word from Wealth Wise

Our reader didn't say whether the $700,000 house is her primary home or if she lives near her adult kids. That's an important detail; she could invite her children to move in with her temporarily. That solution could provide solid financial help to them without dipping into her savings.

If the house is a second vacation home, she could sell it and invest that money to provide an income stream. At a 4% withdrawal rate, her additional monthly income would be about $2,300. She could also explore renting the home, though she's said the house has needed repairs. It's possible that renting might involve more financial stress than she could bear now.

We think it's wonderful that she wants to hold onto the home as a legacy for her children. But lowering her family's financial stress by selling could be the best gift of all.

Not all questions submitted will be published, and some might 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 might have in relation to the matters discussed in this article.

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• Should We Downsize or Drain Our 401(k) to Pay Off Our Home?
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• We're 65 With $3.9 Million. Should We Give Our Adult Children Their Inheritance Now to Pay for Daycare and Buy a Home?
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High-income retirees are often surprised by a Medicare expense that can lurk behind the scenes, automatically deducted from their Social Security benefits each month.

It's a surcharge added to Part B and D premiums known as the income-related monthly adjustment amount (IRMAA).

These surcharges are tiered, meaning sometimes a single additional dollar of taxable income could trigger thousands in extra costs. Because it's based on income from two years ago, many retirees don't see it coming until it's too late.

The amounts aren't small. For 2026 the annual surcharges for Parts B and D range from slightly more than $1,100 for the lowest tier to nearly $7,000 for the highest tier. Those are per person, and on top of the base premiums.

Here's how the 2026 IRMAA brackets break down:

The good news is that it's reassessed each year, so you can take steps now to manage this hidden "tax" and optimize your Medicare costs.

Here are five situations in which you could pay more than you should in Medicare surcharges and strategies that could help.

1. After a major life event

Many Medicare enrollees are unaware that IRMAA can be reassessed under certain circumstances if an appeal is submitted.

The Social Security Administration (SSA) outlines specific eligible life-changing events, with the most common being retirement (or a work reduction such as moving from full-time to part-time), marriage, divorce and death of a spouse. A full list is available on Form SSA-44.

Strategy: You should consider appealing if it's likely to move you into a lower IRMAA bracket. This won't be the case for every life event.

For example, if you got married and your joint income would have pushed both partners in a higher IRMAA bracket, appealing won't be beneficial.

If you decide to appeal, you have 60 days from receiving your initial determination notice to do it, with instructions included in that notice. To start, you'll need to contact the SSA and will likely file Form SSA-44 and provide supporting documentation.

Depending on timing, you might need to appeal two years in a row. As an example, someone retiring in 2026 might need to appeal twice: Once for their 2027 assessment (which would otherwise be based on their 2025 working income); and once for their 2028 assessment (which would otherwise be based on their 2026 working income).

2. When your taxable income is near an IRMAA threshold

Distributions from retirement accounts such as traditional IRAs and 401ks typically increase taxable income. If you're near a threshold, an unnecessary distribution could push you into the next tier. The only thing worse than triggering IRMAA is triggering it by just a few dollars.

Strategy: If your income has historically been toward the top or bottom of an IRMAA bracket, try to stay (or get) in the lower tier. Be thoughtful about taking retirement distributions from pre-tax accounts that could pop you into the next tier.

If you have a health savings account (HSA), you can use distributions to cover qualified medical expenses without increasing your taxable income, including paying the premiums, deductibles and copays for Medicare Parts A, B, C and D (but not Medigap premiums).

If you have Roth accounts, you might be able to take tax-free distributions to keep you under the next IRMAA threshold.

3. When you start taking required minimum distributions (RMDs)

RMDs are withdrawals that must be taken from certain retirement accounts starting at age 73. For those with substantial traditional (pre-tax) retirement assets, this can translate to a meaningful increase in taxable income when they start taking RMDs, which can result in a surprise IRMAA bill two years later.

Strategy: If an RMD is pushing you into a higher IRMAA bracket, and especially if you're toward the bottom of that income bracket, a qualified charitable distribution (QCD) might be useful.

A QCD is a direct transfer from an IRA to a qualified charity. It can help satisfy your RMD without increasing your taxable income (up to $111,000 for 2026), all while giving to your charity of choice.

4. When you're doing Roth conversions

A Roth conversion involves moving funds from a traditional IRA to a Roth IRA. Because so many retirees have the bulk of their retirement savings in pre-tax assets, there can be many advantages to completing Roth conversions: The potential for tax-free distributions, no RMDs, and a tax-free asset for your heirs.

The cost is paying taxes now on the converted amount.

The tax impact means it's a good idea to work with a financial adviser and tax professional to execute the conversion, but even then, many well-intentioned professionals forget to mention (or consider) the impact on IRMAA.

Strategy: When considering Roth conversions, you'll want to keep in mind the immediate and future impact to IRMAA. Increasing your taxable income might trigger IRMAA two years after the conversion, but the resulting Roth assets can help save on IRMAA in future years, both by reducing future RMDs and providing a source for tax-free withdrawals.

The key is to understand the short-term and long-term impacts. It might also make sense to spread a conversion across multiple years.

5. When you choose your filing status at tax time (if you're married)

Filers who are married have a choice at tax time to file jointly or separately. But because IRMAA is a surcharge (generally deducted directly from Social Security payments) rather than a true tax (paid and reported to the IRS), it's often not considered as part of the calculation in determining which filing status is more advantageous.

This is problematic because the IRMAA determination for married individuals filing separately is particularly steep (some would say punitive), likely because the government doesn't want couples to file separately solely to avoid triggering IRMAA for both spouses.

Couples — even those working with experienced tax professionals — might save a few hundred dollars on their taxes by filing separately, only to trigger thousands of dollars in annual IRMAA surcharges that could have been avoided.

Strategy: Whether you're doing your own taxes or working with a professional, make sure potential IRMAA surcharges are part of the calculation of whether to file jointly or separately.

Final thoughts

By coordinating distributions, conversions and filing decisions with Medicare thresholds, retirees can avoid thousands of dollars in unnecessary surcharges.

The earlier you incorporate IRMAA into your planning, the more opportunities you'll have to keep your healthcare costs in check.

Related Content

• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later
• Will Your Retirement Income Trigger the IRMAA This Year? (Plus, 6 Ways to Avoid it in the Future)
• How One Extra Dollar of Income Can Cost You Thousands in Retirement
• 4 Ways to Make Debt Your Friend Instead of Your Frenemy

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

A prospective client told me he had it all done. He had a will in place, did his own stock picking and his wife did the taxes. What more did he need?

I went through my checklist. He had a lot of cash sitting in the bank and CDs — not ideal for high earners, since the interest is taxable. His will had no family trust, causing potential probate issues, and his adult children had no estate plan either. He was giving cash to charity, another tax faux pas. And on we went.

On the surface, financial planning can seem simple, if you are unaware of the possibilities. That is where a professional can help. And thanks to improvements in technology, today I am more excited about the opportunities to help high-income earners than ever in my 25-plus years in the industry.

Here are three examples, depending on individual circumstances, where technology may help in financial planning for high earners.

Tax-aware fixed income

High earners were traditionally advised to invest in tax-free municipal bonds in taxable accounts. Municipal bond interest is generally exempt from federal income taxes, and so high-income investors in a high tax bracket can use municipal bonds to avoid having the interest eaten up by taxes.

However, municipal bonds don't always pay the most interest on an after-tax basis. Some non-municipal bonds, such as corporate bonds and federal agency bonds, can pay more interest even after taxes.

Investment managers today can jump between different types of bonds depending on which yield pays the most after-tax interest for the client. Different bonds move at different speeds or valuations.

Munis might rally and become expensive relative to other bonds, and depending on the client's tax bracket, the manager might take gains from the munis and reposition into taxable bonds. Of course, you must pay attention to credit risk too, as different bonds have different risks.

The key is: Don't think municipal bonds always make sense. That might not be the case, and other bonds may offer different after-tax characteristics worth considering.

Robust tax-loss harvesting

If you are staring at a taxable gain on your Schedule D Tax Form, you probably need a more robust tax-loss harvesting strategy. Tax-loss harvesting — selling stock or bond losses to offset gains elsewhere in a portfolio — has been around for a long time.

However, technology has improved trading capabilities immensely. Today, tax-loss harvesting can be implemented more frequently using these tools.

There are other non-traditional tax-loss harvesting strategies appropriate for certain high-net-worth clients that can also be considered. If your tax-loss harvesting is stuck in the old way of doing it once a year around the end of the year, I encourage you to explore the new platforms that are available.

Advanced scenario planning

Moving to a state with a lower income tax? It can seem like a good idea, but it's best to check with a professional beforehand. Tax software can help show the difference in taxes between the two states, and sometimes the savings is less than expected.

I have client who wanted to see the impact of making additional Roth 401k contributions. The scenario planner showed the tax impact assuming different rates of return and different tax rates in the future. This helped put some context into the client's decision.

The software most planners use today is highly intelligent. Most of these scenarios can be done rather quickly and can lend confidence to decision-making.

My advice to high-income investors is this: If you haven't explored wealth management capabilities recently, much has changed in what a planner can do for you. The technology improvements have significantly improved the advice we can provide, and may be worth exploring.

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

When it comes to planning for retirement, the conversation usually centers around accumulating wealth.

Many people spend the majority of their careers focused on building enough savings to hopefully leave the workforce.

However, as retirement approaches, the mindset needs to shift.

In the five to 10 years before retirement, the goal should shift from growing assets to determining how those assets will generate income and support long-term goals.

Oftentimes, this transition is overlooked, and mistakes made during these years can have a significant impact on a person's ability to retire comfortably and maintain their lifestyle.

One of the biggest mistakes people make during this stage is assuming they still have plenty of time to figure everything out. The final five to 10 years before retirement are when important decisions about income needs, investment risk, Social Security and withdrawal strategies come into focus.

Another common mistake is assuming that a large retirement savings account is the only prerequisite to retirement. While reaching a certain savings goal is a great accomplishment and can provide confidence, it's not an accurate measurement of preparedness.

Many pre-retirees focus on how much they've saved without thinking about how that money will support their lifestyle in retirement. Without a detailed cash flow analysis that accounts for inflation and future expenses, even those with large retirement accounts may find themselves unprepared.

Wealth protection is important

Preparing for life after retirement involves more than maintaining the same investment strategy that worked during the earning years. While growth is important, protecting against significant market losses becomes the main priority.

A major market downturn can have a much greater impact on someone who plans to retire within the next 10 years than on someone who is still decades away from leaving the workforce. Therefore, pre-retirees should evaluate whether a portfolio's risk level still aligns with their personal timeline and income needs.

Understanding where retirement income will come from is equally important. Instead of assuming withdrawals can be made as needed, pre-retirees need to have a clear understanding of how their savings, investments and any other income sources will support their lifestyle.

Failing to account for these factors can leave some retirees with a false sense of security. For example, some pre-retirees think withdrawing 4% from their retirement accounts each year will provide a stable income stream.

While that may be the case in some circumstances, this strategy doesn't account for every market environment. A significant market decline in retirement, in addition to inflation and ongoing withdrawals, can put additional strain on a portfolio, impacting long-term stability.

As a result, stress-testing how savings will generate income in a variety of scenarios can be just as important as the amount of savings.

While every plan is different, there are three specific areas people who are five to 10 years from retirement should begin reviewing.

1. How much income will you need?

The first step is having a realistic understanding of how much income will be needed throughout retirement. Housing, healthcare, travel, hobbies and daily living expenses should all be factored into a retirement budget with regard to inflation.

Pre-retirees in this phase should also evaluate whether their investment strategy still aligns with their retirement timeline, risk tolerance and income needs.

The investment strategy that was used during your working years may not be appropriate as retirement nears. Once the need for income becomes more immediate, such as in retirement, protecting against major losses while managing volatility becomes the main priority.

2. Where will your income come from?

The next step is identifying where retirement income will come from, particularly for tax efficiency. Having different types of retirement assets, such as traditional IRAs, Roth IRAs and non-qualified investments, can offer more flexibility when managing taxes throughout retirement.

3. Do you have a retirement plan in place?

Finally, pre-retirees should have a comprehensive retirement plan in place before exiting the workforce. This plan should serve as a road map, accounting for income needs, spending expectations, taxes, investment risk and long-term goals.

Retirement is often viewed as a financial milestone, but the final preparations that should be made in the final decade of your career aren't talked about nearly as much.

While reaching a target number of retirement savings is important, understanding how those savings will generate income and withstand market volatility while supporting long-term goals is the key to a sustainable retirement.

By taking the time to address these questions in the decade leading up to retirement, pre-retirees can transition into retirement with more confidence and a better understanding of what lies ahead.

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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 allure of living in a state with no income tax in retirement can be undeniable. You won't have to worry about withdrawals or required minimum distributions pushing you into a higher tax bracket. Nor do you have to think about the state taxing some of your Social Security or pension. Plus, every dollar you save on taxes is another dollar you can spend on travel, hobbies, spoiling the grandkids, or leaving money to your heirs.

It's one of the reasons Florida, Texas and Tennessee are popular destinations for retirees. But relocating for the tax break doesn't mean you'll automatically save in retirement. Other living expenses could make it a wash, or worse, more expensive.

"If a state doesn't have income tax, it still has to pay for things," says Chelse Stevens, a certified financial planner and VP, consultant at Fidelity Investments. "Tennessee has one of the highest sales taxes (in the country). You start to see it in other ways."

And it's not just sales tax where costs may be higher in a tax-friendly state. Florida doesn't tax your income, but it has the highest HOA fees and ranks third for the most expensive homeowners insurance. Meanwhile, Texas has the seventh-highest property taxes in the country and ranks fifth for the highest average home insurance premiums. Then there are property values, the cost of living, and health care costs to be factored in. You may not have to pay income taxes, but is everything else more expensive?

It's why Stevens says don't let the "tax tail wag the dog" when choosing where to live in retirement. Instead, ask yourself these three questions first to ensure you're moving for the right reasons.

1. What is the state's total tax picture?

When clients tell JPMorgan's Chief Retirement Strategist Michael Conrath that they are considering moving to a tax-free state, the first question he asks is which taxes they are referring to.

"It can be a pitfall to focus solely on the state income tax piece," says Conrath. "A zero income-tax rate can look great on paper, but it’s not a complete retirement plan. For retirees, the all-in picture — income taxes, property taxes, sales taxes and local taxes — is what matters."

Don't forget to consider the state's estate and inheritance taxes, says Conrath, as they can change the legacy you leave behind. Before relocating, Conrath suggests working with a tax professional, financial adviser, or doing it yourself to determine what you’ll pay in total taxes where you are now versus where you’re going.

2. Do I understand the total cost of living, and can I afford it?

Taxes are only part of the decision. There are other living expenses, which is why the second question you have to ask yourself is: Do I know the total cost of living?

"A move that saves on taxes can be offset quickly by higher insurance, utility bills or health care costs, which can vary dramatically by ZIP code," says Conrath. If you move to a state to save on taxes, will you end up paying more for housing, insurance, food, travel, medical and entertainment? Even one of those expenses could cancel out the savings from not having to pay state income tax.

3. Will the move improve my quality of life?

Moving in retirement for the taxes alone is not a good reason, even if you think you'll save money. There has to be something more, says Stevens, which is why the third question you should ask yourself is: Will the move improve my life?

Even if moving to Florida in retirement saves you tens of thousands of dollars, is it worth leaving your support network behind? A successful retirement relocation means balancing the financial benefits with quality-of-life factors, including proximity to family, friends, healthcare and daily conveniences.

"Before you move, make sure you are considering all the factors, not just one," says Stevens.

Test drive before you commit

To really get a sense of what it will be like to live in a tax-free state, consider a test run, Conrath says. Try renting for a season to get a sense of the costs and other trade-offs that won't be obvious by running the numbers on a spreadsheet. A test run can also help you "pre-experience" what normal life will be like if you retire in your city of choice.

"Don't just chase the lowest tax rate," says Conrath. "The goal is to understand and improve the durability of your plan over the course of your entire retirement so that you have the confidence to enjoy the retirement you’ve earned."

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, Go Ahead and Splurge, But Ask Yourself These 3 Questions First and Before You Give Money To Your Kids, Ask Yourself These 3 Questions.

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Mike came into the consultation with his mind nearly made up.

At 67, he was past full retirement age and, between him and his wife, he had the larger earnings history. He could file for Social Security now and receive about $3,500 a month. Waiting until 70 felt, to him, like leaving money on the table.

"I paid into this system for decades," he said. "Why should we spend down our portfolio while I wait for a larger check?"

Amy, his 54-year-old wife, was quiet.

That happens often in Social Security consultations. Some couples arrive as a team. Others arrive as two people making what looks like a joint financial decision, while one spouse carries most of the confidence and the other quietly carries most of the worry.

So I asked Amy a simple question: "What concerns you most if Mike dies first?"

She paused. "I don't want to tell him what to do," she said. "But if I'm the one left here for another 25 years, I don't know what my income is supposed to look like."

That sentence changed the consultation.

The Social Security decision was no longer just about Mike's check. It was about Amy's future income floor.

The mistake: Claiming as if you are single

One of the most common Social Security questions I hear is: "How long do I have to live to make delaying benefits worth it?"

It is a logical question. It is also often the wrong one.

For a single retiree, a break-even calculation may be a useful starting point. But for married couples, especially couples like Mike and Amy with an age gap, Social Security should not be modeled only over the life of the person filing. It should be modeled over the life of the household.

That distinction can change everything.

Social Security gives retirees a claiming window. You can generally begin retirement benefits as early as 62, claim at full retirement age or delay as late as age 70. Delayed retirement credits can increase a retirement benefit for each month benefits are delayed beyond full retirement age, and the increase stops at age 70.

Many retirees know that delaying can increase their own monthly benefit. What they often miss is that the higher benefit may also affect the surviving spouse.

When one spouse dies, the survivor generally does not continue receiving both full Social Security checks. If the survivor's own retirement benefit is smaller than the survivor benefit available on the deceased spouse's record, Social Security generally pays the higher amount, either directly or by paying the survivor's own benefit plus a survivor amount to bring the payment up to the larger benefit.

That means the higher earner's claiming decision can become the surviving spouse's income floor.

This is where age gaps matter.

If spouses are close in age, the survivor period may be shorter. But when one spouse is 10, 12 or 15 years younger, as Amy nearly is, the survivor period can last decades. A claiming decision that seems minor at 67 can become a major income decision for a widow or widower in their 70s, 80s and 90s.

That is why I tell couples: "Do not ask only, 'When do I break even?' Ask, 'What happens to my spouse if I die first?'"

A simple example

Let's use round numbers.

Assume Mike's benefit if he files now is about $3,500 a month. If he delays until 70, delayed retirement credits could raise that benefit to roughly $4,340 a month before future cost-of-living adjustments. The exact increase depends on birth year and the number of months delayed, but the planning concept is the same: Waiting can produce a meaningfully larger check.

In this illustration, the difference is about $840 a month, or roughly $10,000 a year.

If this were only about Mike's own life, he might focus on how long he must live to recover the checks he skipped by waiting. But in an age-gap marriage like his, that is incomplete.

If Amy later qualifies for an unreduced survivor benefit and survives Mike by 20 years, that extra $10,000 a year could represent roughly $200,000 of additional survivor income before cost-of-living adjustments and taxes. If she survives him by 30 years, the difference could be roughly $300,000.

Mike and Amy's actual numbers will depend on their birth dates, benefit amounts, claiming ages, health, work history and survivor eligibility. Once survivor benefits are available, Mike's claiming age can help determine the size of Amy's protected income stream for the rest of her life.

Spousal benefits and survivor benefits are not the same

A major source of confusion is the difference between spousal benefits and survivor benefits.

A spousal benefit while both spouses are alive can be worth up to 50% of the worker's primary insurance amount, depending on the spouse's age and eligibility. Delayed retirement credits earned by the worker do not increase that spousal benefit above the 50% calculation.

Survivor benefits are different. A surviving spouse who qualifies may receive up to 100% of the deceased spouse's benefit, depending on the survivor's age and other factors. In addition, delayed retirement credits earned by the deceased worker can increase the survivor's benefit.

That is why the higher earner's claiming decision can be so powerful.

Delaying may not dramatically improve the younger spouse's benefit while both spouses are alive. But it may materially improve the amount available to the survivor after the higher earner dies.

This is the distinction many couples miss. They ask, "What will my spouse receive while I am alive?" But the more important question may be, "What income will my spouse have if I die first?"

The marriage dynamic matters

Social Security claiming conversations are rarely just about numbers. They often reveal how a couple makes decisions.

Some spouses communicate openly. They ask questions together, challenge assumptions respectfully and think of retirement as a shared household problem. Others unintentionally approach the decision as if they are still financially single. One spouse focuses on "my benefit," "my life expectancy" and "my money," while the other spouse quietly wonders what the plan means after the first death.

That dynamic matters because the quieter spouse is often the one carrying the survivor risk.

In Mike and Amy's case, Mike was not trying to ignore Amy. He simply saw the decision through the lens of checks he would receive or give up. Amy saw it through the lens of a possible future where she was widowed, older and dependent on one remaining Social Security check.

He had not been selfish. He had been solving the wrong problem.

Three questions every age-gap couple should ask

The right Social Security claiming strategy is not based on a rule of thumb. It is based on household modeling. For age-gap couples, three questions are especially important.

1. Who is this decision really protecting?

At Social Security Claiming Experts, we help clients understand their unique longevity forecasts. But no one can predict longevity perfectly. Age, health, family history and gender all matter.

In consultations, I listen not only to the numbers but also to the marriage dynamic. The higher earner may be focused on recouping what he or she paid into the system. The younger spouse may be thinking about an entirely different question: "Will I be financially secure if I am alone?"

Neither concern is irrational. But they are not the same concern.

If the higher earner is older and the lower-earning spouse is younger, the claiming decision may affect the younger spouse long after the higher earner is gone. That does not automatically mean the higher earner should wait until 70, but it does mean the survivor impact must be modeled.

Social Security is not just a monthly check. For many households, it is longevity protection. The longer the surviving spouse may live, the more valuable that protection can become.

2. Which Social Security check will survive?

Look at both spouses' benefit estimates.

If both spouses have similar earnings histories and similar benefit amounts, the survivor issue may be less dramatic. But if one spouse's benefit is much larger, the higher earner's claiming age deserves special attention.

The key question is not just, "How much will we receive as a couple?" The better question is, "What remains when one check goes away?"

Many affluent couples underestimate this because they view Social Security as supplemental income. But after the first death, the surviving spouse may face lower household income, higher effective tax pressure, reduced pension income or greater dependence on portfolio withdrawals.

In that moment, the larger Social Security check can become far more important.

3. What is the cost of waiting, financially and emotionally?

Delaying Social Security is not free. A household may need to use taxable savings, draw from retirement accounts, rely on pension income, continue working or adjust spending to bridge the gap.

For high net worth households, this is often where planning creates the most value. The question is not simply whether delaying produces a larger Social Security check. The question is whether the household has an efficient way to bridge the years before claiming.

Sometimes using portfolio assets earlier in retirement feels uncomfortable. That discomfort is real. The older spouse may see the account balance falling and feel like the plan is losing ground. The younger spouse may see the same withdrawals as the price of building a larger protected income floor for later.

Both perspectives deserve to be heard.

Other times, waiting may not make sense. If delaying would force damaging withdrawals, create cash-flow stress or increase risk in the rest of the plan, claiming earlier may be appropriate.

When delaying may be worth it

Delaying the higher earner's Social Security benefit often becomes more attractive when several factors line up:

• The higher earner has a much larger benefit
• The spouse is younger
• The younger spouse's own benefit is modest
• The couple has reasonable longevity expectations
• The household has enough savings, income or flexibility to bridge the delay

But this is not an argument that everyone should wait until 70.

An earlier claim may make sense when there are serious health concerns, when both spouses have similar benefit amounts, when there is no meaningful survivor issue, or when the household needs the income immediately.

The point is not "always delay." The point is "do not claim as if you are single when you are married."

The moment the conversation changed

When Mike first looked at the decision, he saw three years of checks he would not receive if he waited. That is a natural way to see it.

But when we modeled the household to Amy's potential survivor years, the decision changed. Mike was no longer comparing checks he might receive at 67, 68 and 69. He was comparing Amy's possible income at 75, 85 and 95.

By the end of the conversation, he said it differently: Waiting was not simply giving up checks. It was potentially buying Amy a larger, inflation-adjusted income floor.

That is a much more useful frame.

Your Social Security claiming strategy should not be built only around the person filing first. It should be built around the person most likely to live longest.

In many age-gap marriages, that means the older, higher-earning spouse's Social Security decision is not really about the older spouse at all.

It is about the spouse who may still need that check 20 or 30 years later.

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

A growing number of Americans are worried that higher taxes in the future will erode their income in retirement. Yet few people who express this concern are adjusting their financial plans to help meet the challenge.

That’s the conclusion of two recent surveys by financial services companies.

According to an Allianz Life study earlier this year, 70% of Americans are now concerned about the impact of taxes on their income once they stop working, up from 66% in 2025. Gen Xers, on the cusp of retirement at ages ranging from 46 to 61, are the most fearful, with nearly 80% of them sharing this concern.

Yet, as a Nationwide Retirement Institute survey found, only 31% of investors who expect taxes to rise are taking steps to manage their finances accordingly.

"Taxes continue to be in flux, and finding the right strategy to help maximize your retirement income is definitely key," says Kush Kotecha, president of Nationwide Annuity.

Although federal tax rates are currently at historically low levels, the massive budget debt and coming solvency problems for Social Security and Medicare have heightened fears that taxes will head up.

"We cannot continue like this," says Kelly LaVigne, vice president of consumer insights for Allianz Life Insurance.

To minimize the bigger bite of income that higher taxes in retirement could take, experts suggest these steps:

Invest tax-efficiently.

Outside of tax-advantaged retirement accounts such as 401(k)s and IRAs, interest on U.S. government and corporate bonds and short-term capital gains (profits on the sale of assets held for a year or less) are taxed as ordinary income, with rates as steep as 37%.

But the top rate for long-term capital gains is only 20%, and the rate is 0% this year for taxable income below $49,450 for singles and $98,900 for married couples filing jointly.

Actively managed mutual funds tend to trade stocks often, causing their investors to owe short-term and long-term capital gains taxes, but index funds and exchange-traded funds make far fewer transactions, reducing their tax liabilities.

You can also seek out actively managed funds whose mission is to be tax-efficient, or you can put some money in municipal bonds and muni funds, which are generally exempt from federal taxes — and sometimes from state income taxes, too.

Consider a Roth conversion or a Roth IRA.

You’ll pay income taxes now on the amount you convert or invest, but you won’t owe taxes on withdrawals in retirement, when your liability could be higher if rates rise.

"Paying taxes ahead of time isn’t necessarily a bad thing," says LaVigne.

Take RMDs on time.

You must begin making required minimum distributions from traditional 401(k) plans and IRAs beginning at age 73 (age 75 starting in 2033), and your RMD can push you into a higher tax bracket and lead to higher taxes on Social Security benefits.

That may hurt, but so will the penalty for failing to follow the rules: You’ll owe up to 25% of the amount you should have withdrawn.

A Vanguard study of clients 73 and older with traditional IRAs found that about 7% failed to take their RMDs in 2024, and 24% took out less than the required amount. More than half who miss RMDs in one year miss them the next year as well.

Be generous.

After age 70½, you can make a qualified charitable distribution, or QCD, from money in a traditional IRA — up to $111,000 in 2026.

That amount won’t be included in your adjusted gross income, so it won’t be subject to taxes. QCDs after age 73 can satisfy some or all of your RMD, too.

Stash cash in a HSA.

If you’re not yet on Medicare and have a high-deductible health insurance plan, consider contributing to a health savings account.

You’ll be able to lower your taxable income, the funds will grow tax-deferred, and withdrawals for medical expenses are tax-free. Says LaVigne, "An HSA is one of the best deals on the planet."

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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One in three Americans feel less confident in their retirement plan than a year ago, and nearly half of pre-retirees say they expect to retire later than planned.

That's according to a survey from CNO Financial Group.

Factors ranging from inflation to healthcare costs are part of the reason, but longevity, market volatility and the possibility of outliving savings is making it increasingly difficult for many Americans to feel they're prepared enough for retirement.

For those approaching retirement, feeling secure enough to stop working can be difficult to define, especially during periods of economic uncertainty. Even workers who have spent decades saving consistently might still not feel fully prepared for retirement.

This uncertainty is largely tied to longer life expectancies. Many people fear their retirement savings won't be enough to stretch across several decades, especially when factoring in inflation, increasing healthcare costs or long-term care.

As a result, some pre-retirees continue to increase their savings goal, even when they've surpassed their original figures.

Sometimes it makes sense to delay retirement

There are situations in which delaying retirement makes sense. Instead of claiming Social Security benefits as soon as you become eligible at 62, waiting to claim can increase your check by around 8% per year up until age 70.

In addition to earning consistent income, working longer than expected also gives your 401(k) or IRAs additional time to grow before required minimum distributions (RMDs) begin.

However, there's a difference between postponing retirement strategically and delaying because of uncertainty.

Waiting too long to retire can bring its own set of risks. As a wealth management specialist, I once worked with an older couple who were both healthy. Over time, they began experiencing physical setbacks that limited their ability to participate in many of the activities they'd planned to in retirement.

By the time they finally felt comfortable enough to retire, their vision for how that time would be spent had dramatically changed.

Emotional changes and retirement

Retirement also comes with emotional changes that aren't discussed as much. After decades of working around a structured schedule, having complete control of your time can be a difficult adjustment.

For many of us, work provides routine, stability, social interaction and a sense of purpose that can be hard to replace as a retiree. As a result, some retirees choose to re-enter the workforce.

I once worked with a retired physician who took a position at a Lowe's home improvement store simply to stay active, interact with people and maintain a sense of purpose.

Although financial security is important, retirement will always involve some level of uncertainty. Deciding when the right time to stop working is more than just reaching a specific savings number.

Quality of life, physical and mental health and emotional preparedness must all be considered.

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• Americans Are Retiring Later: Will This Trend Last?
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

It's not a secret that AI adoption is becoming increasingly commonplace in Corporate America. But it's not just giant corporations that are using it. A 2026 Intuit QuickBooks survey (PDF) found that 77% of small and midsize businesses now use AI regularly, up from 48% two years ago.

If you own a small business, you may be looking to increasingly lean on AI tools to improve productivity and save on costs. In fact, the same QuickBooks survey found that 78% of US respondents reported productivity gains from AI use, and 42% reported revenue gains. For large companies, a PwC study found that investing at least 1.6% of revenue in AI tools resulted in 9.5% growth (as measured in EBITDA). Moreover, AI can help create documented workflows and efficiencies that can give you a higher exit price when you're ready to sell up and retire.

But what if those tools are making some of your employees' tasks obsolete?

On a scale of 1-5, which of the following describes your current views of AI's impact on your productivity? (Asked of U.S. small businesses.)

Letting employees go is a gut-wrenching decision for any small business owner. But when your personal finances are at stake, sometimes you may need to make hard choices.

If you're a business owner who's looking to power through for a few more years and sell your business to fund your retirement, you need your company to be profitable and competitive. That means shedding unnecessary costs and using technology to your advantage. Here's how to reconcile the financial side of the equation with the moral and emotional side.

Look at AI as a time-saver more than anything else

AI may be able to take over some of the tasks your employees handle now. But that doesn't mean those employees suddenly lose all of their value.

Paul Carlson, CPA and managing partner at Law Firm Velocity, a company that provides virtual CFO and financial services to law firms across America, says, "You don’t want to make decisions out of guilt and keep carrying payroll that no longer makes financial sense for the business."

He explains, however, that just because AI is saving you time doesn't mean your employees with years of business knowledge and experience are suddenly obsolete.

"What helps you make a more mindful decision is to first see whether the freed-up time can actually improve some other aspect of your business," Carlson says. Those aspects could be things AI can't handle, such as strategic decisions that require more human intervention and judgment.

Carlson says that discovering the time-saving power of AI could position you to make better use of your employees' skills rather than letting them go.

"In most small businesses, your employees will most certainly end up wearing multiple hats over time. So even if AI suddenly saves someone five or six hours a week, that doesn’t necessitate that the employee is no longer able to play a part, especially given the kind of context they have about what works for your business and what doesn't," he explains.

Carlson also points out that if you're running a lean operation, you may not be tracking the various ways your employees are contributing. Before letting them go, it pays to take a closer look.

"Some employees are integral when it comes to catching mistakes," he says. "Others are great at answering questions nobody else has time to deal with, or take great pride when following up with clients. All those elements may have had a big role to play in your company’s reputation and how satisfied clients are with you."

E.J. Simonsen, Founder & Finance Advisor at EIDLexit, agrees. His best advice? "Replace tasks, not people."

"Routine administrative labor can be handled by AI," he says. "Use the savings of time to transition employees into higher value endeavors such as customer service, business development, process improvement, or client retention. Those domains are often higher impact to revenue and significantly harder to automate. This enables you to be competitive while still investing in your team."

Proper AI adoption could make your business more valuable

If retirement is on the horizon and you're within 10 years of an exit plan, you need a sound strategy that enables your business to maintain its edge without blowing money on unnecessary costs.

Kevin Williams, founder of Ascend AI, advises C-suite executives and small business owners on AI adoption, governance, and workforce readiness. And he says that given your timeline, you have a prime opportunity to use AI in a way that could make your business more valuable without shedding headcount.

"Companies where AI is used strategically and where the team knows how to leverage it fetch a higher price," he insists. "Such companies are viewed as mature, where things work efficiently. Buyers pay a premium for that."

Williams also says, "Using AI to increase productivity of each employee by 20-30% and thus build a lean and competent organization that is highly valued by a potential buyer [several] years down the road — that's how to retire successfully."

Simonsen says that ultimately, a business that runs well and has good and skilled people will generally be worth more. On the flip side, if AI adoption makes a business feel cold, automated, or robotic, client retention might drop.

"Balancing compassion and business decisions is part of establishing a better company," he says.

Of course, successfully implementing AI requires an investment. And training employees to use it could take time away from daily operations while your staff gets up to speed. But if you're willing to sacrifice some short-term gains, you may find that AI boosts your company's profitability in the long run and puts you in a stronger position once you're ready to sell.

It's also important to be transparent with your employees about how you're looking to integrate AI. Nothing hurts employee morale like the fear of being replaced by a machine. Emphasize that you're adopting AI tools to make their jobs easier, not to replace them.

Take guilt out of the equation

It's natural to feel bad about the idea of letting hard-working employees go. But if you use AI the right way, you may not have to.

"If you feel guilty about AI, then this is because you miss the point entirely," Williams says. "Guilt doesn't arise from using AI technology. It comes from the choice you made [regarding] AI use."

Of course, you may come to the realization that one or two roles at your company are, in fact, obsolete in the wake of AI, and that you can't justify the cost of labor. In that case, it's important to do your best to ethically offboard those employees.

If you can afford to be generous with severance, it could ease the financial blow for those impacted while helping you sleep better at night. Be empathetic but pragmatic.

But all told, Williams says, using AI to empower your employees rather than replace them could set you up for a lot more financial success. And that way, you can forge forward with your personal financial plans without the remorse that might come with destroying other people's livelihoods.

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Leaving a financial legacy is an important factor in financial planning for many retirees, particularly those with high net worth.

Whether the goal is to give loved ones a financial boost, strengthen their retirement or contribute to grandchildren's education, proper planning can allow retirees to make an impact long after they pass away.

Taxes can be a significant factor in determining how much is left. If you aren't tax-efficient in your strategy, you might be paying a large portion of your legacy to the government rather than your loved ones.

Federal estate taxes begin at any amount of inheritance above $15 million for individuals, $30 million for married couples.

Beyond that, income and capital gains taxes on inherited assets can come back to bite.

As high-net-worth individuals plan their estates, it's important to do so early and keep tax efficiency in mind. Here are three things to consider.

Pick the right trust

Trusts are one of the most powerful ways to protect and control your money from the grave and ensure it is passed on to the correct beneficiaries. One of the key advantages of a trust is avoiding probate, to which a traditional will is subject.

There are more than 30 types of trusts to consider, but they're broken into two categories: Revocable and irrevocable.

A revocable living trust is usually where we start the estate-planning process — this type of trust can be amended by the original grantors/trustees during their lifetime, allowing flexibility and control of the assets.

An irrevocable trust doesn't offer the same flexibility; under most circumstances, it can't be changed unless all beneficiaries agree to make modifications, which can be a complicated process.

However, the benefit of an irrevocable trust is that it's typically excluded from the additional estate tax applied to estates above the $15 million threshold.

Establishing clear goals while legacy planning can help distinguish whether revocable, irrevocable or both types of trusts should be a part of your plan.

Determining if your estate is above the threshold and subject to additional taxation is a good place to start. If it's over, an irrevocable trust might be the best option to avoid further taxation.

However, because of the lack of flexibility, it's important to choose someone you have faith in to be in charge of the trust, such as a loved one or your personal lawyer or financial adviser.

One type of irrevocable trust to consider is a charitable remainder trust. This option allows you to designate a portion of the trust to be donated to charities of your choice when the beneficiaries die. The income is distributed to the beneficiaries tax-free, and the remainder can be donated to charity when they pass away.

Consider step-up-in-basis

Understanding your capital gains situation can help determine if and when you should utilize tax-loss harvesting strategies to effectively limit your taxation, both in the present and future.

Step-up-basis means that when someone inherits an investment, such as property or stocks in a brokerage account, the asset's cost basis is reset to its value on the date of the original owner's death.

As a result, when the beneficiary sells it, they only have to pay capital gains tax on the appreciation that occurred after inheritance, rather than the total gain accumulated over the decedent's lifetime. Depending on income levels, capital gains can be as high as 20%.

For example, Apple stock was worth about 30 cents in 1990, and it's currently worth around $300. If you were to buy this stock 36 years ago and sell it today, you would owe up to 20% capital gains tax on your total earnings. If you leave it as an inheritance, the value resets at the current $300, and your beneficiaries can sell it with significantly less tax.

Good planning is knowing which stocks to sell and harvest now, and which stocks to save for the next generation.

Indexed universal life insurance might help

Many people only think of life insurance as an option to protect their family's finances when they're younger, in the event of an unexpected death.

However, life insurance can also be an effective way to pass on tax-free money or income when they pass away.

The widow's penalty is often overlooked but can be detrimental for the surviving spouse. For example, if one spouse has a pension, the surviving spouse might lose some or all of that income.

In addition, Social Security benefits are reduced, as the surviving spouse only gets to keep the larger of the two benefits.

Not only do we need to plan for a reduction in income, but also an increase in taxation as the widow moves from the joint to single tax bracket; this double whammy can be difficult to manage.

An indexed universal life insurance (IUL) policy can help supplement the surviving spouse's income. It's typically funded over a period of time through monthly premiums, which can total up to thousands of dollars per year.

A portion of the premium covers the cost of insurance, including a death benefit, which can be more than $1 million, depending on the policy. The remaining portion contributes to the policy's cash value accumulation.

The cash value can be invested in the market, typically using an index fund, contributing to the policy's growth over time. When the owner passes away, beneficiaries will receive the death benefit, completely tax-free.

However, the cash value could be subject to capital gains tax.

This option might not be suitable for everyone, as it sometimes requires extensive health screenings, which are harder to pass as we age. But it can be one of the better tools to utilize if you plan and have the capital to do so.

Summary of high-net-worth estate planning

To recap, here are the key tools and strategies to consider for high-net-worth individuals creating an estate plan:

• Pick the right trust. Evaluate the different types of trusts, including revocable, irrevocable and charitable remainder trusts to maintain control and limit taxation
• Tax planning. Knowing when to utilize tax-loss harvesting strategies and when to save those stocks for the next generation. Be intentional about the assets you leave behind.
• Indexed universal life insurance. An IUL can help protect your family after your death and provide tax-free income, which can help offset the widow's penalty
• Other strategies may include gifting or selling a family business to the next generation, which can be spread across several years to help reduce taxation now and in the future.

There's a lot to keep in mind, but it's important to get it right. I recommend speaking with a financial adviser to evaluate your unique situation and build a plan that works for you. You and your family deserve to protect and experience your full legacy.

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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.

Few would argue with the idea that hiring a financial professional to assist with your financial plan and an attorney to draw up your estate plan is a wise move.

Each professional brings specific expertise to those undertakings, knowing the best practices for achieving your goals.

But even then, pitfalls await the unwary.

All that precise planning could collapse if no efforts are made to integrate the estate plan with the financial plan, ensuring that the two work as one.

Unfortunately, in many instances, the financial professional who works on the financial plan and the attorney who puts together the estate plan don't communicate.

That's when the trouble begins — trouble that might not be noticed until you're gone and your beneficiaries are left to untangle, if they can, the untidy state of affairs left behind.

Thinking ahead and making sure those responsible for preparing the two plans are talking goes a long way toward avoiding potential problems down the line.

Failing to properly fund a trust

When the financial plan and estate plan aren't integrated, things can go awry in a number of ways.

Here's one example involving a revocable trust, the purpose of which is to establish a controlled distribution of your assets to your heirs. Essentially, the trust helps ensure the right heir receives the right asset at the right time.

This comes in handy when you worry that someone might mismanage — or squander — what you bequeathed if they receive it in one large lump sum.

In that case, through the trust, you could arrange for them to receive their bequest in 25% increments, spread out over a certain number of years (or however you think best to handle the situation).

But if the trust's distribution plan isn't funded properly, all your plans could become meaningless. When a revocable trust is properly funded, the assets are typically transferred through beneficiary designations on investment accounts.

Clearly, you don't want something to fall through the cracks. That's why having your financial professional involved in the process, working in tandem with an attorney, can help make sure that all the assets are accounted for — a critical factor for having the trust work as intended.

Financial power of attorney

It's also important to designate a financial power of attorney to ensure that someone can handle your financial matters if you're still alive but have become incapacitated. This way, your financial and business affairs can still be managed.

Integration also plays a role here. Sometimes the power of attorney is not broad enough, and the designated agent doesn't have the full authority to make the decisions they need to.

Usually, it's best for the powers of attorney to be written broadly, but with safeguards in place to prevent the designated person from taking advantage of the client.

For example, an incapacitation trigger can be put in place so the agent isn't vested with authority until the client is incapacitated, with proof of incapacitation.

It's also important to choose a trustworthy person who'll see that the game plan is executed properly.

Two sets of professional eyes

A financial professional and an attorney both provide important services, but they can be even more effective when they work together. Each brings professional knowledge and experience to the collaboration.

One might spot an opportunity that the other would miss, or one could notice a problem that the other might have missed. It's two sets of professional eyes and two sets of expertise looking out for you.

You, in turn, will benefit by having a financial plan and an estate plan that are integrated, helping to ensure that taxes are minimized, all assets are accounted for, and your wishes are carried out when you are gone.

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.

For more than a year, we've been sharing the profiles of millionaires who've generously and honestly recounted how they made their first $1 million.

Our My First $1 Million series is at 61 profiles and counting (with many more to come) — from a novelist in New England and a 37-year-old banking executive (yes, 37), to the owner of a waste-hauling business and a retired middle school teacher.

Many of these millionaires have told strikingly similar stories about how they built their savings, and we noticed some trends among them, some of which we highlighted in the article 5 Key Insights We Learned From 50 First-Time Millionaires.

They've had some retirement regrets, too, which we wrote about in 5 Things 50 Millionaires Wish They'd Known Before They Retired.

This time, though, we want to turn the spotlight on you. Have you been paying attention? Do you know what it takes to become a millionaire yourself (if you're not already one!)?

Take this quiz to find out. 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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If one thing is unique about military retirement, it's that retirement for most service members means finding another job, since most retire in their 40s. That's just the tip of the iceberg. Active duty personnel, who have worked in a much different professional and financial environment than most Americans, must master new, usually more expensive, benefits and work life.

"I wish there was a better word for it … 'career shift' or something else, not calling it 'retirement,' because for most people, that is definitely not what it is," says Kate Horrell, a Navy spouse and financial counselor who specializes in advising military families.

Because of their unique circumstances, service members approaching retirement often focus on the job search, but there is much more to consider. Here are some things future military retirees should consider to ensure a smooth transition.

1. The math is different when retiring from the military

All personnel who have served at least 20 years qualify for lifetime retirement pay, which varies based on when they entered service and Department of Defense programs offered over the years. Retirees are eligible to receive 40% to nearly 103% of their active-duty base pay, although the highest percentage is reserved for senior officers or top enlisted personnel who served 40 years or more.

Service members can only lose their retirement pay in rare circumstances, such as being incarcerated or owing debt to a spouse, like alimony, or the government, such as repayments of unmet requirements for bonuses. Getting fired from a job (but not discharged) doesn't count, unless it's for a circumstance that involves a prison sentence.

2. There is a 'how-to' course in military retirement

Service members leaving the U.S. military must attend the Defense Department's Transition Assistance Program, which offers classes on education, veteran benefits, job searches, resume building and financial planning. But while the program looks good on paper, it has been criticized for not adequately preparing members for the lifestyle change and focusing too much on educational opportunities.

Also, although the program is mandatory, many members avoid attending because they believe it won't help, or aren't provided the time because of unit or job requirements.

However, Horrell says the courses are worth the time, and recommends attending multiple sessions. "Why go?" she says. "You go on the chance that you get a really good presenter."

3. Many need a transition fund for the first couple of years

Service members often spend the start of their careers living paycheck to paycheck. But with cost-of-living increases, promotions and time in service, they can enjoy a comfortable living after working for 20 years.

Still, they should sock away money starting two years before retirement because retirement expenses could include a move, a prolonged job search or other unexpected costs.

Lila Quintiliani of the Military Officers Association of America says she invested in a multi-year guaranteed annuity that will come to term and be available for payout when her husband retires. "I'm glad we did it because we locked in a high interest rate," she says. "The point is, have a stash of cash in a liquid account. You don't want to dip into retirement savings."

4. Prepare for some big tax surprises — bad and good

Many military retirees often underestimate their taxes the first year. In addition to states that don't tax any personal income (Texas, Florida, Nevada and six others), active duty personnel in Arizona, Arkansas, Illinois, Kansas, Minnesota and Pennsylvania don't pay state income tax on military pay. They also don't pay taxes on allowances for meals and housing.

On the plus side, 28 states don't tax military pensions, and another 13 tax only a portion of them.

5. Expect healthcare costs to go way up

Active-duty personnel and family members enjoy low-cost or even free medical care through the U.S. military. But upon retirement, they get a taste of the healthcare costs incurred by the vast majority of Americans. Retirees who stay with Defense Department health coverage, known as TRICARE, must select a program plan and share some of the costs.

For most, dealing with out-of-pocket costs, such as premiums, co-payments and deductibles, requires a steep learning curve. "You really need to compare the different plans that are available to you in your job or your spouse's job in a way that military families really don't have to think about," says Eileen Huck of the National Military Families Association.

"I was kind of gobsmacked because it's a big change."

6. Don't overlook veterans services

Twenty or more years in the military can wreak havoc on a human body: combat injuries, musculoskeletal damage, tinnitus and hearing loss, and other hidden illnesses that may develop later in life.

For conditions considered connected or caused by military service, the Department of Veterans Affairs offers medical care and disability compensation, with payments based on the impact of the illness or injury on a person's well-being and employability. Military retirees should start connecting with the VA 90 to 180 days before retirement to see whether they're eligible for benefits.

7. A bonus for settling in an ideal retirement haven

Unlike civilian retirees who must pay the cost of selling their homes and moving to Florida, Arizona or wherever they may wish to settle in retirement, military retirees are eligible for a nice relocation perk.

The U.S. military pays for one final move, up to the cost of returning to the original home of record. Some personnel opt to stay in the area of their final duty station, while others choose a dream destination or let the job determine their decision. The wise ones consider quality of life and affordability as well as location, says Quintiliani.

"The financial side is only part of the picture — you also need to think about job satisfaction, support networks, transportation hubs, availability of healthcare," she says.

8. Facing long-term financial issues

Like Social Security, the Defense Department's Survivor Benefit Plan program offers an annuity to a military spouse or eligible dependents when a service member dies. While this benefit is free while on active duty, retirees must pay a monthly premium to maintain the coverage. The amount of coverage is chosen at the time of retirement and cannot be modified.

9. There's resume and networking help

Nonprofit organizations and companies have stepped up to help military retirees work on their interview skills, connect them with mentors and translate their military expertise into a workable civilian resume.

The Defense Department offers the Skillbridge program, which connects troops to training programs and internships in their last six months of service. LinkedIn offers one year of free premium upmarket services to military veterans and retirees, and Hire Heroes USA, a nonprofit employment service, helps companies connect with veterans and military retirees for jobs.

10. The first job after military service is likely not the last

A 2019 Pew Research Center survey found that 56% of post-9/11 veterans stayed in their first civilian job for more than a year, while the rest stayed for less than half a year, including 20% who left within six months.

This turnover indicates the challenges of transitioning from military to civilian life and is a sign of finding the right fit — either a field or company — and not failure, says Huck: Don't "expect that the first job is going to be a forever job."

The military retiree may have to go through the whole transition effort a second time.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that's right on the money.

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Total market bond funds offer competitive yields, but do they belong in your portfolio?

Often complex and misunderstood, these funds encompass more than basic bond investments; they vary in structure, management approaches and risk characteristics.

Active management in the bond market presents unique challenges, as managers must carefully navigate duration and credit exposures to outperform benchmarks, often by adjusting duration or targeting higher-yield corporate bonds.

If you're thinking of working with an adviser to include total market bond funds in your portfolio, here's what you should know.

What are total market bond funds composed of?

Total market bond funds were traditionally used to reduce equity risk and enhance diversification and are composed of various public and private bonds.

For example, the Bloomberg U.S. Aggregate Bond Index (the Agg), which tracks more than 10,000 securities with a total value of roughly $50 trillion+, is made up of three primary components: U.S. Treasuries, corporate bonds and mortgage-backed securities.

Overarchingly, with total market bond index funds, the more debt an entity issues, the greater its weight in the index. Hence why U.S. Treasuries are such a large component of the index.

Besides the Agg, what are other common total bond market funds?

Many funds track an Agg-like index. Some are actively managing "total bond" or "core/core-plus" funds. They mostly use investment-grade U.S. bonds, including Treasuries, agencies and investment-grade corporate bonds, as well as agency mortgage-backed securities.

Active "total bond/core /core-plus" funds offer more flexibility. They include more corporate, securitized and mortgage assets. Some funds add high-yield and international bonds.

How should investors assess their risk appetite?

To accurately gauge risk tolerance with total market bond funds, investors must identify interest rate, credit and duration risks. While diversification is often viewed positively, it may not always yield stability in bond portfolios.

Previous beliefs about bond reliability must be reevaluated. For example, while interest rates are higher than they were before 2022, can bonds earn enough income to offset inflation moving forward?

When interest rates rise, the value of existing bonds declines. Funds linked to the Agg generally have significant duration, which increases their sensitivity to rate fluctuations. A prolonged period can lead to significant losses during rising interest rates.

Between 2021 and 2022, investors encountered substantial losses in perceived "safe" bond funds as rates surged. Confusing duration with maturity and misjudging rate sensitivity contributed to negative surprises. Not all advisers may be up to the task.

How should investors benchmark a total market bond fund's performance?

Benchmarking is crucial for managing total bond market funds and is highly personalized.

To see if a bond fund works for your specific financial goals, you or your adviser should compare it to the Agg over time.

Many investors compare their portfolios to the S&P 500, even in a 60/40 or 40/60 mix. Old rules, like "age in bonds," are archaic and come from a time of high rates that no longer exist.

To try to beat the Agg, active managers might buy more investment-grade corporates rather than Treasuries, then add high-yield or unrated bonds and invest in securitized credit, such as mortgage-backed securities.

This approach may increase yields but can also heighten vulnerability to economic contraction and credit disruptions, potentially leading to pronounced losses during severe credit downturns.

Your personal risk appetite will determine whether total market bond funds is a good strategy.

Remember, total bond market funds are simply a tool

Ultimately, investors should prioritize achieving personal financial objectives and treat total bond market funds as portfolio instruments rather than inherently "safe" investments.

Remember that two total bond funds with similar names may have very different risk levels.

To strategically add them to an otherwise healthy portfolio, carefully assess duration, credit composition, sector allocation, fees and performance relative to the Agg before moving forward.

Working with a knowledgeable adviser can mean the difference between injecting a healthy dose of risk, aiming for a smart long-term gain or demolishing the portfolio you've worked hard to build.

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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.

"Barry," a reader in Reno, Nevada, was "losing hair over this," he said on a phone call describing the mess he and his former fiancée are in.

"Five years ago, planning to be married, 'Christy' and I bought a home with acreage in the country. But I admit I was a jerk and kept putting off marriage until she grew tired of my excuses, so we broke up. Both of our names are on the deeds, but only my name is on the loan, and she will not agree on a sales price.

"I paid for an appraisal and was given an asking price far higher than Christy got from a lending institution. I then spoke with a lawyer who said that the courts will not generally get involved in situations like this involving unmarried couples. Why, Mr. Beaver, to both questions?"

Barry needed to understand why marriage solves these problems.

Ownership and the loan are completely separate

Without a written agreement on how property will be dealt with in the event of a breakup, if only one partner signs the mortgage, that partner alone is legally responsible for the entire loan. This is true even if both verbally agree to split payments and do so. It's also true even if both names are on the deed.

Meanwhile, the partner not on the loan has full ownership rights, with no obligation to make payments, because their name is on the deed. "True love" often creates the worst possible mismatch of rights and responsibilities.

Do not look to the courts for help

Unlike married couples who have divorce courts to divide property, in most jurisdictions, unmarried couples do not. I can't begin to count the number of times I've heard, "It feels like I am drowning," when the person on the loan realizes they:

• Cannot force their ex to refinance
• Cannot force them to sell
• Cannot force them to move out

Their only option is to retain counsel and file a partition action, at substantial legal expense.

The ultimate in getting even?

No one wants to feel used or misled, so anyone who commits to marriage and then keeps pushing back the date may have a certain karma coming.

When both names are on the title, both parties must agree to sell the property. That gives one partner the opportunity to block the sale just by being unreasonable.

Christy can remain in the house and even stop making half of the mortgage payment. Unless Barry makes the full payment, his credit would be at risk, while no damage is done to hers.

That said, if both were to stop making payments, this would result in a foreclosure. The property would be taken over by the lending institution, which might negotiate a rental agreement with the occupant — Christy — or simply evict her.

Going a step further, unmarried couples, in my experience, never give a second thought to what happens if one of them dies. Here's what can result:

• Without a will or trust, the surviving partner may inherit nothing
• The deceased partner's family may inherit their share of the house
• The survivor may suddenly co-own the home with the deceased partner's family
• The lender may demand a refinance the survivor will not qualify for and lose the house

Asking price can be a huge struggle

Agreeing on an asking price can create another struggle, as Barry is learning.

I asked real estate appraiser Atom Levi, of A.L. Appraisal Co. in Sacramento, California, who has both MAI and SRA professional appraisal designations, to explain the difference in asking prices.

"They serve different purposes," he told me. "A lender's appraisal is conservative, intended to protect its collateral and answers one question: 'Is this property safe security for our loan?'

"Lenders often use automated valuation models (AVMs) or desktop appraisals when possible. These rely on public data, which can miss nuances such as upgrades, views or micro market trends.

"However, a private appraisal (the one Barry obtained) is designed to tell us: 'What is the property actually worth in the current market?' Independent appraisers work for the homeowner, not the lender, conducting a deeper analysis with a physical inspection, verifying square footage, evaluating comparable sales and considering neighborhood trends more deeply."

How not to become a 'Barry'

Buying a home together before marriage may seem romantic, but it is not. It is a business partnership, and without legal protections, the consequences can be financially and emotionally devastating.

Any couple considering this dance around land mines needs either:

• A written cohabitation/property agreement, or
• A registered domestic partnership, depending on where you live

I advised Barry to retain a real estate attorney, or he may never awaken from the nightmare he created for himself by being a self-admitted jerk.

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

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

Imagine the stock markets are plummeting, your portfolio has incurred a significant unrealized loss and you need a substantial sum of cash immediately. What's your safety net?

Having an emergency fund minimizes the need to sell investments during market downturns. It protects your future profits by keeping your investments intact, allowing them to recover and grow.

It also helps cover expenses if your income stops or decreases, if you need to pay medical bills not covered by insurance, settle taxes, handle auto and home repairs or support family members.

An emergency fund is a highly liquid, risk-free asset that isn't affected by market volatility. Typically, savings or money market accounts are the best choices because they prioritize protecting your principal over earning interest.

Also, your emergency fund should be hard to access for unnecessary spending and free from withdrawal penalties.

How much to save in an emergency fund

A standard guideline is having enough in savings to cover three to six months of essential expenses. If you are self-employed, have irregular income or support others, aim for the higher end of that range or even more.

Keep it up to date. Review it annually to be sure it still covers your expenses. And if you do dip into it, be sure to replenish it as soon as you can.

How should you build an emergency fund?

Decide on the dollar amount you want to reach eventually, then work toward it gradually, month by month. Here are some suggestions:

• Transfers: Schedule monthly transfers from your investment income, your paycheck if you're still working or your Social Security benefit.
• Non-employment income: Set aside a portion of your freelance earnings.
• Tax refunds and bonuses: Earmark a portion of refunds or bonuses.
• Windfalls: Direct unexpected money gifts or an inheritance.

In short, an emergency fund is the smartest insurance policy you can have. It boosts your confidence by helping you stay calm during market declines, enabling you to make well-informed financial decisions from a position of strength.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that's right on the money.

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Receiving an inheritance is emotional. Even when it comes from a place of love and generosity, it often arrives during one of the hardest seasons of life.

Once the initial emotions settle, many people suddenly find themselves responsible for decisions they've never had to make before.

I've seen inheritors make thoughtful, life-changing decisions, and I've also seen smart people unintentionally create avoidable issues simply because they moved too quickly or didn't have a plan.

That's especially important to keep in mind as an unprecedented amount of wealth changes hands in the coming years. It is estimated that $105 trillion is expected to flow to heirs through 2048.

The good news is you don't need to become a financial expert overnight.

Before you start spending, investing, gifting or paying off debt, there are a few things to consider.

1. Don't rush to make big decisions

A common mistake people make after inheriting money is responding to pressure to "do something." An inheritance can create emotional urgency. Suddenly, family members have opinions. Friends may offer advice, and even social media might start providing investment-related content.

It can feel like you're missing out on opportunities or like you're falling behind if you don't act quickly.

In reality, slowing down is often the smartest move. In fact, you may not have a choice. Settling an estate is a big task, and if assets are not held in a trust, they will likely go through probate, which can take months and sometimes even years.

Take this time to create a plan. Think through some of your short-term and long-term financial goals, whether that's paying down debt, saving for retirement or even taking a vacation.

If the money is sitting in cash, in a bank account or a brokerage account, I suggest temporarily putting it into a high-yield savings account or a money market fund while you process your options. Remember, you don't need an instant solution.

2. Understand what you actually inherited

Give yourself time to begin gathering important documents and account statements for the assets you inherited. Not all inherited assets should be looked at the same way.

For example, an inherited IRA comes with distribution rules and potential tax consequences, while a taxable brokerage account may receive a step-up in cost basis, which can significantly reduce capital gains taxes. Real estate may come with maintenance costs, property taxes, and/or tenants and rental agreements.

Before making withdrawals or liquidating investments, it's important to understand the type of account, how it's titled and what rules apply. A single uninformed decision can create a large surprise tax bill.

3. Avoid treating the inheritance like "found" money

Psychologically, inherited money often feels different from earned money. People tend to spend inheritance funds more freely because they don't associate the money with years of work or sacrifice.

This behavioral bias is called "mental accounting," where people treat money differently depending on where it came from, even though it should be treated the same.

In fact, a study from ThinkAdvisor (paywall) shows that 42% of inheritors spend their inheritance within a year. That kind of behavior can quietly derail long-term goals.

This doesn't mean you shouldn't enjoy any of the inheritance. In many cases, using a portion for meaningful experiences or family memories can be fulfilling, but treating the entire inheritance like found money can lead to lifestyle creep that is difficult to sustain in the long run.

4. Lean on a trusted advisory team

Even knowledgeable inheritors may sometimes feel overwhelmed when dealing with money left to them, because the decisions can be complex. Questions around how certain assets pass, distribution rules around certain types of accounts, property transfers and tax strategies can quickly become more nuanced than people expect.

This is where having a strong advisory team can help make a meaningful difference. That team may include a financial adviser, CPA, estate planning attorney and even an insurance broker or agent.

Having experienced professionals by your side can help you avoid preventable mistakes and identify opportunities you may not know exist.

A good advisory team should help you slow down and think clearly. You don't have to navigate every financial, legal and emotional decision alone.

5. Create a legacy, one step at a time

This journey is personal and often overwhelming. The financial steps you take now can help bring peace and stability for the years to come, and create a legacy that honors your loved one.

You don't need to figure it all out in one day, but having a plan and the right team beside you can make all the difference.

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

For decades, private equity has generally been confined to pension funds, university endowments and the ultra-wealthy, but that's beginning to change. Without much publicity, private equity is starting to find its way into 401(k) plans — not as a fund you can easily select, but embedded inside target-date funds and other diversified portfolios that millions of workers already use.

For retirement savers, this raises an important question: If private equity is showing up in your 401(k), how does it affect you, and what should you be paying attention to?

You may already own it (without realizing it)

Most workers won't see "private equity" listed anywhere on their 401(k) menu. Instead, exposure is being added behind the scenes, typically within target-date funds, the all-in-one portfolios that automatically adjust risk as you approach retirement.

If your plan uses a custom target-date fund or a more complex investment structure, there's a chance a small portion of your account is already allocated to private markets. That's not necessarily a problem, but it does mean your retirement portfolio may be changing in ways that aren't immediately obvious.

Why it's being added

The argument for including private equity is straightforward: Potentially higher long-term returns and better diversification.

Private companies don't trade on public markets, so their performance doesn't always move in lockstep with stocks. In theory, that can help smooth out returns over time, especially for younger investors with decades before retirement.

Large institutional investors have relied on private markets for years. Now, some plan sponsors are trying to replicate that approach inside 401(k)s. But there's a key difference: Institutions have long-time horizons, large pools of capital, and teams dedicated to managing complexity, while individual retirement savers typically do not.

The trade-offs most people miss

The biggest risk isn't that private equity is inherently bad. It's that it introduces trade-offs many investors don't fully see, including:

Less transparency. Unlike publicly traded stocks, private investments aren't priced daily by the market. Their value is estimated periodically, which can make performance appear smoother than it really is. That can be misleading. A portfolio that looks stable on paper may simply be slower to reflect underlying changes.

Higher fees (sometimes much higher). Private equity has traditionally come with significantly higher costs than index funds or standard mutual funds. Even when bundled into a 401(k) structure, those fees don't disappear — they're just less visible. Over time, higher fees can meaningfully reduce your retirement balance, especially if the performance doesn't justify the added cost.

Limited liquidity — beneath the surface. You can still move money in and out of your 401(k) as usual. But behind the scenes, private investments are less liquid, meaning they can't be quickly bought or sold. To manage this, funds limit how much private equity they hold. Still, in periods of market stress, liquidity constraints can create complications that don't exist with traditional investments.

Complexity layered into "simple" funds. Target-date funds are often marketed as set-it-and-forget-it solutions. Adding private equity makes them more complex — sometimes significantly so. That doesn't mean they're inappropriate. But it does mean the simple option may not be as simple as it appears.

Who stands to benefit — and who should be careful

Private equity exposure may make more sense for certain investors than others.

If you're early in your career, consistently contributing to your 401(k) and unlikely to need access to your funds for decades, a small allocation to private markets may not materially change your risk — and could potentially enhance long-term returns.

But if you're closer to retirement, the calculus shifts. At that stage, transparency, liquidity and cost control tend to matter more than incremental return potential. Even modest increases in fees or unexpected constraints can have a larger impact when your time horizon is shorter.

What to look for in your plan

You don't need to become an expert in private equity. But you should understand how your 401(k) is evolving. Here are a few suggestions:

• Check what's inside your target-date fund. Look beyond the name. Review the fund's fact sheet or prospectus to see whether it includes "private markets," "alternatives," or similar language.
• Pay attention to total fees, not just the headline number. If your plan has introduced more complex investments, ask whether overall costs have increased and how those costs compare to simpler alternatives.
• Understand how performance is reported. If returns seem unusually smooth compared to the broader market, that may reflect how private assets are valued and not necessarily lower risk.
• Consider your time horizon. If you're within five to 10 years of retirement, you may want to think carefully about how much complexity and illiquidity you're comfortable with, even indirectly.
• Ask questions. Plan sponsors and HR departments may not proactively highlight these changes, but they should be able to explain them.

A shift worth watching and not ignoring

Private equity in 401(k)s is still in its early stages. Adoption remains limited, and many employers are proceeding cautiously. But the trend is worth paying attention to.

For years, the biggest risks in retirement plans were obvious: Not saving enough, taking on too much risk, or paying excessive fees. Those risks haven't gone away, but they are now being joined by a more subtle one — complexity creeping into portfolios that were designed to be simple.

For most investors, the right response isn't to overreact or opt out entirely. It's to stay informed. The biggest impact on your retirement savings often doesn't come from a single investment decision; it comes from understanding how all the moving pieces fit together, especially when they start to change behind the scenes.

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

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Got a question? See below for how to send it to us.

DEAR WEALTH WISE: My Social Security and pension cover all my expenses, so my sizable IRA and taxable brokerage accounts will be used for charity, gifts ($19,000 per heir annually) and eventual inheritance. Should I invest aggressively in my asset allocation model based on my heirs' ages, since, in essence, I'm investing for what they'll eventually receive? — Passing It Down.

Dear Passing It Down: Many people retire with minimal savings and become reliant on Social Security to cover their monthly expenses. But if you're receiving generous benefits from Social Security plus a pension, and your needs are fairly modest, you might not need your savings to cover your costs. If you've managed to accumulate a large amount of money, you have a prime opportunity to be generous with your heirs.

About 53% of American millionaires expect to leave an inheritance or charitable gift as part of their estate plan, according to a 2025 Northwestern Mutual Planning & Progress Study. If your plan involves taking advantage of the annual $19,000 gift tax exclusion to share some of your wealth while you're alive, you can strike a nice balance between leaving a notable inheritance and giving with warm hands.

But our reader raises an important question. When your savings are earmarked for your heirs' benefit, should your investment strategy follow their timeline or yours? Here's what the experts have to say.

It makes sense to use your heirs' ages as your benchmark

Retirees are often advised to maintain a reasonably balanced portfolio. You don't want to invest too aggressively in the stock market when you expect to use your savings to fund your lifestyle. Some professionals might recommend a fairly even stock/bond split, though that's a personal choice based on a variety of factors.

If you don't plan to use your savings to cover living expenses, it could pay to invest as though you're still in the wealth-building stage of life, says Daniel Milan, founder and managing partner at Cornerstone Financial Services.

"When your guaranteed income fully covers your living expenses, your investment accounts effectively function as a multigenerational wealth transfer vehicle, which fundamentally changes how they should be managed," he explains.

In that scenario, Milan says, it makes sense to align your asset allocation with your heirs' longer time horizons rather than your own, since the money might not be used for decades.

"A 30-year-old heir, for example, has a 30-plus year runway to recover from any market volatility, making a more aggressive, equity-heavy portfolio entirely appropriate for the assets destined for them," Milan explains.

If you're in good health, your heirs might not inherit your leftover money for a good number of years. That gives your portfolio time to recover from market downturns before the money becomes available to your loved ones.

Treat annual gifting differently from an inheritance

While you might want to invest most of your portfolio for growth, Jon Zetlmaier, CFP, AIF (accredited investment fiduciary) and owner at Zetlmaier Wealth Management, says that if annual gifting one of your goals, that money should be treated differently.

"If the gifts are going to be made in cash, the investment decision should be based on the timing of the goal," he explains. "The next few years’ worth of distributions should be invested more conservatively."

Zetlmaier also recommends that gifts to heirs come from cash or low-cost-basis investments from a taxable account.

"For money to be set aside for near-term gifts of cash, I would take a look at short and ultrashort duration fixed income to cover the next three to five years of distributions," he says.

Allocate some assets for your own needs, and invest accordingly

It's noble to want to give your entire investment portfolio to your loved ones via a combination of annual gifts and inheritance. But while your Social Security benefits and pension might suffice in covering your recurring needs, you never know when you might encounter an unplanned expense those income streams can't pay for.

That's why Milan recommends carving out a separate "personal reserve" bucket and investing that money conservatively. You might, for example, want to pull out two to three years' worth of living expenses.

Milan also says to be mindful of unexpected costs, such as home repairs and medical bills.

"I would especially recommend accounting for potential long-term care expenses, as those can often become the most cumbersome in life’s later stages," Milan says. "The remainder can then be invested more aggressively with confidence knowing your safety net is intact."

Zetlmaier agrees that it's important to be prepared for the unexpected.

"While this investor should be praised for his or her altruism, it is highly unlikely that a pension and Social Security will cover unknowns such as higher-than-expected inflation, unforeseen health problems, nursing home costs and long-term care expenses," he says.

Don't look at your portfolio as a single pool of money

It's natural to see your savings as a giant pot of money to manage. But Milan says a better bet is to "think of it as two portfolios with two distinct purposes — one for life's surprises, and one built to grow for the next generation."

If you invest the safety-net portion in conservative such assets as bonds, U.S. Treasuries, and certificates of deposit, you can invest the "next generation" portion in stocks and other growth instruments. That way, by the time your heirs get their hands on their inheritance, they could be looking at a truly life-changing amount of money.

A word from Wealth Wise

Our reader mentions a sizable IRA earmarked for heirs but doesn't specify if it’s a traditional or Roth account. This is a scenario in which asset location becomes just as critical as asset allocation. If it's a traditional IRA, heirs will eventually owe income tax on those distributions.

Strategically executing partial Roth IRA conversions now — provided it fits within a broader tax strategy and avoids triggering Medicare surcharges (IRMAA) — could be an incredibly powerful gift. It allows the next generation to inherit those growth assets completely tax-free.

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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We're living longer, and that's wonderful news — until you sit down with a calculator. A 25- or 30-year retirement isn't unusual anymore. This means your health and money must last far longer than they did for your parents.

One thing that affects both is preventive health spending. It sounds simple: Get the screenings, take the vaccines, keep up your checkups, stick to healthy habits.

However, the financial consequences are bigger than most people realize.

Here's how to incorporate preventive health spending into your retirement planning.

Understanding preventive health spending

Preventive health spending covers everything you do now to avoid costlier problems later:

• Routine screenings
• Vaccinations
• Annual wellness visits
• Healthy lifestyle changes

None of this is glamorous. But it pays off down the line.

The financial case is strong: Chronic conditions drive 90% of the nation's $4.5 trillion in annual health spending, according to the CDC. Many are preventable or manageable when caught early.

Community-level prevention programs show meaningful returns. Investing $10 per person per year in proven community-based programs could save the country more than $16 billion annually within five years, a return of $5.60 for every dollar invested.

Clinical screenings make a difference at the individual level, too. Colorectal cancer screening starting at age 45 reduces both incidence and mortality, with strong evidence supporting its benefits.

Vaccinations for adults against seasonal flu, shingles, pneumonia and other related diseases reduce hospitalizations and complications, especially as we age.

From a financial planning perspective, preventive health spending can be viewed as a form of risk management. It helps reduce future costs while protecting both your health and your money in the long term. It should be part of your retirement planning for healthcare costs.

The economics of longevity and retirement

Longevity changes the math.

Retirements that once spanned 10 to 15 years can now stretch two or three decades. While life expectancy dipped during the pandemic, long-term planning horizons are trending longer for many households.

Gallup reports the average retirement age is near 62 to 64, with workers expecting to retire around 66. That gap hints at a reality check ahead.

Healthcare inflation complicates things further. Medical costs tend to rise faster than general inflation over time. Fidelity estimates a typical 65-year-old couple might need $172,500 in after-tax savings set aside just for healthcare in retirement. That number doesn't include long-term care.

Planning for a 20- or 30-year retirement requires a different mindset than previous generations. Your financial plan must account for both increased longevity and rising healthcare costs.

Smart, preventive health investments today compound into substantial wealth preservation over decades.

Impact of preventive health spending on lifetime wealth

Preventive care helps you avoid the most expensive kind of healthcare: emergency, late-stage, hospital-based care.

When blood pressure is controlled, you're less likely to face a stroke or heart attack. When you catch colon polyps early, you dodge the cost and trauma of advanced cancer care.

Each avoided crisis keeps assets in your account rather than paying medical bills.

Bryan Henry, president of PeterMD, recommends treating preventive care as part of a long-term financial strategy, not just a medical routine. This is especially essential when planning for retirement healthcare expenses.

"Our data shows that individuals who invest in preventive care experience 40% fewer catastrophic health events after age 65, Henry explains. "This translates into significant savings and preserved wealth over time. The most successful retirees treat health spending as an investment … not an expense."

Ultimately, the preventive path doesn't just lower bills. It stabilizes cash flow … which matters a lot when you're drawing down a portfolio.

How to incorporate preventive health into retirement planning

If you're building or updating a retirement plan, treat preventive health like any other core line item. Give it a budget, a schedule, a purpose. Here's what you can do:

Map your age-based screenings. Use your annual physical to set a personalized screening calendar. Get your blood pressure, lipids, colorectal and breast cancer, bone density and skin checks.

Medicare covers a wide range of preventive services with no copay when you see a participating provider.

Use the insurance for which you already pay. Many employer policies and marketplace plans cover recommended preventive services without cost-sharing. Put those dollars to work.

Fund an HSA if you're eligible. Health savings accounts (HSAs) offer a triple tax advantage: pretax contributions, tax-deferred growth, tax-free withdrawals for qualified expenses.

If you can, invest HSA dollars and pay routine costs out of pocket now, saving your HSA for retirement healthcare.

Lean into employer wellness programs. Employees who maximize their wellness benefits and HSA contributions build a powerful financial buffer for retirement. These programs offer tax advantages while funding preventive care.

It's about creating a sustainable strategy that protects both health and wealth simultaneously.

Build a small "health opportunity" fund. Think of a fitness budget and nutrition support. Consider such things as a community center membership or sessions with a dietitian. Modest spending can have big, long-term returns.

Embracing preventive health spending for lifetime wealth

Prevention isn't just about adding years to life; it's about adding quality to those years while protecting your finances. The more you can avoid catastrophic events, the more control of your savings you keep.

If you haven't already, look at your financial plan and ask a few practical questions:

• Do you have a preventive care schedule on your calendar?
• Are you using insurance-covered services for which you're already paying?
• Is your HSA strategy set up to help future you (not just present you)?
• What wellness benefits are you leaving on the table at work?

Small, steady choices today can buy you more options tomorrow.

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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.

'Who has the time?' isn't something retirees often say. Or do they?

Many people in retirement are busier than ever, saying yes to everything from volunteering and consulting to babysitting their grandchildren, all while juggling multiple responsibilities as they search for purpose. Others overcommit out of fear of downtime. They were so busy during their working years that the thought of free time scares them.

"I definitely know retirees who were easier to get a hold of when they were working," says John J. O'Hare, wealth manager at O'Hare Wealth Management at Steward Partners. "They are now on six different boards, traveling, volunteering, fundraising. People want to find their purpose; after that, very few know what it is, so they sign up for a million things."

Having purpose in retirement is important to stave off loneliness, depression and cognitive decline. Studies have shown it can help you live longer, lower the risk of disease and keep your mind sharp.

But how much is too much purpose? Sometimes, overcommitting can cause more harm than good. Here are five sneaky ways saying yes to everything when you retire can hurt you.

1. It can derail your retirement plans

You retired for a reason, but if you overcommit and it derails your plans, why did you leave your job in the first place?

O'Hare had one client who retired to Florida but couldn't claim residency because he was consulting too much. Another was offered a year's salary to work for three months, and that offer was extended once the year was up. Eventually, the client had to turn it down, because he wanted to enjoy his retirement, says O'Hare.

If you find you can't pursue a hobby, spend time with family, or even sleep late because you are overextended, that's a sign you may want to pull it back a bit.

2. It can cause physical or emotional stress

Even if you like jumping from one commitment to the next, your body and mind may not. Physically, it can wear down your aging body. Mentally, it could lead to burnout. If you're too busy to keep up with your regular checkups, you could end up with health issues in the long run.

3. It can lead to financial strain

Finding purpose can be expensive, especially if you're not sure what it is. If you're spending more than you have in the pursuit of purpose, it could lead to financial hardship. If you're forced to withdraw money from your savings in a down market, it could trigger sequence of returns risk, in which you lock in losses early in retirement before your money has time to recover, creating a potential shortfall later on.

"Overcommitting can show up in dollars, and it can show up in time," says JR Williams, a senior director at Ally Invest. "If you're saying yes to one trip, it doesn't really impact your finances, but if it becomes a pattern and you are traveling more than you had initially anticipated, it can blow up your budget."

4. It can leave you little free time

Retirement is supposed to be your time to relax, not to have a schedule for every minute of every day. Sure, you want a routine, but you also want time to be spontaneous. Plus, Williams says you run the risk of becoming the person that everyone assumes is always available if you always are.

Occasionally helping neighbors or enjoying spending time with your grandkids is one thing; becoming a full-time babysitter or a permanent errand-runner is another.

5. It can strain relationships with family and friends

If you're spending all your time consulting or on the golf course and not enough time with family or loved ones, it may strain those relationships at a time when you should be cherishing them. Time is a commodity, especially in retirement. Experiences matter more than how much money you can make from that consulting gig or how many times you can sink that hole-in-one.

Give yourself time

It's important to keep busy in retirement, but that doesn't mean you have to say yes to everything. Finding purpose doesn't have to happen overnight. It can be a slow and steady process.

In fact, O'Hare tells his clients to wait at least six months to a year before making any major commitments. "You want to get bored playing golf, fishing, doing all those things first and then find out if you really are bored," says O'Hare.

After that, if you want to do everything under the sun, go for it!

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Most affluent retirees don't have an investment problem. They have a structure problem. That distinction matters.

As a financial adviser with more than three decades of experience in investment strategies, tax-efficient retirement income planning and legacy wealth building, I've seen many portfolios that look strong on paper but leak wealth in retirement.

The account balances may be high, the allocation may look reasonable and the investment performance may be acceptable. But if the structure is wrong, money can quietly drain away through taxes, forced distributions, Medicare surcharges, Social Security taxation, poor withdrawal sequencing, survivor-tax penalties and inefficient legacy planning.

That is the retirement tax trap. And it usually does not show up as one dramatic mistake. It shows up slowly. These are some ways that the trap can appear:

• A larger tax bill than expected
• A required minimum distribution (RMD) that pushes income higher
• A Roth conversion window that closed too soon
• A surviving spouse suddenly paying more tax on similar income
• Children inheriting a large IRA that is far less efficient than the parents had assumed

None of this feels urgent while the accounts are still growing. The most dangerous retirement tax problems are often created when people feel financially safest.

Accumulating vs income engineering

Most successful retirees spent decades doing exactly what they were told to do — save, defer taxes, max out retirement accounts, reinvest, avoid debt and build the portfolio. That advice helped them accumulate wealth. But accumulation is not the same as retirement income engineering.

A retirement portfolio tells you what you own. A retirement income structure tells you how much control you actually have. Those are not the same things.

If most of your wealth is inside IRAs, 401(k)s, 403(b)s, deferred compensation or other tax-deferred accounts, you do not own that money with complete freedom. You own it with a future tax claim attached.

That does not make those accounts bad. It just means that they are incomplete without a distribution strategy.

IRA expert Ed Slott has warned for years that tax-deferred retirement accounts can become a tax time bomb when people confuse tax deferral with tax elimination. His core point is simple: Tax-deferred money is not tax-free money.

Emotionally, many retirees still treat a $2 million IRA like $2 million of spendable wealth. It's not. Part of that account belongs to future taxes. The only questions are how much, when and under whose tax rates.

That is where structure matters.

If you have never modeled how your IRA withdrawals, Social Security, pension income,

investment income, Medicare thresholds, Roth conversions and future RMDs interact over time, you may not have a retirement tax plan — you may only have a portfolio. That's a dangerous distinction.

The IRS does not tax your retirement based on how hard you worked, how responsibly you saved or how badly you want the money to last. It taxes the structure.

And a weak structure creates leaks. Some leaks are obvious; others stay hidden until the planning window has already narrowed.

Preventing leaks: How to strengthen your plan structure

Wade Pfau, a professor at the American College of Financial Services, has written extensively about retirement income planning as a different discipline from traditional accumulation investing.

He argues that retirement is not just about maximizing returns. It's about building an income structure that can support spending, manage risk, preserve flexibility and survive uncertainty. That is the point that many retirees are never shown clearly enough. A pile of assets is not a plan.

A plan requires coordination:

• The investment account has to work with the tax return
• The tax return has to work with Social Security
• Social Security has to work with Medicare thresholds
• IRA withdrawals have to work with Roth conversions
• Roth conversions have to work with future RMDs
• Income planning has to work for both spouses, not just while both are alive
• Legacy planning has to account for what children actually inherit after taxes

If those pieces are not coordinated, the plan may still look fine. Until the leaks begin.

The solution is a retirement tax map. It should show:

• Where income will come from
• Which accounts will be used first
• When Roth conversions may make sense
• How future RMDs may grow
• How Social Security taxation fits in
• Whether Medicare thresholds are being managed
• What happens to the surviving spouse
• How heirs may inherit assets after taxes

That kind of planning does not guarantee perfection. But it gives the family something most retirees desperately want: Control over timing, taxes, income, survivor outcomes and how much of the family's wealth is preserved.

As you create a retirement tax map that gives you the strong structure you need, bear in mind the following:

There is an optimal mathematical balance to keep in your tax-deferred account that allows you to get your future RMDs tax-free. Creating a systematic Roth conversion timeline will help solve this.

Creating a portion of your retirement income that's not market-dependent is one of the strongest mathematical financial structures you can build.

Stress-test your retirement structure

The worst retirement mistakes are rarely obvious when they are being made.

They look responsible. They look normal. They look like what everyone else is doing until years later, when the tax bills, forced distributions, survivor issues and legacy problems finally reveal what the account statements never showed.

By then, the issue is not just money. It's regret. The feeling that the family worked for decades, saved responsibly and still overlooked a problem that could have been mitigated with better structure.

If your retirement structure has never been stress-tested for taxes, widowhood, forced distributions, Medicare thresholds, long-term income sequencing and after-tax legacy outcomes together, you may be seeing your portfolio but not your future exposure.

That is the real retirement tax trap. Not taxation itself, but waiting too long to see where the leaks are.

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.

In 1776, the American colonists did something remarkable, not for the reasons most people think. They did not rebel impulsively.

They spent 169 years living under a functional system that governed, organized and provisioned their lives in exchange for something they had not fully understood: The systematic extraction of their labor, resources and future.

The exact moment of realization, when it finally occurred, was encapsulated by Thomas Jefferson in a single sentence: "Whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government."

Most people reach retirement without ever making this declaration.

The system I'm describing isn't a government. It's the work-identity system, the structure that guided your life for 30 or 40 years.

It defined your worth by your title, scheduled your time by someone else's calendar, limited your relational energy to what was practically useful and paid you in currency: Money, status and a sense of purpose borrowed from the institution. It felt sufficient until the day it stopped.

This isn't intended as a critique of work, which can be meaningful, productive and deeply fulfilling. However, the structure most people operate within was originally built on mercantilist principles, the same principles that guided Britain's relationship with its American colonies.

An imposed structure

The organization was not primarily focused on your growth. It was focused on your productivity. As Thomas Paine noted about the Crown's relationship with America: "England consults the good of this country no farther than it answers her own purpose."

Replace "England" with "the organization." The sentence still holds.

If you doubt this, consider the grievances. The work system took your best hours, not your leftover hours, but the prime hours of your prime years. It imposed its structure on your family without their consent.

It measured your worth by metrics it designed for its own purposes. It severed your access to deeper relationships, curiosity, community and unhurried time with the people you love, because these produced no measurable return. It called the benefits it provided gifts, though they were simply the minimum required to keep you productive.

Bearable costs

None of this was malicious. Most of it was invisible. That's how extractive systems sustain themselves: Not through cruelty, but through familiarity.

The colonists didn't suffer under the Crown because they lacked intelligence. They suffered because they were accustomed to it, and because, for a long time, the costs were bearable.

Jefferson understood this: "Mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed."

This is why many people enter retirement psychologically unprepared. The system wasn't destroyed; it was merely put on hold. They carry the colonial master into freedom: The need for external validation, equating worth with productivity and discomfort with time that isn't owned by anyone. They've crossed the border but never declared independence.

The Declaration of Independence wasn't the hard part. What followed was harder. Jefferson wrote that the goal was to "institute a new Government, laying its foundation on such principles and organizing its powers in such form as shall seem to them most likely to secure their Safety and Happiness."

This is precisely what the Encore Years require:

• Not a vacation from the old system but the intentional design of a new one
• A system built around identity grounded in character rather than title
• Purpose derived from contribution and curiosity rather than productivity metrics
• Connections valued for depth rather than utility
• A structure you chose rather than one that chose you

Most retirement planning addresses the financial dimension of this transition with considerable sophistication. It also addresses the structural dimension:

• Who am I without the title?
• Where does my sense of worth come from now?
• What do I build my days around, with considerably less?

The result is what financial advisers recognize but rarely name: Clients who have achieved financial independence while remaining psychologically colonized by the system they left.

Money, it turns out, is a subset of wealth. The colonists understood this. Their grievances were not only about taxation but also about identity, autonomy and the right to govern themselves.

Jefferson was careful to note that independence is not declared for "light and transient causes." The threshold was a long train of abuses, a pattern rather than an incident. The pattern in retirement is usually visible in hindsight:

• The growing suspicion that the currency you were paid in was not the one you needed
• The relationships that faded because they required time you allocated elsewhere
• The questions about meaning you delayed until there was more room to consider them

There is now more room. The question is whether you will use it to create the life you want or to rebuild the one you left behind.

The paradox of retirement freedom is this: The system you're leaving gave you structure, but at the expense of autonomy.

The system you now need to build requires you to create your own structure to regain that autonomy.

Independence isn't the absence of government; it's the presence of better government, designed by you, accountable to your core values and organized around the principles you truly believe in.

The colonists knew the difference. They didn't dissolve one government and leave a vacuum. Instead, they built something new.

That is the declaration retirement requires.

To learn more, pick up my new book, Your Encore Years: The Psychology of 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.

Over the past few months, Microsoft has made headlines by offering a select group of employees the chance to take an early-retirement package.

This is the first time Microsoft has made an offer like this, and as the employees who have elected to take the package begin to make their exit, it's become clear that this offer has a lot to teach all of us about retirement planning and readiness.

The offer

Microsoft rolled out what it is calling a Voluntary Retirement Program (VRP), a one-time offer for certain employees to retire early with a specific set of benefits. Employees who have elected to take it will receive a certain number of months of severance based on their years of service, continued vesting of company equity and continued health insurance for a defined period.

The Microsoft execs I've talked with say they have been strategizing things like cross-country moves, future healthcare costs and wondering how to mobilize company stock to help achieve their goals.

With layoffs on the rise and AI-fueled job fears dominating the headlines, these types of concerns are increasingly common for modern executives. It turns out that Microsoft's VRP is forcing questions for their employees that can serve as a retirement readiness checklist for all of us as we plan for the unexpected.

Here are five things to keep in mind.

1. Retirement readiness has a number

Microsoft gave its employees a number and left it to them to assess if it was worth making the jump to retirement. They have had to choose whether the offer helps them achieve, or even accelerate, their retirement goals.

For modern executives, there is always a number that can gauge how ready you are to make a change. That number could be described as your "financial freedom number," and it essentially tells us if your current savings and investments can support an early retirement.

It's very common for executives, even those with a million dollars or more of company stock, to question whether they are truly on track. This is a scary transition and an understandable fear, but a few targeted conversations and some careful math can readily help address things like:

• Can your investments support your goals?
• Do you need additional income after you retire?
• When do you need to sell company stock?
• How long will your money last? What should you pass on to others?

I've written before about Coast FI planning as a kind of secret weapon for high earners precisely because it turns a really overwhelming question into a thoughtful framework. A planning philosophy like this means that you can always know how ready you are to face the unexpected.

2. The healthcare bridge

Look closely at Microsoft's package, and you'll notice it includes up to five years of continued medical, dental and vision coverage. It's hard to overstate how often healthcare costs keep people anchored to jobs.

If you retire before 65, you are not yet eligible for Medicare. You have to bridge the gap, and if you're in your late 50s, that bridge can be pretty expensive. People go to great lengths and mental gymnastics to solve this problem.

I've talked to execs over the years who consider retiring and getting the proverbial "part-time job at Starbucks for health insurance" or even moving to another country to lower their healthcare costs.

Microsoft addressed that problem for its retirees by handing them a multiyear runway. The rest of us have to build our own runway, through the ACA marketplace, a working spouse's plan, COBRA or dedicated savings earmarked for premiums.

Weighing the various options for healthcare can be overwhelming, but there are a few valuable tools for people considering early retirement.

Create an annual cash flow projection. Mapping out your income and expenses shows you the impact of changing healthcare expenses.

Understand ACA subsidies. For early retirees, even those with large portfolios, it's possible to control your income levels in key years to qualify for additional ACA subsidies to assist with insurance costs.

Include your new costs in your long-term plan. Health insurance costs are almost always discouraging, but if you have weighed your options carefully and included the cost in a long-term financial plan that works for your family's goals, you are prepared to make moves more confidently.

As we make our plans for entering a new phase, we all have to do the math on what options will work for our finances, but the bigger challenge is likely to be accepting that cost so that you can move into early retirement with a sense of actual freedom.

3. Every decision is a tax decision

Put yourself in the shoes of a Microsoft employee taking the VRP:

• You have half a year of taxable W-2 income already
• You're being paid an additional eight to 39 weeks of severance pay as cash
• You will continue to have stock vest (and taxed) over the coming months
• You may have to sell stock to kick off your retirement, incurring capital gains taxes

It's tempting to think this scenario is entirely unique, but in many ways, it's a common story when someone finally makes the jump from corporate work to early retirement.

For employees leaving midyear, the time is now to make your first tax projection. Understanding your likely tax bill is going to inform how much cash you need to set aside for the IRS and what other moves you need to make this year vs future tax years.

This may end up being a higher-than-average income year for Microsoft employees taking the offer, creating opportunities for charitable-giving strategies, tax-loss harvesting and quality long-term planning.

For other would-be retirees, the opportunity may cut the other way. As you leave your job, you may find you have an especially low-income year, which can open a window for planning moves like Roth conversions and capital gain harvesting.

At Reach Strategic Wealth, we call these different phases of someone's life Strategic Planning Windows, which we visualize like this:

Whether it's time as an employee, early retirement or taking a consulting role for the first time after you exit, each one of these windows brings unique opportunities, and each one is open only so long.

Correctly identifying which planning window you're in and what moves are open to you in that window are vital in making the most of your money.

When it comes to early retirement strategies like selling company stock, performing Roth conversions, giving to charity or beginning to live off of portfolio income, taking advantage of your Strategic Planning Window requires thoughtful planning and must include multiple years of tax projections to help you understand the impact of any potential moves.

4. You can't eat stock for breakfast

Microsoft is letting the employees who take the VRP continue to receive stock vests for six to 12 months after their exit date.

Like many executives, senior Microsoft employees likely already have a concentration in their company's stock. This means that as they make their transition, they will be faced with decisions around when to sell stock to fund their retirement.

It's not that you need to sell company stock all at once — it's that you need to clearly articulate your goals to understand your cash flow needs so you can make moves tax-efficiently.

I laid out a framework I use for exactly this decision in the article Tied Up in Knots Over a Concentrated Stock Position? This Strategy Will Help You Unravel.

It's quite common to see people retire with a robust balance sheet made up of company stock that can't support regular spending on its own.

In other words, it's great to have stock, it might even make you rich on paper, but you can't eat it for breakfast.

There are many different strategies available to sell and diversify concentrated stock positions — exchange funds, direct indexing, long/short investing and charitable donations, to name a few.

The problem isn't a lack of tools — it's that, as we noted earlier, every decision is a tax decision, and when it comes to selling company stock, it's very easy to get "analysis paralysis" while considering the options.

To overcome this, we start with learning your family's very specific goals so we understand your income needs and then move on to the technical strategies that may let you pursue them tax-efficiently.

In my experience, getting those steps out of order is a recipe for staying stuck.

5. The hardest part probably isn't financial

Microsoft gave eligible employees a window of about a month to decide. That deadline is doing something not-so-subtle: It's forcing a choice that people often postpone indefinitely.

It's very common for a family to be financially ready to make a move well before they are mentally ready for it. The desire and confidence to leave don't necessarily come directly with a given account balance.

You've likely heard before about the spouse who wants their partner to leave the corporate world, but it keeps getting put off. It's the cycle of sticking around for one more bonus or stock vest. Or the executive just can't imagine what post-corporate life will be like.

These things can often become the real golden handcuffs, not just the equity that vests if you stay, but the identity and routine that make you stay put.

The tool that breaks this way of thinking is almost embarrassingly simple: A year-by-year cash flow plan. When you can see the income, the taxes, the healthcare and the portfolio drawdown laid out side by side, the abstract fear of "Can I really do this?" gets replaced by a concrete answer, whether it's "yes" or "no."

A deadline like Microsoft's is uncomfortable precisely because it demands that clarity. The good news is you can create the same clarity for yourself, proactively, so you are ready to make the jump on your terms.

Making a plan before your employer forces it

The idea of a well-planned, one-time retirement date is alluring but elusive, almost to the point of being mythical. Many times, it seems that layoffs, caregiving responsibilities or health needs force our hand when it comes to retirement decisions.

In other cases, retirement from the corporate world is just a bridge to consulting or re-entering the workforce down the line.

Microsoft decided that changes to the org chart were needed for its company plans. Whether that wave reaches your industry next, the offer it put together is an opportunity for the rest of us to learn. It prompts us to map out these key points and to check in on our own plans as we prepare for a new phase of life.

The families who navigate these steps well are rarely the ones who guessed right about the stock market. They're the ones who take the time to articulate their goals, understand what strategic planning window they are in and execute the necessary moves tax-efficiently.

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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.

Collecting Social Security at age 70 is the holy grail of retirement planning. It's the milestone that financial planners and wealth advisors urge you to strive for if you want the biggest paycheck possible.

Yet, claiming Social Security at 70 isn't that popular. According to Social Security Administration data, only around 10% of recipients actually wait until that age to collect. For some, health issues get in the way of waiting. Others don't trust that the system will remain solvent. Others need the money now, or prefer to spend it while they are young enough to enjoy it.

Either way, the vast majority of Americans choose to take their benefits long before age 70. (If you are thinking about joining them, check out five reasons why you should and shouldn't take Social Security benefits at 62).

Is taking benefits at 70 a mistake? It depends. There is a strong case to be made for waiting until 70, but there are equally compelling reasons to claim earlier. With that in mind, here are five reasons to hold out until 70 and five reasons to take the money and run.

5 reasons to wait until 70 to collect Social Security

1. You'll receive the highest monthly payout possible.
Each year you delay collecting Social Security benefits after your retirement age, which for people born in 1960 and beyond is 67, you'll receive a roughly 8% increase in your payment. After age 70, that extra 8% bump goes away. But by holding out for just those three years between 67 and 70, your permanent monthly benefit increases by 24%.

2. You'll have a larger cost-of-living-adjustment (COLA).
One of the perks of Social Security is that it is adjusted for inflation each year, as a percentage, which means the bigger your monthly benefit, the higher your COLA will be. If you wait until 70 for the highest check possible, every future COLA percentage is multiplied against a much larger number than if you collected benefits earlier. A 3% inflation increase on a $3,000 monthly check is $90. A COLA of 3% on an $ 1,800-a-month check is $54. Waiting gives you more inflation protection.

3. You can replace your lowest-earning years.
Your Social Security benefits are calculated based on the 35 highest-earning years, adjusted for inflation. During the later years of a career, people tend to be in their peak earnings period. If you choose to work until 70 and are earning top dollar, you can bump out older, lower-paying years, effectively increasing your baseline benefit. That means a bigger check when you retire and begin collecting Social Security.

4. Increased survivor benefits.
Since you are waiting until 70, you'll have a bigger monthly payment, which means that if you were to pass away first, your surviving spouse can receive a bigger monthly benefit for the rest of their life.

5. Long-term longevity insurance.
Outliving your savings is a fear many retirees have. But if you work until 70, and collect a bigger Social Security check, that concern diminishes, at least a little bit. After all, you're bringing in income for longer, saving for more time and building a larger Social Security payout. The latter of which provides permanent protection against outliving your other savings and investments.

5 reasons why you should take Social Security earlier than 70

1. You have health and longevity concerns.
If you have health issues or longevity concerns and you don't think you are going to make it to 70, it doesn't make sense to wait to collect Social Security. After all, the break-even point, or the age at which the large checks from waiting catch up to the total amount of the smaller checks, is around age 80 to 82.

2. You'll have to deplete your personal savings or get into debt.
You may have had every intention of waiting until 70, but life happens and when it does, it's better to begin receiving Social Security than getting into debt or depleting your savings to get by. If you need the cash, don't create a financial hole now for a bigger payment later.

3. Unlocking spousal benefits for married couples.
A lower-earning spouse can only begin receiving spousal benefits, which can be as much as 50% of the higher earner's benefits, once the primary earner files for his or her retirement benefits. If your lower-earning spouse needs the benefits now, waiting until 70 to claim won't do them any good.

4. Fund an early retirement.
The average age of retirement in America is 62, which is the earliest you can collect Social Security. If you want to join the majority and need the cash to fund an early retirement, Social Security can be a viable option. Especially if it prevents you from tapping your investments, giving them more time to grow and compound. After all, retirement can easily last thirty years, longer if you are retiring early.

5. Passing wealth on to your heirs.
When you and your surviving spouse die, your Social Security benefits disappear. You can not leave your Social Security benefits to heirs in your will. But if you want them to reap the benefits of your hard work over the years, you can collect earlier than 70 and use that money to pay for your everyday living expenses. This allows you to leave your existing IRA, 401(k), or other investments completely untouched so they can keep growing and be passed down to your beneficiaries.

It's up to you

Deciding whether to claim Social Security at 70 is a uniquely personal choice. While waiting guarantees the biggest possible paycheck, claiming earlier can protect your health, fund your most active retirement years and safeguard your private investments for the next generation.

Take a close look at your health, your lifestyle goals, and your retirement roadmap when determining the right age for you. If you aren't sure which path to take, seek help from a financial adviser who can help you map out the perfect strategy for your situation.

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Some people spend decades building up credit card rewards. Frequent travelers might accumulate hundreds of thousands of airline miles or hotel points, while everyday spending can generate sizable cash-back balances and flexible rewards over time.

Those rewards can represent real value, but what happens to them after you die isn't always straightforward. Unlike money in a bank account, credit card rewards are governed by the terms of each card issuer and loyalty program, which determine whether your heirs can inherit or redeem them.

Depending on the program, your family might be able to claim those rewards, or they could be forfeited when the account is closed. Understanding the rules before they're needed can help prevent valuable points and miles from being lost during estate settlement.

Can your heirs inherit airline miles?

Credit card rewards have become more valuable than ever. Americans redeemed $20 billion more in rewards in 2024 than they did five years earlier, leaving many cardholders with sizable balances of airline miles and hotel points. That makes it worth understanding whether those rewards can be passed on to your heirs as part of your estate plan.

Airline policies vary widely. Some carriers, including Delta Air Lines and JetBlue, generally close a deceased member's account and don't allow miles to be transferred after death. However, JetBlue's Family Pooling feature lets eligible family members share points during the account holder's lifetime, reducing the risk that rewards will be lost later.

Other airlines are more flexible. United Airlines, for example, says it might transfer all or a portion of a deceased member's miles to an authorized person. The executor might need to provide documentation, such as a death certificate or proof of executor status, and in some cases pay a transfer fee.

Because every loyalty program has its own rules, reviewing your airline's policy before it's needed can help your heirs understand what they might be able to inherit and what steps they'll need to take to claim eligible rewards.

What happens to your hotel points?

Like airline miles, hotel loyalty programs have different rules for whether your heirs can inherit points after your death. Some programs allow points to be transferred to a beneficiary, while others limit who can receive them or require specific documentation.

For example, Hilton and IHG Hotels & Resorts allow points to be transferred after a member's death if the required documentation is submitted within one year. Marriott International generally limits transfers to a legal spouse or the person named in the member's will.

Because every hotel loyalty program has its own rules, reviewing them in advance can help your heirs understand whether points can be transferred and what documentation they'll need to claim them.

Are credit card rewards treated differently?

Credit card rewards aren't limited to airline miles and hotel points. Depending on the card, you might have accumulated several types of rewards over the years, and each could have different redemption or inheritance rules.

Before determining what your heirs may be able to claim, it's helpful to understand the different types of rewards a credit card can offer.

• Cash-back balances: Rewards earned from everyday purchases that can often be redeemed as a statement credit, direct deposit or gift card.
• Flexible rewards points: Credit card points that could be transferred to participating airline or hotel loyalty programs or redeemed through the card issuer.
• Travel portal rewards: Points that can be redeemed through a credit card issuer's travel booking portal for flights, hotels, rental cars and other travel expenses.
• Statement credits: Credits applied directly to a credit card account, such as merchant refunds, promotional offers or certain rewards redemptions, that reduce the account balance.

These rewards can represent significant value, but whether your heirs can claim them depends on the credit card issuer. Some issuers forfeit unused rewards when an account is closed, while others allow an estate to redeem them or convert them to cash.

For example, Capital One converts eligible miles to cash after being notified of a cardholder's death. The value is first applied to any outstanding account balance, and any remaining funds are typically sent to the estate after the required documentation is provided. JPMorgan Chase follows a similar approach by automatically redeeming Ultimate Rewards points for a statement credit.

Citigroup takes a different approach. According to its estate services guidance, an estate representative could redeem a deceased cardholder's ThankYou points, but the rewards generally must be claimed within one year of the cardholder's death.

Because every issuer has its own policies, reviewing your credit card's rewards terms now can help your heirs understand what they might be able to inherit.

Does being an authorized user help?

Being an authorized user might help, but it doesn't automatically give someone ownership of the credit card rewards. Authorized users are permitted to make purchases with the card, but the primary account holder remains responsible for the account and typically retains ownership of any rewards earned.

In some cases, a family member who already has access to the account may be able to redeem rewards before the account is closed. However, what's allowed depends on the credit card issuer's policies.

How families can avoid losing rewards

A little planning now can help your family avoid losing valuable rewards later. Consider taking these steps:

• Keep a list of rewards accounts: Your family will need this list to know where to look for potential rewards.
• Document login information securely: Keep account credentials in a secure location, such as a password manager or estate-planning document, so your executor can locate your accounts if needed.
• Review program transfer rules: Every loyalty program has different rules for transfers after death. Review those policies in advance so you understand your options.
• Redeem rewards periodically: It’s possible that heirs might run into roadblocks when trying to transfer rewards. Consider periodically redeeming those rewards so they don’t go to waste.
• Discuss rewards as part of estate planning: Discuss your rewards accounts with your estate planning attorney and include any relevant instructions in your estate documents.
• Include loyalty accounts in estate inventories: Make sure your inventory includes airline, hotel and credit card rewards accounts so they aren't overlooked during estate settlement.

Rewards aren't an estate asset in the traditional sense

Loyalty programs usually retain broad authority over rewards balances, so rewards don’t function as an estate asset in the traditional sense. While you have full power and control of the balance in your bank account, points and miles are governed by program terms, and the points might be changed or canceled.

While rewards points might seem insignificant compared to retirement accounts or real estate, they can still have meaningful value and might be a sizable portion of an estate. By understanding the program rules in advance, your family can maximize those benefits, rather than losing them during estate management.

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America celebrates 250 years as a nation this month, and over that span the "American Dream" has become completely intertwined with our homes.

Our life aspirations typically involve: A partner, a couple of kids, a college degree, a steady job — and a home to call our own. But when it comes to protecting that home with insurance, that dream has become akin to a horrifying nightmare.

Ask Charlene Craig. The retired 65-year-old graphic artist from La Mesa, Calif., and her husband James have long tracked their expenses "religiously," even creating a custom database to do so.

So Craig knows exactly how much her home insurance costs have risen over the last few years — and it tells the shocking story of the broader American market.

In 2019, it cost $735 a year to insure their 1,600-square-foot home near San Diego that originally belonged to her grandparents. Then it nudged north to $769. Then $951. Then $1,406. Then $1,906.

When it was slated to jump another $600 — she began to panic. She and her husband were both retired, and her husband had developed serious health issues.

Rising premiums across the country

"We went, 'Holy cow, we can't afford that?'" she remembers. "We did everything we were supposed to do for retirement, we saved, we were scrupulous — then this. It's so scary, and I feel very unsettled."

Craig is not alone. Consider these eye-popping statistics: In Overburdened, a report released last year from the Consumer Federation of America, researchers found that homeowners insurance premiums had jumped in 95% of zip codes from 2021 through 2024.

The average increase was $648, up 24%. In a third of zip codes, premiums rose by more than 30%.

"We are seeing a homeowner's insurance crisis across America," says Michael DeLong, a research and advocacy associate at the federation. "People are struggling to pay their premiums, or are seeing companies cut back on coverage or withdraw from certain areas. It's becoming expensive and unaffordable, and it's affecting retirees."

To get a glimpse of the Ghost of Home Insurance Future, look at Florida — home to the most retirees and the highest insurance rates. Insurance on a $350,000 house, owned by someone with midlevel credit, would cost a whopping $9,462 a year — or $789 a month, according to the CFA.

And that's if you can find coverage. Insurance companies are pulling back or pulling out of certain higher-risk areas altogether, if the numbers don't make sense for them.

"The bottom line is we're seeing unprecedented weakening of competition between insurers, and an unprecedented increase in the costs of home insurance," says Amy Bach, executive director of the advocacy group United Policyholders.

"This has far-ranging ramifications — not just for individuals, but for property values, real estate transactions, mortgages. Homeowners are struggling to stay insured all over the country."

Use the tool below, powered by Bankrate, to explore and compare some of today's top home insurance offers:

A 'triple whammy'

The rise in insurance rates is the product of several factors at once. A "triple whammy," as Bach calls it.

First there's our changing climate, with more severe and more frequent storms threatening growing pockets of the country. One Treasury Department study tracked a four-year period that resulted in 84 different disasters (not counting floods) costing $1 billion or more, and causing $609 billion in total damages.

Next there's inflation, with the costs of almost everything going up — CPI was 3.8% annually in April, the highest level in three years. That affects homebuilding materials, which — along with labor shortages exacerbated by the immigration crackdown and tariffs slapped on products from abroad — means that the costs of repairing and rebuilding are higher than ever.

Then there's technology — elements like Artificial Intelligence and drone footage, which have given insurers, which Bach calls "TMI" or too much information. "In the old days, insurers would base their decisions on history, like if there were any previous claims on the property," she says. "Now, they're basing their decisions on what these tech models are telling them might happen in the future."

When insurers start limiting their coverage in certain areas, or stop writing new policies, or pull out altogether, that leaves homeowners with a couple of options — neither of them particularly attractive.

One is to secure policies through whichever companies are left servicing the area, which are often newer and smaller and without reliable long-term track records.

The other is to go bare — foregoing home insurance altogether. Twelve percent of homeowners are doing just that, according to a study by the Insurance Information Institute and Munich Re. That's up from 5% a decade ago—and in hard-pressed areas like Florida, the number may be as high as 20%.

Hitting retirees in their homes

In other words, it's a damned-if-you-do, damned-if-you-don't situation. While younger homeowners in their prime earning years might not be financially crushed by rising premiums, it's another story for retirees.

When someone is dependent on Social Security or pension checks, while simultaneously facing rising costs on everyday things like gas and groceries, every dollar counts — and there is often no room in the monthly budget for premiums that jack up every year.

John Becker, a 74-year-old who lives in California's high desert near Victorville, vividly remembers five years ago when his insurer called and said it wasn't writing any more policies in the area.

That sent him scrambling to call every insurer he could think of — all of whom told him the same thing. Now he has not one policy, but two: A fire-specific one through the state's community pool of last resort, known as the FAIR Plan, which costs him $4,000 a year. Then a second policy to cover everything else, which costs another $1,550.

"We're stuck with this system, and we haven't been able to find a way around it," says Becker — ironically, a former fire chief himself. "I know a lot of friends who have gone somewhere else. I don't know what's going to happen."

Strategies to get and stay covered

Nonetheless, homeowners aren't totally powerless.. There are a few strategies you can implement to minimize insurance burdens, fight back against unfair treatment, and protect what may be your family's biggest financial asset.

But it takes due diligence, hard work, flexibility about the specific coverage you need and openness about the company you're getting it from.

What you don't want: to leave yourself exposed, so that everything you worked for — and want to pass along to your heirs, perhaps — is at the mercy of a random storm that could come at any moment.

Here are a few tips from the experts about how to deal with rising insurance costs and protect your home without breaking the bank.

Shop around

A consumer's best weapon is always knowledge, and researching all the information available to you. Instead of blindly accepting whatever quote a company gives you, study the range of options in your local marketplace.

A good starting point: The financial information site Bankrate ranked a number of standouts in the home insurance space, including USAA, Amica, Chubb and NJM. Another useful resource to use as a cross-reference: JD Power's customer satisfaction rankings, where Amica, The Hartford and Chubb came out on top.

It can also be helpful to have a seasoned ally in your corner. "We are very much in favor of working with a really good agent," says Bach. "They can scour the market for your best options, and stay on top of how your local market is evolving.

Some of these new startups can be hazardous to consumers, and there is a lot of noise on the Internet, so good coverage has become harder to find on your own."

You can explore a national database of independent insurance agents here. The National Association of Insurance Commissioners maintains a database on licensing and complaints at this site. Just go to the consumer insurance search.

Bolster your home's defenses

You can't entirely disaster-proof your home, but you can take steps in that direction. Not only will that give you some peace of mind, but there can be a two-stage financial benefit.

"Some states have established mitigation programs of thousands of dollars in grants to strengthen your home against wildfires or hurricanes," says DeLong of the consumer federation. "That can save you a lot of money. Then make sure insurance companies know about the actions you've taken, which will hopefully lower your premiums as well."

Some examples, from Bach: Hail-resistant shingles, in areas with frequent hail events (like Colorado); and roof tie-downs, to prevent structures being blown away in hurricane-prone areas (like Louisiana or Florida).

For home improvement guidance, FEMA has brochures (go to FEMA and search "protect your property") on common issues like storm surges, earthquakes, severe winds, flooding and wildfires. And for funding those upgrades, search for "hazard mitigation assistance grants" on the FEMA site.

One thing to keep in mind: It's often older homes that are under the microscope for insurers. That's where steps like upgrading old pipes or installing moisture sensors that can give you advance notice of problems, can really pay off.

If you're downsizing and selling the old family home, moving into one with newer construction — or renting — will bring fewer insurance headaches.

Don't go 'bare'

Going without home insurance altogether is only possible if you've paid off your home, since if you have a mortgage, the lender will typically require it. But with premiums at record highs, it can seem very attractive to see those monthly costs fall to zero.

However, you're putting everything you have in jeopardy—especially since for many American households, the home is their biggest asset. "Going without coverage is incredibly risky, and we don't recommend it," says DeLong.

"The costs of repairing or rebuilding a home could be hundreds of thousands of dollars, and most people just don't have that kind of money lying around. Self-insuring is only a good option if you're very wealthy."

Another important thing to remember: Home insurance doesn't just deal with the structure, it can protect you if someone gets injured on your property. So ditching it altogether "opens you up to tremendous loss due to liability," says Janet Ruiz, spokesperson for the Insurance Information Institute.

A side note: Don't let your policy lapse out of carelessness, either. In that case your lender might slap what's called a "force-placed" policy on the property, which protects them but not you. "That's a bad bet for you, and expensive — especially if you're on a fixed income," says Bach of United Policyholders.

Advocate

Politicians aren't blind, and they can see how deeply the homeowner's insurance crisis is affecting voters. That's why we are starting to see policy action to wrestle down costs — and why individuals should continue to advocate for change, before they become swamped by premiums they can't afford.

"The good news is that more states are adopting reforms and taking measures to lower costs," says DeLong. "But I think insurance companies should be required to pass along more discounts as a result, because this needs to result in lower premiums."

One example: Florida, which has initiated tort reform, established state-backed reinsurance programs, encouraged more private insurers to get into the market and launched the "My Safe Florida Home" program that includes grants for mitigation measures.

"Legislation is helping to lower premiums and bring in more insurance carriers to make it a healthier insurance market," notes Ruiz.

Beyond advocating for state or federal policy change, homeowners should advocate for themselves. If they feel they have been treated poorly — their policies cancelled unfairly, their claims delayed or denied, or their premiums gone through the roof for faulty reasons — they have recourse.

"Insurance companies are supposed to promptly pay if your claims are legitimate," says DeLong. "So if they are making you fill out excessive paperwork, or not responding, or making you jump through hoops, or giving insultingly low offers much lower than the damage that occurred, then stand up for yourself. Know your rights, and don't be afraid to speak up."

Such complaints are typically handled through your state insurance regulator. Find your local contact at the National Association of Insurance Commissioners.

Tweak your coverage

A smart consumer will review their policy every year, instead of just automatically signing on the dotted line. If costs are getting out of hand, raising your deductible is the traditional way to reduce premiums.

Homeowners might not like to hear that, since it means you're going to face some out-of-pocket costs before coverage kicks in. But if you want to prevent a catastrophic scenario such as being wiped out completely — and if raising your deductible can help you do that, then you should consider it.

"It's generally the best strategy for bringing premiums down," says Bach. "Raise your deductible, but not too high. Just remember that will leave you with a gap — so know what that gap will be, and have a rainy-day fund to cover it." If you're raising a typical $1,000 deductible to $2,000, for instance, then try to save a little every month so you'll have that amount handy when necessary.

Other ways to tweak your policy: Eliminate non-essential coverage — for instance if you're covered for a garage, but you don't even have one. And do your research about discounts that might be available that you're not aware of.

Those might include people over 55 (the logic being they spend more time at home, and are more on top of any problems), those who work remotely, or those who have access to coverage through their employer or professional association.

"Seniors can save money by making sure they get all the discounts they are eligible for, and bundling home and auto with the same carrier," suggests Ruiz. Such bundling could even save you in the range of 20-25%.

That's exactly what saved California's Charlene Craig. When she and her husband were staring a potential $2,508 annual bill in the face, she explored very avenue possible.

She ended up landing with AAA — where the couple already had other policies, including auto — and were able to get their premium down to $1,126. She's still worried about potential long-term care costs for her husband, which could turn out to be steep. But at least now she can breathe a little easier, knowing that their runaway home insurance costs have been brought back under control.

"It made such a huge difference," she says. "Desperation makes you get real creative."

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 many retirees, the biggest financial threat isn't market volatility, inflation or taxes. It's the staggering cost of long-term care.

According to recent national estimates, a private room in a nursing home can easily exceed $100,000 per year in many parts of the country, and those costs continue to rise.

A prolonged illness, dementia diagnosis or extended nursing home stay can rapidly drain a lifetime of savings — even for families who believed they planned well.

That's why more retirees are exploring a legal strategy known as a Medicaid Asset Protection Trust (MAPT).

When structured properly and implemented early enough, this type of trust might protect assets from being consumed by long-term care expenses, which helps preserve financial security for a surviving spouse and future generations.

Understanding the problem

Many Americans mistakenly assume Medicare will cover long-term nursing home care. However, Medicare coverage is generally limited and temporary. After short-term rehabilitation benefits expire, families often find themselves responsible for the full cost of care.

At that point, Medicaid becomes the primary government program that assists in covering long-term custodial care.

However, qualifying for Medicaid requires applicants to meet strict income and asset limitations.

Without proper planning, this eligibility requirement often means spending down savings, investment accounts and other assets before benefits begin.

For married couples, the consequences can be particularly painful. One spouse might require nursing home care while the healthier spouse remains at home trying to maintain financial stability.

Families are regularly shocked to learn how quickly years of retirement savings can disappear.

What is a Medicaid Asset Protection Trust?

A MAPT is an irrevocable trust designed to remove certain assets from an individual's countable estate for Medicaid eligibility purposes.

Typically, assets such as a home, investment accounts or other nonretirement assets are transferred into the trust. Because the trust is irrevocable, the person creating it no longer directly owns those assets.

That loss of direct ownership is precisely what can help create protection.

After a specified period — generally five years under current Medicaid "look-back" rules — assets inside the trust might no longer count toward Medicaid eligibility calculations.

In simple terms, if you start planning early enough, the assets placed into the trust could be preserved rather than being spent on nursing home bills.

Timing matters

One of the most important aspects of Medicaid trust planning is timing.

Medicaid currently applies a five-year look-back period, which means that transfers into a MAPT made within five years of applying for Medicaid might trigger penalties or delays in eligibility.

Because of the length of the look-back period, using a MAPT to improve Medicaid eligibility works best when families plan for a health crisis well in advance.

Unfortunately, many people wait too long. They assume long-term care is a distant possibility — until a stroke, fall or cognitive diagnosis suddenly changes everything.

Planning earlier provides more flexibility and significantly more protection opportunities.

How it could help a surviving spouse

One of the lesser-known advantages of Medicaid planning involves protecting the financial stability of the healthy spouse at home.

When one spouse enters a nursing facility, the other spouse — often called the "community spouse" — might still need income and assets to maintain their lifestyle, pay property taxes, cover insurance costs and continue living independently.

Without planning, a severe long-term care event can create financial hardship for the community spouse.

A properly designed MAPT might help preserve family assets for the surviving spouse while still positioning the ill spouse to potentially qualify for Medicaid assistance later.

For example, a home transferred into properly structured trusts might help shield the property from nursing home spend-down requirements and in some cases, from Medicaid estate recovery after death.

That can be critically important for surviving spouses who could otherwise face pressure to liquidate investments or sell the family home.

Estate recovery concerns

Another issue many families don't discover until too late is Medicaid estate recovery.

After a Medicaid recipient dies, states are often required to seek reimbursement for benefits paid during life. In many cases, this recovery effort can involve the family home or other remaining assets.

Proper trust planning might help reduce or avoid some of those recovery risks, depending on state law and how the trust was structured.

For families hoping to preserve assets for children or grandchildren, this can be a major consideration.

MAPT is legal planning — not hiding assets

Some people hear the phrase "asset protection" and assume it involves hiding money or exploiting loopholes.

That is not what Medicaid trust planning is.

These trusts are established under existing federal and state laws and are commonly used as part of legitimate elder-law and estate-planning strategies. The key is making sure the trust is drafted correctly by an experienced elder-law attorney and coordinated with an overall retirement and tax-planning strategy.

Families should also understand that irrevocable trusts involve tradeoffs. Once assets are transferred, the creator generally gives up direct access and control of those assets, which is why careful planning is essential.

The bottom line

Long-term care costs have become one of the greatest financial risks for retirees today. A nursing home stay can quickly erode decades of disciplined saving and investing.

For families who want to plan, a Medicaid Asset Protection Trust might offer a way to help preserve assets, protect a surviving spouse and create greater peace of mind.

But timing matters — the earlier families begin the conversation, the more options they have. Waiting until a health emergency occurs can dramatically limit planning opportunities and leave families facing avoidable financial stress during an already difficult time.

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

Social Security benefits have always been designed to protect individuals from a loss of income due to retirement, disability or the death of a primary income earner, but how much you receive might be changing soon.

Current Social Security Administration (SSA) projections predict the program will face a funding shortfall by late 2032, triggered by a wave of retiring baby boomers outnumbering the younger workers paying into the system.

While the program survived a similar insolvency scare via a bipartisan overhaul in 1983, critics argue the current administration's approach makes the upcoming crisis feel different. The SSA has faced shrinking staff, shuttered regional offices and budgetary constraints — downsizing that advocates label as "efficiency," but critics view as an attempt to "gut" the program.

Enter: Trump Accounts. Launching July 4, 2026, the federally seeded vehicles were originally designed, supporters say, to help children build generational wealth.

However, the narrative about the accounts shifted when Sen. Ted Cruz (R-Texas), a key advocate, admitted the program's "dirty little secret" is that these child savings vehicles are actually personal accounts intended to eventually privatize Social Security.

Here's what you need to know.

Trump Accounts: The new face of Social Security?

Trump Accounts, which officially debut this month and are a key component of the 2025 Trump tax bill, were initially pitched as standard child savings accounts meant to help families save for a child's future housing, higher education, or other qualifying expenses.

That definition was broadened last month during a panel on economic mobility at the Milken Institute Global Conference.

Cruz, who originally proposed the Trump Account initiative, elaborated on how these child savings vehicles could be utilized.

Cruz told the audience, according to a transcript of the event.

For decades, various free-market think tanks and lawmakers have tried to overhaul Social Security by shifting it to private investment accounts. These efforts — most famously backed by then-president George W. Bush in 2005 — have historically failed due to prohibitive transitional costs and the risks of exposing retirees to market volatility (more on that later).

But Cruz outlined a strategy to bypass some potential roadblocks: Start at the cradle.

"Babies grow up." Cruz reasoned. "And that little girl who is born this year, she is going to be 70. And the math is, if you contribute regularly to [a Trump Account], by the time she is 18, she will have $170,000 in that account. By the time she is 35, she'll have $700,000 in that account. And … very quickly after that, you get into the millions."

• This strategy aligns with comments made nearly a year ago by U.S. Treasury Secretary Scott Bessent.
• Speaking at a Breitbart News event, Bessent similarly remarked, "In a way, it is a backdoor for privatizing Social Security."

Facing subsequent criticism from Democratic lawmakers, Bessent later clarified on X that the proposed accounts were intended to supplement, rather than replace, existing Social Security benefits.

The push toward privatizing Social Security

Historically, the biggest roadblock to privatizing Social Security has been the "pay-as-you-go" transition problem.

Current workers' payroll taxes fund current retirees' benefits. If younger workers suddenly diverted their payroll taxes into private accounts, the government would be left with a $1 trillion to $3 trillion deficit, according to data from the Center on Budget and Policy Priorities (CBPP) and the Center for American Progress (CAP).

Trump Accounts, supporters claim, could circumvent this problem by building a parallel, privately funded program before Social Security benefits are ever disrupted.

"We're going to be able to go to parents and say, 'Hey, you know that Trump account your kid has….and you're seeing this compound growth? Wouldn't you like to be able to keep a portion of your tax payments…wouldn't you like to have a Trump account just like your kid does?' " Cruz suggested.

Yet, critics argue that the seeming magic of compound interest on a Trump account would look a lot less magical during a market crash.

• Unlike private investment accounts, Social Security benefits have very low administrative overhead and provide a guaranteed, lifelong inflation-adjusted benefit.
• Meanwhile, Wall Street management fees can silently erode a retirement nest egg, disproportionately threatening low-income beneficiaries who lack financial literacy or access to alternative wealth management tools.

According to data from the U.S. Congress Joint Economic Committee (PDF), Social Security accounts for roughly 79% of income for the poorest 20% of "elderly" Americans. Half of women age 65 and older would drop below the poverty line without guaranteed monthly checks. Under a privatized model, these citizens could be more susceptible to market risk and run out of funds early.

Social Security vs Trump account taxes

The Social Security privatization debate isn't just about how you accumulate wealth, but how that wealth is eventually taxed. Traditional Social Security benefits and private retirement accounts (like Trump Accounts) are taxed very differently.

Although the definitive tax rules for Trump Accounts are still being finalized, their structural similarity with traditional IRAs reveals stark contrasts to the tax treatment of Social Security benefits:

For example, a single retiree with provisional income above $34,000 can have up to 85% of their Social Security benefits included in their taxable income.

Meanwhile, proposed IRS rules dictate that the tax bill for a $34,000 distribution from a Trump Account depends entirely on who funded the account.

• If the beneficiary made $5,000 in after-tax contributions, that portion might be withdrawn tax-free.
• However, if the remaining $29,000 consisted of government-contributed amounts, market earnings, and compound interest, it would be 100% taxable at ordinary federal income tax rates.
• Each withdrawal would be roughly 14.7% income tax-free ($5,000/$34,000), and 85.3% taxable income ($29,000/$34,000).

Distributions from Trump Accounts must follow traditional IRA rules, including required minimum distributions (RMDs) once the beneficiary reaches the RMD age threshold.

The bottom line on Social Security benefits

If the U.S. Congress fails to act by the early 2030s, Social Security won't vanish into bankruptcy. Instead, the system will trigger automatic benefit cuts, reducing payouts to roughly 78 cents on the dollar, according to the latest Social Security Board of Trustees Report.

For the average recipient, that translates to losing several hundred dollars a month, which can be a significant blow to the roughly one in five Americans who rely on the program.

The outlook is even more uncertain for late-career Gen Xers (currently ages 46 to 61), who are closing in on retirement. According to AARP polling, 41% of Gen Xers plan to rely on Social Security as their primary source of retiree income — meaning a sudden 22% benefit cut could derail their retirement.

History suggests that panic might be an effective motivator. The last major legislative rescue in 1983 passed just months before the trust funds ran dry. Proposals for the current crisis are rolling in.

• For instance, Sens. Elizabeth Warren (D-Mass.) and Bernie Moreno (R-Ohio) published a joint plan in the New York Times to eliminate the $184,500 payroll tax cap on high earners to fund the shortfall.
• Supporters say this could inject $3 trillion into the program over a decade.
• But some fiscal models, such as those from the Tax Foundation, warn that raising the tax cap alone won't be sufficient to guarantee long-term solvency, returning the system to annual deficits in only a few years.

At the same time, alongside child savings account vehicles, the Trump administration recently signed an executive order establishing TrumpIRA.gov to help adult workers without workplace plans to invest privately for retirement.

The IRS also recently issued guidance establishing a "safe harbor" for Trump Account gift tax reporting, meaning grandparents and relatives can contribute up to $5,000 without needing to file federal gift tax returns.

While the total elimination of Social Security might be unlikely, the launch of parallel private programs could mark a distinctive shift. The next iteration of American retirement security could rely less on traditional federal guarantees and more on private, market-driven accounts. Stay tuned for updates.

Read More

• Taxes on Social Security Benefits: 6 Things to Know for 2026
• Social Security Tax Limit: What the Higher Cap Means for Your Paycheck
• How to Calculate Taxes on Social Security Benefits

When you spend a good part of your life in the same home and neighborhood, you can easily grow attached to both. The friendships and shared history can run deep, buttressing your happiness and sense of identity. But those bonds could create a tricky situation once retirement begins and you're no longer earning the same paycheck as during your working years.

A 2024 AARP survey found that 75% of U.S. adults ages 50 and older want to stay in their current homes as they age, and 73% hope to stay in their communities. At the same time, Harvard University's Joint Center for Housing Studies found that as of 2023, a good 34% of households led by someone age 65 or older were cost-burdened, spending more than 30% of their income on housing.

Given the potential for expensive home repairs and property taxes that will worsen over time, how can you age in place?

The finances could work for aging in your home

There's no getting around crunching some numbers to determine your odds of successfully aging in place. To understand how complex this math can get, look no further than a recent scenario analyzed by financial planners: A 73-year-old widow with a $1.7 million nest egg who wants to remain in her home.

At first, $1.7 million seems like a decent chunk of money to work with for maintaining and staying in a home. But John Moran, CFP and financial planner at Domain Money, says that while it could be enough to retire in place, it depends on the house, coupled with the lifestyle you want.

"Using the common 4% rule, that allows the retiree to withdraw $68,000 per year," Moran says.

"While that number will fluctuate with the market, it gives us a good starting point."

Given that most retirees are eligible for Social Security, it's fair to assume that in this situation, you have a monthly check to supplement your $68,000 a year in withdrawals. If we assume she receives the average monthly benefit of $2,081, that's roughly an extra $25,000 a year, or a total annual "paycheck" of $93,000. (If we use the average $1,927.87 widow's Social Security benefit, that's a slightly lower annual figure at closer to $23,000, for a total "paycheck" of $91,000.)

Still, Moran cautions that if you live in a high-cost area, you might be financially stretched. For this reason, he says, you need to account for all your costs and make sure the numbers work. But if staying put is important to you, and you're willing to limit discretionary spending, aging in place could work.

Don't forget inflation, RMDs, and future costs

Staying in your home isn't just about managing your costs in the near term. You also need to plan for inflation, Moran says.

"Home expenses and healthcare often outpace that 2% target that we hear the Fed aiming for in the news," he says. "If your budget is made up of mostly healthcare and home expenses, which for most retirees it is, we need to adjust our personal expected inflation rate accordingly, especially with older homes."

Douglas Ornstein, CFA and wealth management coach at TIAA, says you also need to think about the future costs of aging in place from a health and mobility standpoint.

"We're talking about long-term care planning — the cost of in-home aides, modifications to the home itself, potential memory care needs down the road," he says. "These costs can be significant, and they arrive without much warning."

Ornstein recommends sitting down with a financial adviser who can incorporate these scenarios into a long-term financial plan.

Another thing to keep in mind is that if you have your savings in a traditional retirement plan, required minimum distributions (RMDs) start at age 73 (but will shift to age 75 for anyone born in 1960 or later). Those forced withdrawals could push you into a higher tax bracket and potentially trigger IRMAA surcharges on your Medicare premiums.

Strategies you can consider

If aging in place is a priority, one thing that might help is to not have to be at the mercy of the market when expenses pop up.

Build a predictable income floor

To that end, Ornstein says it could pay to convert part of your portfolio to a guaranteed income stream.

"Having a predictable income floor — money that shows up regardless of what the market does — creates the financial confidence to let the rest of her portfolio do its job," he says.

A financial adviser can walk you through different annuity options that provide guaranteed income, but make sure you understand the costs and pitfalls involved. Annuities are notorious for having exorbitant surrender charges should you change your mind.

Be wary of HELOCs

Moran, meanwhile, says that while a home-equity line of credit (HELOC) could be a solution if money gets tight, it's not ideal. A HELOC introduces a new form of debt, and taking on debt later in life can be risky. Moran also says that a HELOC is better used "as an emergency funding mechanism" because rates can be variable and aren't always competitive.

Research tax relief options

That said, one thing you can look into is tax-relief programs. Some states offer property tax freeze programs or homestead exemptions. Moran says these programs often go unused simply because people aren't aware they're available. Your state or local tax assessor's website is a good place to start that research.

Downsizing nearby

Another option you could consider is downsizing within the same neighborhood. If your community is vital to your emotional health, downsizing could make it possible to stay close by without the looming repairs and high maintenance costs of staying in the same house.

The catch? Not all communities have the kind of house mix designed for different life stages. In some cases, you might not save much money by downsizing.

Assisted living with other neighbors

In some cases, older members of a close-knit neighborhood choose to reside in a nearby assisted-living community. If that's the case, meet some neighbors already living there for a meal and get a sense of what it's like. If it seems to be a viable option, you could see if other neighbors and friends would be interested in joining you there.

It pays to try to make aging in place work

The reason so many people opt to move and downsize in retirement is that the costs of maintaining an aging home can be overwhelming. But if you're attached to your community and want to stay put, it pays to build your financial plan around that priority.

"Research on healthy aging consistently points to social life and a familiar environment as top contributors to cognitive and physical health," Moran says. "That carries real financial value."

With that in mind, Moran says that a financial planner should be able to help you create an income strategy that allows you to stay in your home. But, he says, "They should be flagging where the tradeoffs sit between staying in place or moving to a more affordable lifestyle."

While moving does introduce a new set of expenses, it might be worth taking those on as a one-time thing for the long-term savings. This solution might give you the best of both worlds.

Read More

• Age in Place or Move? How to Decide Where to Live in Retirement
• So You Want to Age in Place: What Most People Overlook
• Why You May Not Want to Downsize in Retirement
• The 24 Cheapest Places To Retire in the US

Most portfolios are diversified on paper, but not in behavior.

Diversification isn't just about how many things you have in your portfolio. It's about how those different assets are likely to perform when exposed to various types of risk — when the market stumbles or inflation spikes or interest rates fluctuate.

Some people think they're diversified because they own a few different mutual funds, variable annuities and/or ETFs. But if everything you own reacts the same way to market volatility or other economic disruptions, you may not be as protected as you think.

The primary goal of diversification is to limit your nest egg's vulnerability to risk. And that requires building a balanced mix across asset categories, including some investments that move independently of popular stock market indices, such as the S&P 500 or the Dow Jones Industrial Average.

Creating a thoughtful blueprint for retirement

Remember the story The Three Little Pigs and their encounters with the Big Bad Wolf? In the end, it was the third little piggy's thoughtful preparation and choice of building materials that saved the day.

And so it is with retirement planning and building your "fiscal house." If you're worried about how your money will hold up when you're no longer earning a paycheck, it could be that your portfolio and overall financial plan are in need of some renovations. Consider approaching those renovations this way:

Start with a stable foundation. Although no investment is completely without risk, the foundation of your retirement plan should include assets you expect to stay solid and keep you safe.

Even when the economy (or your own financial situation) is feeling shaky, these basic building blocks are meant to help provide steady, reliable income.

CDs (which are protected by the FDIC), Treasury bonds (backed by the U.S. government) and fixed annuities (when purchased from a reputable insurance company) can be good choices for this level of your plan.

Next, build sturdy walls. The walls of your fiscal house should be durable enough to withstand most storms, but they should also allow for some moderate growth to help keep pace with inflation. That means there will be a bit more risk here than in your foundation.

Your walls may bend or even crumble if things get especially rough. But if necessary, walls can be repaired or reinforced, and you'll still have your foundation in place.

Investments at this level could include options that provide income and add to the diversity of your portfolio, such as bonds, real estate, private equity and dividend stocks.

Top it off with a roof. Your fiscal house's roof will be made up of investments that are exposed to the most risk (moderate to high, based on your tolerance) with the goal of growing your money.

Of course, you'll still want to be careful as you choose what your roof is made of. But if it does fail, and the rest of the house is solid, you can remain confident that your plan's entire structure won't be compromised.

Investments like stocks, ETFs, mutual funds and variable annuities are commonly held within the roof category.

Is your design diversified?

Have you ever driven through a neighborhood where all the homes look the same or where there are at most three or four models? Often, that's what investing looks like, with cookie-cutter retirement plans and portfolios that use the same basic — and limited — asset mix.

But a good retirement plan — one that can help you feel secure even on the stormiest days — takes thought, creativity and purpose. And that requires true diversification.

Not just horizontal diversification, with a variety of assets that are all at or near the same level of risk, but also vertical diversification, with assets in different accounts and account types with different levels of risk (including some that are not going to react to the general market at all).

One significant reason diversification is important for retirees is sequence of returns risk. Sequence of returns risk involves the possibility that investment losses early in retirement, combined with regular withdrawals, can deplete your portfolio much more quickly than you would have expected.

In fact, two retirees with identical portfolios and withdrawals could have significantly different outcomes based on the timing of when they retire. Someone who enjoys big market gains early in retirement can better endure losses to their portfolio later on.

Someone who faces a down market at the start of retirement may see the value of their portfolio drop so much that they never get the chance to benefit from the gains when the market recovers.

If you feel anxious when the market wobbles, it may be time to take a step back and evaluate your plan. What's in your portfolio? How will the mix come together to help protect your retirement and provide the lifestyle you desire? Are the assets you're holding now still relevant to your needs?

The good news for today's retirees is that there are several investment options that can help them diversify, including gold and silver or real estate investment trusts (REITs).

But a well-built retirement plan isn't just diversified — it's designed with purpose. Every component should work together to support income, manage risk and adapt to changing conditions.

If you're unsure how your current portfolio would hold up under real-world pressure, it may be worth taking a closer look at how it's structured and whether each piece is truly serving a purpose.

You don't want to wait for that real-world pressure to reveal the gaps in your plan, though. Connect with an adviser to help ensure your portfolio is structured for the long haul.

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.

Summer is now officially in full swing. Across the country, families are firing up barbecues and heading to the beaches. As we celebrate the July Fourth fireworks, the financial markets are trying to stage their own explosive display.

The second quarter of 2026 proved to be a strong period for investors, defined by record-breaking vertical runs in select sectors, a historic changing of the guard at the Federal Reserve and a stark divergence between index-level optimism and the underlying macro realities.

As we close the books on the second quarter of 2026, here is where the markets stand and how to position your capital for the volatile months ahead.

U.S. equities: The casinolike sizzling rally

U.S. large-cap equities put on a show this quarter, defying a wall of worry and a drumbeat of volatile headlines. The S&P 500 rallied 15%, marking its largest quarterly rally since the 2020 post-pandemic rebound.

Yet, beneath this seemingly unstoppable march higher, the structural landscape has shifted in ways that should give long-term investors pause.

The current environment has increasingly reminded market historians of previous historic booms and busts. Speculative fever has reached a high pitch.

Liz Ann Sonders, chief investment strategist at Charles Schwab, warned that gambling psychology is rapidly spilling over into the financial markets. "When I look at the landscape, the markets look increasingly casinolike," she observed.

This assessment is backed by hard behavioral data. A recent Harris Poll conducted by Northwestern Mutual revealed a striking trend: 80% of Gen Z respondents admitted to making "high-risk or speculative" investments because they feel financially left behind.

This retail speculative surge combines with a backdrop where traditional market valuations sit stubbornly within their highest historical percentiles.

Furthermore, we are witnessing a massive structural divergence within technology itself. The Magnificent 7 tech giants ($MAGS) have actually slid into negative territory year to date, weighed down by growing Wall Street skepticism regarding massive corporate capital expenditures (CapEx) and the extended timeline required to see a tangible return on those artificial intelligence investments.

Conversely, semiconductor stocks ($SOXX) have behaved like a rocket ship, soaring more than 70% this quarter on the back of AI infrastructure spend. Some technical analysts are warning that this parabolic run mirrors the late-stage blowoffs of the dot-com boom.

Compounding this risk, American households now hold an unprecedented 45.8% of their total financial assets directly in stocks, shattering the prior peak of 38.7% set at the top of the dot-com bubble in 2000. The upper crust of our K-shaped economy has become dependent on this market "wealth effect" to sustain confidence.

SpaceX takes flight on the wings of AI

The defining capital markets event of the quarter was undoubtedly the launch of SpaceX's mega IPO. SpaceX (SPCX) opened at an unprecedented macro valuation, crossing the $2 trillion mark just days later, instantly making it equivalent to the eighth-largest economy in the world by market cap.

The market priced the space giant at a premium driven by a collective consensus that space represents the true monetization frontier in the decade ahead.

However, historical context is vital for investors eager to chase this high-profile debut. Data shows that the median major IPO over the last 15 years was down 31% exactly one year after going public, and a staggering 53% of those companies fell below their initial closing price at some point during their first year on the board.

International markets: A historical gulf

While the U.S. index level surged, international and emerging markets experienced a positive, yet highly fragmented, quarter. Broad international equities and emerging markets found some operational breathing room due to a welcome pullback in global crude oil prices, lowering input costs for energy-importing nations.

However, persistent U.S. dollar strength and an unstable geopolitical landscape acted as a heavy anchor on broad outperformance.

The persistent strength of the greenback against a weakening Japanese yen has triggered a massive technical breakout, leaving the Bank of Japan (BOJ) backed into a tight corner where aggressive currency intervention to shore up the yen may be close.

What stands out most about Q2 is one of the widest geographical performance gaps we have ever witnessed in global financial history. Driven by semiconductor and chip names, South Korean and Taiwanese equities skyrocketed, while Chinese and Indian equities lagged significantly.

The new Fed and rates: Accountability in a debt trap

The macroeconomic story shifted fast this quarter with a changing of the guard at the Federal Reserve. Newly confirmed Fed Chair Kevin Warsh took the oath of office in May following a highly contentious Senate confirmation vote, immediately establishing a brand-new tone for monetary policy.

Warsh has aggressively refocused the central bank on its 2% inflation mandate, signaling a deep review of the Fed's balance sheet and creating specialized internal working groups.

In a blunt assessment that forced bond traders to recalibrate, Warsh noted that the Fed must take outright ownership and accountability for fundamentally missing the inflation threat over the past five years.

This policy failure has dragged consumer confidence to some of its lowest levels in modern history. The numbers bear out his critique: Domestic inflation has now hovered above the Fed's target level for 63 consecutive months, averaging a punishing 4% per year since 2019.

This persistent inflation has created a mathematical trap for the Fed due to the sheer size of the federal ledger. As of the close of the quarter, the annualized interest payment on the U.S. national debt has crossed $1.2 trillion.

With the annual federal budget deficit forecasted to settle around $2 trillion, the total national debt is on track to breach $40 trillion by year-end.

This leaves the Fed with no easy options. Raising interest rates to fight structural inflation directly increases the borrowing costs on sovereign debt, automatically expanding the federal deficit.

Despite this trap, the bond market has undergone a dramatic repricing. The 10-year Treasury yield climbed steadily as the bond market fully priced in two Federal Reserve rate hikes by the end of the year, a massive 1% total swing in expectations from January, when the consensus was pricing in two rate cuts.

Bank of America went a step further, aggressively forecasting three rate hikes before the curtain closes on 2026.

Gold and silver cool off after a historic run

Following a historic rally over the past year, precious metals finally encountered a severe bout of profit-taking in the second quarter. Gold suffered a sharp pullback, registering its largest single-month decline since 1975.

Silver also experienced intense selling pressure, with silver crashing down more than 50% from recent highs. Technicians view this sharp silver correction as a healthy retest of its massive, 45-year technical breakout above the critical $50 resistance zone that occurred last November.

Despite the short-term pain, the long-term structural bull case for hard assets remains intact considering the national debt dynamics.

Intriguingly, this sharp liquidation phase created a market anomaly: Bitcoin and gold stand as the two worst-performing major global asset classes year to date in 2026. This is a highly unusual, decoupled correlation that we have never observed across any single calendar year in history.

Bitcoin: Technical realities meet institutional bedrock

Bitcoin endured a brutal second quarter, with its price down over 50% from its historical highs, and overall retail sentiment seemingly washed out. From a technical standpoint, bitcoin closed below its crucial 200-week moving average for the first time since the 2023 market cyclical bottom.

Long-term structural models, such as the Bitcoin Power Law model popularized by physicist Giovanni Santostasi, continue to project an asset trajectory reaching $1 million per coin in about eight years and $10 million in 20 years.

However, near-term technical damage, regulatory gridlock and emerging computing threats (such as quantum risks) remain visible headwinds.

The current price action has frustrated recent buyers. Bitcoin is flat over an almost five-year window, weighed down by five consecutive red monthly closes. Yet, savvy allocators are asking whether the asset is quietly gearing up for a major cyclical run.

The underlying infrastructure has expanded even as the price has corrected. In a major structural milestone, Fannie Mae announced that it will soon accept crypto-backed mortgages for the first time in corporate history.

Simultaneously, public bitcoin treasury corporations like MicroStrategy and Tokyo-listed Metaplanet continue to issue corporate credit and digital debt offerings specifically to add more bitcoin on their corporate balance sheets.

All of this occurs while the highly anticipated crypto CLARITY Act continues to hang in political balance in Washington.

Closing advice: Retain your optionality

As we face the back half of the year, investors should consider a shift in seasonal tailwinds. History provides a sobering blueprint: Midterm election years typically experience highly volatile Q3 drawdowns, averaging a historical intrayear correction of roughly 16% as the sitting administration and the Federal Reserve are thoroughly tested by the political cycle.

Currently, U.S. household net worth sits at historic highs relative to actual disposable income. This dynamic has propped up consumer spending and masked flat real income growth via the market wealth effect. If the equity index level rolls over, that wealth effect reverses.

Do not chase the hype in sectors at the top of a vertical spike. Instead, take advantage of this volatility to execute disciplined dollar-cost averaging (DCA) into some non-correlated asset classes that have taken a significant cyclical beating, possibly including gold and bitcoin, both of which are offering more attractive entry points relative to their highs.

When risk is growing under the surface while index prices remain stubbornly elevated, the smartest move may be to protect your downside. Broaden your asset base across truly diversified sectors.

Most importantly, remember that cash is a legitimate, strategic asset class in a highly speculative environment. Maintaining a healthy stash of "dry powder" gives you the ultimate luxury in investing: Pure optionality to capitalize on panic when the casino doors inevitably swing shut.

As Warren Buffett has said, "The stock market is a no-called-strike game. You don't have to swing at everything — you can wait for your pitch."

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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.

Happy Bobby Bonilla Day! For years, I've watched memes pop up across social media every July 1. Baseball fans celebrate the day as a reminder that former New York Mets player Bobby Bonilla is still collecting a paycheck decades after playing his last Major League game. It's become one of sports' favorite annual traditions, often accompanied by jokes about the contract that just won't end.

But here's the thing: Bobby Bonilla Day isn't really about baseball. It's about money.

Few of us will ever negotiate a multimillion-dollar deferred compensation deal, but the idea behind Bonilla's annual paycheck is surprisingly familiar. Whether retirement is decades away or just around the corner, the goal is the same: replacing your paycheck with income that continues after your working years end. That income may eventually come from Social Security, pensions, annuities, investments or rental properties, but building it starts long before you retire.

Why Bobby Bonilla is still getting paid

The story behind Bobby Bonilla Day dates back to 2000, when the New York Mets wanted to move on from veteran outfielder Bobby Bonilla while he was still owed millions under his contract. Rather than paying the remaining money in a lump sum, the two sides agreed to a deferred compensation arrangement.

Under the agreement, Bonilla postponed receiving the money he was owed in exchange for annual payments that began in 2011 and continue every July 1 through 2035. Because the payments include interest, the total amount Bonilla will ultimately receive is significantly more than the original salary he deferred.

Why would the Mets agree to that? At the time, the team believed it could earn higher returns by investing the money instead of paying Bonilla immediately. Those expectations were tied in part to investments associated with financier Bernard Madoff, whose massive Ponzi scheme later collapsed. In hindsight, the strategy proved far more expensive than simply paying Bonilla what he was owed upfront.

Today, the annual payment has become known as "Bobby Bonilla Day." Now 63, Bonilla is older than the age at which Americans first become eligible to claim Social Security retirement benefits, making his annual July 1 paycheck feel even more like a retirement income stream.

While it's often treated as a punchline, the agreement is an example of a basic financial principle: money can be structured to provide income over time instead of all at once. That's a concept that extends well beyond professional sports and into many retirement plans.

Retirement is about replacing your paycheck

For most people, retirement doesn't come with a contract that guarantees a million-dollar check every July. Instead, it requires building enough reliable income to replace the paycheck that disappears when you leave the workforce.

That's one of the biggest shifts in retirement planning. During your working years, your employer provides your primary source of income. Once you retire, you're responsible for creating your own paycheck using a combination of income sources.

For many retirees, that starts with Social Security. Others may also receive a pension, annuity payments, investment income, rental income or distributions from retirement accounts such as 401(k)s and IRAs. The right mix depends on your savings, lifestyle and retirement goals, but the objective is the same: generating enough dependable income to cover your living expenses year after year.

Bobby Bonilla's annual paycheck may be unusual, but the concept isn't. Whether the money comes from a deferred compensation agreement, a pension or an investment portfolio, retirement planning is ultimately about creating income that continues long after your working years are over.

Use the tool below, powered by Bankrate, to connect with a financial professional who can help you create a retirement strategy tailored to your goals.

Deferred income isn't just for professional athletes

Bobby Bonilla's contract may be one of the most famous examples of deferred compensation, but he's far from the only person who receives income long after the work is done.

Many corporate executives participate in deferred compensation plans that allow them to postpone receiving part of their salary or bonuses until retirement, often for tax-planning purposes. Business owners may structure the sale of a company as installment payments that provide income over several years instead of receiving the full purchase price upfront.

Deferred income can also take other forms. Employees may receive company stock that vests over time, consultants may negotiate ongoing retainers, and people who settle lawsuits may choose structured settlements that pay out over many years rather than as a single lump sum.

While these arrangements differ from Bonilla's contract, they all share the same underlying principle: delaying income today in exchange for a predictable stream of payments in the future. Depending on your financial goals, taxes and investment strategy, spreading income over time can provide greater flexibility and help create more consistent cash flow.

The real lesson behind Bobby Bonilla Day

Most people will never sign a contract that guarantees them a paycheck decades after they retire. But Bobby Bonilla Day highlights a goal that every retirement saver should strive for: creating income that continues after their working years are over.

That doesn't happen through a single contract. Instead, it's typically built over decades by combining several sources of retirement income. For many Americans, that starts with maximizing Social Security benefits by claiming at the right time.

Others may supplement those benefits with withdrawals from retirement accounts, dividend-paying investments, interest from bonds or certificates of deposit, pensions, annuities or income-producing real estate.

The best retirement income strategy depends on your goals, risk tolerance and financial situation. Some retirees value the predictability of guaranteed income, while others prefer the flexibility and growth potential of investment portfolios. Many rely on a combination of both.

Every July 1, Bobby Bonilla reminds us that getting paid long after your career ends isn't just a quirky baseball story. It's the same objective that millions of Americans are working toward: replacing a paycheck with dependable income that lasts throughout retirement.

Enjoy the check, Bobby. The rest of us have some retirement planning to do.

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When Citicorp and Travelers Group merged in 1998, the new firm hired designer Paula Scher to create its logo. She sketched it — the same logo used today — during the first meeting, on a napkin, in a few minutes. The bill was $1.5 million.

Asked how a doodle could be worth a fortune, Scher gave an answer that became famous in design circles: it took a few seconds to draw, but more than thirty years to learn how to draw it that fast. The client wasn’t paying for the minutes. It was paying for everything that made those minutes possible.

A version of that argument is brewing in financial advice. Technology is making the information you once got from a professional easy to find, and much of a financial adviser’s workload faster to do.

A 2025 Intuit Credit Karma survey found that 66% of people who use generative AI have turned to it for financial guidance, rising to 82% among millennial and Gen Z users.

Most advisers charge an annual fee equal to a percentage of the assets they manage for you. Roughly 92% use that assets-under-management, or AUM, model in some form, according to 2024 Kitces Research. And an Envestnet survey shows the average AUM fee is 0.96%, which works out to about $960 a year for every $100,000 in your portfolio.

With tools now available to help both investors and advisers handle the traditional money moves, retirees writing that quarterly check might be asking themselves:

Is a 1% fee still worth it?

What should you expect for 1% of your assets?

While an adviser fee comes out of your investment portfolio, what it buys usually goes well beyond investing. Kitces' research finds that, on average, only 59% of an AUM fee pays for investment management. The rest covers financial planning and the work that goes into it.

Matt Chancey, CFP® and founder of Tax Alpha Companies, says that split is the whole point. "The fee was never really about investment management," he said. "It was about the human across the table when things go wrong."

The most valuable thing an adviser does, in his view, isn’t building a portfolio. It’s talking a client out of the worst move at the worst moment, like selling at the bottom of a market correction.

In fact, Vanguard’s Adviser’s Alpha (PDF) research tries to quantify that, estimating a skilled adviser can add roughly 3% a year in net returns, with behavioral coaching the largest piece at up to 1.5%.

Advisers note that the list of what a comprehensive fee covers is long, and most of it has nothing to do with picking funds. Depending on your situation, they say, it can run from proactive tax planning and Roth conversion timing to withdrawal strategies, Social Security and Medicare decisions, and estate and beneficiary coordination.

Cynthia Sforza, CFP® and founder of Lucidity Wealth Advisors, says she checks everything from whether beneficiaries are correct to whether a client has the umbrella insurance policy they probably need.

"If you're paying 1% for investment management only, then you’re overpaying for sure," she said. If it buys all the rest, "then yes, it’s worth it."

Does AI mean cheaper, or just better?

Advisers are well aware that AI could reshape pricing in their industry. Morningstar data show 56% now expect generative AI to have a meaningful impact on the business, and they rank free or low-cost alternatives like AI as the second-biggest threat to their revenue, behind only competition from other firms.

What the price should be, though, may come down to a gap between what advisers think their work is worth and what investors want to pay for it. When Morningstar asked people what they would pay an adviser by the hour, the figure dropped as soon as AI entered the picture. For personalized recommendations, investors said they would pay $102 for an adviser working alone, but only $68 for one who uses AI.

This chart highlights a classic psychological trap: investors often equate a professional's literal time spent with value, demanding a discount for efficiency even if the actual advice is better.

Advisers counter that AI changes the work without lowering its value.
AI now does the research and analysis that used to take a junior planner three days," Chancey said. "That doesn’t make the adviser cheaper. It frees the adviser to do more of the work that justified the fee in the first place."

Sforza cautions against assuming anyone could just do the planning alone. She compares it to coding with an AI tool, where a professional and a novice get very different results from the same software because the professional knows what to ask.

"Many laypersons don’t know all of the context to include in the question," she said, "and they may not even know the questions they should be asking."

The risk shows up in the numbers: in the same Intuit Credit Karma survey, 80% of people who acted on AI financial advice said it improved their situation, but 52% also said it led them into a poor decision.

Mark Stancato, CFP® and founder of the flat-fee firm VIP Wealth Advisors, frames AI as a higher bar, not a discount. “It raises the standard,” he said. “If AI saves me two hours preparing for a meeting, those aren’t two hours I keep for myself. They’re two hours I reinvest into deeper planning.”

Most clients seem to want it that way. Only 38% of affluent investors are even somewhat comfortable with AI in a financial relationship, according to a February 2026 Cerulli report.

Does a 1% fee make sense for every portfolio?

A percentage of assets is the most common way advisers charge, but it’s far from the only one. Flat or subscription fees charge a set dollar amount regardless of portfolio size. Hourly and project fees work like a lawyer’s bill, useful for a one-time question or a single plan. Retainers bundle planning and management into an annual sum.

What matters is whether the structure fits the work you actually need. That’s the case Stancato makes for setting a flat fee.

A bigger portfolio, he argues, doesn't automatically mean a more complicated life. "A retiree with a $5 million portfolio invested in three index funds may require less ongoing planning than someone with $1.5 million, stock options, rental properties, complex taxes and estate planning needs," he said. "Yet under a traditional AUM model, the first client could easily pay three or four times as much."

Advisers who charge on assets don’t entirely disagree. Chancey notes that larger households tend to bring more tax exposure and more coordination, so the work can quietly outrun the fee rather than fall short of it. And most AUM firms already use graduated schedules that lower the rate as the balance climbs, so a $4 million client might pay closer to 0.8% than 1%, according to Kitces.

Either way, it pays to compare costs against your own situation rather than settle for an average.

How to tell if you’re getting your money’s worth

Chancey offers a single diagnostic question: ask what your adviser actually does in October. The fall is when proactive tax work happens, when Roth conversions get sized and gains and losses get managed before the year closes. An adviser with a detailed answer is doing the work. One who isn’t is mostly rebalancing and taking a quarterly call, which AI can now replicate.

Sforza’s test is more personal, starting with access. "Can you reach your adviser in a reasonable time frame, one business day max?" she asks. Then it moves to trust. "Do you feel that they’re truly caring about you and about helping you manage your wealth, or are they just doing a job? Do they have integrity? Do you LIKE them?"

That brings it back to the napkin. Citi didn't pay $1.5 million for five minutes of work. It paid for the thirty years that made those five minutes possible. An adviser fee, whether it’s 1% or less, can work the same way. If AI can run the numbers in seconds, the numbers were never the costly part.

What you’re paying for is the judgment to know what they mean for your life, and someone who understands you well enough to keep you steady when it counts. The question was never how long the work takes, but whether it gets you somewhere you couldn’t have reached on your own.

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When should you take Social Security if you have a pension?

It's one of the most common questions we hear from the retirees we work with at Peak Retirement Planning, where I am the founder and CEO.

The answer is often very different for people in what we call the 2% Club: Retirees who have both a pension and $1 million-plus saved (I wrote a bestselling book on this group — you can request a free copy).

About 20% of Americans have or will have a pension in retirement, and fewer than 10% have saved $1 million or more for their retirement. If you have both, you're in a unique financial position that requires a more customized strategy.

Many retirees without pensions feel pressured to take Social Security as early as possible because they need the income.

However, if you already have a guaranteed income from a pension, your decision may be less about survival and more about optimization, specifically taxes, legacy planning and maximizing lifetime income.

Of course, there's one joke I always make when this topic comes up: "Tell me when you're going to die, and I'll tell you exactly when to take Social Security."

That's ultimately what much of this decision comes down to. Since none of us knows the answer, there are several other key factors pension holders should carefully consider before claiming benefits.

Your health matters more than the math

The first major consideration is your health and life expectancy. If you expect to live into your 80s, 90s or beyond, delaying Social Security will often make sense in the long run. Every year you wait from age 62 to 70 gradually increases your monthly benefit, and in many cases, your age-70 benefit could be nearly double what you would have received at age 62.

The typical "break-even" point, when delaying benefits starts paying off, usually falls between ages 80 and 83.

If your health is poor, your family history suggests a shorter lifespan, or you simply want to maximize the number of checks you receive, claiming earlier may make more sense for your situation.

This is why there's no one-size-fits-all answer. Two retirees with identical retirement balances and pensions could make completely different Social Security decisions based solely on health and longevity expectations.

If you're still working, be careful

Many pension holders retire early, but not everyone does. If you claim Social Security before your full retirement age while still working, your benefits could be temporarily reduced if your earned income exceeds Social Security's annual limits.

That can surprise people who planned to "turn it on" at 62 while continuing to work.

For retirees who stop working earlier, though, this often creates more flexibility and potentially more tax-planning opportunities.

Married couples need to think strategically

Social Security planning is even more important for married couples, and it's crucial to understand how the two benefits work together.

One of the biggest factors is the survivor benefit. When one spouse passes away, the surviving spouse keeps the higher of the two Social Security benefits. That means delaying benefits can sometimes function as a form of longevity insurance for your spouse.

For example, if one spouse waits until age 70 and locks in a significantly larger benefit, that higher amount could continue for the surviving spouse's lifetime.

This matters because of what many advisers call the "widow's penalty." When one spouse dies, the household often loses one Social Security check, but the surviving spouse will also move from married filing jointly tax brackets into single-filer brackets, potentially increasing taxes dramatically. Delaying Social Security can help soften that financial blow.

There's also the spousal benefit to consider. A spouse may be eligible to receive up to half of the other spouse's full retirement age benefit, even if they don't have their own benefit to claim.

One thing to consider is that this benefit maxes out at full retirement age (66 or 67), and delaying past that will only increase your own benefit, not the spousal benefit.

Your pension changes the equation

For retirees with pensions, Social Security decisions often become more flexible because the pension already covers a large portion of living expenses. We see many clients whose pensions replace 70% to 80% of their working income.

Add Social Security and investment withdrawals on top, and they may actually earn as much, if not more, in retirement than while they were working.

This is why many pension holders choose to delay Social Security. Their pension can provide enough income to bridge the gap, allowing Social Security to grow larger in the background.

In some cases, retirees may temporarily withdraw from investment accounts between retirement and age 70, then rely less on those investments once larger Social Security benefits begin.

This can create more flexibility for future healthcare costs, travel, gifting or legacy planning later in retirement.

Taxes are often the biggest factor

For many high-net-worth retirees with pensions, taxes are the biggest consideration in Social Security timing. Many people assume they'll automatically be in a lower tax bracket during retirement, but for pension holders, that's often not true.

A pension creates a steady stream of taxable income, and because of this, we often see their Social Security benefits being the full 85% taxable.

You also have to consider any required minimum distributions (RMDs) from your tax-deferred accounts, which can push your taxable income even higher in retirement.

That's why delaying Social Security can sometimes create a valuable "tax-planning window."

For example, retirees who delay benefits until age 67 or 70 may have several years where income is temporarily lower before Social Security begins. During those years, they may have opportunities to:

• Withdraw money from traditional IRAs at lower tax brackets
• Perform Roth conversions strategically
• Reduce future RMDs
• Lower future tax exposure for surviving spouses

Roth conversions have become increasingly popular among retirees with pensions and large 401(k) balances.

Many retirees have spent decades deferring taxes into their 401(k)s and 403(b)s under the assumption that they'd be in a lower tax bracket in retirement. But pension income changes that equation.

Today's tax rates are historically low by many standards, and a lot of retirees worry that tax rates could rise in the future. This has led some retirees to voluntarily pay taxes now through Roth conversions in exchange for more tax-free income later.

And if those Roth assets eventually pass to children or heirs, distributions can be received income-tax free, potentially reducing the tax burden on the next generation as well.

There is no perfect age

Retirees often want a simple answer: "Should I take Social Security at 62, 67 or 70?"

But the reality is that Social Security planning is deeply personal. The right answer depends on your:

• Health
• Pension income
• Marital status
• Tax situation
• Investment balances
• Legacy goals
• Employment status
• Overall retirement lifestyle

This is why effective retirement planning should never rely on one-size-fits-all rules.

The good news is that retirees with pensions are often in a very strong position financially, and these are all good problems to have.

For many retirees in the 2% Club, retirement becomes less about whether they can retire and more about how to optimize the life savings they've worked so hard for — which is a great place to 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.

It's no secret that retirement tax rules can be tricky to master, especially since they often change significantly from how our income was taxed during our working years. And if older adults find retirement taxes confusing, younger workers — who are decades away from retiring — likely feel less prepared.

A study by the Teachers Insurance and Annuity Association of America (TIAA) Institute, a financial research organization, and the Global Financial Literacy Excellence Center (GFLEC) recently highlighted this knowledge gap.

The study revealed that Generation Z (those born between 1997 and 2007) scored an average of just 29% on a "retirement fluency" test. By comparison, Baby Boomers (those born between 1946 and 1964) answered only 44% of the questions correctly.

Inspired by this finding, we decided to look at a specific, crucial piece of the retiree puzzle: retirement taxes. Can retirement-aged individuals prove their experience, or will a younger worker surprise us?

To find out, we tested a Gen Z working professional (28 years old) outside the financial sector with five retirement tax questions.

That person scored a 40%. Now, it's your turn. Good luck!

Hint: This quiz covers federal retirement tax rules and doesn't include how states tax retirees.

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Accumulating a large balance in a traditional retirement account is a great thing in theory — until the reality of required minimum distributions (RMDs) sets in. Suddenly, the freedom that comes with having a gigantic nest egg becomes a potential tax liability that could come with hidden consequences, like Medicare IRMAAs that drive your costs up substantially.

Let's take the example of a 63-year-old couple living in New York State (in a suburb of NYC) who are sitting on $4.2 million. They want to convert a good chunk of that sum to a Roth IRA. From there, they'll enjoy tax-deferred growth on that money, tax-free withdrawals, and importantly, no RMDs.

But New York is one of the least tax-friendly states to do a Roth conversion. With state tax rates ranging from 4% to 10.9%, converting even half of a $4.2 million retirement account balance could cost this couple a substantial amount.

The 'Florida Flip' — annual conversions in a no-tax state

The potential solution? The "Florida Flip." Move to Florida for about 12 years to avoid state taxes on the conversion.

For the couple in our example, converting a 4.2 million nest egg over 12 years could yield significant savings when done strategically. Over 12 years, they would convert $350,000 annually (though they may qualify for a New York tax break, more on that below). That extra taxable income could result in an annual state tax bill in the tens of thousands in New York.

The Florida plan could shave off about $250,000 in state taxes over 12 years, depending on the couple's tax tier. So it's certainly a good idea in theory. But proper execution is everything.

You need to truly make a clean break from your home state

There's a reason Florida tends to attract retirees beyond just the weather. It's one of the few U.S. states with no income tax. That makes it a good place to do a Roth conversion. But you need to do it carefully, since New York is likely to pursue conversion taxes it thinks it's owed.

"Aggressive state tax pursuit is concentrated in high-tax states, because the flow of lost revenue each year is so massive," explains John Moran, CFP at Domain Money. "New York runs one of the most active residency auditing programs in the country, both because of the high taxes departing residents take with them and the sheer quantity of retirees leaving in pursuit of lower tax rates."

For this reason, Moran says, if you're going to pursue this strategy, you must make a truly clean break.

"The risk for this couple is New York questioning their departure, not Florida questioning their arrival," he says.

Leaving New York isn't enough

You might assume that all you need to do to initiate a "clean" Roth conversion in Florida is pack your bags. But Moran says there's a lot more to it.

"Simply moving to another state and updating their license does not automatically close the door on New York coming for their [tax money]," Moran says. "If they keep a home in New York and spend enough days in the state, New York can treat them as statutory residents and tax the conversion anyway, so both the number of days spent in the state and the use of any retained property matter."

Steven McGowan, Managing Director and Wealth Advisor at Rothschild Wealth Partners, further explains, "The standard defense is a clean factual record you are responsible for tracking — fewer than 184 days in New York [per year], updated driver's license, voter registration, bank and brokerage addresses, and a detailed day-by-day location log backed by receipts and travel records. Seriously."

Moran says the key is to show that you've really cut ties with New York. In addition to spending the majority of your time in Florida, you need to show that you're actively establishing a life there. That means finding doctors based in Florida, joining a gym, and doing other such things that send the message that this is truly your new home.

Moran also says that if New York questions your residency, "The burden of proof in a residency audit falls on the taxpayer, which makes recordkeeping vital." So make sure to document how much time you're spending in New York versus Florida, at least for the first year or two following your move.

Another important point McGowan raises is that you should establish residency in Florida before moving any money into a Roth IRA.

"Relocate first, document everything, establish Florida domicile clearly, check your models again, and then and only then convert," he says. McGowan also suggests having a tax attorney and a financial planner review everything together before a single dollar moves.

Make sure a Roth conversion actually fits into your plans

Relocating to Florida could be a good way to save money on Roth conversion taxes. But McGowan says that before you uproot your life, you should run the numbers carefully.

"A conversion this size creates a significant ordinary income spike that can affect Medicare premiums, Social Security taxation, and other income-based phaseouts. That math needs to be modeled carefully," he cautions.

McGowan says it's also important to ensure you're pursuing a Roth conversion for the right reasons.

"Are you trying to create more tax flexibility in retirement, reduce future RMDs, simplify estate planning, or pass wealth more efficiently to heirs? Because the federal tax cost is still very real, no matter where you live," he says.

Since you're dealing with a very large nest egg, converting just $200,000 to $300,000 a year could place you in a higher tax bracket.

Granted, if you let a $4.2 million nest egg grow another 12 years, your RMDs plus other retirement income could place you in a high enough bracket that it's worth converting now. But it pays to work with a tax professional or financial adviser to run the numbers.

And also, don't be surprised if your 12-year conversion leaves you paying more for Medicare. Depending on your total income, IRMAAs may be unavoidable for at least some of those years. (Note that Medicare uses a two-year lookback period to calculate IRMAAs.)

Finally, to make your Roth conversion as efficient as possible, it's best to plan to pay the taxes from a taxable brokerage account or savings/checking account. That way, you can leave the entire converted balance inside your Roth IRA to grow tax-free.

Understand the costs of moving to Florida

Giving yourself 12 years in Florida to convert some or all of a $4.2 million portfolio is a great strategy for minimizing the federal tax burden, since you'll conceivably only be moving a portion of your total balance over each year. But one final thing you'll need to do is make sure you understand the costs associated with moving to Florida.

With a median property tax bill of $6,542, New York is one of the most expensive states for homeowners. Our imaginary couple living just outside New York City would no doubt pay much higher state and local taxes. Florida, on the other hand, is one of the most expensive states for homeowners' insurance. Plus, in Florida, you could face hefty HOA fees that add to your monthly costs.

Granted, if you own a home in or near New York City and you're planning to sell it ahead of your Florida move, you may be able to pocket enough proceeds to cover the cost of a new place with money left over to pay for insurance, HOA fees, and other expenses that come with living in Florida. But do the math before making that move. You don't want to end up in a situation where what you save in taxes on your conversion, you lose to other expenses.

Another thing to think about is the 12-year Florida plan. If you're buying and selling various homes within a relatively short stretch of time, you're looking at real estate agent fees, moving costs, and other expenses. Some retirees reduce their final home purchase costs using the "half-back" approach: they move to Florida for several years, then settle halfway back to New York or New England to be closer to family while enjoying lower real estate prices.

Also note that if you're 59½ or older, you may qualify for New York State's $20,000 per-person retirement income exclusion. As a couple, you could potentially exempt $40,000 of income per year. In our scenario, the 63-year-old couple would pay state taxes on $310,000 of their annual Roth conversion rather than $350,000.

Granted, Florida's lack of an income tax may result in significantly greater net tax savings overall. But you should know what benefits you're giving up by leaving New York.

And some of those benefits may not be financial. If your family and social network are based in New York, there's an emotional cost to giving those up. So really take a look at the big picture before gearing up to pack your bags.

All told, you can potentially save money on a large conversion by moving to a no-income-tax state if you run the numbers and they work in your favor. But that's a big "if." And if you're going to make the move, make certain it's a truly clean break so your home state doesn't try to come after you for extra money

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We've all seen and heard ads for assisted living facilities in newspapers and online and on the radio and television.

But until a family member has a stroke or some other physical or cognitive impairment, most of us don't know very much about how assisted living, senior living or memory care facilities work. Or, to be specific, how they are supposed to work and what red flags look like.

I sure didn't either, until "Julie," a close family friend, became the victim of medical malpractice. Following a "simple" operation, the 62-year-old retired teacher's electrolyte chemistry wasn't properly monitored, resulting in dangerously low blood calcium levels that triggered muscle spasms, convulsions, seizures, a coma and brain damage.

She now can't walk or use the bathroom without assistance, needs someone to help her eat and has significant cognitive impairment. For the past three years, she has been living in a studio room at an assisted living facility that is part of a nationwide operation.

The facility claims to provide, among other things, 24-hour care and support, food prepared by a chef, an on-site restaurant where families are welcome to dine as well and much more.

These amenities are common in the industry. But in Julie's case, the reality appears far different. Each time we visit, we see a care facility for older people and the infirm racing downhill while monthly charges are increasing.

How cost-cutting harms residents

"It is more than a reduction in the services for people like Julie, who is effectively bedridden. They are putting residents' lives at risk," said "Suzanne," who works at Julie's facility. With my assurance that she could speak freely and confidentially, she described what happens when profits and cost-cutting come first.

I learned from Suzanne that what is happening here is not a rarity in this business and that red flags are everywhere — if you know where to look and ask questions.

'They stopped caring'

"I have been in this field for over 25 years, and this is the third assisted living facility I've worked at, some from opening day," Suzanne said. "Most start out in full compliance with all the promises listed in their contract and then gradually limit services.

"When Julie first came here, things were top-notch. But over the past year, the lack of contractually promised care has fallen dangerously."

Suzanne told me about:

• Residents who push the emergency call button they wear around their necks and wait over an hour for someone to respond: "Some have fallen, can't get up, and it is so sad to see this."
• A failure to conduct frequent, daily checks on patients: "Recently, one gentleman had been dead in his bed for hours."
• While contracts and brochures described chef-prepared meals, some meals were actually cooked by a handyman. The menu, which offered a variety of meals catering to all sorts of residents, has been slashed by over half, and people are upset. Portion size has been reduced because of cost-cutting, leaving many residents hungry.
• Most of the servers have been fired from the restaurant where families could have meals with residents. People are told to immediately leave the premises after eating, and tips left on the table are being taken by managers.
• Managers routinely take cash donations from families that are intended for holiday and other staff parties. One spouse became furious when they asked a staff member, "So how was the party we all paid for?" and heard, "What party?"

Before you sign a contract

When an assisted living facility's sales department gives you the opportunity to visit, make sure you look closely at three primary areas:

• Residents' well-being
• Staff interactions
• Cleanliness

Red flags include:

• High staff turnover
• Residents who appear unkempt
• Management who will not give you a straight answer

After speaking with Suzanne and seeing the situation for ourselves, it's clear you should also try to make unannounced visits by yourself and with other family members, at different times of the day, observing how staff interact with residents.

Speak with residents and their families if possible. Ask them what they like — and what they dislike.

There is a massive amount of highly useful information available online. You should print out the AARP Assisted Living Checklist and go through it with the sales staff at every facility you visit.

Each time we visit Julie, many of the other residents of the facility seem to be longing for human contact. Yes, science and medicine keep them all alive. But are they?

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

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

Among affluent investors, few words are more powerful than "exclusive."

The appeal is not simply the exclusive investment itself, but the feeling that comes with access to something unavailable to most people.

That emotional pull is understandable. Scarcity creates perceived value in nearly every area of life, and investing is no exception. But investors should recognize that exclusivity itself can carry costs — what some advisers think of as an "exclusivity premium."

In wealth management, exclusivity can take many forms — private credit funds, invitation-only investment opportunities, private real estate deals, hedge funds, venture capital allocations and other alternatives available primarily to high-net-worth investors.

The exclusivity premium can appear in the form of higher fees, reduced liquidity, delayed tax reporting, complex partnership structures or capital locked up for years at a time.

In some cases, after accounting for those tradeoffs, investors might discover they've accepted more complexity without meaningfully improving long-term outcomes.

Understand your motivations

Some private investments can play a valuable role in a diversified portfolio, particularly for investors with significant assets, long time horizons or specialized goals. But too often, investors evaluate these opportunities through the lens of access and sophistication before evaluating whether the investment improves their financial plan.

It's a distinction that matters.

In the past decade, the growth of private markets has coincided with increasing demand from wealthy investors seeking opportunities outside traditional stocks and bonds. The pitch is often framed around exclusivity — limited capacity, restricted access, institutional-quality investments and opportunities not available to ordinary investors.

Sometimes those opportunities are worthwhile. Sometimes they're ordinary financial activities wrapped in elite branding.

Private credit offers a useful example. At its core, private credit is fundamentally the business of lending money against collateral. That can generate attractive yields under the right circumstances.

But investors should remember that lending itself is one of the oldest and most established activities in finance. There's nothing inherently superior about an investment simply because it's less accessible or less transparent.

Consider investing alternatives

Meanwhile, many investors overlook what might be the most extraordinary long-term wealth-building vehicle already available to them: Ownership in the world's great public companies.

The companies in the S&P 500 became dominant not because they were marketed as exclusive, but because they successfully competed in global markets over long periods of time. They generate real earnings, serve billions of customers, invest heavily in innovation and operate under constant public scrutiny.

Through low-cost index funds and increasingly sophisticated strategies such as direct indexing, investors can own highly diversified portfolios that are liquid, transparent and tax efficient.

Direct indexing offers an interesting contrast to many private investments. Rather than adding complexity through lockups and opaque structures, it allows investors to harvest tax losses at the individual security level while maintaining broad market exposure.

It's a sophisticated strategy, but one built around efficiency and flexibility rather than exclusivity.

Yet, simplicity often struggles to compete psychologically with exclusivity.

Many investors assume that if an opportunity is harder to access, it must offer higher rewards. Wealth managers aren't immune to these incentives. Complex investments can sometimes create the perception of greater customization or expertise, even when a simpler approach might better serve a client's long-term objectives.

Understand the entire picture

Investors should pause before committing capital to "exclusive" opportunities and ask a more foundational question: Does this investment genuinely improve the long-term plan, or does it primarily satisfy the emotional appeal of access, scarcity and sophistication?

Investment decisions are rarely driven by numbers alone. Status signaling, scarcity bias and the desire for insider access can all influence judgment, particularly among affluent investors accustomed to exclusive experiences in other areas of life.

The goal is not to eliminate emotion from investing, but rather to recognize when emotional appeal begins substituting for disciplined decision-making.

For many wealthy families, the most effective long-term strategy might involve owning productive businesses, minimizing unnecessary costs, maintaining tax efficiency and remaining invested over long periods of time.

That approach might sound boring compared with the latest private-market opportunity, but over decades, boring has historically compounded remarkably well.

The next exclusive investment opportunity will always arrive. The more important question is whether it truly advances the investor's financial goals — or merely offers the feeling of being invited into the room.

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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.

Do you have a plan for how you'll spend your money in retirement? If not, join the club. Many retirees wing it when it comes to withdrawing their hard-earned savings.

But that's a big mistake, says Jean Chatzky, best-selling author of The Forever Paycheck and founder of HerMoney. It's the biggest mistake retirees can make.

"The lack of a concrete plan actually prevents them from living their best retirement," Chatzky tells Kiplinger. "They are not living as well as they could." If you overspend without a plan, you could face a retirement shortfall. If you underspend, you won't get to fulfill your retirement goals.

Reluctance to spend among retirees

Underspending is a common problem among retirees, despite large nest eggs built on a decade-long bull market. By the end of 2024, Fidelity Investments reported that baby boomers made up 41% of all 401(k) millionaires, while Generation X (ages 45 to 60) accounted for 57%.

Yet, despite healthy balances, many are wary of spending. A recent Corebridge Financial survey revealed that less than one-third of retirees feel comfortable spending their savings, with most noting that the prospect causes stress or anxiety. While Chatzky emphasizes that a detailed strategy can alleviate many of those feelings, just 14% of retirees report having a plan to manage their required minimum distributions.

"There are a number of decumulation strategies, but I'm a believer that covering your fixed costs with some sort of paycheck, some sort of guaranteed income, is likely to enable people to live better with less stress," Chatzky says.

That doesn't mean all your money should be in a guaranteed investment product such as an annuity, bonds or Treasuries, but locking some of it in a "forever paycheck is really a smart move for most people," she says.

Preretirees need a plan, too

If you're a pre-retiree, Chatzky says the biggest mistake you can make in the run-up to retirement is not having a plan.

• Do you want to downsize or age in place?
• Will you earn money or are you completely exiting the workforce?
• What about your spouse? Is he or she retiring with you?
• How do you plan to spend your free time?

You need answers to all that and more ahead of time if you want a successful retirement, says Chatzky.

"I'm always baffled by the number of couples who have very, very different retirement visions from one another," says Chatzky. "They get to the point and realize they are not on the same page at all."

Just as with buying a house or having a baby, you can't plan out your withdrawals until you know what your lifestyle looks like and how much it will cost.

Help is out there

When it comes to planning, Chatzky encourages everyone to consider hiring a financial adviser. A financial planner can map out a plan for how to spend your money in retirement or determine how much you need to save.

Chatzky said that while some people think hiring a financial planner means paying fees forever, or think they don't have enough money to need one, both notions are dated and wrong.

You can hire a financial adviser to create a plan you execute yourself, you can hire a planner to review a plan you created, or have someone do it all for you, says Chatzky.

"The whole financial planning field has become democratized in a way that I truly think there are planning services available to fit everyone," she says.

Editor's note: This article is part of an ongoing series in which we ask influential personal finance figures to share their opinion on the biggest retirement mistake you can make. Other articles feature Suze Orman, Dave Ramsey, Grant Cardone and Ramit Sethi.

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