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

Read More

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• The Rise of the 'Half-Back' Retiree: Why a Perfect Florida Condo Isn't Enough
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• Why Do People Retire to Florida? 9 Things You Must Know

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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In 1889, German Chancellor Otto von Bismarck introduced the world's first state pension system and set the retirement age at 70. Life expectancy in Germany at the time was about 45 years. The math was no coincidence.

Bismarck was not building a reward for a life well lived. He was building a political instrument to neutralize the rising socialist movement, calibrated so that most workers would die before collecting a single mark.

The pension was designed to be a promise rarely kept. From its very first institutional expression, retirement was a financial mechanism dressed as a social good.

Forty-six years later, Franklin Roosevelt signed the Social Security Act into law. The eligibility age was 65. Male life expectancy in 1935 was about 60. The architecture was identical to Bismarck's: A safety net mathematically designed to catch relatively few.

Social Security was not a life plan. It was a financial stabilizer for an economy in collapse, and the age of eligibility was set with actuarial precision, not with any concept of what a person might do with 20 or 30 years of post-work life.

Then came the turn that changed everything.

In 1978, Congress added a modest provision to the Internal Revenue Code. Section 401(k) was 11 lines of tax language that almost no one noticed. Ted Benna, a benefits consultant in Pennsylvania, noticed. In 1980, he proposed the first employer-matched savings plan based on that provision, and the modern retirement savings industry was born.

The shift was seismic: Retirement funding moved from employer obligation, the pension, to individual accumulation. The worker was now responsible for building the number.

That transfer of responsibility did something the pension system never did. It put the individual in a direct, daily, emotionally charged relationship with a portfolio balance. It gave the financial services industry its central organizing principle: Retirement success is a number, and that number is never quite large enough.

It created an entire professional class, from insurance agents to financial planners to retirement specialists, each iteration more sophisticated in its tools, each iteration asking the same foundational question: How much money do you have, and is it enough?

What none of these three moments asked, not Bismarck in 1889, not Roosevelt in 1935, not Benna in 1978, was the question that actually governs the quality of a retirement: When you stop working, what does a meaningful life require?

That question has never had a commission. It has never generated a tax provision. It has never had a lobby in Washington or a continuing education requirement for financial planning certification.

And so, 135 years after Bismarck set the retirement age above the average life expectancy, the industry built to serve retirees remains, at its structural core, a financial instrument trying to answer a human question it was never designed to address.

The inherited blind spot

The financial planning industry did not choose this blind spot; it inherited it.

Every professional designation that followed Bismarck's pension, including the insurance agent, the financial planner and the retirement specialist, was built on the same foundational assumption — that retirement is primarily a financial problem.

The tools grew more sophisticated with each generation. Actuarial tables gave way to mutual funds, which in turn gave way to Monte Carlo simulations and dynamic withdrawal strategies. The vocabulary grew more precise. The question at the center never changed.

That question is: Do you have enough money?

It is not a bad question. It is, in fact, an important one. But it is not the question that determines the quality of a retirement. A Monte Carlo simulation will tell you the probability that your portfolio survives 30 years of withdrawals. It will not tell you whether those 30 years will be worth living.

The industry has spent 135 years building extraordinarily precise tools to answer the first question, leaving the second entirely to chance.

The research does not support this prioritization.

The Harvard Study of Adult Development, the longest longitudinal study of human flourishing, followed participants for more than 80 years and reached a conclusion that no financial model has yet incorporated: The quality of your relationships, not the size of your portfolio, is the strongest predictor of health and happiness in later life.

The U.S. Surgeon General's 2023 advisory on loneliness found that social isolation carries health consequences equivalent to smoking 15 cigarettes a day.

Neither finding appears on a retirement planning checklist.

This is the imbalance: The industry measures what is measurable and optimizes for what it can quantify. Purpose is not quantifiable. Connection is not quantifiable.

Identity, meaning and the sense of contributing to something larger than yourself — none of these appears on a balance sheet. As a result, they are treated as secondary concerns, the soft variables that retirees will presumably sort out on their own once the financial plan is secured.

They do not sort themselves out. That is precisely the problem.

Here is the distinction the industry has never institutionalized, though the evidence demands it: Money is a subset of wealth, not the other way around. A portfolio is a tool. Wealth is the life the tool is designed to support. When the tool becomes the goal, the plan is already upside down.

When a retiree's sense of security lives in a balance that shifts every trading day, when market volatility becomes emotional weather, when a 2% drop on a Tuesday ruins the week, the financial plan has not failed. It has simply filled a vacuum that a life plan was supposed to occupy.

The sequence matters. Define the life first. Fund it second. Most retirees receive the reverse: A detailed financial plan and a life plan left as an afterthought, assembled from whatever is left after the spreadsheet is finished.

Money builds the structure of retirement. It does not fill that structure with anything worth waking up for. That work belongs to a different kind of planning, one that the industry, by design, has never been equipped to provide.

The same couple, two retirements

Meet Paul and Sandra. Paul retired at 65 after 32 years in corporate operations. Sandra spent most of those years raising their three children and working part-time as a bookkeeper. They have $1.4 million in retirement savings, a paid-off home in the suburbs, and Social Security that covers their fixed expenses. Their financial adviser has told them, with confidence, that they are in good shape.

By every metric the industry uses, they are. The question is what "fine" feels like from the inside.

Take one
Paul checks the portfolio before coffee. Not because anything requires him to, but because the number has become his first point of reference for how the day will go. On a Monday in early October, the market opens 2.3% lower. Paul watches it for 40 minutes before Sandra comes downstairs. She asks about their trip to Portugal, which they have been planning for two years. Paul says they should wait and see how the fourth quarter looks.

They have been waiting to see how the quarter looks for eight months.

The evening news runs a segment on recession indicators. Paul records it to watch again. He brings it up at dinner, at breakfast the next morning, and on a Saturday phone call with his brother. Sandra has stopped asking about Portugal.

Their financial adviser calls to discuss sequence-of-returns risk. Paul cannot stop thinking about it. He lies awake, calculating whether they should move a portion of the portfolio to cash. He has run that calculation 14 times. The answer has been the same each time. He runs it again.

Paul and Sandra are not struggling financially. They are struggling with something the financial plan never addressed: What the money is for.

Without an answer to that question, the money becomes the answer. The balance becomes the scoreboard. A scoreboard that moves every trading day is a very poor place to anchor a life.

Take two
Same Paul. Same Sandra. Same $1.4 million.

Six months before Paul's retirement date, their financial adviser introduced a different kind of conversation. Not what the portfolio would look like in retirement, but what their life would look like.

• What would Tuesday look like?
• What did October mean to them?
• What did Sandra want that the working years had never allowed?
• What did Paul need that a paycheck had been substituting for?

They spent three sessions designing the answer.

By the time Paul retired, Portugal was already booked for September. He had already committed to mentoring two young men from their church on Wednesday mornings. Sandra had enrolled in a watercolor class at the community center and arranged to spend Fridays with their grandchildren. Their calendar had shape before it had any vacancies.

When the market fell 2.3% in early October, Paul's adviser called to check in. Paul asked two questions, listened, then returned to the project he was building in the garage. He did not check the balance that evening. He did not need to. The balance was not the point.

The money in this scenario did not change. The relationship to the money changed entirely. Paul and Sandra's sense of security does not live in a number that moves every trading day. It lives in a life designed before the market opened.

Their financial plan is a foundation, not a scoreboard. It answers to something larger than itself. That distinction, between a portfolio that governs a retirement and one that funds it, is the difference the industry has never been structurally equipped to provide.

The question worth asking first

The remedy is not to abandon financial planning but to assign it the right role.

A financial plan is an instrument. Like any instrument, it is only as useful as the purpose it serves. A hammer in a house with no blueprint is not a building tool; it is a very expensive paperweight. The 401(k), the withdrawal strategy and the Monte Carlo simulation — these are precision instruments. They deserve a life plan to serve.

That life plan begins with questions the industry was never trained to ask:

• What does a meaningful Tuesday look like at 70?
• Who depends on you, and for what?
• What did the working years crowd out that is still waiting?
• What structure will replace the one work provided automatically for 30 or 40 years?

These are not soft questions. They are the load-bearing questions of a successful retirement, and they belong at the front of the planning conversation, not appended to the end of a spreadsheet.

The areas that research consistently identifies as essential to retirement well-being — physical health, meaningful engagement, intellectual challenge, emotional connection and a sense of purpose larger than oneself — do not appear in a financial plan because they cannot be quantified.

That is not a reason to leave them unplanned. It is the strongest reason to plan them deliberately, in writing, before the financial adviser runs the first projection.

Paul and Sandra in take two did not have more money than Paul and Sandra in take one. They had a better question. Because they answered it before retirement began, the market's daily movements became information rather than identity.

Bismarck built a system to manage a financial liability. Roosevelt built a system to stabilize a collapsing economy. Benna built a system to fund individual accumulation. None of them built a system for the life that accumulation was meant to support. That gap has persisted for 135 years and will not close on its own.

In the encore years, the most consequential decision you make is not which funds to hold or when to claim Social Security. It is whether you allow a financial plan to substitute for a life plan, or insist that the financial plan answer to one.

Money builds the structure of retirement. You are responsible for everything inside it.

To learn more about designing a fulfilling retirement, pick up my 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.

Gray divorce refers to couples splitting after age 50, and it's more common than people think.

Pew Research Center found that the divorce rate for Americans 50 and older has roughly doubled since 1990. And it's even higher for those 65 and up.

The stakes are different when you divorce later in life. There's less time to rebuild savings and more healthcare costs to plan for. Doing your homework before you file for a gray divorce can mean the difference between a secure retirement and scrambling to make ends meet.

Here's how to prepare.

1. Review your finances

To start with, have a clear picture of what you own and what you owe. Having clean records makes everything else easier.

Gather your financial documents:

• Tax returns for the past three years
• Pay stubs or income statements
• Bank and brokerage statements
• Retirement plan summaries
• Insurance policies
• Mortgage and HELOC statements
• Deeds and titles
• Credit card and loan statements
• Business records, if applicable

Build a net worth statement. List individual and joint assets and debts, with current balances and who's on each account. Identify separate vs marital property.

Separate property might include inheritances or pre-marital assets. However, growth and commingling can blur the lines. So, keep supporting documents handy.

Gregor Emmian, deputy chief digital growth officer at Rise, recommends reviewing key financial aspects before filing for a gray divorce. "Build a net worth statement. List individual and joint assets and debts, with current balances and who's on each account. Identify separate vs marital property."

He adds, "Separate property might include inheritances or pre-marital assets. However, growth and commingling can blur the lines. So, keep supporting documents handy."

2. Understand how divorce affects retirement

Retirement accounts are often the largest assets on the table. And the rules matter:

To split employer plans (401(k)s) and pensions without triggering taxes or penalties, you'll need a court order known as a qualified domestic relations order (QDRO).

Individual retirement accounts (IRAs) don't use QDROs. However, transfers must be structured carefully under a divorce decree to avoid taxes. See IRS Publication 504.

Social Security adds another layer of complexity. If your marriage lasted at least 10 years, and you're 62 or older, you may be eligible for a divorced-spouse benefit. If your ex-spouse dies, survivor benefits can also apply.

3. Consider what you'll do with real estate

Your home is often both a financial and emotional anchor in divorce. Selling and splitting proceeds is one path. However, it's not always the smartest option for older couples who value location or community ties.

When the time comes, there may be alternatives to selling, such as:

• Temporary co-ownership agreements
• Structured buyouts

If one spouse buys out the other, they'll be responsible for the mortgage and taxes. Transfers of property incident to divorce are generally non-taxable under IRS rules. But the cost basis and future capital gains still matter.

If you do sell a primary residence, you may be able to exclude up to $250,000 of gain per person if you meet the ownership and use tests (check IRS Publication 523 Selling Your Home). Check the numbers before you sign anything.

4. Review health insurance options

Health coverage after divorce isn't optional, and the cost can surprise people who've been on a spouse's plan for decades.

According to Fidelity, a 65-year-old may need $172,500 in after-tax savings to cover healthcare expenses in retirement.

You'll need to start researching your options at least six months before the divorce finalizes.

Continuation of health coverage (COBRA) typically provides up to 18 months of coverage after a qualifying event, such as divorce, and sometimes longer in special cases.

The special enrollment period on the Affordable Care Act marketplace can also be triggered by divorce. You can shop for plans outside the usual open enrollment window on HealthCare.gov.

If you're nearing 65, consider timing decisions around the start dates for Medicare Parts A and B. Note: HSA contribution rules change once you enroll in Medicare.

5. Know the tax impact of divorce

Taxes weave through almost every decision in a divorce, and asset division creates tax events that can persist for years.

Consider the tax basis of investments before dividing them. A stock portfolio worth the same as a retirement account today might have very different tax implications when you need to access those funds.

If you have minor children, note that alimony rules have changed since 2019. Alimony is generally not deductible for the payer or taxable to the recipient for divorces finalized after 2018. Review the current treatment in Topic No 452 Alimony and Separate Maintenance.

6. Update your estate plan

When your life changes, your estate plan should change, too. You'll need to update the following:

• Will
• Trusts
• Beneficiary designations
• Titling

Note: Retirement accounts and life insurance pass by beneficiary designation (not your will). So check those forms promptly.

Couples going through a divorce often focus on dividing current assets but forget about future contingencies.

Update your power of attorney (POA) and healthcare directives immediately, rather than waiting for the divorce to finalize.

If support payments are part of your agreement, consider life insurance to secure those obligations, and set ownership and beneficiary structures so that they protect both sides.

7. Research your financial and legal experts

Having the right team can save you from expensive mistakes. You'll need the following:

• A divorce attorney who understands later-life issues
• A Certified Divorce Financial Analyst (CDFA) to model settlements and retirement income
• A tax professional to map out near- and long-term tax effects

Before you hire a professional, ask the following:

• How many gray divorces have you handled?
• How do you structure QDROs?
• What software do you use to model cash flow and taxes?
• What's your approach to Social Security claims after divorce?

The answers will show whether they can really guide you through the financial side of gray divorce, including taxes, insurance, retirement income, housing and everyday costs, as well as healthcare and long-term medical needs.

Planning for a new chapter

Gray divorce is a major financial pivot, and preparation makes all the difference. The more groundwork you do before filing, the more control you'll have as things unfold.

Build your documents, run the numbers and lean on professionals who know the terrain.

You're building a new financial plan for the next phase of your life. Careful preparation now will lay a stronger foundation for the years ahead.

Related Content

• When Divorcing, What Financial Specialists Do You Really Need?
• How Do You Know You Are Ready for a Gray Divorce? 15 Yes-or-No Questions
• Five Divorce Settlement Blind Spots: An Expert's Guide to What You Can't Afford to Miss
• How to Negotiate to Lower Your Medical Bills: These Strategies Can Help Reduce Your Costs
• 6 Steps to Quickly Build Your Emergency Fund

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

Dear Wealth Wise: I'm 46 with two teens. I'm debt-free, own my home outright plus three rentals, and have a $5 million portfolio that I actively manage across diversified markets. I live well below my means, am extremely frugal, and do most repairs myself. I met a great partner (48) who also has two teens, owns a home with a mortgage, has a great job with a pension in six years and has a 401(k) worth $400K. He spends way more freely than I do. We're discussing the future but have different views on money and different asset levels. How can I protect myself and my kids?
— Cautiously in Love

Dear Cautiously in Love: Meeting a romantic partner later in life can be a wonderful but challenging thing, especially if there are kids in the picture. Blending families isn't easy, especially when navigating the already tricky teenage years. Here's what the experts have to say about her situation.

A prenuptial agreement is key

When you have two people entering a potential marriage with very different levels of wealth, it's natural to want to protect yourself, as well as your children.

Julia Rueschemeyer, a Massachusetts-based divorce lawyer, says, "If you are planning on getting married, the best and only way to protect yourself is to do a prenuptial agreement. This can spell out exactly what would happen financially in the case of divorce, and it would trump any state laws about division of assets and alimony."

The challenge is that prenups can have a negative connotation, but it's important to recognize that signing a prenup isn't inviting your marriage to fail. It's simply a way to protect yourself, especially since some states have very strict laws about how assets are divided in the event of a divorce.

As Rueschemeyer cautions, "[Massachusetts] state law says that a judge can take any and all assets of one party from before or during marriage and give them to the other party. Only a prenuptial agreement protects you from that."

Don't be afraid to keep some of your finances separate

It's clear that frugality has played a role in your financial success. That's why Kristyn Carmichael, professional mediator, family attorney, and certified divorce financial analyst at Couples Solutions Center, says it might be a good idea to keep some of your finances separate, especially if you and your partner tend to have different views on spending.

"Many of my clients are in this exact situation," she says. "Anything they bring into their marriage is kept separate property. They open a joint bank account that is for agreed upon joint expenses. ... They determine their budget for these expenses and contribute to the account either equally or in proportion to income on a monthly basis."

From there, though, all other expenses, such as individual costs for hobbies, shopping, solo vacations and kid-related expenses, should be paid from their own accounts, Carmichael advises. That way, there doesn't have to be resentment about how much is being spent. In addition, each person retains autonomy without having to consult the other.

This could lead not only to cleaner finances but also to a more harmonious relationship.

Put the right estate planning documents in place

In addition to a prenup, Carmichael says it's important to have your estate-planning wishes documented.

"You will also want a will and trust in place to protect your children individually," she says.

Carmichael says that a trust, for example, might come into play if one of you moves into the other's home.

"If the owner of the home were to pass away," she says, "they [could] will the home to their children but leave a clause that their partner can live in the home for up to a certain amount of time. This allows that person time to grieve since they lost their partner without being kicked out of their home, giving them a transition period while also retaining the children's interest in the asset."

Rueschemeyer says a revocable trust could be a particularly powerful tool in this situation.

"Real estate in a revocable trust does get the step-up in basis when the owner dies," she says. "The heirs pay capital gains only on increases in value from the time the property passes to them until they sell it."

Finally, our reader might consider a qualified terminable interest property or QTIP trust, which is especially helpful for blended families. A QTIP would allow her to provide lifetime income for her husband if she dies first, while legally ensuring that the remaining principal ultimately goes to her children, not his.

Talk to a counselor to avoid financial conflict

It's clear that you and your partner view money differently, and there's nothing wrong with that. You don't need to have the exact same financial philosophy to make a marriage or long-term relationship work.

That said, Rueschemeyer suggests, "Besides getting a prenup, you should meet with a relationship counselor to talk about money before you get married. This could help you talk about your financial habits and aspirations and come to a better understanding and appreciation for each other.

Counseling could also give you the coaching you need to talk about money openly, Rueschemeyer says, so you can enjoy it in your relationship rather than have it become a source of conflict.

A word from Wealth Wise

We understand our reader's concern about protecting her considerable assets in a new marriage, but we aren't convinced that her love interest is a financial slouch. With savings of $400,000 in his 401(k), he has amassed a much larger 401(k) balance than the average 40-something in the U.S., which was $140,000 in the first quarter of 2026.

Moreover, he has a pension, a good job and owns a home, which demonstrates financial discipline and a commitment to a solid retirement. He might feel more comfortable spending money than she does simply because they grew up in different financial circumstances or cultures.

For that reason, we recommend she start with Rueschemeyer's advice to see a counselor. The couple will need to discuss some basic assumptions and questions, such as how much money they need to feel safe, how they'll handle big expenses and purchases and where and how they want to live and retire.

More Advice from Wealth Wise

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Questions from real people, for real people.

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• Wealth Wise: Should We Downsize or Drain Our 401(k) to Pay Off Our Home?
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• Wealth Wise: Bridging the Healthcare Age Gap for Military Couples with TRICARE and Medicare

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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When people step out of their working years and into retirement, they could still have a long journey ahead — perhaps longer than they ever imagined.

Consider how much longer healthy individuals are living today compared with a century ago. For many people, retirement is far more than a brief chapter. It can stretch for decades, which means your planning needs to account for all those years if you want a fulfilling retirement rather than one weighed down by financial stress.

One key to navigating this successfully is having a healthy perspective on accepting longevity. Rather than viewing a long retirement as an obstacle to overcome, think of it as your greatest lever, a powerful tool you can use to your advantage.

Don't eliminate all risk

One way to leverage longevity is by understanding how your investments can complement a longer time period. Many people are tempted to strip nearly all risk from their portfolios as retirement approaches because they worry they won't have time to recover from a market downturn.

While it's true that significant volatility early in retirement can do serious damage to a portfolio (especially when you're simultaneously withdrawing money to cover living expenses while the market is falling), that doesn't mean a conservative approach is your only option.

Protecting every dollar isn't always as efficient as it seems. A portion of your portfolio still needs to be positioned for growth, and that requires accepting some level of risk.

It might feel uncomfortable in this stage of life, but the risks you take should be driven by your needs, not your fears. If you hold on too tightly and suffocate your dollars from growing, they might run out before your retirement does.

This is exactly where longevity becomes your ally. A retirement that lasts 20 or 30 years gives your invested assets real time to recover from market setbacks and continue growing.

That doesn't mean going all in on equities. You absolutely want to shield a portion of your money from market volatility. But keeping your entire portfolio in CDs or similar instruments that can't keep pace with inflation isn't safety — it's a slow erosion of purchasing power.

A balanced investment plan helps give your money a fighting chance over the two or three decades ahead.

An important subject often left unmentioned

When planning for a retirement that could last 20 years or more, one topic deserves a prominent place in the conversation: The potential need for long-term care.

Unfortunately, too many people push this topic aside — which is understandable, but not wise. The prospect of needing a nursing home or round-the-clock in-home care isn't a pleasant topic on which to dwell.

However, these costs can have an incredibly detrimental impact on your retirement savings if you don't plan for them.

The fear of the cost is the other reason people disengage. When they see the numbers involved, planning can feel futile, so avoidance becomes the path of least resistance.

That fear isn't misplaced: Long-term care is genuinely expensive. According to CareScout's yearly Cost of Care survey, the median annual cost of a semiprivate room in a nursing home is $114,975. In-home care can run close to $80,000 annually.

These costs are precisely why planning needs to begin early. Putting it off means that when the need arises, you could find yourself scrambling to address a situation for which you never prepared, and by then, your options might be far more limited.

Those with significant wealth have more flexibility here — not because they're less likely to need care, but because they can afford to pay for it out of pocket. For them, the plan is straightforward: Write a check when needed. Most people don't have that option.

To start, it's worth taking the time to review your options for covering long-term care costs. These might include a dedicated long-term care insurance plan, a life insurance policy with a long-term care rider or setting aside a portion of your savings specifically for that purpose.

This is where the right financial adviser makes a genuine difference, one who is an empowering steward rather than a cautionary money manager. The goal is to build a plan that will help navigate the uncertainties ahead by capitalizing on longevity.

A long retirement can feel like a risk — but it doesn't have to. With the right mindset and planning, longevity becomes an opportunity, not a burden.

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.

Fear gets a bad reputation in retirement planning.

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

That is good advice — up to a point.

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

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

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

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

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

The fear beneath the numbers

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

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

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

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

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

That can be harder than it sounds.

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

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

Fight fear with facts and action

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

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

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

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

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

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

Healthy fears: The 6 fears worth listening to

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

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

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

Don't let fear make the decision

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

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

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

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

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

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

The retirement fears that arrive later

Some fears do not fully appear until after retirement begins.

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

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

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

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

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

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

What healthy fear can do

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A strategy that could work for you

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

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

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

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

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

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

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

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

Building a sustainable income strategy starts with understanding monthly expenses.

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

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

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• What You're Really Losing if You Cut Back on Your 401(k) Contributions

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

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

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

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

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

1. Investments in your brokerage account

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

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

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

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

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

3. Concentrated stocks that have done well

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

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

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

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

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

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

5. Rentals or second homes

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

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

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

Consider the big financial picture before selling

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

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

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

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

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

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

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

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

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

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

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

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

Source: 1Q 2026 Fidelity Retirement Analysis

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

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

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

Why retirees are overweight stocks

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

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

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

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

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

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

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

The risks of retirees loading up on stocks

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

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

3 ways retirees can dial back stock exposure

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

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

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

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

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

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

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

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

Read more on managing retirement savings

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

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

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

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

1. Social Security insolvency — again

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

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

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

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

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

2. Inflation: The ghost of stagflation

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

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

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

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

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

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

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

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

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

The present is too close to history

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

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

More on America's 250th Birthday

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• America's Cost of Living at 200 vs 250: How Affordable is American Life Now?
• How Has Retirement Changed in the Last 50 Years? Take Our Quiz
• 9 Historic Sites to Visit With Your Grandkids for America's 250
• Financial Advice From America's Founding Fathers
• Which Presidents Are on the Social Security Payroll?

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

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

More from Kiplinger on Retirement Saving:

• 6 Changes to IRAs, 401(k)s and HSAs in 2026
• Roth IRAs: What They Are and How They Work
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The country may be turning 250 this summer, but many Americans didn't start taking retirement savings seriously until it turned 200.

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

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

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

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

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

1975-1980: Tax-deferred saving is born

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

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

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

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

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

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

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

1989–2001: The Roth debuts

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

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

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

2006: Auto-enrollment thanks to the Pension Protection Act

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

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

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

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

2010s: The DIY era

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

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

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

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

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

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

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

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

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

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

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

More to come

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

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

More on America's 250th Birthday

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

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

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

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

More on investing from the Kiplinger team:

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"Do I have enough to retire?"

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

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

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

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

Here's why.

The $1 million rule leaves out a key piece

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

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

What is your pension really worth?

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

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

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

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

How does Social Security affect the math?

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

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

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

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

Why retirees without pensions need more

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

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

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

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

So, do you actually need $1 million?

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

That could mean:

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

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

What happens if you have both?

Let's revisit that earlier example:

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

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

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

The real shift: From accumulation to purpose

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

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

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

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

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

Don't ignore taxes and strategy

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

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

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

The bottom line

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

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

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

Related Content

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

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

The investing road to retirement can be invigorating.

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

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

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

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

What is sequence of returns risk?

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

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

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

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

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

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

Where will money come from in retirement?

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

The first thing to do is determine your income needs.

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

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

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

That's where wise investing comes into play.

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

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

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

The diversified income strategy

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

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

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

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

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

Ronnie Blair contributed to this article.

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

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

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

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

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

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

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

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

A new definition of wealth

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

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

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

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

Values-based planning is moving into the mainstream

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

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

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

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

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

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

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

How to align your financial plan with your priorities

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

Ask yourself questions like:

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

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

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

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

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

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

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

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

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

What is TRICARE for Life (TFL)?

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

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

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

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

The crucial Medicare rule for veterans

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

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

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

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

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

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

Your husband still has options if you drop your workplace plan

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

The solution for military families.

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

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

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

For nonmilitary families.

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

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

Another option worth looking into is COBRA, says Punzio.

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

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

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

You can get TRICARE while retaining your existing coverage

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

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

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

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

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

How TRICARE For Life and Medicare work together

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

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

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

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

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

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

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

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

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

Read More

• We're 64 With $4.3 Million. I Want to Retire Now and Pay for Health Insurance Until We Get Medicare. My Wife Says We Should Work. Who's Right?
• My First $1 Million: Retired Military Veteran and Federal Worker, 60, Virginia Beach
• I'm 60 With $2.8 Million Saved. I'm Tired of Working, But Need Health Insurance Until Medicare Kicks In.
• Don't Let Health Care Costs Wreck Your Retirement: Here's How

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

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

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

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

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

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

Here's how it works.

Step 1: Guarantee your 'need'

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

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

The key here is certainty.

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

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

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

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

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

Step 2: Protect your 'want'

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

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

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

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

The goal in this step is protection with moderate flexibility.

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

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

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

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

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

Step 3: 'Grow' the rest

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

This is where you invest for:

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

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

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

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

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

This is a critical advantage.

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

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

How the pieces fit together

In practice, most retirees will allocate:

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

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

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

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

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

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

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

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

Why 'boring' works

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

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

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

When your income plan is predictable:

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

And that's ultimately the goal.

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

Final thoughts

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

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

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

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

Dan Dunkin contributed to this article.

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

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

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

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

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

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

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

Tomorrow isn't guaranteed

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

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

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

Start small

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

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

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

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

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

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

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

1. Why do they need the money?

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

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

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

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

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

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

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

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

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

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

Be smart about helping

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

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

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

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

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

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

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

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

Why I couldn't stand them (around 2015)

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

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

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

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

What changed

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

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

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

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

A product that finally grew up

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

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

The industry matured, and the products improved with it.

Not all annuities are the same

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

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

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

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

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

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

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

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

It's just a tool

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

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

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

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

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

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

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

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

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

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

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

1. They separate money into time buckets

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

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

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

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

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

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

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

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

2. They follow a consistent withdrawal strategy

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

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

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

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

3. They spend deliberately on what matters

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

Common examples include:

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

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

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

4. They plan for healthcare costs realistically

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

Confident retirees tend to:

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

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

Removing uncertainty is often the biggest driver of reduced anxiety.

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

5. They maintain financial flexibility

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

That flexibility can look like:

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

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

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

6. They separate identity from net worth

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

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

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

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

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

Confident retirees tend to be consistent, not compulsive.

A reasonable rhythm might include:

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

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

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

Building these habits

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

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

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

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

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

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

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

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

Stock values are super high

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

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

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

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

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

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

Some of the fear may be unfounded

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

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

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

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

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

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

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

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

What to do if retirement is 10 years out

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

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

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

Davis agrees.

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

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

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

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

A holistic approach is best

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

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

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

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

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

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

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

Don't assume all is lost

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

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

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

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

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

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

Who has legal and financial authority?

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

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

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

Do beneficiaries match intent?

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

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

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

How is property actually owned?

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

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

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

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

Are insurance and liquidity aligned with risk?

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

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

Does the estate plan reflect the family?

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

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

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

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

Turning intent into protection

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

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

Planning for the life you're already living

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

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

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

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

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

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

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

Calculating your RMDs

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

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

The formula is the following:

Account Balance/Life Expectancy Factor = RMD

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

Be aware of taxes

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

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

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

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

Planning is the best protection

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

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

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

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

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

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

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

The sentiment vs behavior divergence

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

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

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

Managing what you can control to beat market drops

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

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

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

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

The shift to tax-free growth

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

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

Automated inertia

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

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

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

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

Long-term vision over short-term noise

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

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

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

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

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

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

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

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

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

That creates confusion.

Three different kinds of 'fiduciary'

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

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

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

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

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

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

Those three fiduciary obligations are not the same thing.

Credentials do not automatically create a legal fiduciary relationship

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

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

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

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

The better question: How are you paid?

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

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

Then ask: "How are you compensated?"

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

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

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

Don't be sold by a marketing buzzword

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

Maybe true. Maybe not. Verify it.

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

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

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

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

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• The Financial Fiduciary Standard Explained
• Three Ways Fiduciary Financial Planners Put You First
• Objective Financial Advice vs a Product Pitch: How to Ensure You Hire the Right Financial Expert Rather Than a Salesperson
• If You're Looking for Financial Advice, Start With This Question (It Isn't About Fees)
• I'm a Financial Adviser: This Is Why I Became an Advocate for Fee-Only Financial Advice

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

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

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

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

Gasping already? Wait, it gets worse.

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

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

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

Buying long-term care insurance at 50

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

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

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

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

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

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

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

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

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

Buying long-term care insurance at 55

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

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

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

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

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

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

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

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

Buying long-term care insurance at 60

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

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

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

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

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

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

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

Buying long-term care insurance at 65

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

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

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

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

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

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

The bottom line: apply sooner if you want that coverage

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

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

Read More

• How to Pay for Long-Term Care
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• The Average Cost of Healthcare by Age and US State
• Healthcare Costs in Retirement: Budgeting for a Healthy Future

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

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

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

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

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

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

1. Start planning early

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

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

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

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

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

3. Consider a Roth conversion

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

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

4. Avoid inheritance complications

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

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

5. Maximize different phases of retirement

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

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

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

Your Hollywood ending

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

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

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• Important Planning Considerations: Insurance & Long-Term Care

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

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

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

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

Please note that this quiz has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or financial advice.

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• Social Security, Healthcare and Tax: The Potential Complications of Working Past Retirement Age
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Mixing business with friendship is always risky, but it can get messy when it involves your life savings.

Consider a common dilemma: You hire a financial adviser who moves in your social circle. She’s responsive, kind, and a great friend of a friend — but in the last five years, your portfolio has consistently lagged behind the market. You want to walk away, but you dread the awkwardness at the next gathering.

If you find yourself wanting some financial planning help, you aren't alone. As of mid-2024, about 27% of Americans were working with a financial planner or adviser, according to a YouGov survey. As more older Americans start to pass down wealth, that percentage could climb.

One reason some people might hesitate to use a financial professional is fear of being scammed or upsold. If you've managed to find an adviser who's a friend of a friend and shares a social circle, that might seem like a win. Someone you know on a personal level might be less likely to take advantage of you and purposely steer you in the wrong direction.

What happens when your portfolio continuously trails the market? You might want to switch advisers, but that can be tricky when there's a risk of social backlash.

Here is how to handle the situation while keeping your financial best interests a priority.

Mixing finances and your social life isn't the best idea

While it's easy to see why working with someone you know socially might seem like a safe pick for managing your money, Bryan Kuderna, CFP and founder of Kuderna Financial Team, says it could be a recipe for disaster.

"Mixing feelings of social obligation with financial matters is not advisable," he insists. "If the client and adviser are purely able to look at the portfolio and business relationship as strictly business, separate from their social lives, then it's fine. But if there's hesitation or potential feelings of awkwardness, then it's not ideal."

As Kuderna explains, when there's a social component or obligation, "both sides may not be fully acting in the client's best interests, which voids the fiduciary standard every professional should seek." Keep in mind that not all advisers operate as fiduciaries; some might adhere to lower standards of "suitability," so make sure you understand your adviser's approach.

John Gillet, CEO and founder of Gillet Agency, also agrees that things could get tricky if your financial adviser is someone you have a social connection with, even though there could be some positives.

"When someone is in your inner circle, you're more likely to treat them with kid gloves," he says.

"You know that relationships and social market capital are paramount to your business. Therefore, that adviser is much more likely to answer your calls or respond to emails, providing you with a more personalized experience."

Nonetheless, Gillet says, you deserve to feel confident in your broad financial plan. If that's not something you're experiencing, you should discuss your concerns with your adviser immediately.

You don't necessarily have to cut ties

If you generally like working with your adviser and the issue you're having concerns recent portfolio performance, the relationship might still be salvageable, provided you prefer to continue despite the potential social complications. But in that case, Gillet says, it's important to be clear that you're not happy with the state of your portfolio.

"Give [your adviser] a chance to recalibrate the relationship with you, your money, and your plan," he says. "You've obviously established a connection with this adviser, which deserves respect, and at the very least a conversation expressing your grievances."

Kuderna says that no matter who you work with, your adviser should be able to communicate what you can expect in terms of both service and performance.

"If there's been chronic underperformance," he says, "then it's worth a discussion," noting that five years is a reasonable timeframe to make that assertion.

Kuderna also says that there might be ways for you and your adviser to work together without them charging you a fee that's calculated as a percentage of assets under management, which is a common structure for financial professionals.

"The adviser or client could suggest a consultation fee to take back control of managing their own assets but retaining financial advice," he says.

That said, Kuderna cautions, "This can muddy the waters, as the adviser is not fully in control of the financial plan." As he puts it, "It's like driving the car with one eye closed."

Remember that performance is relative

Another thing to keep in mind is that when it comes to an investment portfolio, underperformance can be subjective, Kuderna says.

"That is why it's so important that the adviser clearly communicate what the client should expect," he says.

When Kuderna works with clients, he asks them to assess their risk tolerance so he can use that information to help put together a plan that works for them individually. For clients with a very limited appetite for risk, their portfolio growth may be slow and steady.

"[Risk-averse investors] should then understand that the goal is not to get the same upside of the market, but acceptable returns that are less volatile," says Kuderna. "Their time horizon also plays a large factor in how conservative or aggressive they may be."

Knowing when to move on

Portfolio performance aside, it's important to feel like you can express yourself honestly to your adviser at all times. As Gillet says, "You chose this adviser as an accountability partner. That relationship requires communication."

If you communicate your dissatisfaction and your adviser can't adequately address your concerns, you should consider moving on, whether that means managing your portfolio on your own or finding another firm.

In that case, Gillet says, all you should need to do is explain to your adviser that you found better alignment with your financial goals elsewhere.

"If they are a part of your circle, I'm sure you'd both handle that transition with respect and courtesy," he says.

Kuderna agrees that being able to communicate openly is key.

"If they can't have a real discussion regarding fees, performance and expectations moving forward, then they know right there they have no business being in a business relationship," he says.

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• I Thought My Retirement Was Set — Until I Answered These 3 Questions
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For most of my life, I've worked as an innovator in the financial services space, with a particular focus on life insurance and annuity products.

For 40 years, that was my job and specialty. One of my "first of a kind" product inventions — the Accumulator — offered downside protection on the income that a variable annuity could provide and eventually created a $1 trillion industry.

In my current role as an investment adviser focused on retirement planning, my innovations address the current needs of retirees regarding greater longevity, concern about Social Security, high inflation, taxes and increasing medical and long-term care costs. As this survey of retirees by Schroders details, those are the top concerns of many people in retirement.

The concerns about costs of long-term care are about to increase even further, with a new federal Medicaid rule that, beginning in 2028, will cap allowable home equity at $1 million. This will most directly affect middle-class homeowners in high-cost markets.

Under current rules, states set the amount of equity that a homeowner could maintain and still qualify for Medicaid LTC coverage. It ranged from about $750,000 to $1.13 million — and it was adjusted every year for inflation. In 2028, the allowable equity will be $1 million for everyone (except farm families), and it will not be indexed for inflation.

Of course, there are other related costs that Medicaid will not cover, like assisted living or services like a home aide, unless the retiree satisfies a means test.

Change in retirement planning is necessary

As it happens, I've been working on a new design for retirement planning that addresses long-term care costs. It does require, among other things, a breakdown of the silos between investments, annuities and housing wealth.

This design change doesn't focus on wealthy or lower-income retirees, but rather, the broad group of so-called mass affluent. The most popular planning approach for this group of retirees is to invest in different investment portfolios and withdraw 4% to 5% per year, increasing by inflation.

Intuitively, most retirees know that they can do a lot better not only in the level of income, but also in the reduction of risk and taxes, and in greater liquid savings.

On the other hand, most don't fully appreciate the potential costs of long-term care. Not surprisingly, those who live longer are more likely to need long-term support and services like nursing home care.

One interesting statistic is that 50% of retirees age 85 and over will need long-term-care services, which are in the $80,000-to-$150,000-per-year range, with a historical increase rate of 3% to 5% per year.

Our analysis suggests these costs may represent nearly 25% of the average $2 million in net worth split between a rollover IRA and value of a home. Without planning for those costs in advance, the sale of the home, with the related closing costs and taxes, may be required.

Here are the retirement planning design changes we developed.

Consider all major asset classes, including housing wealth and lifetime annuities

In figuring out a solution to these retirement challenges, whether or not Medicaid is an option, it made sense to look at all of a client's net worth. That struck a chord when housing wealth was reported as 50% of our sample retired client's wealth.

Importantly, the innovations needed to be doable with no regulatory change or product refinement — and simply in the retirement planning space. It had to be accomplished through our planning algorithm and executed by an adviser through partnering with different product providers.

The first step was how to include housing wealth in the planning. The second was the integration of the most logical but underutilized retirement product — lifetime annuities.

The key for me was to consider them together rather than separately. Why together?

That togetherness answers the following key objections that often are raised about each product individually (also, see my article Transform Your Retirement Plan With This Powerful Combo):

Housing wealth. If using a reverse mortgage such as a home equity conversion mortgage (HECM) to unlock this wealth, the objections are the costs — and the risks if you borrow too much. (See my article How Your Home Can Fill Gaps in Your Retirement Plan.)

Lifetime annuities. A qualifying longevity annuity contract (QLAC) can help define a better retirement by deferring taxable IRA distributions and delivering guaranteed lifetime income at an age you select. (See A QLAC Does So Much More Than Simply Defer Taxes.)

Despite a lifetime payout for a 67-year-old man of, say, $50,000 per year on a $100,000 premium, retirees often object to the lack of liquidity.

In our development phase, we said, "HECM, meet QLAC." Individually, both HECM and QLAC can be helpful in their own ways.

Together, we call it HomeEquity2Income, and the combination can help you stay in your home as you build liquidity for possible long-term care costs, as well as boost income.

It also means you don't have to spend down the savings in your rollover IRA to qualify for Medicaid.

Here's how we put them together:

1. Set up a line of credit through HECM and purchase QLAC from rollover IRA savings:

2. Analyze standard configurations under HECM and QLAC and why they may not work for your retirement plan. The charts below demonstrate results from both a HECM and a QLAC on a stand-alone basis, as often presented to retirees.

In our view, while both are reasonable designs, they are not used most effectively for retirement purposes.

3. Use a new algorithm for a combination of a HECM and a QLAC (HomeEquity2Income, or H2I) to meet twin retiree objectives of increasing income and increasing liquid savings. At the same time, establish a building block for your retirement plan.

Testing H2I for legacy and historical rates

While income and liquid savings are two important elements of H2I, retirees may also consider the effect of H2I on the legacy they're providing to their spouse and other family members.

Also, the broad message for planning is not to try to predict the exact amount of savings or legacy for each homeowner, but to demonstrate the possible impact of the market performance on your own plan.

The illustrations above were based on industry standard fixed rates but, as covered in my article Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record, we believe it important to be able to Illustrate benefits based on historical performance.

By using historical rates, we are looking at the interplay of various product elements with real-world performance.

Looking at the expanded example of this combination, here's what we learned about each component:

• HECM's liquid savings grow dramatically when you stop drawing down from a line of credit and use a part of QLAC income to pay down the loan balance
• QLAC may be purchased in a laddered format to create increasing income before age 85. In limited situations, QLAC income may be accelerated before its original income start age
• And in combination, HECM and QLAC offer significant tax advantages, particularly in early retirement years

Use H2I as building block in a retirement plan with other savings

With H2I in place, the question becomes how we might further combine it with other retirement savings. Let's look at adding to H2I our sample retiree's rollover IRA savings ($800,000 after QLAC premium), personal savings ($1 million) and Social Security payments ($36,000 starting at 67).

While portfolio allocation is often a very personal decision, here's what our starting plan reflects:

• Allocation of $800,000 in IRA between stocks (growth) and bonds in a balanced portfolio
• Allocation of $1 million in personal savings among stocks (high dividends), bonds, and SPIA (single-premium immediate annuity)

What is the starting income this plan will support? Using H2I as a building block and the Go2Income planning algorithm, the starting income is $133,000. The plan assumes that income will grow at 2% per year.

With the $36,000 of Social Security benefits, the total starting income is $169,000. The retiree can, of course, refine the plan to increase income and lower the substantial amounts of legacy and liquid savings.

Long-term care scenario testing

The next step in the process was to test various H2I scenarios as they related to covering long-term care. That's particularly timely with greater longevity and increased responsibility of retirees, leading to coverage of more long-term care costs.

• The economic return for H2I in the 3.5% to 4.5% range is attractive, recognizing the major asset is the housing wealth, assuming a growth rate of around 4%. In one sense, the higher crediting rate on a QLAC is offsetting the higher HECM interest rate.
• In the scenarios above, we are able to generate additional income and cover $100,000 in LTC costs over five years from age 85 to 89. We would need to do some stress-testing for larger or different patterns of LTC expense. Of course, we should consider the resources from other retirement savings.
• The income tax effects are quite positive with all HECM drawdowns tax-free, QLAC income deferred until received and LTC costs being tax deductible. (See my article The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half.)

H2I for this sample investor can cover a reasonable amount of LTC costs while delivering higher income. The final planning steps include further testing to confirm results. Including a measure of income taxes, market risk and IRR (internal rate of return) before and after tax, we look at three qualities of the plan in our evaluation:

• Inflation protection
• After-tax income
• Stock market risk

For retirees, it means they no longer need to keep an eye on new caps for home equity or spend down all their other assets to qualify for Medicaid's LTC benefits.

Even for those who never considered Medicaid as an option, H2I provides an easier way to create wealth from retirement savings while aging in place.

Unlike product innovation in the past, these design changes don't require regulatory change, product pricing or design changes, or special servicing. Just stack these building blocks and assemble them as the plan instructs. Visit Go2Income, where you can start building your own plan.

Related Content

• The 75% Safety Net: How All-Asset Retirement Planning Helps Reduce Your Investment Risks
• It's Time to Redefine Retirement for Retirees With $500,000 to $5 Million
• Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan
• Does Your Retirement Plan Ignore Half of Your Net Worth?
• The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half

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

For years, the narrative around life insurance went something like this: Buy protection while you're young to replace your income so your family doesn't struggle if something happens to you.

And that message has clearly resonated. A good 51% of American adults say they have some life insurance coverage, according to LIMRA.

When it comes to buying life insurance, you have a choice. You could opt for a term life policy that offers limited coverage and no cash value accumulation. Or, you could buy whole life insurance, a type of permanent insurance that covers you for life and includes a cash value component. (Other forms of permanent insurance include universal and variable.)

While term life insurance holds appeal as the less expensive option, there's an inherent risk in buying it. In a nutshell, if you don't pass away by the end of your policy's term, you'll get nothing out of all of those premiums you paid (though you'll still be alive, so there's that).

With whole life insurance, you're guaranteed a payout. You can reserve the policy's death benefit for your loved ones upon your passing or tap your cash value for supplemental income in retirement.

In fact, you'll often hear whole life insurance touted as a useful retirement savings tool. But is it worth getting for that purpose?

Financial security that comes at a price

Life insurance is an inherently useful and important financial tool. But for many people, term life insurance can get the job done at a fraction of the cost.

Policygenius says that a healthy 30-year-old who doesn’t smoke might pay an average of $26 per month for a 20-year term life policy with a $500,000 payout. That same applicant would be looking at $450 per month for a whole life policy with the same benefit.

For this reason, proponents of whole life insurance tend to look beyond the "insurance" angle and incorporate whole life policies into the retirement planning equation. But while whole life insurance can provide policyholders with retirement income, it may not be the most efficient way to get there.

Whole life insurance lacks flexibility and efficiency in retirement planning

There are some use cases for whole life insurance in retirement planning. But Alex Langan, Chief Investment Officer and financial adviser at Langan Financial Group LLC, says point blank, "For most people in most situations, whole life insurance is not the right primary retirement savings vehicle. That's not a disclaimer. That's our honest assessment after working with clients across a wide range of financial situations."

For disclosure purposes, Langan Financial Group offers whole life insurance as part of its planning work, and in certain circumstances, advisers at the firm may be compensated for those recommendations.

The reason Langan doesn't usually recommend whole life insurance boils down to what the product is designed to do versus what long-term planners actually need.

"Whole life is built first around a permanent death benefit, with a savings component attached to it," Langan says. "Retirement planning is fundamentally about growth, flexibility, liquidity, and tax efficiency over time. Those aren't the things whole life is optimized for."

As Langan explains, whole life policies tend to grow more slowly than market-based alternatives. And since the costs are significant, especially in the early years, that's money that could instead go into an investment portfolio and generate stronger returns.

Derrick Schuler, CFP at Schuler Wealth Planning, agrees.

"Using whole life insurance as a retirement savings tool isn’t necessarily a waste of money, but there are much more efficient ways to save for retirement," he says.

Schuler formerly sold whole life insurance but no longer does. He makes recommendations on whole life insurance for clients, based on how it fits into their overall financial plan.

Schuler says that while whole life insurance accumulates a cash value that grows tax-deferred over time, "there are a lot of insurance costs, administrative expenses, and commissions built into the policy that can reduce the overall return on the cash value."

If retirement savings is the primary goal, says Schuler, then most people are usually better off first maximizing contributions to employer retirement plans, IRAs, and HSAs.

"These accounts generally offer lower costs, greater flexibility, and higher long-term growth potential than a whole life policy," Schuler insists.

Accessing funds from a whole life policy can be complicated

Another issue with using whole life insurance as a retirement savings tool, says Langan, is that accessing the cash value through policy loans or withdrawals comes with real trade-offs.

"Policy loans accrue interest and reduce the net death benefit while the loan is outstanding," he says. "If the loan is repaid in full, the policy can be restored to its original state. If it isn't repaid, the outstanding balance plus accrued interest is deducted from the death benefit paid to your beneficiaries."

Withdrawals work differently. They permanently reduce both the cash value and the death benefit and don't need to be repaid.

But, Langan cautions, "neither option works the way a straightforward account withdrawal does, and that matters when you're planning for retirement income flexibility."

There's also a timing issue Langan raises.

"Because of the way commissions and insurance costs are structured in permanent policies, it can take a meaningful number of years before the cash value exceeds what you've paid in," he explains. "That lag represents a real cost compared to other vehicles where contributions are working from day one."

When can whole life insurance actually make sense?

Langan says there are some scenarios where whole life insurance does make sense in the context of financial planning.

"The first is someone who has genuinely maximized every other tax-advantaged savings option available to them and is looking for additional ways to grow assets in a tax-efficient structure," he says. "At that point, the comparison set changes and whole life becomes more competitive relative to fully taxable alternatives."

Langan also says whole life insurance can fit into estate planning and legacy situations where a permanent death benefit is the actual objective.

"If someone needs a guaranteed death benefit regardless of when they die, and wealth transfer is a primary goal, permanent insurance makes structural sense because it's doing exactly what it was designed to do," he says.

Additionally, Langan says that whole life insurance could make sense as part of business planning. In that context, there are situations in which the guaranteed nature of the policy serves a specific functional purpose.

Of course, there's also a behavioral use case for whole life insurance.

"Some people know themselves well enough to recognize that they won't invest the difference between a term premium and a whole life premium," Langan says. "If the realistic choice is between a whole life policy that forces consistent contributions and builds cash value over time versus doing nothing because the money will otherwise be spent, a whole life policy is better than nothing."

But, Langan says, it's important to recognize that this still doesn't make using whole life insurance as a retirement savings vehicle an optimal financial strategy. Rather, he says, "It's a reasonable solution to a real behavioral challenge. There's a difference, and clients deserve to know which one applies to them."

Ultimately, Schuler says, it's important for savers to understand what life insurance is supposed to do — protect income, pay off debts, and provide for loved ones if something happens to them during their working years. Term life insurance can often provide that coverage at a fraction of the cost.

"For the average person looking to build wealth for retirement," Schuler says, "term insurance combined with disciplined investing will typically provide more insurance protection, more flexibility, and a larger retirement nest egg over time."

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If you have retirement savings in an IRA or 401(k), Uncle Sam is your partner on that money because every dollar you pull out of it is taxed.

Consider this common scenario: One spouse in a retired household passes away and the surviving spouse becomes a single taxpayer, which affects their overall tax liability, even though their income goes down.

Let's say the couple's total income was $200,000 a year. While they were married, this meant they had an effective tax bracket of about 15%.

When the husband passes away, the wife's income goes down to $180,000 because she loses the smaller of their two Social Security checks. But going forward, she will file as a single taxpayer, so she is now in the 20% tax bracket.

Additionally, if her RMDs and her income grow each year, her tax rate could keep climbing. And that doesn't even factor in future tax increases. (It's unlikely taxes will stay as low as they are now, considering our nation's debt of $39 trillion.)

Proactive tax planning could have helped protect her from the impact of higher taxes after losing her partner.

For retirees in higher tax brackets looking to help their spouse (or adult children) avoid this kind of tax trap in the future, partial Roth conversions now can help.

1. Protecting the surviving spouse

If you're a married couple, you're in a joint taxpayer bracket. And once both spouses reach age 65, you become eligible for specific additional tax benefits.

For example, with a taxable income of $148,300, you fall within the 12% tax bracket for married couples filing jointly after the deductions.

The $148,300 figure includes a $32,200 standard deduction based on your filing status. You would also receive the $3,300 additional standard deduction for both being over age 65 – this consists of $1,650 for each spouse, as determined by the One Big Beautiful Bill for taxpayers over 65. On top of this, there is an additional $12,000 bonus deduction for those over age 65 (up to a certain income limit).

However, when one spouse dies, the surviving spouse (usually the wife) jumps up to the 24% tax bracket.

If your income is higher, it's an even larger jump in taxes for the surviving spouse.

For example, if your taxable income as a married couple is $250,000 a year, you can see on the chart below that you're in the 24% tax bracket because you're "married filing jointly."

However, if the husband dies first, the surviving spouse is now a "single filer" with taxable income of $250,000. You can see she has now jumped up into the 32% tax bracket.

A Roth IRA may help protect the surviving spouse from higher taxes as a single taxpayer because you already paid the taxes while you were both alive as joint taxpayers.

2. Protecting non-spouses

When you die and leave your IRA to your children, they only have 10 years to empty your IRA completely.

Let's assume the IRA you leave to your children will earn 4% annual returns over the 10-year period after you leave it to them. This means that your children will have to take out approximately 14% of the IRA balance every year.

This would allow them to take out the 4% annual earnings along with 10% of the principal, so the entire IRA is drained over that 10-year period without a potential big tax hit in year 10.

However, this 14% annual IRA withdrawal could put your heirs in a higher tax bracket.

While a Roth conversion would mean paying income tax now, that could be a bargain compared to the potentially higher income tax brackets your heirs might have to deal with after you're gone — and any state income taxes they may also have to pay.

Additionally, if your children live in a state that has a state income tax (such as New York, which has a 10.9% top state tax bracket), they may be subject to federal income taxes and up to an additional 10.9% in state income taxes as well.

We use software called Holistiplan that helps identify the maximum amount to withdraw year by year to take advantage of today's tax brackets, and will work alongside an accountant or a tax professional.

When appropriate, we recommend our Strategic Roth Integration (SRI) plan to clients so that they can take advantage of today's income tax rates and never pay taxes on their Roth IRA again.

If you'd like to learn more, check out my new book, IRA Owners: Help Defuse Your Ticking Time-Bomb, co-authored with Steven Kao.

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

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

Dear Wealth Wise: As a retired 66-year-old, I find plenty of guidance on portfolio allocation but very little on asset location — how investments should be divided among taxable accounts, traditional IRAs/401(k)s, and Roth IRAs/401(k)s.

Many experts suggest a portfolio split such as 50% stocks (mostly U.S., with some international exposure) and 50% more conservative investments, such as bonds and money market funds. But there's far less discussion about where those assets should be held to maximize after-tax returns. I feel undereducated on the topic of asset location and would like more guidance on how retirees can optimize investments across accounts with different tax characteristics.
— Where Should I Stash My Assets?

Dear "Where Should I Stash My Assets?": Asset allocation is an important part of retirement planning. And you, as a 66-year-old retiree, seem well informed about how much of your portfolio should go into aggressive holdings like stocks versus stable or income-producing assets like bonds.

But your question is one that's not raised often enough — where do the assets actually go?

Mark Sanaiha, CFP, founder and wealth advisor at Macallen Capital, says he likes to tell clients to follow a simple rule.

"Put your least tax-efficient assets where the IRS can't touch them, and your most tax-efficient assets where they're built for low taxes."

Let's dig deeper into that strategy to answer the burning question of how to find the right home for your various retirement assets.

Assets that belong in a traditional IRA or 401(k)

Traditional IRAs or 401(k)s offer the benefit of tax-free contributions and tax-deferred gains while you're in the process of building wealth. In retirement, though, they become less tax-efficient, since withdrawals are taxable and required minimum distributions (RMDs) eventually kick in.

Cody Garrett, CFP, owner and financial planner at Measure Twice Financial, says, "Traditional pre-tax retirement accounts should generally hold tax-inefficient assets, such as taxable bonds, money market funds, REITs, and BDCs."

As Garrett explains, these assets tend to distribute ordinary income rather than qualified dividends and can have higher yields than equities.

Garrett also says that for many retirees, it makes sense to allocate most or all of their bond holdings to traditional retirement accounts. Doing so could shelter your bond interest from immediate taxes, which is important, since bond interest is taxed at ordinary income rates.

Assets that belong in a Roth retirement plan

Roth accounts are often touted as a shining example of tax efficiency. Though contributions are made with after-tax dollars, gains are completely tax-free, as are withdrawals. There are also no RMDs to worry about.

Because assets held in a Roth IRA or 401(k) aren't subject to tax gains, Garrett says, "Roth accounts are often best used for assets with the highest expected long-term growth."

If you have U.S. or international stock market funds and other growth-oriented equity investments, you may want to load them into your Roth.

Sanaiha says, "Your Roth IRA is your growth engine, … so don't waste that on cash or money markets."

Sanaiha also cautions that while it often makes sense to hold international funds in a Roth IRA, it depends on the fund.

"In some cases, the tax drag is comparable to a value fund, so we'll then consider traditional or Roth IRAs for placement," he says.

Assets that belong in a taxable account

With a taxable account (such as a standard, non-retirement brokerage account), there's no IRS benefit when you're contributing funds and building wealth. But there's flexibility. You don't have to worry about annual contribution limits, early withdrawal penalties, or RMDs. Still, it's important to choose the right assets for these accounts.

"Taxable accounts favor tax-efficient investments that produce little taxable income each year and receive long-term capital gains tax treatment on qualified dividends," Garrett explains. "Examples include low-turnover equity funds, such as U.S. stock market index funds. These investments often generate modest dividend income."

Garrett says taxable accounts can also be appropriate for holding crypto ETFs and other volatile assets.

"Investors can harvest capital losses if values decline, while long-term capital gains from securities held longer than a year receive favorable tax treatment," he says. "Many crypto investors instinctively place speculative assets in Roth accounts hoping for tax-free growth, but taxable accounts provide useful tax benefits if the investment performs poorly."

That said, many retirement investors may prefer to skip highly speculative investments like crypto, even with the tax-loss harvesting benefit.

Another attractive option to balance tax efficiency and liquidity needs is municipal bonds or muni market funds, which are exempt from federal income tax. Sometimes they may also be exempt from state or local taxes if they are for in-state bonds.

Assets that belong in an accessible bank account

Retirees are often advised to maintain a hefty cash cushion to cover emergency expenses or buy themselves the flexibility to leave their investment portfolios untapped during periods of market decline. This helps avoid locking in permanent portfolio losses.

Garrett says that from a tax-efficiency perspective, cash and money market funds are best suited for traditional retirement accounts since interest is taxed at ordinary income rates.

"That said, many retirees still prefer to maintain one to two years of liquidity in checking, savings, and other taxable accounts, sacrificing tax optimization for peace of mind," Garrett explains.

Your strategy may shift over time

It's good to go into retirement with a general framework of where to house your various assets. But Sanaiha says that just as your asset allocation might change over time, so too might some of your asset location decisions.

For example, since our reader is 66 years old, their RMDs will start at age 75 under the SECURE Act 2.0. They will have nine years to plan Roth conversions to reduce the risk that RMDs will force them into higher tax brackets.

Moreover, a retiree's asset locations will need to shift as asset allocations change. As you spend down your accounts, using the bucket or other retirement withdrawal strategies, your overall asset allocation will shift. If you spend all your taxable cash first, you may need to rebalance other accounts, which could trigger taxes.

"Asset location decisions should always be made in the context of your overall tax situation, RMDs, Social Security timing, and legacy goals," he says. "What's optimal at 66 may shift significantly by the time RMDs begin."

An evolving strategy, Sanaiha insists, could help you generate retirement income more efficiently while keeping the most money away from the IRS.

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

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For retirees and those closing in on retirement, understanding how to manage required minimum distributions (RMDs) is essential.

These government-mandated withdrawals must be taken from tax-deferred retirement accounts, such as traditional IRAs and 401(k)s, starting at age 73. Yet, as a longtime financial adviser, I've learned that many investors nearing that age aren't familiar with how RMDs work or prepared to deal with the extra taxes they can trigger.

Even those who know something about RMDs aren't always aware of recent rule changes or useful strategies that might help reduce their RMD tax burden. That means they could easily make costly missteps that impact their retirement savings.

What are RMDs?

The IRS doesn't allow retirement savers to keep money stashed in their tax-deferred accounts indefinitely. Once you turn 73, you must begin withdrawing a minimum amount annually (based on an IRS formula) and pay ordinary income taxes on that amount.

These mandated withdrawals are called required minimum distributions. And failing to take the appropriate distribution at the correct time can result in a hefty penalty.

The RMD rules apply to all tax-advantaged plans except Roth IRAs because those account owners have already paid taxes on their contributions.

Common mistakes with RMDs

1. Taking RMDs without advance tax planning

RMDs start at age 73 for most people born between 1951 and 1959. And those born in 1960 or later will start at age 75. But I recommend planning for these complicated withdrawals long before you're required to take them.

When you hear retirees complain about paying much more in taxes than they expected in any given year, it's often because they weren't ready for how RMDs would affect their taxable income.

For example, your RMD could push your income past the IRS threshold that determines whether your Social Security benefit will become taxable and at what percentage it could be taxed.

Your withdrawal could also trigger the income-related monthly adjustment amount (IRMAA), a surcharge on your Medicare premiums. Planning ahead could help you avoid these and other RMD-related tax traps.

2. Waiting until the last minute to take your first RMD

RMDs generally must be completed by December 31 of the current calendar year. In the year you turn 73, however, you'll have the option to delay taking your RMD until April 1 of the following year. (For example, if you're turning 73 in 2027, you'll have until April 1, 2028, to take your first RMD.)

But there can be consequences for postponing. If you decide to make two withdrawals in one year, your taxable income will likely be higher for that year, which could mean facing a steeper tax bill. Before you decide to double up, you may want to run the numbers to be sure it makes sense.

In fact, waiting until the last minute in any year could cause problems if you suddenly get busy, can't afford or simply forget to take your RMD.

If you haven't withdrawn the full RMD amount by the deadline, you could face a 25% penalty on the amount you haven't withdrawn. (That drops to 10% if the RMD is corrected within two years.)

If you decide to wait until the RMD deadline, you also may have to sell investments in a down market. Spreading out your withdrawals could help reduce market risk.

3. Forgetting inherited IRA rules

Planning to leave what's left in your accounts to your beneficiaries? They, too, will have to take distributions based on IRS rules. And they, too, could face a penalty if they don't correctly calculate and take their required withdrawals at the proper time.

The rules for when account beneficiaries must take RMDs vary based on the inheritor's relationship to the original account holder. A spouse who inherits a retirement account usually has more flexibility, for instance, when it comes to determining how soon RMDs will begin and how they'll be calculated.

But most non-spouse beneficiaries are required to empty their inherited account and pay taxes on this income within 10 years of the original account holder's death. Which means adult children often end up having to take RMDs from an inherited account during their highest-earning years.

If you expect to leave money in a 401(k) or similar account to your loved ones, it's important that they have a chance to do their own tax planning. Your financial adviser should be able to suggest strategies to help them maximize your generous gift.

4. Missing out on qualified charitable distribution opportunities

It may be difficult to predict exactly how much your RMDs will be from year to year — or how much they might impact your taxes. But just knowing they're coming will give you an opportunity to prepare.

If charitable giving is part of your financial plan, a qualified charitable distribution (QCD) can help you further your philanthropic goals and reduce the tax hit from your RMDs.

QCDs allow individuals age 70½ and older to make tax-free donations directly from an IRA to a qualified charity, potentially satisfying all or part of the annual RMD amount due from their eligible accounts.

A QCD doesn't offer a tax deduction, but the amount of your QCD won't be included in your taxable income. And you can make a QCD from several different types of tax-deferred retirement accounts — although there are rules regarding using a SIMPLE or SEP IRA, and you can't make a charitable contribution from a workplace retirement plan, such as a 401(k).

5. Ignoring Roth conversion strategies before RMD age

Converting a traditional IRA to a Roth IRA can help you avoid RMDs altogether — or at least lower the amount you'll have to withdraw each year.

Unlike traditional IRAs, Roth IRAs don't require that you take RMDs during your lifetime. This means you can keep your money invested for as long as you want, allowing it to grow tax-free. And if you pass on a Roth IRA to your heirs, they can take their RMDs tax-free.

Of course, you'll have to pay taxes on the amount you convert, so timing — and planning well in advance of your RMD age — is important. Minimizing your income sources in the year you plan to do the conversion can help keep your tax liability as low as possible.

Many retirees find the "sweet spot" for completing a conversion is after they've stopped working but before they begin receiving Social Security benefits or pension payments.

Your adviser can help you determine if and when a Roth conversion makes sense for your needs.

Don't put off RMD planning

If you expect to withdraw the IRS's required amount — or more — each year to cover your living expenses in retirement, RMDs may not be a concern for you. But if RMDs will impact your income, tax and estate planning, you may want to seek guidance.

The rules are complex, and making a mistake can be expensive.

The IRS website offers basic information regarding the overall RMD regulations. But if you want more specific advice and ongoing support, consider talking to a financial adviser ASAP.

Kim Franke-Folstad contributed to this article.

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

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

Retirement planning tends to get treated as a math problem: Should we retire with $2 million or $3 million? Can we spend $7,000 a month or $9,000 a month? Should we claim Social Security at 62 or 67?

Those questions matter. After years of helping people work through retirement plans, though, I've noticed that the couples who struggle most aren't always the ones who got the math wrong. They're the ones who never had the harder conversations.

They assumed they were on the same page about the big money decisions. Then, with retirement suddenly in view, they discovered they had completely different pictures in their heads.

One partner was imagining travel and adventure. The other was counting on staying close to family. One had already mentally quit their job. The other assumed they'd both work part-time for years. None of it surfaced until it was almost too late to plan around.

A few meaningful conversations, well before you hand in your notice, can change that. Not just for your relationship, but for the quality of your financial plan. When you and your partner understand each other's priorities, the plan you build can reflect what both of you want, not just what one of you assumed.

1. What does retirement look like for you?

Start here, before you analyze a single number.

Ask each other: What does a great day look like once we're not working? What do we want most in the first ten years of retirement? What do we want to make sure we don't miss?

In my experience, couples are often closer on this than they expect. I've sat with partners who came into the conversation thinking they wanted completely different retirements. One wanted adventure and outdoor travel. The other wanted family time and one meaningful trip each year.

When they finally talked it through, the overlap was bigger than either had assumed. They agreed on more travel early, especially with family while everyone was still healthy, then a slower rhythm later.

That shared picture became the foundation for everything else.

If you haven't had this conversation yet, have it before you do any serious retirement modeling. The numbers should serve the vision, not the other way around.

2. How do you and your partner think about money?

Money values don't always surface until markets drop or a major financial decision lands on the table. In retirement, that's too late to be caught off guard.

A lot of those values trace back further than most couples realize. Someone who grew up in a household where money was tight, where a job loss or medical bill created real hardship, often carries a deeply cautious relationship with spending and risk. Their instinct is to protect what they have.

Someone who grew up in a more financially stable environment, or where conversations around money were fruitful, may feel far more comfortable letting a portfolio ride through volatility.

I've seen couples who had managed their finances together for decades suddenly disagree sharply when markets fell 20%. One wanted to pull back and preserve what was left. The other wanted to stay the course and let the portfolio recover.

The disagreement wasn't really about the market. It was about two very different relationships with financial security, shaped long before they ever met each other.

Ask each other:

• How much of a cash cushion would help you sleep at night?
• How flexible are you willing to be with spending if things get tight?
• How much financial risk are you willing to accept in exchange for a potentially higher income in retirement?
• If one of us wanted to make a large unplanned purchase, how would you want to handle that conversation?

A partner who is naturally conservative with money and one who is comfortable with more equity exposure can absolutely build a plan together. They just need to have talked about it first.

This is also a conversation where working with a financial professional can help. Sometimes it takes an outside expert to help two people with different money values land on a plan they both feel comfortable with.

3. When do you really want to retire?

This is often where fear and anxiety show up. One partner worries they're retiring too soon. The other wonders if they'll ever get to stop working. The conversation feels loaded, so couples tend to avoid it.

The better approach is to be direct: When do you picture leaving full-time work? Does part-time feel right as a transition? What makes you nervous about the timing, and what makes you excited?

I worked with a couple, both in their early sixties, who had never really compared notes on retirement timing. He assumed they'd both work until 65. She had quietly been hoping to stop at 62. Neither had said it out loud. When they finally did, they realized they were close enough to build a real plan around.

They modeled retiring at 63 and 61, with the husband doing some part-time consulting for one year as a transition. Their Boldin plan showed a very strong chance of success (often referred to in the financial planning industry as a Monte Carlo score).

They ran a second version with no part-time income at all. That scenario still came back above 80%. To them, a one-in-five chance of ever needing to make a modest planning adjustment, like trimming discretionary spending during a rough stretch in the market, felt entirely manageable. What had originally felt like a daunting conversation became a confident plan in a single afternoon.

That's the value of running the numbers. When couples can see what different timing scenarios look like, the fear tends to give way to something more useful: A real decision they can act on.

4. Where do you want to live?

Where you live in retirement touches almost everything: Lifestyle, cost of living, proximity to family, state income taxes and emotional ties to a community you may have spent decades building.

Ask each other:

• Do you want to stay where you are?
• Would downsizing make sense?
• Is there somewhere else you've always wanted to live, or a second home worth exploring?
• If moving closer to family becomes a priority, when would that realistically happen?

This conversation can carry more emotional weight than couples expect. The family home means something. So does the idea of being nearby when grandchildren start arriving.

I've seen couples who were completely settled on staying put change their thinking the moment a grandchild entered the picture. Suddenly, the question wasn't whether to move, but when. That shift has real financial implications worth planning around before the emotions of the moment make the decision for you.

Moving to a different state, for instance, can have a significant impact on how retirement income is taxed. Some states exempt Social Security, pension income or IRA withdrawals entirely. Others tax all of it. A move that feels modest on paper can look very different once you account for those differences.

If there's a potential move in the back of either partner's mind, whether that means downsizing, relocating or buying a second home, surface it now. Treating it as a real option in your planning, even a tentative one, gives you a much clearer picture of what retirement could look like.

5. How do you protect each other later in life?

I saved this one for last, because it's usually the conversation couples save for last, if they have it at all.

Nobody wants to sit across from their spouse and talk about who's likely to outlive whom. The financial decisions you make now, around longevity and Social Security, will determine how well the surviving spouse is protected when that happens.

Start with longevity assumptions. There are several life expectancy tools that factor in family history, health habits and current age. Use them as a starting point, then consider building in a scenario where one partner's longevity is shorter than expected.

Not because you're planning for the worst, but because you want to understand the financial impact on whoever might be left with a longer retirement ahead.

Next, look carefully at Social Security timing. Most couples default to claiming at full retirement age without running the numbers on what delaying might do. Waiting to claim until 70 can significantly increase the monthly benefit and provides a stronger guaranteed income stream for whoever lives longer. When one spouse passes, the surviving spouse keeps the higher of the two benefits. That decision is one of the more powerful tools available for protecting each other.

Long-term care is the other piece most couples avoid. Roughly 70% of people turning 65 today will need some form of long-term care during their lifetime, whether that's in-home assistance, assisted living or memory care.

The costs can be significant, and they tend to arrive at exactly the moment a portfolio can least afford a large, unplanned withdrawal. Some couples self-fund by setting aside a dedicated reserve. Others explore long-term care insurance or hybrid life insurance policies with a long-term care benefit.

What matters most is having the conversation before a health event forces it.

Start the conversation, then build the plan

These can be some heavy conversations, so don't feel the need to tackle them all in one sitting. Starting with these five, though, gives you a strong foundation and a shared sense of direction.

When you know where each of you stands, the retirement plan you build reflects both of you, not just a set of numbers one partner entered into a planning software or spreadsheet.

For couples, retirement planning should not be a solo endeavor. The plan that holds up isn't the one with the biggest portfolio. It's the one both partners built together.

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

Will you live to 100, or do you think you're more the mid-80s type? What about full retirement age? Will you make it there?

Who knows, but judging from the numerous articles, podcasts, TV shows and books about longevity, it sure looks like we are supposed to know or at least have a good sense of how long we're likely to live. If we get the math wrong, we face a retirement shortfall — or we pass away before ever enjoying the money we sacrificed to save.

To play it safe, most financial advisers suggest saving as if you'll live to age 92 for men and 94 for women. However, that baseline doesn't help you decide when to claim Social Security or whether to take a pension as a lump sum vs lifetime payments. It also won't tell you if life insurance is really worth the cost. That's why longevity is such a huge topic; without knowing your own, you're essentially flying blind when it comes to planning for your retirement.

"What happens if you die too soon? You want to have something to cover your family and loved ones when you are no longer here," says Kristin Cook, chief underwriting officer at National Life Group. "Or what if you live too long? How much do you really need to live the type of lifestyle in retirement you want to have?"

How can you tell if you have longevity on your side? From your family tree to your daily habits, here are four ways to know.

1. Your parents and grandparents lived long, healthy lives.

When determining longevity, one of the first things financial advisers, actuaries and underwriters look at is your family tree, which includes information about your parents, grandparents and siblings.

"The overall health of your parents and grandparents plays into a lot of important health factors," said Cook. "Indicators of mortality are genetically based. Cancer, any cardiac risk, high blood pressure and high cholesterol can be passed on from generation to generation."

Other hereditary factors that can influence longevity include:

• Family history of Type 2 diabetes and metabolic diseases
• Genetic predispositions to Alzheimer's disease or dementia
• Autoimmune disorders like rheumatoid arthritis or lupus
• Inherited longevity genes, such as those affecting cellular repair and inflammation

2. You prioritize clean eating and daily movement

Even if your parents and grandparents lived until 100, that doesn't guarantee you will too. Genetics plays a big role in longevity, but so does lifestyle.

According to a study published in the journal Science, roughly 50% of lifespan is determined by lifestyle and environmental choices.

"Are you eating steak and drinking whiskey every night?" said Eric Ludwig, director of the American College of Financial Services Center for Retirement Income. "You have to consider your lifestyle choices" when thinking about longevity.

Some of the lifestyle factors that can influence your longevity include:

• Diets high in saturated fats and ultra-processed foods
• A chronic lack of physical activity and sedentary habits
• High levels of unmanaged stress, which elevate long-term cortisol
• Heavy alcohol consumption, drug use or tobacco use

"Certainly, a person's health matters. Are you active or obese? Do you take care of yourself? What kind of retirement lifestyle are you living?" said Kelly Regan, a Vice President and financial planner at Girard Advisory Services.

"The previous generation sat in their recliners and watched daytime shows and led a non-active lifestyle," she said. "A lot of people live more active lifestyles now and have better brain and body health."

3. You have strong social connections

Loneliness can kill, which is why it's a factor that impacts longevity. Studies have consistently shown a clear correlation between early death and a lack of social connections.

"I find that clients who struggle (with social connections) tend to live shorter lives," said Regan.

Some of the effects of loneliness on longevity, according to the World Health Organization, include:

• Risk of stroke
• Heart disease
• Diabetes
• Cognitive decline
• Premature death

On the flip side, the WHO says social connections can protect your health across your lifespan by reducing inflammation, lowering your risk of serious health problems and fostering positive mental health.

4. You get a good night's sleep and move during the day

Do you toss and turn all night? Do you spend your working days sitting at a desk? If you answer yes to one or both of these questions, you could be shortening your lifespan.

"Sleep is a really big factor," said Cook. Plus, "there have been many studies that sitting all day is just as bad as smoking a pack of cigarettes."

Sleep is particularly important for your body to repair. But just how crucial is sleep for longevity? A recent study of 172,000 adults found that men who got enough sleep lived five years longer than men who didn't. For women, getting enough sleep gave them two additional years of life. How much sleep is ideal? About seven hours, experts say.

Getting too little sleep can impact your longevity in the following ways:

• Disrupted cellular and DNA repair, which accelerates biological aging
• Chronic systemic inflammation, which is a known cause of cardiovascular disease
• Impaired brain toxin clearance, which increases long-term risks for neurodegenerative diseases like Alzheimer's
• Metabolic dysfunction, which increases the chances of developing Type 2 diabetes

Inactivity during work can impact longevity in the following ways, according to the Mayo Clinic:

• Lead to obesity
• Raise the risk of death from heart disease and cancer
• The same risk of dying as smoking
• Causes metabolic syndrome

The good news is you can mitigate some of the negative impact by standing at intervals during the workday and getting 60 minutes of daily exercise.

Live but be aware

Longevity is important to financial planning, but nobody knows for sure how long they will actually last on this earth. That's why understanding these biological and lifestyle factors is so integral.

Understanding your own capacity for longevity can help you find a balance between planning for a lifetime and living like there's no tomorrow.

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More and more retirees are "retiring" from retirement.

Data from the National Institute for Occupational Safety and Health shows the number of retirement-age Americans in the workforce is growing.

And in a survey by Asset Preservation Wealth & Tax, 51% of respondents who'd reached retirement age said they plan to work indefinitely.

The reasons for retirees planning to work into their later years vary. Some simply have to from a financial perspective, while others want to live an active, purposeful life.

However, working during retirement brings challenges and trade-offs, especially when it comes to Social Security benefits, taxes and healthcare. The decisions you make about when to start claiming Social Security and whether you plan to keep working can have lasting consequences.

The pitfalls of claiming Social Security too early

A common phrase we hear is, "I'll just take my Social Security benefits at age 62." While it's true this is the first age you can start claiming benefits, doing so can backfire, particularly if you keep working.

If you claim and continue working before reaching your full retirement age, which is between 66 and 67 depending on your birth year, a portion of your benefits may be temporarily withheld owing to Social Security earnings limits.

For 2026, you can earn up to $24,480 before benefits will be withheld. In the year you reach full retirement age, the earnings limit increases to $65,160. After you reach your full retirement age, there are no earnings limits.

Upon reaching full retirement age, your benefit amount will be recalculated to give you credit for any benefits reduced and withheld.

Additionally, once you've started collecting Social Security, stopping and starting benefits is complicated and can permanently reduce your lifetime payments. It's not a switch you can easily flip on and off.

Bridging the healthcare gap: Age 62-65

Another major issue for people who claim Social Security benefits early is healthcare. Medicare eligibility doesn't begin until age 65, so if you leave your employer's health plan and retire at 62, you'll need to find coverage on the open market, which can get expensive.

Working part-time may provide access to employer healthcare, but that could put you at risk of exceeding the Social Security income limits. You could turn to private insurance, but the premiums can easily use up a large portion, or even all, of your Social Security check.

The three-year gap between age 62 and 65 is one of the most overlooked in retirement planning. I recommend sitting down with a financial adviser to go through all of your options before claiming early and potentially setting yourself up for financial failure, watching sky-high out-of-pocket premiums drain your savings faster than expected.

Income, taxes and the cost of working in retirement

Even after reaching full retirement age, when the Social Security earnings limit no longer applies, income from work can still impact your finances. That's because it depends on your total income.

If you're single and your combined income, the sum of your adjusted gross income (AGI), non-taxable interest and half of your Social Security, exceeds $25,000, or $32,000 for married couples, up to 85% of your Social Security benefits may be taxable.

In other words, the more you earn from working, the more you may have to give back in taxes. It's not necessarily a reason to stop working, but it does highlight the importance of strategically coordinating your income sources.

Knowing when to claim

Many people think waiting to claim Social Security until age 70 is always the best option, since benefits grow by about 8% each year after full retirement age until age 70. While that may maximize the amount you receive every month, it's not right for everyone.

For some retirees, the time value of money may matter more. For example, some may start taking benefits at 67 or 68 and use that income strategically by reinvesting it, reducing portfolio withdrawals or using it to strengthen their overall retirement cash flow.

There's also a break-even point, where the total amount collected by claiming early can surpass what you'd get by delaying. For married couples, it often makes sense to strategically stagger claims, with one spouse claiming earlier and the other delaying for a higher survivor benefit.

At the end of the day, there's no one-size-fits-all when it comes to claiming Social Security. It all comes down to finding the right balance of longevity, income needs and your overall financial plan.

Social Security should supplement, not replace, your income

Social Security was never designed to be the sole source of retirement income. It was meant to supplement, not replace, your paycheck.

You will likely need around 70% of your pre-retirement income to maintain your current lifestyle, and Social Security was only meant to cover about 40% of that.

That isn't to say Social Security doesn't matter. After all, those benefits come from decades of contributing payroll contributions. It's money you've earned. While the benefit may not be life-changing, it can still help cover major expenses, such as housing, travel or healthcare.

The importance of having a plan for claiming Social Security

Working in retirement can be incredibly rewarding, personally and financially. But it also requires strategic planning, especially if you plan to claim Social Security early.

Deciding when and how to claim Social Security is one of the most important financial choices retirees make because reversing your initial decision can be complicated and costly.

Before you claim, make sure you understand how your job, income and healthcare could affect your benefits. Working with a financial professional who can help you strategize Social Security with your overall financial plan can make a big difference. The right timing and strategy can help you keep more of what you've earned and lead to a more confident retirement.

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

Many people don't begin planning for retirement until later in life. Saving earlier can feel financially difficult or secondary to more immediate priorities.

But delaying retirement investing comes at a significant cost: time.

Even modest investments made early can grow substantially through compound returns. The longer money remains invested, the greater the opportunity for growth and long-term financial security in retirement.

Household wealth in the United States is highly concentrated. The top 10% of households hold most household wealth, while the bottom half own only a small share.

One major driver of this divide is access to assets early in life and the long-term power of compounding investments. These differences often begin in childhood.

Children who grow up with savings or investment accounts are more likely to learn the basics of managing and investing money. They might hear conversations about markets at the dinner table or learn early how compound growth works. Over time, those experiences can shape confidence, financial habits and long-term participation in investing.

Many children, however, don't have those advantages. They enter adulthood without access to financial assets or foundational financial education.

As a result, many begin working without understanding the value of a 401(k), long-term investing or how small, consistent contributions can grow over decades. The result is a head start for some and a delayed starting line for others.

That is why proposals for child investment accounts are generating renewed conversation around early wealth-building and financial capability.

The Trump Accounts or 530A accounts create $1,000 pre-seeded investment accounts for children at birth. The broader principle behind them is straightforward: The earlier investing begins, the more powerful its long-term impact can be.

Educational tools should accompany these accounts. Free educational programs such as the SIFMA Foundation's Family InvestQuest™ and Summer Stock Market Game™ can help families build financial knowledge alongside saving and investing habits.

The power of time in investing

One of the simplest truths in finance is also one of the most important: Time is an investor's greatest advantage. The reason is compound growth — investment returns generating additional returns over time.

Consider a simple example. If $1,000 were invested at birth and earned an average annual return of 7%, that single deposit could grow to roughly $3,400 by age 18 without adding another dollar.

If family members contributed an additional $50 per month, the account could grow to about $25,000 by age 18.

If those contributions continued into adulthood, the balance could grow to more than $500,000 by age 59½.

The lesson is clear: Starting early often matters more than investing large amounts later.

But access to that early starting point is not equal for all families.

The growing conversation around early asset-building

Policymakers and financial educators have increasingly explored ways to expand access to investment accounts earlier in life.

Proposals for child investment accounts are built around a simple concept: Create an investment account at birth, provide an initial deposit and allow families, friends or employers to contribute over time.

Similar programs have been tested in several states and cities. Research highlighted by the Milken Institute suggests these child savings accounts or child development accounts are associated with improved financial security, stronger educational outcomes and higher long-term earnings potential.

Children with savings accounts are more likely to attend college, develop stronger savings habits and build greater financial confidence as young adults.

Even relatively small balances can grow meaningfully over nearly two decades. But the benefits might extend beyond the dollars themselves.

When children grow up knowing they have an investment account, they could begin to see themselves as participants in the financial system and future long-term investors.

Access and education must go hand in hand

Expanding access to investment opportunities is only part of the equation. Financial education is equally important.

Through programs such as the SIFMA Foundation's Summer Stock Market Game™ and Family InvestQuest™, families can learn the fundamentals of investing — including diversification, market volatility and long-term planning — in an engaging and accessible way.

Participants manage simulated portfolios using real market data while learning concepts such as asset allocation, risk management and long-term investing.

Research on SIFMA Foundation's financial education programs has found that participants demonstrate improved financial knowledge, greater confidence in investing and stronger engagement with economic concepts.

Such experiences can help demystify investing and prepare young people to make informed financial decisions and avoid when they begin managing real assets.

Financial education can also help young people understand the long-term impact of compounding and the value of beginning retirement investing early.

A step toward a more inclusive financial future

No single policy will close the wealth gap or solve decades of structural inequality. Financial security depends on many factors, including education, income stability, savings habits and access to financial tools.

But initiatives that encourage early asset-building and financial education represent a meaningful step forward. They expand participation in investing, introduce financial concepts earlier and allow time — one of the most powerful forces in wealth creation — to work in the next generation's favor.

For families, the lesson is simple: The earlier conversations about saving and investing begin, the greater their long-term impact can be.

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

Financial advisers spend a lot of time talking about risk, whether that's market risk, inflation, longevity, tax, sequence of returns, concentration, long-term care … The list seems endless.

But clients don't necessarily experience retirement risk as a category on a planning report. They experience it as a knot in the stomach:

• What if I run out of money?
• What if I become a burden to my children?
• What if I retire and lose my identity?
• What if my spouse dies first?
• What if the market falls right after I stop working?
• What if I need care and there is no good place for me to go?

For financial advisers, these fears can be frustrating if they appear to contradict the numbers. The plan may be strong. The portfolio may be diversified. The Monte Carlo analysis may look solid. The client may have more than enough. And yet the fear is real.

That is where the adviser's work becomes more human. The best advisers don't simply tell clients not to worry. They help clients understand which worries are emotional noise and which ones are pointing to real planning gaps.

That is the difference between fear that paralyzes and fear that prepares.

Start by normalizing the fear

Billy Spencer, a wealth manager at Crestwood Advisors in Boston, says fear can be viewed as a feedback mechanism. "The question is not whether a client feels fear. The question is whether the fear is controllable and actionable," says Spencer.

That framing can be powerful.

Clients approaching retirement are often stepping into unfamiliar territory. For 30 or 40 years, the work rhythm was clear: Earn, save, invest, repeat.

Retirement changes the assignment. Now clients must spend from assets, make healthcare decisions, think about housing, prepare for aging and build a life that may no longer revolve around professional achievement.

For high-performing executives and business owners, that can be especially unsettling.

Jeff Blomgren, managing partner and co-founder at Mountain Legacy Family Wealth Partners in Colorado, works with many executives who have accumulated substantial wealth. In his experience, the issue is not always whether they can afford to retire. It's what retirement will ask of them emotionally.

• What will I do with my time?
• How will I stay challenged?
• How will my relationships change?
• How do I remain useful?

Those are not soft questions. They are central retirement questions. Advisers who ignore them may miss the real source of client anxiety.

Separate emotional fear from planning risk

A client's fear of running out of money may mean several different things. It may mean the client truly has not saved enough, or the withdrawal rate is too high. It may mean the portfolio is poorly positioned, or the client has not planned for long-term care.

Or it may mean the client grew up in a household where money was scarce and cannot emotionally trust abundance, even when the plan is sound. The adviser's job is to help tell the difference.

Bob Dietz, a wealth strategist at Bernstein Private Wealth Management, works with high-net-worth and ultra-high-net-worth clients on issues such as tax planning, portfolio stress-testing, wealth transfer and retirement income. "Healthy fear often points to a planning gap. If the fear causes the client to focus, engage and take action, it can be constructive," he says.

That may mean stress-testing the plan under poor capital market assumptions, and modeling life expectancy, taxes, inflation and spending. It may mean looking at the impact of Roth conversions, charitable strategies, required minimum distributions or concentrated wealth created through a business sale.

For wealthy clients, the fear may not be, "Will I be poor?" It may be, "What am I missing?"

Use the plan as a compass, not a verdict

Monte Carlo analysis to stress-test a portfolio can be useful, but should not be presented as a magic bullet. Clients may not fully understand probabilities, and even an 85% or 90% success rate can leave them wondering about the other 10% or 15%.

Spencer describes planning as a compass. It helps clients make adjustments as life unfolds. That is a healthier message than presenting a plan as something carved in stone.

Retirement may last 25 or 30 years. Markets, tax laws and clients' health, family needs and goals will all change.

A good adviser can help clients expect that change instead of fear it. That may include regular reviews, updated projections and plain-English conversations about trade-offs.

Can the client spend more? Give more? Retire sooner? Work part time? Buy the second home? Help a child with a house down payment? Pay for grandchildren's college? Move into a life care community?

The point is not to eliminate uncertainty. It is to make uncertainty more manageable.

Build liquidity clients can believe in

One of the simplest ways to reduce retirement fear is to give clients a clear answer to this question: Where does my spending money come from if markets fall?

Jason Dall'Acqua, CFP®, founder of Crest Wealth Advisors in Maryland, uses planning tools, stress tests and reserve strategies to help clients understand how they can fund several years of spending without being forced to sell long-term assets in a downturn.

Blomgren describes a bucket strategy that may set aside three to five years of essential expenses in safer assets while allowing the rest of the portfolio to remain invested for longer-term growth.

That kind of structure can help clients stay disciplined. It also gives advisers language they can use during volatility: We planned for this. This is why the reserve exists. This is why the portfolio is not built around one market environment.

That does not remove fear. But it can keep fear from turning into panic.

Address the fear of spending

Many retirees need help not only with saving and investing, but with spending.

This can be especially true for clients who built wealth through discipline, frugality and restraint. The habits that helped them accumulate assets may make it difficult to enjoy those assets.

Dall'Acqua says helping clients feel comfortable spending, gifting or giving to charity can be one of the most rewarding parts of the job. But it often requires more than showing a projection. It requires conversations about values:

• What is the money for?
• What experiences matter while the client is healthy?
• What would be more meaningful — leaving a larger estate later or helping children and grandchildren now?
• What charitable causes reflect the family's values?

A healthy fear of running out of money may lead to better withdrawal planning. But an unhealthy fear may cause clients to lead a less-than-fulfilling retirement. Advisers can help clients find the middle ground.

Bring family and legacy fears into the open

Many retirement fears are really family fears:

• Will my children handle inherited wealth responsibly?
• Will one child feel treated unfairly?
• Should I help my grandchildren now?
• How do I talk about money without creating entitlement?
• Who will make decisions if I cannot?
• Will my spouse be prepared if I die first?

These concerns can lead to better planning if advisers know how to guide the conversation.

Blomgren encourages clients to think about supporting family during life, not only through inheritance. That might include education funding, help with housing, charitable giving through a donor-advised fund, or family conversations where younger generations have a voice, even if they don't have a vote.

"Advisers don't need to become a family therapist, but we can create the structure for better conversations," says Blomgren.

Don't ignore health, housing and cognitive decline

Some of the hardest retirement fears involve health.

Clients may have watched parents struggle with care decisions. They may fear dementia or becoming a burden to adult children. They may assume they can age in place, even if their home, location or family situation makes that difficult.

Spencer says these conversations often work best in smaller pieces:

• Who would you want involved if your health changed?
• Are your health care proxy and power of attorney documents current?
• What would quality care look like?
• What housing options would you consider?
• What would aging in place require?

For some clients, the answer may involve self-insuring. For others, insurance, home equity, a second-home sale or a continuing care community may be part of the plan.

The details matter less than the willingness to have the conversation before a crisis.

The adviser's soft skills are now planning skills

The future of financial advice is not just better software, better tax analysis or better portfolios. It is also better listening.

Clients need advisers who can validate concerns without amplifying panic. They need advisers who can say, "That is a reasonable fear. Let's see what it means in your plan."

That takes behavioral knowledge, empathy and patience. It takes the ability to translate complex planning into decisions clients can live with.

Fear will always be part of retirement. The question is whether advisers can help clients use it well.

Healthy fear should lead to action: A stronger plan, a clearer estate strategy, a better cash reserve, a more honest family conversation, a smarter tax strategy, a more realistic housing decision or a more intentional life.

Clients do not need to be fearless. They need to be prepared.

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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 great sports images in recent years shows golfer Rory McIlroy on his knees on the 18th green at Augusta, head bowed, mouth open in a roar, releasing the past. After 17 attempts and several famous heartbreaks, he had finally won the Masters.

The photograph is remarkable in its own right. What makes it more so is who took it. The perfect angle and perfect moment, it’s the kind of frame you’d expect from a career photojournalist. But it was a guy still learning the trade, who also happens to be Hall of Fame baseball legend Ken Griffey, Jr.

Griffey, who has appeared on 24 Sports Illustrated covers, described himself at the Masters as "the low man on the totem pole." A beginner.

No matter what you used to be, retirement asks something hard of nearly everyone. When you step away from the operating room, the classroom, or the corner office, you’re asked to learn how to be a beginner all over again.

Not everyone is ready for it. A 2026 survey from the Transamerica Center for Retirement Studies found pursuing hobbies as one of the top three things workers dream about for retirement, behind only travel and time with family.

But the transition can be harder than the dream suggests. In her book Rethinking Retirement for Positive Ageing, researcher Denise Taylor concludes that up to one-third of retirees find the transition either stressful or notice a decline in well-being, with another 10-25% experiencing real adjustment difficulties, including mental health complications.

As Griffey put it to the New York Times: “I think it’s all about getting better and trying to learn things. If you get stuck or you only do one thing, your mind is going to die. I like taking pictures. So why not learn to take better pictures?”

The hardest thing about retirement, for many, may not be the math. It’ll be doing something you’re not yet good at and sticking with it long enough to get better. But experts say the people who do tend to come out the other side with a better retirement.

The challenge of beginning again in retirement

For most of your career, you’re rewarded for your expertise. Retirement can mean the opposite — to walk into a pottery class, a Spanish lesson or a pickleball court as the worst person in the room.

"The biggest obstacle to becoming a beginner is fear, especially the fear of looking incompetent," says Joe Casey, founder and retirement coach at Retirement Wisdom. "Many people haven’t been bad at something in decades. Becoming a novice again can rattle you at first."

For years, your value was tied to having the answers. Being a novice forces you to confront who you are when you don't.

Casey recommends a small reframe: stop calling it a retirement hobby and start calling it an experiment. "When you call something an experiment, the pressure drops. You’re not performing for something with a score or a grade. You’re just exploring."

The research backs the instinct. Stanford psychologist Carol Dweck’s decades of work on "growth mindset" (the belief that ability is built rather than fixed) finds people who view themselves as learners are more resilient and open to new experiences.

And a study from the University of Texas at Dallas’s Center for Vital Longevity found older adults who took up genuinely new and demanding skills, like digital photography or quilting, showed measurable memory gains compared with a control group doing familiar leisure activities.

In other words, the discomfort of being new wasn’t the price of admission. It was the part that did the work.

Mastering the switch from saving to spending

Besides personal pursuits, there’s a second skill with which retirees often feel like beginners: spending. After decades of trying to get a number to go up — saving more, deferring gratification, watching the balance grow — retirement is a time to flip the relationship.

"Retirement is arguably the first time in a person’s adult life that being a beginner is financially safe," says Jeff Judge, CFP® and managing partner of Chesapeake Financial Planners. "Most people have never practiced it."

And many never get comfortable with it. A recent Morningstar report notes that retirees following typical "safe" strategies — withdrawing only dividends and interest, taking just their RMDs, or sticking to the 3.9% base-case withdrawal rate — tend to finish 30-year retirements with significant balances left over.

Judge sees it constantly. One client with more than $2 million in investable assets called him in a near-panic after buying a $4,000 piece of furniture. “He'd done nothing wrong. But the number went down, and that felt like failure. The money was built as a score, not a tool.”

The pattern shows up at every wealth level. "Someone might have $8 million and agonize over booking a first-class seat," says Mitchell Kraus, CFP® and founder of Capital Intelligence Associates. "Hoarding capital you'll never spend isn’t prudence, it’s waste of a different kind."

What seems to break the spell is the same interventions that help people stick with a new hobby, such as structure and repetition. Several advisers described setting up automatic monthly transfers that look and feel like the paychecks clients used to receive while working. After a year or two of watching the numbers work as designed, the anxiety eases.

The two halves of the retirement-beginner problem are really the same problem. Brenna Baucum, CFP® and founder of Collective Wealth Planning, observes: "Retirement is often the first time in decades that highly accomplished people have to be beginners again. The clients who thrive are usually the ones who embrace that reality rather than resist it."

How to excel as a 'beginner'

A few practical moves can help you get through the beginner phase.

A good place to start is among peers. "The people who push through rarely do it alone," Casey says. "They join a group and learn from others who remember what it felt like to be new. Belonging comes first, before building confidence." In-person, low-stakes group settings, such as community art schools or beginner leagues, can help produce more durable engagement than learning solo.

Most people who quit an activity do so before reaching the point where it starts to feel good, Casey notes. That’s why he suggests committing to a fixed window (a semester, 12 sessions, 90 days, etc.) before deciding to stop.

On the spending side, several advisers recommend creating a line item in the financial plan specifically for experiences, classes and travel. "Giving something a place in the plan can feel like giving yourself permission to enjoy it," Baucum says.

And it helps to think about time as the central currency. Kraus asks his newly retired clients what they'll do with the roughly 2,000 hours a year a full-time job used to take. "Without intentional design, that freedom becomes disorientation. We shift the focus from 'return on investment' to ‘return on life.'"

The performance researcher Steve Magness writes that the people most comfortable trying new things aren’t smarter or tougher than the rest of us. They just have a higher tolerance for looking foolish along the way, along with a different source of pride. Researchers have identified two kinds: authentic pride, rooted in mastery and effort, and hubristic pride, rooted in ego. The bravado, research suggests, usually masks insecurity.

On the other side of the camera, Griffey tries to bring the perseverance and authentic pride he showed on the diamond to his life as a photographer. "The learning curve is massive," he said of his Masters experience. "There’s that old saying, be comfortable being uncomfortable. That was that whole week at Augusta. I was uncomfortable the whole time, but also understood certain things in the big picture."

The rest of us could probably stand to try something like it.

Read More

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There's a small but growing group of retirees who don't fit the typical narrative.

They didn't earn Silicon Valley salaries or inherit wealth. Instead, they spent decades doing the right things: Saving diligently, avoiding lifestyle creep and sticking to a plan. Many also have something increasingly rare: A pension (I wrote a book about this group — you can request a free copy here).

Combine a pension with $1 million or more in savings, and you're in what we call the 2% Club. It's a strong financial position, but it comes with its own set of blind spots.

After working with these retirees, I saw a pattern emerge: Their biggest regrets were about missed opportunities, inefficient strategies and habits that no longer serve them in retirement.

Here are the most common mistakes and how to avoid them:

1. Staying too frugal in retirement

The very behaviors that helped you build wealth — discipline and frugality — can become liabilities in retirement.

Many retirees struggle to "flip the switch" from saving to spending. Even with a pension covering core expenses and a seven-figure portfolio, they hesitate to enjoy what they have.

The result? Delayed travel, postponed experiences and, in some cases, the realization that health or time has become the limiting factor, not money.

Retirement isn't an infinite window. The early years, when health and energy are highest, are often the most valuable.

A "spending plan" should give you permission to enjoy your money, not just save it.

2. Working longer than necessary

For many, retirement at 65 feels like a default. But for those with pensions and significant savings, that timeline may be more flexible than they realize.

We often see retirees who could have stepped away earlier but didn't, either out of habit, the fear of healthcare costs or uncertainty about whether they had "enough."

In hindsight, the regret isn't financial; it's the lost time.

This doesn't mean everyone should retire early. It does mean you should run your numbers to see how possible this could be.

With proper planning, covering a few years of private health insurance or bridging to Medicare may be far more feasible than expected.

Now, on the flip side of this, we have seen people retire too early and run into trouble. Not financial trouble, but emotional trouble from not having a purpose in their retirement years.

They've lost the daily connection they had to others at work and the drive to live a fulfilling life.

My biggest advice, whether you retire early or not, is to ensure you think this through to have a plan for how you spend your later years with the most joy.

3. Having all their money in tax-deferred accounts

A large concentration in 401(k)s, IRAs or similar accounts is common and often encouraged during working years.

However, in retirement, this can create what many call a "retirement tax time bomb." Required minimum distributions (RMDs), combined with pension income and Social Security, can push retirees into higher tax brackets later in life.

It also limits flexibility; every dollar withdrawn is taxable.

Tax diversification matters just as much as investment diversification. Having a mix of tax-deferred, taxable and tax-free (Roth) assets allows you to control your income strategy, manage tax brackets and reduce lifetime tax liability.

4. Giving to charity the wrong way

Many retirees are generous but not always strategic. Writing checks from a bank account may feel simple, but it often misses key tax advantages.

With today's higher standard deduction, most retirees receive little tax benefit from those gifts.

More efficient strategies may include:

• Qualified charitable distributions (QCDs). For those 70½ and older, donating directly from an IRA can satisfy RMDs and avoid taxable income
• Donor-advised funds (DAFs) allow you to "bundle" donations into a single tax year to maximize deductions.

5. Taking withdrawals without a plan

Generating income from a portfolio isn't as simple as "taking what you need."

Without a strategy, retirees may withdraw from the wrong accounts at the wrong time, triggering unnecessary taxes or increasing the risk of running out of money.

Questions that should be answered include:

• Which accounts should you draw from first?
• How do market conditions affect withdrawal decisions?
• How do you minimize taxes while maintaining a consistent income?

A coordinated withdrawal strategy can increase both the longevity of your portfolio and the amount you can spend.

6. Not running the right analysis

Many retirees make decisions based on assumptions rather than analysis.

• Can you spend $80,000 per year safely?
• Should you convert to Roth?
• How much can you gift to family?

These are the questions we hear that many do not want to guess on. They want to run their numbers and forecast the future through comprehensive planning that factors in taxes, market returns, longevity and their goals. It also helps answer one of the most important questions in retirement: Can I enjoy it?

Most of the people we serve in the 2% Club have financial freedom, so we often tell them to either spend, gift to loved ones or give more to charities after we run their retirement analysis. After all, you cannot take it with you!

7. Failing to prepare for wealth transfer

Even retirees who don't prioritize leaving a legacy often end up doing so. Especially those with pensions and $1 million or more saved.

Without proper planning, that transfer can create unnecessary tax burdens or lead to outcomes that don't align with your values. Common gaps include:

• Outdated or missing estate documents
• No strategy for managing the "widow's penalty" (when a surviving spouse faces higher taxes)
• A lack of communication with heirs
• No tax planning for beneficiaries

And remember, the most effective plans don't just transfer wealth; they prepare the next generation to handle it responsibly.

For example, many of our clients like working with our team to ensure we can help their spouse and/or children have everything established. They can have a team to ensure they make the right decisions.

We always encourage working with a team with whom both spouses are comfortable and also a team who works with their children.

The bottom line

If you've built a retirement with both a pension and significant savings, you've already done the hard part. The next phase is about optimization, not accumulation.

That means shifting from that saver's mindset. It means being intentional about taxes, income, timing and legacy.

Most importantly, it means aligning your financial plan with the life you actually want to live.

In the end, the biggest retirement regret isn't running out of money. It's not fully using what you have and doing what I call "running out of life."

Related Content

• 5 Financial Planning Secrets of Millionaires
• How to Manage Money Like a Millionaire (Even If You’re Not One Yet)
• If You're the Millionaire Next Door, You May Be a Terrible Spender
• Do You Have at Least $1 Million in Tax-Deferred Investments?
• The Secret to Reducing Lifetime Taxes for Retirees in the 2% Club, From a Financial Planner

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.

SpaceX, OpenAI and Anthropic sit at the center of the artificial intelligence and space infrastructure boom.

All three are preparing, or are widely reported to be preparing, for public listings at valuations that could collectively exceed $3 trillion.

These are not just big IPOs. They may become turning points for the economy and for investors who are already retired or nearing retirement.

After several slow years for new listings, the IPO market has roared back, led by companies tied directly to AI. Chipmakers, data platforms and now foundation-model companies are drawing intense investor demand and extraordinary price tags.

SpaceX is reportedly targeting a valuation of roughly $1.75 trillion in what could become the largest U.S. stock market debut on record.

OpenAI, the company behind ChatGPT, is reportedly preparing to file for a U.S. IPO and was recently valued at roughly $852 billion.

Anthropic, creator of Claude, has already filed confidentially for an IPO and recently raised capital at a reported $965 billion post-money valuation.

In plain English, public markets may soon absorb several of the largest technology offerings in history, all clustered around one theme: The belief that AI will transform the economy.

Why this matters

AI is no longer just a technology story. It is increasingly an economic one.

Stanford's 2025 AI Index estimated that global corporate AI investment reached $252.3 billion in 2024, with private investment and merger activity still rising. That level of spending helps explain why AI has become one of the dominant stories behind recent market optimism.

But there is a risk. A small group of large technology and AI-linked companies, known as the Magnificent 7, already accounts for a disproportionate share of stock market leadership.

If SpaceX, OpenAI and Anthropic enter the public markets at enormous valuations, that concentration could grow even more.

For investors, concentration cuts both ways. If AI leaders continue to grow into their valuations, broad index funds may benefit.

But if expectations reset, because of slower adoption, regulatory pressure, profit disappointments or capital spending concerns, the same broad index funds could feel the downside.

This is especially important for retirees. When you are still working, market pullbacks are painful but often recoverable with time and new contributions.

In retirement, the math changes. If you are taking withdrawals during a market decline, you may be forced to sell shares when prices are depressed.

That is sequence-of-returns risk, and it becomes more dangerous when market gains are narrow and concentrated.

The emotional pull

The hardest part of this moment is not the math. It is the emotion.

Many investors remember missing earlier waves, such as the internet, smartphones, cloud computing or Nvidia (NVDA). When financial headlines start talking about the "most anticipated IPOs" and trillion-dollar valuations, the temptation is to chase the next big thing before everyone else gets in.

That temptation can be costly. Some of these companies may become extraordinary long-term businesses. But buying a great company at the wrong price can still produce poor returns. The bigger the valuation at the starting line, the more future growth may already be priced in.

For retirees, that matters. You do not have the same margin for error as a 30-year-old investor with decades of income ahead. A speculative position that drops sharply can do more than hurt performance. It can disrupt income planning, withdrawal strategy and peace of mind.

What smart retirees can do

The goal is not to ignore AI. AI is real, and it may help drive the next decade of growth. The goal is to avoid letting excitement replace discipline.

First, review your diversification. Look under the hood of your stocks, mutual funds and ETFs.

How much of your equity exposure is tied to a handful of mega-cap technology and AI-linked names? You may already own more of this theme than you realize.

Second, separate the story from the strategy. The story around these IPOs is compelling: Revolutionary technology, visionary founders and massive addressable markets.

But a retirement strategy should be built around cash-flow needs, inflation, longevity risk, taxes and risk tolerance, not headlines.

Third, use AI as a planning tool, not a lottery ticket. AI may improve portfolio monitoring, tax planning, income modeling and risk management.

For retirees, that may be the more productive use of the technology than speculating on the hottest new AI stock.

Fourth, think in scenarios, not predictions. Ask two simple questions:

• If AI mega-caps keep driving markets higher, am I positioned to participate?
• If they stumble, can I still meet my spending needs?

A good retirement plan should work across a range of outcomes, not just the optimistic one.

Finally, revisit your withdrawal and risk policies. Periods of market enthusiasm are a good time to make sure your cash buffer, income plan and equity exposure still fit your real life.

The bottom line

The coming wave of AI-driven mega-IPOs is a sign that we are living through a genuine technological transition and a period of elevated market optimism. The valuations being discussed for SpaceX, OpenAI and Anthropic show that investors are willing to pay today for a future where AI reshapes productivity, software, defense, healthcare and transportation.

For retirees, the goal is not to bet your nest egg on that future. It is to recognize that a growing share of your portfolio may be influenced by a small cluster of AI-centric giants, then plan accordingly.

AI may help power the next decade of growth, but a disciplined retirement plan is still what turns that growth into reliable income.

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

During your working career, the financial goal is simple: Accumulation. You save, you invest, and you watch the numbers grow.

But as you cross the finish line into retirement, you hit the biggest hurdle in personal finance — the transition to decumulation.

Suddenly, you aren't living on a paycheck; you're living off your portfolio. Does this mean you should automatically become a more conservative investor?

Probably not. While your goals might shift slightly, your asset allocation shouldn't be a knee-jerk reaction to your age.

Instead, it should be a deliberate strategy designed for sustainability, tax efficiency and, perhaps most important, emotional resilience.

How things change, how they stay the same

Any sound investment evaluation starts with a simple question: What should this money do?

For most retirees, the answer shifts toward generating income. To find your new "sleep-at-night factor," you need to look beyond the spreadsheet and consider:

• Net income needs. How much annual income, after taxes, do you need to maintain your lifestyle?
• Fixed income sources. What is the baseline provided by Social Security, pensions or annuities?
• Account diversity. What is the breakdown between your taxable, tax-deferred and tax-free accounts? How much do you have in each?

The real enemy: Sequence of returns risk

During your working years, your average annual return was king. In retirement, average return takes a backseat to timing of returns. A major market dip in the first few years of retirement — known as sequence of returns risk — can be devastating if you're forced to sell equities to fund your living expenses.

To mitigate this, we recommend a liquidity buffer of 18 to 24 months of anticipated distributions. By carving out two years of planned expenses into high-quality, liquid assets such as CDs or money market funds, you ensure the stock market doesn't dictate your monthly "paycheck".

This buffer acts as a shield, giving your growth-oriented investments the time they need to recover from a downturn without being liquidated at a loss.

The withdrawal road map: It's not what you make, it's what you keep

Distributions from retirement accounts are often a retiree's largest tax event. Managing the "tax bite" requires strategic sequencing across your different "buckets":

• Taxable (brokerage)
• Tax-deferred (traditional IRA/401k)
• Tax-free (Roth)

Effective tax bracket management allows you to fill lower tax brackets while avoiding "tax spikes" that can trigger higher Medicare premiums (IRMAA) or unnecessary capital gains taxes.

Tax planning also needs to be a multiyear exercise. Some investors focus on taking assets from taxable accounts first, believing it's better to let tax-deferred accounts grow.

This can often result in two mistakes:

• failing to fully utilize lower tax brackets with taxable distributions
• creating larger than expected IRA required minimum distributions (RMDs) that can combine with delayed Social Security creating a tax torpedo in one's 70s.

Why all accounts are not created equal

One of the most common misconceptions is applying a uniform allocation identically to every account. For a truly optimized plan, you must consider both asset location and tax treatment:

• Roth accounts. These should hold your more aggressive, high-growth assets to maximize tax-free growth in the long term.
• Traditional IRAs. These are often best suited for income-producing assets like bonds or real estate investment trusts (REITs), as the distributions will be taxed as ordinary income anyway.
• Taxable accounts. Prioritize tax-efficient ETFs or municipal bonds here to minimize the annual tax drag on your portfolio.

While managing to a comprehensive asset allocation is sound, each type of account should have its own asset allocation that is tax optimized with the larger picture.

Beyond the spreadsheet

Retirement isn't a signal to abandon equities; it's a time to be more strategic. Your portfolio allocation shouldn't be an arbitrary rule — it should be a customized allocation built around your specific goals, cash flow needs and tax situation.

As you near retirement, a review of your investment strategy makes sense. For some, the transition from your "years to retirement" to your "years of retirement" might require an overhaul, and for others, just a tune up.

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

You wake up naturally on your first day of retirement, with no alarm, just as you dreamed of doing during decades of a stressful career. You delight in the freedom from work responsibilities and schedules, and the chance to travel and spend time with friends and family. You are, in short, enjoying the honeymoon phase of retirement.

But after a few years (or even months), something inside you might shift.

You may find yourself feeling blue, isolated and just plain unfulfilled. You wouldn't be alone.

The National Institutes of Health found that depression is more frequent in retirees than the general public, and that 28% of retirees experience depression. And while most respondents in a 2024 MassMutual retirement survey reported being happier than in their working years, 8% noted they were less happy.

What's perhaps even more telling is that a 2024 Resume Builder survey found that among retirees planning to return to work, boredom was the second most common driver, trailing only unexpected cost-of-living increases. And while returning to work may be an option for some folks who aren't loving retirement, it may not be feasible for everyone. Fortunately, a part-time job isn't the only way to find structure and purpose.

If you're stuck in a retirement funk, it's important to do what you can to break out of it before it takes a serious toll on your mental (and possibly physical) health. Here are some strategies experts say are worth exploring.

Are you in the 'disenchantment' phase of retirement?

Putting a name to "the blahs" could help you reframe your circumstances. Ask yourself if you are feeling disappointed and disillusioned by your retirement. If so, you may be in the "disenchantment" phase of retirement, which generally indicates that you didn't build out a retirement plan that met your needs for social, financial and even spiritual fulfillment after your working years.

Coined by gerontologist and sociologist Robert C. Atchley, the "five phases of retirement" include pre-retirement, retirement, disenchantment, reorientation and finally, reconciliation and stability. Those who plan well may avoid those last three phases, which involve adjusting your expectations and revisiting your retirement plan to meet your needs.

If the thought of refining your approach to retirement just makes you feel discouraged or tired, you may truly be in a retirement funk. Here's what to try next.

1. Practice values-based living

When you're working, you can take pride in your output and contributions in the workplace. When you're retired, you may fall into a funk if you feel you aren't contributing to anything. That's why Dr. Carolina Estevez, psychologist at SOBA New Jersey, recommends that you think about your life differently.

"An additional significant shift for many is transitioning from valuing yourself based on productivity to values-based living," she explains. "Many people define themselves through their job for many years. Retirement allows individuals to reconnect with aspects of their identity that were put on the shelf."

2. Set a schedule

During retirement, you aren't tethered to a schedule the same way you are when you're working. You can take a trip on a whim or surprise your grandchildren with a visit.

But that lack of structure could come back to bite you. You might feel restless and useless in the absence of a routine. That's why Lisa Keer Carusone, wellness coach at Mass General Brigham's Center for Specialized Healthcare Services, says having a schedule could help if you're feeling stuck in a rut.

"Most of the retired adults I work with are in the quandary of wanting to be active and engaged, but also wanting flexibility around their schedules. That conflict often leaves them undersubscribed and bored, socially oversubscribed and feeling empty, or socially isolated and unhappy," Carusone explains.

Her recommendation? Construct a daily schedule with at least a few consistent activities. Even scheduling meal times could help.

Carusone also recommends having a few commitments so you're anchored to your schedule.

"Look locally for engagement and for opportunities [like] town boards [or] local volunteer programs to make commitments and connections," she says.

3. Embrace novelty and new skills

You'll often hear that if you're feeling bored or uninspired in retirement, it pays to immerse yourself in hobbies. Estevez suggests taking that concept one step further by focusing on new hobbies or experiences.

"Your brain continues to grow throughout life and responds positively to new challenges and learning," she says. "Some ways to stimulate your brain during retirement include taking a language class, joining a hiking club, learning to play an instrument, traveling to an area you don't know very well, or setting personal fitness goals. All these activities can give you back a sense of direction and excitement in your life."

4. Make sure to maintain your social connections

One less obvious benefit of work is that it can be a constant social outlet. Losing that regular access to people could take a serious toll. That's why Estevez says it's important to focus on building and maintaining social connections in retirement.

"People typically do better mentally and psychologically when they establish purposeful social interactions," she says.

Shawn McGinness, mental health awareness advocate and COO at Jersey Behavioral Health, says it's important to treat social connection as a priority rather than an afterthought.

"Finding a hobby group, getting into a recreational sports league, or joining a community organization gives an opportunity for the brain to engineer new meaning outside of work and find belonging," he says.

5. Stay active

You know this one, right? But it bears repeating. When you're feeling mentally sluggish, physically moving your body could be a good way to boost your mood, Estevez says. Studies have shown that physical activity can have a positive impact on mental health.

"Activities like going for walks regularly, tending gardens, swimming, or taking dance classes can all help improve your mood and energy levels," Estevez says. And if you haven't embraced the pickleball trend that's been gaining popularity among retirees, you may want to give it a try.

6. Don't hesitate to talk to a professional

If you're feeling unhappy with your new life and routine, there's no shame in getting help,

McGinness insists. And the sooner you recognize the problem, the better.

"Chronic dissatisfaction and inability to adjust after retiring can develop into clinical depression," he says. "This type of life transition is so common that there are professional mental health supports available to help you through it. Reaching for help is not a last resort. It is one of the best and most proactive things somebody can do to take care of themselves."

The good news is that Medicare covers a wide range of mental health services, including inpatient care and outpatient therapy. Enrollees are also typically eligible for one yearly depression screening at no cost.

Read More

• The Emotional Side of Retiring: Six Steps to Help You Move On
• The 'First Year of Retirement' Rule
• 9 Habits for a Happy Retirement
• I’m Burned Out at Work, But I Dread Retirement Boredom and Loneliness. Now What?

Pursuing a Golden Visa is one way to secure a different lifestyle — now or later.

It provides a vehicle for visa-free travel and the opportunity to take up residency in another country, which can be extremely attractive in geopolitically uncertain times.

Many people are attracted to the idea of moving to a country where the weather's better, the pace of life is slower, and healthcare might be cheaper and easier to access.

For high-net-worth individuals (HNWIs), there's also the lure of lower taxes to help protect investments.

An effective hedge against instability

One compelling reason for seeking a Golden Visa is its effectiveness as an emergency backup plan. When viewed from a risk-management perspective, a Golden Visa can be an effective hedge against a range of potentially damaging issues that could cause significant business disruption, as well as impacting individual freedoms, wealth and personal security.

Political instability generates risk and creates volatility in what were formally relatively stable marketplaces and can seriously undermine the financial plans of even the smartest investors.

Changes in government might lead to sudden tax or regulatory adjustments that could devalue long-term investments. The introduction of capital control policies, including tariffs and restrictions on transferring money in and out of the domestic economy, can constrain liquidity, significantly limit investment opportunities and increase the cost of doing international business.

The key to an effective escape route

There's a personal risk too, if rising civil unrest threatens societal and personal stability. In such an environment, it might be prudent to have a plan B that can quickly be put into action if leaving the country becomes imperative.

While this might sound like a doomsday scenario, if it happens, a Golden Visa can provide the key to an effective escape route.

Recent events in the Middle East are a prime example of how global events can affect economies and individuals, with the ongoing conflict causing high inflation, stock market instability and eroding investment value at pace.

Individuals, their families and their assets have the option to legally reside in another country if they possess a Golden Visa. Although they're not usually obliged to relocate once a visa has been secured, having one ensures they have options should the situation take a turn for the worse in their home country.

It provides a second base for individuals and their families to relocate quickly if needed, divert investments if economic uncertainty makes things difficult at home and continue to operate a business internationally if required.

Protection against circumstances beyond your control

A Golden Visa is about enhancing financial resilience and strengthening personal sovereignty.

As a citizen of a single country, individuals are subject to a single set of laws, one passport, one tax authority and the potentially negative impacts of an evolving political climate.

Dual citizenship enables individuals to protect themselves against circumstances beyond their control and gain the peace of mind that if things decline rapidly in their home country, they have a way out.

Of course, it's impossible to get house insurance if the house is already on fire. Those seeking a Golden Visa are advised to start planning early. Waiting for a crisis to hit is inadvisable. It's much easier and cheaper to investigate a Golden Visa while things are relatively stable.

Asset protection in an uncertain world

A Golden Visa doesn't immediately confer citizenship on the holder, but it will usually offer a path to citizenship once any requirements have been met (depending on the country offering it).

Applicants might be required to spend time in their designated country — with requirements typically ranging from one week to six months per year for a predetermined length of time, depending on the location — and will have to demonstrate ties with the host country, either through inward investment, such as real estate, or through passing a basic language test.

It's important to acknowledge that Golden Visa holders aren't abandoning their country of birth in search of a better lifestyle. They're simply seeking to protect their assets, families and businesses in an ever changing, increasingly uncertain world — or, to put it another way, they're managing risk more effectively.

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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.