Roth conversions get a lot of enthusiastic press, and most of it is deserved. Moving money from a traditional IRA into a Roth can reshape your tax picture for decades and ease the required minimum distribution burden later in retirement.

But somewhere along the way, "conversions can be smart" curdled into "conversions are always smart," and that's where I start to worry.

A Roth conversion is a tool, not a virtue. There are specific situations where they're the wrong move — and sometimes an expensive one. Knowing when to hold off is just as valuable as knowing when to act.

Here are five times a Roth conversion usually doesn't make sense.

1. You're in a high-income year

The entire logic of a conversion rests on paying tax now, at today's rate, to avoid tax later. That only works in your favor if today's rate is lower than the rate you expect to face down the road.

Convert during a peak earning year, when your income is already pushing the top of a bracket, and you're doing the opposite: Paying tax at one of the highest rates you'll ever see.

If you're still working and at the height of your career, or you had an unusually large income event this year, that's generally the worst possible time to stack a conversion on top.

The better move is often to wait for a lower-income year, which for many people arrives after they stop working but before required minimum distributions begin at age 73.

2. You'd have to use the IRA itself to pay the tax

This one is a quiet deal-breaker that people miss. A conversion works far better when you can pay the resulting tax bill from outside funds in a taxable brokerage or savings account.

If the only way to cover the tax is to pull extra from the IRA you're converting, you erode the whole benefit. You're shrinking the amount that actually makes it into the Roth, and if you are under 59½, the portion withheld for taxes could itself trigger a penalty.

Picture converting $100,000 and needing roughly a quarter of it to pay the tax. If that quarter comes out of the IRA rather than a separate account, only three-quarters of the money reaches the Roth, and you've lost years of potential growth that qualified Roth withdrawals would have delivered tax-free.

When there's no outside cash to pay the tax, a conversion frequently doesn't make sense. The answer is to wait until you have the liquidity to do it right, or to convert a smaller amount you can actually afford to cover.

3. You expect your tax rate to fall in retirement

Not everyone faces higher taxes later. Plenty of people will drop into a lower bracket once the paychecks stop, especially if they don't have enormous traditional balances generating large future RMDs.

If you genuinely expect your retirement tax rate to be lower than it is today, converting now means voluntarily paying a higher rate to avoid a lower one. That is backward. The conversion crowd sometimes assumes everyone's taxes are headed up, but that is an assumption, not a fact, and it deserves to be tested against your actual projected income.

For some people, simply taking ordinary distributions in retirement at a modest rate beats prepaying tax today. The only way to know is to project your retirement income honestly, including Social Security and any pension, rather than assuming the worst about future rates.

4. The money will pass to heirs who get a step-up anyway

Estate considerations can flip the entire calculation. Consider someone late in life with a serious health situation, whose assets are likely to pass to heirs before long.

Traditional IRA dollars left to heirs are taxed as those heirs withdraw them, which is a real consideration. But other assets, like appreciated stock in a taxable account, generally receive a step-up in cost basis at death, which can wipe out the embedded capital gains for the heirs.

In a case like that, spending energy and tax dollars converting a traditional IRA may make less sense than simply leaving the accounts as they are and letting the estate planning rules do the work.

This is exactly the kind of situation where a reflexive "always convert" instinct can cost a family money rather than save it. It is worth coordinating with an estate planning attorney before acting.

5. State taxes erase the federal benefit

Federal brackets get all the attention, but your state often wants a cut of a conversion, too. If you live in a high-tax state today and realistically plan to retire somewhere with low or no income tax, converting now can mean paying state tax you could have sidestepped entirely by simply waiting until after you move.

The federal math might look fine in isolation, but once you layer your current state's tax on top of the conversion, the case can fall apart.

The decision and your geography are tied together, and analyzing the conversion without your specific state in the picture can lead you somewhere you wouldn't choose if you saw the full bill.

The pattern worth noticing

Look at these five situations and a theme emerges. A Roth conversion isn't good or bad on its own. It's good or bad relative to your specific circumstances:

• Your current bracket vs your expected future bracket
• Whether you have outside cash to pay the tax
• Your estate plans
• Your state

Strip away those specifics and "always convert" is just a slogan. What makes the slogan dangerous is that it sounds responsible. It carries the glow of disciplined, forward-thinking planning, which is exactly why people follow it without checking whether it fits their own numbers.

I'm not arguing against conversions. Used in the right years, with the tax paid from the right place, they remain one of the more useful planning tools available to people heading into retirement.

I am arguing against treating them as automatic. The same move that helps one person in a low-income gap year can hurt another who is at peak earnings, short on outside cash or about to relocate to a no-tax state.

Before you convert, the honest question isn't "Should everyone do this?" It's "Does this make sense for me, this year, given everything else?"

Sometimes the answer is an enthusiastic yes. Sometimes the most valuable thing a conversion analysis produces is the decision to wait.

Both are wins, and knowing the difference is what separates a real strategy from a popular one.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59½ or prior to the account being opened for five years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

Related Content

• Do You Know Why a Roth Conversion Isn't Right for Everybody? Test Your Knowledge With This Quiz
• Why a Roth Conversion Is Wrong for Most People But Often Right for Pension Holders
• Timing Is Everything for Roth Conversions: An Expert's Guide to the Right Strategy
• How to Coordinate Claiming Social Security With Your Tax Bracket
• The 7 RMD Tax Traps Waiting for You in Your 70s — and How to Start Disarming Them in Your 60s

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.

Leaving an equal inheritance sounds fair and like the right thing to do. Just split everything down the middle, avoid playing favorites, and do what you have to do to keep the peace. Easy. But "equal" doesn't necessarily mean "fair," and even your best intentions can lead to the opposite result: Resentment, tax surprises and shattered relationships after you're gone.

The decision becomes even more important when you consider that over the next two decades, Americans will pass down over $100 trillion in the so-called Great Wealth Transfer.

But when it comes to inheritance plans, a new Kiplinger-Morning Consult survey reveals a major gap in expectations and knowledge between older and younger generations in many families. In fact, two in five families have never discussed inheritance plans, and three in 10 parents have no formal plans at all.

Should you leave an equal inheritance to your children? In most cases, the answer is yes, but it can be a double-edged sword, explains Ryan Skinner, president of Apex Retirement Services.

Should fairness be your first concern?

Skinner says the best starting point is to plan to divide the inheritance equally while keeping your options open. "Successful children should not be punished for succeeding, and children who have made poor decisions should not automatically be rewarded for failing."

Phil Reed, estate and asset protection attorney at Reed Law, PLC, agrees. "Inevitably, fairness is always the first concern. But fairness and equality are not the same thing, and having simplified math isn't always the best choice when determining the percentage of a distribution."

For instance, "When a child has served as a caregiver for the parent, the parents may want to compensate that child for the years that they were involved with their care and support. Alternatively, a child actively involved in the family business may be entitled to a higher percentage of the estate when other siblings were not involved."

When you have children with different needs and different involvements with the family, equal distribution tends to be inequitable, at least in the minds of the heirs, he says.

"The primary thing to keep in mind when deciding how to divide your estate is communicating the reasons for that decision and having those memorialized in your estate plan specifically."

All is fair in love

The Morning Consult-Kiplinger survey finds most adult children (70%) and parents (67%) feel ready to manage an inheritance. However, readiness isn't always the same as fairness.

For instance, it's common to give one child a down payment on a house or pay their college tuition. Maybe you covered a financial emergency for another child. Unfortunately, the child who received less during your lifetime may feel resentful, while the one who already benefited may not even remember your help. Without a change to your estate plan (sometimes called a hotchpot clause), the equal division can actually highlight any uneven splits.

Testate and intestacy statutes

Under United States law, a person who creates a valid will can divide their money and property in almost any way they choose. When someone dies without a will, state law distributes their estate based on family ties instead of splitting it equally.

When a will exists, the estate is testate, and the will controls how your property is divided. If you have no will, the estate is intestate, and the state's intestacy statute provides a formula that rarely leaves your kids with the same amount. The idea that siblings automatically get "equal" slices of the same pie is a myth that can cause lawsuits, hurt feelings, and tax surprises.

Assets that can't be easily split

Leaving your family home "equally" to your children can lead to months or even years of unwanted maintenance, unpaid taxes and arguments, especially when they can't agree on selling, renting, or keeping it.

One sibling often ends up doing all the work while the other siblings wait for the cash to roll in. "Thankfully," says Evan Mills, financial adviser at Scholar Advising, "there are different ways to set up entities so the kids no longer have to worry about who's going to pay for the new roof or the property taxes."

But if that structure isn't available for some families, he goes on to say, a house can become the main area of disagreement within the family, and that's not what you want, especially at what's already going to be an emotional time.

Likewise, a family business split equally among siblings who never worked there can complicate decision-making or force a sale, essentially eliminating the livelihood of the child who runs it.

Reed contends that life insurance proceeds and retirement accounts also look equal on paper but produce different tax results depending on the sibling's tax bracket, and says that communication is the single most effective safeguard against discrepancies.

"Explain your reasoning while you're still alive. A letter of intent that accompanies your estate plan documents can reduce the 'Mom loved you more' narrative." Professional trustees, no-contest clauses, and updated beneficiary designations on non-probate assets further reduce the chance that the plan unravels in court," he says.

Sacrifices may go unrewarded

It's not uncommon for one child who becomes the default caregiver — living nearby for years, driving to appointments and managing medications — to feel they deserve a greater inheritance when compared to the sibling who only visited twice a year. This scenario can easily lead to bitterness and resentment. In the same way, handing your big spender the same lump sum as your penny pincher can often hurt more than help.

Trusts with spendthrift provisions mainly exist because equal gifts can backfire.

Beyond the financial side, the emotional impact is also rarely clear-cut. That's because inheritances are typically viewed as a substitute for parental love. Even wealthy children can experience an equal-but-unexplained estate plan as a form of rejection if their needs or circumstances differ. When estate lawyer Marvin Blum asked Warren Buffett and Charlie Munger about inheritances at the 2022 Berkshire Hathaway annual meeting, Munger replied, "If you're going to treat them unequally, that is poison."

But a "split it equally" plan can cause many of the same problems: lawsuits, claims that Mom and Dad loved you more, or, worse yet, siblings who argue and never speak again. Many estate lawyers say that when decisions are left unexplained, families fight, even if the split looks even on paper.

That said, more kids favor "fair" over equal than parents do, by a 21-percentage-point margin, according to the same Kiplinger-Morning Consult survey.

A better approach exists

Brian Gately, managing partner at Anchyra Partners, argues that a better approach exists. "While the instinct to divide an estate into precise, equal percentages is understandable, rigid equality often fails to account for the unique realities of your children's lives, capabilities and callings."

He says that rather than viewing unequal divisions as favoritism, families should view estate planning as a customized toolkit designed to give each child the specific support they need to thrive. "By using modern trust structures, you can ensure that your less financially-inclined children are protected and your public-service-minded children are supported, all while preserving long-term family harmony."

Closing the inheritance expectation gap

The Kiplinger-Morning Consult survey revealed a stark disconnect: Parents are twice as likely to plan on leaving a meaningful inheritance as adult children are to expect one. Bridging that gap requires open communication and a big-picture view.

You'll need to weigh past financial support, individual sibling needs, and the mix of liquid and illiquid assets. Rather than defaulting to an equal split, work with an estate-planning attorney to tailor a strategy that makes practical sense. Ultimately, an inheritance isn't about picking a favorite child. It's about leaving a legacy that unites your family instead of dividing it.

More Trillion Dollar Talk

• The Trillion Dollar Talk
• We Asked 5,000 Americans About Inheritance. Here's What We Learned.
• What Happens When You Inherit a House — With Your Siblings

Most of my clients spend three decades focused on one number: How much they've saved.

As they approach retirement, the question shifts. How much can we spend and keep the plan on track?

That shift catches more people off guard than anything else I see in the practice I founded, MOKAN Wealth Management. It centers on one portfolio decision that, made before you stop working, might be among the most consequential financial moves a preretiree can make.

The risk nobody considers

The first 10 years of retirement are the most consequential, financially speaking. If the market pulls hard during that stretch and you still need income, you're in a position when selling becomes unavoidable. Since every dollar pulled from a 401(k) or IRA is taxed as ordinary income, you often have to sell more shares just to cover the tax bill.

Consider a retiree who needs $60,000 a year from a $1.5 million portfolio, and the market drops 20% in year one. To generate that same $60,000, they now must sell a larger share of a smaller pie and pay ordinary income tax on top of it.

If they need $80,000 pretax to net $60,000 after taxes, that could mean liquidating more than 5% of an already reduced account in a single year, before the market has had any chance to recover.

The market pulls back. You sell more. You owe more tax. Those shares are gone before the recovery arrives. This isn't a rare scenario. It's predictable, and it has a name: Sequence of returns risk.

There are steps you can take to avoid having to deal with this issue.

Step No. 1: Buy yourself time

Time is the one thing that changes everything in a downturn. If you don't have to sell, you can wait for a recovery. The problem is that most retirement plans don't build in that time.

Downturns vary widely in length. The 2020 pullback took about six months to recover. The 2022 decline took roughly two years. The dot-com decline from 2000 to 2002 took about seven years, and the 2007 to 2009 financial crisis took about five and a half. A retiree who needs income every month doesn't have seven years to wait.

The solution is what I call a Retirement War Chest. About three years before retirement, set aside four to eight years of portfolio income in a separate reserve, sized to your specific income plan, tax strategy and spending goals. Not a vague percentage, not a target-date fund — your specific number.

That reserve funds your lifestyle and buys your growth investments time to recover without forcing a sale at the worst possible moment.

Step No. 2: Build it to hold up

The War Chest is not the place to chase yield or take on credit risk. It needs to be stable, liquid and predictable — which points to laddered short-term U.S. Treasuries.

Consider a hypothetical $825,000 War Chest:

Each rung matures and rolls forward, so the reserve keeps generating predictable income without ever touching the market.

This example is illustrative only. Every household's number looks different, depending on spending, Social Security timing and other income sources.

Step No. 3: Let the rest of the portfolio do its job

The War Chest is not the whole portfolio; it's the piece that buys time. The rest needs to stay invested and growing, because a 62-year-old couple could easily have 30 years of retirement ahead of them, and inflation doesn't take time off.

A hypothetical portfolio averaging a 10% return with an 18% standard deviation would produce returns from -8% to 28% in roughly two out of three years, and from -26% to 46% in about 19 out of 20 years. Occasionally it will perform well outside that range in either direction.

Those difficult years on the low end are exactly what the War Chest is built to absorb, so the growth portion of the portfolio never has to sell into them.

Past performance does not predict future results, and every portfolio's actual range will differ based on how it's built and what it holds.

The part most advisers miss

A market pullback can also open a better Roth conversion window. When account values are down, converting the same number of shares costs less in tax. The War Chest covers spending while the conversion happens, and when the market recovers, that growth occurs inside the Roth account, tax-free from that point forward.

Few advisers connect these two ideas. The War Chest is not only a spending reserve; it's what makes it possible to act on a tax opportunity during the exact years the market is presenting one.

The bottom line

The Retirement War Chest is not complicated. It is disciplined. The goal was never to sidestep market volatility. Markets will do what markets do. The goal is to ensure volatility never forces a sale at the wrong time.

One shift, made before you retire is what it takes to walk into the next 30 years on your own terms.

Related Content

• How to Dodge a Retirement Danger You May Not Have Heard About
• The Retirement Move That's Quietly Taxing Your Social Security to the Max (and How Early Roth Conversions Can Help)
• Will Your Death Double Your Spouse's Tax Bill? 4 Ways Couples Should Prepare for the Widow's Penalty
• 9 Tax Surprises Retirees Don't See Coming Until It's Too Late
• The Midterms Offer a Unique Tax Planning Opportunity, But Most Retirees Miss It

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 Great Wealth Transfer is underway in the United States, with an estimated $124 trillion in assets expected to pass from older generations to younger ones over the next 20 years or so.

This massive wealth transfer has major implications for families. And according to a Morning Consult survey commissioned by Kiplinger, most heirs feel ready to manage the money they will receive.

Top of mind, according to those surveyed by Morning Consult, is providing for their family, while paying off a mortgage and improving a home come in second. Not far behind is investing their new windfall to grow their own wealth. But with a seemingly endless amount of assets available to invest in, how do you choose the right one for you?

Here, we attempt to narrow the field with our short quiz on how to invest your inheritance, or whether you even should. While this is no substitute for meeting with a financial adviser, which is the best way to figure out what is right for you, it's a good way to test your knowledge.

And don't worry if you miss a question or two. The articles we link to below give deeper insight into investing and portfolio management.

More on investing and inheritance from the Kiplinger team

• The Trillion Dollar Talk
• I'm 45 and I’ve Barely Invested in the Stock Market. I Recently Inherited $50,000. What Should I Do?
• 5 Core Stocks Every Investor Should Own in 2026 and Beyond
• The Asset Location Rule for Income Investments in Retirement
• Why ETFs Are One of the Easiest Ways to Start Investing
• 5 Best Index Funds for Long-Term Growth
• Which Capital Gains Are Taxable and How to Calculate Your Tax
• How Your Inheritance Actually Gets Taxed: From Stepped-Up Basis to IRA Rules
• Best Online Brokers and Trading Platforms for 2026

Finding love later in life can bring a renewed sense of possibility, but it can also come with homes, retirement accounts, trusts, business interests, adult children and estate plans that make financial decisions more complicated.

According to a widely cited figure from the U.S. Census Bureau, the average age of widowhood is just 59.

Meanwhile, a recent study found divorce rates among adults age 50 and older — known as "gray divorce" — have more than doubled over the past 30 years and now account for nearly 35% of all divorces. The number of adults ages 40 to 59 marrying for the first time has more than quadrupled.

The result? More people than ever are entering — or re-entering — the dating world later in life.

For those who formally couple, an increasing number are choosing to cohabitate — either before marriage or instead of it. In 2000, fewer than 1 million adults age 50 and older lived with an unmarried partner.

The National Center for Family & Marriage Research found that by 2022, that number had grown to around 4.6 million, a nearly fivefold increase.

But living together without marrying doesn't eliminate financial risk. In many cases, it can increase it because fewer automatic legal protections apply, and those protections vary by state.

Married couples benefit from family law, which governs issues such as asset division and financial support if a relationship ends. Unmarried couples generally receive only the protections they put in writing.

If you move into a partner's home, contribute to renovations or commingle assets without a formal agreement, you could walk away with little — or nothing — if the relationship ends. You may also have no legal claim to assets if your partner dies without naming you in an estate plan.

Whether you marry or simply share your life with someone, there are important steps you should take to protect one another financially and build a stronger partnership — especially as you age.

1. Share the full financial picture

It's hard to know how to protect each other financially until you understand what each of you is bringing into the relationship.

Take the time to ensure both partners have a full financial picture of the other's net worth, income sources today and in retirement, obligations to children or ex-spouses, business interests, real estate holdings and current estate plans.

But don't stop there — talk about how each other's wealth was created and what challenges shaped that journey. These details make up your money story, which can explain your perspectives, behaviors and triggers around financial matters.

You may have inherited money after a contentious family dispute, making you guarded about transparency. Your partner may have gone through a divorce where finances were weaponized, making them anxious about merging accounts.

Understanding these histories — not just the numbers — can help both of you approach money conversations with more patience, less defensiveness and a clearer sense of where concerns are really coming from.

2. Agree on priorities and contingencies

Just as each of you brings a unique financial picture and personal history to the relationship, you also bring different priorities, concerns and goals. One partner may be focused on navigating a significant wealth disparity, while the other is concerned about preserving an inheritance for children while still building a shared future.

Perhaps you've moved into your partner's home and are wondering what would happen if they passed away before you, or how best to structure household expenses and shared financial responsibilities.

Whatever your concerns may be, open and honest communication is essential. Discuss not only what matters to each of you, but why it matters. Walk through potential "what if" scenarios together and identify solutions before they become challenges.

These conversations can help align expectations, reduce misunderstandings and create a plan that reflects the needs and priorities of both partners.

3. Formalize the plan

Good intentions aren't enough when life gets complicated. If you want your wishes honored and your loved ones protected, you need legally binding documents — and there is no one-size-fits-all solution.

The right strategy depends on your circumstances and may include a cohabitation or prenuptial agreement, wills, trusts, beneficiary designations, powers of attorney and property agreements.

For example, if you're living in a home owned by your partner or fiancé, a cohabitation agreement alone may not protect your right to remain there if they pass away.

Likewise, if you're remarried and want to provide for a spouse while ultimately preserving an inheritance for your children, that often requires a thoughtful combination of estate planning strategies, trusts and marital agreements.

It's about creating the right structure — not simply checking documents off a list. Regardless of your circumstance, it all comes down to understanding what you want to accomplish, then working with an estate planning attorney, tax professional and financial adviser, as appropriate, to put the right solutions in place.

The takeaway

The goal is not to protect yourself from your partner. It's to remove ambiguity so the relationship you're building together — whether it comes with a marriage certificate or not — is grounded in clarity rather than assumptions.

The couples who navigate this well aren't necessarily the ones with the least wealth disparity or the simplest family dynamics. They're the ones willing to have uncomfortable conversations early, put appropriate legal protections in place and view financial transparency as an act of love rather than a sign of distrust.

Related Content

• Estate Planning and the Legal Quirks of Retiree Cohabitation
• How to Handle Money Together in a Second Marriage
• Money Questions Couples Should Ask Before Combining Finances or Planning a Future Together
• To Love, Honor and Make Financial Decisions as Equal Partners
• How Women Can Navigate Competing Priorities as They Age

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.

Women are stepping into the retirement conversation with more power and purpose than ever.

They control a growing share of household wealth, typically outlive their spouses and increasingly hold full authority over the financial decisions that shape their later years.

For advisers, this isn't just a demographic shift. It's one of the most meaningful opportunities in the profession.

Women bring real strengths to the table. They tend to save diligently, take measured risks, plan for the people they love and stay the course when markets get loud.

As an adviser, your job isn't to fix them. It's to meet their readiness with experience, curiosity and genuine support. Then you can help them turn a lifetime of resilience into a lasting strategy.

Three forces that shape the planning conversation

Women's retirement math is shaped by three structural realities. Understanding them isn't about dwelling on setbacks. It's about spotting where thoughtful planning creates the biggest wins.

The pay gap has a compounding effect. Women working full-time still earn about 81 cents for every dollar a man earns, which amounts to roughly $542,800 in lost earnings over a 40-year career — and more than $1 million for many women of color. That ripples through Social Security, pensions and every retirement account.

The opportunity: Catch-up contributions, tax-efficient savings and income strategies designed to help close the gap on purpose.

Caregiving reshapes the earnings curve. Nearly half of all women who left their jobs in 2025 did so to care for children or aging parents (or both). That pause can mean lost income, halted contributions and zeros in the Social Security calculation.

Yet these same women are extraordinary planners. Show them how to rebuild momentum after a career break, and you become indispensable.

Longevity multiplies everything. Women generally live longer and are more likely to manage money solo later in life. Longevity is a gift, and it raises the stakes on long-term care costs, estimated at $171,000 for women over the course of retirement vs $98,000 for men, as of 2025.

Stress-testing a plan to age 95 or 100 isn't an uncomfortable question. It's a powerful one.

Life doesn't move in a straight line

Even the strongest plan needs room to adapt. A few transitions can reshape a woman's finances, and advisers who anticipate them are far better positioned to help.

Gray divorce. Divorce rates for couples over 50 have roughly doubled since the 1990s. Income often drops while fixed expenses hold steady.

The key moment is before the decree is signed, when you can help a client understand spousal benefits, pension sharing and separate property. These are proactive conversations, not reactive ones.

The sandwich generation squeeze. Many women support adult children and aging parents at once. Your most valuable contribution is often a simple, compassionate reframe: Children can borrow for education or a first home. No one borrows for retirement.

Helping a client hold that boundary, without judgment, is genuinely impactful work.

The confidence gap. Some women hesitate to engage with the math, shaped by decades of social norms and a fear of missteps. The good news? Confidence is built, not born. Small steps compound just like savings do.

Move your clients forward

A few straightforward approaches can help turn readiness into action for your clients:

• Encourage small, consistent learning. Fifteen minutes a week with a podcast or a well-chosen article gradually shifts how a client relates to her finances.
• Make fears specific. Vague anxiety overwhelms. Named, concrete worries become solvable problems.
• Create a low-noise environment. Retirement is a decades-long strategy. Clients who understand that don't react to every headline.
• Automate where possible. Removing willpower from savings decisions is one of the most practical moves in your toolkit.
• Make the relationship feel safe. A client who feels respected, heard and free to ask questions stays engaged. That's not just a warmth metric. It drives retention and referrals.

Transform their approach

While an independent do-it-yourself attitude is possible for many women entering retirement, the stakes in the planning process can be high, and a well-coordinated adviser and team deliver value that is hard to replicate.

A personalized strategy accounts for the specifics of real life: Career breaks, catch-up windows, spousal preservation and longevity projections tailored to the client in front of you. Templates don't serve this market well.

Technical depth is where integrated teams can shine. Tax-efficient income structuring, Social Security claiming and legacy planning aren't separate conversations. They're interconnected, and coordinating across them produces a meaningfully better outcome.

Emotional steadiness is the most undervalued layer. During divorce, widowhood or a major caregiving transition, clients need someone who can hold the long view calmly while everything else feels uncertain. That steady, objective presence is one of the most important things you can offer.

Practical next steps

A few places to sharpen your approach as an adviser:

• Audit your discovery process. Does it systematically address caregiving history, career-break gaps and longevity concerns? Build those questions in as standard practice, not a special track.
• Build a transitions playbook. Gray divorce and sandwich generation pressures rarely come with advance notice. Equip your team with a clear, thoughtful process before the call comes in.
• Lower the entry barrier. A 15- to 30-minute strategy conversation can help deliver more clarity than weeks of private worrying. Make that easy to access.

The time is now

Women are ready to take the reins of their financial futures, and they're doing it with strength, savvy and a clear sense of what matters. The barriers are real, but they're context, not destiny. What comes next is written by the choices made today.

The adviser who meets that readiness with experience, genuine curiosity and real support won't just help women reach financial sovereignty. You'll earn the trust, the loyalty and the referrals that follow for years to come.

Related Content

• How Financial Professionals Can Empower Their Female Clients
• Winning Strategies for Financial Advisers as Clients' Lives Evolve
• Addressing Your Clients' Emotional Side: Communication Techniques for Financial Advisers
• Women Are Better Investors Than They've Been Told: Here's How You Can Use That Edge
• How Advisers Can Establish Relationships With HNW Prospects

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 Generation X, those born between 1965 and 1980, retirement looks vastly different from what it did for many of their parents and grandparents.

As traditional pensions phased out, more responsibility for saving and investing shifted to individual workers. Instead of relying on one predictable source of retirement income, many have had to piece together their own retirement nest eggs across 401(k)s, IRAs, Roth accounts, HSAs, and other investments.

And, for the generation nestled between Baby Boomers and Millennials, saving for retirement isn’t the only priority.

According to the Pew Research Center, 54% of adults ages 40 to 49 and 45% of those ages 50 to 59 fall into the "sandwich generation," meaning they have a living parent age 65 or older and either a minor child or an adult child they are financially supporting or have supported.

Managing that dual financial obligation moves retirement planning out of standard blueprint territory and into a situation where you're essentially building a custom plan. That plan must balance caregiving expenses with your own future savings and navigate income limits, IRS rules, and other potential trade-offs.

Knowing which tax credits, deductions, and strategies might apply can help. Here are seven worth thinking about.

Retirement savings tax breaks and strategies for Gen Xers

The following strategies are presented for educational purposes only. Every person's financial situation is different. So it's good to consult a trusted tax professional or financial advisor who knows your circumstances, particularly if you're unsure or have questions about the best tax strategies for you.

1. Caring for an aging parent? You may be able to claim them as a dependent

If you’re helping support an aging parent, you already know how quickly caregiving costs can add up. What you might not know is that some caregivers may be able to claim a parent as a dependent.

Generally, to claim a parent as a dependent on your return, the parent must meet several IRS requirements (including gross income below $5,300 for 2026), and you must provide more than half of their total support.

Other requirements apply, particularly when siblings share expenses or caregiving responsibilities.

If your parent qualifies as your dependent, certain medical expenses you pay on their behalf may also be eligible for the medical expense deduction if you itemize and meet the applicable IRS requirements.

2. Don’t overlook the Child and Dependent Care Credit

If you’re helping support an aging parent while also paying for child care, those expenses can put added pressure on your budget.

The Child and Dependent Care Credit can help eligible taxpayers offset some of those costs. This non-refundable tax credit is designed to offset a portion of the costs associated with child care for dependents while the parent or guardian is working, looking for work, or attending school.

• For tax year 2026 (returns you typically file in early 2027), the credit allows for a maximum of $3,000 in qualifying expenses for care related to one qualifying individual.
• If your household has two or more qualifying individuals, this cap increases to $6,000.
• The credit is applied at a maximum rate of 50%, but the exact percentage depends on your adjusted gross income (AGI)

For a Gen X household already balancing caregiving costs with retirement savings, exploring the specifics of this credit to see if you can benefit might be worthwhile.

3. Put your Health Savings Account (HSA) tax advantages to work

An HSA may start as a way to pay for medical bills, but it can also play a role in longer-term planning. For eligible taxpayers, HSAs offer a combination of tax advantages that can make them useful well beyond current health care expenses.

Contributions can be deductible, money in the account can grow tax-free, and withdrawals for qualified medical expenses are tax-free.

• For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage.
• Eligibility requires an HSA-qualified high-deductible health plan (HDHP), although 2026 rules also provide for certain bronze and catastrophic plans to be treated as HSA-compatible.

For example, someone who makes the full $8,750 family contribution and can deduct the entire amount while in the 24% federal marginal tax bracket could reduce federal income tax by approximately $2,100.

That combination can make an HSA another piece of the retirement puzzle, particularly for Gen Xers who expect health care costs to remain an integral part of their financial picture later in life. But keep in mind that HSAs aren't right for everyone.

4. Once you get a 401(k) match, ask where the next dollar goes

Getting your full employer retirement plan match is an important part of retirement saving, but what happens after that? The answer isn’t necessarily to put every additional dollar into the same account.

• For 2026, employees can contribute up to $24,500 to a 401(k), 403(b), governmental 457 plan, or federal Thrift Savings Plan.
• Workers age 50 and older can contribute an additional $8,000, while those who turn 60 through 63 during 2026 have a higher "super catch-up" limit of $11,250.

Once you’ve met your match, there’s another question worth asking: ‘Where should my next dollar go?’

A traditional 401(k), Roth account, HSA, and taxable investment account each have different tax implications, so the right choice can depend on your income, tax bracket, employer plan, and expectations for your future retirement income.

The advantage of an à la carte approach is the flexibility to choose the pieces that make the most sense for your situation. You don’t have to put everything in one place. You can build a plan that works for you.

5. Your retirement savings could earn you a Saver's Credit tax break

Saving for retirement can help you build a nest egg, and for some taxpayers, the contribution itself can also qualify for a tax credit.

The Saver’s Credit, officially called the Retirement Savings Contributions Credit, is available to certain taxpayers who contribute to an IRA or employer-sponsored retirement plan.

• For 2026, the credit can be worth 10%, 20%, or 50% of eligible contributions, depending on adjusted gross income and filing status.
• Up to $2,000 of contributions per person can be used to calculate the credit, making the maximum credit $1,000 for an individual or $2,000 for a married couple filing jointly.

For 2026, the credit is available to taxpayers with adjusted gross income (AGI) below $40,250 for single filers, $60,375 for heads of household, and $80,500 for married couples filing jointly. The credit is nonrefundable, meaning it can reduce the federal income tax you owe, but you won’t receive a refund for any amount that exceeds your tax liability.

If you’re already contributing to a retirement account, check whether you might qualify for the credit. Just keep in mind that beginning with contributions for 2027, the Saver’s Credit will be replaced by the Saver’s Match.

6. Make the most of your charitable giving in 2026

Charitable giving can offer tax benefits, but the rules depend on how you give.

Beginning in 2026, taxpayers who take the standard deduction can also deduct up to $1,000 in qualifying cash contributions to eligible organizations, or $2,000 for married couples filing jointly, subject to the applicable rules.

For taxpayers who itemize deductions, 2026 also brings a new 0.5% of AGI floor for charitable deductions.

For people making larger charitable gifts, more specialized strategies, like charitable gift annuities, may also be worth exploring.

A charitable gift annuity can provide a stream of income in exchange for a charitable contribution, although the tax treatment depends on the gift's structure and the donor’s circumstances.

How you give may be as important as how much you give.

7. Retirement isn't just what you save; it’s what you get to keep

Your retirement account balance tells only part of the story. What matters is how much of it you ultimately get to keep.

A dollar in a traditional retirement account can have a different after-tax value from a dollar in a Roth account or a taxable investment account.

Traditional retirement accounts provide a tax benefit today in exchange for paying ordinary income taxes on withdrawals later. Roth accounts work differently. Given that contributions are made with after-tax dollars, qualified withdrawals are generally tax-free.

For Gen Xers who are still years from retirement, that difference matters. You don’t need to predict exactly what tax rates will look like decades from now. You just don’t want all your future retirement income sitting in the same tax bucket.

Strategically saving and earmarking money across differently structured accounts can give you more control over your money in retirement. You may be able to choose where to draw income based on your circumstances and tax situation at the time, including how much taxable income to recognize each year.

That’s why tax planning shouldn’t stop once you’ve decided how much to save. It should be part of the retirement plan itself.

Related

• Gen X, Boomers, Millennials, or Gen Z: Which Generation Pays the Most Taxes?
• New 2026 Tax Change Could Mean More for Your IRA and 401(k) Savings
• A Bunch of IRS Tax Deductions and Credits You Need to Know
• 6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't)

It’s common advice to try to enter retirement debt-free. The fewer fixed costs you have once your job-related paycheck disappears, the less financial stress you might have.

But should your mortgage be the exception? For people who locked in pandemic-era mortgage rates in the 3% range or lower, perhaps it should be. Here’s why having a mortgage in retirement could actually work to your benefit.

The liquidity may be invaluable

If you have a decent amount of retirement savings, you may be able to use some of it to pay off your mortgage balance before your career wraps up. But Steven Rogé, CFP, chief investment officer and CEO of R.W. Rogé & Company, says carrying a mortgage in retirement could make sense for liquidity reasons.

“It preserves liquidity that can't be pulled away from you,” he explains. “Compare that to a line of credit against your portfolio, where you could face a margin call that forces you to sell assets, often appreciated ones, with tax consequences.”

Rogé also cautions clients set on being mortgage-free in retirement that once that loan is paid off, there’s no "undo" button. So before throwing a pile of money at that mortgage, consider the rate you’re paying and how those monthly payments fit into your budget. If your rate is low and your payments are manageable, keeping cash on hand for unplanned expenses could be a smarter bet.

Rogé also says that if you pay off your mortgage ahead of retirement and change your mind, it can be tricky to get a new loan.

"Banks want to see income, and few of them care much about the assets you hold," Rogé explains. (Though some asset-depletion mortgages may help high-net-worth retirees secure new financing.) Plus, given today’s borrowing conditions, you’re likely to end up with a significantly higher interest rate.

Another thing to keep in mind is that maintaining liquidity doesn’t just give you more options for dealing with unplanned expenses. It could also be your ticket to fulfilling some of your retirement goals and maximizing years of good health, says Greg Corneille, CFP, wealth adviser, and founder at Choice Wealth Management.

"When planning for retirement, we don't always think about the importance of maximizing those early retirement years in which we're likely to be most healthy and active,” Corneille says. "If money that could be used to pay off a mortgage can instead produce income in excess of the mortgage payments, then that extra income can be used to get the most out of those peak retirement years — travel, being active, and pursuing things you enjoy."

There may be tax benefits to reap

In addition to liquidity, carrying a mortgage in retirement could mean scoring an extra tax write-off, Rogé says.

"Not every retiree itemizes now that the standard deduction has increased," he says. "But those who do can still claim the home mortgage interest deduction, which effectively lowers your mortgage rate on an after-tax basis."

Plus, Rogé says, "The cash to pay off a mortgage has to come from somewhere. Usually that means selling appreciated assets and paying tax on the gain, or taking an IRA distribution and paying tax on the distribution." That extra income may, in turn, trigger Medicare premium surcharges, known as IRMAA.

In other words, paying off your mortgage could create a secondary tax burden, whereas carrying it could help from a tax perspective.

You might out-earn your mortgage rate

The amount of interest you’re paying on your mortgage should help inform your decision. But Rogé says that if you’re sitting on a 3% mortgage rate or lower, you can pretty easily earn a higher return in a relatively low-risk portfolio, which makes the case for keeping the loan.

"You can generally earn a higher return on your investments than your 3% mortgage costs you. It isn't guaranteed, but even a 3-month T-Bill yields more than that mortgage rate today," Rogé says.

He also reminds borrowers that 3% interest rates aren’t available anywhere today and may not be for a long time. So before giving up that rate, see what your options are for making money off it.

Moreover, a fixed-rate 3% mortgage is a fantastic hedge against inflation. You get to pay back the bank over 30 years using "cheaper," depreciated dollars, while your home's equity theoretically rises with inflation.

You may have a better use for the money

If you have a nice amount of savings, paying off your mortgage may be doable. But Rogé says that if you have a low mortgage rate, you may be better off doing something else with your money.

Many of his clients, for example, have large traditional IRA or 401(k) balances that will be subject to required minimum distributions (RMDs) and the taxes that come with them. Roth conversions can fix the problem, Rogé says, but the cash to pay taxes on a conversion needs to come from somewhere.

In that case, "the cash you would have used to pay off the mortgage can do that job instead," Rogé says.

It’s a matter of your personal comfort

While keeping a mortgage in retirement certainly has benefits, your decision should ultimately boil down to your specific financial situation and how you feel about carrying debt versus being debt-free.

Georgia Bruggeman, CFP, founder and CEO of Meridian Financial Advisors, LLC, says, "Whether to keep a mortgage or not in retirement is not just a math question but a comfort question."

"Some people," Bruggeman explains, "are just really uncomfortable carrying a mortgage. In these cases, it makes sense to develop a plan to just pay more toward the principal to pay off the mortgage sooner."

But if you’re not particularly bothered by the idea of retaining some debt, keeping your mortgage in retirement could give you the best of many worlds — more financial flexibility, tax breaks, and the option to keep other funds invested for added growth.

Read More

• The Cost of Staying Put: Aging in the Neighborhood You Love
• 5 Little-Known Senior Property Tax Breaks in 2026
• Best Places to Retire in the US
• My $1.2 Million Vacation Home Has a $360K Mortgage. I Don't Need My Upcoming $45K RMD. Should I Use It to Pay Down the Mortgage?

My wife and I don't take the same vitamins. We don't follow the same workout plan. We don't have the same diet. (The last one is on me. I should eat healthier food.) Think of retirement planning for women and men as a daily vitamin. They should be different by design.

This can apply to both accumulation for retirement and retirement income planning. For today's purposes, we are going to focus on retirement income planning, where our practice, Exit 59 Advisory (I'm the president), is focused.

Below are four areas where planning for women and men should vary and a few things you can do to prepare.

Longevity planning

The obvious fact that women live longer than men is the first domino that falls and creates many of the less obvious dominos falling in its wake.

If you're going to live a longer life, lifetime income sources are more valuable. Receiving $10,000 per month is more valuable if you receive that amount for 30 years instead of 25. (Duh.) So, what can you do about it?

• Consider delaying claiming Social Security or, if you're married, having your spouse delay claiming. That 8% delayed retirement credit you get paid to wait becomes more valuable the longer you collect the benefit.
• Pension options should be considered in the context of a longer life expectancy: Pension formulas are typically based on unisex mortality tables, so your pension benefit does not change because you're a woman. This makes lump sums less valuable typically than lifetime income streams. And single life annuities, all else being equal, are more advisable than joint options that may make more sense for men.
• Consider other lifetime income sources: A private annuity will factor in the fact that you are a woman. However, if you're married, it may make sense to consider joint income annuities. If you just find comfort in knowing you'll have basic expenses covered for a long life, it's worth getting a quote from an insurance agent.

Asset allocation vs asset purpose

Because women live longer, they should have more of their assets in equities as a hedge. However, this increases sequence of returns risk — the risk that the market drops significantly as you start withdrawing.

It also requires riding an investment roller coaster that is twice as scary when you don't have a paycheck.

The concept of asset purpose is similar to a bucketing strategy in that it will allow you to take more risk with buckets of money that you won't need for a long time. You can carve out a portion of your assets for end-of-life and long-term care. Those funds can be aggressively invested, and likely the risk endured, because you probably won't need them for a longer number of years.

Things like travel funds, an expense that spikes early in retirement, would be more conservative. Expenses needed within two years in this strategy would be kept in cash to account for the possibility of a significant market downturn.

In the aggregate, you would end up with a higher equity allocation over time as you spend down the more conservative buckets early in retirement.

Long-term care

I always used to joke in the continuing education sessions I taught on this topic that men who go into a nursing home hate it and then die. Women go in, make friends and live forever. I was only sort of kidding.

Women are not only more likely to need long-term care, since they don't receive the reciprocal care from their husband who has already died, but they tend to need care for about twice as long as their male counterparts. Not fair, I know.

When we build out financial plans, the long-term care expense we stress-test is about twice as high for women as it is for men.

If you don't have a plan, or want to stress-test it yourself, you can access a free version of the planning software we use.

Estate planning that actually matters for you

It is notoriously difficult to get male clients to tackle estate planning. I suspect that's because it's something solely for the benefit of someone else.

If you are a married woman, you should feel more confident that you are doing estate planning for you — and if you don't, things are going to get messy.

I typically encourage our clients to review beneficiary designations annually and a written estate plan (wills, trusts, etc.) every five years or if something material has changed.

This will almost never feel like a priority until something bad has happened. It pays to spray for weeds before they take over your lawn. Trust me: I know.

I really am just scratching the surface on this topic and plan to come back to it in future columns.

Notably not mentioned is the impact of being a caregiver and the outsized impact and obligation this comes with for women.

In this context, it can take you away from your peak earning years. That impacts Social Security, pensions and investment accumulation, not to mention the reality that mental and physical strain can make it easy to take your eye off the ball (your own finances). The former is hard to prevent; the latter is also difficult, but preventable.

This all seems very unfair to women.

Here's the silver lining and forgive the generalization: Women are also better planners.

Related Content

• How Your Kids' Low Tax Bracket Can Wipe Out Your Capital Gains
• How the Tax Torpedo Targets Wealthy Retirees (and How You Can Step Out of Its Path)
• If You're a Wealthy Retiree Who Ignores These 3 Retirement To-Dos, You're Courting Significant Financial Risk
• 5 Mistakes to Avoid in the 5 Years Before You Retire, From a Financial Planner
• For High-Net-Worth Retirees, Tax Planning and Estate Planning Are the Main Events

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

This story began with a phone call from brother and sister "Lisa" and "Michael," who are both in their mid-40s. Their call was like no other I have received in all my decades of law practice.

"Mr. Beaver," Lisa began, "we have read your column for years and need your help. What can we do to prevent our mother from going forward with plans that will wind up killing our father?"

I, of course, asked them to please be specific. What plans? What's going on?

A matter of Mom's self-image

"Dad has been a beloved pediatrician his entire career in our town," Michael explained. "Mom's self-image has always been as 'Dr. Y's wife,' which, in her mind, gave her social status and made her feel important, a somebody. She always refers to herself as 'Dr. Y's wife.' That is her identity. Recently, Dad was diagnosed with Alzheimer's, and over her protests and denial ('Those neurologists don't know a thing! Dad is fine!' she insists), he had to close his medical practice.

"It was as if someone turned off a switch for her. In her mind, Mom no longer has the celebrity status of being married to a physician beloved by his patients and their families. Instead, she told people that Dad had embarrassed her! It was so upsetting, Mr. Beaver!

"Mom told us, 'I can't face people. We have to leave town.' She made a down payment on a house hundreds of miles away, where they do not know anyone, and she plans to move there with Dad. This will cut him off from all his friends, people who would want to help them in any way possible. He does not want to move but has always been passive in their marriage."

Lisa added, "This move will isolate him and impair his mental and physical health at a time when he needs support from the many people in town who care. We need direct, actionable advice from someone who has experience with these issues, a road map to follow on things we could do that might alter her desire to move away."

Listen before taking action and lead with empathy

Data on migration patterns shows that roughly 22% of people move to a different county following a dementia diagnosis — a rate significantly higher than for other major health events.

To get some advice to help Lisa and Michael, I spoke with Boca Raton, Florida-based Jill Poser, founder of Life Care Concierge of South Florida, a nurse-led care advocacy practice. Recognized as an expert in aging life care management, private duty home care and life care planning, she holds the Certified Dementia Care Partner (CDCP) designation provided through the Alzheimer's Foundation of America.

Poser began our Zoom interview by pointing out, "A diagnosis of Alzheimer's or another form of dementia severely impacts a couple's relationship, often causing a deep loss of identity."

She offered these four recommendations to consider, focusing on addressing Lisa and Michael's mom's grief and identity, continuing care for their father and legal issues.

1. Focus on Mom's grief and her identity fears

Listen to Mom and ask her what she fears. What is the basis of those fears?

View her behavior as an expression of grief and belief that she is losing her identity as "Mrs. Dr. Y."

Approach her from a position of empathy rather than accusation.

For example, don't say, "You are so wrapped up in yourself! Moving away where he has no one will shorten his life."

Instead, show compassion and avoid using "you must" statements: "We know how much you love Dad. How can we support you?"

2. Explore aspects of identity that will strengthen her public role as Dr. Y's wife

Suggest she get involved in social activities, philanthropy, clubs or sports.

Say: "You both loved tennis, and Dad is an excellent pianist, so create sports and music scholarships in both your names for students at our local college. This way, both of you will be so appreciated for giving back to our town."

3. Preserve routine and familiarity for Dad where possible

The siblings should stress the importance of stability and how a familiar environment is crucial for someone with cognitive decline. Routines, longtime friends and known surroundings reduce disorientation and the risk of behavioral decline or wandering.

Point out that in town Mom has a support system that is already in place, but moving away would be a major disruption and could accelerate Dad's functional decline. The responsibility of caring for Dad would be entirely on her shoulders.

Be strategic about this. For example, try something like, "Mom, let's assume that you decide to remain in town. Tell us about the support you would like and think about who you already lean on in times of stress. These are good reasons to remain here. We know the burden will be significant, and you can count on us to be here to help in any way we can."

4. Discuss care management and seek professional support

"A dementia diagnosis is one of the heaviest, world-altering moments (for couples)," Poser says. "It often triggers a fight-or-flight response — the urge to run away, to leave town to escape the reality of the situation. That's a common human reaction to fear and grief."

She adds, "For that reason, among many others, these adult children should suggest hiring a care manager or appropriate professionals to evaluate their father's home-care needs, provide ongoing counseling for their mother and help facilitate difficult family discussions. And be ready to act as a neutral mediator in family discussions."

The key to preventing the move

My advice? Lisa and Michael need to immediately consult with an elder law attorney/conservator who, in most states, could try to obtain a court order that would prevent their mother from isolating their father.

At a hearing, a judge can consider why the move is proposed and whether it is in their father's best interest. Dad's opinion can also be considered, if he is able to express it.

Poser concluded our interview with this observation that should apply to all of us who were raised by loving parents: "Growing up, our parents protect us. Growing older, we protect them."

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

Related Content

• The Delightful Way to Protect Your Cognitive Health
• How to Guard Your Finances in Case Cognitive Decline Sets In
• These Habits Could Reveal Your Risk of Cognitive Decline
• Loyalty Points vs Empathy: What Happens When a Company Forgets the Human Behind the Account
• Six Things Not to Do if You Want to Resolve a Conflict

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 most of my career, I've watched Americans think about life insurance the same way. It's something you buy to protect your family if something happens to you. That's still true, but it's no longer the whole story.

Not only are people living longer, but roughly 11,000 Americans reach retirement age every day, according to the Alliance for Lifetime Income by LIMRA, and trillions of dollars are beginning to move from one generation to the next.

As a result, families are asking harder questions about retirement planning, how to make their savings last and how to leave something behind. Life insurance, when used well, can help answer all three of these questions.

Most insurers are now focused on developing products that solve real protection and long-term financial needs, with products that are less market-sensitive and more capital-efficient for the people who own them.

Consumers should view life insurance through the same lens. Before you buy a policy, here are five questions worth asking.

1. What do I want this policy to do?

Term life insurance is built to protect your family during your working years. It's affordable, straightforward and often the right first step. Permanent policies, including indexed universal life insurance, can do more. They build cash value over time that you may be able to access later in life.

It's important to be clear on what you want the policy to do. If you need coverage only for a set period, term may be the right answer. If you want a policy that can not only provide financial protection for loved ones, but also transfer wealth to the next generation, you are likely looking at a permanent product.

2. How does the cash value grow, and what happens when markets drop?

If you're considering permanent life insurance, ask how the cash value grows and what protects it when markets turn. Some products tie growth to a market index with a floor that limits losses in down years. Others carry more direct market exposure.

There is no single right answer. What matters is that you understand how your policy performs in both a good year and a bad one, how much risk you're comfortable taking and how that fits with the rest of your savings.

3. How can I use this policy during my lifetime?

A life insurance policy is not only for after you're gone. Many permanent policies let you access the cash value through loans or withdrawals while you're living. That flexibility can be useful as your financial needs change over time.

Also ask about riders, as some policies let you access part of the death benefit early if you face a chronic or serious illness. Those benefits can matter as much as the payout itself.

If you're working with a financial professional, ask them to explain how using a policy's living benefits could affect the death benefit.

4. How does this policy fit with everything else I'm planning?

Life insurance works best when it's part of a comprehensive plan. As part of your retirement planning, for example, assess your 401(k), your IRAs, your Social Security timing and all other assets together.

A financial professional can help you see how a policy supports the rest of the plan, including how it can:

• Protect a spouse
• Cover taxes on an inheritance
• Give you flexibility if one part of the plan doesn't perform as expected
• Help replace income that could be lost when a spouse passes away, including income sources for Social Security benefits

5. What do I want to pass on?

Life insurance has long been one of the most efficient ways to transfer wealth. In most cases, the death benefit is income-tax-free to your beneficiaries It can arrive at a time when families need it most, helping to replace lost income and provide financial stability during a difficult transition.

Think about what you want to leave behind and then ask whether your policy is built for that specific outcome.

Making life insurance part of your comprehensive financial plan is all about finding the right policy that can do real work for you over a long life, while helping to protect the people you care about most. Start with what you want and let the product follow.

Related Content

• 5 Smart Ways to Use Your Life Insurance While You're Still Alive
• Is Your Term Life Insurance Policy Expiring? 3 Paths to Consider Next
• Do You Need Life Insurance When You're Young?
• This Is How Life Insurance Can Fund Your Dreams Now

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

For many retirees, few acronyms generate more anxiety than IRMAA.

Countless articles, videos and financial discussions warn retirees to stay below the next Medicare premium threshold. But what if avoiding an IRMAA surcharge causes you to pay more over the course of retirement?

In many cases, that's what can happen when annual tax planning takes priority over lifetime tax planning.

The income-related monthly adjustment amount (IRMAA) is the Medicare surcharge higher-income beneficiaries might pay for Medicare Part B and Part D coverage.

Because IRMAA is based on your modified adjusted gross income (MAGI) from two years earlier, many retirees become intensely focused on staying below the next surcharge threshold.

That focus is understandable — but it can also be expensive.

Many retirees reject Roth conversion strategies or other tax-planning opportunities solely because they might temporarily increase Medicare premiums. In some cases, avoiding an IRMAA surcharge can ultimately result in paying significantly more in lifetime taxes.

• The better question isn't: "How can I avoid IRMAA this year?"
• Instead, ask: "How can I minimize the total taxes and costs my family is likely to pay over the course of retirement?"

Those are two very different objectives.

Think beyond this year's tax return

Traditional tax planning often centers on reducing this year's tax liability.

Lifetime tax planning takes a broader view by evaluating how today's decisions affect taxes, retirement income and wealth in the next 20 to 30 years.

That distinction matters because strategies that intentionally increase taxable income today — such as Roth conversions — can sometimes reduce taxes substantially later.

Depending on the circumstances, converting part of a traditional IRA to a Roth IRA could:

• Reduce future required minimum distributions (RMDs)
• Lower taxable income later in retirement
• Reduce the taxation of Social Security benefits
• Provide additional tax-free assets for future spending
• Improve tax flexibility throughout retirement
• Reduce taxes for a surviving spouse
• Leave heirs with more tax-efficient inheritances

None of those benefits can be evaluated by looking at only one tax year.

Focus on the right goal

Key takeaway: IRMAA is an important planning variable — but it should rarely outweigh a well-supported strategy that meaningfully reduces lifetime taxes.

Understanding the tax valley

Many retirees experience a period after they stop working but before claiming Social Security and before required minimum distributions begin.

During these years, taxable income might be temporarily lower than it will be later in retirement.

Financial planners often refer to this as a tax valley — a window that might present an opportunity to recognize income at relatively favorable tax rates.

Consider a hypothetical married couple, both age 63, with $2 million in traditional IRAs.

Because they recently retired, they temporarily find themselves in the 24% federal income tax bracket. Their retirement income plan projects substantially higher taxable income once Social Security benefits begin and required minimum distributions become mandatory.

Suppose they convert $150,000 per year to Roth IRAs over several years. The conversions increase their taxable income enough to trigger higher Medicare premiums through IRMAA.

At first glance, paying higher Medicare premiums seems undesirable.

However, those same Roth conversions might significantly reduce future required minimum distributions, lower future taxable income, reduce taxes for a surviving spouse, create greater tax flexibility later in retirement and leave heirs with more tax-efficient assets.

If a temporary Medicare surcharge of several thousand dollars helps reduce projected lifetime taxes by six figures, many retirees would likely consider that an attractive trade-off.

The numbers — not the premium increase alone — should drive the decision.

IRMAA is one variable — not the objective

Retirement planning requires balancing many competing financial factors:

• Federal income taxes
• State income taxes
• Social Security taxation
• Required minimum distributions
• Medicare premiums
• Estate planning
• Legacy goals

Each deserves consideration, but the mistake is allowing any one of those to dominate the entire planning process.

IRMAA should be viewed the same way investors evaluate transaction costs or capital gains taxes. It is a legitimate expense to consider — but not necessarily a reason to abandon an otherwise beneficial strategy.

Waiting can be expensive

Many retirees assume paying less tax today automatically leads to paying less tax overall.

Unfortunately, that assumption often proves incorrect.

Traditional IRAs continue growing tax deferred. Larger account balances frequently produce larger required minimum distributions, which could:

• Push retirees into higher tax brackets.
• Increase the taxable portion of Social Security benefits.
• Trigger higher Medicare premiums later in retirement.
• Increase tax burdens after the death of a spouse, when the surviving spouse begins filing as a single taxpayer.
• Leave beneficiaries inheriting taxable retirement accounts that generally must be distributed within 10 years under current law.

Ironically, retirees who spend years trying to avoid modest IRMAA surcharges today might pay larger Medicare surcharges later because their required minimum distributions have become substantially larger.

Every recommendation should begin with a projection

No two retirees have identical circumstances.

The appropriate Roth conversion strategy depends on numerous variables, including expected investment returns, future tax rates, longevity, charitable giving goals, pension income, state taxes, estate-planning objectives and anticipated spending needs.

For that reason, sophisticated retirement planning relies on long-term projections rather than general rules.

Stopping a Roth conversion because it crosses an IRMAA threshold might feel prudent, but without a lifetime analysis, it's impossible to know whether that decision improves a retiree's long-term financial outcome.

The goal isn't to win this year's tax return

The Internal Revenue Service calculates your taxes one year at a time — your retirement plan shouldn't.

The objective of retirement tax planning isn't minimizing taxes this year — nor is it minimizing Medicare premiums this year.

The objective is maximizing after-tax wealth throughout retirement while preserving flexibility for future spending, charitable giving and legacy planning.

Sometimes that means staying below an IRMAA threshold.

Other times, the math clearly supports accepting a temporary Medicare surcharge because doing so produces substantially larger long-term tax savings.

The answer depends on the analysis — not the acronym.

The Centers for Medicare & Medicaid Services (CMS) establishes IRMAA as an income-based adjustment to Medicare premiums, while IRS rules govern the taxation of Roth conversions in the year they occur.

Neither rule suggests retirees should automatically avoid Roth conversions because of a temporary increase in Medicare premiums. Instead, both reinforce the importance of evaluating tax decisions within the context of an overall retirement income strategy.

The most ideal retirement tax plans rarely optimize a single year — they optimize a lifetime.

Related Content

• 8 Changes Coming to Medicare in 2027
• Today's 'Safe' Returns May Not Be Enough to Secure Your Retirement: Here's Why, According to a Financial Pro
• How to Use a Medicaid Asset Protection Trust to Help Shield Your Family From Long-Term Care Costs
• How to Help Prevent Taxes From Taking a Massive Bite Out of a Special Needs Trust
• The Illinois 'Cliff Tax': A Single Dollar Could Cost Families Hundreds of Thousands

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

As an estate planning and elder law attorney for more than three decades, I can tell you that many people believe they've protected their assets by signing a revocable living trust.

They haven't.

Every year, I meet intelligent, financially successful families who have done almost everything right. They've accumulated retirement savings, worked with financial advisers, signed comprehensive estate planning documents and funded a revocable living trust.

Then one spouse develops Alzheimer's disease, Parkinson's disease or another chronic illness requiring years of home care, assisted living, memory care and eventually nursing-home care.

That's when they discover that their perfectly drafted trust is of no help, because it was designed to solve a different problem.

The ultimate question is not whether you have a trust. It's whether you have the right trust for the problem you need to solve.

A revocable living trust (often abbreviated as an RLT) is one of the best estate planning tools available. Unlike a will, an RLT trust protects your assets from probate and provides many other benefits, making it one of the most popular estate planning tools in the country.

But an RLT does not protect your assets from lawsuits or the potentially catastrophic expenses of long-term care.

Why doesn't an RLT protect assets?

The answer is simple.

An RLT works because you effectively remain the owner of all trust assets, and you retain complete control of those assets, including the ability to remove any or all assets from the trust at any time.

Because the assets remain yours, they remain available to pay any bills you owe, including long-term care bills. The assets in your RLT are treated as if they still belong to you and remain available to creditors, including the biggest creditor most people face in their lifetimes — a nursing home.

People often spend thousands creating and funding an RLT believing they've solved both the probate and the long-term care problem, when they've solved only the probate problem.

Unfortunately, many estate planning attorneys never explain this distinction because most don't practice in the area of Medicaid planning. They never discuss the irrevocable Medicaid Asset Protection Trust (MAPT) as an option.

As a result, many families discover the difference only after a health crisis, when planning options are limited.

What an RLT does well

None of this diminishes the value of an RLT.

I regularly recommend revocable living trusts to clients. My firm has prepared thousands of revocable living trusts.

A properly drafted and funded revocable living trust:

• Avoids probate
• Provides continuity if you become incapacitated
• Controls how and when beneficiaries receive an inheritance
• Keeps your affairs more private than a probate estate
• Can protect young or financially inexperienced beneficiaries from receiving large distributions outright
• Can provide ongoing asset protection to trust beneficiaries through the creation of spendthrift trusts, sometimes called dynasty trusts or beneficiary asset protection subtrusts

These are all important benefits. But none of them matter if you die broke because you spent all your money paying for long-term care.

As good as the revocable living trust is, in the past 15 years, my firm has prepared more MAPTs than revocable living trusts because once older clients understand the distinction, many choose a trust that not only avoids probate but also helps protect assets from long-term care costs.

We call our version the Living Trust Plus®. It's a proprietary MAPT system that we license to attorneys throughout the country to offer this type of planning to their own clients.

But most estate planning attorneys don't offer this type of trust planning. Helping clients protect their assets from long-term care costs is not on the radar of many estate planning attorneys.

Medicare won't pay the bill

Another common misconception is that Medicare will pay for long-term care. It won't.

Medicare doesn't pay a penny for long-term care. Families must rely on their own income and assets, long-term care insurance, certain veterans benefits or Medicaid, which is the biggest payor of nursing home expenses in the country.

What makes a Medicaid Asset Protection Trust different?

A MAPT is designed to solve not only the probate issue, but two additional problems. I call my version of the MAPT the Living Trust Plus because it protects your assets from probate plus lawsuits plus long-term care expenses.

Instead of retaining ownership of trust assets, you give up ownership and the ability to reclaim the protected assets. That creates the protection.

However, despite giving up ownership, you can retain a high degree of control of assets in the trust.

You can be the trustee of your own trust, meaning you can control how the assets are invested, whether your home gets sold and when assets get distributed to a trust beneficiary. You can even change the beneficiaries of the trust.

If you, as trustee, decide to distribute assets to a trust beneficiary, such as an adult child, that child can use the distributed money however they see fit, and you can't control what the child does with that money or have any type of agreement on how they use their money.

The child can spend the money for themselves, or they can, if they wish, spend the money for your benefit.

Planning using a MAPT must begin years before nursing home care is needed. The five-year Medicaid lookback period means waiting until a nursing-home admission or after a stroke could eliminate this planning opportunity.

Readers interested in learning more about Medicaid Asset Protection Trusts and other planning tools can find additional educational resources in our Elder Law Learning Hub.

For readers who want a more comprehensive discussion of probate avoidance, Medicaid Asset Protection Trusts and long-term care planning strategies, my bestselling book, Protecting Your Assets from Probate and Long-Term Care (Second Edition): Don't Let the System Bankrupt You and Your Loved Ones, explores these issues in greater detail.

Related Content

• Who Needs a Trust and Who Doesn't? A Financial Planner Explains
• Is Your Estate at Risk? The 5 Trusts You Need to Understand
• Revocable vs Irrevocable Trusts: It Comes Down to Control vs Protection
• What Assets Should Not Be Placed in a Revocable Trust?
• What You Need to Know About Long-Term Care Before You Need It

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

One of the most important retirement planning questions is also one of the hardest to answer: How much can you withdraw from your portfolio each year without running out of money?

A commonly cited starting point is the 4% rule. It suggests withdrawing about 4% of a portfolio in the first year, then increasing that dollar amount for inflation.

Using this guideline:

• A $1 million portfolio might initially support about $40,000 in annual withdrawals
• A $1.5 million portfolio might support about $60,000
• A $2 million portfolio might support about $80,000

These figures are illustrations, not guarantees. A sustainable strategy depends on retirement length, returns, inflation, taxes, healthcare costs, other income, spending flexibility and legacy goals.

A financial adviser can help determine how these factors work together and how the strategy should change over time.

The 4% rule is only a starting point

The 4% rule is appealing because it is simple. Retirement is not. Markets fluctuate, healthcare expenses rise, tax laws evolve and spending changes.

An adviser can help determine whether 4% is reasonable for a particular household or whether a higher or lower starting amount may be more appropriate.

Why the right withdrawal rate is different for everyone

No single withdrawal rate works for every retiree.

Retirement length and investment allocation. Someone retiring at 60 may need a portfolio to last 35 or 40 years. The portfolio must also balance stability and growth. Investing too conservatively may make it difficult to keep pace with inflation, while investing too aggressively may create large losses at the wrong time. An adviser can model longevity assumptions and build an allocation suited to the retiree's needs.

Inflation and taxes. Inflation gradually reduces purchasing power. Taxes also affect how much of a withdrawal is available to spend. Traditional retirement account withdrawals are generally taxable, qualified Roth withdrawals may be tax-free, and taxable accounts may produce interest, dividends and capital gains.

The order in which accounts are used can affect tax brackets, Medicare premiums, Social Security taxation and required minimum distributions. An adviser can help coordinate withdrawals across account types and work with a tax professional when appropriate.

Other income, spending and legacy goals. Social Security, pensions, rental income and annuity payments can reduce the amount required from investments. Retirees who can reduce discretionary spending during difficult markets may have more flexibility.

Some retirees want to spend most of their assets; others want to preserve wealth for family or charities. An adviser can coordinate income and balance lifestyle needs with long-term security and legacy goals.

Why average returns don't tell the whole story

Even when these factors are considered, the timing of market returns can significantly affect retirement outcomes.

A calculator may assume a portfolio earns a steady average return each year. Real markets don't behave that way. Two retirees can earn the same average return over 20 years and still have very different results depending on when gains and losses occur.

The importance of sequence of returns risk

This timing risk is known as sequence of returns risk.

Consider two retirees with the same starting portfolio, withdrawals and average return. One experiences strong returns early. The other experiences a major decline shortly after retiring and stronger returns later.

The second retiree may end up with far less money because withdrawals during a downturn require selling more shares at depressed prices. Those shares are no longer available to participate in a recovery.

Assume a retiree begins with $1 million and plans to withdraw $40,000 annually. If the portfolio declines 20% before the withdrawal, its value falls to $800,000. After taking $40,000, about $760,000 remains. The portfolio would then need to gain more than 31% to return to $1 million.

This is why a withdrawal plan shouldn't operate independently from the investment strategy.

How an adviser can help manage retirement income risk

Sequence risk can't be eliminated, but it can be managed.

Maintain an appropriate cash reserve. Cash for near-term expenses may reduce the need to sell stocks during a downturn. An adviser can help determine how much to hold without weakening long-term growth.

Create flexible spending rules. A retiree may temporarily delay a major purchase, reduce travel or pause inflation increases. Establishing guidelines in advance can make these decisions easier.

Rebalance systematically. An adviser can restore the portfolio to its intended allocation and help prevent short-term headlines from driving investment decisions.

Coordinate Social Security and pensions. Delaying Social Security may increase future guaranteed income but require larger portfolio withdrawals in the near term. An adviser can compare the trade-offs involving taxes, longevity and survivor benefits.

Use a dynamic withdrawal strategy. A fixed withdrawal may not remain appropriate throughout retirement. Guardrails can allow spending to rise after strong performance and decline when the portfolio falls below predetermined levels.

Why ongoing advice matters

A retirement plan shouldn't be treated as a one-time calculation. Markets, spending, tax laws, health and family circumstances change.

An adviser can review withdrawal rates, rebalance investments, update projections, coordinate tax-sensitive distributions and provide an objective perspective during volatile markets.

The value of advice is not predicting every market move. It is helping retirees make disciplined decisions based on a coordinated plan rather than short-term emotion.

The bottom line

The 4% rule can be a useful starting point, but it isn't a personalized retirement income plan.

A sustainable strategy must account for retirement length, investment allocation, inflation, taxes, healthcare costs, other income, spending flexibility, legacy goals and sequence of returns risk.

A financial adviser can bring these issues together and help adjust the strategy as circumstances change. The goal isn't simply to withdraw the maximum amount possible today. It is to balance enjoying retirement now with maintaining financial security for the years ahead.

This article is intended for general educational purposes and does not constitute individualized investment, tax, legal or retirement advice.

Related Content

• The 4% Rule for Retirement Withdrawals Gets an Upgrade
• I'm a Financial Planner: These 4 Spending Mistakes Can Derail Your Retirement Plan
• A Retirement Plan Isn't Just a Number: Strategic Withdrawals Can Make a Huge Difference
• I'm a Retirement Consultant: This Is the Single Most Important Planning Step I Learned After I Retired
• The Truth About Annuities: The Question Isn't 'Are They Good or Bad?' It's 'Are They Appropriate for You?'

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

Living longer creates the opportunity for more — more experiences, more time with loved ones and more chances to pursue what matters most.

Unfortunately, there is often a disconnect between the life people hope to enjoy and how prepared they feel to support it. While most expect to age well, many are still working to build the foundation needed to turn their vision into reality.

Closing that gap starts with an understanding of what lies ahead and planning accordingly, allowing you to approach those added years with greater clarity and confidence.

Redefining aging

According to Guardian's 2026 Mind, Body, and Wallet® report, people are focused not only on living longer, but on maintaining independence, purpose and stability along the way.

Working Americans have a clear picture of what they want that future to look like. Sixty percent anticipate having more free time, 55% look forward to traveling, and 52% want to spend more time with friends and family, reflecting a desire for a more active, connected and fulfilling stage of life.

Retirement itself is evolving, as well. Two-thirds of Americans expect to continue working in some capacity, whether for income, personal fulfillment or social connection.

Where preparedness often falls short

Despite these evolving expectations, many Americans aren't fully prepared for the realities of a longer life.

Guardian found that Americans' financial wellness is at its lowest point in 15 years, with just three in 10 individuals reporting "excellent" or "very good" financial health.

Many people continue to face challenges managing day-to-day finances, with only 32% saying they do so very well, and more than half reporting difficulty living within their means.

Looking further ahead, long-term readiness is also limited. Just 13% feel on track to achieve their desired retirement lifestyle, and planning for key aspects of aging, such as housing or care needs, often remains incomplete.

Broader well-being trends add another layer of complexity. Just 31% of working Americans say they get enough exercise, and only 34% report being good at taking care of their mental health, both of which can influence independence and quality of life over time.

Taken together, these patterns point to a growing disconnect: As lifespans increase, the need for thoughtful preparation grows as well, yet many are still figuring out how to plan effectively for what's ahead.

Building financial confidence for the future

Preparing for a longer life isn't about reaching a single milestone, but rather building habits and a strategy that can evolve over time. Starting early can create more flexibility down the road — yet progress at any stage can make a meaningful difference.

Ultimately, these steps help support the financial confidence needed to enjoy later life as intended.

A few core priorities can help you keep that effort on track:

Start early and build a strong financial foundation. Establishing good financial habits early, such as building emergency reserves, saving consistently, investing for long-term growth and participating in workplace retirement plans can create flexibility.

When invested, even modest contributions can compound, helping reduce pressure later in life and providing a buffer against unexpected events.

Strengthen and protect as life evolves. As income and responsibilities grow, financial strategies should expand, as well. Increasing retirement contributions, managing debt and ensuring appropriate protection such as life and disability coverage can help safeguard progress and reduce the risk of setbacks that could derail long-term goals.

Plan for income, not just accumulation. A longer retirement shifts the focus from how much is saved to how those savings will be used.

Creating sustainable income, addressing longevity risk and preparing for healthcare and caregiving costs are essential to maintaining independence and financial stability over decades.

Stay flexible and adapt over time. Longevity introduces uncertainty, making flexibility critical. Financial plans should be revisited regularly to reflect changing goals, market conditions and life circumstances.

Staying engaged, even in retirement, can help ensure that strategies remain aligned with both lifestyle needs and long-term security.

Finding support along the way

Preparing financially for a long, fulfilling life is more complex than ever. However, it's not a journey you need to navigate alone. More than six in 10 Americans who report high financial wellness also work with a financial adviser, highlighting just how valuable it can be to have a trusted partner each step of the way.

Whether retirement is on the horizon or still decades away, an adviser can provide personalized guidance tailored to your needs and goals. Through regular check-ins, you can gain clearer insight into your financial picture, track progress toward your goals and adjust your approach as circumstances evolve, all within a relationship that strengthens over years and even decades.

Planning for longevity with confidence

Living longer changes the financial equation, but what we know for certain is that the quality of later years is shaped by decisions made much earlier. Building strong financial habits, protecting against risk and planning for reliable income, especially when backed by the expertise of a financial adviser, can be the difference between simply living longer and living with confidence.

By focusing on income, protection and adaptability, you can be better positioned to turn longevity into a source of stability and opportunity.

Related Content

• The Longevity Blueprint: 4 Everyday Signs You’re Tracked for a Longer Life
• 9 Habits for a Happy Retirement
• I'm a Retirement Consultant: This Is the Single Most Important Planning Step I Learned After I Retired
• Aging Well: 10 Things You Should Know
• The 5 Pillars of a Fulfilling Retirement (and They Don't Include Savings, Healthcare Costs or Social Security)

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

A question I frequently hear is: When can I retire? What they're actually asking is: When will work stop being something I have to do?

Those are different questions, and the plan you build depends on which one you answer.

The on-ramp isn't the exit

Think of financial independence as merging onto a highway with an exit ramp available at every mile marker. You don't have to take the exit; you just need to know it's there and that you could take it if you wanted.

That's the point of the milestone: It's optionality, not an instruction.

Retirement is the decision to take the ramp. One is a number your plan produces. The other is a life choice you make with that number in hand. Reaching the first doesn't oblige you to do the second.

You don't need a perfect number

A common misconception I run into is that financial independence requires some enormous account balance before it counts. It doesn't. What it requires is a sustainable gap between what you have coming in and what you spend.

I've worked with clients whose modest spending got them to that on-ramp years before a higher-earning, higher-spending household with a much bigger portfolio.

Chasing a balance in isolation, without looking at the spending side, is how people miss their own exit ramp without realizing it was already within reach.

Flexibility deserves to be treated as an asset

The part of financial independence that gets underrated is what it does when life doesn't cooperate with your timeline. A health scare, a caregiving responsibility, a layoff, a market downturn — none of these sends you a calendar invite.

Clients who've already built in flexibility navigate those moments very differently than clients who were counting on working exactly as long as planned.

Reaching the ramp doesn't mean you must take it

One surprising thing I hear from clients who reach financial independence: Their relationship with work improves.

Once a paycheck stops being a requirement, plenty of people find they still want to do the work — just on different terms. Some stay full time. Others shift into consulting, board work or mentoring.

The point isn't that everyone should retire the moment they can. It's that they get to decide instead of defaulting.

The planning doesn't stop at the on-ramp

Financial independence isn't a finish line at which planning ends. Markets still move. Spending still shifts. A retirement, once you do take it, can run for decades.

Reaching independence changes the stakes of the plan. It doesn't retire the plan itself.

The real goal isn't racing to the earliest possible exit. It's building enough flexibility that when you do take the ramp, it's because you chose to, not because a number on a spreadsheet told you it was time.

Related Content

• Hitting Your Retirement Number Is Not Your Cue to Retire: You Still Have This Question to Answer
• Retirement Won't Make You as Happy as You Expect: A Financial Planner Explains Why
• I'm a Financial Planner: This Is Why a Sounding Board Is as Important as Hitting Your Savings Goal (And It's Never Too Late to Seek Guidance)
• Are You Looking for Financial Advice or Just Validation?
• Your Most Overlooked Retirement Investment: Luxuriating in Doing Nothing

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 U.S. Postal Service financial crisis is no longer a future concern — it's happening now.

Testifying before Congress in June, Postmaster General and Postal Service CEO David Steiner said the agency is running out of cash, deferring retirement obligations and relying on temporary financial maneuvers to continue providing service.

Those maneuvers include borrowing from employees' retirement funds, a move that should stop every postal worker in their tracks.

When Steiner says the agency is borrowing from those funds to stay afloat, he doesn't mean individual Thrift Savings Plan (TSP) accounts are being raided or that earned pensions have vanished.

However, it does mean the Postal Service is using deferred employer retirement obligations as a cash-management tool, which can impact every postal employee trying to make informed decisions about retirement, benefits, income and long-term security.

What postal workers can do to prepare

Postal employees have valuable benefits. This announcement isn't reason to panic, but it is reason to prepare.

Find out how potential changes could affect your pension, TSP, benefits and the financial protections you have chosen for your family. A qualified Federal Benefits Expert can help with that.

Calculate the retirement income you can realistically expect from the Federal Employees Retirement System (FERS), Social Security and your TSP, then compare it with what you actually spend each month.

The difference — whether a shortfall or a surplus — may determine how prepared you really are.

A Federal Benefits Expert can help you run that analysis, too.

Decide now how you would respond if the Postal Service announced another early-retirement offer, a restructuring or an involuntary separation. Understand what you would gain, what you could lose and whether your income, health coverage and savings could support that decision. Options are easier to evaluate before the pressure and deadlines arrive.

Prepare for the potential delay between your last paycheck and your full retirement income. We are seeing some retirement claims take six months (and occasionally as long as 12 months) to finalize.

A dedicated cash reserve can help you cover that gap without being forced into an unplanned, taxable withdrawal that depletes your traditional TSP savings.

That preparation matters because this is unlikely to be the last difficult decision involving Postal Service finances. Until the Postal Service and Congress agree on a durable plan for the Postal Service's long-term financial stability, employees should expect continued proposals that could affect operations, staffing and retirement planning.

Why we're in this situation

Deferring retirement obligations just to keep the lights on is not only indicative of a cash-flow problem for the Post Service, it's clear proof that the current funding model no longer works.

Under Title 39, the Postal Service must serve every American community, including routes that lose money year after year. Today, the agency delivers to roughly 170 million addresses, six days a week, across 233,000 delivery routes. This costs more than $65 million a week.

Steiner says 84% of city delivery routes and 52% of rural delivery routes are financially underwater, totaling a loss of more than $120 billion in the past decade.

In other words, the Postal Service is expected to operate like a business while providing service like a public utility.

The Postal Service isn't just cutting costs, it's fundamentally restructuring how it operates. Through its 10-year Delivering for America plan, the Postal Service is consolidating operations by moving letter carriers from local post offices to larger sorting and delivery centers.

These changes are already underway and have important implications for employees' careers, benefits and retirement planning. It appeared to improve efficiency on paper, but for the workers, it's often resulted in longer commutes, unfamiliar routes, new schedules and increasing uncertainty about future job security.

Although implementation has not met the Postal Service's original timeline, the restructuring has not stopped. In 2022, the Postal Service unveiled plans to consolidate up to 100,000 carrier routes into 400 to 500 larger sorting and delivery centers.

Today, with roughly half of those consolidations complete and about 133 facilities activated, its impact on employees is becoming increasingly evident.

The Postal Service says this change in operations has produced more than $1 billion in savings to date, potentially generating billions more annually if fully implemented.

But an audit from the United States Postal Service Office of Inspector General found it also created $1.4 million in added overtime costs and about $19 million in additional labor expenses.

This raises concerns about whether the savings are as clear as the Postal Service suggests.

Although postal workers' TSP accounts aren't being raided, nor are their pensions disappearing, suspending employer contributions to the FERS to save money isn't a sustainable solution.

While it might be saving the Postal Service roughly $100 million per week, or $2.5 billion in the current fiscal year, using those would-be contributions to employees' retirement funds is only multiplying future indebtedness.

Eventually, those missed payments must be restored, restructured or addressed by Congress.

For postal workers, it also raises an important question: How will the agency afford to pay back both missed and future payments?

Postal workers aren't the only ones impacted by this financial crisis. While taxpayers might not be paying the Postal Service's operating costs now, that doesn't mean they won't in the future. When a public service is legally required to serve every American address, but can't sustain itself financially, the bill gets pushed onto workers, customers, communities and potentially taxpayers.

The Postal Service can no longer afford to be expected to operate like a business while fulfilling a public mission. Unlike commercial carriers chasing profitable routes, the Postal Service is the only carrier legally obligated to deliver to every address in America — from densely populated cities to the most remote rural communities.

Unlike most federal agencies, the Postal Service does not rely on annual taxpayer appropriations to fund its day-to-day operations. Instead, it's expected to finance the majority of its operations through the sale of postage, products and services, all while fulfilling its legal obligation to deliver to every address.

It's a unique mandate that combines the responsibilities of a public service with the financial expectations of a self-supporting enterprise.

Until the Postal Service's long-term funding model is addressed, measures such as deferring retirement contributions are temporary solutions that postpone — not solve — the underlying financial challenges. If universal mail service is a national priority, then ensuring the long-term financial stability of the institution that delivers it must be a national priority as well.

If you're a postal employee, this isn't just another headline — it's your career, your retirement and your family's financial future. As the Postal Service continues to evolve, the decisions you make about your federal benefits today can have a lasting impact for decades to come. Understanding how your pension, TSP, Social Security, healthcare and insurance work together isn't just helpful — it's essential. The best time to prepare is before change leaves you with fewer options.

Related Content

• Thrift Savings Plan Contribution Limits for 2026
• I'm a Financial Pro Focused on Federal Benefits: These Are the 2 Questions I Answer a Lot
• Four Action Items for Federal Employees With $2M+ Saved
• Five Wins for Federal Employees in the Social Security Fairness Act
• The US Postal Service Does More Than Deliver Mail

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 Great Wealth Transfer is upon us: A decades-long period in which more than $100 trillion in assets are expected to pass from one generation to the next.

This once-in-a-lifetime transfer of generational wealth has long been hyped in the press, online and on social media for good reason. An estimated $124 trillion will flow to heirs through 2048, according to research firm Cerulli Associates.

That's a lot of money individuals will have to spend, save and invest — and many don't even know it's coming: A new survey conducted by Morning Consult on behalf of Kiplinger found that while 47% of parents expect to leave a meaningful inheritance, only 24% of adult children expect to receive one.

But there's more to the Great Wealth Transfer than the dollar amount, even though it is eye-popping. There's who gets a piece of the pie, how end-of-life expenses will shrink it, and what it means for your financial plan. That's just scratching the surface.

If you're one of the millions of Americans who stand to inherit wealth during the coming decades, it's important to know everything you can about the Great Wealth Transfer. To test your expertise and help you prepare, take our "Fact or Fiction" quiz.

More Trillion Dollar Talk

• An Expert's Guide to the Estate Planning Documents Everyone Needs
• Is Your Will 'Fair'? Estate Planning Is About More Than Money
• Why the 'Great Wealth Transfer' Could Leave Heirs With Less Retirement Money Than Expected
• Do Your Successful Kids Really Need an Inheritance?

With a challenging economy and rising business failures and bankruptcies, the need for thoughtful asset protection planning is greater than ever.

Asset protection is a layered strategy — a financial fortress built one wall at a time — and the right combination of tools depends on your needs, your risk profile and your circumstances.

Understanding what asset protection is — and is not — is essential: Done properly, it is not about hiding assets or evading legitimate debts, but it is entirely lawful and transparent.

The goal is to structure your affairs so that reaching your assets becomes difficult, slow and expensive for a creditor — changing the economics of a dispute so a claimant is motivated to settle for a fraction of the claim, if anything at all.

While the objective is not mere concealment, legitimate steps such as holding real property in an anonymous LLC can keep your ownership out of public view, since title to real property is a matter of public record.

Protection layer No. 1: The right business entity

The foundation of most plans is to operate any active trade or business through a properly formed and maintained entity, most commonly a C corporation, an S corporation or an LLC.

The purpose is liability containment: A shareholder or member is generally not personally liable for the entity's debts, so long as corporate formalities — separate bank accounts, adequate capitalization, documented governance and arm's-length dealings — are respected. However, the extent of the protection depends on the nature of the claim, the creditor and all the circumstances.

For example, a corporation or LLC is formed for liability protection, but the business owner fails to pay the employees' share of payroll taxes. Most states and the IRS provide for personal liability of not only the corporate or company officers but anyone with control over the business accounts.

The benefits of the limited liability entity were lost for failure to pay the employees' share of the payroll tax liability.

Ignoring those formalities invites veil-piercing or alter-ego claims that reach the owner personally. The choice among entities is driven mainly by taxation:

• A C corporation is a separate taxpayer subject to double taxation
• An S corporation is a pass-through but is limited to 100 eligible shareholders and a single class of stock
• An LLC is the most flexible, offering pass-through taxation by default with the option to elect other treatment

Protection layer No. 2: Foundational estate planning

Before layering on advanced tools, everyone should have a foundational estate plan, because incapacity or death can itself expose assets and because the advanced structures are built on these documents.

The core documents are:

• A revocable living trust, to avoid probate and manage assets on incapacity
• A pour-over will, to name an executor and guardians and catch assets left outside the trust
• Durable powers of attorney for financial and healthcare decisions
• An advance healthcare directive
• A HIPAA authorization

Key considerations include properly funding the trust, coordinating beneficiary designations on retirement accounts and life insurance and using discretionary and spendthrift provisions so that what you leave to children is shielded from their future creditors and divorcing spouses.

A revocable trust avoids probate, but, because you retain control, it does not protect your assets from your own creditors during life; a blind trust — which can even be a revocable trust whose name does not identify you — can hold title to real property without revealing your name in public filings.

Protection layer No. 3: Statutory exemptions

State and federal law already shield specified assets without any special structuring, so careful planning means identifying and maximizing the exemptions available where you live.

The homestead exemption protects equity in a primary residence, but the amount varies enormously by state — from a few thousand dollars to a capped figure (California ties its exemption to countywide median home prices), to the effectively unlimited exemptions in Florida and Texas.

Retirement assets receive some of the strongest protection: ERISA-governed plans such as 401(k)s enjoy a federal anti-alienation shield, and IRAs are protected in bankruptcy up to an inflation-adjusted cap.

Most states also exempt some combination of life insurance cash value and annuities, a motor vehicle up to a set value, household goods, tools of the trade, a portion of wages, public benefits such as Social Security and workers' compensation, college savings accounts and a "wildcard" amount — and some protect property held as tenancy by the entirety from the creditors of only one spouse.

A well-known illustration is the O.J. Simpson matter: After a roughly $33.5 million wrongful death judgment for the Goldman and Brown families, little was collected, in part because his NFL pension and other retirement assets were beyond creditors' reach, and he'd moved to Florida, where the homestead exemption is essentially unlimited in value.

Protection layer No. 4: Limited liability entities

Holding investment assets and real estate in limited liability entities such as LLCs and limited partnerships adds a layer of separation and changes the remedies available to a creditor.

Their signature feature is the charging order, which in many states limits a creditor to a lien on distributions rather than the entity's assets — and where the charging order is the exclusive remedy, the creditor cannot foreclose on the interest or force a distribution, improving settlement posture.

The strength of this protection varies by state: Nevada makes the charging order the exclusive remedy even for single-member LLCs, one of the strongest positions in the country, while single-member LLCs are weaker elsewhere (Florida's Olmstead decision is the well-known example, since addressed by statute).

Holding real property in an anonymous LLC also keeps ownership off the public record, though this is privacy, not concealment, and transfers into an entity remain subject to fraudulent transfer law.

Protection layer No. 5: Marital planning

For married couples, careful planning can shift lower-risk assets to the spouse less exposed to liability. The mechanics depend on the marital property regime:

• In community property states, community property is generally reachable for the debts of either spouse, so planning may involve a written transmutation or partition agreement converting it to the separate property of the lower-risk spouse
• In common-law states, titling — and, where available, tenancy by the entirety — controls ownership.

Premarital (prenuptial) and postmarital (postnuptial) agreements are central tools, characterizing assets as one spouse's separate property and defining how future earnings are owned — generally enforceable only with full financial disclosure, independent counsel for each spouse and the absence of duress.

This planning must be proactive: A transfer to a spouse made after a claim arises can be unwound as a fraudulent transfer, and it carries divorce-related risk that should be weighed separately.

Protection layer No. 6: Domestic asset protection trusts

A domestic asset protection trust (DAPT) is a self-settled spendthrift trust that, contrary to the traditional rule, lets you remain a discretionary beneficiary while shielding trust assets from many creditors after a seasoning period.

DAPTs are authorized or permitted in 20 states, which include Alaska, Delaware, Nevada, South Dakota, Tennessee and Wyoming. Nevada is often favored for its lack of a state income tax, short two-year seasoning period and absence of statutory exception creditors.

A DAPT can also enhance privacy, since assets titled in the trust's name are not held in your own name.

Residents of states hostile to self-settled trusts — California, in particular — should plan carefully, often using a third-party trust (for the benefit of a spouse, child or parent) rather than a self-settled DAPT.

Protection layer No. 7: Foreign and hybrid trusts

A fully foreign trust is often considered the highest level of protection because it places assets beyond the easy reach of U.S. courts, but it carries the heaviest U.S. tax compliance from the outset, including foreign trust and foreign account reporting (Forms 3520 and 3520-A and FBAR filings).

The hybrid trust captures the benefit while deferring that cost: It begins as a DAPT and stays domestic until a defined threat arises, at which point the U.S. trustee resigns, and a predesignated foreign trustee takes over.

Because a trust is generally governed by the law of the jurisdiction where the trustee sits, that change shifts the trust into an offshore regime such as the Cook Islands, Nevis or the Cayman Islands — where U.S. judgments are not recognized, registries are private, and, in the Cook Islands, a creditor must prove its case beyond a reasonable doubt with no contingency fees allowed.

Even greater protection comes from also moving the underlying assets offshore, and the heavier reporting is triggered only if the trust actually goes foreign.

One important caution: If you remain within reach of the U.S. courts while your assets sit offshore, a court can order you to repatriate them and hold you in civil contempt — even jailing you until you comply, as happened in FTC v. Affordable Media, LLC and in Re Lawrence.

In both cases, though, the debtor retained control or acted in bad faith; a trust settled in calm weather is harder for a court to reach, but the personal risk of contempt is real.

Critical limitations

The most important rule is timing: Planning must be completed before the events that give rise to the liability.

Every state has a fraudulent transfer statute — the Uniform Fraudulent Transfer Act or its successor, the Uniform Voidable Transactions Act — allowing a creditor to unwind two kinds of transfers:

• Actual fraud, made with intent to hinder, delay or defraud, inferred from "badges of fraud" such as transfers to insiders or after being sued
• Constructive fraud, made without reasonably equivalent value while insolvent, regardless of intent

A voidable transfer can be set aside and clawed back from the transferee.

In asset protection, once a claim is on the horizon, the most effective tools are largely off the table, so implement any plan well in advance and with experienced counsel.

The same principle applies to exemptions, which are powerful but not absolute: In bankruptcy, the homestead exemption is reduced to the extent its value derives from property disposed of within the prior 10 years with intent to defraud a creditor, so last-minute conversions of nonexempt assets into exempt ones can be challenged.

In conclusion

Asset protection works best when it is proactive, layered and tailored to your circumstances.

Beginning with the right operating entity and a sound foundational estate plan, then adding statutory exemptions, limited liability entities, marital planning and — where appropriate — domestic, hybrid or foreign trusts, you can build a financial fortress that stands up to future challenges.

Because the rules vary significantly by state, interact with federal tax and bankruptcy law and turn heavily on timing, this planning should always be done well before any claim arises and with the guidance of qualified counsel.

This article is provided for general informational purposes and does not constitute legal advice. Consult a qualified attorney regarding your specific circumstances.

Related Content

• Domestic vs Offshore Asset Protection Trusts: A Basic Guide From an Attorney
• Got Assets? Attorney Explains How to Protect Them From Greedy Lawsuits
• Eight Types of Trusts for Owners of High-Net-Worth Estates
• What Assets Should You Put (or Not Put) in Your Trust?
• Ins and Outs of Domestic Asset Protection Trusts (DAPTs)

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 age-old advice of "buy low, sell high" seems simple enough to follow, and it is — except when the market tosses out surprises and emotions kick in.

We watch as stock prices plummet and something inside calls out, "Sell now, before it's too late." Of course, at that point it already is.

Or the market soars and that inner voice says, "Buy now and catch this wave." But the wave may have already crested.

Humans are human, which means if we aren't careful, emotions can replace logic when market volatility comes into play, causing us to make financial moves we later regret.

We saw this in 2020. When the pandemic began to affect markets, some people grew nervous and moved their money into the safety of money market accounts. By the end of the year, when the market had recovered and they had missed out on the gains, they lamented that move.

One thing we can count on is that there are always events that can lead to market volatility. Wars. Natural disasters. Government shutdowns. Unexpected election results.

During this year's midterm elections, depending on how people react to the results, the market could soar, plummet or hold steady. (Interestingly, the market tends to do well, on average, after a midterm election, although that doesn't mean every midterm election has proved favorable for investors.)

We can't control market volatility. But what retirees can do is have an investment portfolio that is suitable for this stage of life and that matches their risk tolerance. That way, they are in better shape to withstand market swings.

With the right investments attuned to their needs, they won't see as many large fluctuations as they would with a high-growth portfolio, and they will feel more comfortable with what they do experience.

Gauging risk tolerance

Among the problems retirees face with volatility is that they may not have time to recover when the market tumbles. Younger clients may have a 20- or 30-year time horizon, so a loss today isn't as worrisome because they have decades to recover.

Retirees, who often are withdrawing money from their accounts to live on, even as the value drops, are in a rougher spot. For example, after the 2008 financial crisis, it took more than five years for the S&P 500 to fully recover.

Still, that doesn't mean your situation is the same as everyone else's. One of the keys to building a portfolio is to look at all of your assets and determine how to invest them in the most efficient way.

If you are working with a financial professional, the more they know about your complete financial picture, the better. Much like a doctor, they can advise you based only on what they know.

An effective strategy many retirees use is to divide their investments among different investing buckets with different levels of risk that accomplish different goals.

When doing this, you first want to make sure your income is taken care of. That's the bucket with safer investments that will pay for your current living expenses.

After that, other buckets with different time horizons can be more aggressive because you don't anticipate needing to use that money anytime soon.

Once again, though, your risk tolerance comes into play. How much risk are you taking, and how do you feel about that risk? At our firm, RSG Investments, we use specific tools and technology to help our clients identify their risk tolerance. We determine what their pain points are so we can allocate investments appropriately.

It's not unusual for a husband and wife to have different results on the risk questionnaire, with one more conservative than the other. In those situations, it's important to get them on the same page so they are both comfortable with the investing decisions.

Helping you set aside the emotions

Market volatility always has been and always will be a possibility, and no one has a crystal ball to predict when the going might get rocky.

That's why it's important to have a financial professional you can speak with about any concerns you have, someone who can help you separate emotions from investing decisions and who understands your needs.

With the right person in your corner, you can build a portfolio where you will feel comfortable regardless of market ups and downs.

Ronnie Blair contributed to this article.

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

Related Content

• Market Volatility Tests More Than Just Portfolios — It Tests Soon-to-Be Retirees' Nerves: Are You Passing?
• These 5 Steps Can Help You Keep Your Head When Market Volatility Causes Others to Lose Theirs
• When Markets Are Jumpy: A Financial Planner Explains How to Stay Grounded
• A Simple Trick for Better Investing: Stop Timing the Market
• 5 Top Buy-and-Hold Investments to Manage Market Volatility

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.

Despite economic uncertainty seemingly around every corner, the stock market seems unfazed, continuing to set record highs.

It's a welcome sight for investors, particularly those playing the long game.

But for those nearing retirement, it can create a sense of unease, wondering if or when the shoe could drop.

It's a reasonable concern since deciding when to retire is one of the most important financial decisions you'll ever make. But in many cases, retirement readiness has far less to do with what the stock market is doing today and more to do with the planning you've done leading up to retirement.

If you've planned well, market highs can present an opportunity to retire sooner than you expected. As a wealth planner at Blue Ridge Wealth Planners with nearly 15 years of experience, I'm here to help you figure that out.

What makes early retirement possible?

Retirement should not be driven by fear or by trying to predict the market's next move. It should be based on preparation, spending needs and risk management.

One of the biggest threats to any retirement plan is when retirees must withdraw from their accounts while the market is down, which locks in their losses and can have a negative compounding effect on their nest eggs. This is known as sequence of returns risk.

That is why many retirement income strategies focus on ensuring that the first few years of retirement are funded through more stable income sources or lower-risk assets.

You can never remove all risk, but the goal is to make sure any sudden market drops don't force major changes to your retirement plan.

How can you manage risk leading up to retirement?

Strong markets can be especially helpful for those who are close to retirement. If your portfolio has seen significant growth, those gains might improve your odds of retiring when you want.

In some cases, it might even allow you to retire early. But being able to call it quits early depends on more than just account balances.

As you get closer to retirement, the goal is no longer simply maximizing returns. It's about ensuring that the wealth you've accumulated can support your lifestyle throughout your retirement.

For example, if you're someone within a few years of retirement, today's elevated market conditions might provide an opportunity to lock in gains, reduce risk and position your assets more strategically to focus on income generation.

Why is retirement planning as important as building savings?

Without proper planning, wild swings in the stock market can create problems. For example, if you're heavily exposed to stocks and planning to retire soon, a sudden market drop could delay your retirement by years.

That's a long time to continue working because you took on too much risk nearing retirement. Your retirement plan needs to be resilient enough to handle market ups and downs without jeopardizing your long-term future.

Your retirement income plan should be stress-tested against different market conditions and life scenarios. You need a clear strategy for generating income.

Retirement isn't simply about having a large account balance. It's about turning your assets into a dependable income stream that can last for decades.

What do you spend in retirement?

Keeping your expenses down is also a key factor. Someone who spends conservatively may be able to retire earlier than someone with a more expensive lifestyle, even if their savings are similar.

The difference comes down to how much income will be needed each year and how much flexibility exists within the budget. If you've done a good job controlling your expenses, you might have more options than you realize.

Don't let your emotions drive your decision-making

Many investors wait for the bottom to fall out, assuming that a stock market correction must be around the corner. That mindset can lead people to postpone retirement when they don't have to. This could cause you to spend years trying to make back the money you had, then lost.

Instead of making an emotionally charged decision, I encourage clients to ask themselves a series of questions to help determine their retirement readiness:

• Do I have enough saved to support my lifestyle?
• Are my expenses low enough to make my savings last?
• Have I reduced risk enough to avoid having the market dictate my retirement date?
• Would delaying retirement improve my outcome or add unnecessary stress?

If their answer is yes to any of those questions, then market conditions might be less of a warning sign and more of an opportunity.

The bottom line

No one knows when the next market correction will happen. Instead of trying to predict what markets will do next, focus on what you can control: Your savings, spending habits, income strategy, tax planning and overall risk exposure.

At Blue Ridge Wealth Planners, we take the guesswork and complexity out of financial planning. We help our clients create a plan for everything that covers all the bases in their wealth world.

If you're nearing retirement, now is the time to evaluate your readiness. Strong market performance has created opportunities for many investors, but retirement success isn't about chasing every dollar. It's about converting the wealth you've accumulated into lasting financial confidence.

Blue Ridge Wealth Planners is an investment adviser registered with the Securities and Exchange Commission. SEC registration is not an endorsement by the SEC nor does it imply a certain level of skill or training.

Related Content

• For 3 Years, Markets Have Soared Ever Closer to the Sun: Is It Time to Protect Your Gains Before Their Wings Melt?
• How to Inflation-Proof Your Retirement Without Cutting Costs (You Can Even Take Your Dream Vacation)
• I'm a Wealth Planner: Don't Skip the Estate Planning Step That Makes It All Work
• I'm a Wealth Planner: These Are the 3 Pillars You Need Before You Build Your Estate Plan
• The Middle Wealthy Are the Goldilocks of Retirement, But Where Do You Find the Financial Advice That's 'Just Right'?

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

Dear Wealth Wise: I'm in my 60s and will retire in March 2027. I'm happy with the amount I have saved and, at this point, would like to keep no more than 15% in equities. Where should I put the remaining 85% to generate stable income? — Intentional Investor

Dear Intentional Investor: When you're in the process of building wealth for retirement, it's common to invest the bulk of your portfolio in stocks. But it's equally common to shift away from stocks as retirement nears to reduce risk.

Our reader has clearly done a good job of saving for retirement and understands their income needs. They want minimal stock market exposure so they can sleep at night. Here's the approach our experts suggest to build an ultra-low-risk portfolio.

Bonds can get the job done

Bonds are often a great fit for retirees because they offer predictable income without the wild swings for which the stock market is known. Paul L. Gaudio, CFP, director and wealth planner at Crestwood Advisors, says that for a simple portfolio, a broad investment-grade bond fund or a pure Treasury bond fund could be a good choice.

These funds can deliver competitive yields without the homework of tracking individual maturity dates, he notes.

That said, it's important to consider near-term cash flow and upcoming expenses.

"If they have specific spending needs coming up, then a Treasury ladder may offer a great solution," Gaudio explains.

"Picture splitting money evenly across 1-, 2-, and 3-year Treasuries," he continues. "Each year a rung matures, and that principal is there for spending or reinvesting at whatever rates look like then. It's predictable and helps reduce some interest rate risk."

Municipal bonds might be worth a look

Keeping taxable income as low as possible in retirement is crucial. When income creeps up, it could trigger Medicare premium surcharges called IRMAAs, or income-related monthly adjustment amounts, that could add hundreds of dollars per month to the cost of Part B.

The "problem" with bonds is that interest payments are commonly included in taxable income. That's why Gaudio says municipal bonds might be worth considering.

"If they're in a high tax bracket, municipal bonds deserve a serious look," he says. "Municipal bond interest is exempt from federal tax entirely, and home-state bonds usually avoid state tax, too."

On the other hand, municipal bonds can't protect you from IRMAA surcharges, as their interest is added back to your modified adjusted gross income (MAGI).

Gaudio also says that for higher-income retirees, municipal bonds can offer more financial upside than Treasuries when accounting for tax-equivalent yields.

However, he cautions, "The trade-off is lower headline yields and thinner liquidity than Treasuries, so they work best as part of the mix, not the whole allocation."

It's worth considering an annuity

Retirees who are extremely risk-averse are often willing to forgo portfolio gains and liquidity for peace of mind. In that case, Gaudio says, "If this client’s true concern is guaranteeing income, then it may also be appropriate to consider an immediate annuity with a portion of their wealth."

As Gaudio explains, an annuity requires an up-front sum that guarantees income for the remainder of the client’s life. But annuities have certain drawbacks. They can be complex and often come with hefty fees. They might also lack inflation protection.

"The trade-off is that the principal is locked up in exchange for that guarantee, so it works best for money the client won’t need for flexibility or legacy purposes," he says.

Focus on liquidity

When you're retired and are actively using your savings to cover living costs, it's important to make sure you have enough safe, liquid assets to cover at least a few years' worth of living expenses, says Stoy Hall, CFP and founder at Black Mammoth.

"High-yield money market funds are paying in the neighborhood of 3.5% right now, and Treasury bills are around 3.7% and backed by the government," he says. Both could be appropriate places to stash one to two years of living costs.

Hall also recommends building a CD ladder for midterm liquidity. With this approach, "cash lands in your lap on a schedule, and you're never forced to sell anything at a bad time."

Protect against inflation

Hall understands the desire our reader has to unload risk.

"You saved enough, and you want to sleep at night, so we build you a paycheck, not a portfolio to babysit," he says.

On the flip side, Hall cautions that over the course of what could be a 30-year retirement, a 15% equity allocation exposes you to inflation risk. For this reason, he says, the remaining 85% of your income needs to keep up with the cost of living.

To this end, he says, it could be wise to put money into TIPS, or Treasury Inflation-Protected Securities, as well as I-bonds. TIPS adjust the bond's principal for inflation, while I-bonds adjust their interest rate. (Note, however, that I-bonds impose an annual investment limit of $10,000 per individual.)

"With most of your money in fixed-rate assets, this is your hedge against the one force that quietly shrinks a 'safe' retirement," he adds.

Look at the big picture

Many financial experts warn that a 15% equity allocation can erode purchasing power over time.

Gaudio says this allocation could work for some people, but not everyone.

"It tends to make the most sense for clients spending this money within the next five years, or clients who are highly risk-averse and have spending needs well below their portfolio's long-term potential," he says.

Ultimately, Gaudio explains, the right investment mix depends on a given retiree's full picture, including their income needs, spending patterns and tax situation.

"That's where working with a planner earns its keep — translating a menu of good options into the portfolio that actually fits this investor's life," he 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 Wealth Wise Stories on Asset Allocation

• Is a 60/40 Portfolio Too Aggressive in Your Seventies?
• Should Fully Funded Retirees Invest Like 30-Year-Olds?
• You’ve Mastered Asset Allocation — Now It’s Time for Asset Location

Every sports fan loves the game-winning touchdown, the walk-off home run or the buzzer-beating shot. Those unforgettable moments make the highlight reels.

But ask any championship coach what really wins titles, and you'll hear a different answer. Championships are usually won long before the final whistle. They're built through preparation, discipline, communication and making countless small decisions that put a team in position to succeed when the pressure is highest.

Retirement is no different. The people who enjoy the most successful retirements rarely arrive there by accident. They get there through years of preparation, thoughtful decisions and disciplined execution.

Many people assume a successful retirement comes down to having a large investment portfolio or earning the highest possible return. While those certainly help, the retirees who enjoy the greatest financial freedom often succeed because they follow many of the same principles great coaches emphasize every season.

Focus on the fundamentals of your plan

As Vince Lombardi famously reminded players by holding up a ball and saying, "Gentlemen, this is a football," championship teams focus relentlessly on fundamentals.

For retirement, those same fundamentals apply to achieving your financial goals. Here are 10:

• Saving regularly during your working years
• Avoiding emotional investment decisions
• Adjusting plans as life evolves
• Seeking advice before major financial decisions rather than after
• Living within your means
• Maintaining an appropriate emergency reserve
• Diversifying investments
• Reviewing beneficiary designations
• Managing taxes proactively instead of reactively
• Rebalancing periodically instead of emotionally

Over the course of a 20- or 30-year retirement, mastering these fundamentals often matters more than trying to predict the next hot investment. Small improvements, repeated consistently over decades, often produce extraordinary results.

1. Review your game plan every year

Preparation creates options.

• The best time to think about taxes isn't during tax season
• The best time to plan for required minimum distributions (RMDs) isn't the year you turn 73
• The best time to evaluate your Social Security strategy isn't the month before you file

The more decisions you make before they're urgent, the more flexibility you'll have when opportunities — or unexpected challenges — arise.

Legendary UCLA men's basketball coach John Wooden always preached that, "Failing to prepare is preparing to fail." Winning one game doesn't guarantee a championship.

Likewise, retirement isn't won by making one brilliant financial investment or decision. A successful, secure retirement is achieved by a series of thoughtful decisions year after year:

• Should this be the year for a Roth conversion?
• Should I realize capital gains this year while I'm in a lower tax bracket?
• Is it time to begin Social Security benefits?
• Which accounts should fund this year's income?
• Will an additional IRA withdrawal increase Medicare premiums in two years?
• Should appreciated investments be sold now or later?

Viewed individually, these choices may seem small, but they can significantly influence how much retirement income you keep after taxes and how long your savings last.

Coordinate the pieces of your plan

Even the best head coach relies on assistants, scouts and a coordinated game plan. The various pieces of retirement planning work much the same way.

• Investment decisions affect taxes
• Tax decisions influence Medicare premiums
• Estate planning impacts future generations
• Insurance decisions affect retirement income
• Withdrawal strategies affect all of the above

Some of the greatest retirement opportunities occur when tax planning, investment management, retirement income planning and estate planning are coordinated rather than addressed separately.

That's one of the advantages of working with both a CFP® and a CPA. When each piece is considered independently, opportunities are often missed. When they're coordinated, they reinforce one another.

Create a long-term plan that brings calm during uncertainty

Preparation creates confidence. Confidence makes disciplined decision-making easier when emotions run high.

One of the defining characteristics of great coaches is their ability to remain composed when circumstances become unpredictable. Financial markets inevitably experience periods of volatility. Headlines create anxiety. Predictions dominate television and social media.

Retirees who remain committed to a thoughtful, long-term strategy often fare better than those who constantly react to the latest news cycle.

Be flexible to adjust when necessary

No coach expects every game to unfold exactly as planned. No master strategist like Bill Belichick walks into the locker room at halftime and says, "Let's keep doing exactly what we planned before the game started."

They evaluate what's working and what isn't. They prepare for injuries, weather, unexpected opponents and momentum swings. They develop contingency plans because they know uncertainty isn't an exception — it's part of the game.

Retirement deserves the same mindset. Markets will fluctuate. Tax laws will change. Healthcare costs may rise. Family circumstances can shift. Inflation may persist longer than expected.

A retirement plan shouldn't be built for one perfect scenario; it should be flexible enough to adapt when life inevitably calls an audible. The best retirement plans are living documents that are revisited regularly. A retirement plan shouldn't be a trophy placed on a shelf and forgotten.

Winning in the long run

Much like championship teams, people who get the most out of their retirement years trusted a process. Retirement is about preparation, adaptability and disciplined execution over time.

The highlight moments — traveling with family, supporting grandchildren, pursuing long-delayed passions or simply enjoying the confidence that comes from financial security — are often the result of years of quiet decisions that no one else ever noticed. That's a lesson every championship coach understands — and one every retiree can benefit from embracing.

It is often said that winning moments lead to winning days. Winning days lead to winning seasons. Winning seasons ultimately create a championship retirement.

No single decision determines financial success. Rather, it's the accumulation of hundreds of thoughtful decisions made consistently over time that builds lasting confidence and financial security.

Dan Dunkin contributed to this article.

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

Related Content

• I'm a Retirement Consultant: This Is the Single Most Important Planning Step I Learned After I Retired
• A 10-Year Retirement Planning Checklist
• 5 Habits to Help Make Your Retirement Planning Highly Effective
• Retirement Can Scare You No Matter How Confident You Are: This Is How to Tame the Beast
• The 8 Stages of Retirement: An Expert Guide to Confidence, Flexibility and Fulfillment, 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.

A 65-year-old retiring in 2026 can expect to spend $185,000 on healthcare costs. That's a 130% increase since 2002.

Those figures come from a new report from Fidelity, and they don't include long-term care, such as at-home caretakers or retirement homes.

You may have mapped out your retirement destination and legacy plans, but have you thought through the long-term care costs?

As a Registered Financial Consultant (RFC®) who specializes in tax-efficient planning for retirees, I'm sharing four considerations that every retiree should think about when it comes to planning for healthcare costs later in life.

1. Healthcare could become your largest retirement expense

Most Americans are ready to plan their housing, travel and everyday living expenses in retirement, but a portion could find that healthcare costs balloon beyond expectations, becoming the overall largest expense.

Consider the costs of Medicare premiums, prescription drugs and out-of-pocket costs that factor into your yearly budget.

You should also be honest with yourself about your mobility and health later in life. Americans are living longer, with more people making it to age 100 every year. Self-sufficiency at older ages can deteriorate quickly, and if you expect you'll need long-term care from professionals or a facility, monthly costs can range from $6,000 to $11,000, according to CareScout.

2. Medicare could fall short in retirement

Don't assume that Medicare will take care of your healthcare expenses in retirement. While it will certainly help with inpatient care, specialist visits and important screenings, there are multitudes of expenses that Medicare will not cover.

Beneficiaries will still pay for things like deductibles, coinsurance and insurance premiums. You can be hit with surprise expenses for out-of-market coverage or emergency care. It also won't cover routine dental, hearing and vision care appointments.

There are also significant time limits to the care that Medicare covers. If you find yourself at a long-term care facility, Medicare will cover only the first 20 days of your stay in full and only a portion of the care up to 100 days.

Medicare offers great support for paying for medical expenses, but if you're expecting it to take care of you on its own, you'll find a pile of unexpected bills in your mailbox.

3. Make your healthcare plans now

The earlier you begin planning for healthcare expenses, the more options you will have in retirement.

If you're still working, contributing to a health savings account (HSA) can offer one of the most tax-efficient ways to save for future healthcare costs.

Part of your plan should be what age you intend to enroll in Medicare. Most should enroll around the age of 65, but you may be able to delay Medicare Part B without penalty if you're still working and receive health insurance through your employer.

This will keep you from paying the premiums on your current insurance and Medicare at the same time.

You will be allowed to sign up for Medicare during a special enrollment period if you leave your position and lose your employer coverage.

The real issue to avoid is enrolling late without qualifying coverage. If you miss your window to apply, your premium can increase by 10% for each year you were eligible but chose not to enroll.

That is a devastating and unnecessary expense that will follow you throughout your retirement.

Be sure to speak with a financial adviser or retirement professional to understand the important windows of when you should enroll.

4. It's never too late to lower risk and costs

The best way to reduce your healthcare costs is by not needing healthcare in the first place.

Obviously, some unforeseen conditions and circumstances will impact our healthcare spending, but it's never too late to reduce the risk factors.

Eating well and exercising regularly will help keep risk factors for a wide range of illnesses and health conditions down. A lower risk of heart disease or broken bones means fewer medical bills throughout your retirement.

It will also greatly improve your mobility later in life, helping you enjoy your golden years to the fullest.

Just like saving for retirement, the sooner you invest in your health, the better. But it's never too late to start the journey to healthier living.

It's not a conventional consideration when making your financial plan, but it is a factor that could make a major impact on your healthcare spending in retirement.

Related Content

• Average Cost of Healthcare by Age and US State
• 5 Smart Retirement Healthcare Moves: Maximize Your HSA and Medigap Savings
• The 5 Biggest Stealth Costs in Retirement
• Retirement Location, Location, Location: Can Florida Be Beaten?
• Is That Really Your Grandkid Calling, or an AI Scam Trying to Rip You Off? 3 Tips to Protect Your Money

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

During my long career in journalism, I was good at meeting deadlines, which made me popular with editors. I’ve always filed my tax return well before April 15. I even return my library books on time.

But when it comes to things that don’t have a hard deadline, I’m less diligent. I often postpone mundane tasks, such as cleaning out my spice cabinet, because I don’t have to worry about paying interest or penalties — or losing my job — if I put off tossing some expired cumin.

I suspect that for many people, estate planning falls into this category. It’s something we’re all aware we’re supposed to do, but since we don’t know when we’re going to die, there’s no specific deadline for completing this unpleasant task.

It’s important to understand that creating an estate plan isn’t just about deciding who will inherit your assets after you’re gone. Without advance directives for your finances and healthcare, your family could be forced to go to court to obtain the authority to manage your affairs if you become incapacitated.

Here's my checklist.

Update beneficiary designations

Now that I’m semi-retired and definitely not getting any younger, I’m in the process of getting my estate in order. My first step is to update my beneficiary designations. My husband and I don’t have children, so I’ve named him as the beneficiary for retirement accounts and other financial assets that aren’t already jointly owned. But I need to add a secondary beneficiary — also known as a contingent beneficiary — to those accounts.

A secondary beneficiary will inherit your assets if the primary beneficiary is deceased, can’t be located or declines the inheritance. If that happens and there is no contingent beneficiary, your assets will go into probate — the legal process by which assets are distributed in accordance with state law.

You can name multiple contingent beneficiaries, so I plan to designate some of the charities I support. (If I outlive my husband, I’ll probably name them as my primary beneficiaries).

Update powers of attorney

My next step is to make sure our powers of attorney for finances and healthcare are up to date. Many people believe married couples don’t need these documents, but if you are incapacitated, there may be limits on what your spouse can do with jointly owned accounts without a POA. The same goes for power of attorney for healthcare (also known as a healthcare proxy), which gives someone you trust the ability to make healthcare decisions on your behalf.

If you don’t have an attorney, you can download the documents from websites such as LegalZoom and Rocket Lawyer. It’s a good idea to have these documents notarized, even if your state doesn’t require it, because financial institutions and hospitals may not recognize forms that a notary doesn’t sign.

You should also make sure that your financial service providers will honor your POA for finances. Some institutions require you to use their own POAs, and obtaining one at the last minute is not something you want to have to deal with in an emergency.

Draw up a will

The final estate-planning task I need to tackle is drawing up a will. Although beneficiary designations will provide for the distribution of my financial accounts, both my husband and I have inherited items with a lot of sentimental value, and we need to think about what will happen to them after we’re gone.

And I’m going to start getting rid of things I’m pretty sure nobody wants — an effort popularized by Margareta Magnusson, author of The Gentle Art of Swedish Death Cleaning. Magnusson, who died earlier this year, said that decluttering is one of the greatest gifts you can leave to your heirs. Hard to argue with that.

Sandra Block is a former senior editor of Kiplinger Personal Finance. Send comments to sandra.block02@futurenet.com.

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

Related Content

• I'm a Financial Planning Pro: Do Your Family a Final Favor and Write Them a Love Letter
• How to Leave a Legacy to Your Loved Ones — and Keep Probate Out of It
• Estate Planning Checklist: 5 Tasks to Prioritize to Make Things Easier for Your Family

Financial confidence in retirement isn't just about accumulating a large nest egg.

According to the Employee Benefit Research Institute, retirees in the top 10% of the wealthy share distinctive money-management behaviors — and many have little to do with investment genius and everything to do with discipline and planning.

What makes these patterns valuable is that many are accessible across the wealth spectrum — you don't need millions to adopt the behaviors that protect millions.

Here's what the most successful retirees do differently, and how to apply it at any account balance.

1. They treated retirement savings as non-negotiable during working years

Their security was built decades before retirement. These retirees consistently maxed out 401(k) contributions, treating savings as a fixed expense rather than a choice.

The compounding is dramatic — $20,000 a year from age 30 to 65 at 7% grows to roughly $2.7 million — and they added catch-up contributions after 50.

They automated contributions, raised them with every pay increase and never cut them in downturns.

2. They front-loaded Roth conversions in early retirement

Many of these retirees spent their 60s converting traditional IRA assets to Roth, especially in the low-income years from retirement to claiming Social Security.

The strategy is counterintuitive — paying taxes now to avoid them later — but it works when you convert in low brackets instead of the higher ones that required minimum distributions (RMDs) and Social Security might trigger later.

The benefits compound: Roth IRAs have no lifetime required distributions, withdrawals don't count toward Medicare IRMAA surcharges, and assets pass to heirs tax-free.

These retirees typically hold 30% to 40% of assets in a Roth by their mid-70s, vs under 10% for others.

3. They maintain multiyear cash reserves

Market volatility doesn't stress wealthy retirees because they're not forced to sell during downturns. They typically keep two to four years of spending in cash and equivalents — high-yield savings, money market funds, short-term CDs or Treasury bills.

The modest opportunity cost is really insurance against sequence-of-returns risk: The danger that selling stocks in an early downturn permanently depleting a portfolio.

Studies show two to three years of reserves raise the odds of a portfolio lasting 30-plus years by 15 to 20 percentage points.

4. They delay Social Security to maximize lifetime benefits

The top 10% overwhelmingly delay Social Security to age 70, funding the early years from other assets. Each year of delay past full retirement age raises the benefit about 8% — a guaranteed, inflation-adjusted return impossible to replicate elsewhere, and for a high earner, that can mean an extra $10,000 or more a year for life.

They bridge the gap with taxable-account withdrawals, Roth conversions and earmarked cash.

For married couples, the higher earner often delays to 70, while the other claims earlier, ensuring the surviving spouse receives the maximum benefit.

5. They work with fee-only or fee-based financial advisers

According to Russell Investments' 2024 Value of an Advisor study, advisers add roughly 3.75% in net value annually through planning, coaching, tax strategy and portfolio management.

These retirees typically work with fee-only or fee-based fiduciary advisers, compensated through transparent fees rather than product commissions — so recommendations aren't skewed toward whatever pays most.

The value isn't investment selection but coordination of tax planning, behavioral coaching, estate and healthcare decisions and sustainable withdrawals.

They view advisory fees (typically 0.5% to 1.5% of assets) as insurance against costly mistakes.

6. They separate essential from discretionary spending

Wealthy retirees separate non-negotiable expenses (housing, healthcare, food, insurance) from discretionary ones (travel, entertainment, gifts, dining out).

Essentials are typically covered by Social Security, pensions and bond income, while discretionary spending comes from portfolio withdrawals — so in a downturn they can cut it 30% to 50% for a year or two, easing pressure at the worst time to sell. This isn't deprivation but options.

7. They optimize healthcare decisions strategically

These retirees treat Medicare enrollment, Medigap vs Medicare Advantage and drug-plan selection as serious planning exercises, not administrative tasks.

They typically choose Medigap — higher premiums for lower out-of-pocket risk and broader provider access — and watch income before age 65 to avoid IRMAA surcharges.

Most important, they plan for long-term care early, often buying coverage in their 50s when premiums are lower.

8. They practice tax-bracket arbitrage religiously

Perhaps the most distinctive behavior: These retirees obsess about marginal tax rates, making year-by-year decisions to minimize lifetime taxes — filling low brackets with Roth conversions, realizing capital gains at 0% when income allows, avoiding IRMAA cliffs, bunching deductions in alternate years and making qualified charitable distributions after age 70½.

Over a 30-year retirement, that discipline can save $100,000 to $200,000.

9. They rebalance systematically without emotion

These retirees rebalance on a schedule, acting when allocations drift 5% or more from their target. This enforces buying low and selling high: Surging stocks get trimmed into bonds, and crashes become buying opportunities.

The discipline matters more than the frequency: No panic-selling after declines, no chasing rallies.

10. They update estate plans and beneficiaries regularly

Finally, these retirees review estate documents every three to five years and after major life events.

They keep beneficiary designations current — which is critical, since these override will provisions — and update powers of attorney, directives and trusts to reflect current wishes and tax law.

The distinction: Average retirees create a plan once and file it away; these retirees treat it as an ongoing process.

The common thread

These behaviors share a common trait: They require planning, discipline and often some upfront costs.

These retirees build wealth not because they're investment geniuses but because they're systematic, proactive and make decisions that compound over decades.

Most of these traits can be adopted at any wealth level — you can keep proportional cash reserves, delay Social Security, practice tax-bracket arbitrage and rebalance systematically without millions in the bank.

Financial confidence in retirement is less about the size of your nest egg than how strategically you manage it.

Related Content

• The Smart Way to Retire: 13 Habits to Steal from the Wealthy
• The 13 Best Things Rich Retirees Do
• How to Coordinate Claiming Social Security With Your Tax Bracket
• The 7 RMD Tax Traps Waiting for You in Your 70s — and How to Start Disarming Them in Your 60s
• 8 Expenses That Quietly Disappear After Retirement

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

Many investors spend their lives staying the course, saving well, pushing for growth and riding the market as long as they can.

The problem with that strategy is that it ignores the most critical phase of your retirement saving journey: The five-year home stretch until you retire.

Most people don't want to hear this, but one wrong move or assumption can do lasting damage.

A common mindset among pre-retirees is the expectation that strong market returns will continue indefinitely. It's not unusual to hear someone project 15% — or even 20% — annual returns as part of their retirement plan.

On paper, that kind of growth can make everything work beautifully. But markets don't move in straight lines, and they rarely cooperate with timelines.

The real risk isn't just that returns fall short. It's that they fall at the wrong time.

How one bad year can upend your retirement

As retirement approaches, the impact of market volatility changes. A downturn early in your career is inconvenient. A downturn just before or after you retire can be devastating.

Consider what happens if the market drops 30% to 40% in the years leading up to retirement. Many investors assume their portfolios will perform in line with the S&P 500, but that's often not the case.

Many portfolios are made up of mutual funds, sector funds or other investments that can behave very differently, sometimes falling even further due to overlapping risks and hidden correlations.

Then comes the bigger issue: Withdrawals.

If you're taking 4% to 5% income from a portfolio that just lost 30%, your effective loss isn't just 30% — it's closer to 35% once withdrawals are factored in.

This also means the following year, you're taking income from a significantly smaller base.

That creates a mathematical uphill battle that many portfolios never fully recover from. This is known as sequence of returns risk, and it's one of the most underestimated threats in retirement planning.

Lessons from past market cycles

During the dot-com bubble and the 2008 financial crisis, many investors discovered that their portfolios were far more vulnerable than they'd realized, which had a significant impact on those nearing retirement.

Even those who believed they were diversified found that their investments were heavily tied to the same underlying risks. When markets fell, everything seemed to fall together.

The major lesson learned is that diversification isn't just about owning different funds — it's about understanding how those assets behave under stress.

Why asset allocation matters more than ever

In the final years before retirement, asset allocation becomes less about maximizing returns and more about managing risk. That doesn't mean abandoning growth altogether, but being intentional with your investment decisions.

Every piece of your portfolio should have a defined purpose. Some assets should be geared toward growth, others earmarked for protection and designed to generate income.

When portfolios are heavily skewed toward one objective, typically growth, without enough consideration for what happens when markets take a turn for the worse, that's when problems occur.

Think stability first, growth second

One of the best ways to manage risk is to flip the traditional planning process. Instead of starting with investments and hoping they generate enough income, start with the income itself.

How much do you need in retirement? From there, identify reliable income sources — Social Security, pensions, rental income, etc. Determine how to fill any remaining gaps with strategies designed to produce consistent, predictable income.

For some investors, that could include annuities, particularly those that offer guaranteed lifetime income or principal protection with some growth potential. While they may not be right for everyone, these tools can serve a specific purpose: Creating a baseline of income that isn't dependent on market performance.

Once that foundation is in place, the rest of the portfolio can be invested for growth with a clearer sense of purpose and pressure.

The mindset shift before retirement

Perhaps the biggest transition in the final five years before retirement is not financial, but psychological.

You've spent decades accumulating: Saving, investing and growing your portfolio. Retirement flips that script. Now the focus shifts to distribution: Turning assets into income. That's not always an easy transition.

Many retirees struggle with the mechanics of withdrawals — deciding which investments to sell, when to sell them and how to do so efficiently. Those decisions become more complicated and emotionally charged in volatile markets.

A structured income strategy can simplify this process. Instead of constantly making withdrawal decisions, you're replacing a paycheck with a predictable income stream. The rest of the portfolio can then be managed with a longer-term perspective.

The bottom line as you near your golden years

Retirement planning isn't just about building wealth — it's about making that wealth last, because in the final years leading up to retirement, the margin for error becomes much smaller.

A strong market can mask underlying risks, but a single downturn at the wrong time can expose them quickly.

Keep these issues in mind to ensure your retirement plan can withstand whatever the market delivers:

• Markets don't move in straight lines. Adjust your investment strategy in the five years leading to retirement.
• One bad year in the market can ruin your retirement if your portfolio is not properly balanced.
• Asset allocation matters more than ever. Every piece of your portfolio should have a designed purpose.
• Flip the traditional planning process and think stability first, growth second.
• Embrace the mindset shift from accumulation to distribution to make your wealth last.

Retirement success isn't determined by how high your portfolio climbs; it's about whether it can carry you through your golden years.

Your 50s are not the time to take chances with the money you've worked your whole life to earn. It's never too late to create or adjust your retirement plan.

Work with an adviser who can help you find investments that will grow at a steady pace, benefiting when the market goes up without taking a hit when it goes down.

Related Content

• Within Five Years of Retirement? Five Things to Do Now
• These Are the Most Critical Moves to Make in the 5 to 10 Years Before You Hang Up Your Hat
• Social Security, Healthcare and Tax: The Potential Complications of Working Past Retirement Age
• We've All Heard the Buzz About Roth Conversions, But Not Everyone Will Like the Reality
• Your 401(k) Is Sitting Pretty Right Now: It Could Be Time to Rethink Your Strategy

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.

JP spent 38 years in technology. He built two companies, sold one and retired at 66 with a portfolio he described as more than sufficient.

He had done everything the financial planning industry said was essential to a strong retirement plan: The right accounts, the right withdrawal rate, the right estate documents and enough money to do almost anything he wanted.

Eight months into retirement, he found himself trying to articulate something he couldn't quite name. He tried several versions before settling on this one: "I have everything I said I wanted, and I feel like I'm waiting for something that never arrives."

He had not yet named what was missing. He had also, without realizing it, just described the most common yet least expected experience of modern retirement.

What the career was providing

For 38 years, JP woke up with a reason that extended beyond himself. Not every day was meaningful in a way he could articulate. But the aggregate of his work, the teams he built, the problems his company solved and the engineers he developed gave his days a context that outlasted any individual task.

He was part of something. That something had stakes. And the stakes, invisibly and continuously, answered a question that retirement would eventually force into the open: Why do my days matter to anyone other than me?

Most people never ask that question during their careers. Their careers answer it automatically. Retirement removes that answer before anyone has a chance to replace it.

What the research says

The pillar of retirement most likely to be dismissed in a financial planning context is the one the research most consistently shows to predict health and longevity.

A 2019 JAMA Network Open study followed more than 6,000 adults over 50 and found that a greater sense of purpose in life was linked to significantly lower all-cause mortality and fewer cardiovascular events.

The effect was substantial. Adults in the lowest quartile of purpose were more than twice as likely to die during the study period as those in the highest. Purpose was not a soft variable. It was a biological one.

Researchers studying the world's Blue Zones, the five regions where people consistently live past 100, identified purpose as a common thread across cultures.

In Okinawa, Japan, the concept is called ikigai: A reason to get out of bed in the morning. In Nicoya, Costa Rica, residents call it plan de vida.

The vocabulary changes; the underlying mechanism does not. People with a clear reason to matter live measurably longer than those without one.

Austrian neurologist, psychiatrist and Holocaust survivor Viktor Frankl observed that human beings can endure almost any "how" if they have a sufficient "why." The inverse is equally true. Comfort without meaning is not fulfillment. At best, it is a holding pattern.

The definition that matters

In this research, spirituality is not religion. This distinction matters because it determines who reads this article and who stops reading here.

The research uses the term to describe a specific condition: A connection to something larger than oneself, a sense of meaning that extends beyond personal comfort, and an answer to the question of why the days have weight.

This does not require faith, doctrine or affiliation. It requires only a coherent response to the question that retirement poses to every retiree, whether ready or not.

JP is comfortable in retirement. His days are pleasant and unhurried, and, in a way he has not yet named, purposeless. He has not lost his intelligence or capability. He has lost the context that gave those qualities a place to go.

That is not a spiritual crisis in any religious sense. It is a planning gap with measurable health consequences.

The planning gap

Financial planning answers the quantity question: How long will the money last? It does not answer the quality question: What are those years for?

Purpose is plannable. Most retirees encounter this idea expecting it to be framed in therapeutic terms. The research frames it differently: As a design problem. You cannot withdraw from a purpose account you never opened.

The retirees who sustain the highest levels of well-being in later life are not those who stumbled into meaning after retirement. They are those who designed for it before they retired.

The question that begins the design is not complicated. It is uncomfortable, which is why most people avoid it: What would make the next chapter matter to anyone other than yourself?

For JP, the answer emerged slowly, then clearly. He began mentoring two young engineers through their first company. Not for equity. Not for visibility. For the work itself and for what it produced in the people he was developing. A year later, that absence was gone. The portfolio has not changed. The purpose has.

The prescription

Purpose in retirement is not found by waiting for it. It is built by answering a question most retirement plans never ask.

The research identifies three conditions under which purpose takes root in later life: A commitment that demands your best thinking, a community that depends on your presence, and an outcome that outlasts you. None of these require a salary. But all of them require a decision.

The financial plan funds the years. Purpose determines whether the person living them gets out of bed with a reason.

Both require planning. For too long, only one has received any.

To learn more about designing a fulfilling retirement, pick up my book, Your Encore Years: The Psychology of Retirement.

Related Content

• Want to Retire Happily? Plan for Leisure and Purpose
• Your Retirement Needs a Sketchbook, Not Just a Spreadsheet: This Book Focuses on Your Life Goals Rather Than the Math
• The Emotional Side of Retiring: Six Steps to Help You Move On
• Think Your Retirement Plan Is Perfect? Does It Address This Very Important Question? (It's Not About Money)
• Gary Has a Plan for Retirement: Crash on the Sofa and Veg. Here's the Problem With That …

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

A pattern shows up often enough in my practice that I've stopped being surprised by it.

Someone in their mid-50s comes in for a routine check-in. Their mortgage is paid off. The kids whose 20-year term life policy was meant to protect are mostly grown. That policy did its job well.

But somewhere in the conversation, it comes out that an aging parent has just moved in or started needing help that wasn't part of anyone's plan two decades ago, right around the time the original coverage is scheduled to end.

September is Life Insurance Awareness Month, which makes this a good moment to look at a timing problem that comes up more than people expect. This isn't a rare coincidence.

According to Northwestern Mutual's Planning & Progress Study, roughly one in five Americans is caring for a family member, and many are making financial trade-offs to do it: Cutting spending, pulling from savings or taking on debt.

That's the backdrop many are managing when a term policy expires in the same decade.

What makes these situations challenging is not necessarily the policy itself. It is that people may be trying to address today's responsibilities with a financial plan built for a very different season of life.

How age and health affect the cost of new coverage

Here's what I explain to people in that situation: Term life insurance is generally relatively inexpensive because it's temporary, and the premium you paid years ago reflected your age and health at that time.

When that policy ends and you look for new coverage at 55 instead of 35, an insurer isn't underwriting the same person. Medical history and health markers may have changed over that period, even for people who feel healthy.

What that means in practice: Replacement coverage at this stage may cost more for the same death benefit, and health changes can sometimes limit what you're able to qualify for.

I don't tell people that buying term coverage in their 30s was a mistake. If they had a young family and a time-limited need, like a mortgage or a child's dependent years, term insurance was likely the most cost-effective way to secure meaningful coverage, and for many it still is. The issue is making sure the plan keeps pace as responsibilities change.

Three ways to approach an expiring policy

If your term policy is nearing its end date, there are three paths to consider. The right one depends on your health, budget and what you're trying to protect against.

Convert what you have. Some term policies include a conversion option that may allow you to convert some or all the coverage to a permanent policy, subject to policy terms, without new medical underwriting.

This may be a valuable option for anyone whose health has changed, but conversion windows are typically limited to a specific age, so check before your policy expires.

Add smaller coverage on top. Instead of replacing your full death benefit, you may need only a death benefit to help cover a narrower, current gap, like a parent's care needs or a remaining few years of a child's dependency on your income.

Start over with today's numbers. The coverage amount that made sense at 35, based on income replacement, a mortgage and young children, may have little to do with what you need to protect now. Recalculating based on your current obligations often produces a more accurate target.

This kind of planning matters even more for those also thinking about what they'll eventually leave behind. A historic $124 trillion intergenerational Great Wealth Transfer is already underway between generations in the U.S., and those revisiting an expiring term policy are often also due for a broader look at their estate plan.

Don't skip the estate planning conversation

An expiring policy is a natural prompt to check something many haven't looked at in years: Their beneficiary designations.

I ask clients to review whether their beneficiary designations still align with their estate plan and whether they should consult tax or legal professionals about potential unintended consequences.

A former spouse listed as beneficiary, a minor child who'd receive a lump sum before they're ready to manage it or an estate named as beneficiary by default can all create complications that a trust, staggered distribution or other planning tool may help address.

Some permanent life insurance policies can build cash value over time. For some households, its death benefit can help address estate planning needs, which may include estate taxes, equalizing inheritances among heirs or charitable giving.

For those whose estate plan hasn't been reviewed since the term policy was purchased, an expiring policy is as good a reason as any to have both conversations at once.

For wealthier individuals, the expiring policy itself is often less the point than what it was quietly standing in for. Coverage tied to a business loan, buy-sell agreement or key-person planning can also expire or lapse, and often carries higher stakes.

It's also common for these clients to have postponed other estate planning decisions, such as gifting assets into a trust or updating succession plans. An expiring policy is a reasonable prompt to finally have that conversation.

What to do before the policy lapses

If any part of this sounds like your household, a few steps are worth taking now, while you still have options:

Pull your policy documents and check whether it includes a conversion option and by what date it needs to be exercised

Take an honest inventory of who currently depends on your income, rather than the picture from 20 years ago

Check your beneficiary designations against your current estate plan, not the one you had 20 years ago

Talk to a financial adviser before your term expires, not after a lapse notice arrives — options narrow once the policy has ended

In my experience, the clients most exposed to this timing mismatch usually aren't the ones who think of themselves as underinsured. They may have purchased exactly the right coverage for the season of life they were in.

The challenge is that life rarely stands still. Careers change. Families change. Businesses grow. Parents age. Responsibilities shift.

The good news is that many of these situations can be addressed when they are identified early. The goal is not to perfectly predict every change life may bring. It's to revisit your plan often enough that it can evolve alongside the people and priorities that matter most.

Sometimes an expiring policy is simply the reminder that it's time to make sure your financial plan has changed along with your life.

Article prepared by Northwestern Mutual with the cooperation of Gina Cimineri. To view detailed disclosures regarding individual representatives, view their information at taketwofinancial.nm.com.

This article is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax or legal professional for advice specific to your situation.

Related Content

• What Is Term Life Insurance?
• How to Shop for Life Insurance in 3 Easy Steps
• How Much Life Insurance Do You Need?
• Do You Need Life Insurance When You're Young?
• 5 Ways to Use Your Life Insurance While You're Alive

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

There's a hidden epidemic that might be lurking in your future: Stress, which doesn't retire when you do.

Retiring from working might eliminate one stressful aspect of life, but the sudden lack of structure and purpose can have detrimental effects on emotional and psychological health.

It's important to retire into a life that's structured differently, but still structured. Whether that means maintaining a schedule of volunteering or socializing regularly, retirement with purpose is preferable to a purposeless existence.

AARP research suggests that feelings of financial insecurity are on the rise among those ages 50 to 64.

The same research also suggests that financial insecurity isn't necessarily tied to income, but stems from experiencing "financial shocks," such as losing a job, encountering an unexpected but significant expense, market volatility or even losing money due to fraud.

The sandwich generation is squeezed from both sides

Financial shocks in midlife can also take the form of caring for aging parents while also helping children who are entering adulthood.

Most people realize they might need to eventually help their kids through college or in buying a first home, but not everyone realizes that they might have to do that while helping their own parents.

This sandwich generation provides financial, emotional and sometimes physical support to both kids and parents in a juggling act that's potentially exhausting and can lead to emotional burnout. Add financial strain, and retirement becomes far less tranquil.

Another AARP report further suggests that emergency savings are the key to feeling less financially insecure later in life.

Conversely, the presence of debt and a lack of retirement savings increase feelings of financial insecurity in midlife. It's never too late to pay down debt and increase savings, and the benefits of doing so will be numerous as you age.

Isolation has a price tag

Loneliness comes at a cost. Research from the U.S. Surgeon General suggests that social disconnection poses a health risk comparable to smoking 15 cigarettes a day.

Retirement shouldn't be the time when you metaphorically drop off the face of the earth and stop socializing. If anything, it's a time to strengthen social connections and actively seek ways to be more involved.

Whether they realize it or not, some people try to fill the social void with overspending, leading to compounding problems. According to Psychology Today, research suggests that loneliness can increase materialism, which can further increase loneliness. It can be a vicious cycle.

Building social networks can be just as important as building your investment portfolio when it comes to living a long, happy life. Isolation in retirement isn't solved by reaching into your wallet; it's solved by reaching out to other people.

Financial shame keeps people silent

By some estimates, debt in the 50-plus demographic has nearly doubled in the last decade. It's a problem that many people live with, but few talk about because they're embarrassed.

That embarrassment can sometimes lead to avoidance, which can quickly become a bigger problem because people don't seek solutions, so the problem grows.

Avoidance and money management are a bad combination, especially among those who should be spending this time preparing for retirement.

Recovering from financial shame starts with knowledge and open communication. Stop avoiding your finances and start creating a plan.

Transparent conversations with your financial adviser and those close to you can reveal solutions and ease the burden of stress that can come with willful avoidance.

The new wealth equation includes well-being

True financial planning should be a holistic plan that takes mental health into consideration. Wealth isn't just numbers in an account; it's also your ability to enjoy life.

A comprehensive budget should include time for things that can accentuate your life, such as therapy when appropriate, relaxation and community. If your money plan doesn't protect your mind and well-being, it's not protecting your life.

Speak with your adviser to set up a plan to create the midlife experience you want — one that is rich with community engagement, fun events and a financial plan that moves you toward the life you want.

Related Content

• Are You Ready for the Emotional Side of Retirement?
• 8 Signs You’ll Thrive in Retirement (Even If You're Afraid to Make the Leap)
• Turning Everyday Spending into Free Flights, Hotel Rooms and More
• The Secret to Life, Liberty and the Pursuit of Happiness? It Isn't Money. A Financial Planner's Take on the American Dream
• Should You Buy a Beach House? The Truth About Vacation Homes, 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.

Some people may assume that once Social Security taxes have been deducted from their paychecks, they will automatically be eligible to receive a retirement benefit.

But eligibility is not attained simply by starting to pay into the program. Workers must accumulate a minimum number of Social Security credits before they can collect retirement benefits on their own earnings record.

This can create an unpleasant surprise for immigrants, people who spent only part of their careers in the United States, workers who moved in and out of covered employment and those who stopped working earlier than expected.

The good news is that falling short of the standard requirement does not always mean the Social Security taxes you paid will produce no benefit. Depending on your age, marital history, future work plans and employment in another country, several options may still be available.

Understanding the 40-credit requirement

A credit is the basic unit for determining whether a worker is insured under the Social Security program. To be eligible to collect retirement benefits, a worker must have earned enough income, subject to FICA or SECA payroll tax contributions, to have received 40 credits.

Each credit is earned by a dollar amount and not specific to when it is earned in the calendar year.

In 2026, the amount of earnings required for one credit is $1,890. Therefore, to earn all four credits in 2026, a worker must earn and pay FICA or SECA taxes on at least $7,560 of gross income or net income if they're self-employed.

No matter how high the earnings may be, only up to four credits may be earned in one year.

If a person earns a lower amount than $7,560 in 2026, they will earn fewer credits. A person earning $7,560 and another earning $100,000 would each receive four credits for the year.

As an example, let's consider a worker who expects to earn $3,900 in 2026. This person will earn two credits in 2026. This is determined as follows: $3,900 ÷ $1,890 = 2.06 → 2 credits

A credit is never rounded up since the dollar amount of the next quarter has not been met. Only full quarters of coverage can be earned.

Credits determine only whether you are insured for benefits; they do not directly determine the size of your Social Security benefit.

You may be able to earn the missing credits

Social Security credits remain on your earnings record permanently. They do not expire simply because you stop working, leave the United States or take a job that is not covered by Social Security.

A person with 36 credits, for example, could earn the remaining four credits through one additional year of covered employment. Because credits are based on annual earnings, the person would not necessarily need to work for the entire year.

Before making employment decisions, all workers, of any age, should review their official earnings history through their personal my Social Security account at SSA. Missing or incorrectly reported earnings could affect both the number of credits and future benefit amounts.

SSA recommends regularly checking the earnings record and requesting corrections when necessary.

Workers should also confirm that their current employment is covered by Social Security. Most private-sector employment is covered, but certain state and local government positions, foreign employment and other specialized work arrangements may operate under different rules.

You might qualify on someone else's record

Social Security offers benefits to dependents of a worker as well. A person does not need 40 credits on their own record to potentially receive a benefit as a spouse, divorced spouse, widow or widower.

For example, someone who is married to a worker receiving Social Security retirement or disability benefits may qualify for spousal benefits, generally beginning at age 62. At full retirement age (FRA), the maximum spousal benefit may equal as much as 50% of the worker's FRA benefit. Claiming before FRA will result in a permanent reduction of the spousal benefit.

A divorced person may potentially qualify on a former spouse's record if the marriage lasted at least 10 years, and the other eligibility requirements are met. Survivor benefits may also be available to qualifying widows, widowers and surviving divorced spouses.

All these benefits are based on the worker's insured status, so the spouse or former spouse does not have to independently earn 40 credits.

The rules for disability and survivor protection are also different from the standard retirement rules. Younger workers may qualify for Social Security Disability Insurance (SSDI) with fewer than 40 credits, although they must generally satisfy both a total-work and recent-work requirement.

Likewise, the number of credits required to provide survivor protection depends partly on the worker's age at death.

In certain cases, as few as six recent credits may provide benefits for surviving children and a spouse caring for those children.

What happens to the Social Security payroll tax contributions already paid?

Social Security is a social insurance program, not an individual investment account in which each person's payroll taxes are held separately.

As such, Social Security taxes paid by employees and employers into the Old-Age, Survivor Disability (OASDI) trust fund and Hospital Insurance (HI), or Medicare, trust fund cannot be refunded merely because a worker has not accumulated enough credits to qualify for benefits from these funds.

This makes it particularly important to identify possible eligibility through additional work, family benefits or international coverage before assuming the contributions will never produce a benefit.

Worked in another country? A totalization agreement may help

The U.S. has bilateral Social Security agreements, commonly called totalization agreements, with numerous countries, including Canada, the United Kingdom, Germany, France, Italy, Australia, Japan, South Korea, Brazil and others.

These agreements serve two primary purposes:

• They help prevent workers and employers from paying Social Security taxes to two countries on the same earnings
• They also help people who divided their careers between the U.S. and another country qualify for benefits when they lack sufficient coverage under either system alone

For U.S. benefits, a worker generally must have at least six U.S. Social Security credits before foreign coverage can be considered. The foreign credits do not become U.S. credits. Instead, the two countries' coverage periods may be combined to establish eligibility.

If the combined record qualifies the worker for a U.S. benefit, the SSA calculates a partial, or prorated, benefit reflecting the portion of the worker's career covered under the U.S. system. The foreign country may separately determine whether the person qualifies for a benefit under its laws.

A worker who already has enough U.S. credits to qualify without foreign coverage generally receives a regular U.S. benefit rather than a totalization benefit.

Review and prepare before retirement

Anyone who has worked in the U.S. for fewer than 10 years should review their Social Security earnings record in detail well before retirement. They can then determine how many credits are on their record, whether any earnings are missing and how many additional credits could realistically be earned.

Considering all options is critical:

• Are spousal, ex-spouse or survivor benefits available?
• Was part of the career spent in a country with a U.S. totalization agreement?
• Could another year or two of covered work secure insured status?

Coming up short of 40 credits may limit the options, but it does not always end the conversation. A careful review of the worker's complete employment and marital history can uncover benefits that might otherwise be overlooked.

Related Content

• How Divorced Retirees Can Maximize Their Social Security Benefits: A Case Study
• Paper Social Security Checks Are on Their Way Out: How to Help Your Aging Loved Ones Cope
• Social Security Family Maximum Benefits: Are You Eligible and How Much Can You Receive?
• Filed for Social Security Too Soon? 2 Ways to Get a Do-Over
• Still Working While Receiving Social Security? A Financial Adviser's Guide to the Earnings Test

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.

Traditional employer-paid pensions, once the gold standard for retirement security, have played an important role in providing retirees with predictable, monthly income for life. But that's changing fast. About 52% of people 65 and older have a pension, but only 5% of those under age 25 do, according to the Federal Reserve. Younger generations must rely on 401(k)s and individual retirement accounts (IRAs).

Traditional pensions remain a key source of retirement income for federal, state, and local workers (retirees with public pensions), and Americans who work at the dwindling number of companies that offer pensions. "If you have a pension, it gives you peace of mind," says Christian Weller, professor of public policy at the University of Massachusetts Boston.

The power of a pension

Why do retirees love pensions? Your employer invests for you and later funds your pension payment. More importantly, the monthly checks are guaranteed for life, providing a steady stream of income retirees can count on (for the most part), no matter what the economy or financial markets are doing.

"For many households, especially those with limited assets, the presence of predictable lifetime income appears to be closely associated with greater financial stability," says Leslie Muller, senior research associate at the Employee Benefit Research Institute (EBRI). A 2026 EBRI report found that access to guaranteed income streams, such as pension income, plays a key role in helping retirees preserve assets and manage financial shocks later in life.

Monthly pension checks, coupled with monthly Social Security benefits, can help cover essential monthly expenses during retirement. "Pensions are a critical part of a retiree's lifetime income," says Karen Friedman, executive director of the Pension Rights Center. With inflation high and the cost of living taking up a larger share of workers' wages, Friedman says it's getting harder for workers to save for retirement.

While pension checks won't cover your entire salary, those monthly benefits can still offer much-needed income.

There are a number of factors that determine the size of a pension’s monthly benefit. The typical pension formula takes into consideration the number of years you worked at the company, your final average salary, as well as the so-called accrual rate, or how much pension benefit is earned for each year of service. So, the longer you work for a company and the more money you make, the higher your pension benefit will be.

How much is the typical monthly pension benefit check?

Here is the most recent data available on median pension benefits from the Pension Rights Center, a non-profit, non-partisan organization that protects and promotes workers' retirement security.

The amount beneficiaries receive varies by pension type. And in the broad categories noted above, median monthly benefits range from $953 to $2,776. What's important to remember is this monthly benefit can't run out and will be paid out for your entire life. "You can count on that money," says Weller. "That’s a deal that people know and understand. And they don’t have to worry about it."

Those monthly pension benefits compare favorably to the average Social Security benefit of $2,086 per month for retired workers, based on Social Security Administration data.

Weller says another key benefit of a pension is that it provides automatic retirement security without requiring workers to make a series of complex savings and investment decisions.

Private-sector pensions are also insured by the Pension Benefit Guaranty Corporation (PBGC), which pays benefits up to certain limits if a company goes bankrupt and can't fulfill its pension payment obligations. The PBGC caps the maximum monthly benefit, which varies based on the age at which benefits begin. (Religious institutions are not required to insure their pensions and may face shortfalls.)

And with the average 401(k) balance at just $141,000 at the end of March 2026, according to Fidelity Investments, future retirees with guaranteed income streams from both Social Security and a pension will be in far better financial shape in their golden years.

Like Social Security, pensions also offer spousal and survivor benefits, creating even more financial security for married couples.

The average monthly public pension benefit by state

Where you live also affects how much your monthly pension check will be, according to a state-by-state analysis by the National Institute on Retirement Security (NIRS).

These figures are from 2024, the most recent available data, and cover public pensions, which tend to be higher than private ones.

Source: National Institute on Retirement Security (NIRS) /AARP/NRTA, data through 2024.

Monthly benefits vary widely, from Connecticut's average monthly check of $3,808 to Indiana's $810.

How much of a beneficiary's pre-retirement pay the pension replaces also varies, ranging from 30% to 75%. NIRS data show most pensions cover 50% or 60%.

Keep in mind, however, that most private pensions do not account for inflation with a cost-of-living adjustment (COLA), so your actual purchasing power can diminish significantly over the years.

If you live in one of the 16 states that do not tax pension income, you'll be able to hold onto more of your pension payout.

The big decision: Lump sum or monthly payments?

Often, pension beneficiaries can take a lump sum instead of a monthly benefit, but experts say doing so means missing out on lifetime income and potentially mismanaging the lump sum and running out of money.

"If you have a pension and take the monthly benefit, it can’t run out," says Friedman. "You don’t have to worry about outliving your benefits or managing a lump sum. And the truth is, when retirees get into their 70s, 80s, and 90s, who wants to be figuring out how to invest money?"

For workers who are weighing taking a lump sum over a monthly check, it’s important to do an analysis to see how it impacts retirement security over the long haul, says Brian Donohue, partner at October Three, a pension consulting firm. "People have to run the numbers," says Donohue.

Read More on Average Retirement Savings

• Average 401(k) Balance by Age in 2026
• Average IRA Balance by Age and Generation in 2026
• Average Retirement Savings by Age
• Average Social Security Check by Age

The road to retirement is filled with potential missteps, but one of the most serious — affecting how you live your golden years if you aren't careful — is being too conservative with your retirement investments. It's the biggest mistake Mellody Hobson, co-CEO and president of Ariel Investments, sees retirees and pre-retirees make all the time.

"People think they are winning by not losing when over time it's not outpacing inflation," Hobson told Kiplinger.com in an exclusive interview. "You need your money for years, and the only way for it to grow is to have equities. People pull back too fast, too soon." Pre-retirees, especially those nearing retirement, are guilty of the same mistake, says Hobson. They see the off-ramp getting closer, and they get conservative too quickly.

A healthy mix of equities and fixed income wins the race

Hobson isn't advocating for retirees to be super aggressive with their retirement investments either. She says retirees should have a well-diversified nest egg that outpaces inflation and can last for what may be 30 years in retirement. After all, at last check, the life expectancy for women in America is 81.4 and 76.5 for men, but people live well past that.

If you are a retiree, or pre-retiree who has gotten too conservative, don't panic; you can fix your mistake. But don't go crazy buying stocks all at once. Either work with a financial adviser to allocate more of your portfolio to equities or consider dollar-cost averaging over six months or a year, says Hobson. This strategy involves investing a fixed amount of money at regular intervals, regardless of how the markets perform.

Beyond dollar-cost averaging, another way to protect your portfolio is the bucket approach to spending, with one bucket for short-term needs, one for medium-term needs, and one for long-term needs. You invest the money in the long-term bucket in growth-oriented stocks.

Hobson's runner-up mistakes

Beyond being too conservative, Hobson sees other mistakes retirees make that can quickly derail their retirement, and two big ones are taking a lump-sum payout from their 401(k) when they retire and supporting adult children at their expense.

Take the lump-sum payout for starters. Hobson isn't saying retirees shouldn't enjoy their hard-earned retirement savings; quite the contrary, but she does think taking a lump-sum payout means less money growing and compounding to live off later. They could also face a big tax hit if the withdrawal comes from a traditional 401(k), which is treated as ordinary income.

"We have this impulse to buy something, to use that money for a boat, vacation, or something, but that money has to be for the long term," says Hobson. "You don't have to buy the boat; you can go on a boat trip. You have to resist the impulses because ultimately you sacrifice your long-term financial security."

As for supporting adult children in retirement, Hobson says it's become an epidemic in recent years and, if left unchecked, can severely impact a retiree's financial security. "You have to get very serious about family members standing on their own two feet, or come up with some kind of clear expectation about what the support needs are long term," says Hobson. Retirees have to "take the training wheels off."