For decades, the 60/40 portfolio has been one of the most familiar approaches to investing: Roughly 60% in stocks for growth and 40% in bonds for income and stability.

There's a reason that framework has lasted. Stocks and bonds remain important building blocks for many investors.

But today, investors have more choices than they did a generation ago.

High-net-worth investors, family offices and advisers increasingly have access to private credit, real estate, private equity, infrastructure and direct energy investments that can provide exposure to assets and economic drivers outside the traditional public markets.

That doesn't mean the 60/40 portfolio has stopped working.

It means investors now have the opportunity to ask a broader question: What other assets may complement it?

Diversification: What drives the investment?

Owning multiple funds doesn't always mean a portfolio is truly diversified.

Stocks and bonds can respond to many of the same forces, including interest rates, inflation, economic expectations and broader market sentiment. In 2022, for example, investors were reminded that stocks and bonds can decline at the same time.

That's why I believe diversification should be viewed not simply in terms of how many investments someone owns, but in terms of what actually drives their value.

Alternative investments can introduce different sources of potential return.

Real estate may be driven by rents and property values. Private credit may be driven by contractual interest payments. Infrastructure may benefit from long-term demand for essential services.

Direct oil and gas investments can be tied to something different again: The development, production and sale of energy.

Where direct oil and gas can fit

I've spent most of my career in oil and gas, and one of the things I believe investors should understand is how different direct energy ownership can be from simply purchasing shares of a publicly traded energy company.

A public oil and gas stock is still a stock. Its price can be influenced by the broader market, investor sentiment, analyst expectations, interest rates and company-specific events.

A direct oil and gas investment can provide exposure much closer to the underlying assets themselves.

Depending on the structure, investor capital may be used to acquire acreage, drill and complete wells, bring production online and develop reserves.

That distinction matters.

When an operator deploys capital into drilling, the goal is to turn dollars invested today into producing energy assets tomorrow.

A successful well can potentially create several layers of value, including current or future oil and natural gas production, potential monthly cash flow, additional proved or undeveloped reserves, potential value from continued development and potential value if producing assets are ultimately sold or otherwise monetized.

That's one reason I believe direct energy deserves a place in the broader diversification conversation.

Instead of investing solely in financial instruments, investors can potentially participate in the development of tangible assets producing commodities the global economy uses every day.

Capital goes to work in the ground

This is an important distinction in the way I think about oil and gas investing.

When we raise capital for a drilling program, the objective is not simply to hold acreage and hope it appreciates.

The capital has a job. It can be deployed to drill wells, complete wells and move assets from undeveloped potential toward production. Each stage can potentially add information and value to the asset.

Before a well is drilled, much of its value may be based on geology, engineering and nearby production. Once it is drilled and completed, the operator has additional data. Once it begins producing, there is another layer of information: Actual production performance.

That production history can help engineers evaluate reserves and can give lenders, potential buyers and other market participants more information with which to assess the asset. In other words, drilling can be a value-creation process, not simply an expense.

That's the model I find particularly compelling: Putting capital to work with the objective of creating producing assets and building value through development.

Energy demand isn't theoretical

There's also a fundamental reason oil and gas remains relevant. The world continues to require enormous amounts of energy.

Transportation, manufacturing, agriculture, petrochemicals, electricity generation, data centers and countless parts of the modern economy depend on reliable energy supplies.

At the same time, oil and gas production is naturally depleting. Existing wells decline, which means new capital and new drilling are continually required simply to replace lost production. That creates an interesting dynamic for investors.

Energy is both an essential commodity and a capital-intensive business. The industry needs investment to find, develop and produce the resources the economy continues to consume.

For investors who understand the risks and have the appropriate time horizon, participating directly in that development can provide exposure to a very different part of the economy than a traditional stock-and-bond portfolio.

The tax treatment can be meaningful

Direct oil and gas can also offer potential tax characteristics that are different from many traditional investments.

Depending on the structure of the investment and an investor's individual tax circumstances, certain drilling and development expenses may qualify for deductions, including potential intangible drilling cost deductions.

Producing oil and gas properties may also qualify for depletion deductions over time. For certain high-income investors, these potential tax benefits can materially affect the overall economics of an investment.

I don't believe anyone should make an investment solely for a tax deduction. The underlying assets, operator, development plan and economics must make sense first.

But when a fundamentally attractive investment also offers potential tax advantages, those benefits can become an important part of the overall investment consideration.

Because the rules can be complex and investor circumstances vary, individuals should always consult their own tax professionals regarding how those provisions may apply.

Start with the asset

When evaluating an oil and gas opportunity, I've always preferred to start with the asset rather than the spreadsheet.

Projections matter, but they're only as good as the assumptions behind them.

I want to know what exists in the ground and what we know about the surrounding area. I ask if there is existing production, if nearby wells have successfully produced from the same formations, what the geology tells us, what the development plan looks like, and what the capital will be used for. I also want to know how experienced the operator is at drilling, producing and selling oil and gas.

These types of questions tell me far more than an attractive projected return by itself.

In our business, the objective is to acquire and develop assets where we believe operational execution can create additional value.

That means deploying capital into drilling and development, gathering real production data, building reserves and continually evaluating the best way to maximize the value of those assets.

The operator matters

Oil and gas isn't a passive business from the operator's perspective. Execution, drilling decisions, completion design, cost control, land and title work, production operations, commodity marketing and timing: These all matter.

That's why I believe investors evaluating direct energy should spend as much time evaluating the operator as they do evaluating the projected economics.

An experienced operator should be able to explain where investor capital is going, what milestones are expected, what can create additional value and how the assets may ultimately be monetized.

The investment isn't just in a commodity. It's also an investment in the operator's ability to execute a development strategy.

Private investments require patient capital

Direct oil and gas investments are generally private investments, which means they should be viewed differently from publicly traded securities.

An investor may not be able to sell an interest with the click of a button. Timing and patience are important.

Patient capital can allow an operator to execute a multi-stage development strategy: Acquire the asset, drill wells, establish production, build reserves and pursue opportunities to create additional value over time.

For investors who have sufficient liquidity elsewhere in their portfolios, that longer-term approach may fit well alongside more liquid public-market investments.

Is 60/40 enough?

For many investors, it may be.

There's nothing inherently wrong with keeping a portfolio simple.

But for investors with significant assets, longer investment horizons and the ability to accept the risks and illiquidity associated with private investments, alternatives can broaden the opportunity set.

I don't view direct oil and gas as a replacement for stocks or bonds. I view it as something fundamentally different. Stocks provide ownership in companies. Bonds provide contractual debt exposure.

Direct oil and gas can provide qualified investors with the opportunity to participate in the acquisition, drilling, development and production of real energy assets.

That is an important distinction.

The question shouldn't be whether every investor needs alternatives.

The better question is whether adding assets driven by different fundamentals can make sense within the investor's overall strategy.

For the right investor, I believe direct energy deserves to be part of that conversation. At the end of the day, diversification isn't about making a portfolio more complicated.

It's about putting capital into assets that have a clear purpose, a clear economic rationale and the potential to create value in different ways.

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

For many 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.

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

One of the most 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.

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

Every year, thousands of employees and executives retire or leave a job with a 401(k) full of company stock and unknowingly pay far more in taxes than necessary.

The culprit is a lack of awareness around net unrealized appreciation (NUA), a little-known IRS provision that can convert a chunk of ordinary income tax into much cheaper long-term capital gains tax.

If you or your executives hold concentrated employer stock in a 401(k), profit-sharing plan or employee stock ownership plan (ESOP), understanding NUA could mean the difference between a seven-figure tax bill and meaningful savings.

What is NUA?

NUA is simply the growth in your company stock's value while it sat inside your retirement plan. To put it another way, it's the gap between what you (or your employer, via matches or stock bonuses) paid for the shares and what they're worth today.

Consider an executive who accumulated employer stock over a 20-year career with a cost basis of $200,000 and whose position is now worth $4.2 million. The $4 million difference is the NUA.

Under normal 401(k) rules, every dollar you eventually withdraw, including all that appreciation, gets taxed as ordinary income, which can run as high as 37% for top earners. On a $4 million distribution taxed entirely as ordinary income, that's roughly $1.5 million owed to the IRS.

NUA treatment changes that equation by letting you split the stock into two tax buckets: The $200,000 cost basis, taxed as ordinary income now, and the $4 million appreciation, taxed later at long-term capital gains rates (currently capped at 20% federally) whenever the shares are sold.

Why NUA is a big deal for executives

This distinction matters most for executives and long-tenured employees as they're the ones most likely to hold large, highly appreciated positions in employer stock after years of matches, ESOP allocations or stock bonus programs.

In this scenario, using NUA could shift roughly $4 million from a 37% ordinary income bracket down to a 20% capital gains bracket, a potential difference of more than $600,000 in taxes owed, simply by handling the distribution correctly.

There's an added bonus: The NUA portion, along with any gains after distribution, escapes the 10% early withdrawal penalty regardless of the employee's age, and it's exempt from the 3.8% Net Investment Income Tax as well.

The rules you can't skip

NUA isn't automatic. It only applies if very specific IRS requirements are met, and missing even one disqualifies the entire strategy. Use this checklist if you are considering it:

• A "triggering event" must occur first: Separation from the employer, reaching age 59½, disability or death.
• The entire vested balance across all of that employer's qualified plans must be distributed within a single calendar year, with no partial distributions carried into the next year.
• The company stock must be distributed "in-kind" as actual shares into a taxable brokerage account, never sold for cash first.
• If required minimum distributions were already taken in a prior year, NUA eligibility is lost. Taking only the current year's RMD is still allowed as long as the account is zeroed out by year-end.
• The stock must currently sit in a tax-deferred account, such as a traditional 401(k). It can't be in a Roth 401(k) or Roth IRA.

How the process actually works

Once eligibility is confirmed, the mechanics are straightforward but require careful sequencing.

• The employer stock gets distributed in-kind directly into a non-qualified brokerage account, triggering an immediate ordinary income tax bill on the $200,000 cost basis only.
• Meanwhile, any remaining 401(k) assets, such as mutual funds, cash or other holdings, can be rolled over tax-free into a traditional IRA or a new employer plan.
• From there, the $4 million NUA portion sits untaxed until the shares are actually sold, at which point it's taxed at long-term capital gains rates no matter how briefly the shares were held after distribution.
• Any additional appreciation that occurs after the distribution date is taxed separately, following normal short- or long-term capital gains rules based on the new holding period.

Common mistakes to avoid

The biggest and most irreversible mistake is rolling employer stock into an IRA by default, as this permanently forfeits NUA treatment on that entire $4 million gain. This is a common outcome when executives don't flag their intent in advance.

Other frequent missteps include taking RMDs in a prior year without realizing it disqualifies future NUA eligibility, selling shares inside the plan before distribution (converting NUA to cash disqualifies it), and failing to distribute the full account balance within one tax year.

Making the decision

NUA isn't right for everyone, but for an executive with a large basis-to-value gap, the math is compelling. It works best when the stock is highly appreciated relative to its basis, when the executive doesn't need immediate liquidity to cover the upfront ordinary income tax on the basis, and when long-term capital gains rates offer a real advantage over the executive's ordinary income bracket.

For those under 59½, the trade-off between the 10% early withdrawal penalty on the cost basis and the long-term tax savings on the multimillion-dollar gain needs careful modeling.

Given how irreversible and rules-driven this strategy is, any executive sitting on a concentrated, highly appreciated position of employer stock inside a 401(k) — especially those approaching retirement or a job change — should run the numbers with a financial adviser or tax professional well before their triggering event happens, not after.

Once the account is rolled into an IRA, the opportunity to save hundreds of thousands (or more) is gone for good.

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

Tax preparation and tax planning are not the same thing. For retirees with pensions, the difference could be worth tens of thousands of dollars over the course of their retirement.

When you think about working with a CPA, you probably think about your tax return. And that makes sense — tax professionals help calculate what you owe, identify available deductions and credits and make sure your return is filed correctly.

But there is a big difference between preparing your taxes and planning your taxes. Tax preparation looks backward. Tax planning looks forward (I wrote a book on this called I Hate Taxes — request a free copy here).

That distinction becomes particularly important for retirees with pensions, substantial savings and multiple sources of retirement income. A pension can provide valuable lifetime income, but it also creates a tax-planning challenge that many retirees don't anticipate: Your retirement income could be higher than it was during some of your working years.

As the founder and CEO of Peak Retirement Planning and a CFP® Professional, I recommend that retirees look beyond their federal income tax bracket and consider how decisions affect Social Security taxation, Medicare premiums, capital gains, Roth accounts and estate planning.

Here are eight retirement tax strategies worth discussing with your financial planning team.

1. Don't automatically dismiss Roth conversions

A Roth conversion involves moving money from a traditional IRA or other tax-deferred account into a Roth IRA and paying income taxes on the converted amount today.

In exchange, qualified Roth withdrawals in retirement are generally tax-free, and Roth IRAs aren't subject to lifetime required minimum distributions (RMDs) for the original owner.

The conventional wisdom around taxes is often simple: Defer taxes as long as possible. But that isn't necessarily the best strategy for every retiree.

Consider someone who has a pension, Social Security and several million dollars in traditional retirement accounts. Their future taxable income could be substantial, as RMDs will eventually force money out of tax-deferred accounts, and pension and Social Security income continues arriving regardless of whether the retiree needs additional cash.

This can create a very different tax picture than the one they had while working. A Roth conversion could make sense when the tax cost today is lower than the expected lifetime tax cost of leaving the money in a traditional account.

However, the calculation should include more than the federal income tax bracket. Social Security taxation, Medicare's income-related monthly adjustment amount (IRMAA), state taxes, future RMDs and estate planning goals all affect the result.

The goal isn't necessarily to pay the lowest tax rate this year; it's to pay the lowest lifetime tax bill.

2. Put charitable giving on your tax-planning calendar

If charitable giving is part of your retirement plan, don't wait until tax season to think about it. Beginning in 2026, a new above-the-line charitable deduction allows eligible taxpayers who take the standard deduction to deduct up to $1,000 of qualifying charitable contributions for single filers and $2,000 for married couples filing jointly.

This creates another planning opportunity for retirees who don't itemize deductions.

But retirees with larger retirement accounts have another important tool: Qualified charitable distributions (QCDs). Once you reach age 70½, a QCD allows you to make a charitable contribution directly from an IRA.

The distribution may satisfy part or all of an RMD, subject to applicable limits, while generally keeping the transferred amount out of adjusted gross income.

That distinction matters. For a retiree with a pension, keeping taxable income under control could have ripple effects beyond the income tax return, as it can influence Medicare premiums and the taxation of Social Security.

Charitable retirees therefore shouldn't simply ask, "How much can I deduct?" They should ask, "Which account should the charitable gift come from, and when should I make it?"

3. Stop treating tax preparation as tax planning

Your CPA might prepare an excellent tax return, but that doesn't necessarily mean you're receiving comprehensive retirement tax planning.

Tax preparation is largely reactive — the tax year has ended, your income and transactions are known, and your professional calculates the resulting liability.

Tax planning is proactive. It asks questions such as:

• Should you make a Roth conversion this year?
• How much should you convert?
• Which account should fund your next withdrawal?
• How will an RMD affect your tax bracket?
• Could a large capital gain increase your Medicare premiums?
• Should you delay Social Security?
• How will your tax strategy change after one spouse dies?
• Where should assets be held for tax efficiency?

These decisions often need to happen months or years before the tax return is prepared.

Retirees shouldn't necessarily expect one professional to handle every aspect of the process. Instead, the CPA and financial adviser should communicate so that investment and tax decisions work together rather than operating in silos.

That collaboration can be especially valuable for retirees with pensions, because the interaction between guaranteed income, retirement accounts and government benefits can add a lot of complexity to your plan.

4. Build tax diversification into your retirement portfolio

Most investors understand investment diversification: Don't put all your money in one stock or one asset class.

The same concept applies to taxes. Retirees may potentially benefit from having assets spread among three different tax "buckets":

• Tax-deferred. Traditional IRAs, 401(k)s, 403(b)s and similar accounts
• Tax-free. Roth IRAs and other qualifying Roth assets
• Taxable. Brokerage and other non-retirement accounts

Having everything in tax-deferred accounts could create a problem later. When you need money, you have limited flexibility — withdrawals generally create taxable income, and RMDs will eventually force distributions whether you need the money or not. A Roth account provides another option.

Suppose tax rates are relatively high in a particular year. You could draw more heavily from Roth assets, assuming the withdrawals are qualified, rather than adding more taxable income.

In another year, when your taxable income is lower, drawing from a traditional IRA could be more attractive.

Tax diversification gives retirees choices, and in a retirement that could last 20 or 30 years, flexibility has real value.

5. Pay attention to the "three-legged stool" of retirement income

Pension retirees often have three major sources of income:

• A pension
• Social Security
• Withdrawals from retirement accounts

Individually, each might be beneficial, but together they can create a surprisingly large stream of taxable income. A retiree with a $70,000 pension, $50,000 of Social Security and significant IRA withdrawals could have considerably more taxable income than they expected when they first retired. The consequences extend beyond ordinary income taxes.

This increased income could cause up to 85% of Social Security benefits to be taxable and can also push long-term capital gains into higher brackets, eliminating opportunities to realize gains at the 0% rate.

Medicare Part B and Part D premiums increase through IRMAA, when income exceeds certain thresholds. That means an additional dollar of taxable income isn't necessarily just another dollar subject to income tax. It could also contribute to higher Medicare premiums.

For pension holders, this is one reason tax planning needs to look beyond the tax return.

6. Don't overlook the tax implications of pension decisions

Choosing between pension options is primarily an income-planning decision, but taxes deserve a seat at the table.

For example, someone might be deciding between a monthly pension benefit and a lump-sum distribution. The choice involves numerous factors, including longevity, investment risk, survivor benefits, liquidity and spending needs.

Taxes are only one piece of that decision, but they influence the long-term outcome. Survivor benefits deserve particular attention, as while you may be able to file jointly now and enjoy the more favorable tax brackets, one spouse passing away could result in a severe increase in your tax and IRMAA situation. Not to mention the potential to lose a Social Security benefit.

That combination creates what is commonly called the widow's penalty. A pension strategy that looks perfectly reasonable while both spouses are alive could create a very different tax picture for the surviving spouse.

In some situations, Roth conversions during the couple's joint-filing years could help reduce the future tax burden. The key is to model the decision before making an irrevocable pension election.

7. Make your investment strategy tax-efficient, not just return-efficient

Retirement investing isn't only about selecting investments that you believe will perform well. It's also about deciding where those investments should live.

For example, highly appreciated assets held in a taxable brokerage account create capital gains when sold. Meanwhile, mutual funds often distribute taxable capital gains even when you didn't sell the fund yourself, creating "phantom gains."

Those distributions might make tax planning more difficult because you don't necessarily control when the taxable income occurs. Tax-loss harvesting is another strategy worth considering. Selling an investment that has declined in value generates a capital loss that offsets capital gains, subject to applicable tax rules.

The proceeds could then potentially be reinvested in another investment while maintaining a similar overall portfolio strategy, provided you follow the wash-sale rules.

Asset location matters, too. Growth-oriented investments could be particularly attractive inside a Roth account because future qualified growth can be tax-free.

More conservative investments could potentially fit better in traditional accounts, while certain investments in taxable accounts often benefit from favorable capital gains treatment.

The best location depends on the entire portfolio, not simply the investment itself.

8. Don't let your pension create a retirement tax trap

Here's the overarching issue pension holders need to understand: A guaranteed income stream could make retirement taxes more complicated, not less.

Many retirees have relatively little taxable income, so they remain within the standard deduction or lower tax brackets. Pensioners with significant savings can have a different experience.

Their pension continues producing income. Social Security then becomes partially or largely taxable. Their retirement accounts continue growing. Eventually, RMDs begin. If they don't need those RMDs for living expenses, they often reinvest the money in a taxable account, creating another layer of potential capital gains and taxable investment income.

The result is a cycle in which one source of income affects another. That's why retirees with pensions and substantial assets should look at taxes as a long-term planning issue rather than an annual filing exercise.

The objective isn't to eliminate taxes. Instead, the goal is to coordinate the different pieces of a retirement plan so that you aren't unnecessarily creating taxable income, Medicare surcharges or avoidable tax bills later in life.

The bottom line

Retirement tax planning isn't about finding one magic strategy; it's about understanding how today's decisions affect the next 10, 20 or even 30 years.

• A Roth conversion could be beneficial in one situation and counterproductive in another
• A charitable gift could comprise cash, appreciated investments or an IRA, with different tax consequences
• A pension election could affect the surviving spouse's future tax burden
• And the way investments are allocated among taxable, tax-deferred and Roth accounts may influence how much flexibility you have later

Perhaps most importantly, tax preparation and tax planning should not be confused. Your tax return tells you what happened. A comprehensive retirement tax plan asks what you can do about what happens next.

For retirees with pensions and significant savings, that distinction could be one of the most valuable parts of their retirement strategy.

Now, for those who have a financial planner who says, "I am not a tax professional, go talk to your tax preparer": It may be time to find a new adviser. We believe retirees should work with what we call a "one-stop shop," where the CPA and financial planners work in the same office to ensure the above strategies get implemented.

Related Content

• Why a Roth Conversion Is Wrong for Most People But Often Right for Pension Holders
• 13 Things to Know About How Your Pension Affects Your Taxes in Retirement
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)
• 10 Retirement Fixes You Can Implement Today to Strengthen Your Financial Plan
• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully

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

When the world gets expensive, uncertain and volatile, the investors who win are the ones who move toward tangible assets and tax efficiency, not away from them.

Let me paint the picture.

• Oil is above $80 a barrel and volatile
• Gas is hovering around $4 a gallon nationwide (and above $6 in parts of California)
• The Strait of Hormuz, through which roughly 20% of the world's oil supply normally flows, has been contested and largely closed since early March — the International Energy Agency has called it the largest supply disruption in the history of the global oil market
• Moody's recession model is sitting at 49%
• Mortgage rates have climbed back above 6%

If your instinct right now is to freeze, to sit on your hands and wait for the smoke to clear, I understand the impulse. But I'd also argue that's exactly the wrong move.

Because buried inside this chaos is one of the most compelling arguments for tax-advantaged real estate investing that I've seen in my career.

Let me explain what I mean.

When everything else gets expensive, real estate gets interesting

Inflation is the silent killer of stock market portfolios. When oil prices spike, the cost of everything follows: Food, shipping, manufacturing and consumer goods. Corporate margins shrink. Consumer spending contracts. Stocks, which are priced on future earnings expectations, take the hit.

Real estate, on the other hand, has a fundamentally different relationship with inflation. Rental income tends to rise with inflation, because landlords adjust rents as costs increase. Property values tend to hold or appreciate because the replacement cost of building new construction rises with materials and energy prices. And the debt on the property, which is typically fixed-rate, becomes cheaper in real terms as the dollar loses purchasing power.

In other words, inflation erodes the value of what you owe while increasing the value of what you own. That's not a bad deal.

This dynamic doesn't guarantee positive returns in every scenario, of course. Rising mortgage rates can suppress transaction volume and put downward pressure on prices. But for investors who already own real estate, or who are exchanging into it using tax-advantaged strategies, the inflationary environment actually strengthens the fundamental case for staying in the game.

One crisis, three investors, three strategies

Let's look at how this energy crisis is affecting three very different investors and how each one is using the current environment to their advantage.

Nadia is a 58-year-old landlord who owns a small strip center in suburban Houston. She's been thinking about selling for years, but the capital gains tax bill has always stopped her cold. Now, with commercial property values still holding steady in her market but stock portfolios getting hammered, she's fielding calls from buyers who want to move money out of equities and into something tangible. Her property is suddenly more attractive to a wider pool of buyers than it has been in years.

Nadia's move: Sell now while buyer demand is strong, execute a 1031 exchange and roll the proceeds into a portfolio of Delaware statutory trusts. She defers the entire capital gains tax, exits active management and picks up monthly passive income from institutional-grade real estate, the kind of property that weathers inflationary storms better than a strip center with two vacant units.

She also captures bonus depreciation through DSTs that have undergone cost-segregation studies, creating paper losses that offset her passive income and reduce her current tax bill.

David is a 44-year-old software executive who sold $2 million in company stock when his restricted stock units (RSUs) vested in January. He was already sitting on a significant capital gain. Then the market cratered, and now he's watching his remaining portfolio shrink while staring at a six-figure tax bill on the shares he already sold.

David's move: Invest the capital gains from his stock sale into a Qualified Opportunity Fund within his 180-day window. He defers the tax on those gains through the end of 2026 and, more importantly, starts the 10-year clock toward completely tax-free appreciation on any growth within the QOZ investment.

His money moves from the stock market — which is at the mercy of oil prices, geopolitics and Federal Reserve press conferences — into tangible real estate in communities poised for long-term growth.

Ten years from now, if all goes well, the IRS doesn't see a dime of the new appreciation.

Patricia and Ray are both 67, and they're done. Done with tenants, done with maintenance, done with the stress of checking their brokerage account every morning to see what the latest Strait of Hormuz headline did to their retirement savings overnight. They own a rental duplex worth $800,000 and a stock portfolio that lost 15% of its value earlier in the year. They want simplicity, stability and income they can count on.

Their move: Sell the duplex via a 1031 exchange into DSTs for the real estate side, eliminating landlord duties while deferring the capital gains. For the stock portfolio, they harvest losses on their worst-performing positions to offset gains elsewhere and redirect a portion of any remaining gains into a QOZ fund.

The combination gives them passive income from the DSTs, tax-loss harvesting from the stock sell-off and a long-term growth vehicle in the QOZ. They've turned a crisis into a retirement plan.

Why timing matters more than usual

There are three reasons why this particular moment demands attention.

First, the Opportunity Zone clock is ticking. Deferred gains from earlier QOZ investments come due on December 31, 2026. If you're making a new QOZ investment today, you're still under the OZ 1.0 rules, which means the 10-year tax-free appreciation benefit is fully intact.

And with the OZ 2.0 maps being drawn, which began on July 1, investors who understand both programs will have a significant edge over those who don't.

Second, bonus depreciation is back at 100%, permanently, thanks to the One Big Beautiful Bill Act. For high earners investing in DSTs with cost-segregation studies, this creates the opportunity to offset passive income with accelerated first-year depreciation deductions. In an inflationary environment where every dollar of tax savings matters more, this benefit is amplified.

Third, the energy crisis itself is creating urgency among sellers and opportunity among buyers. Landlords who are spooked by rising costs and uncertain economic conditions are motivated to sell. Investors fleeing the stock market are looking for stable, income-producing alternatives.

The result is a marketplace where well-advised buyers using 1031 exchanges, DSTs and QOZ strategies can acquire quality assets at attractive valuations while deferring or eliminating taxes in the process.

The bigger picture

Every major economic disruption in modern history — the 1973 oil crisis, the 2008 financial collapse, the 2020 pandemic — has reshaped how investors think about risk, tangibility and tax efficiency. The 2026 energy crisis will be no different.

When the dust settles, the investors who moved toward real estate and deployed tax-advantaged strategies during the turbulence will have built portfolios that are more resilient, more diversified and more tax-efficient than those who waited for calm seas that may be years away or may never come.

The tools are all on the table: 1031 exchanges for tax-deferred repositioning, DSTs for passive income and bonus depreciation and Qualified Opportunity Zones for tax-free long-term growth.

Each one is powerful on its own. Used together, in the hands of an adviser who understands how the pieces fit, they become something close to a complete playbook for navigating exactly this kind of environment.

The crisis is real. But so is the opportunity. The only question is whether you're positioned to take advantage of it.

Related Content

• What a Delaware Statutory Trust Can Do for Your Kids That Your Will Can't
• DST Inventory Just Hit a Record $3.9 Billion: What 1031 Exchange Investors Should Do Next
• Your Stock Portfolio Just Got Hammered: Here's a Tax-Smart Way to Recover
• Don't Defer Retirement if You're a Landlord, Defer Taxes Instead
• I'm a Real Estate Investing Pro: This Is How to Use 1031 Exchanges to Scale Up Your Real Estate Empire

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

Your friend is running a race for a local charity. Do you make a donation?

A natural disaster has occurred. Do you want to donate to help out?

You're checking out at your local store and get a prompt asking if you want to round up for charity. Do you do it?

While many of us are basking in the hazy days of summer vs the cold reality of the months to come, the warm weather seems to bring a lot of "Giving Tuesdays." The asks for everything from swim teams to summer camps to walk-a-thons begin to add up, leaving me to ponder: "Am I giving enough?"

So, while the end of the year feels a long way away, this time of year is a good time to think about creating a giving plan for the rest of the year and identifying how you want to maximize the tax benefits for your gifts.

There are a few key components to unpack with this process. Some include:

• Is charitable giving important to your core values?
• What capacity do you have to give to charities?
• How much can you give to receive a tax benefit?

The causes

Every one of us, without too much trouble, could find, or be asked, to give to a charity every day. There are plenty of groups that need help (some we've never heard of) and plenty of people (some we've never met) looking to raise cash.

Psychologically, if I give to something in a reactionary way — maybe I got put on the spot to give — I'm most likely going to feel less connected to the outcome, and the feel-good nature of the gift will be fleeting.

So, how do conversations with my clients go? Especially with those who might have a significant capacity to give.

I always advise my clients who are charitably inclined to set an intentional giving plan. This means rather than scattering a few dollars here or there based on various fundraisers, pick one or two core causes that align with your personal values.

Local youth sports? Animal welfare? Your alma mater? A local house of worship? Take the time to see if these fit the legacy you want to leave. After determining the cause, spend the time to do the due diligence on the charitable options presented in that space.

Look at the mission and the impact measurements, as well as the financials of an organization so you feel more confident that your investment is going to be spent in a way that you feel good about and aligns with your own goals and values.

What's your giving capacity?

Once you've determined that you want to give to charity, it's important to look at your personal capacity to give.

Everyone has different demands on their bank account. If someone is in a position where they need to pay off high interest debt, build an emergency fund or saving for a large purchase or a college education, their capacity is going to look differently than someone who doesn't have any of those events looming, is fully funding their retirement plans and is in their peak earning years.

While charitable giving is initially driven by values and purpose, it's OK to also want to maximize the financial advantages associated with giving to nonprofit organizations.

By the numbers

It's important to address upfront that while giving your money to something you believe in can feel good, a dollar-for-dollar tax deduction is not guaranteed.

In truth, a deduction lowers your taxable income, rather than your final tax bill.

The next key thing to know is the level of deduction you are eligible for depends on whether you take the standard deduction or itemize.

The standard deduction for 2026 tax year is $16,100 for single filers and $32,200 for married couples filing jointly — leaving many Americans finding themselves in the standard-deduction camp.

For a long time, this meant that you wouldn't get any deduction for giving to charity. But, as a result of the One Big Beautiful Bill Act, passed on July 4, 2025, taxpayers utilizing the standard deduction will now be able to receive a deduction for charitable gifts up to $1,000 for single filers and $2,000 for married couples filing jointly.

For individuals who itemize, there is a new floor for deductions. The amount given to charity that is equivalent to the first 0.5% of adjusted gross income (AGI) is not deductible, and for taxpayers in the top tax bracket, the tax benefit of the charitable deductions is capped at 35% rather than 37%.

Meaning if you have $500,000 AGI and charitable contributions of $20,000, then the first $2,500 (0.5% of $500,000) is not deductible, but the remaining $17,500 is. But, because you're in the highest bracket, the benefit is capped at 35%. In this example, the gift produces about $6,125 of federal income tax savings.

For individuals who want to get more of a tax benefit, but don't give enough in a single year to make the most of these limits, there is an idea called "bunching." Instead of giving a small amount every year, they can bunch two or three years of giving into a single year.

As a reminder, in order for you to receive a charitable deduction for your donation, the charity you choose must be a registered 501(c)(3) organization. So, while giving money to a friend's GoFundMe page after they experience misfortune is kind, it's not tax-deductible.

Additionally, for gifts of $250 or more, taxpayers must receive a formal acknowledgment letter from the charity confirming the donation and making it clear that they didn't receive any goods or services in return for their largesse.

So, should you be giving more to charity? Well, many of us could probably give more.

But a better question — and one I always ask my clients — might be: Are you giving in a way that reflects your values and maximizes the impact you want to have?

When charitable giving is approached with intention rather than obligation, it becomes more than a tax deduction or a response to the latest fundraising appeal.

It becomes an expression of purpose, a reflection of personal values and an opportunity to create meaningful change for the causes and communities we care about most.

Having a plan in place for your charities and your taxes makes great sense — especially as peak giving season approaches.

Related Content

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• Give More But Pay Less: An Essential Guide to Tax-Smart Charitable Giving in 2026
• Five Ways to Maintain Charitable Giving in Volatile Times
• 3 Reasons Young People are Filled With Financial Anxiety — and How to Help
• Tending to Your Estate Plan? Don't Forget to Give Your IRA Some Love

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

As the saying goes, there are only two certainties in life: Death and taxes. But when it comes to estate planning, many Americans are reluctant to spend time thinking about either.

According to a new survey conducted by Morning Consult on behalf of Kiplinger, only about 56% of parents admitted to having a conversation with their children about inheritance. That number drops to just 39% when you ask adult children whether they've had a discussion about family plans for passing on money and assets.

The lack of engagement and understanding is also stark when it comes to estate taxes, according to the survey. Roughly 40% of both children and parents say they're "not sure" whether taxes will apply to any inheritance plans.

Considering the U.S. is already in the beginning stages of the Great Wealth Transfer, in which members of the massive baby boomer demographic reach the end of their lives, this kind of procrastination with estate planning comes with a real cost. By some estimates, the collective fortune to be passed to younger generations tops well over $100 trillion in value.

Naturally, you want to ensure that your financial legacy stays in the hands of your loved ones, and doesn't get consumed by the Internal Revenue Service. Perhaps you're making arrangements for your own estate. Maybe you're overdue for such a plan and don't know where to start.

Whatever the case might be, take a few minutes for an introduction to the most tax-efficient ways to leave investments to your children.

1. Hold appreciated investments until death

A lot of research shows that the best strategy for investing is to buy and hold stocks for very long periods rather than actively trading in and out of fads. When it comes to tax planning, one of the best strategies for the stocks that have appreciated over the long-term is to hold them until the day you die.

According to IRS rules, heirs are frequently eligible for a "step-up" in cost basis to the asset's fair market value at the date of death. That has the potential to entirely eliminate capital gains taxes on a stock's appreciation over the original owner's lifetime.

Considering long-term capital gains can be 15% or more of the profits on a stock sale, this strategy of handing down the stock itself can result in significant cost savings.

If you've invested wisely and have big winners, one of the most tax-efficient ways to leave investments to your children is to not liquidate shares or to pass on the stock as a gift while you're still alive. Just let your heirs inherit the stock and do the selling directly.

2. Make your 401(k) and IRA beneficiaries your heirs

For many families, one of the biggest legacies they'll leave is the retirement funds in a tax-deferred retirement account such as a 401(k). As the term implies, the taxes on this money were deferred when originally invested. When withdrawals are made, the IRS is due its share.

The challenge is that withdrawals from such an account are taxed as "ordinary income," so a big one-time windfall results in a big tax bill. For example, current tax brackets include a 24% tax rate on anything above $105,701 — and a hefty 32% rate on anything above $201,776.

Because this ordinary income category includes an employer's paycheck, an heir who makes a decent living might find themselves in a steep tax bracket even if the distribution from your estate is relatively modest.

This is where adding heirs directly to your account can help. The IRS generally allows 10 years for nonspouse beneficiaries to liquidate an account such as a 401(k). As such, they can withdraw the money in smaller chunks on their own terms to maximize tax savings.

While there's no way to avoid taxes entirely on an inherited 401(k) or traditional IRA, this longer runway allows heirs to avoid a big one-time tax hit from a single distribution.

3. Regular gifts under the tax threshold

If you want the warm feeling of delivering some cash into your child's hands so you can watch them enjoy it, there are also ways to pass on assets now without running afoul of the tax man. Parents can gradually transfer investments during their lifetimes using the federal annual gift tax exclusion.

The maximum annual tax-free gift as of 2026 IRS rules is $19,000. That's a nice chunk of change by itself, but you can also continue to provide that gift annually – and to as many different individuals as you see fit — to transfer significant wealth over time.

What's more, making annual gifts in this manner might reduce the size of a taxable estate after death.

As long as you don't cross the threshold in a given year, your heirs won't have to claim the cash on their tax returns. They also can put that money to immediate use to take a trip, put a down payment on a house or anything else — while you have the benefit of seeing them put your gift in action.

4. Irrevocable trusts

It's worth noting that most families won't face significant tax burdens by deploying the strategies above. However, if your estate is particularly large, a comprehensive irrevocable trust might be in order.

Irrevocable trusts are commonly used by higher-net-worth families to remove future appreciation from a taxable estate by permanently giving ownership of assets to a trust. That trust then manages those assets for the benefit of other people and can deliver the cash according to the grantor's instructions.

This is the big artillery when it comes to the most tax-efficient ways to leave investments to your children.

Trusts have numerous benefits, including protecting assets from creditors or lawsuits as well as taxes and allowing you a measure of control on how your heirs spend their inheritance long after you've passed away.

However, the word "irrevocable" is not to be taken lightly. Many estate planners call such a trust a one-way street because you can't change your mind to get the money back or about your directions.

That said, these trusts can sometimes span multiple generations and efficiently protect a hard-earned fortune from eroding, thanks to mismanagement or heavy taxes.

5. Financial planning is personal, so talk about it

The Morning Consult survey conducted for Kiplinger found that almost a third of all U.S. parents say they have no formal estate plan — including failing to document arrangements in a will. There are many reasons for this including the fact that some families don't have significant assets to pass on.

But it's also simply a matter of avoiding the topic.

Estate planning begins by taking stock of what you want to leave behind when you're gone. These financial goals will naturally be personal, based on your specific portfolio, as well as your family situation and your final wishes.

You have a sense of your situation; consider talking with a good estate planning attorney or tax adviser next. These professionals can be well worth their fees by providing tailor-made solutions in which various investing and tax strategies can be used in complementary ways.

Most important: Share your plans clearly with your heirs before it's too late.

Nobody likes to dwell on death or taxes, but they're realities for all of us. If you're confused about how to arrange your estate, the simplest way to begin is by talking about it.

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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.

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

Bob and Sue thought they had it made when they retired at 63. They had hit their savings goal of $2 million, and their house was paid off.

They felt their work stress slip away as they settled into their retired life.

Their morning commute turned into coffee on the porch. The only deadline they had was signing up on time for their pickleball league. And their projection of lower taxes at retirement was spot on.

With Social Security and a pension covering their bills, and their savings account covering "extras" like travel and gifts to the grandkids, their first retirement tax bill was much lower than when they were working.

Life was carefree — until they turned 73 and they got their first notice for required minimum distributions (RMDs).

Thankfully, their retirement money had grown. But now, more than $3.2 million in their traditional retirement accounts was subject to RMDs.

They were required to take out more than $120,000 in taxable income each year, and their RMDs were projected to grow even higher in the future.

When they retired, Bob and Sue figured their RMDs would push them into a higher tax bracket, but they didn't think it would be that bad.

But when they got there, they wished they had done something about the RMD problem sooner.

Sadly, Bob and Sue — and far too many others in their 70s — had missed what I call their "golden tax planning window." In their 60s, they could have chosen how much of their retirement income would be taxable, instead of being required to take a minimum taxable amount when they hit RMD age.

They thought they had their taxes set in their 60s because they had a lower tax bill each year than when they were working.

Yet they were unknowingly making a huge tax mistake each year by failing to use tax planning strategies that would help them avoid nasty tax surprises in their 70s.

Here are the three biggest mistakes I believe retirees can make during the golden tax planning window.

Tax Mistake No. 1: Missing the best years for Roth conversions

Bob and Sue were actually enjoying tax season in the early part of retirement. They were in a lower tax bracket than when they were working and they really weren't worried about how much they owed, or whether they were facing a tax penalty.

But then they were faced with their first RMD of more than $120,000.

That caused their Social Security to go from a small amount showing up as taxable to the maximum 85% showing up as taxable income.

And it pushed them from regular Medicare costs to paying extra through the IRMAA (income-related monthly adjustment amount) Medicare surcharges.

Each low tax year of their 60s felt like a win. Instead, it was a missed opportunity to take advantage of their lower tax bracket by making use of Roth conversions.

A Roth conversion allows you to intentionally pay taxes — within the tax bracket you'd like — by choosing the timing and amount of your traditional IRA that shows up on your tax return.

This level of control on the timing of your tax payments is generally the biggest during your golden tax planning window — the time between when you retire and when your RMDs start at 73.

When you retire in your 60s, your taxable income is generally the lowest it's been in decades. This allows you to convert part of your traditional IRA to a Roth IRA so that your future gains can grow tax-free — and won't be subject to required taxable distributions later on as an RMD.

Here is a three-step action framework I created to help retirees in their 60s make the most of their golden window:

Find your lower-income years: Usually these are the gap years between when you stop working and when guaranteed retirement income (pensions, Social Security benefits, RMDs) begins.

Estimate your future RMDs: Using the IRS' formula, calculate what your traditional IRA balances will be at your RMD ages, how large those RMDs will be and how much you'll have to pay in taxes.

Compare your current versus future tax brackets: If your tax rate on a Roth conversion during your golden window is lower than the tax rate on an RMD will potentially be in the future, that's your opportunity to reduce your overall lifetime taxes.

Tax Mistake No. 2: Forgetting the tax component of Social Security

Bob and Sue were like many retirees who view Social Security strictly as an income decision.

They were like many of their friends, who took their Social Security right away because it helped them get enough income to retire.

Other retirees look at the near 8% growth on waiting to file Social Security and they choose to delay their claiming, so they get the most income later on.

Whether you take Social Security early or late, focusing just on the income component may often mean you overlook the tax flexibility and lifetime tax bill that your Social Security decision can create.

Start claiming Social Security too soon, and you might drive up your taxable income for the rest of your retirement. This could potentially slam shut your golden window for Roth conversions, resulting in higher RMDs later on.

On the other hand, if you start claiming maximum benefits at 70, and you haven't already made moves to reduce the taxable impact of your RMDs, you could be facing the same basket of tax problems.

Sure, in a vacuum, letting your Social Security benefits grow by approximately 8% per year is a smart move. But maintaining long-term financial flexibility and reducing your lifetime tax liability are also parts of the Social Security equation.

Before claiming your Social Security benefits, remember to:

Evaluate your claiming age: Calculate how your projected benefits at various ages affect the other parts of your financial plan — especially taxes and your golden window for Roth conversions.

Compare your tax projections: Run scenarios showing how your taxes could look if you claim at 62 versus claiming at full retirement age and later.

Target Roth conversion opportunities: Once you start taking Social Security, your golden window for Roth conversions starts to close. Make the most of these low-tax years before you are on Social Security so that you're taxed less in the future as well.

Tax Mistake No. 3: Leaving the survivor with the 'widow's penalty'

No one wants to imagine a world without them or their spouse in it. But preparing for both of those difficult scenarios is an important part of retirement planning.

Bob and Sue were fortunate to both be living as they hit their RMD age of 73. But at some point, one of them will pass away. The other could be faced with the same RMD amount but with the single taxpayer brackets, instead of married filing jointly brackets.

When you transition from a married couple filing taxes jointly to a single filer, the tax brackets and the standard deduction are cut in half. But RMD percentages often stay relatively the same — and the taxable RMD amount stays relatively the same.

With a similar taxable distribution, and half the room in each bracket, the widow runs through the tax brackets quicker, getting to the higher tax rates quicker.

For a surviving spouse, the taxable income often stays nearly the same, yet their tax bill goes up.

To avoid this "widow's penalty," you can take the opportunity during your golden window to:

Model survivor tax projections: What will each spouse's income and tax brackets look like if they become a single filer at various ages?

Consider Roth conversions while filing jointly: Take advantage of the wider married filing jointly tax brackets while you both are still living. The more money you can convert into a Roth IRA now, the more potential tax-free money a surviving spouse will have in the future.

Evaluate the long-term household tax burden: Too many 90-year-old widows are living off the income and tax decisions their husbands made decades ago. Couples should plan for each survivor's long-term tax scenario before they start claiming Social Security.

Create your tax-smart retirement plan

When you consider not just this year's taxes, but your lifetime tax bill, your 60s might be the most valuable decade of your entire life.

And while each of these three mistakes — missing out on Roth conversions, forgetting the tax aspect of Social Security and leaving the survivor with the widow's penalty — can be costly, I believe the biggest retirement planning mistake you can make in your 60s is not realizing how each decision coordinates with the other.

The key to retirement planning, which I cover in more detail in chapter 5 of my book Retire Today, is to follow a system that helps you make retirement decisions in a coordinated manner.

During the golden window you can often manage your tax strategy for the rest of your retirement by:

Using your lower-income years intentionally: Pay lower taxes today "on purpose" through Roth conversions.

Evaluating Social Security through a tax lens: Don't just claim benefits because you stopped working. And don't delay taking benefits just to maximize them. Consider, as well, using your Social Security plan to help lower your lifetime taxes.

Planning for the survivor tax situation before it happens: Try to avoid the "widow's penalty" by shifting taxable IRAs to the tax-free growth potential of Roth IRAs while you still have the advantage of larger tax brackets on your married filing jointly tax return.

Remember: Once the golden tax planning window closes, it's likely closed for good. Unlike Bob and Sue, use the lower tax brackets you might find in your 60s to lower your tax bill over your lifetime.

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

From Andrew Carnegie to Mackenzie Scott, America has a long and proud tradition of producing great philanthropists who have erected universities and cultural institutions and bestowed generous gifts to causes and communities.

But it's not just centi-millionaires and billionaires who are generous — average Americans are committed to charitable giving, too. According to a survey from the Associated Press-NORC Center for Public Affairs Research, roughly three-quarters of U.S. adults say their households have donated to a charitable cause.

While "'tis better to give than to receive," it does help that the U.S. tax code rewards generosity. Of course, the structure of the gift is important when considering the tax implications of philanthropy.

Heading into the second half of the year, many people begin to think carefully about their year-end giving strategy. Here are four structures to consider.

Direct giving

The simplest, most straightforward way to give to a charitable organization or cause is direct giving. While most people think philanthropy must involve monetary donations, you can also gift appreciated securities, automobiles, recreational vehicles, boats and other personal items, all of which will also qualify for a tax benefit.

Direct gifts of appreciated securities, for example, may allow donors to avoid recognizing capital gains while potentially receiving a charitable deduction for the full fair market value, subject to applicable IRA rules.

Not only is this the most common form of giving, it can also supplement the other structures outlined below.

Donor-advised funds

Donor-advised funds (DAFs), which effectively separate the tax savings from the charitable-planning component, are becoming increasingly popular.

With a DAF, an advisor opens the fund, and the donor immediately receives an eligible charitable income tax deduction. Meanwhile, the fund continues to grow, giving the donor time to decide how to disburse money.

Beyond the planning benefits, DAFs can provide meaningful tax savings. With the standard deduction for married couples (filing jointly) now at $32,200, most Americans will find that it doesn't make sense to itemize their taxes for a standard charitable gift.

But if you can afford to bunch multiple years of charitable donations into one lump sum, it might help you surpass the standard deduction and realize significant tax savings.

This strategy is particularly helpful in a year when a family has an unexpected windfall, such as a large bonus, and it's looking to offset larger tax liabilities. Another perk of setting up a DAF: You can name the fund, which can allow you to preserve anonymity.

DAFs are also great for teaching children about giving back and money management, as families can decide together how to distribute the funds based on shared values.

Charitable trusts

For families gifting larger dollar amounts, charitable trusts can wrap charitable donations in a larger estate planning framework. There are typically two trust structures which clients choose from when creating a charitable trust.

A charitable remainder trust provides income from investments during the donor's lifetime, with the remaining assets ultimately passing to the charity.

Conversely, if a donor wants to leave assets to their children, a charitable lead trust operates in the opposite fashion — the charity receives payments for a specific period before the remaining assets pass to heirs.

Both options allow families to pair their charitable giving with estate planning to support both personal and philanthropic goals.

Foundations

Individual or family foundations provide donors with more control over named charities and benefactors, but this structure also requires a significant commitment, both financially and timewise.

Donors must be prepared to set up and fund the entire organization, including operational oversight and administrative expenses. Often, foundations can become difficult to sustain over time when the administrator steps away, and the foundation begins looking at how to wind down operations, either via a merger or dissolution.

While the idea of a foundation might sound appealing, we typically advise wealthier clients that they can achieve the same goals through either a donor-advised fund or a charitable trust.

Some parents like the idea of creating a foundation to provide a child with a job and an income stream. But if you're simply looking for income, you can achieve the same goals by setting up a charitable remainder trust with the child as the income beneficiary, or as a grantor charitable lead trust, with children or grandchildren eventually inheriting.

Families sometimes view private foundations as a path to involving younger generations in philanthropy. However, donor-advised funds and charitable trusts can often provide similar opportunities with less administrative complexity.

Philanthropy is personal. Whether you give to express your values, honor a loved one or leave a legacy, the smartest philanthropists make it a win-win, structuring their gifts to increase both the effectiveness of their giving and the value of available tax incentives.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting or legal advice. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax adviser.

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

As natural disasters, such as hurricanes, wildfires, earthquakes, tornadoes, floods and blizzards, become more intense, losses from these disasters are soaring. If you suffer property damage from such a disaster, knowledge of the tax law can help.

Deducting Losses

Individuals can deduct personal casualty losses that are not reimbursed by insurance to the extent those uninsured losses are attributable to federally declared disasters that affect a wide area.

Your loss is equal to the smaller of the damaged property's adjusted basis or decline in value, less any insurance proceeds you receive or expect to receive.

New legislation passed by Congress has tax easings identical to prior relief for victims of federally declared disasters that occurred in 2020 through July 4, 2025. The law, named the "Doug LaMalfa Federal Disaster Tax Relief Certainty Act," applies to federally declared disasters beginning before 2026, which includes disasters that occurred in the last six months of 2025.

The new legislation lets taxpayers deduct their uninsured personal losses, such as damage to a house, car, or personal belongings, from federally declared disasters in excess of a $500 threshold, without regard to the 10%-of-adjusted-gross-income offset that generally applies to disaster loss deductions.

This expanded tax break is available for taxpayers who claim the standard deduction and for those who itemize on Schedule A of Form 1040. The IRS refers to these losses as “qualified disaster losses.”

Computing the amount of loss to your home, car, or belongings can be difficult. Luckily, the IRS has multiple safe harbors that may help with this calculation.

• For example, one method lets a homeowner with casualty losses of $20,000 or less take the lesser of two repair estimates to determine the decrease in the home's value.
• Homeowners can also use the estimated loss in reports prepared by an insurer or a licensed contractor's invoice.
• And there is a safe harbor to help you compute the replacement cost of your personal belongings destroyed in the federally declared disaster.

You can find out more about these safe harbors in IRS Publication 547 and IRS Revenue Procedure 2018-08.

If you suffered a disaster loss last year after July 4, 2025, and you used the old tax rules when preparing your 2025 tax return, you have three years from the filing due date to amend your return by filing Form 1040X to take advantage of the new law.

If you suffer a disaster loss in 2026, you can claim the loss on your 2026 or 2025 federal tax return. That's because individuals can opt to take the loss for the disaster year or the year immediately preceding the disaster.

For example, if a tornado damaged your home or personal belongings this year, you can claim the loss on your 2026 return or your 2025 return, giving you the flexibility to claim it in the year that provides the greatest benefit. If you decide to claim it for 2025 and you have already filed your 2025 return, you can amend it by filing Form 1040-X.

Note that for this purpose, the filing due date for a 2025 amended return is six months after the normal due date for filing your return (without extensions) for the year in which the loss took place. So for 2026 disaster losses, you would need to file an amended 2025 return by October 15, 2027.

IRS Resources

The IRS can be your friend after a disaster. If you lost prior-year tax returns in a hurricane, fire or other disaster, there are multiple ways to get a tax transcript, which is a summary of your key tax information. You can get a paper copy of your full return, but that would take longer.

The IRS also has a dedicated phone line for disaster-related questions: 866-562-5227. This is in addition to the tax filing and tax payment extensions that the IRS regularly provides after a disaster.

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

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Retirement often requires adopting a new mindset.

When you were saving for retirement, you were in the accumulation phase as you built wealth. Once you reach retirement, you move into the distribution phase where you begin spending those savings. This warrants a different approach to your financial decisions — and possibly a different adviser.

Just as doctors have specialties, so do many financial professionals. Those who concentrate on the accumulation phase are adept at helping you grow your money during your working years and finding ways to make the market work for you. Their view is long term — as it should be — because they are looking at your retirement from a distance.

Other financial professionals specialize in the distribution phase of retirement. They understand the strategies that can help you maximize your retirement income, improve tax efficiency and make your savings last. Their primary objective is to help you avoid the costly mistakes that can derail an otherwise well-planned retirement.

1. How much income will you really need?

As someone who works in the distribution phase, one of the first things I discuss with clients is what type of lifestyle they want in retirement.

Do they expect to be on the go, traveling to bucket-list locales or buying that boat they fantasized about for years? Or do they envision being a homebody, reading books, chatting with friends and babysitting the grandchildren?

Their answer helps determine how much income they will need, and income is the heartbeat of retirement. Without a sustainable income strategy, retirement plans can go awry.

That's why it's important to make sure your income aligns with your spending goals. Your sources of income may include Social Security, a pension, IRA withdrawals, dividends and interest, cash and rental property.

For example, if someone expects to spend $10,000 monthly in retirement, their withdrawal strategy should be tailored to that need. I always plan for the worst-case scenario and recommend budgeting for more than you will actually spend.

2. When will you claim Social Security?

One significant decision that affects retirement income is when you claim Social Security benefits. The federal government offers plenty of options but not a lot of guidance on this, so Social Security is another area where a conversation with an adviser who specializes in the distribution phase is helpful.

You can begin drawing Social Security as early as age 62 but at a reduced amount that remains reduced for life. There are also income limits if you plan to keep working.

If you wait until your full retirement age (67 for most people these days), you receive more money and there are no income limits. Finally, you can postpone Social Security up until age 70 and receive a larger monthly benefit.

Each claiming strategy has its own advantages and trade-offs, which is why there is no one-size-fits-all answer. The right decision depends on factors such as your health, life expectancy, income needs, tax situation and whether maximizing survivor benefits for a spouse is an important consideration.

3. Can you lower your tax burden?

Taxes may not have been a concern during your accumulation phase, but they could become one during the distribution phase. There are ways to reduce your tax burden in retirement, but if you're not careful, you could unintentionally increase it.

Roth conversions, for example, allow you to move money from taxable retirement accounts, such as traditional IRAs and 401(k)s, to a Roth account that isn't taxed.

It's better to start using them when you are still a few years away from your required minimum distribution age. You pay taxes when you make the conversion, but then your money grows tax-free and isn't taxed when you withdraw it in retirement.

Be careful about transferring too much money into a Roth in the same year, though. You could bump yourself into a higher tax bracket or even cause an increase in your Medicare premiums if your taxable income grows too high.

With the right planning, you can reduce your taxes, keeping more of your money to pay for your retirement needs and wants.

4. Have you thought about sequence of returns risk?

Sequence of returns risk is a potential shadow looming over many retirements — and it may be one of the most significant differences between the accumulation and distribution phases.

It's also another reason retirees need a financial professional who has distribution-phase experience.

Sequence of returns risk can be summed up this way: Before you enter retirement, the order in which your investment returns happen generally makes no difference.

For example, in a 20-year stretch, you can have weak years followed by strong years, or strong years followed by weak years, and at the end the total in your portfolio will be substantially the same.

This is not the case when you retire and are making withdrawals. If the market performs poorly in the first five to 10 years, that combination of market losses with withdrawals can severely drain your portfolio. By the time a recovery happens, you may not have enough in your accounts to capitalize on it.

On the other hand, if the market is strong in your first years of retirement and you are seeing growth even as you make withdrawals, you will be better poised to withstand a down market later on.

Sequence of returns risk is one reason people might want to revisit their investments as they approach retirement. One strategy is to reduce the level of volatility your portfolio faces.

5. And finally: Will you let yourself have some fun?

Many people are hesitant to spend money in retirement, watching pennies carefully and avoiding luxuries or anything even vaguely ostentatious. Remember what I said about retirement requiring a new mindset? That applies here as well.

People who lived frugally as they saved for retirement sometimes struggle to turn off that economical mental attitude when they reach the distribution phase.

They worry so much about running out of money that they risk missing out on the enjoyment these years they saved for can bring. I encourage them to spend that money, to reap the benefits of those years of frugality and to remember the adage they have heard their entire lives, "You can't take it with you."

Of course, they need clarity, structure and some level of comfort to make such a mindset adjustment. That's where the right financial professional comes into play, helping them achieve that comfort by discussing income plans, expenses and any legacy they want to leave behind for children, grandchildren or favorite causes.

The distribution phase can and should be the fun phase — if you let it.

Ronnie Blair contributed to this article.

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

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

"Should we move to Florida to save on taxes?"

As a CFP® and wealth adviser with more than 20 years of investment experience, I hear some version of that question from nearly every client approaching retirement in a high-tax state, and it's a fair one.

If you've spent decades building your savings, of course you want to keep more of it. States like Florida, Texas, Tennessee and Nevada have long attracted retirees because they skip state income tax entirely. Next to a high-tax state like Connecticut, New Jersey or California, the choice can look obvious.

After helping hundreds of families work through this decision, I've learned it rarely is. The tax savings are usually smaller than people expect, and the true cost of relocating is almost always bigger.

Recent changes in federal tax law have shifted the math even further. Before you list your house, it's worth running the numbers.

Here's what I walk clients through before they make the call.

The tax gap has narrowed

New federal legislation has changed how I evaluate a move for clients. A higher cap on the state and local tax (SALT) deduction, a new bonus deduction for eligible older taxpayers and a permanent federal estate tax exemption of roughly $15 million per individual all reduce the federal tax burden for many retired households.

None of that eliminates state income tax. But it does mean the gap between staying in a high-tax state and relocating to a no-tax one is often smaller than it looked just a few years ago, especially for clients who assumed the old rules still applied.

I've started running this comparison earlier in the planning process for exactly that reason: The answer clients got two or three years ago may not hold up today.

Consider a hypothetical couple pulling $90,000 from IRAs, $45,000 in Social Security and $20,000 in investment income. Depending on their deductions and how that income is structured, moving to a no-tax state might save them several thousand dollars a year, which is real money but rarely the whole story.

The moving costs add up fast

Clients focus on the annual savings and forget the one-time bill: Real estate commissions, closing costs, movers, repairs before listing, furnishing a new home, temporary housing and the cost of rebuilding a healthcare and professional network from scratch.

I've seen these add up to tens of thousands of dollars before anyone accounts for the stress of starting over.

If a move saves $6,000 a year but costs $60,000 to pull off, that's a decade just to break even. I want clients to see that number before they call a Realtor, not after.

You're not just leaving a state

The cost that's hardest to put on a spreadsheet, and the one I push clients hardest on, is distance from family. I've watched clients move south for the weather, then start flying back for birthdays, grandchildren's games and Sunday dinners they didn't expect to miss. The airfare and hotel bills climb, and some eventually move back entirely.

There's also the team you leave behind: Your financial adviser, tax preparer, estate attorney, insurance agent, doctors. You can rebuild that team, but it takes time, and a physician who knows your history or an adviser who's worked with your family for years provides continuity you can't buy on day one in a new state.

I've had clients spend the better part of a year finding a new cardiologist or estate attorney they trusted as much as the one they left, and that search has a cost even if it never shows up on a spreadsheet.

Moving isn't the only lever

Relocating is one way to lower your lifetime tax bill. It's far from the only one.

I regularly help clients cut their tax burden through Roth conversions timed to lower-income years, coordinating retirement account withdrawals, managing required minimum distributions (RMDs), tax-efficient investing, charitable giving and smarter timing of Social Security.

Done well, these strategies can produce meaningful savings while letting clients stay exactly where they are.

When a move actually makes sense

None of this means relocating is a mistake. I have plenty of clients for whom it was the right call: Their family had already scattered, healthcare needs were easy to meet elsewhere, housing costs fit their goals better, or the long-term tax savings genuinely outweighed the cost of getting there.

The difference is that those clients ran the numbers first. Before you decide, ask yourself what you'd actually save after every tax year, what the total moving cost would be, how long it would take to break even, how often you'd travel back for family and whether better tax planning could get you a similar result without packing a single box.

Sometimes those questions confirm that moving is the right move. Just as often, they reveal that staying put is the smarter financial decision — you just hadn't run the full comparison yet.

Retirement isn't about finding the state with the lowest taxes. It's about building a life you won't spend the next decade second-guessing.

When I walk clients through taxes, income, healthcare, housing, estate planning and family togetherness, the answer usually gets a lot clearer, and it isn't always the one they expected when they first asked about moving to Florida.

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

Sudden wealth doesn't change who you are. It does reveal how prepared you are.

I recently read a news story in which a lottery winner who received a jackpot worth more than $167 million had reportedly been arrested four times within 14 months of receiving the money.

Such stories often generate headlines because they reinforce the belief that sudden wealth changes people.

After more than 25 years as a financial planner, I don't believe that's entirely true.

I believe sudden wealth reveals whether someone has developed the habits and discipline necessary to manage it.

While lottery winners capture the headlines, they're among the least common examples of becoming suddenly wealthy.

Sudden wealth typically arrives in four main ways:

• Inheritance
• The sale of a closely held business (liquidity event)
• A significant legal settlement
• On rare occasions, a lottery or other unexpected windfall

Although each situation is unique, they all have one thing in common. Money that was once unavailable suddenly becomes accessible. That transition is both psychological and financial.

People who accumulate wealth over time (commonly decades) become accustomed to seeing money in their accounts and formulating successful financial and emotional discipline.

• They watch retirement accounts fluctuate with the markets without panic
• They realize that consistent contributions, compounding returns and time is what it took to get to a particular level

The goal is to make work optional through having a balance sheet that yields enough to replace your income.

For some, their balance sheets aren't there yet, or maybe they were never working toward financial independence, then one day the inheritance arrives or the settlement comes in. Whatever the source, the money is available, and it is now a spendable currency.

Real-life examples

I've watched families respond to this moment very differently.

Years ago, I worked with a blue-collar worker and father who spent his entire working life doing everything right. He lived modestly, saved consistently and built a meaningful estate because he wanted to leave something for his three children.

After his passing, two of the children requested checks rather than seeking guidance or developing a long-term plan. Within a couple short weeks, their inheritance was spent on a trip to Las Vegas. The third sibling made some responsible decisions, but within a relatively short period, those funds had also been depleted.

It would be easy to conclude they simply made poor choices. I see it differently. They inherited the money. They never had the opportunity to develop the habits that created it.

I've also witnessed the opposite. A client's mother accumulated substantial wealth during her lifetime and explained not only what she hoped her daughter and son-in-law would receive, but what she hoped the wealth would accomplish.

Today, they continue to manage those assets thoughtfully, taking disciplined annual distributions while preserving the portfolio for future generations.

The difference between these two families wasn't as much about the size of the inheritance. It was the mindset, and the steps below can help anyone with mental framing and decision-making related to sudden wealth.

4 steps to staying wealthy after experiencing 'sudden wealth'

1. Do nothing.

When a significant amount of money suddenly appears on your balance sheet, resist the urge to act.

In most situations, I recommend making no major financial decisions for four to six months. Don't purchase a vacation home, quit your job or make large investments simply because the money is available. The assets aren't going anywhere.

What often changes during that time is your perspective.

2. Understand what you have.

Before making any financial commitments, determine the tax consequences and legal obligations associated with your newfound wealth.

Depending on how the assets were received, there might be income taxes, capital gains taxes, inheritance taxes, trust provisions, estate planning implications or other considerations that affect what's truly available.

3. Decide what this wealth is meant to accomplish.

Start with your own household. Does this wealth provide financial independence or greater flexibility?

Once your household is secure, consider whether you want to help family members, support charitable causes or strengthen your community.

Finally, revisit your estate plan so your own legacy reflects your new financial circumstances.

4. Create a sustainable spending plan.

What lump sum amounts are immediately required? Evaluate what impact spending today has on future income.

Risk tolerance and time horizon will influence what amount of annual distribution is sustainable.

Look for articles on strategies and options on calculating a safe withdrawal rate and methodologies of creating a paycheck from your portfolio.

The real measure of success

After more than two decades helping families navigate life's biggest financial transitions, I've come to believe that sudden wealth isn't really about money. It's about stewardship.

Money can be transferred in a single day. The judgment required to preserve it often takes time to develop.

Whether your wealth arrives through an inheritance, the sale of a business, a settlement or an unexpected windfall, the greatest responsibility isn't deciding what to buy. It's properly preparing before starting to deploy your newfound resources.

Related Content

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• Treating Your Inheritance as 'Extra Money' Is a Sure Way to Blow It: Instead, Use This Simple Technique for Financial Windfalls
• What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You Everything
• Your First 5 Potential Moves When Inherited Wealth Makes You Rich Overnight
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

While Roth conversions are often talked about in retirement planning, they aren't the right strategy for everyone.

For retirees with modest savings and no pension, leaving traditional accounts untouched until it's time to start RMDs can work well. But retirees with pensions face an entirely different tax reality.

In a recent article, Joe F. Schmitz, a CFP® and CEO of Peak Retirement Planning, explains why Roth conversions are so important for retirees with pensions. Schmitz is a regular contributor to Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation.

Check out these five questions to test your knowledge about Roth conversions, pensions and taxes.

Good luck! (Don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Related Content From Adviser Intel

• Why a Roth Conversion Is Wrong for Most People But Often Right for Pension Holders
• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
• If You're Converting to a Roth IRA, Don't Do It Like This
• 5 Reasons Roth Conversions and Pensions Work Well Together
• 7 Times to Dip Into Your Roth IRA if You Have a Pension (and When to Leave It Alone)

Americans who are over the age of 55, mainly baby boomers, own more than half of the country's wealth. Over the next two decades, it will be passed down to the generations that follow, marking the greatest wealth transfer in our country's history.

While many of us look at inheritance as something purely for the wealthy, 66% of Americans either expect to or have already received an inheritance from their parents, according to a survey from Choice Mutual.

Receiving any kind of inheritance can be overwhelming, and being unprepared can lead to losing much of that money to poor financial decisions or taxes. If you think you may be a part of the Great Wealth Transfer, either as a provider or a beneficiary, here's how to avoid those pitfalls.

1. Start conversations now

One of the biggest issues with the trillions of dollars expected to be passed down during the Great Wealth Transfer isn't the money itself, but beneficiaries being unprepared to manage the assets they receive.

Although it may be uncomfortable, discussing the plan for these ahead of time helps family members know exactly how much they will receive and what taxes they might expect.

If beneficiaries don't have a chance to discuss the inheritance before their loved one passes away, they may end up making important decisions while they're grieving.

Bringing the topic up well beforehand will give them time to plan before their emotions take over, helping reduce the likelihood of poor decisions or impulsive spending.

Some of the most successful inheritances I have seen are among families who prioritize these conversations.

2. Avoid spending sprees

If you suddenly receive a windfall, it can be tempting to spend money on the things you've always dreamed of. You may want to buy a bigger house, a more expensive car or finally take that extravagant vacation. But going on a shopping spree can lead to disaster.

Your dream items will come with additional costs, such as taxes, insurance and maintenance, and those will stick around long after the initial purchase.

You should look at your inheritance as a long-term investment, not an excuse for a one-time splurge. If you have a good plan for the assets, they should help provide financial security for years.

Using the money to pay down any debts you have or starting an emergency fund is much more valuable than spending it on an asset that will eventually lose its value.

3. Consider tax implications

While the tax implications that come with an inheritance will depend on what you inherit and where you live, receiving an inheritance can trigger estate, capital gains, inheritance or income taxes.

For example, while many people may believe they will owe federal income taxes on any inherited money they receive, that may not be the case. Cash that is passed down from a person who has passed away is not considered taxable income for the beneficiary.

If you are gifted a property as an inheritance, receiving it is not taxed in most cases. However, depending on how you plan to use it, you need to consider a few things:

• Ongoing property taxes, insurance and maintenance costs
• Capital gains tax if the property value increases significantly before it is sold
• How you will use the property (personal, investment, rental) determines which tax deductions you can take

Most people don't have a full understanding of which processes will be triggered when estates are handed down. It's important to work with a financial professional before signing anything.

4. Build a strong team

Being part of the Great Wealth Transfer may be life-changing, but it could also be overwhelming. You may be faced with financial decisions you've never had to navigate before.

Having a strong team of professionals, such as a trusted financial adviser, tax professional or estate attorney, can help everyone involved avoid costly mistakes and create strategies that align with their goals.

A large inheritance is a life-changing event, and surrounding yourself with the right people can be the difference between enjoying it and watching it disappear.

Related Content

• Manage an Inheritance Like a Pro in Just Seven Steps
• Preparing for an Inheritance: Don't Let Your Blessing Become a Curse
• What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You Everything
• Four Things to Know About Managing a Loved One's Finances
• I'm a Financial Planner: Here's How to Make the Most of Your Charitable Giving on a Budget

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.

Roth conversions have become one of the hottest topics in retirement planning. Browse financial headlines long enough, and you'll likely encounter conflicting advice.

Some experts argue that everyone should convert their traditional IRA to a Roth. Others insist it's a costly mistake. The truth is far more nuanced.

As a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that for most Americans, a Roth conversion probably isn't necessary. However, retirees with pensions often live by a different set of tax rules (I wrote a book for those with pensions, The 2% Club, that you can request for free here.)

Their guaranteed income can create tax challenges that don't apply to the average retiree, making Roth conversions worth a much closer look.

Before deciding whether a Roth conversion belongs in your retirement strategy, it's important to understand the factors that actually determine whether the math makes sense. You can learn more about this in my YouTube video:

The only question that really matters

Many investors focus on whether they can afford to pay the taxes on a Roth conversion today. While that's certainly part of the equation, it isn't the deciding factor. The more important question is this: Will your total tax rate be lower today than it will be later?

That "total tax rate" extends beyond your federal income tax bracket. A Roth conversion can also influence:

• State income taxes
• Medicare IRMAA surcharges
• Social Security taxation
• Capital gains taxes
• Estate planning outcomes

When viewed together, your true tax cost could look very different than your federal bracket alone suggests.

Why most people don't need a Roth conversion

For many retirees, taxable income will naturally decline when they stop working. Someone who retires with modest retirement savings, no pension and Social Security as their primary income source usually remains in relatively low tax brackets throughout retirement.

In those situations, paying taxes today through a Roth conversion could result in paying more tax than necessary.

Roth conversions are frequently overpromoted, as they can be powerful, but they aren't universally beneficial.

Pension holders face a different tax reality

Rather than seeing their income in retirement decline, retirees with pensions often have multiple sources of guaranteed retirement income arriving simultaneously:

• Pension payments
• Social Security benefits
• Required minimum distributions (RMDs) from traditional retirement accounts

Each source adds taxable income, and together they can keep retirees in higher tax brackets for decades.

For households that have accumulated substantial balances in tax-deferred accounts, such as 401(k)s, IRAs, TSPs or 403(b)s, RMDs can make the situation even more challenging as they grow over time.

That's why many pension recipients find themselves paying as much, if not more, in taxes during retirement than they did while working.

Today's tax environment creates planning opportunities

Another consideration is today's tax landscape: Current tax laws provide relatively favorable tax rates and expanded standard deductions compared with historical norms.

While no one can predict future legislation, many economists expect government revenue needs to increase over time because of rising national debt and the long-term funding challenges facing programs such as Medicare and Social Security.

If future tax rates eventually rise, converting portions of traditional retirement accounts while rates remain relatively low could produce meaningful lifetime tax savings. The objective isn't simply to pay taxes sooner, but to pay them when they're expected to be lower than they otherwise would be.

Don't look only at your tax bracket

One of the biggest mistakes retirees make is evaluating Roth conversions using only the federal tax tables. Your retirement tax picture is much more interconnected.

Increasing taxable income through a Roth conversion could:

• Cause more of your Social Security benefits to become taxable
• Push you into a higher Medicare IRMAA bracket, increasing Medicare Part B and Part D premiums
• Raise your capital gains tax rate
• Increase state income taxes

This is why comprehensive tax planning frequently produces better results than simply converting up to the top of a particular tax bracket.

The widow's penalty can create future tax problems

Married couples regularly overlook one significant future risk: When one spouse dies, the surviving spouse generally transitions from married filing jointly to single tax status. At that time:

• Tax brackets and IRMAA thresholds shrink
• The standard deduction lowers
• One Social Security benefit typically disappears
• The surviving spouse often continues receiving pension income and RMDs

The result can be substantially higher taxes for the surviving spouse. Completing Roth conversions while both spouses are alive allows couples to take advantage of the wider married tax brackets before this transition occurs.

Your children's tax situations matter, too

If leaving money to your children is one of your goals, their future tax bracket deserves consideration as well.

Under current law, most non-spouse beneficiaries must empty inherited retirement accounts within 10 years. A child inheriting a large traditional IRA might be required to recognize hundreds of thousands of dollars of taxable income during that period, potentially pushing them into significantly higher tax brackets.

On the other hand, if your children are likely to remain in relatively low tax brackets, leaving them traditional retirement assets instead of paying higher taxes through Roth conversions today could prove more efficient.

Estate planning isn't one-size-fits-all, and understanding your heirs' financial circumstances is an important part of the analysis.

Tax diversification provides flexibility

Many retirees have accumulated the vast majority of their wealth inside tax-deferred retirement accounts, and that creates a challenge. Every dollar withdrawn becomes taxable income, leaving retirees with limited flexibility when tax laws or personal circumstances change.

Building assets across multiple account types — including traditional retirement accounts, Roth accounts and taxable brokerage accounts — creates what many planners call tax diversification.

Having multiple "tax buckets" allows retirees to decide where retirement income comes from each year, making it easier to adapt to changing tax laws, Medicare thresholds or unexpected expenses.

Where you live can affect the timing

State taxes can also influence whether a Roth conversion makes sense. Someone planning to relocate from a high-income-tax state to one with no state income tax could benefit from delaying Roth conversions until after the move.

Conversely, someone expecting to move into a higher-tax state might decide to accelerate conversions before relocating.

State taxes generally receive less attention in planning than federal taxes, but they can meaningfully affect lifetime tax costs.

A common Roth conversion myth

One objection frequently raised against Roth conversions is that paying taxes today means losing years of investment growth. That argument overlooks an important concept: Taxes on a traditional IRA already represent a future liability.

Paying that liability earlier doesn't necessarily reduce long-term wealth if tax rates remain unchanged — it simply satisfies the government's share sooner.

Where Roth conversions can create additional value is by reducing future RMDs, potentially lowering Medicare premiums, limiting Social Security taxation, providing greater withdrawal flexibility and protecting against higher future tax rates.

The comparison isn't simply about investment growth — it's about maximizing what you keep after taxes over the course of retirement.

The bottom line

Roth conversions aren't appropriate for everyone. In fact, many retirees with modest savings and no pensions might be better off leaving their traditional retirement accounts untouched.

Pension holders, however, ordinarily face a different reality. Guaranteed income, RMDs and long retirement horizons can create tax burdens that make proactive planning far more valuable.

Rather than asking whether Roth conversions are "good" or "bad," ask a better question: Will paying taxes today likely cost less than paying them later?

For retirees with pensions and substantial retirement savings, the answer is often worth exploring through a comprehensive, long-term tax strategy that considers not only income taxes but also Medicare premiums, Social Security taxation, estate planning and future tax flexibility.

Because when it comes to retirement, it's not just about how much you've saved — it's about how much you'll ultimately keep.

Related Content

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• 10 Retirement Fixes You Can Implement Today to Strengthen Your Financial Plan
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In April, the IRS and the Department of the Treasury released Revenue Procedure 2026-12. Here's what it means in plain English: The federal government handed state governors the official playbook, and the official map, for nominating the next generation of Opportunity Zones.

When the One Big Beautiful Bill Act (OBBBA) made Opportunity Zones permanent in July 2025, the industry had to wait nine months for the guidelines to be released.

Here are five things I think every investor with significant capital gains needs to understand.

1. We know exactly which communities are eligible

Revenue Procedure 2026-12 doesn't just describe the nomination process. It identifies, by name and by census tract, every community in America that qualifies for Opportunity Zone designation in 2027.

The number? 25,332 population census tracts across the United States, the District of Columbia and U.S. territories. Every single one of them meets the definition of a low-income community under the updated rules of the OBBBA.

The IRS formally adopted the 2020-2024 American Community Survey five-year dataset as the controlling data source for determining eligibility — locking in the methodology and removing any ambiguity about which tracts qualify and which don't.

Not all 25,332 tracts will become Opportunity Zones. Governors can nominate up to only 25% of their state's eligible tracts. But investors and developers are no longer guessing which tracts are eligible to be nominated.

2. Rural America is a bigger part of the story than ever

Of those 25,332 eligible tracts, 8,334 are classified as fully rural. That's roughly one out of every three eligible communities.

This matters for two reasons. First, the OBBBA created powerful new incentives specifically for rural Opportunity Zone investments. Investors in Qualified Rural Opportunity Funds receive a 30% basis step-up after five years, triple the standard 10%, and rural properties benefit from a reduced substantial improvement threshold of just 50% instead of 100%.

These aren't minor tweaks — they fundamentally change the math on deals that wouldn't have penciled out under the original program.

Second, the law requires that states give rural communities meaningful representation in their nominations. With a third of all eligible tracts classified as rural, governors will have both the incentive and the inventory to direct capital into parts of the country that have historically been overlooked by institutional investors.

For those of us who believe Opportunity Zones should be about real economic development in communities that genuinely need it, this is encouraging news.

3. The clock is ticking

Here's the timeline every investor should have on their calendar.

The nomination window opened on July 1, 2026. State governors — along with the mayor of Washington, D.C., and territorial executives — have less than 45 days to submit their nominated census tracts to the Treasury Department.

That puts the initial deadline at September 28, 2026, with a provision for a single 30-day extension that could push final submissions to October 28.

One important detail from the new guidance: States can submit and revise their nominations multiple times during the window, and nominations filed early in the window aren't processed until the window closes. In other words, this isn't a race to gain first-mover advantage — it's a thoughtful, deliberative process designed to arrive at the best possible outcome.

If you're a developer or community leader trying to make the case for a particular tract, you have a genuine window to advocate right up until the deadline.

After the nomination window closes, Treasury will review and certify the selections. The IRS has indicated it expects to publish the final designated Opportunity Zones before January 1, 2027, the date the new OZ 2.0 map officially takes effect.

Treasury has also announced that it will roll out online tools and resources to help state officials with the nomination process, which should make this round smoother than the sometimes chaotic 2018 experience.

But here's what I want you to take away: If you're an investor or a fund manager, you don't have the luxury of waiting until the final map drops in December.

The smart money is positioning now, identifying likely zones, building relationships with developers and local officials and structuring deals to be ready to deploy capital the moment the new designations go live.

4. Fewer zones, fixed boundaries and more competition for the best deals

One thing that sometimes gets lost in the excitement is this: OZ 2.0 will almost certainly have fewer designated Opportunity Zones than OZ 1.0.

Under the original program, there were 8,764 designated zones. Industry estimates suggest the new round will produce roughly 6,300 to 6,500, a reduction of about 25%.

That's because the eligibility rules are tighter:

• The median family income threshold dropped from 80% to 70%
• The contiguous tract loophole (which allowed some higher-income areas to qualify under OZ 1.0) has been eliminated
• Tracts that qualify based on high poverty rates are now disqualified if their median family income exceeds 125% of the area median

Here's something else the new guidance confirms that should matter to anyone doing long-horizon underwriting: The OZ 2.0 tract boundaries are drawn from the 2020 decennial census map and are set in stone for the entire decade the designation is active, which is January 1, 2027, through December 31, 2036.

No redrawing of lines. No splitting of tracts. No adjustments of any kind. Whatever map gets certified in late 2026 is the map for the next 10 years. That's the kind of certainty that serious investors and fund sponsors can build a strategy around.

Fewer zones do not mean fewer opportunities. It means the zones that do get designated are more likely to be genuinely distressed communities where investment capital can make a real difference. But it also means that the best deals in the best locations are going to attract more competition. Early movers will have a meaningful advantage.

5. Puerto Rico investors: Your timeline is different

If you have Opportunity Zone money in Puerto Rico, this one's for you, and it may come as a surprise.

Most investors know that the original OZ 1.0 designations across the 50 states run through December 31, 2028. What many don't realize is that Puerto Rico has always operated on its own schedule.

Back in 2018, the Bipartisan Budget Act gave the island a unique deal: Every eligible tract was automatically designated as an Opportunity Zone, and that designation was backdated to the passage of the Tax Cuts and Jobs Act (TCJA) on December 22, 2017. That was a full year before most states received their designations.

Both parts of that unique deal are now history.

A 10-year clock that started in December 2017 doesn't end in December 2028. It ends in December 2027. The new guidance makes this point clearly, and that gives Puerto Rico investors one less year than they may have been counting on.

In addition, Puerto Rico will play by the same rules as everyone else going forward: No more automatic island-wide coverage. The governor will nominate up to 25% of eligible tracts, just like every other state.

That's a dramatic reduction in scope for a territory where nearly all census tracts were previously designated.

If you have exposure to Puerto Rico in your OZ portfolio, now is the time to review and make sure your timeline assumptions still hold up.

What all of this means for you

If you have unrealized capital gains — whether from real estate, a business sale, stock or any other appreciated asset — and you've been thinking about Opportunity Zone investing, the new guidelines should sharpen your focus.

The OZ 2.0 framework is no longer theoretical. The eligible tracts are published. The timeline is set. The boundaries are locked. And the enhanced benefits, especially for rural investments, are some of the most generous tax incentives the federal government has ever offered.

This is the starting gun. The investors who do their due diligence now, not in January 2027, will be the ones best positioned to capture the full power of what OZ 2.0 has to offer.

Related Content

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• 2026's Tax Trifecta: The Rural OZ Bonus and Your Month-by-Month Execution Calendar
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Most of my clients hate paying taxes. That part is universal. But what I've noticed over years of helping high-net-worth families with tax planning is that the instinct to avoid taxes today often leads to paying significantly more of them tomorrow.

The pattern shows up consistently: A client prefers to draw first from Roth accounts or taxable brokerage accounts, which are taxed at favorable capital gains rates, to avoid touching their IRA or 401(k) for as long as possible. It feels like a win. They've deferred taxes.

But when you model it out over 20 or 30 years of retirement, that approach often increases the cumulative tax burden, because they haven't spread withdrawals across tax brackets in a way that keeps their taxable income in check year after year.

That's what happens when you optimize for April instead of the next two decades.

Why deadlines are the enemy of good tax planning

When tax planning happens only in the fourth quarter, or in the final days of December, it may limit available strategies.

First, there's a logistical problem: Custodians can't guarantee that transactions such as qualified charitable distributions (QCDs), donor-advised fund (DAF) contributions or Roth conversions will settle before year-end if you wait until the last minute. A missed deadline isn't a tax strategy, it's a penalty.

Second, and more importantly, you lose flexibility. Many tax-saving moves depend on timing relative to market conditions, income fluctuations and life circumstances. Gifting appreciated shares to charity, for instance, is far more impactful when a stock has just jumped on an earnings report than when you're scrambling in December.

The difference between gifting 10 shares at $80 vs $88 per share, a 10% move that translates directly into a larger charitable deduction and greater tax savings, is an opportunity you can only capture if you're watching for it throughout the year.

Four strategies that require time to be effective

Some of the most effective tax moves cannot be executed well in a single tax season. Four stand out, and each one requires years, not months, to deliver.

1. Roth conversions in the low-income window.

For clients who retire before claiming Social Security, there's often a window, of about five to 10 years, when taxable income drops considerably.

Converting IRA or 401(k) funds to a Roth account during this window, at the 12% or 22% bracket rather than the 32% or higher rate that may apply once Social Security and required minimum distributions (RMDs) kick in, may produce meaningful lifetime tax savings, depending on individual income levels, bracket projections and future tax law changes.

This is cash flow modeling at its most useful: Mapping out conversion amounts year by year rather than deciding in isolation.

2. Coordinated charitable giving.

Bunching charitable deductions into a high-income year, such as one marked by a significant portfolio rebalance or a large Roth conversion, can be far more effective than spreading gifts evenly.

When income spikes irregularly, charitable giving becomes a natural offset. Planning this in advance, rather than reacting after the income event has already occurred, is what separates intentional strategy from coincidence.

3. Inherited IRA management under the SECURE Act.

For clients who inherit an IRA, the old "stretch" provision that allowed distributions over a lifetime is largely gone. Most beneficiaries now have a 10-year window to deplete the account. The planning question is when, within that window, to take distributions.

Consider a client who inherits an IRA two years before retirement and is still earning a full income. Depending on their income trajectory and tax bracket, delaying those withdrawals until after they stop working, while still within the 10-year depletion period, could shift distributions into meaningfully lower tax years.

4. Portfolio transitions for clients with embedded gains.

When a client comes in holding a portfolio of highly appreciated securities, triggering all of those gains in year one is rarely the right answer. A better approach recognizes those gains gradually over two, three or more tax years, spreading the burden while moving toward a better-diversified portfolio.

This requires a long-range view of the tax cost, not a reflex to get everything repositioned quickly.

Where investment decisions and tax strategy meet

Paying capital gains taxes is not inherently bad. It means your investments have grown. The risk of staying in a concentrated position that may no longer outperform can be far greater than the tax cost of diversifying.

We see clients hold individual company stock well past the point where it makes portfolio sense, purely to avoid a capital gains bill. That's a case where the tax tail is wagging the investment dog.

The better goal is minimizing taxes without compromising portfolio quality and diversification. Strategies such as tax-loss harvesting, asset location and direct indexing are genuine tools, but they work best as optimizations on top of a sound plan, not as substitutes for one.

Three steps to explore before your next tax season

If you've been taking a reactive approach, here are three places to start looking for opportunities:

1. Pull out your 2025 tax return and look for surprises.

Were there large distributions you didn't anticipate? Did you end up in a higher bracket than expected? Are there tax-advantaged accounts you could be contributing more to?

2. Identify any irregular income on the horizon.

Equity compensation, a business sale, a liquidity event, a large one-time expense: Each of these is a planning opportunity, and the earlier you can model the tax implications, the more options you have.

Once the income has already hit your return, many of the best strategies are off the table.

3. Get organized before you need to be.

One of the biggest sources of tax-season friction is simply not knowing where things are: Prior returns, IRS PINs, cost basis records, charitable contribution receipts.

Building a simple reference document for your annual tax prep reduces stress and makes it far easier to execute time-sensitive strategies without scrambling.

Taxes are unavoidable. But the total taxes paid over a lifetime of retirement are not fixed. They're shaped by decisions made years in advance, at the right income levels, in the right accounts, in the right sequence. That's a long game worth playing.

Related Content

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• The September 15 Tax Conversation You Should Be Having Right Now
• After Decades of Investing, Your Biggest Winner May Now Be Your Biggest Risk
• A 2026 Tax Playbook for High Earners: Stealth Taxes and Strategic Wins
• A Confident Retirement Starts With These Four Strategies

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.

December has become the default season for financial planning. It's when many investors review taxes, increase retirement contributions, make charitable gifts and rush to complete other planning before the calendar turns.

But it can also be one of the least effective times to make important financial decisions. Schedules are crowded as deadlines are closing in, while advisers, accountants and attorneys may have limited capacity to support.

Instead of rushing through year-end checklists, summer can give you the space and time to think more strategically. By this time of year, you can see how income, spending and investments are tracking, with several months left to make changes while they can still have an impact.

In my experience as a CFP®, that head start often leads to better decisions because families have time to consider trade-offs and adjust gradually.

1. Rebalance your portfolio and review asset location

Even if you haven't made any trades, market performance over time can change your portfolio's risk profile. Strong returns in equities, a particular sector or one concentrated holding can gradually increase risk, leaving the portfolio more aggressive than it was at the beginning of the year.

An end-of-summer review can identify where allocations have drifted and whether new contributions should be directed toward underweight areas. The goal is to ensure that the portfolio still reflects your goals, time horizon and tolerance for risk.

The review can also include asset location, or which investments are held in taxable, tax-deferred and Roth accounts. As markets move and contributions are added, assets may no longer be held tax-efficiently.

Income-producing investments may be better suited to a retirement account, while investments that receive favorable long-term capital gains treatment may fit better in a taxable account.

Liquidity needs, charitable plans, required minimum distributions and estate considerations also matter. Reviewing where assets are held can improve after-tax efficiency without changing the overall strategy.

2. Check your retirement contribution pace

Many employees choose their retirement plan contribution rate at the beginning of the year and rarely revisit it. By summer, however, a raise, bonus or promotion may have changed both cash flow and the contribution needed from each remaining paycheck to reach a retirement savings goal.

Reviewing your retirement strategy in late summer allows time to make smaller adjustments over several months. Waiting until November may require a much larger increase over only a few pay periods.

This is an overlooked aspect of financial planning that has come up often in my client conversations: People assume they are on pace because their contribution percentage has not changed, but soon discover that compensation or payroll changes have left them short.

A summer financial review can also consider a mix of traditional and Roth contributions. Retirees should confirm how much remains to be withdrawn from required minimum distributions and whether qualified charitable distributions fit into their giving plans.

3. Run a tax projection

By the end of the summer, your financial picture is typically much clearer and more comprehensive than it was at the start of the year. Wages, bonuses, business income, investment gains and equity compensation are easier to estimate, making summer an ideal time to determine whether tax withholding or estimated payments need to be adjusted.

A summer tax projection may also reveal valuable planning opportunities, including Roth conversion, gifts of appreciated securities, the timing of stock-option exercises or the use of investment losses to offset realized gains.

Some of these strategies may be better executed later in the year, once the full tax picture is clearer. But reviewing them now allows you to identify your options before year-end deadlines begin to dictate your decisions.

The goal isn't simply to lower this year's tax bill — it's to ensure every tax decision supports your broader long-term objectives without creating avoidable cash-flow constraints.

4. Put cash and debt to work more deliberately

Over time, cash can accumulate without a clear purpose. Conversely, some households may have too little set aside, forcing them to rely on credit or investment sales to cover predictable expenses.

An end-of-summer review can separate money needed for taxes, travel, home improvements or other near-term spending from assets intended for longer-term goals. It is also worth checking whether savings are earning a competitive return.

Borrowers with adjustable-rate loans, home-equity lines or other variable-rate obligations should understand how interest costs are affecting cash flow. Anyone planning a major purchase should consider how new debt would interact with retirement savings and other priorities.

Cash and debt can be managed intentionally rather than carried forward without review.

5. Prepare for employee benefit decisions

Open enrollment often leaves employees with little time to make important choices. Reviewing benefits during the summer creates more time to consider whether health, life and disability coverage still match the household's needs, particularly after a marriage, divorce, new child, home purchase or change in income.

Employees eligible for a health savings account can reassess their contribution pace and consider how the account fits into their broader plan.

Executives may also need to review stock options, restricted stock, deferred compensation or company-stock concentration before election deadlines arrive.

These choices affect taxes, cash flow and investment risk, and deserve more than a rushed year-end review.

6. Review estate documents before there is an emergency

Estate planning is easy to postpone when nothing feels urgent. Summer is a good time to ensure that wills, trusts, powers of attorney, health care directives and beneficiary designations still reflect the family's circumstances and long-term intentions.

Major life events — such as births, deaths, marriages, divorces, moves and significant changes in wealth — may also require updates to your broader financial plan.

For families considering significant gifts, planning should begin well before December, given valuations, legal documents and trust administration often require coordination among several advisers.

In conversations with clients, estate planning reviews often uncover practical issues that have little to do with estate taxes. An outdated beneficiary designation, an unfunded trust or a missing power of attorney can all create complications long before federal estate-tax exposure becomes relevant.

The goal is straightforward: Ensure the right people have the authority to act in an emergency and that your assets will be distributed as intended. Don't wait for an arbitrary year-end deadline to review your plan.

Act earlier to save stress later

Year-end planning will always matter. After all, certain tax, retirement and gifting decisions are tied to the calendar. But I believe that December should not be the first time you review and adjust your financial plan.

By summer, enough information is available to provide a clearer picture of your finances while still leaving enough time to make intentional adjustments without being rushed. Acting earlier can give investors the breathing room they need to make meaningful adjustments.

For many households, the most important question is simple: Has anything changed in the markets, my finances or my life that should change what I do next? Asking that question now — rather than in December — can lead to better decisions and less stress in the year-end.

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

If you have millions saved in your 401(k) and IRA, that feels like a win, and it is. But there's one way a large balance quietly works against you: The more money sitting in tax-deferred accounts, the more likely the IRS is to tax the maximum allowable portion of your Social Security check.

That happens by default, unless you plan around it.

Most people who reach this point spent decades doing everything right: Saving consistently, maxing out their 401(k), following the advice they were given. That advice was built for accumulation, not for the withdrawal phase.

This is often called the Social Security tax torpedo. It shows up the same way in almost every retirement plan I, as the founder of MOKAN Wealth Management, review for the first time. It's not a mistake. It's what happens when there's no planning for the tax impact of retirement withdrawals.

How the IRS decides what gets taxed

The IRS uses a number called provisional income to decide how much of your Social Security check gets taxed: Your regular income, plus any tax-free interest, plus half of your Social Security benefit.

Once that number crosses certain levels, your Social Security starts getting taxed, and those levels have never been adjusted for inflation.

Married couples filing jointly start owing tax at $32,000 of provisional income. Above $44,000, up to 85% is taxable. Single filers cross at $25,000 and $34,000.

Frozen since the 1980s and 1990s, these thresholds mean a couple with a modest combined income can land at the maximum simply because the numbers are so outdated.

In retirement, income piles on top of itself:

• Your IRA withdrawal gets taxed
• Your Social Security gets taxed on top of that
• Medicare premiums climb along with both

If almost all your savings sit in a traditional IRA or 401(k), every dollar you pull out to pay the bills is fully taxable, and adding half your Social Security on top pushes most retirees past every threshold in year one, often by a wide margin.

Nobody made a bad decision. They just never built a different kind of account to draw from.

The one exception is a Roth IRA. Money pulled from a Roth doesn't count toward provisional income, doesn't show up on your tax return and doesn't raise Medicare premiums. It's the one source of retirement income the IRS leaves alone.

The three buckets every retirement needs

Think of your savings in three buckets:

• Money you've already paid tax on (a brokerage account, where you owe tax only on the growth)
• Money you haven't paid tax on yet (a traditional IRA or 401(k), where every dollar withdrawn is taxed as ordinary income and where most people hold nearly all their savings)
• Money you'll never pay tax on again (a Roth IRA, which grows and comes out tax-free and is invisible to the IRS)

When almost everything sits in the second bucket, every dollar you withdraw pushes more of your Social Security into the taxable zone.

Tax diversification means having enough in each bucket to choose which dollars to spend each year based on what creates the smallest tax bill.

Roth conversions: Moving money to the third bucket

The most reliable way to build the tax-free bucket is through a Roth conversion: Moving money from your traditional IRA into a Roth IRA and paying income tax on the converted amount that year.

After that, the money and all its future growth come out completely tax-free and never count toward provisional income again.

The window to do this well is shorter than most people think. It typically opens in the years just before or after retirement, before Social Security starts and before required minimum distributions (RMDs) force taxable income onto your tax return. Income is usually at its lowest point during that stretch, which means lower rates on any conversion done then.

Three approaches work well in practice:

• Filling your tax bracket by converting just enough each year to use up room in your current bracket
• Converting larger amounts over a shorter window when a balance is too large for small annual conversions to move the needle in time
• Converting more aggressively when the market is down, since the same number of shares costs less in tax

The biggest mistake is waiting. RMDs force taxable income onto your return at age 73 or 75 whether you need it or not — on a balance that's kept growing with the tax bill still attached.

A before-and-after example

John and Karen, both 60, have $1.8 million combined in traditional IRAs, $200,000 in a brokerage account and almost nothing in a Roth. They plan to retire at 63 and need about $150,000 a year to live on. Their combined Social Security benefit is roughly $70,000 at full retirement age, or about $53,000 if they claim benefits early at 63.

On the default path, they retire and claim at 63, then pull the remaining $97,000 they need straight from the IRA. Provisional income comes out to roughly $123,000, well past the $44,000 ceiling: The 85% maximum, or roughly $45,000 of taxable Social Security, stacked on top of the $97,000 IRA withdrawal.

On the coordinated path, starting at 60 while they're still working, they convert a portion of the IRA to Roth each year, paying the tax from income and the brokerage account so the full converted amount keeps growing tax-free.

They keep converting through their mid-60s and wait until 67 to claim Social Security, when the benefit reaches its full $70,000. By then, the Roth is large enough to cover roughly $40,000 of annual spending tax-free, with the remaining $40,000 from the IRA.

Provisional income lands around $75,000 instead of $123,000: Still above the ceiling, but with substantially less Social Security taxed and a large share of spending arriving with no tax bill.

Same retirement date, same lifestyle spending, a meaningfully different tax outcome for the rest of their retirement. The only difference was starting at 60 instead of waiting until the options had narrowed.

What to do now

Most people don't choose to pay the maximum tax on their Social Security. It happens because they didn't plan for it, which also means it's predictable enough to fix.

Run your own provisional income number. Figure out how much room is left in your current bracket. Then start moving money into the Roth bucket, even a few years before retirement. The window narrows every year you wait.

The Social Security Administration's benefit estimator and IRS Publication 915 are good starting points for running your own numbers.

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

Every financial plan you'll ever see puts heavy emphasis on getting money into retirement accounts.

Contribute early, get the match, max out the IRA and let it compound. That part of the advice is sound, and most disciplined savers follow it well.

What gets far less attention is what happens after the money is in there. For some retirees who did everything right and accumulated a large IRA balance, that account can quietly turn into a complicated tax problem for themselves, a surviving spouse and, eventually, their kids.

The culprit is required minimum distributions (RMDs). Once RMDs start, at age 73 or 75 depending on your birth year, that money adds to taxable income whether you need it or not, on top of whatever else you're already reporting. That's the part most retirees eventually hear about, usually from an accountant and usually a year or two too late.

What almost nobody discusses is where that balance goes after the RMD math is finished for the year.

A large IRA won't create a tax bill only for the original owner. It can create a bigger one for the spouse who is left filing alone and a different one for the kids who inherit what's left when they're in their peak earning years.

One account, three tax bills, three different taxpayers.

John and Jane did everything right

John and Jane are 64. They maxed out their 401(k)s for three decades, didn't touch the money early and rolled everything into IRAs at retirement. Between them, they're sitting on $2.3 million in traditional IRA balances, a paid-off house and modest investment income each year.

Fast-forward to age 75, when their RMDs begin. Assuming reasonable growth and no withdrawals, that $2.3 million could be $3 million or more, generating an RMD of roughly $122,000 in the first year.

Add combined Social Security of about $65,000 and an additional $45,000 of investment income, and they're looking at $232,000 to report on their tax return. It's far more than they need, and none of it is optional.

That $232,000 lands on John and Jane's return, and it's the most straightforward of the three tax bills this balance is about to generate.

The widow's penalty

The problem doesn't stop with John and Jane filing jointly. Assume John passes first, which is statistically likely. Jane's income marginally changes. She still collects the survivor Social Security benefit, still owns the investment account and still has to take RMDs on essentially the same IRA balance.

What changes is her filing status. She moves from joint brackets to single brackets, which are roughly half as wide through most of the income range. Her standard deduction shrinks by close to half as well, pushing more income into taxable territory.

Income that used to be taxed at 12% or 22% when John was alive is now landing at 24% or 32%, even though her income hasn't moved.

Many couples model their household income. Very few model what that same income looks like once one spouse is filing alone. For a couple with John and Jane's numbers, the bracket and deduction squeeze alone can mean $10,000 to $15,000 more in tax every year, for the rest of her life.

This is what is referred to as the widow's penalty and could cost the taxpayer additional tax for decades.

The beneficiary problem

Push the timeline out further. Jane eventually leaves the remaining IRA to their two children, and by then, it's worth roughly $3 million combined, about $1.5 million to each child.

Under rules in place since the SECURE Act, most nonspouse individuals must empty an inherited IRA within 10 years of the original owner's death. Withdrawals don't have to be even, but if the original owner was already taking RMDs, annual withdrawals are typically required throughout that window, too.

For a child who's in their peak earning years, that inherited IRA doesn't always arrive as a windfall. It arrives as $150,000 or more of additional taxable income, stacked directly on top of a salary, a bonus and whatever else they've already got going on. A meaningful chunk of that inheritance can go straight to the IRS.

John and Jane spent 30 years deferring tax on that money, and their children may pay more on it than John and Jane ever would have.

Why this matters now

Two recent changes make this the right moment to make the projection.

First, RMD ages have moved. The SECURE 2.0 Act pushed the starting age to 73, moving again to 75 in 2033. That gives people born after 1959 a longer runway before distributions are forced and more years to plan around it.

Second, the One Big Beautiful Bill Act made the current tax brackets permanent instead of letting them expire at the end of 2025. For years, planners hedged Roth conversion advice with "rates might go up, might go down." That uncertainty has diminished.

Neither change fixes the underlying problem: A large traditional IRA is still going to generate a large RMD. But both make it easier to plan while there is still room to act.

The planning runway

John and Jane have an advantage most people overlook: They're 64, retired, and neither Social Security nor RMDs have started. That runway is valuable, but it won't last.

They could consider a Roth conversion. Every dollar converted gets taxed at today's rate, while their income is relatively low, instead of at a future rate stacked on top of Social Security, RMDs and investment income. A smaller traditional IRA can mean smaller future RMDs, less pressure on a surviving spouse's tax return and less taxable income passed to children.

Another move is a qualified charitable distribution, or QCD, once they turn 70½. IRA owners can send money directly from the IRA to a qualified charity — up to $111,000 per person in 2026 — and that amount counts toward the RMD without showing up as taxable income.

For the charitably inclined, it's one of the few ways to satisfy an RMD and lower a tax bill at once.

Neither move is automatically right for everyone, not even for John and Jane. The goal isn't converting for its own sake, it's optimizing the tax bill across a lifetime, and Roth conversions and QCDs are tools for that, not the whole strategy.

What matters more than picking a tactic is running the numbers every few years, since today's right answer may not be right in five years.

The real problem isn't the balance

There's nothing wrong with having a large IRA. It means the saving worked. The problem is assuming that planning is finished once the account is funded.

Left alone, a large traditional IRA sets off a chain reaction:

• Bigger RMDs than you need
• A tax increase left for the surviving spouse
• A tax bill handed to your kids on money you spent 30 years deferring

None of it is inevitable, but all of it takes years of lead time to fix.

The best time to deal with a large IRA is before the RMDs force the issue, not after.

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

When to claim Social Security is usually framed around break-even analysis and longevity.

Claim at 62, and you'll receive reduced benefits for life. Wait until 70, and your monthly check rises roughly 76% (from delayed retirement credits of about 8% per year) — but you forgo eight years of payments.

What this misses: Timing, which is one of your most powerful tax-planning tools, capable of saving tens of thousands in lifetime taxes when coordinated with other income — often the difference between the 12% and 22% bracket, a swing that compounds over decades.

Understanding the Social Security taxation cliff

Up to 85% of your benefits can be taxed federally, depending on your combined income — adjusted gross income plus nontaxable interest plus half your benefits. The thresholds are low and haven't been adjusted for inflation since 1984:

For married couples filing jointly:

• Combined income of $32,000 or less: 0% of benefits taxable
• Combined income of $32,001 to $44,000: Up to 50% of benefits taxable
• Combined income above $44,000: Up to 85% of benefits taxable

For single filers:

• Income of $25,000 or less: 0% of benefits taxable
• Income of $25,001 to $34,000: Up to 50% of benefits taxable
• Income above $34,000: Up to 85% of benefits taxable

Here's where it gets painful: In the phase-in range, every extra dollar of income makes 85 cents of benefits taxable. In the 22% bracket, that dollar triggers about 40 cents in federal tax — a 40% effective marginal rate, approaching what's usually reserved for six-figure earners.

Strategy No. 1: Use low-income years for Roth conversions before claiming

The years between retirement and Social Security are a unique opportunity: Retire at 62 but delay until 70, and you have eight low-income years for strategic tax moves.

Consider a couple with $1.5 million in traditional IRAs who need $80,000 annually. Withdrawing that keeps them in the 12% bracket (which extends to $94,300 for joint filers in 2025), leaving room to convert another $14,000 to $20,000 to Roth — paying 12% now to avoid 22% or more later.

Once they claim at 70, a $60,000 benefit plus $30,000 in IRA withdrawals pushes them into the 22% bracket. Front-loading conversions beforehand shifts hundreds of thousands into Roth accounts. Those withdrawals won't affect Social Security taxation later.

Strategy No. 2: Coordinate RMDs with Social Security timing

Required minimum distributions begin at age 73, forcing taxable withdrawals from tax-deferred accounts — and their collision with Social Security can create a surge in your mid-70s.

Run the numbers first. If RMDs will push you into a high bracket regardless, delaying might not help. Claiming earlier and using those benefits to fund Roth conversions or spare your IRAs can be wiser.

If your balance is modest, delaying makes more sense: Withdraw at lower rates in your 60s, then lean on your higher benefit after 70.

Either way, model your income through your mid-80s to find the claiming age that minimizes lifetime tax.

Strategy No. 3: Use capital gains to fill low brackets before Social Security

Long-term capital gains and qualified dividends get preferential rates: 0% if taxable income is below $94,050 for joint filers in 2025, 15% for most others, 20% at the top.

The 0% bracket is an arbitrage opportunity: In pre-claiming years, if savings or modest IRA withdrawals keep income under the threshold, you can realize gains tax-free.

Consider a couple before claiming $50,000 from IRAs plus $44,000 in realized long-term gains is $94,000 of taxable income — all within the 0% capital gains and 12% ordinary brackets.

Once benefits and RMDs arrive, that same income lands them in the 22% bracket with gains taxed at 15%. Harvesting beforehand captures those gains tax-free.

Strategy No. 4: Consider state taxes in the equation

State-level taxation varies: Eight states tax benefits to some degree, while the rest exempt them entirely. If you're considering a retirement move, this could influence timing.

In a state that taxes benefits (Minnesota, Vermont, New Mexico), delaying can pay off if you move to a no-tax state such as Florida or Texas before claiming.

If you have high rates and plan to stay, claiming earlier to trim IRA withdrawals might keep you below state thresholds.

Strategy No. 5: Coordinate spousal benefits with tax planning

Married couples have added complexity and opportunity. Note that the threshold for married, filing separately is $0 — all benefits are taxable immediately — so you can't file separately to dodge the tax.

The strategy: The lower-earning spouse claims at full retirement age while the higher earner delays until 70, freeing cash flow for Roth conversions and gains harvesting while securing the survivor's maximum benefit. Keeping household income below the $44,000 threshold can also limit the 85% taxation.

Strategy 6: Factor in Medicare IRMAA surcharges

Social Security income counts toward the modified adjusted gross income thresholds that trigger Medicare's income-related monthly adjustment amount (IRMAA).

For 2026, surcharges run $70 to $419.30 per person monthly on Part B and $12.90 to $81 on Part D.

IRMAA is based on income from two years prior, so a large benefit claimed at 70 plus other income could push you above a threshold and add thousands annually to Medicare costs.

The opportunity: Model your income in your late 60s and early 70s to spot IRMAA cliffs. If delaying to 70 would push you slightly above a threshold, claiming at 69 — or funding expenses from Roth or cash reserves — might keep you below it. Advisers with tax-planning software can model the tradeoffs.

The holistic approach

Optimizing your claiming age for taxes isn't separate from optimizing for longevity or income — it's one part of a retirement tax plan that considers:

• When and how much to withdraw from IRAs
• When to convert to Roth and how much
• When to realize capital gains
• When to claim Social Security
• How to structure income to limit Medicare surcharges
• Whether income bunching or smoothing makes sense

Done well, this compounds meaningfully over a 30-year retirement. The worst approach is claiming based solely on when you need the money; the best is modeling scenarios with an adviser three to five years before you claim, while you can still position assets and income efficiently.

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

"Ellen" called me on day 38.

I hear some version of that call every week.

She had sold an apartment building she had owned for 19 years. The closing went smoothly. Her attorney was good, her qualified intermediary was competent, and the proceeds were sitting safely in the exchange account.

The only problem was that she had seven days left to decide what to do with the rest of her life.

She had spent the first 38 days doing what most people do. She toured four buildings. Two were overpriced. One had a tenant problem she did not want to inherit. The fourth was fine, and she did not want it. Every week, the phone rang with someone who had heard she was flush with cash and had something to sell her.

By the time she called me, she was not evaluating anything. She was picking.

That is the 45-day trap. It has almost nothing to do with the calendar and almost everything to do with the sequence.

The two clocks and when they start

A 1031 exchange runs on two timers, and both start on the same day: The day you transfer the property you are selling.

You generally have 45 calendar days to identify a potential replacement property in writing, and you must receive the replacement by the earlier of 180 days after that transfer or the due date, including extensions, of your federal income tax return for that year. The IRS lays out the timing in Publication 544.

Now read that first sentence again. The clocks do not start when you find a buyer. They do not start when you go under contract. They start at closing — the moment you have the least attention and energy to spare, because you have just spent three months getting a deal to the table.

These are calendar days. Weekends count. Holidays count. December 25 counts. Day 45 does not move to Monday because it landed on a Saturday. Under the Treasury regulations governing deferred exchanges, the identification generally has to be in a signed writing, describe the property unambiguously and go to a permitted party in the exchange.

A conversation with your broker does not count, and neither does a note to your own accountant or attorney. The rules treat your own agents as disqualified recipients.

Three ways to identify and one way to undo your own work

Most investors know about the 45 days. Far fewer know that how you identify is its own trap.

Those same regulations provide three tests for identifying multiple replacement properties:

• The three-property rule. Identify up to three properties, at any value.
• The 200% rule. Identify any number of properties, as long as their combined fair market value does not exceed twice the value of what you sold.
• The 95% rule. Identify as many as you like at any value, but you must actually acquire at least 95% of the total value identified. This is a rule of last resort, not a planning tool.

Here is the part that costs people money. If you identify four properties and blow past the 200% ceiling, the extra identifications do not simply fall away and leave you with three good ones.

Unless you satisfy the 95% rule, or actually close on the property inside the 45 days, you can be treated as having identified nothing at all, and the exchange can fail. You would learn this in April, from your CPA, about a decision you made in October.

You can revoke or change an identification before the deadline, in writing, delivered to whoever received the original. After day 45, nothing changes. You may only buy from the list you filed.

Anyone can count to three. The failures happen when someone tries to keep options open on day 44 and quietly converts a valid identification into a void one.

The fourth-quarter problem

Here is a deadline almost nobody hears about until it has already cost them.

Your exchange period is not automatically 180 days. It ends on the earlier of day 180 or the due date of your return, including extensions.

Sell in June, and this is academic. Sell in late October or later, and it is not, because that is when day 180 starts landing after your return is due.

A November 15 closing puts day 180 in the middle of May. But if you file your return on April 15 without an extension, your exchange period ended on April 15. You lost roughly a month of runway and, quite possibly, the exchange along with it.

The fix is usually a one-page form. Most individual filers use Form 4868. Filed properly and on time, the extension is automatic, and you do not have to explain why you want it. File it by the original due date and your filing deadline moves to October 15, which pushes the end of your exchange period out past day 180.

The right form depends on how you file your return, whether as an individual, a partnership or a corporation, so confirm it with your CPA.

Two things to be clear about. An extension buys more time to file, not more time to pay. Any tax you expect to owe is still due on the original date. And do not file that return early. Once it is filed, you can no longer obtain an extension for that year, which leaves you capped at the original due date.

If you closed in the fourth quarter, file the extension even if you expect to finish the exchange in February.

Urgency disguises itself as conviction

The mechanical traps are the easy ones. The expensive one is psychological.

I have watched investors grow more certain as the deadline approaches, not because the property improved, but because the cost of walking away became visible. Once a large tax bill is attached to the decision, "I need more time" starts to feel like, "I am choosing to pay the tax." That is a very uncomfortable sentence to say out loud on day 40, so people stop saying it.

What follows is predictable. Contingencies get waived that would have mattered in any ordinary purchase. Capital expenditures get underestimated. Debt gets replaced with financing that is expensive or restrictive, because matching the debt became the only goal.

And the danger is not limited to obviously bad property. A perfectly respectable building can still be wrong for you. A 70-year-old who sold because he was tired of tenants can exchange into a replacement that quietly hands him the same job back. Someone who needs liquidity can defer a tax bill by buying an asset he cannot exit.

A successful exchange is not measured only by whether the tax was deferred. It should leave you owning something you would have bought without a countdown clock.

What to do before you close

The way to manage the 45-day window is to do most of the work before it opens. Before the relinquished property closes, and ideally before it is listed, I would want these six things done:

1. Know what the deferral is actually worth. Have your tax professional model the federal and state consequences, including depreciation recapture. You cannot rationally decide how much risk to accept in exchange for deferral until you know the size of what you are deferring.

2. Set the reinvestment range. Estimate proceeds, exchange equity and how much debt must be replaced to avoid taxable "boot." Decide in advance whether some cash should intentionally be retained and taxed rather than forced into a replacement.

3. Decide which structures are on the table. Directly owned property, passive fractional interests, or some combination. That should be driven by what you want your life to look like, not by what happens to be available in week six.

4. Write down your underwriting standards. Acceptable property types, markets, leverage, hold periods, deal-breakers. A written standard is much harder to negotiate away under pressure than an unwritten one.

5. Prepare more than one path. A primary replacement can fail inspection, financing or the seller. A backup should be something you would be content to own, not a placeholder typed onto an identification form on day 44.

One wrinkle worth knowing: If you identify three properties but intend to acquire only one, ask your qualified intermediary whether the others should be designated as alternates.

Otherwise, after purchasing one property, you may remain entitled under the exchange agreement to acquire the other two, and your intermediary may be unable to release any unspent exchange funds until the exchange period ends.

6. Assemble the team before the sale. The qualified intermediary must be engaged before closing; if the proceeds touch your hands, there is no exchange to salvage. You should not spend the first two weeks of a 45-day window finding the people you need to execute it.

A note on passive replacements

This is usually where Delaware statutory trusts (DSTs) enter the conversation, and because my firm advises clients on DST investments, I want to be careful not to present convenience as suitability.

A DST can come together quickly. You are not negotiating a purchase price or arranging property-level financing, and an open offering can accept an investor quickly. That is exactly why one so often appears late in an exchange.

Chosen deliberately, as part of a plan made before the sale, a passive replacement can be the right answer. Whether a DST fits you at all is a separate question, with its own set of tests.

Chosen at day 43, it is not a plan. It is whatever was available.

If a DST belongs in your exchange, it belonged in the plan before you closed. Not on day 43.

Back to Ellen

Ellen identified three potential replacements on day 44, including a DST, and ultimately invested in the DST on day 71.

The investment worked out. She receives distributions, she no longer fields calls about water heaters, and by any objective measure the outcome was fine.

But she did not choose it. She landed on it. And when she describes the sale now, 19 years of ownership come out in one sentence and the last six weeks take 20 minutes.

The deadline was never really the problem. It is fixed, published and knowable. The problem was that the most consequential financial decision of Ellen's life got made during the seven days when she had the most pressure and the least information.

You generally cannot extend the 45 days. But you can decide how prepared you are when they start.

If you are approaching a sale and want to work through these decisions while you still have time to make them, you can read more about Sera Capital's 1031 exchange planning process. We are a fee-only fiduciary firm and earn no commissions on any investment.

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

Since becoming law, the One Big Beautiful Bill Act (OBBBA) has been generating headlines. While much of the conversation revolves around politics, the legislation created new opportunities for retirees to become more strategic with how and when they recognize income.

Significant opportunities for retirees

One of the more significant retirement provisions under the new law is the expanded deduction available to many retirees. But receiving the full benefit isn't automatic. Eligibility is based on your modified adjusted gross income, so withdrawals from traditional retirement accounts, pension income, capital gains and, even Roth conversions can all impact whether you qualify.

That makes coordinating when and how you recognize taxable income especially important. Taking time to plan may help some retirees keep the deduction while also reducing taxes on Social Security benefits.

Retirees may also want to revisit whether Roth conversions are appropriate. Moving money from a traditional IRA into a Roth IRA and paying taxes on the converted amount now may help some retirees reduce future taxable income. This can also create additional future tax flexibility.

The One Big Beautiful Bill Act permanently extends many of today's lower income tax rates, which gives retirees more certainty when evaluating whether converting assets over time make sense with their retirement plan. Combined with the delayed age for required minimum distributions (RMDs) under the SECURE 2.0 Act, many retirees may now have more time to strategically convert portions of their retirement savings before they must start taking withdrawals.

Rather than waiting for RMDs to increase taxable income, converting assets gradually over time may help retirees better manage future tax obligations while staying in a comfortable tax bracket.

Looking ahead

But tax planning isn't just about your taxes right now — it also includes considering how the decisions you make today might affect your spouse, your heirs, and your future decades from now.

A commonly overlooked scenario is the death of a spouse. Despite the fact that a household's income is often reduced after the death of a spouse, the surviving spouse will usually file as a single taxpayer the following year. Because single tax brackets reach higher rates at lower income thresholds than married couples who file jointly, many surviving spouses end up paying more in taxes.

However, taking time to plan strategies like Roth conversions while both of you are alive may help reduce that future tax burden, known as the widow's penalty.

This same principle also applies to estate planning. While many retirees hope they can give their remaining savings to their children or grandchildren, inheriting a large, pre-tax retirement account could also mean inheriting a future tax liability.

This can be overwhelming, especially to an heir who may not have been involved in your plan. However, including tax management strategies in your estate plan can help your loved ones avoid that risk. It may even help preserve more of those assets for future generations.

Take time to create a tax plan

Although it has introduced several new tax opportunities for retirees, the OBBBA alone isn't enough to determine how much you'll ultimately keep.

However, taking the time to make a thoughtful plan, with the help of a professional, can help.

Retirees who coordinate withdrawals and manage taxable income, while considering the long-term impact of today's decisions, may be better positioned to preserve more of their savings for themselves, their families and future generations.

Investment advisory services offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor. BWA and Beckett Financial Group are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents.

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

SpaceX went public in June in what is being called the largest IPO in history, and other large IPOs are not far behind.

Even for investors who don't hold a single share of any of those companies, the past 12 months have been strong. Markets have climbed steadily, with technology stocks leading the way. A lot of people are sitting on gains — and many of them are likely thinking about taxes.

For investors with appreciated stock, that tax exposure also creates a giving opportunity, and a donor-advised fund (DAF) is one of the most effective tools to act on it.

At DAFgiving360, one of the nation's largest DAF providers and where I am the director of the Charitable Strategies Group, we're having these conversations regularly with donors and advisers.

While DAFs have been growing in popularity in recent years, many investors may not realize the role charitable giving can play in their overall tax and wealth management planning. A DAF isn't just a charitable giving vehicle — it can be a tax and investment management tool with significant charitable outcomes.

For anyone holding appreciated non-cash assets such as stock, a private business interest or real estate, donating the assets directly to a DAF can unlock additional funds for charity in two ways:

• You can potentially eliminate the capital gains taxes that would be incurred if the assets were sold first and then donate the proceeds — which can increase the amount available to charity by up to 20%
• You may claim a fair market value charitable deduction for the tax year in which the contribution is made

Why a donor-advised fund is often the right vehicle

Most charities are not equipped to receive stock directly, particularly stock that comes with complexity: Shares subject to lockup restrictions, concentrated positions in newly public companies, equity compensation awards or holdings in private companies.

That's where a DAF becomes even more useful to both the donor and the receiving charity.

A DAF is a 501(c)(3) public charity that accepts the contribution on your behalf, handles the valuation and liquidation of the asset and holds the proceeds in your account.

A donor takes the tax deduction in the year they contribute (if they itemize deductions), and the contribution is invested for tax-free growth — creating additional available dollars for charity.

Then, on their own timeline — this month, next year or over the next few years — donors can recommend grants from the account to the charities they want to support.

DAFs typically have the resources and expertise for evaluating, receiving, processing and liquidating complex non-cash gifts that most individual charities are not equipped to handle.

Generally, the most complex asset contributions can be handled and processed by major DAF sponsors within five days.

You don't have to be an IPO insider for this to matter

The IPO headlines are attention-grabbing, but this strategy applies to anyone holding appreciated stock.

Tech-heavy portfolios, company stock held through an employee purchase plan or brokerage account, equity compensation that is vested over several years — any of these can create the same dynamic: Shares that have grown substantially in value, with a capital gains tax bill waiting whenever the assets are sold.

If you've been holding off on portfolio rebalancing or trimming a concentrated position because of the tax consequences, donating a portion of those shares to a DAF before selling is worth considering.

The tax rules are straightforward. Shares must have been held for more than one year to qualify for the full fair market value tax deduction.

The deduction for appreciated non-cash assets is generally limited to 30% of adjusted gross income in any given year, with a five-year carryover for any amount above that limit.

And all contributions to a DAF are irrevocable — once contributed, the assets belong to the charitable organization that sponsors the DAF.

The flexibility factor

One thing that surprises many donors is how much flexibility a DAF provides. Donors don't need to decide where their money goes before they contribute. Separation between the financial decision and the charitable decision removes a lot of pressure.

Major liquidity events tend to be busy and emotionally complicated. A DAF lets donors make the contribution now, while using their contribution to support both short- and long-term charitable giving goals.

If you have appreciated stock — whether from an IPO, years of market growth, equity compensation or a concentrated position you've been managing — now is the time to start thinking about how your philanthropic goals can align with your overall wealth management goals.

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

Nearly every retirement calculator is built to answer the same question: How far am I from having enough saved to retire?

It's an important question, and if you've spent the last 30 or 40 years investing diligently for retirement, you've probably checked your progress more times than you can count.

Then one day you open your accounts, look at the balances and realize you've hit it. You've reached the number you've been working toward all these years. Naturally, you then ask, "Is it really enough?"

That's not the right question. What you should be asking is, "How will I turn my savings into the paycheck I'll be living on for the next 25 or 30 years?" That conversation is vital but, in my experience, far too few people are having it.

Reaching your number tells you that you've accumulated enough assets to support retirement. It doesn't tell you how prepared you are to make the transition from building wealth to living on it.

You've spent 40 years making one financial decision over and over: How much should I save? Retirement hands you a different set of decisions, starting with how much you can safely withdraw, where your income should come from, how taxes fit in and when to claim Social Security.

Each decision carries consequences that can last for decades. That's a conversation a retirement calculator, or an AI agent, simply isn't equipped to have.

Your portfolio has a new job

Managing your finances may have been relatively straightforward during your working life. You earned a paycheck, spent some of it and invested the rest. When the market dropped, you kept contributing because time was still on your side. If you made a mistake, there was another paycheck coming and another opportunity to recover.

Retiring changes the rules. The day your paycheck stops, your portfolio takes over. You're no longer asking how much you can save. Now you're asking how much you can safely spend.

And here's what surprises many new retirees: Two people can earn the exact same investment return and end up living very different retirements. It's not because of what they invested in, but because of how they withdraw the money.

Your discipline got you most of the way there. A strong market may have carried you across the finish line. We tend to assume the day we hit our retirement number is purely a function of years of disciplined saving, but that's only part of the story.

Here's what people easily overlook. A strong bull market may have helped push your portfolio over your retirement goal, but that doesn't necessarily mean it's the ideal time to retire.

If markets weaken just as you begin drawing income, those early retirement years can have an outsized impact on how long your savings last.

That doesn't mean retiring after a strong market is a mistake, or that you should wait around for "perfect" stock market conditions. No one knows when those will arrive.

It does mean that hitting your retirement number shouldn't automatically trigger your retirement date. It should trigger a different question: Not "Can I retire?" but "How should I retire?"

Your savings are only half the story now

Consider two couples who both retire at age 67 with $2 million saved. They invest the same way, earn the same returns and spend the same amount every year. The only difference is how they generate retirement income.

One couple simply withdraw money as they need it. The other intentionally coordinate withdrawals, Roth conversions and Social Security claiming to manage taxes over time.

Twenty-five years later, the second couple could realistically end up with hundreds of thousands of dollars more in after-tax wealth — not because they earned higher investment returns, but because they kept more of what they earned.

Research on retirement income planning has consistently shown that coordinated withdrawal strategies can add significant lifetime value for many affluent retirees. The exact benefit varies from household to household, but one point is remarkably consistent: How you withdraw your money can matter almost as much as how you invested it.

Ignoring withdrawal planning doesn't just cost you a little at the margins. It can blindside you years later, at exactly the wrong time.

Consider what's known as the widow's penalty. A married couple filing jointly enjoy lower tax brackets and a larger standard deduction. When one spouse dies, the survivor typically loses the smaller of the two Social Security checks, but required minimum distributions (RMDs) often remain largely unchanged because the retirement accounts themselves haven't disappeared.

Now much of that same income is taxed using the narrower single-filer tax brackets, while Medicare premium thresholds become much easier to exceed.

The result? It's entirely possible for a surviving spouse to pay tens of thousands of dollars more in lifetime taxes than they would have if the couple had gradually converted some of their traditional IRA to a Roth during the lower-income years they shared together.

Nobody made a bad investment. Nobody timed the market poorly. They simply never looked ahead and asked what their tax picture might look like after one spouse was gone.

There's another cost to not having a retirement income plan — and this one is emotional.

According to a 2025 survey from the Employee Benefit Research Institute, more than three-quarters of retirees say they could actually afford to spend more freely than they do. Yet nearly half admit they continue to hold back because they're afraid they'll eventually run out of money.

Imagine spending 40 years building your retirement savings, only to spend the next 30 afraid to use them.

That's the real cost of not knowing exactly where your retirement paycheck is coming from each month.

If you've just hit your retirement number, celebrate it. You've earned that moment. But before you decide today's the day to retire, take the time to pressure-test the income plan that will support the next 25 or 30 years of your life.

That's where a knowledgeable, fee-only retirement income adviser can make an enormous difference.

Reaching your retirement number answers one important question: Have I saved enough? Retirement immediately asks another: Do I know how to live on it?

Those are two very different questions, and the second one deserves every bit as much attention as the first. That's where retirement planning becomes far more interesting — and far more valuable.

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

For many retirees, managing taxes becomes just as important as managing investments. The way income is withdrawn in retirement can have a meaningful impact on how much of that income ultimately stays in your pocket.

While tax laws are complex, certain provisions can create valuable opportunities when used thoughtfully.

One such opportunity, sometimes informally referred to as the Big Beautiful Bill, offers a potential tax benefit for retirees who meet specific income thresholds.

Understanding how it works, and how withdrawals are structured each year, can make a noticeable difference in after-tax income. As a financial adviser and owner of New Smyrna Beach Retirement Solutions with more than a decade and a half in the financial industry, I can help with that.

What is the Big Beautiful Bill?

The Big Beautiful Bill is a colloquial term used to describe the One Big Beautiful Bill Act (OBBBA), a tax law that, among other things, allows eligible retirees to claim an additional deduction when their taxable retirement income stays at or below $150,000 per year.

For individuals age 65 and older, this bonus deduction can help reduce taxable income and lower overall tax liability.

On the surface, the rule appears simple. Stay under the income threshold and qualify for the deduction. In practice, however, many retirees exceed income limits unintentionally because they do not fully understand how different income sources are taxed or how withdrawals interact with one another.

Pensions, Social Security benefits, required minimum distributions (RMDs) and investment withdrawals can all contribute to taxable income in different ways. Some income is fully taxable, some partially taxable and some not taxable at all.

Without a clear strategy, it is easy for income to creep higher than expected.

Why withdrawal strategy matters

In retirement, income often comes from multiple sources. Traditional IRAs and 401(k)s are generally taxable when withdrawals are taken. Roth IRAs may provide tax-free income if certain requirements are met. Taxable investment accounts can generate income through interest, dividends and capital gains.

The key to taking advantage of income-based tax deductions is deciding how much to withdraw from each type of account in a given year. Drawing too heavily from tax-deferred accounts may push income above the threshold, while a more balanced approach could help keep taxable income within qualifying limits.

This is where coordination matters. By intentionally selecting the portion of income that comes from taxable, tax-deferred and tax-free sources, retirees may be able to manage their income level more effectively and preserve eligibility for valuable deductions.

This does not mean one account type is always better than another. It means coordination matters.

When withdrawals are planned intentionally, retirees may have more control over their taxable income and greater flexibility to adapt as tax rules and personal circumstances change.

Know what actually counts as taxable income

A practical first step is gaining clarity around what income is fully taxable, partially taxable or not taxable at all. Many retirees assume that income equals cash received, but the tax code treats different sources differently.

Understanding how Social Security benefits are taxed, how RMDs affect income and how capital gains are calculated can help prevent surprises. This awareness creates a foundation for better decision-making before withdrawals are taken.

Map out income before the year begins

Rather than reacting at tax time, retirees may benefit from projecting income at the start of each year. Estimating how much income is needed to support spending allows withdrawals to be structured more intentionally.

This forward-looking approach can highlight potential issues early. For example, it may reveal that a full RMD combined with other income sources would exceed the $150,000 threshold for the bonus deduction for older people. Seeing that in advance creates opportunities to adjust.

Use account diversification to your advantage

Retirees who have savings spread across taxable, tax-deferred and tax-free accounts often have more flexibility. If one source would push income too high, another may help fill the gap without increasing taxable income as much.

This might involve taking smaller withdrawals from traditional accounts in certain years, supplementing income from Roth accounts or being mindful of capital gains in taxable accounts.

Over time, this type of coordination can help preserve eligibility for deductions and reduce unnecessary taxes.

Pay attention to timing

Timing matters in retirement income planning. Some retirees experience lower taxable income in the early years of retirement before RMDs begin. These years can offer planning opportunities.

Others may face income spikes due to large withdrawals, one-time expenses or changes in investment income.

Recognizing when income is likely to rise or fall can help guide withdrawal decisions and avoid crossing important thresholds unintentionally.

A strategy that requires annual attention

Unlike some financial decisions that can be made once and left alone, income planning is ongoing. Tax brackets change, RMDs increase, and personal needs evolve.

Because of this, strategies designed to capture income-based deductions should be reviewed annually. Even small adjustments can make a difference. A slightly different mix of withdrawals, taken at the right time, may help preserve tax benefits that would otherwise be lost.

Regular reviews also help retirees adapt to changes in tax law and market conditions without making reactive decisions under pressure.

The bottom line

The OBBBA's provisions are examples of how thoughtful income planning can support a more tax-efficient retirement. While the bonus deduction for older people may seem modest, the cumulative impact of managing withdrawals carefully over many years can be meaningful.

For retirees, the broader lesson is clear. How income is structured often matters just as much as how much income is received.

Taking proactive steps to understand income sources, coordinate withdrawals and review strategies regularly can help ensure that available tax benefits are not overlooked and that retirement savings are used as efficiently as possible.

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

The financial professionals who contribute to Kiplinger's Adviser Intel are always here to share expert insights on wealth building and preservation.

The recent article Retirement Milestone Ages Most People Miss (And What to Do About Each One) outlined the key moments in retirement planning from your 50s to your 70s, and how the decisions you make work together to form a coordinated strategy. You can find out now how well-versed you are on the importance of these ages.

This quiz is designed to test how much you know about some of the more obscure milestones. (And don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

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

Read More From Adviser Intel

• Retirement Milestone Ages Most People Miss (And What to Do About Each One)
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For many retirees, a pension is one of the greatest financial assets they have.

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

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

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

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

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

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

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

Consider these three primary sources of retirement income:

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

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

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

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

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

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

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

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

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

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

No. 4: Higher income can increase capital gains taxes

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

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

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

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

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

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

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

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

No. 6: Medicare premiums are also affected by income

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

No. 10: Tax diversification creates more flexibility

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

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

No. 11: Where you hold investments matters, too

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

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

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

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

No. 12: Pension distribution decisions have tax consequences

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

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

No. 13: Charitable giving can reduce taxes

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

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

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

Your taxes in retirement shouldn't be an afterthought

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

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

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

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

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

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

Here's the background.

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

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

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

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

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

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

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

The default method can cause a tax bomb

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

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

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

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

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

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

Annuitization: More tax deferral

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

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

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

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

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

Stretching it out without annuitizing

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

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

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

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

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

Not so fast!

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

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

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

Ask questions

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

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

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

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

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• For Your Fixed-Income Pot, Consider an Annuity That Behaves Much Like a Bank CD
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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

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

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

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

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

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

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

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

In reality, this is a false dichotomy.

The actual range of options is much wider.

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

The full range of options, from most work to least

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

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

• Tenants
• Repairs
• Vacancies
• Taxes
• Insurance

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

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

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

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

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

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

The trade-off, of course, is control.

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

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

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

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

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

The lesser-known middle-ground options

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

• Property taxes
• Insurance
• Maintenance

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

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

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

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

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

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

Weighing your options: Two questions to answer

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

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

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

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

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

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

Related Content

• I'm Retired and Hate Being a Landlord. Should I Sell My Rental Property?
• A Cautionary Tale: Why Older Adults Should Think Twice About Being Landlords
• Counting on Real Estate to Fund Your Retirement? Avoid These 3 Costly Mistakes
• Should I Sell or Rent My House When I Relocate for Retirement?
• Do 1031 Exchanges Make Sense for Baby Boomers?

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

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

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

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

That habit is where the money leaks.

By September, you can see most of the year:

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