Triple net lease (NNN) commercial real estate means that the tenant handles insurance, taxes and maintenance on the asset along with rent and utilities, leaving the landlord with minimal responsibilities.

For real estate investors who are sick of managing multifamily buildings or juggling a dozen different residential assets, they can be a great option if you want to 1031 exchange into something that's a little bit more hands-off (with the understanding that every asset will, at some point, require at least some of your attention).

With NNN, ongoing day-to-day maintenance is significantly lower than it is with other types of real estate that you directly own. No one will be calling you about a leak. No one will need you to fix a toilet. As long as the tenant keeps paying rent, your responsibilities are largely limited to filling out some paperwork here and there.

Put a different way: On the passive-active continuum, NNN is somewhere between a REIT and a rental.

If you clicked on this article, you're likely already interested in investing in your own NNN asset. You might have even checked some of them out with a broker or an adviser.

But what should you be looking for before going under contract?

We're a private family office that specializes in triple (NNN) and double (NN) net lease commercial real estate, having facilitated over $470 million worth of transactions over the past few years.

Here's what our team looks at first.

1. Tenant creditworthiness

Imagine you're renting out a single family home and your renter pays the property taxes, insurance and takes care of the maintenance. You're ecstatic.

When you first hear about NNN commercial real estate, you might have a similar reaction.

There's only one problem: What happens if that tenant loses their job? Or, in the case of commercial real estate, what happens if the tenant goes bankrupt?

That's why tenant creditworthiness is the number one factor when evaluating single tenant net lease assets. Your tenant's ability to pay rent is essential, which is why it's prudent to invest in the highest quality tenant you can find. If that tenant stops making money, there's a chance that they'll default on the lease.

Look for national corporate tenants with an investment grade of BBB- or higher (depending on your risk tolerance), with the understanding that there's a close relationship between risk and return. If you're investing in McDonald's corporate-guaranteed ground leases, you're taking on very little risk, so you can expect very little reward.

If you invest in a regional quick service coffee operator, you can expect significantly higher reward while taking on more risk.

2. Corporate guarantee

A corporate guarantee is a legal promise by one company (often a parent company or affiliate) to cover the financial or contractual obligations of another business entity (such as a subsidiary) if it defaults.

For instance, let's say you purchase an oil change garage in what turned out to be a bad location, but your lease is corporately guaranteed by a national operator with 500+ locations across the country.

The beautiful thing about economies of scale is that even if that location underperforms, the operator might be willing to not turn a profit on it. Intelligent accounting might allow them to use the losses from that location to offset gains from another location.

Suffice it to say, it's important to have a corporate guarantee on your lease — and it's important for this guarantee to be backed by the corporate entity involved in the transaction, not just single LLC or franchisee.

This is a common pitfall for newbie commercial real estate investors: You might think you're getting a great deal on a property only to find out that the lease guarantor isn't necessarily connected to the actual tenant — or at least not in any way that would allow you to recoup significant losses.

If the Wendy's is "corporately guaranteed" by Wendy's 456 Lakewood Dr LLC, for instance, that LLC could be easily dissolved in the event of that location's underperformance.

Commercial real estate can get confusing fast, particularly when there are multiple LLCs involved in a single transaction. Always pay attention to who is actually guaranteeing the lease. If it's a franchise entity, you need to know that going in.

3. Long-term leases

Let's return to that residential metaphor and assume you have a tenant who's been diligently paying the taxes and insurance on your property, fixing up the roof, replacing the gutters and so on.

What if they decide to leave one day?

You'll be stuck trying to find a new tenant just like them, and if it's a location that's perfect for them (but not necessarily anyone else), you might have a difficult time finding a new tenant. That's when your low landlord responsibilities might become a little bit more intensive.

Take a dialysis clinic as an example. In a dialysis clinic, there will be 20 to 40 bays with mechanical, electrical and plumbing coordination. A water treatment room houses the reverse osmosis and bicarbonate distribution infrastructure. Usually, this is all purpose-built to be used as a dialysis clinic, since finding a new tenant for that space can be difficult.

That's why you'll want to secure a tenant with a long-term lease (anywhere from eight to 20 years or more). That way, you'll have plenty of room to plan accordingly if you ever run into any re-tenanting issues.

Know the difference between NN, NNN and absolute NNN

There's unfortunately no authoritative definition for these that everyone sticks to, and offering memorandums for net-lease assets tend to conflate NNN with what we would call NN. The three "Ns" typically refer to insurance, taxes and maintenance.

Some offering memorandums will say that it's an NNN lease with the tenant handling the roof and structure.

In our opinion, that's maintenance. Some might say that the "maintenance" in NNN only refers to "common area maintenance." We think that's confusing.

We only use two definitions: Absolute NNN (tenant handles all maintenance, insurance and taxes) and NN (tenant handles insurance, taxes and maybe some maintenance, but you're on the hook for roof and structure).

In conclusion

If you're interested in investing in NNN and NN assets, there are three specific things to look for:

1. Tenant creditworthiness (look for national tenants with credit ratings north of BBB-, depending on what you're looking for)

2) Corporate guarantees (from the parent company, not an individual franchisee or LLC)

3) Long-term leases (so you can plan your exit accordingly)

If managing an entire NNN acquisition all by yourself seems overwhelming, our private family office can help. We built out seven divisions to simplify the process of acquiring a commercial real estate property.

Related Content

• How Commercial Real Estate Investing Can Add Balance to Your Portfolio
• 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
• Don't Defer Retirement if You're a Landlord, Defer Taxes Instead
• Nearing Retirement and Done Being a Landlord? Here Are All of Your 1031 Options

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 the conversation about Trump Accounts has focused on the beginning.

Who gets the $1,000. Whether families should contribute more. Whether a 529 plan is still the better place to save for college.

There's also been plenty of discussion about what happens at 18, when the account begins operating under traditional IRA rules. One obvious strategy is to convert some or all of it to a Roth IRA while the young adult is still in a low tax bracket.

As a financial adviser with more than 25 years of experience, I see that that's where planning gets more complicated.

An 18-year-old college student with little income might look like the perfect Roth conversion candidate. Under the kiddie tax rules, that assumption can be expensive.

What changes at 18

A Trump Account is a traditional IRA with special rules during childhood. Money generally can't come out before January 1 of the year the child turns 18. After that, it's generally treated as a traditional IRA.

Family contributions aren't deductible, so they become basis and come back tax-free. The government's $1,000 pilot contribution and qualifying employer contributions don't create basis. They're taxed as ordinary income when withdrawn, along with all the growth.

Here's a hypothetical: Ignoring the $1,000 pilot contribution for simplicity, a family that contributes $5,000 a year for 18 years and earns 7% ends up with about $170,000: $90,000 of contributions and $80,000 of growth.

Left alone until 65, it grows to roughly $4 million, nearly all of it taxable when withdrawn. That's why a Roth conversion is so appealing.

Why the kiddie tax changes the math

The kiddie tax generally applies to children under 18, to 18-year-olds whose earned income doesn't cover more than half their support and to full-time students ages 19 through 23 who don't meet that earned-income test. A taxable Roth conversion is unearned income for this purpose.

For 2026, the first $1,350 is effectively sheltered, the next $1,350 is taxed at the child's rate, and net unearned income above $2,700 is generally taxed using the parents' rate.

There's a second constraint. You can't convert only the tax-free dollars. Basis is spread pro rata, so every conversion carries the same taxable percentage as the whole balance.

Trump Accounts have an unusual twist: the IRS applies that calculation to the Trump Account separately from any other IRAs. In our example, about 47% of every dollar converted is taxable.

Here's what timing does, holding the balance constant and using 2026 federal rates.

Converting everything at 19 as a full-time dependent student. About $80,000 is taxable, and almost all of it above $2,700 is taxed at the parents' rate. For parents in the 24% bracket, the federal tax is about $18,700.

Converting over two years after graduation, on a $45,000 salary. Each year adds $40,000 of taxable income on top of the salary. The added federal tax is about $13,300.

Converting over two years once the kiddie tax no longer applies, with little other income. A young adult who is no longer a dependent gets the full $16,100 standard deduction and the 10% and 12% brackets. The federal tax is about $5,200 total.

Same account, same conversion and a difference of more than $13,000. The lesson isn't to convert at a particular age. It's to identify the right tax window.

The FAFSA problem

Because a Trump Account is a type of traditional IRA, the balance should generally fall under the FAFSA's exclusion for retirement accounts.

The conversion income is the issue. It lands on the student's tax return, the FAFSA uses tax information from two years earlier, and student available income, after applicable allowances, is assessed at 50%.

If need-based aid could be significant, model the FAFSA effect before converting, and consider avoiding large conversions in tax years that will feed into an application.

What families should do now

Keep records of every contribution. After-tax dollars are basis, and the young adult will need to document it on Form 8606. That applies to grandparents' contributions, too.

Give each account its own job. For college, the 529 is still the right tool. Qualified withdrawals are free from federal tax, and a parent-owned 529 gets favorable FAFSA treatment.

Up to $35,000 of leftover 529 money can also roll to the beneficiary's Roth IRA, subject to annual limits and other requirements, if the account has been open at least 15 years. The Trump Account is better suited to money the family doesn't expect to need for decades.

Plan the conversation, not just the conversion. Your child owns the account from the beginning, even though a responsible party manages it during childhood. By adulthood, the conversion decision is theirs. The families who get this right will be the ones who explained the plan at 16, not the ones trying to explain it at 22 while the tax return is being prepared.

The rules are still developing

Treasury and the IRS have issued guidance and proposed regulations covering the pilot contribution, account administration, employer contributions and eligible investments. But several regulatory provisions remain reserved for future guidance, and some of the regulations are still proposed rather than final.

Everything here reflects the law and guidance available as of September 18, 2026. Revisit the strategy as additional guidance arrives, and certainly before the first conversion.

The bottom line

For families who qualify, the $1,000 pilot contribution provides a free head start. But that isn't where the most important planning happens.

Treat the Trump Account as what it is: an IRA with an 18-year runway. What happens after that runway ends can have a meaningful effect on the account's after-tax value. Getting the timing right could ultimately matter more than the original $1,000.

Tax rates and limits reflect 2026 federal law as of September 18, 2026 and may change. Examples are hypothetical, assume constant 7% returns, hold balances constant where noted, exclude the $1,000 pilot contribution, and are for illustration only. They do not represent any specific investment or client. State taxes are not included. This article is educational and is not tax or legal advice. Radiant Wealth Management operates under NewEdge Advisors, LLC and is not affiliated with the U.S. Treasury or any account provider mentioned.

Related Content

• Should You Start a Trump Account for Your Child?
• How Trump Accounts Compare With 529 College Savings Plans
• I'm a Financial Planner: Trump Accounts Are a No-Brainer if You're Eligible (How to Apply)
• I'm a Financial Adviser Who's About to Have a Kid: This Is How I'll Handle Trump Accounts
• When a Long-Term Care Insurance Company Drops the Ball, What Should You Do?

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 you have spent decades saving diligently, building wealth and earning a pension, you have accomplished something relatively few Americans have. But there is a catch: The more you have, the more complicated retirement planning can become.

A retiree with a pension and $1 million, $2 million or even $5 million saved faces very different planning challenges than someone with a smaller nest egg and no pension.

Taxes, required minimum distributions (RMDs), Medicare premiums, estate planning and income strategies can all become significantly more important.

Yet many financial advisers primarily focus on investment management. They may do a great job managing a portfolio, but managing investments is only one piece of a comprehensive retirement plan.

If you have a pension and $1 million or more saved for retirement, I wrote a book just for you — you can request it for free).

As a CERTIFIED FINANCIAL PLANNER® professional and the founder and CEO of Peak Retirement Planning, I'm highlighting 10 red flags to watch for when evaluating your financial adviser.

You can also watch this video about the topic:

1. Your adviser immediately tells you not to do Roth conversions

I'm not saying everyone should do a Roth conversion. They shouldn't. But if you have a pension and significant tax-deferred savings, I would be skeptical of an adviser who tells you that Roth conversions don't make sense without first running the numbers.

Many people enter retirement believing their tax bracket will automatically fall. For high-income retirees, that isn't necessarily true.

Consider someone with a $75,000 pension, Social Security benefits and several million dollars in an IRA. Eventually, RMDs could add a substantial amount of taxable income on top of the pension and Social Security.

A Roth conversion can be one way to address that future tax liability. You pay taxes on the amount converted today, potentially at lower rates, and move those assets into a Roth account where qualified withdrawals can be tax-free.

The important part isn't whether your adviser is "pro-Roth." It's whether your adviser has actually run the numbers.

A good adviser should be able to show you the potential tax consequences of converting different amounts and explain when a conversion makes sense and when it doesn't.

2. Your adviser doesn't have an RMD strategy

RMDs can become a major issue for high-net-worth retirees. For someone with $500,000 in tax-deferred retirement accounts, an RMD of roughly 4% could initially mean around $20,000 of taxable income.

But consider someone with $3 million. A 4% distribution would be about $120,000. And that's before adding a pension, Social Security or other income.

The problem can become even more pronounced as you age. RMD percentages increase over time, meaning a retiree could eventually be forced to withdraw substantially more from a growing retirement account.

This can result in higher income taxes, higher Medicare premiums and less flexibility in managing your income.

Your adviser should be modeling your future RMDs, not simply telling you to "wait until you're required to take them."

3. Your adviser doesn't talk about IRMAA

If your adviser has never mentioned IRMAA, I would ask why. IRMAA, the income-related monthly adjustment amount, is an additional charge that higher-income Medicare beneficiaries can pay on top of their standard Medicare Part B and Part D premiums. For high-income retirees, this is an important part of tax and income planning.

A Roth conversion, capital gains, IRA withdrawal or other income can potentially push you into a higher Medicare premium tier. Since these thresholds can be relatively narrow, a seemingly small difference in income can sometimes have an outsized effect.

I've seen situations where retirees missed an opportunity to manage their income and ended up paying substantially more for Medicare, which is why I believe Medicare planning shouldn't be treated as an afterthought.

Your adviser should understand how your retirement income strategy interacts with your Medicare premiums.

4. Your adviser immediately recommends an income annuity

An income annuity isn't inherently bad. In the right situation, it can be a useful tool, but if you already have a substantial pension, I would question why someone is automatically recommending another source of guaranteed lifetime income.

One of the reasons people buy annuities is to create a predictable stream of income and reduce the risk of running out of money. But if you already have a pension providing lifetime income, you may have already addressed a significant portion of that risk.

An annuity can also come with costs, limitations, reduced liquidity and potentially less upside compared with other investments. I've seen situations where retirees were advised to put a very large percentage of their assets into an income annuity even though they already had a substantial pension.

The right question isn't, "Are annuities good or bad?" It's, "What role does guaranteed income already play in your retirement plan, and what problem would another annuity solve?"

5. Your adviser wants to protect half or more of your portfolio

The more money you have, the less you may need to rely on your portfolio for your basic lifestyle. That's an important concept for high-net-worth retirees to understand.

Imagine you have $3 million saved, a $50,000 pension and $50,000 in Social Security. That's $100,000 of relatively dependable annual income before taking anything from your investment portfolio. If you need $150,000 to maintain your lifestyle, you may need only $50,000 from your portfolio, which is less than a 2% withdrawal rate on $3 million.

In that situation, you may not need to put 50% or more of your portfolio into highly conservative investments. You could potentially set aside enough assets to cover several years of portfolio withdrawals while allowing the rest to remain invested for longer-term growth.

This isn't an argument for taking excessive risk. Some retirees genuinely value safety over growth, and that's perfectly reasonable, but your adviser should understand that your pension itself is part of your retirement safety net.

If you have a pension covering a substantial portion of your expenses, treating your pension and half of your investment portfolio as separate "protection" buckets may result in you being far more conservative than you actually need to be.

6. Your adviser says they do tax planning, but they don't help with tax preparation

There's a big difference between saying you do tax planning and actually doing it. I became even more convinced of this after adding a tax team to our firm.

When you have the ability to coordinate tax planning throughout the year with the actual preparation of a client's tax return, you can see whether the strategies you recommended were actually implemented and identify more opportunities for the next year.

Without that coordination, tax planning can become a conversation that happens once a year or doesn't happen at all. For high-net-worth retirees, tax planning shouldn't be limited to asking, "How much did you owe last year?" It should involve questions such as:

• Should you do a Roth conversion?
• How much should you convert?
• How will an IRA withdrawal affect your tax bracket?
• How will your income affect Medicare premiums?
• Should you realize capital gains this year?
• Are there charitable strategies that could reduce taxable income?
• How will today's decisions affect your future RMDs?

If your adviser says they do tax planning, ask them to show you what that actually means.

7. Your adviser doesn't have the CFP® certification

A designation doesn't automatically make someone a great adviser, but when I'm trusting someone with my life savings, I want to know they've demonstrated a broad understanding of financial planning, not just investments.

That's one reason I place a high value on the CFP® certification, which covers areas such as retirement planning, tax planning, estate planning, insurance and investments.

At Peak Retirement Planning, we require our advisers to have the CFP® certification or to be working toward it.

Again, this isn't to say that someone without the designation can't be a great adviser, but when you're evaluating someone who will be responsible for coordinating the many moving pieces of a high-net-worth retirement, comprehensive financial planning knowledge matters.

8. Your adviser doesn't help coordinate your estate plan

The more wealth you accumulate, the more important estate planning becomes. Yet I see too many situations where an adviser essentially says, "Go find an estate planning attorney," and leaves it there.

Your adviser should help facilitate the plan. That includes making sure your accounts are properly titled, beneficiaries are up to date, and trusts are properly funded when appropriate.

A beautiful estate planning binder doesn't accomplish much if the underlying plan isn't actually implemented, and high-net-worth retirees have additional issues to consider:

• What happens to your tax-deferred accounts when you die?
• How will your heirs be taxed?
• What happens to your spouse's tax situation?
• How will your assets be distributed among your children?

9. Your adviser doesn't help with Medicare and Social Security

If you're approaching 65, you should be thinking about your Medicare options and how your healthcare costs fit into your retirement plan, and if you retire before 65, you need a strategy for health insurance until Medicare begins.

This becomes particularly important for people who retire in their 50s or early 60s. You shouldn't have to coordinate all of these decisions independently. Your Social Security, Medicare, pension, investments and taxes should work together as one retirement plan.

10. Your adviser doesn't plan for early retirement

If your adviser primarily works with people who retire around the traditional retirement age, they may not have much experience planning for someone who wants to retire in their 50s or early 60s.

High-net-worth retirees with pensions are often in a unique position. They may have the ability to leave work earlier because they have three things many retirees don't: A pension, significant investment assets and the ability to generate income without immediately relying on Social Security.

This creates opportunities. For example, someone might retire at 55, use investment assets for income for several years, delay Social Security and strategically execute Roth conversions during a period when their taxable income is relatively low.

This can look very different from simply working until 67, claiming Social Security and then taking RMDs later.

And if you have a pension, the value of that pension needs to be incorporated into the entire equation. A $50,000 annual pension paid for 20 years represents $1 million of income over that period, before considering any cost-of-living adjustments.

That's a significant financial asset that needs to be treated as part of the retirement plan.

What should a high-net-worth retiree look for in an adviser?

If you have a pension and substantial retirement savings, I'd want my adviser to be asking questions such as:

• What will my tax bracket look like in retirement?
• Should I do Roth conversions?
• How large could my RMDs become?
• How will my income affect Medicare premiums?
• When should I claim Social Security?
• How much of my portfolio actually needs to be protected?
• How should my pension affect my investment strategy?
• How should I plan for my spouse if I pass away?
• What happens to my retirement accounts when I die?
• How can I minimize taxes for my heirs?
• Can I retire earlier than I think?

These questions are much bigger than "How is my portfolio performing?" Your adviser should be planning for the retirement you'll actually have.

I've spent much of my career working with what I call the 2% Club: People who have a pension and $1 million or more saved for retirement. This group is unusual. You've done the hard work of saving, you've earned a pension, and you've accumulated significant wealth.

But that success creates its own set of planning challenges. And if your current adviser can't answer the above questions, it may be time to start asking some harder ones.

Related Content

• Want to Hire a Financial Planning Firm? Five Questions to Ask
• Is Your Financial Adviser Doing a Good Job for You?
• A 7-Point Retirement Checklist for People Retiring With a Pension
• 8 Retirement Tax Strategies Your CPA Won't Tell You
• 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.

One of my clients, a single woman in her early 50s, inherited an IRA of $900,000. She earns about $200,000 a year before her bonus, which puts her firmly in the 24% federal tax bracket. She didn't need the money right away, and with 10 years to empty the account, there was no obvious rush.

But if she simply took out about $90,000 a year, most of every withdrawal would be taxed at 32% or 35%.

The 10-year rule isn't always as simple as it sounds, either. Depending on when the original owner died, you may have to take money out every year. And even if you follow the minimum requirements perfectly, waiting too long to take larger withdrawals could leave you with a much bigger tax bill toward the end of the 10-year period.

Before December 31, there are five things every inherited IRA beneficiary should understand.

1. Make sure you're following the right rules

Not everyone who inherits an IRA follows the same schedule. Most adult children who inherit an IRA from a parent who died in 2020 or later fall under the 10-year rule. The inherited account generally has to be completely emptied by December 31 of the 10th year after the owner's death. So if a parent died in 2021, the inherited IRA would generally need to be emptied by December 31, 2031.

There are exceptions. Spouses have additional options, and different rules may apply to certain disabled or chronically ill beneficiaries, minor children of the account owner and beneficiaries who are close in age to the person who died.

You don't need to memorize every IRS category. You do need to know which one you fall into and the exact year your account has to be emptied.

2. Find out whether you need to withdraw money this year

For many inherited traditional IRAs, whether annual required minimum distributions (RMDs) are required depends on whether the original owner had already reached their required beginning date.

If the owner died after reaching that point, the beneficiary generally has to continue taking annual RMDs while also making sure the entire account is gone by the end of year 10. If the owner died before reaching that point, annual withdrawals generally aren't required during years one through nine, although the account still has to be emptied by the deadline.

The IRS provided temporary penalty relief for certain missed inherited IRA RMDs from 2021 through 2024, but that relief has ended. Missing a required distribution can now result in a 25% penalty on the amount that should have been withdrawn, which drops to 10% if the mistake is corrected in a timely manner.

Before year-end, make sure you know whether an RMD applies to you and whether the correct amount has already been taken. IRS Publication 590-B includes the life expectancy table used to calculate it.

3. Don't just think about this year's tax bill

Withdrawals from a traditional inherited IRA are generally taxable income, so the timing of those withdrawals matters.

Suppose you get toward the end of the 10-year period and still have $300,000 sitting in the account. If the deadline arrives, you may have no choice but to withdraw that entire balance on top of your salary or other retirement income, pushing a large portion of it into higher tax brackets.

Instead, look at the entire 10-year period. Compare what happens if you take only the required minimum each year, take roughly equal withdrawals, or intentionally take larger amounts during certain years. The goal shouldn't simply be to pay the least tax this year. It should be to manage the tax bill over the entire life of the inherited account.

4. Work the inheritance into your retirement plan

If you're still earning a high salary today but plan to retire in a few years, it may make sense to take smaller distributions while you're working and larger ones after your paycheck stops. But pensions, Social Security, withdrawals from your own retirement accounts, Medicare premiums and, if you retire before 65, health insurance costs all affect that calculation.

That's the approach we took with the client I mentioned earlier. For the next few years, she is taking only the minimum withdrawals while she is earning significant money.

Our plan is to have her retire early and liquidate the IRA over a three-year period. She will still land in a higher tax bracket in those years than the one she's in while working, but she will pay less in tax overall than if she simply took out 10% of the account each year.

That is the difference between simply following the 10-year rule and actually planning around it.

5. Look for lower-income years

Maybe you retire halfway through the year. Maybe you change jobs, work fewer hours or have a down year in your business. Those years can be an opportunity to take more from an inherited IRA while your other income is temporarily lower.

For example, imagine an additional $40,000 withdrawal would all fall into a 22% federal tax bracket this year but could fall into a 32% bracket later. Ignoring other tax considerations, that's the difference between $8,800 and $12,800 of federal income tax.

A low-income year shouldn't go to waste without at least running the numbers. Before December 31, look at your projected income, determine how much room you have in your current tax bracket and decide whether taking more than the minimum makes sense.

The inherited IRA rules can feel complicated, but the planning questions are fairly simple: When does this money have to come out, and when would it make the most sense for it to come out? Those answers aren't always the same.

Good planning can also begin years before an inheritance happens. If your children are likely to be in a higher tax bracket than you when they inherit your IRA, Roth conversions on your own accounts may be worth a hard look while you still have the ability to change the outcome.

Your loved one likely spent decades earning and saving that money. Taking the time to build a withdrawal strategy can help make sure more of that inheritance goes toward your family's goals instead of being dictated by a tax deadline.

Related Content

• Inherited an IRA? The 3 Decisions That Could Cost You Thousands
• Inherited an IRA? Don't Fall Into the 10-Year Tax Trap
• Opportunities and Challenges When You Inherit an IRA
• Want to Retire to a Low-Tax State? Relocating Could Actually Cost You More Than You'd Save: What to Consider
• Should You Pay Off Your Mortgage Before You Retire? A Financial Planner Gets Real

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 topic of this week's column comes from a vexed landlord, who writes: "Mr. Beaver, over the past two years I have been involved in a lawsuit from a guy who literally stubbed his toe on a tiny object sticking up from the sidewalk in front of a small strip mall I own.

"[My defense attorneys] could have taken his deposition early in the case, but did not, and tried to bring in the city, which was an expensive lost cause. They refused for months to tell me how much my insurance company was paying them.

"The case finally settled for peanuts — which could have been offered early on. Was I the victim of a conflict of interest with the law firm?"

How can property owners recognize when their insurance-appointed defense attorneys may be prolonging litigation and driving up legal fees rather than pursuing an efficient resolution?

I ran that question by Shant Karnikian, managing partner at Los Angeles-based Kabateck LLP. He provided practical guidance on how property owners can protect themselves during settlement, including verifying medical liens and bills, reviewing settlement language, and spotting provisions that could improperly release attorneys from liability.

"As a plaintiff's trial lawyer," Shant said, "I sue the people and businesses responsible for injuries. I also represent policyholders against their own insurance companies — folks who are being sued but having trouble getting their insurance company to protect them in that lawsuit. So I understand exactly where insured parties get hurt, often by the very insurer that's supposed to protect them — a company they've paid high premiums to for years.

"The bottom line policyholders need to understand: Your insurance company isn't your friend, even when it's paying your lawyer. And the defense lawyer they provide may have a conflict of interest."

Reservation of rights letter

I asked Shant if he could explain what it means if you receive a reservation of rights letter from your insurance company or the lawyer they hire to represent you.

"This usually means, 'We'll defend you, but we may not pay,'" he said. "These letters rarely spell out that you may have to fund the settlement."

To understand why, it's helpful to know how the insurance for liability coverage works.

Duty to defend vs duty to indemnify: The carrier (insurance company) must provide (appoint and pay for) a lawyer if a claim against you involves even a potential for coverage. However, the insurer must pay a settlement or judgment only for claims that are actually covered.

"That gap is where the insured often gets burned," Shant said. "Furnishing a defense does not necessarily mean they will fund your settlement (indemnify) ­— it depends on your policy."

So it would seem that having an appointed lawyer creates a false sense of security. Would it be wise to consult with your own lawyer to make sure the insurance company is doing the right thing?

"Yes," Shant agreed. "We represented a plaintiff injured on a homeowner's property. The carrier appointed defense counsel, so the homeowners thought they were covered. Only at settlement discussions did the carrier reveal it wouldn't contribute anything. The homeowners had to pay out of pocket.

"The carrier lulled them to sleep by creating the impression that defending them in the lawsuit also meant that they would pay for all damages."

The three-way relationship conflict

"While the law firm represents you," Shant said, "the carrier pays them and sends them repeat business. This creates a conflict of interest, incentivizing your defense attorney to protect the insurance carrier.

"For example, if facts come up in the case that affect your coverage, the way counsel handles them can shape whether or not you're covered — and, therefore, help determine whether the carrier has to pay out on the claim.

"This conflict may entitle you to independent counsel paid by the carrier and depends on your state's law."

Shant listed several red flags that suggest a serious conflict of interest:

• There's been no early case evaluation or settlement push.
• Defense conducts heavy discovery and motion practice on a small case.
• Defense says, "Plaintiff hasn't made a demand yet." (Nothing stops your attorney from making a demand or offer.)
• You receive no status reports or budget.
• Defense files costly cross-complaints when cheaper options exist, such as offering to pay policy limits to settle the case.

If you spot any of these, you should immediately consult a lawyer you've selected to monitor what the defense attorney is doing.

It's also important to realize that how much the attorney bills matters to the policyholder, even when the insurance company is paying for the defense lawyers.

First, you may still be paying deductibles.

Second, you may have a policy in which defense costs reduce limits. Future premiums may be affected by how much it costs to defend the case. The longer it takes to resolve, the greater the risk the case may grow beyond your coverage or limits.

What should you do if you're in this situation?

• Tell the carrier and defense counsel in writing that you want the case settled within the limits of the insurance policy as soon as possible.
• Instruct the defense attorney to communicate with you about every settlement demand and offer. If you receive a reservation of rights, ask in writing: "Will you fund a settlement? If not, why not?"
• Consider hiring your own lawyer to watch the carrier and push it to get you out of harm's way.

At settlement

• Make sure the entire case gets dismissed, including cross-complaints.
• Make sure that any release you sign doesn't include a release of claims you may have against the insurance company.
• Get confirmation that your insurance company won't be coming after you for money it pays out.

Bite-sized piece of advice

"A lawyer showing up to defend you is not the same as your insurance company agreeing to pay," Shant cautioned. "Waiting for a demand isn't a strategy. It's a reason to bill another month.

"A few thousand dollars for your own lawyer to watch the insurance company can be the best money you spend in a lawsuit."

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

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

A high-income earner can save diligently for decades and still face a tax problem in retirement: Most of their savings could be concentrated in accounts in which withdrawals are taxed as ordinary income, with limited flexibility to manage those taxes.

Direct Roth eligibility may have phased out years earlier.

Indexed universal life insurance, or IUL, can address part of that issue. It provides a death benefit, while its cash value could create a supplemental source of money later in life.

For people who have maxed out traditional tax-advantaged accounts and want more control of retirement income sources, IUL might deserve a closer look.

Cash value grows tax-deferred inside the policy, and the owner could later access it through withdrawals and policy loans that are generally not subject to current income tax. This only works if the contract is properly structured and stays in force.

That combination of tax-deferred growth and potentially tax-advantaged access is what differentiates IUL from other retirement savings vehicles.

LIMRA (the Life Insurance Marketing and Research Association) reported record IUL premiums in 2025, up 17% from the prior year. Growing sales do not by themselves establish that a product is appropriate for any client. Still, they show increasing interest in how permanent life insurance might fit into a modern financial plan.

High earners run out of familiar tax-advantaged space

The issue becomes more visible during peak earning years. For 2026, employees can contribute up to $24,500 to a 401(k), excluding catch-up contributions. Direct Roth IRA eligibility phases out from $153,000 to $168,000 for single filers and from $242,000 to $252,000 for married couples filing jointly.

Those limits are not an automatic reason to buy life insurance. Consider workplace plans, health savings accounts, backdoor Roth strategies, taxable investments and adequate liquid reserves first. Still, a high earner with surplus cash flow and a legitimate need for permanent insurance might have room for another layer.

Cash value can add another retirement-income layer

An IUL policy builds cash value and credits interest partly based on the performance of an external index. The money is not invested directly in that index. Caps, participation rates, spreads, guarantees and policy charges determine how much interest is credited.

Growth inside the policy is tax-deferred. The owner can later access cash through withdrawals and policy loans, potentially without current income tax if the contract is properly structured, avoids modified endowment contract status and stays in force. That access might supplement qualified-plan distributions, Roth withdrawals, taxable investments and guaranteed income from annuities.

This additional income source might help during a high-tax year, after a market decline or before tapping another retirement asset. Tax flexibility is a key argument for IUL. The policy doesn't need to replace a retirement account to contribute meaningfully.

The right buyer needs more than a high income

The strongest candidates for an IUL tend to share several characteristics:

• They are typically from ages 40 to 55 and have time to fund the policy before taking income.
• They have stable surplus cash flow after addressing other retirement priorities and liquidity needs.
• They need permanent life insurance for family, estate or business reasons.
• They understand that early surrender can be expensive, and a long-term time horizon is part of the strategy.

Someone with inconsistent income, limited reserves, a short time horizon or no insurance need likely requires a different solution. IUL might work best when both sides of the contract matter: protection for beneficiaries and carefully managed access to income for the policyowner.

Tax advantages don't remove policy risk

Loans accrue interest and reduce cash value and the death benefit. A policy that's been heavily borrowed from can lapse, potentially creating taxable income at an unfavorable time. Policy charges continue, interest-crediting terms can change, and illustrated results are not guaranteed.

Prospective policyowners should review lower crediting assumptions, changing policy terms, interrupted premiums and rising loan balances before committing.

The NAIC's life insurance illustration guidance helps frame that review. AI-enabled planning tools can quickly compare funding and loan scenarios. Still, they can't determine whether the death benefit is necessary or whether the owner can sustain the policy for decades. Regular human review and current in-force illustrations still matter.

Decide what the next dollar needs to do

For financial advisers, at the next review with a high-income earner, map the tax treatment of their existing retirement assets. Then ask where the next long-term dollar should go and what job it needs to perform.

If traditional savings options are already addressed, permanent coverage is needed and another potential source of tax-advantaged money might strengthen the income plan, compare an IUL with the available alternatives. Use conservative projections, explain the conditions plainly, and build annual reviews into the recommendation.

Life insurance is designed to protect people after a death. For the right high-income earner, a properly designed IUL policy might also support decades before that.

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

If you're years into an income-driven repayment plan and working toward student loan forgiveness, there is an important number you may not have been tracking: The potential tax bill at the end.

For five years, most student loan forgiveness received favorable federal tax treatment. The American Rescue Plan temporarily excluded qualifying student loan debt forgiven from 2021 through the end of 2025 from federal taxable income.

That temporary protection has now expired. For qualifying income-driven repayment forgiveness that occurs on or after January 1, 2026, the amount discharged is generally included in taxable income for federal purposes.

That doesn't mean forgiveness suddenly stopped being valuable. It does mean borrowers need to look at the entire financial picture rather than focusing only on bringing the loan balance to zero.

The good news is that for most people pursuing long-term forgiveness, this "tax bomb" should not come as a surprise. You may have years to prepare for it.

What the student loan 'tax bomb' actually means

The student loan "tax bomb" sounds more dramatic than the mechanics really are. If you have $50,000 of student loan debt forgiven, you do not suddenly owe the IRS $50,000. Instead, the forgiven amount is generally added to your taxable income for that year.

For example, suppose you earn $80,000 and $50,000 of your remaining student loan balance is forgiven through an income-driven repayment plan. Very broadly, you could be looking at income closer to $130,000 for federal tax purposes before factoring in deductions, exclusions and other parts of your return.

How much additional tax that creates depends on several things, including your filing status, other household income, deductions, credits and the tax brackets that apply in the year your debt is forgiven.

That is why I would not use a simple formula such as "forgiven balance multiplied by your tax bracket." Our tax system is progressive, and everyone's situation is different.

What matters is understanding that a large balance forgiven in a single year can create a meaningful one-time tax liability.

You may also receive a Form 1099-C reporting canceled debt after the debt is forgiven.

Not all student loan forgiveness is taxable

This is an important distinction because the 2026 change does not affect all forgiveness programs in the same way.

Public Service Loan Forgiveness (PSLF) remains federally tax-free. If you qualify for PSLF and have your remaining Direct Loan balance forgiven after completing the required qualifying payments and employment requirements, the amount forgiven is not considered income for federal tax purposes.

Certain other discharges can also qualify for tax-free treatment. Under current IRS guidance, student loan debt discharged because of death or total and permanent disability may be excluded from federal taxable income, subject to applicable IRS requirements. Certain work-related loan cancellation and repayment assistance programs can also receive favorable tax treatment.

The borrowers who need to pay the closest attention are those expecting a remaining balance to be forgiven at the end of an income-driven repayment period.

And those timelines are changing. Depending on your loans and repayment plan, forgiveness may be available after different repayment periods. The new Repayment Assistance Plan (RAP), for example, provides forgiveness of a remaining eligible balance after 30 years of qualifying payments.

So before estimating any future tax bill, make sure you know which repayment plan you are actually on, how much qualifying time you have accumulated, and when forgiveness is realistically expected.

Don't forget about state taxes

Federal taxes are only one part of the calculation.

Your state may also treat forgiven student loan debt as taxable income, and state treatment can vary considerably. Federal Student Aid specifically advises borrowers that income-driven repayment balances discharged beginning in 2026 may also result in state taxes, depending on where they live.

If you live in a state without an individual income tax, that part of the equation may be much simpler. But if your state taxes income, don't automatically assume it will treat student loan forgiveness the same way the federal government does.

This is one of those areas where I would check your state's rules as you get closer to forgiveness rather than relying on something you read several years earlier. State tax laws can change long before a borrower reaches the end of a 20-, 25- or 30-year repayment period.

High earners should run the numbers again

For higher-income borrowers, this tax change deserves even more attention.

The strategy behind income-driven forgiveness is fairly straightforward. You make payments tied to income for the required period, and if a balance remains at the end, it may be forgiven.

But if a significant amount is forgiven during a year when your income is already high, adding that canceled debt to your taxable income can make the final cost of forgiveness higher than you may have originally expected.

That doesn't automatically make forgiveness the wrong strategy.

It simply means the right comparison is no longer, "How much will I pay before my remaining balance is forgiven?"

The better question is, "How much will I pay in student loan payments plus taxes on the forgiven balance compared with paying the loan off another way?"

That distinction matters.

For some borrowers, pursuing forgiveness will still save a substantial amount of money. For others, particularly those whose incomes have increased significantly since they first entered repayment, aggressive repayment or refinancing may deserve another look.

If you are considering refinancing federal student loans, remember that refinancing with a private lender means giving up federal benefits, including income-driven repayment options and federal forgiveness programs. That decision is generally irreversible, so compare the full long-term cost before making the move.

If refinancing does make financial sense for your situation, you can compare available rates through a marketplace such as Credible rather than evaluating lenders one at a time.

One provision could reduce the tax bill: Insolvency

There is another part of the tax code that borrowers should know about, particularly those expecting a large amount of debt to be forgiven.

Canceled debt can sometimes be excluded from taxable income to the extent you were insolvent immediately before the debt was canceled.

In simple terms, insolvency generally means your total liabilities exceeded the fair market value of your total assets.

Suppose, for example, that immediately before forgiveness your liabilities exceeded your assets by $30,000, and $50,000 of student debt was canceled. Depending on your circumstances, the insolvency exclusion could potentially apply to part of that canceled debt.

This is not something I would casually estimate. The IRS looks at your financial position immediately before the cancellation, and claiming the exclusion generally involves Form 982.

If you think you may qualify, work with a tax professional who understands cancellation-of-debt income.

What to do now if you're working toward income-driven repayment forgiveness

You don't need to overhaul your repayment strategy because of a tax bill that may be years away. I recommend adding the tax calculation to your planning now.

First, confirm when you are actually eligible for forgiveness. Log into StudentAid.gov, confirm your current repayment plan, and understand how much qualifying repayment time you have accumulated. Federal repayment options have changed significantly, so don't base your planning on what your loan terms looked like several years ago.

Next, estimate what your balance could be when forgiveness occurs. The number that matters is not what you owe today. It is the projected balance that could actually be canceled.

Then estimate the potential tax. You do not need an exact number 10 years in advance. You need a reasonable range. Revisit that estimate as your income, balance, and tax laws change.

Start building a tax reserve if the potential liability is meaningful. If you expect a $10,000 or $20,000 tax obligation, setting aside money gradually over several years is far easier than finding it all at once after forgiveness.

Finally, rerun the forgiveness-versus-payoff calculation periodically. A strategy that made perfect sense when you earned $60,000 may look very different when you earn $160,000. Your income, family situation, interest rate and loan balance can all change over a repayment period that lasts decades.

Your student loan strategy should be allowed to change with them.

Forgiveness can still be valuable

The return of federal taxation on IDR forgiveness should not scare borrowers away from forgiveness. But it should change the way you calculate its value. For several years, it was easy to think about forgiveness as the finish line: Make the required payments, reach the end of the repayment period, and watch the remaining balance disappear.

Beginning in 2026, many borrowers need to add one more step: What happens to my taxes when that balance disappears?

If you are still many years away, that is actually an advantage. You have time to estimate the liability, build savings for it, monitor changes in the law and periodically ensure forgiveness still makes financial sense.

A future tax bill is much easier to handle when it has been part of the plan all along.

And with student loan rules changing as frequently as they have in recent years, I would make a habit of reviewing that plan regularly rather than assuming the strategy you chose today will remain the best one 10 or 20 years from now.

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• Student Loan Shake-Up: What the OBBB Means for Parent PLUS Borrowers, From a Financial Aid Expert
• Taking Out a Private Student Loan Before the Fall Tuition Bill Deadline? 5 Essential Steps Before You Sign
• Parent PLUS Caps Just Changed the Math on Paying for College: How Will You Fill the Gap?

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 people think of Roth options, most think of a Roth IRA. Even though 95% of employers offer a Roth 401(k) plan, less than 20% of employees take advantage of it.

I worked as a consultant in the retirement industry for decades and I was part of the 80% that didn't contribute to Roth in my 401(k). Almost five years into retirement, it's one of my biggest regrets.

The statistics show that, like me, most people continue to contribute pretax to their 401(k). They don't question the conventional wisdom that their tax bracket is probably higher while they're working than it will be in retirement. They take the deduction now and defer the income tax until retirement when they're likely in a lower bracket. It makes sense.

For a lot of Boomers and Gen Xers, Roth 401(k) wasn't an option they skipped — it simply wasn't available. Roth in 401(k) plans didn't exist until 2006, and most employer plans didn't add them for years after that.

As a Gen Xer, that was me: Roth didn't reach my plan until my mid-forties, when I was in my highest-earning years and wanted to reduce my taxable income as much as possible.

Now, almost five years into retirement, I wish I had given Roth 401(k) more consideration. I'm not alone in feeling this way.

Roth conversions increased 41% year-over-year as of Q1 2026, according to Fidelity, indicating that many people who previously contributed on a tax-deferred basis now want the benefits of tax-free growth.

Why the regret?

1. Paying tax on the compounding when it could have been tax-free

Reducing my taxable income while I was working helped, but it was only going to help once. Had I contributed to Roth instead, it could have grown tax-free for decades. And the income tax I'd have avoided on all that growth would have outweighed the tax I saved on the contributions themselves.

When you contribute on a pretax basis, you're not just deferring tax on what you put in, you're deferring it on everything that money earns for decades.

Take a person earning $100,000 who contributes 6% to a 401(k) and receives a 4% employer match over a 40-year career, working and retiring in Florida (no state income tax) at 65. Over those 40 years, they earn a 5% annual return.

For simplicity, this assumes a flat $100,000 salary with no raises, a 22% federal tax rate while working, and a $75,000 annual draw in retirement taxed at 15%.

Real careers and tax brackets are messier than that. The point isn't to predict your exact outcome — it's to illustrate how the tax owed on decades of compounding growth compares to the tax saved on the contribution alone. Before making the Roth versus pretax decision, it's important to run your own numbers with your tax accountant or financial adviser to see how it plays out for your specific situation.

This example also assumes the employee contributes the same dollar amount either way. The Roth contribution reduces take-home pay more because the tax is paid upfront. A pretax saver could invest the tax savings elsewhere, which would narrow the gap. But many people don't, and that's part of the point.

The company match stays pretax in both scenarios, since only about one in five plans currently offer a Roth match.

In this example, if you elect Roth contributions throughout your career, you'd get to retirement with $761,000 of income-tax-free money. You contributed, invested and paid income tax on $6,000 every year for 40 years ($240,000 in total). The other $521,000 is pure tax-free growth. Compare that to the pretax side, where the entire $1.2 million balance is taxed. It feels different, doesn't it?

2. A greater long-term average rate of return widens the gap

The example above uses a conservative 5% return. If the stock market's long-term return is higher, the difference can become more pronounced. Here's the same example: Same contributions, same 15% tax rate, using a 7% return instead of 5%.

The only thing that changed is investment performance, and by contributing to Roth the difference nearly doubled. The better you do as an investor, the more this decision is worth.

These are hypothetical examples and not representative of any specific situation. Your results will vary. The hypothetical rates of return used don't reflect the deduction of fees and charges inherent to investing.

3. Where you work and where you retire both matter

To keep the math simple, the example above assumes no state income tax. But state taxes can change the equation.

Work in a high-tax state and retire to one with no income tax, and pretax may work in your favor.

But if you flip it — work in a no-tax state and retire in one that taxes retirement income — those same pretax dollars could end up subject to both federal and state tax on the way out.

4. Pretax only means grossing up every withdrawal to get what you want

Want to withdraw $10,000 out of your pretax 401(k)? You'll have to take out $11,765 if you're in a 15% tax bracket to net the $10,000. With Roth, if you want $10,000, you withdraw $10,000.

5. Roth conversions mean writing a check you feel

You have to pay income tax regardless of whether you contribute to Roth initially or convert the assets down the road. But paycheck withholding happens automatically, before the money ever reaches your account. A conversion means writing the government a bigger check, since you're also paying tax on the earnings. And writing a check just doesn't feel the same.

6. Roth 401(k): No RMDs

With the SECURE 2.0 Act, as of 2024, original owners of a Roth 401(k) (or Roth IRA) don't have to take RMDs from that account during their lifetime.

7. Heirs inherit money and the tax

When my dad passed away in 2018, he left me some money in his traditional IRA. I was 50, still working and in some of my highest-earning years, so every required distribution added to my taxable income at the worst possible time.

Because he passed in 2018, I was able to stretch those distributions over my own lifetime. That option largely went away for non-spouse heirs beginning in 2020. Those heirs now have 10 years to empty an inherited pretax account, which means bigger distributions and bigger tax bills, often during their own highest-earning years.

When I've had to take RMDs on my dad's IRA, I've paid tax at whatever rate I happen to be in that year. Had it been Roth, those withdrawals would have been income-tax-free.

To Roth or not to Roth?

Whether you plan on "dying with zero" or leaving a legacy to your heirs, to Roth or not to Roth is something to carefully consider. And it doesn't have to be either/or — it can be both.

When you're living in retirement on a fixed budget, having some portion of your assets income-tax-free is confidence that's hard to put a number on.

I can't go back and change my 401(k) contribution elections. But if you're still working and have a Roth option sitting unused, you can. It's worth considering during annual enrollment this year.

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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.

Spend two weeks in Spain and you may end up believing that living costs are less than what they are in the U.S.

A cup of coffee is cheaper. Dinner is cheaper. Apartments are cheaper. You begin to wonder how far your retirement budget might stretch in Valencia.

But there's a problem with that. Tourists don't pay a month's rent. They don't buy groceries every week, insure a home, pay utilities or local taxes. The cost of living varies enormously from one Spanish city to another.

The mistake is assuming that what you spend on vacation is a useful indicator of what you'll spend as a resident.

A vacation is not a household budget

Consider Benicàssim, a beach town in the Castellón province about 50 miles north of Valencia.

It is a popular vacation destination, and many visitors browse real estate listings before they go home.

(For dollars, use an exchange rate of $1.16 per euro.) A two-bedroom apartment might cost €120 a night, and a lunch of a bocadillo, a soft drink and an ice cream will cost around €12 a head. A three-course dinner with wine can be expected to run about €40.

I drove an electric car during my visit there, so instead of using my own transportation costs, I substituted the approximate cost of a midsize rental car from Valencia airport, including fuel and parking.

For two people, the resulting vacation day looked like this:

Now, put the same couple in Valencia, but as residents rather than visitors.

A midrange two-bedroom apartment, utilities, internet, groceries and public transportation come to about €2,520 a month, or €84 a day. Add occasional restaurant meals and other expenses, and that gap narrows.

The vacation budget also contains a cost that disappears when you become a resident: Nightly accommodations. A long-term rental in a less expensive location can dramatically reduce the daily cost of living.

There are other expenses that don't come into play on vacation: Health insurance, home insurance, professional fees, taxes and the costs of maintaining a household.

There is no single cost of living in Spain

The useful question isn't "How much does it cost to live in Spain?" It's "How much would it cost to live the way I want to live in the Spanish city of my choice?"

Consider the same hypothetical household across five cities — a retired couple renting a midrange two-bedroom apartment, without a car or school fees. These are monthly estimates for rent, utilities, groceries, public transportation and internet. They exclude eating out, leisure, health insurance and taxes.

* Dollar figures use an exchange rate of $1.16 per euro. Costs exclude eating out, leisure, health insurance and tax

The striking number isn't the difference in the grocery bill. It's the difference in rent.

The same basic household budget costs about €1,145 more each month in Madrid than in Alicante — nearly €14,000 a year — largely because of housing.

These aren't necessarily trade-offs between an attractive city and somewhere you'd never want to live. Alicante and Málaga both have international airports and major medical facilities. Valencia has excellent public transportation and a large international community.

Go further down the list, and the numbers can fall again. Granada and Badajoz, for example, can offer substantially lower housing costs than Madrid or Barcelona. The table also holds lifestyle constant at a midrange level. Change that assumption, and the totals move substantially.

A useful exercise before moving is to take your last 12 months of housing, utilities, groceries and transportation costs, divide that number by 12, and compare it with the city you're considering. Then, add the expenses you would incur in Spain but not necessarily at home.

The expenses tourists don't see

Healthcare is one area in which Americans moving to Spain can see significant savings, particularly if they're accustomed to paying U.S. private-insurance premiums. Private health insurance is required for some residency applicants, and premiums vary considerably according to age, location, medical history and coverage.

For example, 2026 quotes obtained for policies meeting Spanish immigration requirements included:

Those are examples, not universal prices. Older applicants, people with medical conditions and people seeking broader coverage can face substantially different premiums.

Utilities are not necessarily cheaper than in the U.S., and older Spanish buildings might have limited insulation or inefficient heating and cooling. A January heating bill in Madrid is something a July visitor is unlikely to factor into a budget.

Transportation matters, too. A couple who can live comfortably without a car can save substantially compared with one that needs to own, insure, fuel and park a vehicle.

Then there are taxes. Spain generally taxes residents on worldwide income, while Americans continue to have U.S. filing obligations. Tax rules also vary among Spain's autonomous communities, including rules affecting wealth and inheritance.

Someone moving to Spain for employment might also qualify for a special tax regime known as the Beckham Law. Eligibility is limited, and retirees generally won't qualify, but employees transferring to Spain (or some remote workers) should have a specialist determine whether it applies.

Income matters as much as expenses

Spain can feel inexpensive to an American earning or receiving U.S.-level income while feeling expensive to someone living on a Spanish salary.

Spain's average gross annual salary was €29,540 in 2024, according to the Instituto Nacional de Estadística. The median was €24,497, while the most common salary was €16,520.

That doesn't mean Americans moving to Spain are automatically wealthy. It means the same restaurant bill, rent payment or utility charge can represent very different proportions of household income.

It also helps explain why a place can seem inexpensive to a visitor but feel expensive to a resident.

If your income comes from a U.S. pension, Social Security, investments or a remote U.S. job, compare that income with your projected Spanish expenses, then model the tax consequences.

Don't forget the currency

The Alicante couple's expenses are €2,295 a month whether the dollar rises or falls.

At an exchange rate of $1.16 to the euro, that's about $2,660. At $1.03, the same €2,295 would cost about $2,364.

Nothing in Alicante has changed; only the exchange rate has.

Over a long retirement, currency movements can materially affect a dollar-based household budget. Anyone relying primarily on U.S.-dollar income should stress-test the budget against an unfavorable exchange rate move rather than assuming today's rate will persist.

Budget for the year, not the month

A monthly budget is only a starting point. Some expenses arrive once a year: Property taxes, insurance renewals, professional fees and perhaps a flight home. Others might arrive only once, such as visa and legal costs, deposits, shipping, furnishing an unfurnished rental or buying a car.

A reasonable approach is to build a full 12-month budget, then add a separate contingency reserve. Stress-test it against higher utilities, an unfavorable currency move or an unexpected trip back to the U.S.

Turn your vacation into a scouting trip

A vacation can tell you whether you like Spain. A scouting trip can tell you whether you can afford to live there.

Book accommodations in a residential neighborhood in your price range. Visit a supermarket and do a real grocery purchase. Use public transportation. Price rental car rates.

Look at apartments. Check the neighborhoods and how far they are from supermarkets, medical care and public transportation.

Talk to professionals before you make the move. An immigration lawyer can explain which residency route applies to you. A cross-border tax adviser can model your tax situation under Spanish and U.S. rules. Give each city at least several days.

If a coastal town is on your shortlist, consider returning in winter. A resort that feels perfect in June might look very different in January.

The budget that matters

Spain might indeed cost less, but the size of the saving depends on where you live and how you live. The vacation tells you what coffee, dinner and an apartment cost for a few days; the real budget tells you what the rest of your life will cost.

Moving to Spain has managed more than 700 relocations from the U.S. and U.K. since 2017. You can use our calculator to compare the cost of living across Spain.

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• Retire in Spain for Rich Culture, Cuisine and Coastal Bliss
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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 I ask pre-retirees with large 401(k)s how they plan to handle the taxes on those accounts, I usually hear some version of the same answer: "We'll wait until we retire. Our income will drop, and we'll be in a lower bracket."

However, "What will my tax rate be the year after I stop working?" is the wrong focus for a household with $2 million or more in pre-tax savings.

It's far more useful to consider what you and your spouse, and eventually your children, may pay in taxes across all the years that money will be withdrawn.

Your deduction today is a decision about decades

Deferring taxes while you work can make sense, and today's deduction is a real benefit.

But a traditional 401(k) or IRA isn't entirely yours to spend. Every dollar that comes out is generally taxed as ordinary income, and the balance that will eventually be taxed keeps growing along with your investments.

At a hypothetical 6% annual return, $2 million doubles to roughly $4 million in about 12 years. That growth is good news, but it also means the pool of income you'll eventually pay tax on may be much larger than the one you're looking at today.

You also won't have full control over when that income shows up. Required minimum distributions (RMDs) generally begin at 73, or 75 if you were born in 1960 or later, and they're calculated from your pre-tax balance whether you need the money or not.

Where 'lower later' tends to break down

Retirement can open a window of lower-income years. But for large pre-tax savers, that window is often shorter than expected.

Income stacks. RMDs add taxable income. Higher income can make up to 85% of your Social Security benefits taxable. It can also trigger Medicare IRMAA surcharges on Part B and Part D premiums, which are based on your tax return from two years earlier.

Market declines leave fewer choices. A downturn strains any retirement portfolio. But if all of your savings are pre-tax, every withdrawal you take to cover spending also adds taxable income. Roth savings don't protect you from market losses, but they give you another account to draw from without raising your tax bill.

A surviving spouse files alone. After one spouse dies, the survivor generally files as a single taxpayer. Household income often doesn't fall by much, especially if the survivor inherits the IRAs, but the tax brackets are roughly half as wide.

Your children inherit the tax bill, too. Most non-spouse beneficiaries must empty an inherited IRA within 10 years, according to IRS Publication 590-B. Those withdrawals are generally taxable, and for many adult children they land during their own peak earning years. Inherited Roth IRAs have distribution rules too, but qualified withdrawals can be tax-free.

None of these factors makes a Roth conversion the right move on its own. But together, they're the reason "we'll be in a lower bracket" isn't the same as "we'll pay less."

What paying tax now can buy, and what it costs

A Roth conversion doesn't avoid tax. You recognize income today and move that amount into a Roth account, where future growth may be withdrawn tax-free if you meet the IRS qualified-distribution rules.

In return, you get more control. A smaller pre-tax balance can mean smaller RMDs later. Qualified Roth withdrawals aren't counted in gross income, so they generally don't increase the taxable portion of Social Security or the income Medicare uses to set IRMAA. And as the original owner of a Roth IRA, you aren't required to take distributions from it during your lifetime.

The costs are just as real. A conversion raises this year's tax bill and can push you into a higher bracket or trigger higher Medicare premiums two years later. Paying the tax from savings outside your IRA uses money you could otherwise keep invested. A conversion can't be undone. And if your future tax rate really is lower, waiting may cost less.

So the real decision is when to recognize income, and whether paying some tax now may lower what your household pays over both spouses' lifetimes.

How to test the assumption

If you're within 10 years of retirement or recently retired, these steps can show whether waiting is really your cheapest path.

1. Sort your savings by tax treatment. List pre-tax 401(k)s and IRAs separately from Roth and taxable accounts. Many couples I work with are surprised by how much of their net worth carries a future tax bill.

2. Project income, not just a rate. Estimate what RMDs may look like alongside Social Security, pensions and planned withdrawals. The question is how much income will land on your return each year, and in which years.

3. Plan for both spouses, and your heirs. Run the numbers for the years after one spouse is gone and for what your children would receive. Those are the years a pre-tax-heavy plan is most likely to cost more.

4. Convert in pieces. A conversion plan doesn't mean moving an entire account in one year. Many households convert enough to use available room in a chosen bracket, then pause in years with a bonus, a business sale or a large capital gain.

5. Line up the tax payment first. Decide how you'll pay the tax, and adjust withholding or estimated payments before you convert. Your tax professional can help you check the effect on Medicare premiums and state taxes.

Make waiting a choice

Waiting until retirement to convert may still be the right answer for you. But it should be a conclusion you reach after comparing your options over both spouses' lifetimes, not a default you accept because it's what most people do.

Every pre-tax dollar will be taxed at some point. You have the most say over when that happens in the years before RMDs and other retirement income begin to stack up.

Projections depend on assumptions about returns, tax law and your circumstances, and they cannot guarantee a lower tax bill. The 6% return above is hypothetical and does not represent any specific investment.

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• Just Retired? This Could Be Your Once-in-a-Lifetime Opportunity to Lower Your Lifetime Taxes
• The Retirement Move That's Quietly Taxing Your Social Security to the Max (and How Early Roth Conversions Can Help)
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

"I'm self-funded." I hear those two words from almost every successful retiree I meet, and I understand the instinct.

Nobody wants to spend their retirement thinking about nursing homes or memory loss.

But after 40 years of planning for retirees, I can tell you the real question was never whether you can pay for long-term care. It's what happens to your spouse and your children while you do.

What self-funding actually costs

Here's the math most people never run. Say a care need costs $10,000 a month, a realistic figure for assisted living or a home health aide today. That money typically comes out of a traditional IRA that hasn't been taxed yet.

To walk away with $10,000 after taxes, you might need to withdraw $16,000 to $18,000. Your income jumps, your tax bracket can shift, and your Medicare premiums rise with it.

Then there's timing. Care doesn't wait for a good market. If a health event hits during a downturn, you're selling investments at the worst possible moment, not because it's smart, but because the bills don't stop.

When adult children are managing the finances during a crisis, they don't always make calm decisions. I've sat across the table from families quietly watching an inheritance disappear, arguing about whether Mom "really needs" a higher level of care. That's not a position any parent wants to put their kids in.

What changed one couple's mind

Let's consider a scenario with a couple I'll call Richard and Diane, a composite of a pattern I see constantly.

He's 67 and retiring, she's 66, and for three years, a couple like them tell me the same thing every retiree tells me: "We're self-funded." Large IRA, strong financial plan, long-term care nowhere on the radar.

What changes minds like theirs isn't a spreadsheet. It's Diane watching her own father need care. He had the money to pay for professional help and refused to spend it, so the calls went to his children instead.

Diane stepped up, and she saw firsthand what that looks like: The physical demands, the disruption to her own family, the exhaustion.

Her conclusion, one I hear versions of constantly: "There is no way I'm putting my kids through that."

That's the moment long-term care planning stops being a financial exercise and becomes something personal.

What Medicare will and won't cover

One of the biggest misconceptions I run into is that "Medicare will handle this." It won't, at least not the way people expect. Medicare might pay for a stay in a skilled nursing facility following a hospitalization, but that coverage runs out fast.

Around day 20 or 21, once care shifts from skilled to custodial, Medicare typically steps back, and the bill lands on you.

For a progressive condition such as dementia that requires years of care, Medicare offers very little.

The plan this structure solves for

Say Richard and Diane have a large IRA sitting untaxed, and Richard is approaching the age at which required minimum distributions (RMDs) would start. A common structure here is a custodian-to-custodian transfer, for example $280,000, from that IRA into a new IRA held at an insurance company.

That money funds a long-term care life insurance hybrid policy over 10 years, with the carrier adding roughly $65,000 in interest, bringing the total to about $345,000, distributed in equal annual pieces.

The policy would give them a current monthly benefit of slightly more than $6,000 for home healthcare, assisted living or nursing home care, available immediately if needed. That benefit typically increases 3% a year for two decades, so by the time they're in their late 80s, it has roughly doubled.

The benefit is unlimited in duration and paid out completely tax-free. Each spouse's benefit is entirely separate, so one spouse's claim never reduces what's available to the other. If neither of them ever needs care, there's a death benefit for their heirs.

There's a second benefit most people miss: The annual transfer from the IRA counts toward Richard's required minimum distribution once he turns 73, so a decision he had to make anyway now does double duty.

In this short video, I break down how such a structure plays out over a decade, RMDs included, if you'd like to see the numbers visually.

None of this was available to them by accident. Long-term care insurance requires underwriting, and Richard and Diane could still qualify because they had this conversation while they were healthy. Wait until a diagnosis arrives, and you might not qualify at all.

Wait five years because you're not ready to think about it, and the policy will likely cost more, with no guarantee you'll still be insurable. Most people I meet after a health event no longer have that option.

I want to be straightforward: A policy such as this doesn't cover every dollar of every care scenario, and costs will keep rising. But having $10,000 or $12,000 a month arriving tax-free changes the equation. Your children aren't scrambling for cash, and your surviving spouse isn't draining their own resources.

There's no investment strategy that replicates that kind of advantage. You can't self-fund an unlimited benefit. The math doesn't work.

Three steps to take now

1. Run the real numbers on what self-funding a $10,000-a-month care need would cost you in taxes and IRMAA surcharges, not just the sticker price.

2. If you're in your 60s and in reasonably good health, get a hybrid long-term care quote now. Underwriting only gets harder from here.

3. Talk to your spouse and adult children about who would provide care if no plan existed and whether that's a role you want them in.

You don't put a long-term care plan in place for yourself. You put it in place for the people who love you enough to show up when things get hard, so that showing up never becomes their full-time job.

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• Long-Term Care Insurance Alternatives: How to Craft a Flexible Plan to Help Cover Future Health Needs
• I'm a Financial Planner: Here Are 3 Ways to Plan for the Soaring Cost of Long-Term Care
• You Can Save Hundreds on Your Medicare Supplement Plan Premium by Shopping Around, But Your Timing Is Key

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 30 or 40 years, the job is simple: Save more, invest it, let it grow, repeat. Then you retire, and almost everything about how your money behaves changes at once. The habits that built the nest egg are not the habits that manage it well in retirement.

As a financial planner with nearly two decades of experience, I've sat with plenty of accomplished people who mastered the accumulation game but were caught off guard by the drawdown phase. The shift is real, and knowing what's coming makes it far easier to handle.

Here are six things that happen to your investments the moment you stop working.

1. Sequence of returns risk takes center stage

While you were saving, a market drop early in your career was almost a gift. You kept buying shares at lower prices, and time smoothed everything out. In retirement, the order of your returns suddenly matters enormously.

A steep decline in the first few years of retirement, while you're also withdrawing to live on, can do damage that a later decline of the same size would not. You're selling shares to fund expenses at exactly the wrong moment, and those shares aren't around to recover when the market eventually rebounds.

Two retirees with identical average returns over a 30-year retirement can end up in very different places depending purely on when the bad years arrived. The one who hit turbulence late may sail through comfortably. The one who hit it in years one and two may run short, even though the long-run average was identical.

This is the single biggest behavioral and structural shift. But most people have never heard of sequence of returns risk until it is upon them.

2. You move from 'growth at all costs' to income and stability

The whole point of accumulation is growth. The point of retirement is using the money. That usually means dialing back the most aggressive parts of the portfolio in favor of holdings that can produce income and ride out volatility with less drama.

This isn't about abandoning stocks altogether, since a multi-decade retirement still needs growth to keep pace with inflation. It's about changing the mix so that a bad year doesn't force you to sell your strongest holdings at a loss to pay the electric bill. The balance you held at 45 is rarely the balance that serves you at 65.

3. Cash suddenly has a job

During your working years, large cash balances felt like a drag — money sitting idle while it could have been invested. In retirement, a cash reserve becomes a tool rather than a missed opportunity.

Holding a year or two of expenses in cash and equivalents gives you somewhere to draw from when markets are down, so you aren't forced to sell investments at depressed prices. That buffer is what lets the rest of the portfolio stay invested through a rough patch.

The mindset flip is hard for lifelong savers, who spent decades being told that idle cash is wasted cash. In retirement, that idle cash is doing important work.

4. Required minimum distributions start making decisions for you

Eventually the IRS stops letting your tax-deferred accounts grow untouched. For 2026, required minimum distributions (RMDs) generally begin at age 73. From that point, you must withdraw a calculated amount each year whether you need the money or not, and it's taxed as ordinary income.

For someone with a large traditional IRA, those forced withdrawals can be substantial enough to push you into a higher tax bracket or trigger Medicare surcharges. The penalty for missing one is steep: 25% of the amount you failed to take, reduced to 10% if you correct it promptly.

RMDs turn your portfolio into something that generates taxable events on a schedule you don't control. This is also why the years before 73 carry so much planning value. Drawing down or converting some of those tax-deferred dollars earlier, while you have room in lower brackets, can soften the size of the RMDs waiting for you later. Wait passively and the distributions, and their tax bill, only grow.

5. Dollar-cost averaging runs in reverse

For decades, you put money in on a regular schedule, buying more shares when prices were low. That steady-drip discipline worked in your favor.

In retirement, the flow reverses. You're taking money out on a regular basis, which means you sell more shares when prices are low — the mirror image of the dollar-cost averaging strategy that served you so well.

This is why withdrawal sequencing and that cash buffer matter so much. Pulling a fixed dollar amount from a falling market chips away at the share count faster than most people expect. The same mechanical force that built your wealth can erode it if you don't plan around it.

6. You become a spender — and that's harder than it sounds

This last one is psychological, but it is no less real. People who spent their whole lives saving often find it genuinely difficult to flip the switch and spend. They under-spend out of anxiety, denying themselves things they planned and saved for, because watching the balance drop feels wrong after decades of watching it climb.

I've seen retirees with more than enough ration their own travel and comfort as if the money were not really theirs to use. Others swing the other way and spend too freely early on, before they have a clear read on how long the money needs to last.

Neither extreme serves you. Becoming a deliberate, comfortable spender, drawing down the money you worked to build without fear or recklessness, is one of the underrated challenges of retirement, and almost nobody warns you about it in advance.

Putting it together

Look at these six issues together and a theme emerges. Retirement isn't just "accumulation, continued." It's a different game with different rules, different risks and a different relationship to your own money. The instincts that built the nest egg — save aggressively, stay heavily invested, ignore short-term noise — don't all translate cleanly to spending it down over decades.

None of this means retirement is something to dread. It means the transition deserves its own plan, not just an extension of the one that got you here. The years right around your retirement date are when these shifts hit hardest, which is exactly why thinking them through in advance, ideally before you stop working, tends to make the whole transition smoother.

The accumulation phase rewarded discipline and patience. The drawdown phase rewards planning and flexibility. Knowing the difference — and adjusting before the shift catches you off guard — is most of the battle.

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

I moved to the Lowcountry in South Carolina in 2006. I told my wife I'd give it five years, and then I wanted to go back to Indiana, where I'm from. Twenty years later, I'm still here.

I'm a financial adviser, CFP® and Certified Financial Fiduciary®. My firm, Coastline Complete Wealth, is in Bluffton, which is the mainland side of Hilton Head Island and about 45 minutes from Savannah.

Almost everyone I meet who moves to this area seems to have vacationed on Hilton Head first. The island may be what draws them in, but then they discover that moving a little farther inland can buy them a newer home, more space and considerably more for their money.

For someone coming from an expensive market in the Northeast, seeing what their money can buy in South Carolina can feel like they're playing Monopoly.

And they're coming. According to the latest U.S. Census Bureau estimates, South Carolina is the fastest-growing state, and Jasper County, right here in the Lowcountry, is the nation's fastest-growing county.

What I'm seeing isn't unique to this area. Whether you're considering South Carolina, Florida, Georgia or somewhere else, vacationing there and retiring there are two very different things (I even wrote a book on this topic, Lowcountry Retirement). And buying a less expensive house doesn't necessarily mean retirement will be less expensive.

If you're going to move here, understand what it costs to fully commit

The Lowcountry can be an expensive place to live, but it can become a really expensive place to own a second home.

South Carolina property taxes are one thing to pay close attention to. A qualifying primary residence is generally assessed at 4% of fair market value versus 6% for a second home, and primary residences are also exempt from school operating taxes.

I recently met with someone who had bought a home here as a second property, having looked at the previous owner's property tax bill of roughly $6,000 on Zillow. He couldn't believe it when his first tax bill was more than $36,000.

South Carolina is a very property-tax-friendly state, but you have to do it right. A second home doesn't get the same favorable treatment as your primary residence.

Insurance is another consideration. We've had several hurricanes affect the region over the years, and insurance companies have been pulling back from coastal areas. Most homeowners insurance also doesn't cover flooding, so make sure you price both homeowners and flood coverage before you buy.

I have a handful of clients paying around $2,500 a month between homeowners' association fees and club dues. That's $30,000 a year before we've talked about property taxes, insurance, utilities, landscaping or maintaining the house.

In some parts of the country, $2,500 a month might be an entire mortgage payment. Here, it can just be the cost of belonging to the community.

Rent before you buy — and see what living here is actually like

I met with a couple earlier this year who had a flat overlooking the Hudson River. They were considering the Lowcountry and had just started looking at houses. A couple of days later, he called to tell me they'd bought a house in Sun City on their first trip here.

If you're seriously considering retiring here, get an Airbnb for the month of August. See what you think about the heat and humidity, and sit in the traffic on a Saturday when it's check-in day on Hilton Head Island.

Then come back and get an Airbnb in December, when we just throw on a fleece and say 55 is cold. You need to experience the place as someone who lives here, not someone who's here for a week.

You also need to think about what happens when you move somewhere everybody else likes to vacation.

For about two months every year at our house, it seems like we're shuffling one group of visitors out just in time to bring the next one in. They don't want to cook spaghetti every night. They want to go out to dinner, go to Hilton Head, play golf and do the things people do on vacation. They're on vacation even though you're not, and you're probably going along for the ride.

That's one of the great things about living here, but it also becomes part of your retirement lifestyle and spending. If your children, grandchildren and friends are going to visit regularly, plan for that too.

What does your retirement actually cost?

The biggest financial concern I see usually isn't that people haven't accumulated enough money. Quite the opposite. Many of the people I meet have substantial assets, and it's not unusual for someone sitting across from me to have $2 million or more saved for retirement. What surprises me is how many have no idea what their lifestyle actually costs.

I'll sit across from a couple who may have been earning $300,000 a year before retirement, and when I ask what they expect to spend, they'll say something like, "Well, if we can't live on $100,000 a year, something's wrong."

That's not a retirement budget. That's an arbitrary number. It may have been 20 years since that couple actually lived on $100,000 a year, so why would we assume they're suddenly going back to that lifestyle in retirement?

Start with reality. Look at what you actually spent over the past 12 months, subtract the expenses that will disappear in retirement and add the things likely to increase: Travel, golf, eating out, visitors and the carrying costs of the new house.

Once you know what your retirement is likely to cost, the next question is where the money is going to come from. A retirement plan should determine how you'll use Social Security, investments and retirement accounts to fund that lifestyle while considering the taxes you'll pay along the way.

The goal isn't to figure out the lowest number you can possibly live on. It's to build a plan that lets you afford the retirement you actually want.

I love this place, and you couldn't drag me out, so don't let me talk you out of coming. Just do it the right way. Understand what the lifestyle will actually cost and build a retirement plan around it.

You may find out, like I did, that five years turns into 20 pretty quickly.

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

When it comes to estate planning, avoiding probate is one of the main motivators.

Whether it's designating beneficiaries or putting assets in a living trust, there are several ways assets can be directly transferred to heirs without going through probate.

But simply shielding assets from probate doesn't automatically mean assets will be distributed the way you intended. Sometimes, the same strategies used to avoid probate can unintentionally override other parts of an estate plan, potentially leaving loved ones without the protection you put in place.

Consider a father who has two adult children with different financial needs. One receives government benefits that have income and asset eligibility requirements. The other struggles with substance abuse and isn't able to responsibly manage a large inheritance.

To accommodate both children, the father creates a revocable living trust with separate trusts made for each. This allows the father to leave an inheritance to both while also keeping protections they need in place.

Later, the father opens a bank account and purchases an annuity, naming both children as beneficiaries.

Once he dies, the bank account and annuity proceeds go directly to the children instead of the trusts that were created. While naming the children as beneficiaries of that account allowed the father to keep his assets out of probate, it also bypassed the protections he deliberately built into his estate plan.

While avoiding probate is an important part of the plan, it shouldn't be the only consideration in this process. A beneficiary's situation can matter just as much as how the assets get transferred.

For example, a beneficiary might receive government benefits that have income or asset restrictions, struggle with substance abuse or managing money, or could be dealing with a personal matter such as a divorce.

Leaving an inheritance to someone in one of these situations could jeopardize future benefits, leave money vulnerable or bring new financial responsibilities they might not be prepared for or capable of handling.

Instead of having assets transferred to them outright, you might choose to open a trust so you can manage the inheritance and determine when and how distributions are made.

However, those protections only work if the assets are directed to the trust. Naming the individual as the beneficiary rather than the trust itself could make the trust irrelevant altogether.

While trusts can be helpful in protecting and managing assets, they're only one tool in the estate planning process. Reviewing how assets are titled and who's designated to receive them after you die is important.

Look at bank and investment accounts, retirement accounts, real estate, life insurance policies and annuities. A beneficiary designation or other transfer arrangement on a particular asset could determine where it goes once you die, even if that overrides protections you've established elsewhere in your plan.

Avoiding probate is just one of many considerations when it comes to building an estate plan. What's most important is making sure your assets are transferred to the people you intended in a way that accounts for their needs and circumstances.

For some, naming beneficiaries directly is enough. Others might find additional protections are necessary. Regularly reviewing your estate plan, making adjustments as needed, will ensure the strategies you use to avoid probate don't work against your estate 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.

The above picture was taken from my seat in Seattle at (sadly) the U.S. soccer team's last 2026 U.S. World Cup game.

I had tossed around the idea of going since the U.S. qualified for the round of 32, but I came up with too many excuses to take it seriously. It wasn't until the day before the game when my wife said, "Memories over money — just do it." More on that later.

The best emails I get from clients at Exit 59 Advisory, where I am president, feature phrases such as:

"I just got back from…"

"I just booked…"

"I just committed to…"

The best, best emails are the ones that include the part above and then the same quote from my wife: "Memories over money."

Now I know this seems counterintuitive coming from a financial planner, but let me explain.

Think of money as the base of Maslow's hierarchy of needs. I am not diminishing its importance. I am not diminishing the need for financial security to be happy in retirement.

Basically, every academic study agrees that we need financial security, along with health and social connection, to experience true happiness in retirement.

What is diminishing, to use that word once more, is the return you get beyond the security point. Beyond security, money can:

• Buy you freedom
• Buy you time
• Buy you memories

To be clear, all of our clients have financial plans. All of those plans have a line item for expenses like those. If you want to build your own, you can access our planning software.

When my wife and I were first married and had no kids, we caught the travel bug. When we had kids, we thought we would press pause, at least on the bigger trips. We didn't.

Many people told me that the kids wouldn't remember the trips. And we felt OK about that. We were still enjoying the trips. Our kids are now 8, 4 and 1:

• Our oldest, Vivian, recently brought up the name of a bunny on a farm we visited in Austria
• Our middle child, Lucy, talks about seeing the Statue of Liberty in "Yew Nork"

If my young children remember these trips fondly, even when everything didn't go exactly as planned, I would bet they'd be even more impactful for your adult children and grandchildren.

Carl Richards, a fellow financial planner who is part of my speaking agency and is a former New York Times personal finance columnist, has a Venn diagram sketch with "experiences" in one circle and "people you love" in the other, with an arrow pointing to the overlap and the label "spend money here."

So this is not just about travel. It is about spending money to create memories or creating memories that don't require spending.

My extended family has been gathering for Sunday dinners almost every weekend since 2011. Experiences, whether they involve a trip, a meal or a walk, provide more bang for your buck than material purchases.

You get the benefit of anticipation, the actual experience and the memory — bang for your buck from experiences in three phases.

So the Sunday night before the U.S. squared off against Belgium in Seattle, I booked a flight, one night at a hotel and a ticket to the game. As you probably know, the game did not go our way, but I have no regrets about going.

There are two more important lessons here.

First, even bad experiences or experiences with bad parts can become good memories. Three years later, we are able to laugh about my daughter getting sick on a transatlantic red-eye.

The last lesson is the concept of "contrast." One reason I got so much joy out of such a ridiculous itinerary is because of how much it contrasts with my day-to-day life. If this were something that was normal or not special, I would have been one of the five people in the front row scrolling their phones during the game.

As you know, I spend my days looking for every avenue to help you accumulate a healthy balance sheet, to save you money on taxes and otherwise optimize your financial situation.

I've also been doing this long enough to say that those who convert their financial balance sheet to a memory balance sheet tend to be happier.

Memories over money!

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

Most people know the basics of building financial security include saving consistently, investing for growth, managing debt and preparing for retirement.

The challenge facing many Americans is that financial strategies tend to focus on numbers while overlooking something equally important: Family communication.

Lincoln Financial's latest Consumer Sentiment Tracker found that 78% of families surveyed haven't had an in-depth conversation about life insurance, for example. It also found that 60% of adult children believe their parents have life insurance coverage in place, while only 44% of parents say they do.

The disconnect extends beyond life insurance. Similar gaps exist around retirement income, healthcare costs and wealth transfer.

What I find interesting isn't just the data. It's what it reveals about how families approach a financial strategy.

Many people assume critical decisions have already been discussed. They assume their spouse understands the decisions that have been made. They assume their children know where important documents are. They assume their parents have taken care of everything.

Sometimes those assumptions are right, but often they're not.

That's why I believe financial protection starts with conversation.

Why communication is becoming more challenging

Today's families are juggling more financial responsibilities than ever.

Many adults are trying to save for retirement while helping children through college. Some are supporting aging parents while managing mortgages, careers and their own long-term goals. Others are navigating questions about healthcare, caregiving and legacy at the same time.

As financial realities become more complex, communication becomes more important. Yet this is often the first thing to get postponed.

Nobody wakes up on a Saturday morning excited to talk about life insurance, healthcare costs or estate decisions. These conversations can feel uncomfortable. They can feel premature. Sometimes they can even feel unnecessary.

After all, if everything seems fine today, why bring it up?

The problem is that many financial decisions don't become important when they're made. They become important years later.

The families that seem most confident in their financial decisions aren't necessarily the ones with the largest portfolios or the most sophisticated strategies. In many cases, they're the families that have created clarity around who is responsible for what, what protections are in place and what they want their future to look like.

Life insurance awareness starts with creating clarity through conversation. That may sound simple, but many families still haven't taken that first step.

Life insurance is part of a bigger financial picture

One of the reasons life insurance gets overlooked is because people often think about it separately from the rest of their financial strategy.

Retirement preparation goes in one bucket, investments go in another, and insurance sits somewhere else.

But in reality, every financial decision is connected.

The amount of risk someone is willing to take in an investment portfolio may depend on the protections they have elsewhere. Meanwhile, healthcare needs, estate planning considerations and family obligations can all affect the type of financial protection that makes sense for a specific situation.

That's why I've long believed life insurance should be considered alongside saving, investing and preparing for retirement as part of a comprehensive financial strategy.

It's important to ask whether someone's overall strategy reflects the life they're building today and the responsibilities they want to prepare for tomorrow.

A family with young children may have different priorities than someone approaching retirement. A business owner may need different protection than a salaried employee. Someone caring for aging parents may face entirely different financial considerations.

The goal isn't to arrive at a universal answer.

The goal is alignment between financial decisions and financial realities.

Moving from assumptions to informed decisions

The good news is that closing the conversation gap doesn't require a complicated financial approach.

Most families don't need to start with spreadsheets, policy reviews or legal documents.

They need to start with goals.

Ask questions like:

• What are we trying to protect?
• Who depends on us financially?
• What would happen if one source of income disappeared?
• Are there responsibilities we haven't accounted for?
• Does everyone understand the decisions and protections in place today?

Those questions tend to open the door to more meaningful discussions about financial protection, retirement goals and long-term priorities.

From there, families can begin identifying areas that need more attention and move from assumptions to informed decisions.

Five ways to close the conversation gap

1. Treat life insurance as part of your financial strategy

Review life insurance the same way you'd review retirement accounts, investments or estate documents. Financial protection deserves a seat at the table alongside every other major financial decision.

2. Identify who's impacted

Financial decisions rarely impact just one person. Consider spouses, children, aging parents, business partners or anyone who depends on your financial wellbeing.

Talking across generations helps create a shared understanding of responsibilities, priorities and expectations before important decisions need to be made.

3. Start with goals, not policies

People connect more easily to conversations about family, security and future priorities than they do to policy features or coverage amounts.

Focus first on the people and goals you're trying to protect. The technical details can follow.

4. Check assumptions against reality

Ask yourself what you're assuming to be true. Then verify it.

• Do family members know where important documents are located?
• Have beneficiary designations been reviewed recently?
• Would the people who matter most know what steps to take if something happened tomorrow?

Assumptions are often where financial gaps begin.

5. Bring a financial professional into the conversation

A financial professional can help evaluate protection needs, identify blind spots and ensure life insurance is viewed within the context of a broader financial strategy.

Their role isn't just to recommend solutions. It's to help create clarity and guide informed decision-making.

A better way to think about life insurance

Lincoln's research suggests that for many families, there are important financial conversations left to have. The issue isn't a lack of interest in protecting loved ones. Most people care deeply about that.

The issue is that many families have never confirmed whether everyone's understanding of the family's financial decisions and protections matches reality.

Closing the conversation gap won't solve every financial challenge, but it can help families create clarity before it becomes urgent.

And it can help ensure life insurance plays the role it was intended to play from the beginning: Helping protect the life families are building today.

The conversation doesn't have to be perfect. It just has to start.

Lincoln Financial is the marketing name for Lincoln National Corporation and its affiliates, including issuing insurance company The Lincoln National Life Insurance Company, Fort Wayne, IN, and wholesaling broker-dealer, Lincoln Financial Distributors, Inc., Radnor, PA. LCN-9117890-090926

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

There's more than one good reason why U.S. investors have Portugal in their sights. Ultra-high-net-worth individuals and switched-on investors regard it as a fast-growing entry point into the EU marketplace.

They view significant investment from the likes of Microsoft, which recently pledged to invest $10 billion in new AI data centers in Sines, as a clear indicator that it's an up-and-coming investment hotspot.

They're also attracted to its relaxed lifestyle, and the political and economic stability it offers, seeing it as a potential escape route if geopolitical disruption further impacts their lifestyle at home.

What U.S. citizens need to do to purchase property

Portugal has no nationality-based restrictions on property purchases, whether residential, commercial or new builds, but there are plenty of other rules around buying a property and seeking residency.

The first step for any U.S. citizen seeking to buy property is to get a Portuguese tax number, known as an NIF. It's essential for getting contracts signed, opening bank accounts and paying taxes. It's also required when registering property ownership.

Non-EU buyers will also need an in-country fiscal representative to comply with local tax obligations, such as municipal property taxes and Portugal's requirement for a local contact for non-EU citizens.

You can apply for an NIF online, or in person by pre-booking an appointment at a local tax office.

Bank accounts and legal representation

A Portuguese bank account is a must-have. Without one, buyers will be unable to pay a deposit on a property, utility bills or taxes. Although non-resident bank accounts are available, they will be subject to compliance checks. An in-country account will help to simplify any bureaucracy you may encounter.

Securing the services of a Portuguese lawyer, although not mandatory, is advised. They'll be needed for title checks, registry searches, contract reviews and deed signings.

Lawyers also need to perform due diligence, including verifying land registry certificates, dealing with the tax registry, securing a habitation license and handling any debts or encumbrances associated with the property purchase.

The buying process

Buyers must follow these steps once they've established a bank account, secured a NIF and contracted a legal representative:

• Negotiate the property purchase terms
• Instruct the local lawyer to complete due diligence
• Sign a promissory contract (CPCV)
• Pay a deposit typically ranging between 10% and 30%
• Register ownership when the deed is complete

All of this can be done remotely by power of attorney.

Note that a CPCV is a binding contract. If the seller withdraws, they will need to pay double deposit compensation to the unsuccessful buyer. If the buyer withdraws, they will be liable for a similar level of compensation.

Tax implications for U.S. buyers

Buyers are required to pay a property transfer tax known as IMT. Currently, non-residents pay a flat 7.5% IMT on residential purchases, although the current rules allow for exceptions — for example, if the buyer becomes a Portuguese tax resident within two years of the purchase.

Other annual taxes, such as municipal property tax (IMI) vary by municipality. Mortgage terms for non-residents include higher interest rates and stricter lending criteria.

U.S. citizens holding Portuguese bank accounts may also have U.S. reporting obligations. Foreign accounts may need to be reported through a Foreign Bank Account Report (FBAR) if their combined value exceeds $10,000 at any point during the year.

Taxpayers whose foreign financial assets exceed separate, higher thresholds may also need to file IRS Form 8938 under the Foreign Account Tax Compliance Act.

Given the potential complexity of the tax implications for U.S. citizens, professional cross-border tax advice is highly recommended.

2026 market conditions

Portuguese properties remain a compelling investment proposition, with prices rising rapidly as its popularity grows. The national average rise stands at 19.8%, according to Statistics Portugal (INE), with higher increases in Lisbon and Porto.

Mortgage rates are currently between 3% and 4%, although non-resident mortgage rates are generally higher. This is softened to a degree by the comparative strength of the U.S. dollar, which still provides significant buying power and relatively good value.

Portugal still offers a stable, transparent and accessible property market. Its attractions are clear, but U.S. investors must understand the tax, legal and procedural requirements they'll need to complete before committing.

Portugal Pathways connects internationally mobile individuals and families with specialist cross-border wealth management, estate planning and tax advisory services. Through its network of regulated advisers and family office professionals, it helps clients structure, preserve and transfer wealth across multiple jurisdictions.

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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.

Investing is complex, and human beings are wired to make predictable mistakes, which is why you should consider enlisting a good financial adviser — someone who doesn't just manage your money, but also your behavior.

They help you stay disciplined when every instinct screams at you to do something, which happens to even the most experienced investors.

Successful relationships aren't built on promises of market-beating returns or sophisticated strategies. They're built on trust. But trust can't exist without transparency.

Transparency begins with asking the right questions to cut through the marketing language and sales pitches and reveal what really matters.

1. What is your investment philosophy?

By asking about an adviser's investment philosophy, you can learn whether you're dealing with someone who understands how markets actually work or someone who's still chasing yesterday's performance.

You want to hear about evidence-based investing, broad diversification and rules-driven approaches. The adviser should be able to explain the relationship between risk and return without resorting to jargon or promising to eliminate risk entirely.

2. How will you invest my money — and why?

This question digs deeper into the practical implementation of their philosophy. The answer should be directly connected to your personal financial plan and cash flow needs, not some generic model portfolio.

Think of your investments as a portfolio for life and focus on the long term, not on a series of day-to-day, short-term objectives. You want to hear about specific rebalancing rules, tax-management strategies and how investment policy flows from your individual circumstances.

When it comes to designing the actual investment plans, experienced advisers can help devise a sensible combination of relatively risky and relatively riskless assets such as money market funds to point you to the best, most likely path to reach your goals.

They can run simulations to demonstrate the full range of potential outcomes for different modeled portfolios, so you can understand the tradeoffs in designing the right mix to suit your goals, preferences and risk appetite.

The adviser should be able to explain why they've chosen specific asset classes, how they'll manage taxes in taxable accounts and what triggers will prompt rebalancing. Most important, they should connect every recommendation back to your specific situation.

3. How do you get paid, and for what?

When someone's compensation depends on how often they can get you to trade or which products they can sell you, that creates what economists call a principal-agent problem.

Your interests and theirs aren't aligned. You want a clear explanation of all fees, not just the adviser's management fee, but every underlying cost including fund expenses, trading costs and custody fees. Ask when fees change and whether financial planning is included or costs extra.

4. Do you work with people like me?

When an adviser knows exactly who they serve best, they can develop specialized knowledge about the unique challenges those clients face. They understand the emotional and practical aspects of your situation because they've guided many others through similar circumstances.

5. Can you show me a sample plan and your planning process?

A question such as this might separate the professionals from the product salespeople. A real financial adviser should be able to show you examples of their work, demonstrate how they approach scenario planning and outline their implementation process.

A good way to start is with an honest self-assessment that helps you know where you stand now and where you want to get to, evaluating all aspects of your financial health (such as your savings and spending habits.)

Think of it as a financial checkup that can help clarify your goals, needs, and preferences. How is your brain wired? Are you comfortable taking more risk or less? You want to see evidence of comprehensive planning that goes beyond investment allocation.

6. What's your background — and why this profession?

One adviser I know often starts first meetings with a story. He explains that his father suffered a rare brain illness, and while the family had some safeguards (a will, a mandate, disability insurance), they were still left struggling.

That experience shaped his mission: to make sure no family he works with is ever left unprepared. "You'll tell me things you wouldn't tell your spouse or best friend," he says. "I take that seriously." Clients don't just learn his credentials; they learn his reasons.

Look for advisers who can tell a coherent story about why they do this work and how their experience shapes their approach. The best advisers often have personal experiences with money — sometimes painful ones — that drive their commitment to helping others avoid similar mistakes.

7. Who is your custodian? How is my money protected?

You want to understand how your assets are held and protected, separate from the adviser's business. Third-party custody means your money is held by an independent organization such as Charles Schwab or Fidelity, not by the adviser themselves. This protects you if something happens to the advisory firm.

You should also understand SIPC insurance coverage and any additional protections. Bernie Madoff was able to run his Ponzi scheme for so long partly because he served as both investment adviser and custodian, giving him complete control of client statements and making independent verification impossible.

8. How often will we meet — and about what?

Regular communication is essential for maintaining trust and keeping your plan on track. You want to understand not just the frequency of meetings but what will be covered in those discussions. It's crucial to communicate clearly and often.

An adviser can add value by explaining carefully what they're doing when forming portfolios and by setting appropriate expectations. That way, whether performance is good or bad, the investors can feel alright about the decisions that they made upfront.

By putting cadence and content on the table from the start, advisers eliminate one of the biggest sources of client anxiety: Silence. These conversations should cover changes in your life circumstances, progress toward goals, tax planning opportunities, and any adjustments needed in your strategy.

The frequency of these meetings should match your needs and preferences. Some clients want monthly check-ins, while others prefer semi-annual reviews. What matters is that the schedule is predictable and the meetings are substantive, because having a routine builds long-term discipline.

9. Who will be on my team, and who does what?

Modern advisory practices often involve teams rather than individual advisers. You want to understand the roles of different team members, whom your primary contact will be and how decisions get made. You should know whether you'll be working with the named adviser or primarily with associates. Understand the experience levels of different team members and how work gets allocated.

What's the escalation path for complex decisions or unusual situations? The best advisory teams have clear role definitions and good communication systems. You shouldn't feel as if you're being passed around randomly, but you also shouldn't expect to monopolize the senior adviser's time for routine account maintenance.

Before your meeting, consider some of these questions yourself. Think of them as conversation starters, prompts that open feelings and life priorities that often stay hidden.

You'll go into your meeting with a better sense of what you need.

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

I'm sitting on the sofa in my office, which is in Virginia. Looking out the window, I can see both Virginia and Maryland. There's an often-incorrect assumption that when you cross the bridge from Virginia into Washington, D.C., your taxes jump. The reality is much more complicated.

Income taxes, which is how we often gauge whether taxes are "high" or "low," do go up if you move into D.C. But property taxes come down. So, if you're retired, you may actually be better off in D.C.

However, D.C. has an estate tax, and Maryland has an estate and an inheritance tax, so depending on your balance sheet, you may be better off staying in Virginia. You can see how things can get complicated quickly.

My goal in this article, as a CFP® and president of Exit 59 Advisory, is to help you avoid making a big decision on where you move in retirement for tax purposes — which I think is often a mistake in and of itself — without understanding the full tax picture.

Five taxes to consider

1. Income tax

You've heard of people moving from California to Texas. We have several clients in the process of changing residency from New York to Florida. This isn't because Texas has delicious BBQ or because Florida has Publix. It's typically because folks want to ditch the income tax. While this is almost always the most consequential tax when you're working, that isn't always the case for retirees.

Nine states don't tax earned income. However, like the federal government, most states do have a progressive income tax, where the rate rises with your income. Be sure you understand that progression and what effective or average rate you're likely to pay.

When we have a relocation in retirement in a client's financial plan, it becomes pretty clear what will happen to their income, capital gains and estate taxes, all else being equal. We recently had a client moving from California to Texas and were able to tell them how much money they would save, and therefore, could spend elsewhere. We used specialist software to do that, and you can use our subscription to access it for free.

2. Capital gains tax

Capital gains rates are more favorable than income tax rates at the federal level as a way to incentivize investment. The same cannot be said about state treatment of capital gains.

In most states that levy an income tax rate, the same rate is applied to capital gains. When my parents sold their (not so) forever home in Maryland, it basically looked as though the capital gain was income. It was taxed at the same rate.

There are some notable exceptions. Washington state, for example, doesn't have an income tax but does have a capital gains tax. If your savings are all in retirement accounts, you don't have too much to worry about. But let's say you sold a business and almost all your assets are in non-retirement accounts. For you, Washington state may not be a good tax destination.

3. Sales tax

I'm a (perhaps too) proud graduate of the University of Delaware. Delaware is often referred to as the "tax-free state." Incorrect. Delaware doesn't have a sales tax. It does have income and property taxes, though those property taxes are extremely low by the beaches. Take notes, Florida.

Sales taxes are more straightforward, except that there are adjustments on certain types of purchases. Like to eat out? Then Washington, D.C., is no good. To be clear, the food is good. Like to drink? Avoid Washington state.

4. Property taxes

You might be unpleasantly surprised when you arrive in Texas for the BBQ or Florida for the Publix, and you're presented with a massive property tax bill. As the saying goes, "There's no such thing as a free lunch."

States need income, and that income gets raised somewhere. The key is landing in a state where that somewhere or someone is not you. If you're looking at a second home, you could consider renting instead of buying, so long as you can still satisfy the residency requirements.

Another thing to evaluate when it comes to property taxes is the property's assessed value, which can sit close to the market value or far below. A high tax rate on an assessed value much below market value may not sting as much as you think.

5. Estate and inheritance taxes

While estate and inheritance taxes are often used interchangeably in the context of death taxes, they are not the same. Estate taxes are levied on the decedent's estate. Inheritance taxes are paid by the beneficiary.

Fewer and fewer states have either of these taxes. As of this writing, 17 jurisdictions. However, if you have enough money and haven't done enough planning, estate taxes can be punitive. Before you move because of it, see if you can plan around it.

Why the full picture is even more nuanced

There's an exception to every rule in our tax code, and nothing is black and white. While an income tax rate may be high on the surface, many states exempt retirement income sources such as Social Security, pensions and retirement account distributions. Many have income phaseouts or caps on those exemptions.

Property taxes can be discounted in multiple jurisdictions if you meet certain requirements.

And let's not forget the cost of living. You may be someone who had spreadsheets for all of the above but still wound up with astronomical grocery bills, mortgage payments and restaurant bills because you weren't the only one who moved to Florida during Covid.

If you do want to move for tax purposes retirement, my hope is that you go in with your eyes wide open.

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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.

California can be a wonderful place to retire. The great weather, access to outdoor activities, good food and diverse culture are some reasons retirees choose the Golden State.

That said, retiring there comes with its unique financial considerations. The cost of living is high, state taxes can take a big bite out of retirement income, and housing, transportation and healthcare costs can add up quickly. The overall cost of living in California is roughly 40% to 45% higher than the national average.

Retiring comfortably in California requires careful planning and consideration. If you're taking a do-it-yourself approach to retirement in California, here are a few areas to consider.

Get a good handle on your expenses

One of the first steps in planning for retirement is understanding what it costs to maintain your lifestyle. This might sound obvious, but many of my clients come to work with me at Halbert Hargrove because I am a CFP® professional and wealth adviser.

I review my clients' bank and investment account information and help them analyze and understand how much they spend on a monthly or annual basis. While many of my clients know how much money they have in their bank accounts, they often don't have a clear understanding of how much they spend on a regular basis.

I recommend starting with your regular fixed expenses. Think housing, utilities, insurance, transportation and healthcare premiums. Then consider the expenses that don't occur every month: Vacations, home repairs, property taxes or helping family are examples of some.

Knowing your nondiscretionary expenses (what you need to spend), vs your discretionary expenses (what you want to spend), is helpful. If the stock market has a challenging year, knowing where you have the flexibility to cut back can help you adjust your withdrawals while you wait for the market to recover.

Plan for healthcare beyond Medicare

California is home to some of the greatest medical institutions and hospitals in the nation including Cedars-Sinai Medical Center, Stanford Health Care, UC San Diego Health and UCLA Ronald Reagan Medical Center. But medical planning goes beyond finding the best doctors for the care you need.

California retirees need to budget for Medicare premiums, Medigap or Medicare Advantage, Part D (prescriptions), dental, vision, long-term care and any out-of-pocket expenses. Knowing the average cost of healthcare as a starting point can help, but age, location and tobacco use can impact costs.

There's another issue: Higher taxable income can increase Medicare premiums through IRMAA (income-related monthly adjustment amount). This is a surcharge added to your monthly Medicare Part B and Part D premium if your income is above certain limits.

What this means for retirees is a large IRA or 401(k) withdrawal might create a tax bill today and potentially higher Medicare premiums later.

Pay attention to California taxes

In addition to a higher cost of living, California has one of the highest state income taxes in the U.S. State income taxes start at 1% and go up to 12.3%, plus an additional 1% for taxable income over $1M. This matters quite a bit when retirees are drawing from large IRAs, 401(k)s or pension plans, as the net distribution from a pretax account can be considerably lower after you account for taxes.

Long-term capital gains tax, which is triggered by the profit you make from the sale of an asset held for more than a year, is also taxed in California using the same ordinary income rate that's applied to withdrawals from pretax retirement accounts.

At the federal level, long-term capital gains are taxed at a more preferential rate, so California is unfortunately unique in this regard. For retirees with substantial investment income, this can really increase their tax liability.

One silver lining — California does not tax Social Security benefits, disability or survivor benefits, so retirees who live primarily on these types of income have less tax exposure.

Don't forget housing, property taxes and home insurance

For many retirees, homes can make up a large portion of their net worth. This is especially true for California, where the prices of homes have skyrocketed throughout the years.

I frequently hear my clients recount how they bought their first homes for tens of thousands of dollars, and have watched the property grow into a multimillion-dollar assets.

A retiree in that situation might have substantial equity in their home, but a low-cost basis and property tax assessment. That can make a decision such as downsizing or moving to a retirement community much more complicated than simply looking at the price of the new home.

Before moving, consider the complete cost of the new property, including property taxes, homeowners' insurance, homeowners' association (HOA) dues and maintenance.

A smaller or less expensive home might not lower monthly expenses by much, all things considered.

When it comes to property taxes, keep in mind that Proposition 13 imposes a 1% cap on the tax rate and a 2% maximum for annual increases, offering some protection from long-term owners.

If you're a homeowner age 55 and older who wants to move from one California home to another, Proposition 19 allows you to transfer the lower assessed value of the primary residence to a newly constructed or replacement principal home. Eligible adults can use this tax transfer benefit up to three times.

Keeping your California retirement on track

Retirement in California can be expensive, but for many people, the lifestyle is a significant factor in their decision to live here. Understanding the costs, staying flexible and recognizing how each financial decision affects others can help you make informed choices while enjoying this chapter of life.

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

Editor's note: This is the third article in a four-part series on AI concentration risk in growth portfolios. The first two are: Your Diversified ETF Isn't as Diversified as You Think, and AI Is a Supply Chain Rather Than an Industry: Here's Why. The final article will explain the corporate adoption timeline that determines which layers ultimately earn their valuations.

Every layer of the AI supply chain depends on one assumption holding: That the money being spent today gets paid back by revenue tomorrow. That assumption isn't guaranteed, and four distinct risks could break it.

Demand risk

The first risk is the simplest to state and the hardest to verify. Enterprises and consumers have to want AI capability enough to pay for it at the volume hyperscalers are underwriting. The revenue is real, but it is not yet close to matching the spending.

Analysts estimate the annual gap between AI infrastructure spending and AI ecosystem revenue at roughly $600 billion, a figure that has widened rather than narrowed through 2026.

That gap doesn't prove demand will fail to show up. It proves that today's valuations are pricing in demand that has not arrived yet.

If it arrives on schedule, the companies building the infrastructure look prescient.

If it arrives two or three years late, a great deal of currently invested capital sits idle in the meantime, generating cost without matching revenue.

Capital spending risk

The second risk is that the spenders themselves change their minds. Microsoft, Amazon, Alphabet and Meta are projected to spend $700 billion to $725 billion combined in 2026, and every one of those companies answers to public shareholders who are already asking harder questions about the return on that spending.

Alphabet's stock fell roughly 7% in a single session in late July 2026 after the company raised its 2026 capital spending guidance, with investors specifically flagging concern over the return on that investment.

Capital spending plans are guidance, revised quarterly, not contracts. Every company in this chain can slow construction, delay chip orders or renegotiate power agreements if the return case weakens.

A slowdown doesn't require a crisis. It only requires one or two disappointing quarters of cloud revenue growth at the companies writing the checks.

Infrastructure bottleneck risk

The third risk runs in the opposite direction: Demand outrunning the physical capacity to meet it. Power, not chips, has become the binding constraint on the AI buildout.

Microsoft has disclosed a data center backlog worth roughly $80 billion that it can't yet fulfill because of power constraints. Separate estimates put the current U.S. data center power shortfall at more than 11 gigawatts today, growing toward nearly 50 gigawatts by 2028.

That constraint isn't just about equipment sitting in a factory somewhere. It's about the years-long wait to connect anything to the grid at all.

More than 2,060 gigawatts of generation and storage capacity are sitting in U.S. interconnection queues awaiting approval, according to Lawrence Berkeley National Laboratory, and the median project reaching completion in 2025 spent more than five years waiting in that queue before going live.

A company can have the capital, the chips and the building ready, and still be years away from switching anything on.

The equipment behind that power is just as constrained. GE Vernova, one of only a handful of companies in the world that build heavy-duty gas turbines at scale, reported an order backlog of 116 gigawatts in the second quarter of 2026, up from 100 gigawatts the quarter before, and it is already booking turbine reservations for 2031 delivery.

Writing a check today for new gas-fired power doesn't move a buyer to the front of a line that already stretches five years out.

A bottleneck sounds like good news for the companies that supply power and cooling equipment, and in the near term it often is. A persistent shortage also caps how fast revenue can grow across the entire chain, regardless of how much capital is available to spend.

Money can't buy electricity that doesn't exist yet, and permitting new energy takes years, not quarters.

Return-on-investment risk

The fourth risk is the one to watch most closely, because it determines whether the first three matter. Even if demand shows up, spending continues and bottlenecks clear, the infrastructure being built still has to generate a return that justifies its cost.

The divergence between AI capital expenditure growth and AI revenue growth is currently running around 46%, a figure that already exceeds the roughly 32% divergence observed during the telecom infrastructure buildout of the late 1990s, the cycle that preceded a multi-year correction in that sector.

That comparison is worth taking seriously without taking it too literally. The telecom buildout of that era did not turn out to be worthless; much of the fiber laid during that boom is still carrying traffic decades later.

It turned out to be built years ahead of the demand that eventually filled it, which meant a lot of capital invested at the peak was never recovered by the investors who supplied it, even though the infrastructure itself proved valuable.

AI's infrastructure could follow the same pattern: Durable and eventually useful, while still delivering a poor return for whoever financed the buildout at today's prices.

Three things to do about it

Look through every fund you own for exposure to the supply chain layers behind the AI buildout, not just the ticker you recognize. A fund can look diversified by holding count and still concentrate your money in a handful of companies whose revenue depends on the same four checkbooks.

Measure your overlap across funds, not within any single one. If your growth ETF, your S&P 500 index fund and a semiconductor fund all derive a meaningful share of returns from the same AI capital spending cycle, your effective concentration is higher than any single fund's fact sheet will show you.

Stress-test the shared assumption directly. Ask what happens to each holding, not the portfolio in the abstract, if hyperscaler capital spending growth slows from 60% to 15% next year. Some holdings would barely notice.

Others would take the full force of the correction. Knowing which is which before it happens is the entire point of this exercise.

The AI buildout may well justify itself over time. The risk worth pricing in today is not whether AI works. It's whether the bill comes due before the revenue arrives to pay it, and whether your portfolio is positioned to survive the gap either 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.

When people think about improving their financial lives, they frequently focus on strategies, portfolios, budgets or tax planning. Those things matter.

But after years of working with successful individuals and families, I've come to believe that the quality of a financial decision depends on the quality of the thinking behind it: How self-aware you are and how well you handle uncertainty.

My colleagues and I call that mental fitness. At Brighton Jones, we use a framework called Mindful, Emotional and Social Intelligence (MESI) to help clients build both financial capital and the internal capacity to use wealth in service of a meaningful life.

Here are some key tenets to help you manage your finances more intentionally.

Start with what matters most

Many people discover that financial decisions become clearer when they have a simple set of values to use as a filter.

I've seen this play out many times. One couple we worked with was weighing a job offer that would have doubled one partner's income but required relocating across the country.

Their parents, both in their late 70s, lived 15 minutes away and relied on them for weekly dinners, doctor appointments and help around the house.

After modeling the financial upside, they realized the trade-off wasn't just geographic, it was relational. They declined the offer, deciding that staying present during a finite season of their parents' lives mattered more than the additional income.

When a major decision arises, instead of asking, "What's the right financial choice?" ask, "Which option best supports the life and legacy I'm trying to build?"

One exercise I often recommend is envisioning your ideal day — not your most luxurious day, but the most fulfilling one. The themes that emerge aren't often found on a planning sheet.

Pay attention to your financial patterns

Notice your reactions to situations that impact your money. We worked with a family who began discussing whether to stop funding their children's 529 plans after a difficult stretch in the markets. News headlines and shrinking account balances made them wonder whether to wait until things felt more stable.

After stepping back, they realized their concern was being driven more by short-term fear than by any change in their long-term goals. They continued contributing as planned. Looking back, the experience reminded them that you make disciplined decisions when emotions are strongest, not weakest.

Create space between the event and the decision

One basic idea in mental fitness is that events themselves are rarely the biggest challenge — our interpretation of them usually has greater influence.

When facing a financial decision, I ask clients to walk through a series of questions that get under the surface.

• First, explain what happened and the values that were activated or threatened in that moment
• Next, think about the emotions present in that moment and what sits underneath them
• Finally, consider the thoughts and stories that share your perspective

Consider an executive deciding whether to exercise stock options. The financial analysis matters, but so do the values, fears, expectations and assumptions that influence the decision.

Align your resources with your life

Once you've clarified your values and noticed your own decision-making patterns, the next step is alignment. If personal relationships matter, is that reflected in how you spend your time and money? If health is a priority, do your calendar and spending support that commitment? If philanthropy matters, does your giving actually match it?

Consider a founder who sold a business in her 40s and initially treated giving as an afterthought, writing a few checks at year-end when friends asked. During a values exercise, she reflected on how a teacher and scholarship program had changed the trajectory of her own life.

That realization caused her to build education-focused philanthropy into her long-term plan, establishing recurring gifts and involving her children in grant decisions.

Alignment doesn't require a complete financial overhaul, but it might require honesty about where the gaps are. Small, intentional adjustments often create more significant change than dramatic ones.

Many of the decisions clients bring to us aren't technical. A retirement date, a wealth transfer, a family business transition — these touch identity and purpose as much as they touch numbers. That's why our conversations usually go beyond numbers, to the values underneath them.

Build habits that support better decisions

You build mental fitness through consistent practice: A few minutes of reflection each day, moments of pause built into the schedule, time for attentive thinking without distraction and a regular check-in on whether your values have shifted.

These habits may seem small, but they build the emotional steadiness that good decision-making requires, especially during phases of uncertainty.

Bringing everything together

Financial success and individual satisfaction aren't automatically the same thing. When mental fitness, self-awareness and intentional planning come together, wealth acts as a tool for both.

At the end of the day, some of the most important work in wealth management doesn't happen in a portfolio. It happens in the space between what we value and how we choose to live.

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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.

Have you ever wondered whether job-hopping is a good strategy for career advancement? Or what it does to your personal relationships?

There is a psychological connection between chronic job-hopping and serial relationship departures when driven by a deeply entrenched dissatisfaction personality, as you will see in a moment.

But first, in August, The Wall Street Journal published an article (paywall) that portrayed job-hopping as generally beneficial to the employee. It led to my office getting a number of emails and phone calls from readers — business owners and parents of job-hoppers — with very different opinions.

While this column has been critical of "helicopter" parents and those who enable their children's poor behavior that often plays havoc with their adult lives, the WSJ article prompted several parents of job-hoppers to ask me if I knew of "anything out there" that their kids could read that might help persuade them to knock it off.

What matters to employers

A recurrent theme common among the parents I talked with could be summed up like this: Old-fashioned values of stability and loyalty still matter to employers and are key to getting ahead on the job. But how do you get that through the thick skulls of young adults who merely see a few more dollars in a paycheck from changing employers every year or two, while chasing emotional fulfillment?

Instead of leading to advancement, constant employment changes can create a risk of falling behind.

And to answer the question, "Is there something out there that could influence job-hoppers to reconsider their view of employment?" — there is indeed. It's a new book, The Insider Advantage: Moving Up, Finding Success, and Building a Career That Lasts, by Wharton professor Matthew Bidwell.

I was sent an advance copy of his book over the summer, and I had the most interesting Zoom interview with Bidwell, a business professor who has put the dots together, leading to a simple and oh-so-valuable conclusion: "The real key to career growth is often staying exactly where you are."

A counterargument on job-hopping

Bidwell challenges the notion that frequent job-hopping is the fastest path to professional growth and higher compensation by showing that "insiders — employees who intentionally build their careers within a single organization — consistently develop a strong competitive edge over external candidates."

He notes that this advantage lies in the value of firm-specific skills, internal relationships and institutional knowledge that takes time to acquire.

Studies show that companies pay external hires 18% to 20% more than internally promoted staff for the same roles, yet these expensive outsiders score significantly lower on performance evaluations during their first two years. They lack an understanding of the existing workplace culture and operational mechanisms, requiring over two years to come up to speed while facing higher rates of voluntary and involuntary departures.

The Insider Advantage proves, through Bidwell's research, that staying put often accelerates upward mobility into positions of true leadership and influence.

"While moving to a new firm can provide an immediate salary bump," he points out, "long-term tenure lets a worker establish trust and climb the organizational ladder more easily and with greater job security."

Bidwell recommends that workers take advantage of internal mobility first and strategically time any outside jumps only once a clear structural ceiling is reached.

Red flags from the real world

I asked a friend of this column to share his opinion about and experience with job-hoppers.

Dr. David D. Schein is an attorney and full professor at the Cameron School of Business at the University of St. Thomas in Houston. He is also a published author and webcaster, with a focus on business, employment, ethics and human resources. He has a very dim view of the benefits of job-hopping.

"In my years as an employment attorney/HR consultant," he says, "I've never heard that job-hopping was a way to manage your career. Bluntly, in evaluating résumés for job hunters, (if an applicant has) a history of being in a position for less than three years, (that tends) to be a red flag.

"When they get to their 40s and 50s, that is a killer (because that's) when others are looking to move into C-suites. That said, employees who face a toxic workplace or other problems should leave ASAP."

On a relationship level

Frequent job-hopping correlates with a higher risk of divorce, according to sociological and economic data. Research indicates that high job turnover and employment instability are closely tied to reduced marital stability.

I asked another friend of this column, psychology professor Dr. Luis Vega of California State University in Bakersfield, to describe the impact it often has on personal relationships.

"Myriad reasons can explain job (or relationship) hopping," he says, "from impulsivity at not missing the next best option, to ambition, to lack of commitment — some of which may involve personality traits unique to the individual.

"For most people, the appeal of job-hopping is the belief that the next opportunity will bring monetary gain and prestige or a renewed sense of happiness. This also is true of relationship-hopping.

"Unfortunately, we are terrible at predicting happiness, what is called affective forecasting. Once the novelty wears off, happiness plateaus, and again we seek the next best thing, a repeat pattern."

He added that, instead of trying to forecast happiness — comparing to the past/future — it works best to focus on comparison of what is possible.

"Notwithstanding barriers that may require change, rather than replacing a job or relationship, it is best to rebuild on existing foundations, where comparisons to the possibilities are easier, and predictability is more assured."

So, if you are thinking of job-hopping, this might be the perfect time to read The Tale of Peter Rabbit by Beatrix Potter. He finally hopped home to his family.

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

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

This is the third in a series of five articles bringing you ideas from Feroz Ansari's national bestseller, The Wisdom and Wealth Solution. Feroz, CFP®, is a portfolio manager at Compak Asset Management and an adjunct professor at the University of California-Irvine. (The Wisdom and Wealth Solution is published by Kiplinger Books and is a national bestseller*.)

The most expensive investing mistakes are often not mathematical. They're mistakes of perspective.

They happen when we mistake a frightening headline for a permanent trend, confuse information with understanding or let the emotional temperature of the moment dictate decisions meant to last decades.

Today, we're being pulled toward two equally misleading views of the future.

The first says everything is falling apart. The economy is broken, the world is increasingly dangerous, institutions are weakening, technology is destroying jobs, stocks are in a bubble and government debt is out of control.

The second says technology will solve everything. Artificial intelligence will create endless prosperity, productivity will soar, markets will always recover, progress is inevitable, and tomorrow will be better simply because yesterday was.

Both stories are incomplete.

The world is better than it feels, but it might also be more dangerous than it looks.

A valuable financial skill

Learning to hold both truths at the same time is a form of wisdom wealth and might be one of the most valuable financial skills you can develop.

In my book, The Wisdom and Wealth Solution, the second step of the LIVING360 method is "know the world." Once we begin to understand ourselves, our values, fears, habits and goals, we must understand the environment in which our lives and financial decisions will unfold.

You can't choose the best path or build a good financial life with a bad map of the world.

Human progress is real. By many measurable dimensions, we're living in one of the most fortunate periods in human history.

A child born around 1900 could expect, on average, to live about 32 years. By the early 2020s, global life expectancy had risen to roughly 73 years. The global under-five mortality rate has fallen to less than half its 2000 level.

Billions of people now have instant access to information, education and opportunity that would have been unimaginable to kings, presidents and industrialists only a generation ago.

Yet, spend enough time consuming headlines, and you could be forgiven for believing the opposite.

A crisis thousands of miles away becomes a video on your phone. A market decline becomes an emergency alert. An AI breakthrough becomes either a promise of utopia or the beginning of civilization's collapse. One bad economic statistic becomes evidence that the future has been canceled.

Your news feed vs perspective

Your news feed is information. It's not perspective, and it's certainly not wisdom.

As I write in The Wisdom and Wealth Solution: "A wider view doesn't dismiss suffering; it contextualizes it. Wisdom doesn't ignore what's wrong; it remembers what's right, too."

That wider view matters because fear can be financially and emotionally expensive.

Why do we feel worse when we have more? Consider one of today's most revealing contradictions.

American household and nonprofit net worth reached a record $195.9 trillion in the second quarter of 2026. Yet, the University of Michigan's Consumer Sentiment Index stood at just 46.3 in October, about 14% lower than a year earlier and near historically depressed levels.

How can a country become wealthier on paper while its people feel less secure?

Goldman Sachs economist Joseph Briggs recently suggested that weak economic sentiment might partly reflect a more pessimistic view of society itself. Only 23% of Americans described themselves as "very happy" in 2024, down from 31% in 2016, an eight-percentage-point decline.

If our financial wealth grows while our confidence, trust and happiness decline, perhaps the missing asset is not entirely financial. Part of it might be Wisdom Wealth.

Wisdom wealth is not blind optimism. It's the ability to see reality in context, to distinguish an event from a trend, fear from probability and information from understanding.

Progress is not guaranteed

Humanity's extraordinary progress doesn't mean improvement will continue automatically.

In many parts of the world, economic growth has slowed. That matters because people don't judge their lives only by what they have. They also judge them by whether life seems to be getting better.

The future contains genuine risks. Government debt is rising across many developed economies. Geopolitical tensions remain significant. Technology is advancing faster than many institutions can safely adapt.

Perhaps nothing captures our uncertainty better than artificial intelligence.

AI might be the ultimate test of perspective

At one extreme are visions of AI abundance: extraordinary productivity, lower costs, new industries, greater convenience, more personal time and machines that expand human capabilities.

At the other are warnings of mass unemployment, greater inequality, weakened critical thinking and increasingly autonomous systems escaping effective human control.

The loudest voices are often at the extremes.

You don't have to believe AI will destroy humanity to recognize that it could transform work more quickly than many people expect.

The International Monetary Fund estimates that AI could affect almost 40% of jobs worldwide and roughly 60% of jobs in advanced economies.

"Affect" does not mean all those jobs disappear. Some will. Many will change. Others might become much more productive. Entirely new roles will emerge.

That's not a reason for panic. It's a reason to prepare.

Help your children prepare, not for one permanent job title, but for a lifetime of learning, adaptation and reinvention.

Use your cognitive telescope

In my book, I suggest a practice I call using a cognitive telescope.

When a frightening headline appears on your screen, zoom out before you react.

Ask five questions:

• Is this an event or evidence of a long-term trend?
• How likely is the risk, and how severe would the consequences be?
• What assumptions am I making because of my concrete box, even though the world might have changed?
• What opportunities might exist on the other side of this change?
• What, if anything, should I do differently today?

A war deserves attention. It doesn't automatically justify abandoning the long-term asset allocation in your 20-year retirement plan.

Human progress has been extraordinary. It doesn't mean progress is inevitable.

Wisdom resides in the space between complacency and panic.

Knowing yourself helps you determine what matters and why. Knowing the world helps you understand the environment in which you must pursue it.

Financial wealth gives you resources. Wisdom wealth helps you interpret reality and decide how to use them.

Together, they create what I call total wealth.

The next time a headline tells you that everything is collapsing, or that some new technology is about to solve everything, pause.

Zoom out. Look backward before looking forward. Separate the signal from the noise, probability from fear and opportunity from hype.

That is what your cognitive telescope is designed to do.

Learning to see the world more clearly might be one of the most important Wisdom Wealth assets.

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

A few years ago, artificial intelligence in money management felt like a gimmick. Now it's woven into everyday banking, budgeting, saving and even investing. You're not just getting prettier pie charts. You're getting help making decisions in real time, with tools that learn how you actually live.

AI can nudge you before you overspend, top off savings when your account can handle it and make it easier to keep your long-term plans on track. Here are five ways it can help you take control of your finances.

1. AI-powered budgeting

Old-school budgets can feel like forcing your life into a spreadsheet. AI budgeting flips that. It watches what you actually do and helps you adjust more quickly.

The apps that work use machine learning to tag transactions more accurately, predict your bills and cash flow, and highlight small leaks like price creep and seasonal spikes.

Jeffrey Zhou, CEO and founder of Fig Loans, says: "AI-powered budgeting can help people better understand their cash flow and make informed decisions before financial stress builds up. For fintech companies, the goal is to turn these insights into simple tools that help people manage expenses and build healthier financial habits."

If you've ever felt whiplash from grocery prices or utility bills creeping up, this is where the tech helps. AI can flag a trend in three or four months that might take you a year to notice.

2. AI financial investments

Robo advisers can make diversified investing easier for people who don't want to pick stocks. They use algorithms to align your portfolio with your goals and risk tolerance. Then they automate the grunt work: Rebalancing and (in some cases) tax-loss harvesting.

AI adoption is best for future investment decision-making. It can process market signals faster than any human and keep emotion out of the equation. However, investors should treat it as a tool. The key? Pairing algorithmic discipline with a clear understanding of your own goals and risk tolerance.

Look for transparent fees and clear introductions when choosing an investment platform. And remember that one-size-fits-most glide paths might miss nuances in your situation. It's easy to "set and forget" money tools, so check in at least annually or after big life changes.

3. AI leverage for savings

Saving consistently is hard because life is messy. That's why automation helps so much. AI takes it further by watching your inflows and outflows as well as picking the best moments to move money.

Apps like Digit popularized this idea, using algorithms to automatically nudge small amounts into savings. Rule-based tools like Qapital let you build simple triggers that can add up without you thinking about it. For example, every purchase over $20 moves $2 to savings.

Most people struggle to save because it requires constant willpower. AI removes that friction by quietly moving money at the right moments, based on your income and spending rhythm. You wake up to savings you didn't have to think about.

Two quick ways to make the most of automated savings:

• Park savings in a high-yield account, so your cash works harder. The FDIC's national rate and cap data show how much average rates vary by product category, and is a useful reminder to shop around.
• Set up different savings buckets (emergency fund, travel, lifestyle, home improvement). That way, the app knows what you're saving for and can pace contributions to match your priorities.

4. AI-driven debt management

Debt can paralyze people because they don't know where to start. An AI tool can cut through that by mapping out which balances to prioritize and showing the payoff timeline. The caution? Stay engaged: The tool guides the plan, but you still have to commit to it.

It can also model the fastest or most motivating way to pay off your debts. While the avalanche method (highest rate first) is mathematically efficient, the snowball method (smallest balance first) can boost motivation, which helps people stick with the plan over time.

AI can simulate both, show you the trade-offs and help you pick the approach you're most likely to follow.

5. AI adoption for financial security

Fraud losses have climbed, and the scammers haven't slowed down. In 2023, the FTC reported that consumers lost nearly $10 billion to fraud including investment scams and imposter schemes. The good news? Banks and card networks now lean on AI to spot patterns humans would miss and to act quickly.

You can maximize AI's potential by:

• Turning on real-time transaction alerts and location-based card controls in your banking apps.
• Using virtual card numbers for online purchases. Capital One's Eno offers this feature.
• Enabling strong authentication. Passkeys can reduce account-takeover risk.
• Keeping your device's operating system up to date, as this includes security protections.

Take control of your finances with AI

AI won't rebuild your budget or fund your IRA on its own. However, it can keep you on track with less effort and catch problems early. It can give you day-to-day clarity that builds real momentum.

Start small. Turn on the alerts. Let an app suggest a budget that fits how you live. Try a robo advisor with a modest amount ,or set up an automated savings rule and see how it feels.

Having an "AI co-pilot" for your finances can be more than an interesting experiment. It can mean less juggling, fewer surprises and a clearer path to the goals that matter to you.

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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.

Something interesting is happening among young Americans: Even young conservatives are becoming more skeptical of capitalism.

A Wall Street Journal opinion piece (paywall) recently cited a survey showing that 53% of conservatives under 40 support government-run grocery stores. Harvard's Fall 2025 Youth Poll found that just 39% of young Americans support capitalism, down from 45% in 2020, with only 19% describing themselves as capitalists.

Those numbers are striking. However, I don't think the explanation is as simple as young Americans suddenly embracing socialism. I think they're frustrated, and a lot of that frustration is justified.

Housing is expensive, education and healthcare costs have risen. People who already own homes and stocks have benefited enormously from rising asset prices, while those trying to enter the market are paying significantly more to do so.

A 25-year-old looking at that landscape has every reason to ask whether the system is working for them.

But there's another part of the equation that I think gets overlooked.

I've spent more than 25 years as a tax attorney focused on retirement accounts and wealth creation. One of the hardest things about convincing someone in their twenties to care about retirement is that the reward feels impossibly far away.

You put $7,500 into an IRA at 25. A year later, maybe it's worth $8,500. That's not exactly life-changing money.

The mistake is evaluating that decision at 26 instead of 65.

Capitalism has a similar problem. Its benefits often take time, and we increasingly live in a culture that expects results immediately.

Starting out has never been easy — but it's different today

When I started practicing law in New York in 2001, I made about $125,000 a year. That was a very good salary for a 25-year-old.

I still had a roommate.

I didn't buy my first house until I was 37. Of course I would have liked to own one sooner. But at the time, I didn't interpret not owning a home in my twenties as evidence that the economic system had failed me. I was building my career, saving money and starting a business. I assumed the payoff would take time.

There is an important difference today.

Young Americans aren't imagining the affordability problem. Housing costs are real, and rising asset prices have disproportionately benefited people who already own stocks and real estate. Someone starting from zero today can reasonably look at the cost of a home and wonder whether patience alone is enough.

We shouldn't dismiss that concern, but we also shouldn't make the opposite mistake and conclude that because the path has become harder, the principles behind building wealth no longer work.

Social media shows the finish line

When I was 25, I wasn't carrying around a device that showed me hundreds of wealthy people every day.

Today, someone can open TikTok and immediately see a 27-year-old entrepreneur stepping onto a private jet, an investor talking about making millions in crypto or an influencer showing off a house that most people historically wouldn't expect to own until much later in life.

What you don't see is the race.

You don't see the 10 years of work, the failed businesses, the bad investments or, in some cases, the family money behind the lifestyle.

At the same time, sports betting and speculative investing have made the idea of getting rich quickly feel more attainable. Pew Research found that 31% of Americans ages 18 to 29 bet on sports in the past year, compared with 22% of adults overall. A 2026 Urban Institute study found that 15% of young bettors saved less because of it.

My concern isn't that placing an occasional bet is going to destroy capitalism.

It's the mindset.

Real wealth creation is usually boring: Work. Save. Buy assets. Reinvest. Avoid major mistakes. Repeat.

The real divide is ownership

This is where I think young Americans are identifying a real problem but sometimes drawing the wrong conclusion from it. Capitalism rewards owners.

If you own a home and its value increases, you benefit. If you own stock in a growing company, you benefit. If you own a business, you participate in the value that business creates.

If you own nothing, you are primarily dependent on your labor, and that divide matters.

But if the problem is that too few people participate in ownership, the answer isn't to reject ownership. It's to help more people become owners earlier.

Retirement accounts are one of the simplest ways to do that.

Imagine someone invests $7,500 annually from age 25 to 65 and earns an average 8% return. That account could grow to roughly $1.9 million, even though only about $300,000 came directly from the investor's contributions.

That's what time does.

A person investing $10,000 annually at 8% would have roughly $145,000 after 10 years, $1.2 million after 30 and $2.6 million after 40.

The investor didn't suddenly become smarter in year 30.

Their capital had time to work.

Young Americans are right to want more

None of this means telling a 25-year-old struggling with rent, student loans or healthcare costs to stop complaining and wait 40 years.

That's not a serious response.

If we want younger Americans to believe in capitalism, they need a realistic opportunity to participate in it. That means making it easier to save for retirement, improving financial education, expanding access to investment and creating more pathways into home and business ownership.

It also means recognizing something uncomfortable: Previous generations benefited from economic conditions that aren't identical to those facing young people today.

But acknowledging that doesn't require abandoning the basic principles of long-term wealth creation. In fact, I would argue the opposite.

If rising asset prices have widened the gap between owners and non-owners, becoming an owner matters more, not less. Young Americans have access to investment tools my generation could barely imagine at their age. You can open an IRA in minutes, buy fractional shares and invest with virtually no commissions.

What young people have most of all is something nobody can buy later: Time.

Capitalism isn't perfect. It doesn't guarantee success, and legitimate structural problems deserve legitimate solutions.

But neither capitalism nor retirement investing should be judged solely by what they produce in a year or two.

At 25, you're not supposed to have already built wealth. You're building the foundation for it.

The question shouldn't be whether young Americans are patient enough to accept an economy they believe isn't working for them. It should be how we help more of them become owners.

Our retirement system may be the best tool we have to do that. A 401(k), IRA or Roth IRA gives almost every working American a tax-advantaged way to own stocks, businesses, real estate and other assets. And young Americans have the greatest advantage of all: Time.

At 25, they have four decades for ownership and compounding to work in their favor. If the economic divide is increasingly between those who own appreciating assets and those who don't, the answer isn't to abandon ownership.

It's to create more owners, and give them enough time for ownership to matter.

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

I started to focus on retirement income planning about 15 years ago. One thing that struck me early in this journey was just how much our clients detest required minimum distributions (RMDs).

A large percentage of our clients were federal retirees with large pensions under the old system. They didn't need the money.

It wasn't that they were mad about having to take the funds — it was the taxes. On top of the taxes, there were also the other dominos that could fall — the phaseout of certain deductions, higher capital gains taxes and, perhaps the most hated, Medicare premium hikes (IRMAA).

Today, many of our clients still hate RMDs. This is not just because they all have large pensions, but many have put themselves in strong financial positions and do not like paying taxes on money they don't need. It's like paying the tolls on the Jersey Turnpike but having no desire to actually get where you're going.

We use many strategies to lower our clients' lifetime tax bills, but these three very niche strategies are designed to stop or delay the actual income you don't want, in turn, reducing or deferring the taxes.

1. Skip your first RMD

Everyone is eligible to defer the RMD in the year they hit their RMD age. This can be 70½, 72, 73 or 75, depending on your year of birth. This sounds better than it is, but it can make sense in the right situation.

Let's say you were born in 1960. Your RMD age is 75, and you will hit that in 2035. You can defer your 2035 RMD until 2036. Here's the catch: You'll then have to take two RMDs in 2036, one by April 1 and one by December 31.

Doing this without running the numbers can really backfire, because that lumpy distribution is more likely to cause more bad dominos to fall than if you'd split the distribution over two years.

Here are some situations where we've seen it make sense to skip the first RMD:

• You retire in 2035 and will have a significant income drop in 2036
• You sell your business in 2035

You have a lump sum from any other source in 2035 that causes your income to spike (unpaid leave, inheritance, inherited IRA distribution, home sale, etc.)

You see the theme. If your income is much higher in 2035 than you expect it to be in 2036, it could be beneficial to skip your first RMD. We rely on financial planning software to project out tax rates to make that determination. You can access a version of what we use.

2. Buy a qualified longevity annuity contract, or QLAC

When interest rates were hovering around zero, it rarely made sense to turn to a QLAC. Income guarantees move in the same direction as interest rates, so if there is any silver lining to inflation, it's that most fixed annuity rates moved up as the Fed raised rates to combat inflation. Merry Christmas!

A QLAC is a type of deferred annuity, basically meaning you give money to an insurance company in exchange for a future income stream. This is a unlike a single premium immediate annuity (SPIA), with which payments start immediately.

I believe that you need to approach this as longevity insurance first and as a tax tool second. Because many of these contracts will defer income until age 85, you are making a big bet on longevity.

The tax benefit is that you can move up to $210,000 per person (2026 limit) from your IRA into a QLAC. Round numbers: If RMDs start at 4%, you are delaying just $8,400 per year in RMDs.

"Delaying" is the key word. When that money does come out, it is still taxable.

Once again, this makes sense if you are already considering an annuity as a longevity hedge and like the idea of guaranteed income later in retirement.

3. Keep working

This one is not complicated but is often misunderstood. A costly mistake. If you are still working in any capacity as an employee and own less than 5% of the company, you can defer RMDs from your current employer retirement plan, but not from all your retirement plans.

Take the example of the client who started a manufacturing business that he sold to his employees. The business is his life. He tells me he'll work until the day he dies. I tell him he'll work until the day the new owners decide they can't take him anymore. He sort of laughs. He can defer RMDs until that day.

More commonly, we see clients continuing to work part-time in retirement. For anyone who is still working, and for employer retirement plans that accept rollovers into the plan, you may be able to roll funds from your IRA into your current employer plan and avoid RMDs on a much larger chunk of money.

This is the definition of the tax tail wagging the investment dog, which most textbooks caution against. But if you've got a good retirement plan at work and don't plan to stop working, it may make sense.

Most retirees spend more than their RMDs every year, so this is really an uptown issue for those who are really focused on taxes, as we are in our practice.

It is important to note that there are very few ways to completely eliminate the tax consequences, as you would if you did a qualified charitable distribution (QCD), so it's important to note that there is no prize for being the best tax deferrer. It only makes sense if your future tax rates will drop.

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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.

Katie retired at 67 after 30 years as a marketing executive. She had planned for it. In the final months of her career, she made a list of everything she had wanted to do but never had time for: Painting, reading, travel and long lunches with friends.

She retired in June and by September had done them all. By January, she was restless in a way she could not explain.

She was not exactly bored. Her days were full. She painted three mornings a week, attended a book club twice a month and had taken two trips she described as wonderful. She had the life most people picture for retirement. She also had a persistent, low-grade sense that something was not adding up.

She was doing everything right. She simply did not realize that doing everything right is not the same as doing the right things.

The leisure trap

Most retirement planning conversations miss a distinction entirely: Pleasant activity and purposeful engagement are not the same. One passes time agreeably. The other builds something.

Many retirees arrive at retirement with a version of Katie's list. They have delayed hobbies and postponed pleasures, and retirement finally gives them the time to pursue them. This is not a problem. The problem is mistaking the beginning of a fulfilling retirement for the whole of it.

Meaningful activity has three qualities:

• It draws on something you are good at
• It continues to challenge you
• It generates an outcome beyond personal enjoyment

Pleasant activities can satisfy one of those conditions, while purposeful engagement satisfies all three.

Katie's painting met one. She enjoyed it. It did not yet require her best thinking. It produced no outcome that mattered to anyone outside the room. And it was not growing.

What work was actually providing

For 30 years, Katie's career provided three things she did not consciously notice until they were gone: A skill that was always developing, an audience whose response to her work mattered and outcomes with real stakes.

The marketing campaigns she built either succeeded or failed. The metrics were visible, and the feedback was immediate. The challenge was never fully mastered.

That combination of novelty, accountability and consequence is what psychologist Mihaly Csikszentmihalyi identified as the conditions for flow: A state of full absorption in a demanding, skill-matched activity.

Flow is not relaxation. It is the opposite of relaxation. Csikszentmihalyi's decades of research identify flow as one of the most reliable contributors to well-being and meaning in adult life.

Pleasant hobbies rarely generate flow. They generate comfort. Comfort is not nothing. It is simply insufficient to fill the psychological space a career once occupied.

The distinction that changes everything

Purposeful engagement is not about what you do. It is about how you do it and for whom.

Golf is an instructive example. As a vehicle for walking, outdoor exposure and social connection, it is among the most valuable physical activities for a retiree. The distinction is not in the game itself. It is in what the game is being asked to carry.

As the sole answer to the question of how to spend the years after a career, it becomes a placeholder masquerading as a life. Same activity. Entirely different design.

Three conditions turn a hobby into purposeful engagement:

• A skill that still has room to grow. An activity not yet mastered that continues to demand more than you can deliver
• An audience beyond yourself. Someone whose response to your work, presence or contribution matters to the outcome
• Stakes. Something that would be diminished if you stopped showing up

A hobby that meets none of these conditions is considered leisure. Leisure is valuable. A retirement built entirely on leisure is like a financial portfolio held entirely in cash: It preserves what is there, but it yields nothing new.

The prescription

Katie's restlessness was resolved not by changing what she did but by altering the conditions under which she did it.

She joined a community art collective that required her to show work quarterly and to receive critiques.

She began teaching watercolor once a week at a center for older adults, which required her to clearly articulate what she knew.

She entered a regional exhibition but did not place. The following year, she entered again and had different results.

The hobby took on a higher purpose.

The painting did not change. The design did. She now has an audience, a standard and a reason to improve that extends beyond her own preference.

Her days have the quality of her career days, oriented toward something that is not yet finished.

That orientation is what the hobbies pillar, properly understood, is meant to provide. Not entertainment. Not the pleasant passage of time. An answer to the question retirement poses to every retiree who takes it seriously.

Who am I becoming in the years after my career, and is anyone watching?

The financial plan tells you how long the money will last. Purposeful engagement determines whether the person spending it keeps growing.

Both deserve a plan. For too long, only one has had it.

To learn more about designing a fulfilling retirement, pick up my new book, Your Encore Years: The Psychology of Retirement.

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

Americans have no shortage of retirement benchmarks competing for their attention. Some experts say you need $1 million, others suggest saving 10 times your salary, and then there's the 4% rule.

On top of that, there are annual surveys and statistics that aim to calculate or identify the ever-popular retirement "magic number" for how much the average American needs to retire comfortably.

While these figures and rules can offer a starting point, they can also create unnecessary anxiety and lead people to focus on the wrong end goal.

Retirement planning is not about reaching someone else's number. It's about creating enough sustainable, reliable income to support the life you want to live.

Start with the retirement you envision

Many people begin retirement planning by asking, "How much do I need to save?" However, a more useful question may be, "What do I want retirement to look like?"

For some, retirement means extensive travel and new experiences. For others, it may involve staying close to family and supporting children or grandchildren. Others might even consider relocating, volunteering, pursuing a passion project or continuing to work in some capacity.

Those decisions matter because they determine the amount of income you will actually need. A retirement built around international travel will look very different financially from one centered on spending time at home with family.

Starting with your goals rather than a savings target helps turn retirement planning from a math exercise into a strategy built around your life.

Focus on income, not just assets

During your working years, retirement planning is largely about accumulation. You save, invest and allow time and compounding to work on your behalf.

As retirement approaches, the challenge changes. The question is no longer how much you can accumulate. It becomes how effectively you can convert those assets into reliable income.

This is where popular rules of thumb can fall short. Let's take the 4% rule, for example. This strategy suggests withdrawing 4% of your savings in the first year and then adjusting that amount for inflation every year after.

While this can feel simple and may work for some, there is a lot it can't account for, including when you retire, your tax situation, spending patterns, desire to leave assets to heirs or charitable causes, among other factors.

Two retirees with identical portfolio balances could require very different withdrawal strategies based on their goals, other income sources and life circumstances.

Consider the personal risks, too

A retirement income strategy should also account for risks that a simple savings target can't capture.

Longevity is one example. Funding a retirement that lasts 20 years is very different from funding one that lasts 35 years.

Market conditions matter as well. Retiring into a market downturn can create challenges that don't exist when markets are rising, particularly if withdrawals begin immediately.

Inflation can reduce purchasing power over time, while taxes can significantly affect how much spendable income remains from different accounts.

Family considerations also play a major role. While some retirees expect to help support aging parents, others may want to assist adult children, fund education for grandchildren, or prepare for a future transfer of wealth.

These priorities are meaningful, but they're difficult to capture in a single benchmark or national average.

Build a plan that evolves

No matter what you envision for your retirement, planning for it shouldn't be a one-time exercise completed just before leaving the workforce. A strong retirement income strategy should be flexible enough to adapt as life and goals evolve.

That's where an adviser can add value. Working with an adviser can help you build and refine that strategy over time, aligning your resources with your goals, revaluating trade-offs and adjusting as circumstances change.

A retirement plan should reflect your life, not a "magic number" or arbitrary benchmark. In the end, what matters most is having a personalized income strategy that supports the retirement you want today and can evolve with you tomorrow.

This material is provided for informational purposes only and is not intended as investment, legal, or tax advice. Any opinions expressed are those of the author as of the date of publication and are subject to change. Individuals should consult their own legal, tax and financial professionals regarding their 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.

If there's one thing I've learned in my years advising real estate investors, it's this: The tax code doesn't care about your feelings. It does, however, reward you handsomely if you know which tools to pick up and when.

The problem is that most investors think of 1031 exchanges, Delaware statutory trusts and Qualified Opportunity Zones as one-size-fits-all solutions. They're not.

Recommending a 1031 exchange to every investor who walks through the door is like a doctor prescribing the same medication to every patient. Sure, aspirin is great, but it's not going to fix a broken leg.

So let's meet four very different investors, each facing a unique set of circumstances, and match them with the tax strategy that fits like a glove.

Henry: The stock market refugee

Henry spent 25 years building a seven-figure stock portfolio. Then came the tariff whiplash of late 2025 and the energy crisis of 2026, and Henry watched a decade of gains get rattled in a matter of weeks. He didn't just lose money — he lost sleep, his appetite and his faith in Wall Street.

Now Henry wants out. He's sitting on stock he'd like to sell, but the remaining gains still carry a hefty capital gains tax bill. And he wants something he can see and touch — something that doesn't swing 3% before breakfast.

Henry's play: A Qualified Opportunity Zone fund. When he sells his stock, those capital gains can be reinvested into a QOF within 180 days. The original gain gets deferred, and if he holds the QOZ investment for at least 10 years, any new appreciation is tax-free. The growth on his new investment owes nothing to Uncle Sam.

Better still, the One Big Beautiful Bill Act (OBBBA) has made the Opportunity Zone program permanent, introducing a rolling five-year deferral for gains invested after December 31, 2026, and a 10% basis step-up for those who hold for at least five years.

For stock market refugees like Henry who want to pivot into tangible real estate while getting a serious tax break, QOZs are the escape hatch.

One important note: Henry doesn't qualify for a 1031 exchange because he's selling stocks, not real estate. The QOZ program, unlike Section 1031, accepts capital gains from virtually any asset class: Stocks, crypto, businesses, art, you name it. That's what makes it the Swiss Army knife of capital gains strategies.

Rachel and Tom: The divorcing couple

Nobody gets married planning for a divorce, but here we are. Rachel and Tom own three rental properties together, and now they need to split everything up, ideally without handing a third of their equity to the IRS in the process.

Their situation is more common than you'd think and more treacherous than most people realize. If they simply sell all three properties and divide the cash, the capital gains taxes could be devastating: Potentially hundreds of thousands of dollars in federal and state taxes, plus depreciation recapture, gone before either party sees a dime.

Rachel and Tom's play: A 1031 exchange into Delaware statutory trusts. They sell the properties and use a qualified intermediary to execute a 1031 exchange, but instead of buying replacement properties together (which, given the circumstances, has obvious shortcomings), they each exchange into separate DST investments.

DSTs allow each of them to invest independently in institutional-grade real estate — think Class A apartment complexes or Amazon distribution centers — with minimum investments typically starting around $100,000.

Each party gets their own portfolio, their own monthly distributions and their own tax deferral. No more joint ownership. No more awkward phone calls about the leaking roof on Property No. 2.

The DST structure also eliminates the 45-day identification panic that sinks so many 1031 exchanges. Because DST properties are prepackaged and already acquired by the sponsor, Rachel and Tom can identify their replacement investments quickly, even under the emotional fog of divorce proceedings.

It's the cleanest possible split, with the least possible tax damage.

Sofia: The empire builder

Sofia is 42, owns a couple of single-family rentals and is hungry for more. She's not looking for a beach chair and a mailbox full of passive income; she's looking for a ladder. Her goal is to consolidate her smaller properties into larger, higher-performing commercial real estate and build serious generational wealth.

Sofia's play: The classic 1031 exchange, the way it was drawn up over a hundred years ago. She sells her two rental homes — let's say for a combined $800,000 — and rolls the full proceeds into a 20-unit apartment building worth $2 million, financing the balance with a mortgage. No capital gains taxes due. Every dollar of equity stays in the game.

This is the power of the 1031 exchange in its purest form: The ability to trade up without the tax drag. If Sofia had sold those two rentals and paid federal and state capital gains taxes, plus depreciation recapture, she might have lost $150,000 or more off the top.

That's not just money lost; that's leverage lost. It's the difference between a 20-unit building and a 12-unit building, between scaling an empire and treading water.

And Sofia doesn't have to stop there. Five or 10 years down the road, she can 1031 that apartment building into an even larger asset — a retail center, an industrial property, a portfolio of commercial buildings.

Each exchange defers the gains from the last one, creating a compounding effect that has made more real estate millionaires than any other provision in the tax code.

If she's strategic enough to hold her final property until death, her heirs receive a stepped-up cost basis, potentially wiping out every dollar of deferred gains along the way.

That's not just a tax strategy. That's a dynasty play.

Raymond: The high-income professional

Raymond is a plastic surgeon earning north of $800,000 a year. His tax bill is, to put it delicately, eye-watering. He wants two things: Passive income that doesn't require him to leave the operating room, and every legitimate tax deduction he can get his hands on.

Raymond's play: A combination strategy. First, he invests directly in DSTs that offer bonus depreciation. Under the newly restored 100% bonus depreciation rules, Raymond can potentially offset a significant portion of his passive income with accelerated depreciation from his DST investments — paper losses that reduce his tax bill without reducing his actual wealth.

Second, Raymond allocates a portion of his capital gains from stock sales or other investments into a Qualified Opportunity Zone fund, starting the 10-year clock toward tax-free appreciation. With the OBBBA making the OZ program permanent, Raymond has a long runway to compound gains without the drag of annual capital gains taxes.

The combination of DST depreciation benefits and QOZ tax-free growth creates a one-two punch that's hard to beat for high earners. Raymond gets monthly passive income from the DSTs, a meaningful reduction in his current tax liability and a long-term growth vehicle in the QOZ, all without ever picking up a wrench or answering a tenant's midnight phone call.

Your move

If you see yourself in any of these scenarios — or in some combination of them — the worst thing you can do is nothing. The tax code rewards action, and every day you delay is a day your money is working harder for the government than it is for you.

The best thing you can do? Find an investment adviser who understands not just one of these strategies, but all of them. Find someone who can look at your complete financial picture and recommend the right tool for the job, not just the only tool they happen to sell.

Because in the world of tax-advantaged real estate investing, the right strategy isn't the most popular one. It's the one that fits you.

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

I live in Arizona, and during monsoon season, we know what a black cloud looks like.

You can see it building in the distance. The sky gets darker. The temperature changes. The wind starts to pick up. Even though nothing has happened yet, you worry about it.

Is it going to rain? How bad will it be? Will there be hail? High winds? A dust storm? Is it even going to hit us — or will it pass by?

The other day, the clouds were dark enough that I called my 17-year-old daughter and told her to be careful driving. There wasn't a storm at our house yet, but I knew there was enough risk that it was worth thinking ahead.

Those clouds are a good metaphor for how I look at long-term care: It's the black cloud of retirement planning.

You know the cloud is out there

Most people approaching retirement understand they might need some form of long-term care. What they don't know is what it will look like. They're likely asking themselves:

• Will I need long-term care at all?
• When will I need it?
• Will my spouse be able to take care of me?
• Will I need a little help at home or full-time care?
• Will I need help for six months or six years?
• How much might that care cost?
• What happens financially to my spouse if I'm the one who needs care?

That's a lot of uncertainty hanging over a retirement plan, which makes long-term care so uncomfortable to discuss.

• We can estimate how much income someone will need in retirement
• We can model Social Security
• We can build an investment portfolio
• We can discuss taxes and estate planning

But long-term care is different.

We don't know if or when the storm is coming, how long it will last or how severe it will be.

That's why we should plan for it.

The storm isn't just about money

When people hear "long-term care planning," they often think about the financial hit. But that's not always the biggest risk.

Long-term care can become a family issue before it becomes a financial problem.

Someone must coordinate doctors, medications, transportation and care facilities. A spouse might become the primary caregiver. Adult children might begin rearranging work schedules and family responsibilities. Families are often forced to make difficult decisions when they're already feeling stressed.

There's also the potentially substantial cost.

Imagine a married couple who have spent 30 or 40 years saving for retirement. They've built a nest egg that's meant to provide income for two people. They have travel plans. They want to help their grandchildren. Maybe they want to leave something to their children.

Then one spouse needs significant care.

Suddenly, the same pool of assets has two jobs. It must provide for the healthy spouse's retirement while simultaneously paying for the other spouse's care expenses.

That's why I believe the long-term care planning conversation should start with people, not products.

What would you want to happen?

Before discussing insurance and other options, I like the idea of asking some basic questions:

• If you needed care, where would you want to receive it?
• Would you prefer to remain at home as long as possible?
• Who would you expect to help you?
• What assets would you be comfortable spending?
• How important is preserving assets for your spouse?
• How important is leaving an inheritance?

These questions change the conversation. The plan comes first. The product comes second.

There are several ways to prepare for the storm

There isn't one long-term care strategy that will work for everyone. Generally, families have at least a few options, including:

1. Self-funding

Some people have accumulated enough wealth to comfortably pay for care from their own assets, and that's a perfectly legitimate strategy.

But self-funding should be a strategy, not an assumption. It should include modeling what happens if one spouse requires significant care for several years.

• From where would the money come?
• Which assets would be tapped?
• What happens to the surviving spouse's income?
• Does the rest of the retirement plan still work?

2. Traditional long-term care insurance

Traditional long-term care insurance allows someone to transfer a portion of the risk to an insurance company. In the right situation, it can provide significant leverage and help protect other retirement assets.

But the tradeoffs include ongoing (usually high) premiums and the possibility of premium increases, not to mention the discomfort some people have with paying for something they might never use.

3. Hybrid or asset-based strategies

Another option is a hybrid or asset-based strategy — usually a life insurance policy or annuity that includes long-term care benefits.

The money that goes into this strategy can serve multiple purposes. If long-term care is needed, those benefits are available. If it isn't needed, the death benefit or other value remains.

This can make the decision more acceptable for someone who dislikes the idea of "use it or lose it" insurance.

4. Combining strategies

Planning doesn't have to be all or nothing.

A family might choose to insure against part of the risk while retaining enough assets to cover the rest.

That's often how we handle other risks in life. We decide how much risk we're comfortable shouldering and how much we want to transfer to auto, home, health or other insurance policies.

Doing nothing is still a decision

You could decide to do nothing and figure it out as you go. That's the long-term care strategy many families have by default.

Maybe a spouse provides the care. Maybe the children step in. Maybe assets are spent down. Eventually, Medicaid might become part of the conversation for some families.

But there's an important distinction between intentionally choosing to retain a risk and ignoring it: The default plan might give you fewer choices when you need choices the most.

Plan while the sky is still clear

Having a strategy in place can help you feel more prepared and might reduce the urge to constantly watch the sky.

That's one of the primary goals of a good retirement plan: It can help provide confidence in the face of uncertainty.

Planning earlier might give you time to evaluate your financial resources, your family situation and the various ways you could handle the risk.

You don't necessarily have to purchase something. But you should have the conversation.

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.