When you budget for an AI tool, you budget for the bill the vendor sends. That bill is the visible part of the cost. It is also the smaller part.

The expenses that decide whether AI pays off for your firm never appear on the vendor's invoice at all, and most firms do not budget for them until they arrive.

This is the part of AI economics that catches finance leaders off guard. The token cost is the tip. The real cost sits below the surface, and it is made of your people's time and your firm's regulatory exposure.

The cost of review

Every piece of AI output that reaches a client must be checked by a human first. This is not optional for a fiduciary. You cannot send an AI-drafted client communication, an AI-generated summary or an AI-assisted recommendation to the people who trust your firm with their money without a qualified person reviewing it.

The technology does not change the standard of care. It changes who does the first draft.

That review is a labor cost, and it scales with how much AI you use. The more your advisers generate, the more there is to check. A firm that measures only the token bill sees AI getting cheaper per task while the review burden quietly grows.

If you do not budget the review time, you have not budgeted the tool. You have budgeted half of it.

The cost of training

A tool your staff cannot use well is a tool you are overpaying for. I see this all the time with firms that roll out Microsoft Copilot without any training around how to use the tool and get the most out of it. These firms quickly find the costs without the benefits.

Getting real value out of AI requires teaching your people how to prompt it and how to judge what comes back, including when to distrust it. That training takes time, it takes a person to deliver it, and it repeats every time the tool changes or a new hire arrives.

This cost is easy to skip and expensive to skip. Untrained staff produce worse results from the same tool, which makes the AI tool look like a poor investment when the real problem is the absence of training. The token bill is more expensive when your people use the tool badly, reducing your return on the investment.

The cost of governance

This is the line that protects the firm, and it is the one most likely to be missing from the budget.

Using AI responsibly in a regulated business requires an acceptable-use policy that classifies which tools are approved and which data may be processed. It requires vendor due diligence documentation for every tool that touches client data, mapped against your regulatory obligations.

It requires updated supervisory procedures showing how AI-assisted work is reviewed before it reaches a client. It also requires a training record an examiner can inspect.

None of that builds itself. Each piece takes time from compliance and operations staff, and it must be maintained as the tools and the rules change. The off-channel communications enforcement wave taught the industry an expensive lesson about applying existing rules to new technology after the fact.

AI governance is the same lesson waiting to be learned again. The firm that funds the tool but not the governance around it is buying the upside and leaving the downside unbudgeted.

Why ownership decides the outcome

These costs fall across three parts of your firm. The token bill belongs to technology. The review burden belongs to the leadership team. The governance work belongs to compliance. When one of those groups owns the AI budget alone, the costs that live in the other two go unfunded.

Research on AI return makes this concrete. According to the Mavvrik report AI Cost Statistics 2026: Forecasting, ROI, and Budget Risk, firms where technology teams own AI spend by themselves capture less value than firms where finance and compliance share the decision. The reason is exactly this fragmentation.

A technology-only budget sees the invoice and misses the iceberg. A shared budget sees the whole cost, funds it correctly and gets a real answer about whether the tool is worth it.

How to budget the whole cost

Start by writing down every cost a single AI workflow creates, not just the one the vendor charges for. Put the token estimate at the top. Then add the hours of review the output will require, the training to get staff using it well and the compliance work to govern it.

That full number is the real cost of the tool. It is the only number that tells you whether the investment returns anything.

I want to point out that this cost will always be less than a human cost, but it should be clearly measured.

Then assign each cost to the group that incurs it and bring those groups into one budget conversation. The token line is a technology decision. The rest is not.

The firm that budgets the whole iceberg will know what its AI use costs and whether it pays dividends on the investment.

The firm that budgets only the tip will be surprised twice, once by the hidden costs and again by the return that never materialized because the tool was never properly supported.

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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 most people hire a financial advisor, they think they are receiving comprehensive financial advice. Unfortunately, that assumption is not always correct.

Many financial advisors focus primarily on investments. Others specialize in insurance, taxes, retirement planning or estate planning. While expertise in any one area can be valuable, consumers often discover that financial decisions rarely occur in isolation.

A decision about investments affects taxes. A decision about taxes affects retirement planning. A decision about retirement planning affects estate planning. Every financial decision is connected to several others.

That reality helps explain why comprehensive financial planning has long been considered the highest standard of financial advice.

Gary Schatsky, founder of Independent Financial Counselors in New York City and former chairman of the National Association of Personal Financial Advisors (NAPFA), has spent more than four decades advocating for comprehensive, fee-only financial planning.

According to Schatsky, the fundamental challenge is that consumers often receive advice focused on a single area of their finances while the real opportunities and risks may exist elsewhere.

"You can't have someone who's closing one eye and focusing on one issue when investment allocation is no more important than tax planning, which is no more important than debt planning," he says. "They're all completely integrated."

That simple observation highlights one of the most important realities in personal finance: Financial success rarely depends on one decision. Instead, it depends on how all the pieces fit together.

What is comprehensive financial planning?

In my book AdvisorSmart for the Individual Investor, I describe comprehensive financial planning as a process that examines a client's entire financial life rather than focusing on a single product, account or investment decision.

A comprehensive approach considers goals, investments, taxes, retirement plans, insurance needs, estate planning, employee benefits, debt management, cash flow and other financial factors.

CFP Board, which sets and enforces the requirements for the CERTIFIED FINANCIAL PLANNER® certification, identifies several major planning disciplines, including:

• Financial statement analysis
• Insurance and risk management
• Employee benefits planning
• Investment planning
• Income tax planning
• Retirement planning
• Estate planning

A comprehensive financial planner evaluates how these areas interact and affect one another rather than treating each as a separate assignment.

Schatsky believes this holistic perspective is what separates professional financial planning from narrower forms of financial advice. "The goal is to know 360 degrees of someone's world," he says.

In his view, advisors should understand far more than a client's investment portfolio. They should understand family circumstances, tax situations, debt obligations, retirement goals, estate planning concerns, charitable objectives and other factors that influence financial outcomes.

Any advice they provide is cheapened if they don't know "100% of a client's financial world" and haven't considered it fully, he warns.

Why comprehensive advice produces better outcomes

Imagine two investors with identical investment portfolios:

• The first investor has no debt, lives below their means, maintains appropriate insurance coverage and has a well-designed estate plan
• The second investor carries high-interest credit card debt, lacks adequate insurance, has no estate plan and has significant tax inefficiencies

Although their investment accounts look identical, their financial situations are dramatically different.

A comprehensive financial planner would recognize those differences immediately. For the second investor, debt management advice may be more valuable than selecting a different mutual fund or making a minor portfolio adjustment. As Schatsky says, "I'd be happy to take money earning 3% and pay off a credit card [charging] 10%."

Similarly, effective tax planning can sometimes generate greater financial benefits than investment selection alone. Strategic Roth conversions, charitable giving strategies, tax-loss harvesting opportunities and proper asset-location decisions can create substantial value for investors over time.

The common thread is that these opportunities often fall outside traditional investment management.

The importance of asking better questions

Comprehensive financial planning begins with information gathering.

In my experience, a competent financial planner may ask dozens — or even hundreds — of questions before making major recommendations. The purpose is not to create paperwork. The purpose is to understand the client's complete financial picture.

Schatsky compares the process to solving a complex puzzle: "You need to have all of the skills. I need to see your tax return. I need to understand your debt. I need to know your family's situation. I need to understand all the factors."

Consumers should be cautious when advisors ask very few questions before making recommendations.

A financial plan built on incomplete information is likely to produce incomplete results.

If an advisor spends most of the meeting discussing investment products without thoroughly exploring goals, taxes, debt, insurance, retirement planning and estate issues, investors should consider whether the advice is truly comprehensive.

Why fee-only matters

Comprehensive planning becomes even more powerful when combined with a fee-only compensation model.

Fee-only financial planners are compensated directly by clients rather than through commissions generated from the sale of financial products.

The significance is straightforward.

When advisors are not paid to sell products, they are often in a better position to evaluate alternatives objectively.

For example, a fee-only advisor may recommend paying down debt instead of investing additional assets. They may recommend delaying the purchase of a financial product. They may even recommend retaining an existing investment rather than replacing it.

The focus shifts from product implementation to problem solving.

Schatsky believes this objectivity is essential: "The public needs impartial advisors."

The combination of comprehensive planning and fee-only compensation creates an environment where advisors can focus on identifying the best solution rather than the most profitable solution.

What consumers should look for

Investors searching for a financial advisor should ask potential candidates several important questions:

• Will you review my entire financial situation?
• Will you examine my tax returns?
• Will you evaluate my debt structure?
• Will you review my insurance coverage?
• Will you discuss estate planning issues?
• How are you compensated?
• Are there any financial products for which you receive commissions or incentives?

The answers can reveal whether an advisor is providing comprehensive financial planning or a more limited service.

According to Schatsky, consumers should seek financial advisors who embrace the responsibility of understanding every relevant aspect of their financial lives.

"If you're not getting skilled advice and comprehensive advice and impartial advice simultaneously," he says, "you're not getting what you need."

The future of financial planning

As technology continues to automate many investment functions, the value of comprehensive financial planning may become even more apparent.

Portfolio management is increasingly commoditized. Asset allocation models can be automated. Rebalancing can be automated.

What cannot easily be automated is the thoughtful integration of taxes, retirement planning, estate planning, insurance decisions, debt management, family dynamics and life goals into a coherent financial strategy.

That is where comprehensive financial planning continues to demonstrate its value.

More than 40 years after the modern fee-only movement began, the central idea remains remarkably simple: Investors deserve advice that considers their entire financial life.

As Schatsky puts it: "The public needs comprehensive advice."

For consumers seeking objective guidance and better financial outcomes, that principle remains as relevant today as ever.

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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 series in which Peter Newman, CFA®, of Peak Wealth Planning, shows you how to make the most of Employee Stock Ownership Plans (ESOPs). The first and second articles are Why High-Net-Worth Families Need a Financial Quarterback to Protect Their Wealth and Concentrated Company Stock in Your ESOP? Waiting to Diversify Could Tank Your Retirement.

Sally retired at 62 with $890,000 in her Employee Stock Ownership Plan (ESOP) and another $420,000 in her 401(k). The numbers looked solid. She'd done the math a hundred times. It was enough to cover expenses, maybe some travel, definitely that kitchen remodel.

Then reality hit. Health insurance before Medicare? $1,800 a month. Property taxes she'd overlooked? Another $6,500 annually. And because she'd claimed Social Security at 62, her monthly benefit was permanently reduced by roughly $750 every month for life.

The ESOP money was there. The 401(k) was there. But the plan wasn't. That gap turned what should have been a comfortable retirement into constant calculations of what she could and couldn't afford.

Here's what I've noticed: The difference between people who retire confidently and people who retire anxiously isn't about how much they've saved. It's about what they did — or didn't do — in the decade before retirement.

Your 50s are a critical window where you either build the foundation for sustainable retirement income or realize too late that your assumptions don't match reality.

Age 50-54: The foundation you can't skip

At 50, you're probably earning peak income, kids might be finishing college, and retirement feels distant.

But this is actually the most important time to create your first real retirement income forecast. Not a napkin calculation or a vague sense that things will work out. An actual projection accounting for your ESOP balance, your 401(k), maybe your spouse's retirement accounts, and what those numbers translate to in monthly income.

Why now? You might discover you're on track to retire at 61. Or you might find out that you need to work until 68. Both answers are valuable, but one of them requires a significant adjustment to your timeline. It's better to know that at 50 than 59.

This is also when you need to look at your debt and what financial obligations are competing for your money. I've seen too many people prioritize funding kids' college education while assuming their own retirement will take care of itself. Sometimes that works out. Often it doesn't.

The questions you should be asking:

• What's my realistic retirement budget, including health care costs?
• Am I on pace to replace my current income, or do I need to adjust expectations?
• What debts should I eliminate before retirement?
• Am I prioritizing retirement savings, or are other goals consuming resources I'll need later?

Getting clear answers at 50 gives you five years before diversification eligibility at 55 to course-correct if needed.

Ages 55-59: Strategic decisions that compound

At 55, you hit your first ESOP diversification eligibility. If you've been with your company for at least 10 years, you can now sell back up to 25% of your accumulated shares.

Say you've accumulated $800,000 in company stock. At 55, you could diversify $200,000, rolling it into an IRA where you can invest in something other than your employer's stock. You can take the cash directly, but there are significant tax consequences and potential penalties that make that option less attractive for most people.

This is also when major life events can change everything. A grandchild is born and you want to help with their education. You buy a second home. Someone gets a difficult medical diagnosis. These things are common, and they should trigger an update to your financial plan.

Between 55 and 60, you'll continue accumulating shares if you're still working, and you may have options to diversify small amounts annually. Whether that moves the needle enough to be worthwhile depends on your specific situation.

Ages 60-65: The pre-retirement pressure test

At 60, you can diversify up to 50% of your total ESOP account. This is your chance to shift half of your concentrated company stock into a more balanced portfolio before retirement.

Here's where planning becomes critical. Retiring before 65? You need a rock-solid plan for healthcare costs until Medicare kicks in. Those costs can easily run $18,000 to $24,000 annually for a couple.

Planning to retire before the full Social Security retirement age of 67? Understand what that costs. Claiming at 62 reduces your benefit by roughly 30% for life. Waiting until 70 increases it by about 24% compared to 67. That difference can mean tens of thousands of dollars annually when you might need it most.

This is also when your liquidity strategy becomes crucial. You need your expenses for the first one to three years of retirement covered by stable sources, such as money market funds, savings accounts or low-risk bond funds. Not your ESOP. Not aggressive stock funds that could crater 40% right when you retire.

Post-retirement: The plan continues

Retirement is when the ongoing management gets more complex. You've got multiple income sources that need coordination: ESOP distributions that might be delayed up to 24 months, Social Security, possibly a spouse's pension or 401(k), maybe an annuity.

And then there are taxes. What federal bracket will you be in? Will a large ESOP distribution push you into Medicare surcharges? Are you approaching 73, when required minimum distributions kick in and potentially force you into higher tax brackets than you'd planned for?

There's no one-size-fits-all answer. Every situation requires mapping out each income source, projecting taxes not just this year but for the next decade, and making strategic decisions about which accounts to spend from when.

The timeline nobody follows (but everyone should)

I get it. Planning across a decade feels overwhelming, especially when you're busy working, managing family obligations and living your life. But the cost of not planning systematically is usually much higher than the effort of doing it.

The people who retire confidently didn't necessarily save more than everyone else. They just understood the timeline and made strategic decisions at each phase instead of letting things happen by default.

If you're anywhere in your 50s with significant ESOP wealth, the question isn't whether you should be planning, it's whether you're going to start now or wish you had five years from now.

For readers looking to better understand how these strategies apply to their own situation, Peter Newman created My ESOP Planner — a resource focused on helping employee-owners plan for diversification, retirement income and legacy decisions. Learn more at www.myesopplanner.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.

For decades, the traditional balanced portfolio has relied on stocks for growth and bonds for stability. The classic stock-and-bond allocation became the foundation of retirement investing because it offered investors a practical way to pursue long-term returns while managing risk.

But investing has evolved and today, we have access to solutions that didn't exist when the traditional portfolio was developed.

One product receiving increased attention is the registered index-linked annuity (RILA), prompting an important question: Should investors rethink whether traditional bond allocations are the only way to help manage portfolio risk?

The key is downside protection

Unlike bonds, which are influenced by interest rates and credit markets, a RILA may provide returns linked to the performance of a market index, such as the S&P 500, while providing a defined level of downside protection over a specified outcome period.

Many contracts today offer downside protection against the first 10% to 30% (or even 100% in some cases) of market losses over a six-year term while allowing investors to participate in the market's gains, subject to participation rates, upside caps or other contract provisions.

Protection features are subject to contract terms and limitations, and investors can still experience losses.

Portfolio construction should evolve as investment solutions evolve. For years, investors had two primary choices for long-term assets: Stocks for growth potential and bonds for stability.

Additional tools

Today, investors have additional tools that may deserve consideration depending on their objectives.

That shift has led many advisers to think less about replacing one investment with another and more about expanding the conversation. Whether a RILA, bond allocation or other strategy is appropriate depends on an investor's objectives, risk tolerance, liquidity needs, time horizon and tax circumstances.

Rather than viewing a portfolio as consisting of only two buckets (growth potential and stability), some advisers now view buffered investment strategies as a potential third category, positioned between traditional equities and fixed income.

Worth evaluating

For investors seeking growth potential with a predetermined level of downside protection, that middle ground could offer an alternative worth evaluating.

The goal isn't to declare that one investment is universally better than another. It's to ask whether the traditional portfolio deserves a fresh look.

Investors today have more choices than previous generations, and sometimes the best solution is one that didn't exist when conventional wisdom was established.

RILAs are not appropriate for everyone.

• Investors generally forgo dividends
• Upside returns may be limited by participation rates or caps
• Downside protection applies only according to the contract's terms only if the contract is held through the applicable outcome period

Most contracts also include surrender charges during the early years, and withdrawals from nonqualified contracts are generally taxed as ordinary income to the extent of earnings.

In addition, distributions taken before age 59½ may be subject to a 10% federal tax penalty unless an exception applies.

Bonds continue to play an important role for many investors by providing income, liquidity and diversification. The point is not that bonds have become obsolete. Rather, it is that today's investors have more choices for managing risk than they did a generation ago.

Perhaps the conversation is no longer simply about stocks vs bonds. Maybe it's time to consider whether modern portfolio construction includes a third bucket —one designed to bridge the gap between growth potential and downside protection. For many investors, that conversation may be long overdue.

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

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

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

1. Start conversations now

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

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

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

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

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

2. Avoid spending sprees

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

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

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

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

3. Consider tax implications

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

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

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

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

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

4. Build a strong team

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

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

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

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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.

Raising financially literate children requires intentionality. By making financial literacy a regular part of family life, parents can empower their kids to make informed, responsible financial decisions that will benefit them throughout their lives.

And that attitude helps your kids — and yourself — throughout all phases of raising children.

First, starting a family — maybe in your 20s or 30s — means a shift in both your lifestyle and your finances, but it also means that you are responsible for teaching your children good financial hygiene and money habits.

Later, your 40s often bring a unique blend of increased responsibilities and high earning potential, and you might find yourself balancing the financial and emotional needs of growing children with your own financial planning goals.

Finally, as your children approach their teen and young adulthood years, it is important that you set them up for success in college and beyond by building on earlier lessons.

Here are specific ideas for each stage.

Start talking to them about money when they're young

Start early and normalize talking about money. Begin as early as when they are 5 years old. Introduce age-appropriate financial activities that help them understand the value of money and how to manage it.

Making "money memories" with your kids is one way to educate them about financial responsibility while having fun: Giving them a piggy bank to learn about saving, practicing budgeting on family outings and celebrating savings wins are a few ways to teach kids about money, and they can also create positive memories.

Today's kids may never carry as much physical cash as adults, but they still need to understand the value of every dollar. Whether money lives in a wallet or on a phone, the habits of saving, spending intentionally and planning never change.

To help children recognize that continuity, openly discuss financial decisions and share your household budgeting process in simple terms.

Later, this foundation will help as children reach their teen years. You can encourage them to track their spending habits and get a part-time job or step into a small entrepreneurial venture.

Just like any skill, practicing good financial habits over time makes children more adept at managing money as they grow older.

Go digital, but don't ignore physical cash

I send my preteen daughter's allowance through Apple Pay because that is most likely how she'll interact with money as she gets older. It is important for her to learn how to make digital payments and manage her account in a world that continues to move toward "tap" or "double click" to pay.

This also teaches her independence and empowers her to make her own money decisions — and potentially money mistakes. I would rather have her make a $20 purchase that she regrets at age 12, than a $20,000 mistake when she's 22.

While embracing digital tools, I also intentionally use physical cash to teach my daughter about other financial concepts. We talk about where cash comes from and how to count it, and we take physical money to the bank to deposit into her savings account.

I want her to understand that the numbers on the screen in her Apple Wallet represent real dollars, and I want her to be comfortable managing her money both ways.

Teach them about trade-offs

Teens — like all of us — need to understand that every financial decision involves a trade-off. Spending money on one thing means that money won't be available for something else.

For example, buying the latest gaming console might mean saving less for a car, college or future experiences. This concept helps them prioritize and understand the long-term implications of their choices.

Help teens learn to resist the bombardment of messages promoting instant gratification and luxury, often amplified through social media. Help them differentiate between needs and wants, understand the true cost of things (including the impact of debt) and resist the pressure to keep up with trends.

Encourage them to use critical thinking about advertising and social media influencers and emphasize that a healthy money mindset often comes from smart choices and delayed gratification, not just outward displays of wealth.

If they're working, consider helping them open a Roth IRA to teach them about investing early. You should also discuss responsible credit use before they get their first credit card.

Don't stop when they get to college

The goal isn't to raise a child who can balance a checkbook — it's to raise a young adult who feels confident making financial decisions. That confidence comes from hundreds of small conversations and real-life experiences over many years, not one big lesson.

College provides a perfect context for in-depth discussions, both when saving and spending. It's never too early, or too late, to start saving for college.

If you anticipate that your child will contribute to the costs of their higher education, that's something to discuss earlier rather than later. That way, as they grow up, they'll have a full understanding of the plan.

Raising financially savvy children is more important than ever in today's fast-paced, digital world. Teaching your kids about the value of money and how to manage it responsibly can have a lasting impact on their future success.

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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.

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

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

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

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

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

The only question that really matters

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

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

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

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

Why most people don't need a Roth conversion

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

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

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

Pension holders face a different tax reality

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

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

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

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

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

Today's tax environment creates planning opportunities

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

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

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

Don't look only at your tax bracket

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

Increasing taxable income through a Roth conversion could:

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

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

The widow's penalty can create future tax problems

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

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

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

Your children's tax situations matter, too

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

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

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

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

Tax diversification provides flexibility

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

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

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

Where you live can affect the timing

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

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

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

A common Roth conversion myth

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

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

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

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

The bottom line

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

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

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

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

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

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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.

Annette Kruzynski, a 79-year-old retiree from West Hempstead, N.Y., used to think her 401(k) survived the dot-com bust, the Great Recession and the COVID pandemic because she moved all her money to cash. She proudly told anyone that being in CDs, bonds and money market accounts saved her from the massive sell-offs in the stock market.

But in hindsight, she knows she was wrong. "I wish I didn't keep everything safe," says the retiree and grandmother of five. "I think if I had invested, I would have had much more money saved."

Kruzynski can't change the past, but she and other retirees can help future generations avoid similar mistakes, particularly their millennial children, the oldest of whom are turning 45 this year.

It's a prime age to take your finances seriously and, more importantly, hear some sage advice. At this point, you're typically in the peak earning years (or about to enter them) and still have time to build a nest egg. You're also likely juggling multiple expenses, making it difficult to save.

"In your 40s is where everything starts to become a priority, and those priorities for spending are competing with each other," says Pam Krueger, founder and CEO of Wealthramp, a free service that matches consumers with fee-only fiduciary financial advisers. "This is where money decisions start to have bigger consequences."

Today’s 45-year-olds may think they have it all figured out, but the retirees who have come before them know better. Having learned the hard way, these older adults want to spare the younger generation the pain, knowing that preserving family wealth starts with avoiding costly mistakes. Whether it's investing, saving, or spending, here are the crucial, hard-earned lessons retirees and financial professionals say 45-year-olds need to know.

Investing: Siloed accounts and too much risk

Even if 45-year-olds have figured it out by now and are contributing to their 401(k)s and IRAs, financial pros say some common mistakes still linger, including these:

Viewing your retirement accounts in silos. Treating your and your spouse's different retirement accounts as separate, standalone investments rather than a unified portfolio could result in additional fees or overexposure to a single market segment. "You might not have diversification, you might pay three times in fees or your returns may be beaten down because you didn't coordinate," says Krueger. "It's important to clean up, organize and have a clear view of the accounts consolidated in one place."

Taking on too much risk or being too conservative. This might be the age of the buy-and-hold Millennial, but there are plenty of 45-year-olds investing in crypto, meme stocks or other speculative investments. "People buying the next hot, shiny thing and taking unnecessary risk is the worst action I see, especially with retirement money," says Derrick Longo, a financial adviser at Savant Wealth Management in Huntersville, N.C. "A lot of people will hear something on social media or from a friend, and they let that influence their investment strategy. They might get a short bump, but in the long term, it doesn't keep up with market returns."

If you want to make speculative investments, Longo says, do it with money you can afford to lose. On the flip side, taking too little risk can also be detrimental to a 45-year-old's investment portfolio. With 20-plus years left in the workforce, a 45-year-old can afford to have more growth — and more risk — in their 401(k) than a 55- or 60-year-old.

Having been a little too conservative is one thing Sharon and Roger Gibbs wish they could change. The married retirees worked for the state of California for over 30 years and retired in their mid-50s. "Thinking back to age 45, we probably should have been more of a risk taker, but we’re pretty conservative. We regret not renting out a cabin vs selling it at one point," says Sharon, 73, who lives with Roger in Watersound, Fla. "But, for us, our jobs were our investment for our future. We were told by so many people, ‘If you can retire early, do it; you never know what tomorrow brings.’ "

Saving: Standing still on contributions and matches

In the age of the automatic 401(k) enrollment, many 45-year-olds don't have a choice when it comes to saving for retirement, granted that they work for a company that offers one. But that doesn't mean they don't make costly mistakes. One is not contributing enough to get the company's 401(k) match. That's free money they're leaving on the table.

Another mistake is leaving their contribution rate steady instead of automatically increasing it. Most plans offer the ability to automatically increase your savings rate by 1% each year. You can also have your plan increase contributions when you receive raises and bonuses.

Failing to save more aggressively is one of Kruzynski's primary regrets. In addition to being too conservative, she wishes she had contributed more to her 401(k). She worked for over 30 years, and while she has enough money to live comfortably in retirement, she could have had more cash to travel and to leave to her heirs. "Not adding more money to my 401(k) was a mistake," says Kruzynski.

Spending: Living on the edge with a 40-something budget

Many retirees remember all too well how managing their spending in their mid-40s was a constant exercise in discipline. Between paying down mortgages and funding children's educations, a multitude of expenses pull at the household budget all at once. When trying to manage it all, it was easy to make mistakes. A big one that throws everything else off course is winging it, says Michael Conrath, JPMorgan's chief retirement strategist. They have a vague idea of their monthly expenses and savings goals, but nothing concrete.

"On the fundamental level, they need to ask themselves, how much do I spend monthly, what are my known expenses and what do they cost me?" said Conrath. "It's important to have that foundation."

Lots of 40-somethings also live beyond their means, worrying about saving later. "They tend to believe they will keep earning the same amount they are right now and when you make that assumption, you might go for the bigger house or the bigger and better car," says Krueger. "You're living on the edge of your budget instead of putting that money to work."

The view from the finish line

Making sense of money in your 40s is a balancing act with the financial realities of spending and saving pulling you in different directions. While the oldest Millennials may feel they have plenty of time to fine-tune their investing, saving, and spending strategies, retirement will arrive before they know it. That's why it's so important for them to listen to the hard-earned lessons of the retirees who came before them. After all, sharing their lessons on unified investing, disciplined spending and aggressive saving is the best way to protect everyone's wealth.

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

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

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

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

1. We know exactly which communities are eligible

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

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

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

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

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

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

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

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

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

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

3. The clock is ticking

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

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

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

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

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

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

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

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

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

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

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

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

That's because the eligibility rules are tighter:

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

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

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

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

5. Puerto Rico investors: Your timeline is different

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

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

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

Both parts of that unique deal are now history.

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

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

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

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

What all of this means for you

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

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

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

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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.

Some of the saddest meetings I have aren't with couples. They're the ones where a client comes to see me for the first time after losing their spouse.

After nearly 30 years as a financial adviser, I've noticed a pattern. In most marriages, one spouse becomes the family's de facto chief financial officer. They know where the accounts are, when the required minimum distributions begin and why certain beneficiaries were chosen. The other spouse understands the big picture, but not always the details.

When the spouse who handled the finances passes away, the survivor isn't just grieving. They're suddenly responsible for a financial life they may never have expected to manage, often while well-meaning family members and financial institutions are pushing them to act fast.

In my experience, the families who fare best aren't the ones who move the fastest. They're the ones who slow down and think it through.

Resist the urge to do everything immediately

Aside from getting certified death certificates and handling immediate household needs, very few financial decisions have to be made in the first few weeks.

I've watched surviving spouses notify every financial institution within days of a death, only to find out that a pension payment, dividend check or insurance reimbursement is still coming payable to the deceased spouse.

Once an account is restricted, negotiating that payment gets far more complicated than it needs to be.

Gather information first. Meet with your financial adviser, CPA and estate planning attorney before making decisions that could be difficult or impossible to reverse.

Your beneficiary designations just changed

Retirement accounts, annuities and life insurance policies pass according to their beneficiary forms, not your will or trust. That makes them one of the first things worth reviewing.

I often see clients who named their living trust as the beneficiary years ago. Depending on your situation, naming individual beneficiaries instead can be simpler for your heirs to administer.

There's no universal right answer here, which is exactly why it deserves a real conversation with your adviser and attorney rather than a quick assumption.

Don't let the widow's tax catch you off guard

Here's a planning window most people miss: For the year your spouse dies, you can still file as married filing jointly. The following year, you'll typically file as single, where the tax brackets are considerably less favorable. Advisers call this the "widow's tax" or the "widow's penalty."

That one-year gap can be an opportunity to convert some, or all, of a traditional IRA to a Roth IRA while you still qualify for the wider joint-filer brackets. The catch is timing: The conversion generally has to be done by December 31 of the year your spouse passed away. If your spouse dies later in the year, that window shrinks fast.

Don't make this decision in isolation. The 2025 tax law changes, including the new $6,000 deduction for older people and the updated SALT deduction, can change the math on a Roth conversion. Loop in your CPA before you convert a dollar.

Don't rush into a spousal rollover

I see this more than almost any other misstep: A surviving spouse moves an inherited IRA into their own IRA right away because it feels like the obvious next step. Sometimes it is. Often, it isn't.

There's no deadline requiring a spousal rollover. If you're younger than 59½ and need access to retirement money, distributions from your own IRA are generally hit with a 10% early withdrawal penalty.

Distributions from an inherited IRA owned by a surviving spouse generally avoid that penalty. Once you complete the rollover, that flexibility is gone. Wait until you actually know which option fits your situation.

Give your estate plan a second look

Your estate plan was written for a different chapter of your life. Have your attorney review your living trust, power of attorney, HIPAA authorization and healthcare directive to confirm the people you named are still the right people.

If your trust is older, it may require setting up a bypass, or "B," trust when the first spouse dies. That provision made sense when the federal estate tax exemption was much lower.

Now that the exemption has been raised to $15 million per individual in 2026, many families no longer need that structure, and keeping everything in the A trust may be simpler if your estate falls under that threshold.

This is a decision to make with your attorney, not on your own.

Have the family conversation

One of the best things you can leave your family isn't money. It's clarity.

I encourage clients to hold a family meeting after losing a spouse. You don't have to share account balances. Just let your family know where your documents are, who your advisers are and how your estate plan works.

This is also a good time to start passing along personal items that carry meaning. If your late spouse loved fishing, the family member who shares that passion might treasure the gear now more than they would years from now.

My goal for every client is simple: When the surviving spouse eventually passes, I don't want their kids searching for account numbers and passwords. I want them focused on the life that was lived, not a scavenger hunt for the paperwork behind it.

Losing a spouse changes your finances as much as it changes your life. The families who come through it in the best shape aren't the ones who acted fastest. They're the ones who took a breath, asked the right questions and made each decision on its own timeline.

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

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

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

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

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

Why deadlines are the enemy of good tax planning

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

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

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

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

Four strategies that require time to be effective

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

1. Roth conversions in the low-income window.

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

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

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

2. Coordinated charitable giving.

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

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

3. Inherited IRA management under the SECURE Act.

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

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

4. Portfolio transitions for clients with embedded gains.

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

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

Where investment decisions and tax strategy meet

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

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

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

Three steps to explore before your next tax season

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

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

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

2. Identify any irregular income on the horizon.

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

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

3. Get organized before you need to be.

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

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

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

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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.

By now, the fall tuition bill has landed, and for a lot of families the numbers don't close the way they used to. That isn't your imagination.

The federal borrowing caps that took effect on July 1 set a ceiling on Parent PLUS for the first time at $20,000 a year and $65,000 over the life of a student.

They also ended Grad PLUS for new borrowers. The loan that quietly filled whatever grants and federal aid left behind now runs out sooner.

Private lending is already a $140 billion market, about 8% of all student debt, according to industry data from Enterval. Analysts expect private loan volume to climb sharply this year as families move to cover the difference.

So here you are, maybe taking out a private loan for the first time, with a payment deadline days away. The textbook advice was to shop these loans back in May or June. That window has closed, but the situation isn't an emergency yet. Private loans have no fixed federal deadline and can still disburse into the fall term.

What you can't afford is to let the clock stampede you into the first offer that clears the bill. A little thought now will save you years of paying for a rushed choice.

First, make sure you have hit the federal ceiling

Before you sign anything private, confirm you have used every available federal dollar, because federal loans offer protections, such as income-driven repayment, forgiveness programs and deferment options, that private lenders rarely match.

Understanding these benefits helps families weigh the true cost and safety of each option.

Review each step deliberately. Make sure the student has accepted their full federal loan amount first. Then look at what Parent PLUS still allows under the new caps, because even a capped PLUS loan keeps federal features that a private loan might not offer.

A private loan should only fill the gap that remains. Borrow that figure, not a dollar more. A federal-versus-private loan comparison (like the one on CollegeLens, the website that I founded) can help you confirm you're filling a real gap rather than replacing cheaper, safer money.

Get a fixed rate unless you have a specific reason not to

A variable rate will almost always look cheaper on the day you apply. That is the point of it, and it is also the trap. A rate advertised at 3.99% variable can climb to 8% or 9% if benchmark rates rise, and this is a loan you may be repaying for a decade or more.

A fixed rate locks in your cost for the life of the loan. For a bill you're financing over many years, the certainty is worth more than a low teaser number. Unless you plan to pay the loan off fast and can absorb a jump, fixed is the safer call.

Understand what a cosigner really signs up for

Most students need a cosigner to qualify, and most cosigners don't fully register what they're agreeing to. If you cosign for your child, you're not vouching for them. You're equally on the hook. The debt shows up on your credit report; a missed payment is a missed payment, and it can sit on your record for years.

You're also not unusual in needing one. Cosigners are the norm in this market, not the exception. Industry data from Enterval shows cosigner rates have remained above 85% every year since 2009.

In the most recently reported quarter, more than 94% of newly originated private loans carried a cosigner, including almost 97% of undergraduate loans. If a lender is willing to lend to your student at all, it is usually because someone with established credit is standing behind the loan.

This is where the fine print earns its keep. Look for a cosigner release — the provision that lets you come off the loan once the student has made a stretch of on-time payments, often around 12 months, and can qualify on their own.

Some lenders offer it, and others don't; the terms vary widely. If two offers are close on rate, the one with a clean, achievable cosigner release is the better loan.

The trade you are actually making

It is helpful to understand what you give up when moving from federal to private loans, especially since private loans typically lack income-driven repayment options. Payments do not flex with income drops, and deferment or forbearance are limited and lender-specific.

Knowing these limitations can make you feel more cautious and prepared to weigh the risks involved.

None of that makes a private loan a bad choice. For a family with strong credit, it can be a perfectly reasonable way to close a real gap, and the rate can even beat a federal loan in some cases.

The point is to go in knowing the trade rather than discovering it later. If you have read my earlier columns, you will recognize the theme: The mistake is rarely the loan itself. It is borrowing on autopilot because you were busy.

Here's a short checklist for before you sign:

• Confirm the student has accepted all federal loans first, then measure the true remaining gap.
• Borrow only that gap. Resist rounding up for a cushion you will pay interest on for years.
• Choose a fixed rate unless you have a concrete plan to pay it off quickly.
• Compare at least two or three lenders on rate, fees and cosigner release, not just the first approval.
• Read the deferment and forbearance terms so you know your options if income drops.

The bigger picture

The federal safety net for college borrowing shrank this summer, and the private market is stepping into the gap it left. That isn't automatically bad news, but it does shift more of the responsibility onto you to shop well.

The deadline on your desk is real. It is also the exact moment a lender's job gets easier, and yours gets harder.

So slow down by one notch, even now. Fill the gap you actually have, lock in a rate you can live with, protect whoever is cosigning, and know the protections you are trading away.

Do that and a private loan becomes a deliberate piece of a plan instead of the thing you grabbed because the bill was due on Friday.

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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 hoping to retire someday, invest and start early."

Many of us have probably heard this, and it's true. However, investment accounts are only part of a comprehensive financial plan. Many people mistakenly believe contributing to a 401(k), IRA or brokerage account means they have a plan in place.

However, those accounts are just tools. The actual plan is a road map for how those tools should be used to help achieve financial goals.

In addition to making retirement savings contributions, a lot of people review their portfolio statements periodically, largely focusing on balances, returns and performance.

These statements are great for providing a snapshot of where your investments stand, but they don't explain how they'll be used to help you achieve your goals.

For example, two individuals can have identical portfolios with very different strategies. Someone who's planning to retire in the next few years will likely have different risk considerations and income needs compared with someone who is still decades away from retirement.

Rather than focusing on balances and returns, it's the financial plan that helps determine whether those investments align with your needs and circumstances.

Don't forget tax planning

Tax planning is another area in which portfolio statements fall short. They can tell you what type of accounts you're invested in, but they don't explain how withdrawals will be taxed or whether your money is in the appropriate account based on your situation.

Since investment accounts are taxed differently, where money is saved and how it's taken out can significantly impact your tax burden.

With a well-rounded financial plan, pre-retirees have the ability to understand how assets are intended to be distributed across retirement accounts and how withdrawals can be managed to reduce tax liabilities.

Adapting to changes

Unlike a portfolio statement, financial plans are designed to adapt to changes in your life rather than changes in the market.

Major life events such as a new job, marriage, the birth of a child or approaching retirement influence financial priorities, oftentimes requiring updates to an existing strategy.

A person's goals and spending habits can also change throughout retirement. The early years of retirement, also known as the go-go years, might mean traveling or taking on new experiences.

As the slow-go and no-go years approach, priorities tend to shift, especially when it comes to healthcare. However, financial planning doesn't stop when retirement hits.

Although a portfolio statement might list beneficiaries, it doesn't account for greater estate planning needs. Some people might want to leave assets to children or grandchildren, while others might decide to donate to charity or set specific guidelines for how their wealth should be distributed.

A financial plan helps make sure those wishes are incorporated into your overall strategy.

Paying attention to investment returns is important, but they're only one piece of the pie. A portfolio statement can give you a snapshot of current beneficiaries, various retirement accounts, and current investment performance.

It's the plan that helps determine whether those investments support your financial goals.

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

For generations, philanthropy has measured itself by generosity: How much money went out the door. Maybe it's time to measure something else: How long the impact lasts.

America's foundations have made a difference. They've funded hospitals, kept food banks stocked and propped up communities through hard years.

But too often, "success" still means dollars distributed rather than lives genuinely changed. A grant can ease a crisis this month. It rarely creates the conditions that let a family or a neighborhood stand on its own two feet next year.

Sometimes, without meaning to, it does the opposite: It funds the same need again and again instead of solving it.

The need for philanthropic investment

Every industry hits a point where the old playbook stops working. Philanthropy is there now. The problems facing communities have changed shape over the past few decades; the tools built to fight them mostly haven't. Funding yesterday's solution for today's problem rarely produces tomorrow's opportunity.

The world has moved on. Entrepreneurship is everywhere. Venture capital turns raw ideas into real companies at a pace that would have seemed absurd 50 years ago. Yet most institutional giving still runs on a model built for an earlier era, one designed to meet needs rather than build capacity. That deserves a second look.

Today's problems call for something more ambitious than charity alone: Philanthropic investment. Foundations acting less like check-writers and more like long-term partners, backing entrepreneurs, community leaders and organizations capable of creating opportunity that outlives the grant.

The goal shouldn't be to make people better at receiving help. It should be to help them stop needing it.

Americans gave an estimated $593 billion to charity in 2024, up 6.3% from the year before, or about 3.3% after inflation, according to Giving.org.

Private foundations alone distributed nearly $110 billion. And because most private foundations are subject to annual distribution requirements tied to roughly 5% of certain assets, that number only grows as endowments do.

The real question isn't whether philanthropy has the resources to make a dent. It clearly does. The question is whether those resources are being spent to fix things, or just to keep fixing the same thing.

A new playbook for private foundations

My years at the JPMorgan Chase Foundation taught me something simple: Capitalism creates opportunity only when capital actually moves. A neighborhood doesn't build lasting prosperity while its most promising entrepreneurs stay chronically underfunded.

That means foundations need to step outside their comfort zones, trading some of the risk aversion of traditional grantmaking for the instincts of an angel investor.

Zero-interest loans, recoverable capital, and patient, mission-driven investment are three methods. Money that comes back and gets reinvested, again and again, doing more good the second and third time around than a one-time grant ever could.

Picture a foundation less like a donor and more like a convener pulling together business leaders, entrepreneurs, schools, nonprofits and local officials around one goal: Durable local prosperity, not just relief from the latest hardship.

We don't have to guess at what this looks like in practice. A few foundations have already written the playbook. The Kauffman Foundation has spent decades investing in entrepreneurship and expanding access to economic opportunity.

Miami tells a similar story: The Knight Foundation helped turn it into one of the fastest-growing startup hubs in the country, not through blind check-writing but through smart, sustained bets on entrepreneurs, civic institutions and the organizations around them.

In both cases, the money was never the point. It was the ecosystem it built: Businesses, investors, schools, nonprofits and local leaders all pulling in the same direction.

Philanthropy's next chapter

The lesson here is worth sitting with: Philanthropy does its best work as a catalyst, not a benefactor. Bring the right partners to the table, absorb some of the early risk nobody else wants to touch, and back ideas with real staying power. Suddenly a foundation's reach extends well past its own checkbook.

What you get isn't just healthier nonprofits. You get local economies that keep generating opportunity long after the original investment is a distant memory.

Venture investors know most bets won't pay off, but the ones that do can create jobs, spin up new supply chains and lift an entire community in the process.

Philanthropy can borrow that same long game, just with a different scoreboard: Not equity value, but economic mobility, business formation, household income and community resilience.

No single foundation can pull this off solo. The real opportunity lies in public-private partnerships, where philanthropic capital pairs with business expertise, government resources and entrepreneurial energy. Together, they can build something no one player could fund alone.

Philanthropy's next chapter shouldn't only be about doing charity better. It should be about needing less of it. Every dollar that funds a small business, seeds an entrepreneur or builds real capacity in a community is a dollar that starts working on its own, creating jobs, generating tax revenue and funding the next idea.

That's not a smaller vision for philanthropy. It's a bigger one.

The foundations that figure this out first won't just write the biggest checks of their era. They'll build the playbook every foundation after them has to reckon with. The ones that don't will keep measuring success in dollars out the door, long after everyone else has moved on to measuring what those dollars actually built.

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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 had school-aged children or grandchildren in your care during the pandemic, COVID-19 was that nightmare none of us fully woke up from, leaving this haunting question: "What did these past several years — a tsunami of doubt and contradictions — do to our children?"

While, historically, it has been virtually impossible to sue a school district for educational negligence ­— for example, graduating kids from high school who are functionally illiterate — COVID opened the floodgates, leading to multimillion-dollar class action settlements across the country to pay for remedial tutoring in basic subjects.

But money alone can't answer those questions that most of us had, and might still have, such as:

• Was it really necessary to shut down the schools, depriving our kids of not only education, but the development of important social and life skills?
• Was the virus really a fatal risk to young children?

The release of Dr. Anthony Fauci's pandemic diaries could not have come at a better time for many of these issues to be reexamined. In 2020, when the pandemic began, Fauci was director of the National Institute of Allergy and Infectious Disease.

As Southern California pediatrician Dr. Stanley Calderwood asks in his book, COVID-19, Children and the Lasting Impact: A Parent's Guide to the Global Pandemic, published in July, "Did the pandemic response truly protect children, and how can we do better next time?"

Mass of confusing messages

"There was a mass of confusing messages we all heard about the COVID-19 virus and efforts to find treatments and a vaccine," Calderwood noted during our Zoom interview. "But little attention was paid to educating the public in the basic biology of what we were facing — how a virus, like COVID, can infect someone merely if you stand next to them."

His book takes us through a mini course in Infectious Diseases 101. He has a unique ability to break down the science behind what makes us sick and how our bodies are equipped to fight a never-ending war against unseen enemies — and how the science of vaccination has saved so many.

Vaccination helped win the Revolutionary War

And speaking of war, did you know that it was science — yes, science — that played a significant role in our Revolutionary War? "It wasn't only the military brilliance of George Washington that helped to achieve independence," the author pointed out, "but something that took great courage off the battlefield to assure victory on the battlefield.

"A distrust of vaccination developed during the COVID crisis, but most people are completely unaware that in the winter of 1775, George Washington faced two enemies — the British army and smallpox, which had a mortality rate of 30%.

"An early form of vaccination, known as 'variolation,' while controversial, was proven to be effective in preventing the deadly respiratory aspects of the disease. Washington ordered this be administered to recruits who never had smallpox and quarantined those who were infected.

"During the spring offensive, his troops were healthy and encountered little resistance from the British, many of whom were too sick to fight, giving the Continental Army its first significant victory."

Was it necessary to shutter the schools — and the country?

Who can forget the panicked shutdown of human activity during COVID, "as a way, it was thought, of stopping the disease and fatalities. This was flawed reasoning," the author notes. "Several countries did not go into lockdown — Japan, Taiwan, Sweden, for example — and were not worse off for it, as we see in retrospect."

Calderwood's pediatric practice remained open throughout COVID. He and his colleagues gathered a great amount of data on the frequency of infection and symptoms in children, and he draws on more than 30 years of clinical experience in his examination of the virus and the public health response to it.

"The results were striking. Half of the children who tested positive were asymptomatic. They reported no symptoms and had normal vital signs. Almost all the remaining children had only mild or moderate illness, typically recovering within seven to 10 days.

Researchers and physicians across the globe have substantiated these findings. The majority of children with COVID-19 are asymptomatic or have mild disease.

Why do children not become as ill as adults?

Calderwood spends a great deal of time in his book explaining how an infection spreads and tells us why children did not become so ill: "COVID-19 gains entry into cells by binding to the ACE-2 receptor cells on their surface. In children, there are relatively few ACE-2 receptors, significantly limiting the virus' ability to establish serious infection.

"Early in the pandemic, many pediatric infectious specialists understood this and were very cautious about voicing opinions that contradicted the prevailing narrative, afraid to tell it like it was, that COVID-19 would not be a serious infection for children."

Education and the family

Calderwood is most eloquent when he looks at what the lockdown did to children at critical stages in their social development and academic education.

"There is a window of opportunity where the brain is best able to develop language and math skills. Merely by reopening the schools, things do not pick up where they left off. While a short period of closure to slow the virus may have been warranted, we continue to witness the results of our failure to ask, 'What does shuttering schools do to the students? What does it do to families?'"

Calderwood concluded our interview with this cautionary observation: "COVID-19 illustrated what happens when politics and ideology slam the door to science shut. Society will be tested again."

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.

A signed will, a funded trust and a list of named beneficiaries can create a powerful sense of security for individuals mapping out their estate: The paperwork is done, so the plan must be ironclad.

In reality, even the most carefully designed estate plans can quietly fall apart when left unattended.

Anyone actively engaged in or preparing to start the estate planning process should be fully aware of where they may be exposed to vulnerabilities, which life events should prompt an immediate review and reevaluation and what to bring with them when meeting with an estate planning attorney.

Here are five of the biggest myths in estate planning, each paired with the best practice to follow instead.

Myth No. 1: The will and trust always have the final say

It seems logical that a will or trust controls where everything goes. In practice, beneficiary designations on retirement accounts, life insurance policies and similar assets generally take precedence over both.

Consider a revocable trust that thoughtfully establishes a separate share for each child in a family. If the largest retirement account names just one child as beneficiary, that single form quietly bypasses the entire trust structure. The funds go directly to the named child.

Strategy tip: Treat beneficiary designations as a core component of a coordinated and comprehensive estate plan and confirm that every designation is made with intent that is reflected within the will and trust.

Myth No. 2: Once beneficiaries are named, the job is done

Standard beneficiary forms carry default rules that routinely surprise families. For example, if three adult children are each named as one-third beneficiaries and one of them dies first, that child's share typically flows to the surviving siblings, rather than the deceased child's own children.

In such a scenario, the grandchildren are unintentionally disinherited by a form nobody thought to revisit.

When assets do reach minors through beneficiary designations, the results are rarely good: The child receives full control at 18. Custodial Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts are irrevocable, and compounding growth over time can gradually turn modest gifts into a substantial sum no teenager is properly prepared to manage.

In our own practices, these accounts have produced some of the most difficult conversations we have ever had — a parent watching a 17- or 18-year-old gain control of far more money than anyone ever intended, with no legal way to slow it down.

By the time a family realizes the account has ballooned, nothing can legally stop the transfer.

Likewise, divorce introduces its own trap. Some states automatically sever a former spouse's beneficiary designation the day a divorce is finalized. Anyone who intends to keep an ex-spouse as beneficiary must re-execute the designation after the divorce is final, or the law may quietly override the plan.

Strategy tip: Review every beneficiary designation after any major life event and at least every five years. Make sure to review beneficiary designations on accounts with less common beneficiary designation options such as payable on death (POD) or transfer on death (TOD).

Myth No. 3: More documents mean more protection

Complexity is not the same as security. While an estate plan may become more elaborate with every well-intentioned addition, it can also become more fragile. Key warning signs include:

An uncoordinated patchwork of paperwork. Wrangling several documents not designed to work together — such as a living trust from one attorney and powers of attorney from another — can add up to produce disaster.

Outdated assumptions. The federal estate tax exemption now sits at $15 million for individuals; roughly two decades ago, it was $1 million. Sophisticated structures built under the old rules can be obsolete today.

Assets ignored by documents. A closely held business, a buy-sell agreement or a family investment entity can derail everything.

Forced togetherness. A family cabin left jointly to three children living in three different states, further complicated by a provision forbidding its sale, is a recipe for resentment. So are co-fiduciaries, which generate an outsized share of estate litigation.

Strategy tip: Favor coordination over accumulation, revisit older structures as the law changes and name one person at a time.

Myth No. 4: The attorney will flag any problems

As former practicing estate planning attorneys ourselves, we say this with genuine affection for the profession: Attorneys are, by the design of their practice, reactive.

They respond to what clients bring them, and they rarely reach out unprompted to ask whether a plan still reflects a client's life.

So, the responsibility for noticing that a named guardian is no longer needed, or that a personal rift has made a chosen trustee a poor fit, tends to fall on the client.

Strategy tip: Complete three steps before any attorney meeting:

• Do a cursory self-review. Check who is named and in what roles, the ages at which distributions occur and whether significant assets are mentioned in the documents at all.
• Articulate wishes in plain language. An effective plan maps who receives what, in what proportions and under what conditions, no legal vocabulary required.
• Bring a personal financial statement. Provide a clear accounting of what is owned, how it is titled and who else holds an interest.

The stakes of that last step are easy to underestimate. We once worked through a client's entire plan, only to have her mention, almost in passing, that she had been diagnosed with stage IV cancer.

Attorneys can work with only what they are given, and one undisclosed detail can quietly undo an otherwise flawless plan.

It also pays to ask the attorney's opinion directly. Asking, "Would this work in my situation?" invites a far more engaging answer than a directive ever will.

Myth No. 5: A good plan is built to last a lifetime

An estate plan is not an immovable monument; it is a living document. Trying to solve for the next 30 years is a surefire recipe for decision paralysis.

The better question is simpler: If something major happened in my life within the next five to 10 years, how should my estate plan follow suit?

There is no standard estate plan. The power of a good estate plan lies in how precisely it reflects a particular family, its assets and the wishes of the person drafting it.

Strategy tip: Plan for the foreseeable future and resist any plug-and-play template.

The strongest plans are not the longest or the most sophisticated, but rather, the ones reviewed regularly, coordinated carefully and shaped by owners who stay engaged.

An intentionally designed plan does not simply sit in a drawer looking impressive; it makes a meaningful difference for the family it was designed to serve.

Ultimately, the most effective estate plan isn't the one with the most documents, but the one that stays coordinated across wills, trusts and beneficiary designations and is revisited after every major life event.

By staying actively engaged, individuals can ensure their plan continues to protect the family it was built to serve rather than falling victim to the default rules and outdated assumptions that catch so many families off guard.

Shelby Anderson, J.D., CEPA®, is a Senior Wealth Planner at Clark Capital Management Group. In this role, Shelby works closely with clients' legal and tax advisers to provide client-facing expertise across a wide range of wealth planning strategies.

Patrick Schultz, J.D., CEPA®, is a Senior Wealth Planner at Clark Capital Management Group. In this role, Patrick works closely with clients' legal and tax advisers to provide client-facing expertise across a wide range of wealth planning strategies.

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

For many homeowners, today's housing market feels like a stalemate. Elevated mortgage rates and limited inventory have left many people choosing to stay put rather than make a move.

A recent report from Citizens, where I am the head of Mortgage and Consumer Lending, found that only 13% of American homeowners say that buying a new home feels realistic in the current economic environment.

But not everyone has the luxury of waiting. Job relocations, family changes and caregiving responsibilities continue regardless of market conditions. For these "must-move" buyers, the question isn't whether to act, but how to move forward in a difficult market.

Many begin the process with a strategic, financially focused approach. Affordability remains a top concern. However, market conditions frequently prompt buyers to pivot.

Many buyers enter the process expecting their current home to be the biggest hurdle. Increasingly, we're seeing the opposite. Homes might sell quickly, while limited inventory and competition make finding the next property significantly more difficult.

Managing the gap

For homeowners who need to sell one home and buy another, the challenge is often less about completing a transaction and more about managing the gap between two transactions that rarely align perfectly.

Navigating this environment requires flexibility. A clear understanding of the financing and liquidity tools available can help bridge those gaps, but many buyers aren't sure where to start.

The same report from Citizens reveals that 63% of homeowners are likely to need financing for a home purchase or improvement within the next five years, yet 39% say they don't understand how financing options work.

In addition, 27% are either unfamiliar with home equity or have not yet explored how to use it.

Lots to discover

This knowledge gap can complicate an already complex process. Beyond finding the right home, buyers must evaluate loan options, compare costs and manage timing — all while dealing with uncertainty around rates and inventory.

For those who need to move quickly, liquidity and flexibility are critical. Some buyers are exploring ways to tap into their existing home equity, including home equity lines of credit (HELOCs) and home equity loans.

About 40% of HELOC applications at Citizens reach final approval in 10 days or less, helping borrowers act decisively without prolonged uncertainty.

These options allow homeowners to borrow against the value they've built in their current property, which can be useful when the competitive market makes the purchasing timeline difficult to pin down.

For example, a buyer relocating for work might have a defined timeline to sell the current home and secure housing in a new region. Too often, those timelines don't align.

A home might sell quickly, but a lack of suitable options can delay the purchase of the next property, creating the need for interim housing or temporary financing solutions.

In these situations, accessing home equity can help bridge liquidity gaps and reduce pressure to make rushed decisions.

Buyers can also strengthen their position by obtaining a fully underwritten commitment letter from a lender, which verifies income, credit and debt-to-income ratio before they begin making offers.

Explore your options

That said, home-equity products and a strong position in the market aren't the only paths toward a successful transaction, and they don't come risk-free. Sale contingencies are an option, but most sellers prefer to avoid them.

Alternatively, buyers who want to hold on selling their home before buying can consider a bridge loan, which is designed to provide short-term financing that "bridges" the gap between buying a new home and selling the current one, giving buyers the funds to make an offer before their existing home closes.

That opens the possibility of carrying two housing payments at once and causing great financial strain. The flexibility of a HELOC's draw period allows borrowers to pace principal and interest repayments, which can be useful for smoothing out cash flow in early repayment years.

Understanding these risks is key to making decisions that will best position the buyer financially, far beyond the transactional moment of moving.

Easing the strain

Even when equipped with solid information, buying a home under pressure can be difficult. Practical guidance and realistic expectations can help buyers make more confident decisions.

In today's challenging market, buyers should build a trusted team of advisers — including real estate professionals and lenders — early in the process. They can also anticipate setbacks and consider temporary housing if necessary to avoid compromising on their goals.

When buyers fully understand their options, they are better positioned to make decisions that support their long-term financial health.

While some experts suggest the housing market is at a standstill, the must-movers prove that the market hasn't shut down completely. People are still buying homes, just with a stronger need for reliable guidance when timing isn't ideal. They want to understand every possible financial risk before listing.

In this landscape, buyers who take the time to understand their financing options and plan for liquidity are better positioned to navigate the market thoughtfully, even when waiting isn't an option.

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

You've done everything the system has asked of you.

You were automatically enrolled in your 401(k) on your first day and never opted out. Your contribution rate climbs a little each year — automatically, whether you notice or not — and your money sits in a target-date fund that quietly rebalances while you live life.

On paper, you're a retirement success story — the exact "participant outcome" every employer hopes for and the entire financial services industry is built to produce.

Then the brakes on your car go, the emergency room copay hits, or the rent notice arrives with a number you simply can't cover this month. And you do the very thing you swore you'd never do: You log in and pull money out of the account you know you shouldn't touch.

If that stings a little, it's probably because it's a story about a lot of us.

In 2025, a record 6% of retirement plan participants took a hardship withdrawal from their 401(k), according to Vanguard's latest How America Saves report — the largest share the firm has ever recorded, and up from 5% the year before.

That happened in the very same year account balances climbed 13% and plan participation reached an all-time high of 86%. Read that again.

By those measures, the system looks healthier than ever. So why are more people than ever reaching into their retirement savings early? And how can we help mitigate this?

Hardship withdrawals aren't a discipline problem

The "easy" conclusion is that people simply aren't saving well, or that they lack discipline. I'd argue the opposite. The median hardship withdrawal last year was about $1,900. The two most common reasons were to stop a foreclosure or eviction and to cover a medical bill.

People aren't necessarily draining their retirement accounts for a vacation, a new pool in the backyard or an online shopping spree. They're reaching for the last cushion they have, because every other one is already gone.

That's the real story hiding inside the headlines: The early withdrawal isn't the problem. It's a symptom. The fragility was there long before the withdrawal; this is just where it finally became visible.

The rest of the data agrees. Worker confidence in retiring comfortably fell six points in a single year to 61%, the lowest since 2017, according to the Employee Benefit Research Institute. Fewer than three in five workers say they could handle an emergency expense, while 65% say debt is a problem in their household.

These aren't the numbers of a country that forgot how to save. They're the numbers of a country where paychecks stopped stretching as far as the plan assumed they would.

To be fair, part of the increase is mechanical. It's simply easier to take a hardship withdrawal than it used to be thanks to a 2018 rule change that removed a required step, resulting in less paperwork and fewer hoops to jump through.

Going back to the 6% taking withdrawals, this could mean friction is disappearing, not necessarily that distress is appearing. But that caveat doesn't rescue the overall story. In contrast, it sharpens it.

When someone is facing eviction, unexpected medical bills or a $1,900 shortfall and this is what they reach for first, you're not looking at carelessness. You're looking at a need.

A better way to cope with financial emergencies

If you find yourself eyeing that account in a hard month, instead of asking, "What's wrong with me?", ask some of these questions instead.

Am I measuring the right thing? A growing retirement account balance feels like security, but it's a promise about a life you'll live decades from now. It tells you nothing about your next 30 days.

The fragility lives in the gap between this paycheck and the next surprise, and that gap never shows up on your quarterly retirement account statements.

The number that may better predict whether you'll have to raid it is a different one: How long you could cover the basics if the paychecks stopped tomorrow, using money you can easily reach without touching retirement at all.

Is there anything between me and the next emergency that isn't my retirement account? For a lot of people, honestly, there isn't. But that's not a character flaw — it's the most changeable thing on this list.

A small, separate emergency fund, built however it gets built — a little set aside over time — is often all that stands between an unexpected bill and a withdrawal.

And what would actually make me feel secure, as opposed to just making the balance bigger? Those aren't always the same goal, and noticing the difference is where real security starts.

Rather than focusing too rigidly on standard savings advice, find the number that helps you sleep at night.

To be clear, none of this means the years of saving were pointless. It means retirement readiness and financial security are two different things, and we've spent a long time discussing the first as if it guarantees the second.

If you're doing everything right and still feel like you're one surprise away from it all coming apart, you're not imagining it, and you're not alone — you're paying attention. The account is never the whole picture. The life around it is.

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• The 401(k) Loan Dilemma: Is It Ever a Good Idea?
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• Take It From a Tax Expert: The True Measure of Your Retirement Readiness Isn't the Size of Your Nest Egg

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.

My parents were born during the Great Depression and understood money down to the penny.

I still have their passbook savings accounts — small booklets filled with handwritten deposits and withdrawals that documented the flow of money through their lives. Every entry is a reminder of a time when financial stewardship was a necessity.

Today's teenagers and young adults live in a very different world. As many prepare to leave for college and manage money on their own, parents are asking important questions: Should they provide a monthly allowance? Encourage a part-time job? Help their children open a credit card?

Many families understandably provide financial support during college — whether for tuition, housing or living expenses. In fact, according to Edelman Financial Engines' What Money Means study, 43% of parents with adult children say they currently provide financial support, including 14% who say they provide a significant amount.

Financial assistance has remained remarkably consistent over the past several years, suggesting this has become a normal part of launching young adults into adulthood.

1. Start with awareness: Help them see how money moves

Most teens and young adults experience money only at the moment of spending. They tap a card, and the story ends there. But financial maturity begins with understanding how money actually flows into, out of and through our lives.

One good way to illustrate the value of money is to encourage them to track their spending — ideally for a month. The point is not to judge their choices — it's to help them see patterns.

If they are earning a paycheck, walk them through it. Show them the difference between gross and net pay, how taxes work and why payroll deductions matter. For students who take on a campus job, reviewing a paycheck can be an eye-opening lesson.

Understanding why take-home pay is less than expected — and learning to budget around it — builds practical financial skills.

Another way to teach financial responsibility is to let young adults pay for certain things themselves. Start small with discretionary purchases — the things they really want — and gradually move to necessities.

Whether support comes through a monthly allowance or helps cover larger expenses, establishing clear expectations helps young adults learn to budget while still benefitting from a parent's guidance. This is not about withdrawing support — it is about giving them the dignity of ownership.

2. Teach credit before they need it

College is often the first time young adults are exposed to credit card offers. Before they apply, help them understand the difference between building credit and accumulating debt. Explain how interest works, why paying the balance in full each month matters and how credit utilization affects a credit score.

It's also important to discuss common credit card mistakes, such as making only the minimum payment, carrying a balance month to month, maxing out available credit, missing payments or treating a credit card as an emergency fund.

These habits can lead to costly interest charges, damage credit scores and make it harder to reach future financial goals.

In fact, nearly 60% of Gen Z credit cardholders say they typically make only the minimum payment on at least one credit card, according to a recent LendingTree report.

The survey also found that many cardholders mistakenly believe carrying a balance helps their credit score and rely on credit cards as a substitute for emergency savings.

Relying on minimum payments can become an expensive habit because interest continues to accrue on the remaining balance, making debt more difficult and costly to pay off over time.

When used responsibly, a credit card can be a valuable financial tool. When used carelessly, it can become an expensive lesson.

3. Help them start saving and investing early

If your teen or young adult has income through a job, helping them open a Roth IRA may be one of the most valuable gifts you can give. Even modest contributions to an individual retirement account can be powerful because time — not investment brilliance — is the most valuable asset a young investor possesses.

The goal is not to teach them how to pick winning stocks. Instead, teach them the importance of regularly saving, broad diversification and patience. Show them how a low-cost index fund allows them to become owners of hundreds or even thousands of companies around the world.

More importantly, help them understand the extraordinary power of compounding over decades. A teenager who invests a few thousand dollars today may find that those early contributions may become some of the most valuable dollars they will ever save.

4. Model the behavior you want them to learn

Young adults learn far more from what they observe than from what they are told. One of the most effective ways to teach healthy money habits is to be open about your own experiences with money, including the lessons you've learned along the way.

Whether it's sharing how you paid off debt, recovered from an overspending habit or learned the importance of saving for emergencies, these real-life examples can make financial concepts feel more relatable and achievable.

According to the What Money Means study, 86% of Americans say their parents or upbringing influenced their relationship with money, including 35% who say the influence was major.

Financial responsibility is not learned in a single conversation. When we help young adults understand money, we give them confidence, independence and a foundation for lifelong financial well-being.

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• My 2 Key Rules for Investing Work Even When the Markets Are in a Tizzy

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.

Could owning a pet affect the way you view life during retirement?

Turns out Fido or Whiskers may have a bigger influence on your post-work happiness than you thought.

Full disclosure: I'm a retirement researcher by profession, and I'm also an animal lover. My wife is a veterinarian, and we're proud pet parents to three dogs, two guinea pigs and a tortoise.

In other words, I don't need to do any research beyond my own home to know the profound impact a pet can make at any stage of life.

Still, I was delighted that Prudential included a few questions about pet ownership in the Global Retirement Pulse Survey it did last summer. And it's really not much of a stretch — the cost of owning a pet should absolutely be a factor in building a comprehensive retirement income plan.

Some things we learned aren't particularly surprising: Pet ownership declines notably by age, people who owned pets before are likely to want a pet during retirement, and most people don't fully consider all the costs of owning a pet after they're done working.

Cats vs dogs

Now for the fun part, and I realize I may have buried the bone — I mean, buried the lede. I wanted to see whether pet ownership — specifically cats and dogs — is related to changes in life outlook. So, we asked whether someone's outlook on life has gotten better with age.

Drum roll, please: Go give your dog a treat! People who own dogs report having better life outlooks than those with cats. And people who have cats actually reported life outlooks that were worse than people without pets (I mentioned this to a few cats I know, and perhaps not surprisingly, they just don't care).

I was curious if other factors like wealth could be driving this, so I ran some additional calculations, and it turns out I wasn't barking up the wrong tree. See the results below.

So, I can't offer any guarantees from our research. But if you think owning a dog in retirement will bring a lasting smile to your face, who am I to disagree?

For over 20 years Prudential has been studying broader economic trends impacting Americans in its Pulse survey. The latest, the Global Retirement Pulse Survey, expands the geographic footprint and includes responses from the U.S., Brazil, Mexico, and Japan (for this analysis I just focus on just the U.S. respondents). The survey was conducted online by Brunswick Group between August 8-22, 2025 and there were 1,000 U.S. respondents. Note, the survey only included "mass affluent" adults, who are defined as age 30+ with at least $100,000 in investable 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.

In my experience, when a couple sits down to plan their Social Security timing, one thing surprises them almost every time: They don't agree.

One spouse has read that waiting until 70 gets you the biggest possible check, so that's the plan. The other wants the income now.

Neither of them has run the number that should be driving the conversation: Not the maximum benefit, but the spousal benefit and what happens to it if they wait.

That's the piece of Social Security planning I see skipped more than any other. It can be worth hundreds of dollars a month, for the rest of a spouse's life, and most people never calculate it until it's too late to matter.

The decision you can't undo

Social Security is one of the only truly irreversible decisions in retirement planning. Once you file, that's generally it. There's a narrow exception: You can withdraw your application within 12 months of filing, but only once, and you must repay every dollar you've received. Past that window, you're locked into whatever you chose, for life.

That permanence is exactly why this decision deserves more than a rule of thumb. "Wait until 70" is good general advice for a single person maximizing their own lifetime benefit. It's incomplete advice for a married couple, because it ignores a benefit that only becomes available once someone files.

The number most couples never calculate

If you're married, your spouse may be eligible for a spousal benefit worth up to 50% of your benefit at your full retirement age, even if they have little or no work history of their own, or if their own benefit is smaller than 50% of yours.

But here's the part that trips people up: Your spouse can't collect that spousal benefit until you file for your own.

Consider a hypothetical couple, Mark and Diane, both in their mid-60s, with a full retirement age of 67. Mark's full retirement age benefit is $3,200 a month, but he's planning to wait until 70 to collect $3,968. Diane spent most of her career raising their kids and working part-time, so her own benefit at full retirement age is only $700 a month.

Most couples in this position focus entirely on Mark's number. But Diane is also eligible for a spousal benefit of up to $1,600 a month, more than double what she'd get on her own record. The catch is that she can't touch it until Mark files.

While Mark waits, Diane can draw her smaller $700 benefit or wait alongside him. Either way, that's three extra years of a meaningfully smaller household income in exchange for a bigger Social Security check down the road.

Whether that trade-off is worth it depends entirely on the couple's full financial picture, which is exactly why this number needs to be calculated, not assumed.

Running the break-even math

The other number worth knowing is the break-even age: The point at which the extra money from delaying benefits catches up to and passes what you'd have collected by filing earlier.

For someone weighing full retirement age against age 70, that break-even point typically lands in the early-to-mid 80s, depending on the exact benefit amounts involved.

If you expect to live well past that age, delaying tends to pay off in total lifetime benefits. If your health or family history points the other way, filing earlier may make more financial sense, even before you factor in what it means for your spouse's income today.

The part everyone forgets: The survivor's check

Here's the piece that rarely comes up until it's too late to plan around: When one spouse dies, the survivor doesn't keep both checks. The smaller one stops, and the survivor keeps the larger one for the rest of their life.

That means whoever has the higher benefit, and their filing age, determines the income floor their spouse will live on if they're the one left behind.

That's a real argument for delaying the higher earner's benefit, especially when there's an age gap or a health difference between spouses. But it's not automatically the right call for every couple, and it needs to be weighed against the income the household is giving up in the meantime, not treated as a rule that overrides everything else.

3 steps to take this week

You don't need an adviser to start this process. You need 10 minutes and both spouses' numbers.

Pull both statements. Log into your accounts at SSA.gov and record each spouse's benefit at 62, at full retirement age and at 70.

Calculate the spousal benefit two ways. Compare each spouse's own benefit against 50% of the higher earner's full retirement age benefit, and use whichever number is larger.

Run your own break-even math. The 80s range in this article is a general guide, not your number. Free tools, such as Open Social Security, let you plug in your actual birth dates and benefit amounts to see your household's real break-even age and total lifetime income under different filing combinations.

See the math applied to a real filing decision. If it helps to watch this reasoning play out step by step, this video walks through a similar case, including the spousal benefit tension and the break-even trade-off.

Make the decision with the numbers in front of you

Social Security timing isn't a decision either spouse should make alone, and it's not one that should be settled by general advice in an article you've read, including this one. It's a decision that depends on your spousal benefit, your break-even age, your health and what happens to the survivor.

Do the math for your household, not someone else's. And have the conversation with real numbers on the table before you file, because after that, there's no going back.

Related Content

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• When Spouses Clash on Retirement Age: Longevity Risk vs Early Retirement
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• Social Security Do-Overs Quiz: Can You Undo a Claiming Mistake?

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

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

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

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

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

1. Rebalance your portfolio and review asset location

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

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

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

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

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

2. Check your retirement contribution pace

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

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

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

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

3. Run a tax projection

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

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

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

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

4. Put cash and debt to work more deliberately

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

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

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

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

5. Prepare for employee benefit decisions

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

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

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

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

6. Review estate documents before there is an emergency

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

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

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

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

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

Act earlier to save stress later

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

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

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

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

We've all done it. You're waiting in line. You see a snack and think, "It's just a few bucks." Or you tap to subscribe because it's only $4.99 a month.

Those tiny decisions feel weightless in the moment. That's the psychology of "just one small purchase" at work.

It shows up everywhere in modern consumer life. From coffee runs and in‑app upgrades to delivery fees and streaming trials. Understanding why small buys feel harmless helps explain why budgets leak even when we think we're being careful.

As a financial professional, I'm here to help you learn how to rise above this mentality.

The psychological drivers behind minimal purchases

Small purchases (or frictionless digital payments) don't slip past our radar by accident. A few well‑studied biases give them cover and make them easier to justify.

The denomination effect. The tendency to treat smaller units of money as easier to spend. Research in the Journal of Consumer Research finds people are more willing to part with smaller bills than a single large bill of the same value, which makes bite‑size buys extra tempting.

Mental accounting. This is a concept popularized by behavioral economist Richard Thaler. We mentally sort money into different buckets (like rent, groceries, fun money, etc.), then treat each bucket as if it's separate.

Our minds treat minor purchases differently from major ones, making people underestimate the impact of small buys.

Marketing cues and the environment. Placement at checkout, limited‑time offers, one‑click payments — these design choices shrink the "pain of paying" and turn a "maybe" into a "yes."

Social comparison also plays a role. We don't shop in a vacuum — we scan what peers are doing and use it as a yardstick.

For instance, blank apparel is often priced affordably, so adding an extra T-shirt or hoodie to your order may seem like a small decision. It's the kind of purchase that's easy to justify because each item doesn't feel expensive.

Combined with limited-time offers or free shipping thresholds, those small additions can quickly become part of the "just one more" mindset.

The slippery slope: How small purchases add up

The tricky part isn't a single latte or one delivery fee. It's the slow drip.

Picture this scenario for Sheryl:

• She grabs a $4.50 coffee three times a week on her commute
• She has two streaming services at $12 and $15 a month, plus $9 for cloud storage
• She makes a couple of $3 in-app purchases each month
• Her meal-delivery fees average $6 three times a month
• She gets a snack at the register once or twice a week for $1.50

None of these actions feel like decisions. They're habits.

Add it up over a year:

• Coffee: $4.50 x three times a week x 52 = $702
• Streaming: $27 a month = $324
• Cloud storage: $9 a month = $108
• In‑app extras: $6 a month = $72
• Delivery fees: $6 x three a month x 12 = $216
• Small snacks: $1.50 x two a week x 52 = $156

Total: About $1,578 a year

That's real money. And it doesn't include the costs of the food that came with delivery — just the fees.

Gregor Emmian, deputy chief digital growth officer at Rise, says today's digital payment experience makes it easier than ever to overlook small purchases.

"People rarely worry about a single small purchase," he says. "The challenge is that these purchases become routine. And over time, they can add up to much more than expected. "

For a bigger backdrop, U.S. households spend thousands each year eating outside the home, a category packed with small, frequent swipes. The Bureau of Labor Statistics (BLS) reports that average household spending on "food away from home" was over $3,600 in 2022.

How to combat the 'just one small purchase' mentality

You don't need heroic willpower to fight this mindset. A few small shifts can make a big difference. Why? Because they meet the problem where it lives: In the moment.

Track the tiny stuff, briefly and honestly. For two weeks, log every sub‑$10 purchase in one place. Patterns pop up fast. If you like budgeting with buckets, give minor purchases their own category so you can see the full picture.

Cap the category, not the item. Set a weekly "small flex" budget, say $25 or $40, to cover coffees, snacks, tips, microtransactions and more. When the bucket's empty, you're done for the week.

Use a wait‑and‑watch rule. A simple waiting period is one of the most powerful tools. When you give yourself 24 hours before a non-essential purchase, most of the urgency disappears. Pair that with clear financial goals, and every small decision starts serving a bigger purpose.

Tie every "yes" to a goal. Name the trade‑off: "If I buy this, I'm choosing it over an extra $25 toward my emergency fund." The clarity is usually enough.

Reintroduce gentle friction. Turn off one‑click checkout on discretionary sites or require Face ID for purchases. A six‑second pause is often all you need.

Make small swaps that feel easy. Take a travel mug two days a week. Batch your errands to avoid "I'm out anyway" impulse buys and order pickup once a week instead of delivery.

If you find mindfulness helpful, try this quick sequence when a small purchase tempts you:

• Notice the urge
• Name the feeling (Bored? Stressed?)
• Number it (1 to 10)
• Navigate (choose to wait, pass or buy with intention)

A final note

If you want to test this for yourself, total your past 30 days of sub‑$10 transactions. No judgment, just data. Then pick one change that would cut that number by 20% next month without making life feel smaller.

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

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

That happens by default, unless you plan around it.

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

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

How the IRS decides what gets taxed

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

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

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

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

In retirement, income piles on top of itself:

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

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

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

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

The three buckets every retirement needs

Think of your savings in three buckets:

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

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

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

Roth conversions: Moving money to the third bucket

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

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

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

Three approaches work well in practice:

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

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

A before-and-after example

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

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

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

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

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

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

What to do now

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

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

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

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• I'm an Investment Adviser: This Is the Tax Diversification Strategy You Need for Your Retirement Income

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

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

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

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

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

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

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

One account, three tax bills, three different taxpayers.

John and Jane did everything right

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

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

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

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

The widow's penalty

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

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

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

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

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

The beneficiary problem

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

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

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

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

Why this matters now

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

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

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

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

The planning runway

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

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

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

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

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

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

The real problem isn't the balance

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

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

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

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

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

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

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

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

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

Understanding the Social Security taxation cliff

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

For married couples filing jointly:

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

For single filers:

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

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

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

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

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

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

Strategy No. 2: Coordinate RMDs with Social Security timing

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

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

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

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

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

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

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

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

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

Strategy No. 4: Consider state taxes in the equation

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

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

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

Strategy No. 5: Coordinate spousal benefits with tax planning

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

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

Strategy 6: Factor in Medicare IRMAA surcharges

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

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

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

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

The holistic approach

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

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

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

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

Editor's note: This is the first article in a five-part series in which Feroz Ansari is highlighting ideas from his book, 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*.)

What if I told you that many of your most important life choices weren't entirely your own?

The career you chose. The amount of money you think you need. Your political and religious beliefs. Your definition of success. Even what you believe will make you happy.

We naturally assume these choices are ours. But what if they have been shaped over decades by forces you never stopped to question?

I call it the "concrete box."

Until you recognize that you were born inside a concrete box, and that you may still be living inside it, it can remain one of the greatest obstacles to building what I call "total wealth" — a life of meaning, fulfillment, authentic happiness and financial security.

For more than a decade, I have begun every graduate wealth management class that I teach at the University of California, Irvine with the same question:

"Imagine you are 60 years old. Someone offers you one final choice. You can receive $20 million in cash or a Nobel Prize. Which do you choose?"

Year after year, more than 95% of my students choose the money.

When I first began asking the question, their answer surprised me. Today it no longer does.

The question is not really about $20 million or a Nobel Prize. It reveals something much deeper. It forces us to examine the assumptions we carry about success, happiness and what makes a life worth living.

Somewhere along the way, many of us began believing that if we accumulated enough money, happiness, security and meaning would naturally follow.

After more than 25 years helping families build financial security and studying the relationship between wealth and human flourishing, I have come to believe that money is essential. But it is only half the answer.

The other half is much harder to recognize because it exists inside the invisible box through which each of us experiences the world.

The box you never chose

None of us chooses where we are born. We don't choose our parents, the genetics encoded in our DNA, our first language, our religion, our culture, our early education or the economic circumstances into which we arrive.

Long before we make our own decisions, these forces begin shaping how we think, what we value, what we fear and what we believe success should look like.

Consider a simple thought experiment. If you had been born to different parents in another country, speaking another language and immersed in another culture, would you hold the same beliefs you hold today?

Almost certainly not.

That realization is both humbling and liberating. It reminds us that many of our deepest convictions are not conclusions we arrived at independently. They are inheritances from the box.

Over time, those inheritances become so familiar that we stop recognizing them as influences. We no longer say, "This is how I was taught to think." Instead, we quietly assume, "This is reality. This is truth. This is simply how the world works."

Those assumptions, masquerading as unquestioned truths, form the concrete box.

The box is not your enemy. It gives you identity, belonging and community. It provides stability and helps answer many of life's earliest questions. But it also creates invisible boundaries around your thinking.

Like a fish that never notices the water surrounding it, most of us never realize that we are viewing life through walls we did not build.

Comfortable prisons rarely look like prisons.

Why it matters more than your portfolio

Traditional financial planning asks important questions. How much should I save? How should I invest? Will I have enough for retirement?

Those are essential questions. But over the years, I have become convinced that an even more important question comes first.

Who is making those decisions — and why?

Financial decisions are rarely driven by mathematics alone. They are deeply personal.

Two investors can own exactly the same portfolio. One watches the market every hour, convinced that disaster is always around the corner. The other pays little attention to daily headlines because experience has taught them that discipline, patience and time matter more than today's market commentary.

Although both investors own the same assets and experience the same market, they live in completely different emotional worlds.

Or consider buying a home. For one family it represents security. For another it symbolizes success — the large house with the pool and white picket fence becomes proof that they have finally "made it."

The transaction may look identical. The motivation rarely is.

That motivation often resides deep inside the concrete box.

We've been measuring wealth with only half the equation

Early in my career, I believed my primary responsibility was to help clients and students become wealthier. I still believe disciplined saving, intelligent investing and thoughtful planning are essential. It is difficult to experience peace of mind when financial stress dominates your thinking, and it is difficult to cultivate deep relationships when you are constantly worried about paying next month's bills.

Yet after working with families whose wealth ranged from almost nothing to many millions of dollars, I noticed something I could no longer ignore. Some of the happiest people I knew were not the wealthiest. Some of the wealthiest were not particularly happy.

That observation forced me to rethink what wealth really means.

Total wealth has two dimensions:

Total wealth = wisdom wealth + financial wealth

Financial wealth provides freedom and opportunity. "Wisdom wealth" provides perspective and direction.

Money can buy choices.

It cannot tell us which choices are worth making.

Building windows

The good news is that you do not have to destroy your concrete box. You cannot. Your history, your culture and your life experiences will always remain part of who you are.

What you can do is begin creating windows.

Every meaningful conversation with someone who sees the world differently allows more light into the room.

Every great book challenges an assumption you once accepted without question.

Every country you visit broadens your perspective.

Every difficult question you ask yourself weakens the concrete just a little more.

One window may not change your life. But enough windows eventually become a door. For the first time, you begin choosing your beliefs instead of simply inheriting them. You stop asking, "What does everyone expect from me?" and begin asking, "What kind of life is truly worth living?"

The most important investment you'll ever make

We devote enormous energy to improving our portfolios. We rebalance our investments, search for higher returns and look for tax efficiencies. Yet we rarely devote the same effort to improving the perspective of the person making those decisions.

A better investment strategy can improve your returns.

A better perspective can improve your life.

Before you adjust your asset allocation, examine the assumptions that shape your financial decisions

Before you purchase another investment property, ask yourself what you are truly chasing

Before you devote more energy to increasing your financial net worth, make sure you are also building a life anchored by purpose, gratitude and meaningful relationships.

Your portfolio will influence how much wealth you accumulate.

Your concrete box will influence what that wealth ultimately means.

So let me leave you with one final question.

Which decision you made this year was truly yours, and which one did your concrete box quietly make for you?

The moment you begin to recognize the walls surrounding your thinking, they become less permanent. You begin to question assumptions that once felt unquestionable. You become curious instead of certain. That curiosity creates windows. Those windows eventually become a door.

A larger portfolio may make the inside of your concrete box more comfortable. It cannot open the door.

You now have the key. Will you step outside?

To learn more, visit wisdomandwealthsolution.com or subscribe to The Wisdom and Wealth Solution YouTube channel.

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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 Trump Accounts launched this summer, most media coverage focused on the federal government's $1,000 seed deposit for eligible children.

Almost no one was talking about the second, quieter piece of the law: Your employer may be allowed to put up to $2,500 a year into your children's accounts, tax-free, and most human resources (HR) departments haven't said a word about it.

That's not an oversight so much as a timing issue. The provision that lets employers contribute — new Internal Revenue Code Section 128 — didn't become legally operative until July 4, 2026, exactly one year after the One Big Beautiful Bill Act created Trump Accounts in the first place.

Employers are still building the framework, and this benefit lands in the same spot health savings accounts (HSAs) and dependent care flexible spending accounts (FSAs) occupied years ago: Legally available, valuable and functionally invisible until someone puts it in front of you at open enrollment.

Right now, the responsibility sits with you to ask, not your employer to make an announcement.

What Section 128 actually allows

Under Section 128, an employer can contribute up to $2,500 per year to the Trump Account of an employee or their dependent, as the IRS detailed in guidance issued this spring. The contribution is excluded from your taxable income and is a deductible business expense for the employer — similar to how an HSA contribution works.

It runs through a formal, written Trump Account Contribution Program that meets nondiscrimination requirements, and it shows up on your W-2 in Box 12 under a new code, "TA."

Two details matter more than anything else here:

• First, the $2,500 limit is per employee, not per child. If you have three children with Trump Accounts, your employer still tops out at $2,500 in total contributions — the money doesn't multiply per dependent.
• Second, employer contributions count against the overall $5,000 annual contribution cap per child. This isn't found money sitting outside the system; it's part of the same bucket your after-tax family contributions fill.

The coordination math

Here's the scenario I walk clients through: Say an employer commits the full $2,500 through a Trump Account Contribution Program. That leaves exactly $2,500 of room before the family hits the $5,000 annual ceiling for that child.

If the family had been planning to contribute $5,000 out of pocket without checking on the employer benefit first, they'd either over-contribute or find out too late that $2,500 of their planned funding was redundant.

For families with more than one child, the math gets more complicated rather than more generous. The employer's $2,500 cap doesn't stretch across multiple kids — it's capped at the employee level. If you have two children in the program, you need to fund the remaining room separately for each child's account, not assume the employer contribution covers both.

The questions to bring to HR

If you're heading into open enrollment, these questions are worth asking your benefits administrator:

• Does our company have a written Trump Account Contribution Program under Section 128?
• Is the contribution funded directly by the company, or offered through payroll as a salary-reduction option?
• Will this show up as code "TA" in Box 12 of my W-2?
• Is the $2,500 limit per child, or capped at $2,500 total for me as the employee?
• What's the deadline to elect this during open enrollment, and is it retroactive for this year?

HR and payroll teams are actively building these programs right now, and asking early gives your employer time to include you in the first wave rather than the next plan year.

Coordinating employer money with personal contributions

This is where tax planning and account structure meet. Once you know whether an employer contribution is coming, and how much, size your own contributions to fill the remaining room under the $5,000 cap — don't layer them on top without checking first.

I think about this the same way I think about bucket planning more broadly: Know what money is already working toward a goal before deciding how much more to commit.

A Trump Account functions as a long-horizon "later" bucket for a child, distinct from a 529 earmarked for near-term education costs. Employer contributions simply become one more funding source to sequence intelligently.

Not the right fit for every family

Before treating the employer match as free money, work through a few questions:

• What's your current vs expected future tax bracket? Pretax contributions defer tax, but if a child eventually withdraws funds in a higher bracket than yours today, that deferral can work against the family.
• Does this crowd out higher-priority savings? If you're still building an emergency fund or catching up on your own retirement contributions, redirecting money to a child's account — even employer-funded — isn't automatically the right sequencing.
• How does this interact with financial aid planning? Account ownership and structure can affect need-based aid calculations differently than a 529 does.
• Is the employer contribution free, or does it come with strings? Some programs may require you to also elect a personal salary-reduction contribution to unlock the match — worth confirming during the same HR conversation.

The employer benefit is worth asking about for nearly everyone — it costs nothing to inquire. Whether to lean into it, and how hard, is a household-specific decision, not a blanket recommendation.

The bottom line

Trump Accounts are only months old, and the employer contribution provision is younger still. The families who benefit most this year will be the ones who ask the right questions during open enrollment — before contribution decisions get locked in for the year.

If you have a workplace benefit sitting on the table, the only way to know is to ask.

Related Content

• I'm a Financial Adviser Who's About to Have a Kid: This Is How I'll Handle Trump Accounts
• Is a Trump Account Worth It? Projected Growth — and Who Should Skip It
• I'm a Financial Planner: Trump Accounts Are a No-Brainer if You're Eligible (How to Apply)
• Should You Start a Trump Account for Your Child?
• How Trump Accounts Compare With 529 College Savings Plans

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

If you have to ask …

That line is usually attributed to J.P. Morgan. Someone asks the financier what it costs to run his yacht, and Morgan replies, "If you have to ask, you can't afford it."

The phrase has survived because it flatters the person it describes. It suggests that not knowing the number is itself a kind of arrival. Accounting is for other people.

I have spent much of my working life among people for whom that line is more than a joke. Twenty-seven years ago, I founded TIGER 21, a global network of some of the most successful entrepreneurs and executives in the world.

Eighteen months ago, I ceded control to a new lead owner. I now spend much of my time running my own family office, though I remain non-executive chairman.

Over the years, I have sat through countless conversations about wealth, investing and legacy, and I have come to believe that the Morgan story survives for a reason its tellers never intended. The indifference to cost did not stop with yachts. It migrated, quietly, to portfolio performance.

How that wealth was built

Many successful entrepreneurs know what their assets are worth. Far fewer know what actual returns they have generated to build that wealth. Fewer still know whether those returns justified the risks taken, the complexity embraced and the fees paid.

This is not carelessness. Quite the opposite. These are often among the most accomplished business builders of their generation. On average, members of our family office groups in the U.S. are roughly 1 in 50,000 by financial accomplishment. What they understand deeply is how wealth was created. What they often understand less clearly is how wealth is managed once it has been created. That distinction matters.

It is here that a soft impression hardens into something measurable. The surveys that ask family offices about a single year's returns produce numbers that often swing with the market and reveal little — 15% in a boom, a fraction of a point the year before, maybe even a loss.

But the durable, across-the-cycle figure that keeps surfacing is sobering: The average family office investment portfolio compounds over time at something between 6% and 7% a year.

What to consider

It is worth sitting with that, because compounding is unforgiving. A dollar growing at 6% becomes about $5.74 over 30 years — a single generation. The same dollar in the broad American stock market, at its long run rate of roughly 10%, becomes about $17.50 over the same 30 years.

That's three times the money for likely taking less idiosyncratic risk, paying lower fees and making almost no decisions at all. The family office, with its staff and managers and quarterly meetings and access to everything, runs hard and arrives at a third of where it would have landed by doing nothing but invest in the indexes.

Yet many wealthy families employ investment committees, consultants, managers, advisers, private funds and specialized strategies only to discover that, over time, they have produced results that compare unfavorably with simpler alternatives. Why? Because the activity of managing wealth is fundamentally different from the activity that created it.

Entrepreneurs typically build fortunes through concentrated conviction. They identify a specific opportunity, commit extraordinary energy and accept substantial risk. The family office, however, is often designed to do the opposite. Its purpose is diversification, risk control and capital preservation.

Both approaches are rational. But they are not the same. The concentrated risk that created the fortune is frequently retired the moment the family office is established. What follows is not wealth creation in the entrepreneurial sense. It is wealth management.

This is the point

Over 42 years, I compounded capital at what my accountants calculate at a 21.7% return. I do not offer that as a benchmark for any investment office, mine included. It is not a portfolio return. It is the return on a life spent concentrated in things I largely created and largely controlled, and it carried risks no prudent steward of family capital should be fully exposed to. That's the point.

The person who builds the fortune likely earns financial returns three to five times the annual returns the later family office will likely produce when investing the proceeds.

The cure is not more software, though better tools certainly help. The cure is a decision about what the investment function is for. Twenty years ago, Billy Beane and the Oakland Athletics changed baseball by asking a simple question: What if many of the statistics everyone relied upon were the wrong statistics? The genius of Moneyball was not finding better baseball players. It was finding better ways to measure performance.

Wealth management may be approaching a similar Moneyball moment. For decades, wealthy families have measured success by account values, asset allocations, manager reputations and access to exclusive opportunities. Those metrics may be interesting, but they are not the scoreboard.

In the Morgan story, the man asked what it cost, and Morgan made him feel foolish for asking. The family office that refuses to measure its returns does the same to itself.

Measuring performance sensibly was never the foolish thing. The foolish thing is being able to find out, and choosing not to. That self-inflicted blindness compounds over a generation, and the wealth it quietly forfeits can end up larger in scale than the entire fortune the family started with.

To avoid the actions that quietly erode many family fortunes, I suggest these disciplines:

1. Measure performance over multiple time horizons and liquidity

Instill the discipline to track returns across short, medium and long-term time horizons, as well as liquidity and risk. Most families organize portfolios by asset allocation — stocks, bonds, private equity, real estate and cash — but that only tells part of the story.

A second framework groups investments according to how quickly they can be converted to cash and level of risk. These tiers include:

• Immediately liquid assets
• Less liquid assets that can be sold at a discount within 90 to 360 days
• Illiquid and cash-flow oriented assets such as operating businesses
• Aspirational investments such as venture capital, start-ups and development projects

Looking at returns through both frameworks often reveals strengths, weaknesses and concentrations that conventional reporting completely misses.

2. Recognize that investing is a different skill than entrepreneurship

Many entrepreneurs assume that creating wealth was the difficult part and managing it will be comparatively straightforward. The opposite is often true. Successful entrepreneurs usually built businesses where they possessed a genuine competitive advantage. After a liquidity event, however, they enter global capital markets — perhaps the most competitive marketplace in the world.

Without exceptional investment skills, or exceptional investment talent around them, a family office's portfolio returns will inevitably fall below the entrepreneurial returns that created the fortune in the first place.

3. Decide what the family office is aiming to accomplish

Before discussing investment strategy, answer three more fundamental questions:

• Do future generations want to keep their assets together, or would they prefer to manage them independently?
• Under what circumstances should financial and philanthropic assets remain unified or eventually divided?
• What role, if any, should spouses and heirs play in governance?

Questions of governance and structure almost always determine the success of a family office far more than investment selection.

4. Measure what matters

Organizations tend to improve the things they measure well. Businesses understand this instinctively. Understanding that most family offices earn only 6% to 7% over time will shape decisions about whether to sell an asset, how to staff and whether creating a family office is justified at all.

Once returns are consistently measured across both time horizons, asset allocations and risk to liquidity tiers, weaknesses become visible, edge becomes repeatable, and better decisions naturally follow.

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• Will Millennials' Attitude Toward Money Put the Family Wealth at Stake? A Wealth Adviser Explains How Families Can Find Common Ground
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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 you recognize the need to add services to better support your clients' retirement strategies, one major roadblock often stands in the way: Your sales process.

Change doesn't have to mean overhauling your entire process. Minor adjustments — such as refining your annual strategy session or annual review — may be the ideal opportunity to explore a new service.

Something as simple as adding two additional questions to your strategy session or looking for small openings in your current process to dive deeper could make the difference in addressing your clients' needs and improving their retirement strategies.

Our team recently worked with multiple offices and identified three key opportunities for advisers to make small adjustments to the sales process that can have a large impact on your clients' planning.

Opportunity No. 1: From reviews to strategy sessions

A small mindset change can lead to a completely different conversation in what's often referred to as the annual review.

By calling this meeting a "strategy session" instead, you set an expectation with the client that you are actively reviewing their current approach with the intent to make purposeful adjustments for their benefit.

Examples may include discussing long-term care options, reviewing unused income riders to convert for legacy planning or simply revisiting their current strategy to help ensure it still meets their needs.

This approach doesn't add more meetings or appointments — rather, the same meeting with a few extra minutes of conversation could uncover more of the client's needs or wishes.

And the best part: A mindset change doesn't cost you anything!

Opportunity No. 2: The first 100 days

One adviser I work with has perfected the concept of the 100-day mark. When a new client reaches their 100th day with the office, the adviser schedules a milestone planning meeting.

In this meeting, they cover topics such as tax strategies, Medicare and life insurance — and they present a long-term care option to every client. This is a great time to have these conversations now that money transfers are complete, the client relationship has been established, and one of the biggest fears — income in retirement — has been addressed.

At this 100-day mark, the client has given your firm more time and greater trust to turn over more of their financial situation. They are also still new to the process and open to additional suggestions on how to help better protect their retirement future.

Opportunity No. 3: Find openings

Enhancing your sales process doesn't mean starting over. Taking a deep dive into your current process and finding small openings to add an extra question or tweak a current process can create new protection opportunities and revenue lines.

At a recent training event, one team laid out their three-bucket sales process. They realized that by simply adding a long-term care conversation to their "tomorrow" planning bucket, they can help protect their clients if they experience a future long-term care event.

This not only helps provide the client with some assurance but also prevents the depletion of other portfolio investments should they need care.

Challenge yourself and your team to look at your current process. Where is an opening to have a long-term care conversation?

When reviewing their policies, don't just look at performance — look for opportunities, unused income riders, old annuities that are not performing as well as current products or life events that have created new concerns, such as the need to provide future safeguards for their grandchildren.

Small adjustments, big results

Doing what's best for our clients sometimes requires us to evolve, but that change doesn't have to be a complete overhaul. Small steps can have big impacts, especially when they positively affect retirement outcomes.

If you can take two extra steps today to help mitigate risks to your clients' future, wouldn't you do that?

By proactively identifying these touchpoints and guiding your clients through these essential conversations, you not only demonstrate exceptional value but also open doors to new planning opportunities.

These efforts can lead to meaningful revenue growth for your firm through strengthened client loyalty, increased referrals and the implementation of insurance strategies that truly address your clients' needs.

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• How Financial Advisers Can Deliver a True Family Office Experience

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 most common piece of housing advice in retirement planning is also the most rarely examined: Your home should be the last thing you touch.

It sounds prudent. It feels prudent. Homeownership carries an emotional weight that no other line on the balance sheet carries, and "don't touch the house" honors that weight.

But follow the arithmetic of that advice across a retirement, and it does something no adviser would ever recommend on purpose.

The concentration no one plans

Start where most retiree households actually start: The home is a significant share of total wealth, often the single largest asset on the balance sheet. Now apply the standard sequencing. Spend the portfolio first. Draw down the stocks, the bonds, the cash, every non-housing asset, before the home is considered.

Each year that plan runs, the household's remaining wealth becomes more concentrated in a single asset. Carried to its conclusion, a client who began retirement reasonably diversified ends it with something approaching all of their wealth in one illiquid, undiversified position.

The entire premise of thoughtful financial advice is diversification, not the manufacture of a riskier position over time.

Yet that is precisely what the last-resort rule produces — not by accident of markets, but by design of the sequencing itself.

An asset that ages with its owner

The concentration would be concerning even if the asset were a strong one. The research suggests something more uncomfortable. A January 2026 research brief from Boston College's Center for Retirement Research found that home sellers begin realizing lower sale prices around age 70, with an 80-year-old netting roughly 5% less than a younger seller on a comparable home, and that deferred maintenance and upkeep explain about a quarter of the gap.

Related academic work reaches the same direction: As homeowners age, the capacity to maintain a property declines, and the home's relative performance tends to decline with it.

The last-resort rule therefore concentrates a client's wealth into an asset whose performance is most likely to weaken during exactly the years the concentration peaks.

The literature already moved

This is not a novel objection. Financial planning research has been building the case for more than a decade that housing wealth works harder when it is coordinated with the plan rather than quarantined from it.

Barry Sacks and Stephen Sacks, writing in the Journal of Financial Planning in February 2012, found that coordinated strategies outperformed the conventional last-resort sequencing.

John Salter, Shaun Pfeiffer and Harold Evensky at Texas Tech reached parallel conclusions the same year on housing wealth as a standby buffer that protects portfolios during drawdowns, and Wade Pfau's 2016 work on incorporating home equity into retirement income strategy points the same direction.

Notably, FINRA itself removed the "last resort" description from its investor guidance in early 2014. The research moved. Much of the advice has not.

What 'proactive' looks like

None of this argues that any client should access home equity, and nothing here is a recommendation. The point is that a sequencing question deserves the same scrutiny as every other allocation decision.

Some advisers have begun treating housing wealth that way: Evaluating it early in the plan, in a client's 50s and 60s, while the household still holds a diversified balance sheet and the widest range of options, rather than arriving at it last, by default, when the options have narrowed.

Timing carries a benefit that sharpens the point: Many of the strategies housing wealth can fund — life insurance and long-term care coverage among them — depend on insurability, and insurability narrows with age and health.

Evaluated early, home equity can still fund that kind of long-term planning. Deferred to the last resort, the same equity often arrives after the underwriting window has closed.

The instruments available for that conversation have also broadened.

Alongside traditional financing, newer structures such as home equity investment agreements — CHEIFS® (Cornerstone Home Equity Insurance/Investment Funding Solutions), where I am a co-founder, is one — allow housing wealth to enter the planning conversation without adding new monthly payments or interest, settling instead from the home's value at a future settlement event such as a sale, a permanent move-out or the homeowner's passing.

Which tool fits, if any, is a client-by-client judgment for the adviser and the homeowner's own professionals to make.

The question that is not client-by-client is the one the last-resort rule keeps answering by default. Advisers spend their careers protecting clients from concentration. The sequencing of housing wealth deserves the same protection.

Related Content

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• Does Your Retirement Plan Ignore Half of Your Net Worth? Here's How You Can Tap Your Housing Wealth for a More Robust Retirement
• How Combining Your Home Equity and IRA Can Supercharge Your Retirement

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

When I speak with financial advisers about artificial intelligence, I often hear the same concern. Many are worried that AI will eventually replace them.

I understand the fear, as it seems that every major new artificial intelligence technology comes with predictions that this time the profession is finished. The headlines are certainly not helping, as every week there seems to be another article explaining how AI can build portfolios, answer financial questions, analyze investments or generate financial plans in seconds.

For many advisers, it may feel as if AI is attacking the very value of the practice they have spent years building.

I think that perspective misses what is actually happening.

The clients using AI are not trying to replace their advisers.

They are simply trying to become better clients.

And that distinction may be one of the most important aspects for a financial adviser to understand, and when they do, I believe it will shed a new and exciting light on the future of our noble profession.

The empowered client

For decades, many clients walked into meetings feeling overwhelmed. For your clients, financial planning can be intimidating, which is exactly why they want to work with you.

Investment terminology can feel like a foreign language. Tax code, retirement income strategies, estate planning techniques and risk management concepts are not subjects most people spend their weekends studying.

As a result, many clients sat quietly through meetings, nodded politely and left without fully understanding what had just been discussed or what action they took in their portfolios.

AI is changing this.

Clients are becoming empowered through AI and can now ask questions whenever they want. They can learn the basics of Roth conversions, Social Security strategies, charitable planning, annuities, investment management and countless other topics within minutes, but here is the key: They arrive at meetings empowered and with more information than ever before.

They no longer have to sit there and nod politely as you explain why you believe duration risk needs to be accounted for in this market, without a clue about what "duration" means.

Many advisers see this as a threat, but I see it as an opportunity because an informed client is often a more engaged client, and a more engaged client asks better questions, which leads to deeper conversations.

These deeper conversations create stronger relationships.

The adviser who embraces this rather than fights it may find that AI does not weaken the client relationship but may actually strengthen it.

The emergence of the 'confidently wrong' investor

Of course, there is an important caveat.

More information does not always create a better understanding.

AI can not only help your client feel more empowered, but it may also create a uniquely new AI-driven challenge: The confidently wrong investor.

That may become one of the most important issues for financial advisers in the next decade.

AI is trained to sound authoritative, but it is not trained to always be correct.

AI hallucinates more often than people realize. It can confidently invent IRS rules, estate planning strategies, tax interpretations and legal concepts that simply do not exist.

Sometimes it pulls from outdated information. Other times it blends accurate information with misinformation in ways that sound incredibly believable.

The important thing to understand is that AI does not feel embarrassment the way you or I would if we confidently gave somebody the wrong answer over coffee. It does not pause and think that it should double-check things. It simply delivers information with remarkable confidence, whether the answer is accurate or completely wrong.

That changes the adviser's role, as I believe the future adviser becomes something very different.

The rise of the 'Epistemic Adviser'

That is why I think advisers who fight AI are making huge mistakes. The future adviser is no longer the person hoarding information. The future adviser is the person helping clients navigate information.

That is a much more meaningful role.

I call this role the Epistemic Adviser.

Now, I realize that sounds like something a philosophy professor would say, but the idea itself is simple. An epistemic adviser is somebody who evaluates the quality of knowledge before a client acts on it.

Who said my liberal arts degree was useless?

An Epistemic Adviser is a knowledge quality inspector. Your role is no longer simply delivering information, but it is now evaluating its quality before a client acts on it.

That is a very different profession.

And here is the key: You will use AI to become the Epistemic Adviser!

You encourage your client to use AI if they want to. You will both use AI in a manner compliant with your firm. Both AIs will recommend a Roth conversion, but you are the one who knows the human side of the client, and getting her to write a $182,000 check to the IRS is something she will never do.

Both AI recommendations were for a gifting program for estate tax purposes, but the client forgot to tell the AI that she lives in Illinois, which has one of the most complicated state estate taxes I have ever seen.

Are you starting to see my point?

Both you and your client are both using AI, but you, as the Epistemic Adviser, are essential to sort it out.

The difference between knowledge and judgment

This is where advisers become more valuable, not less.

You see, you are not competing with AI. You are helping clients navigate it and think about what they are really asking for.

With the endless supply of information, they are not asking for more information. They are seeking confidence that they are making the right decisions and in the right context.

They are asking for judgment.

They are asking for someone who understands how financial decisions interact with real life.

AI may recommend delaying Social Security benefits, but it is the adviser who understands the client's health concerns.

AI may recommend a gifting strategy, but it is the adviser who understands family dynamics and state-specific considerations.

You see, the difference is not information.

The difference is judgment.

Closing thoughts

As we move forward, I believe advisers should stop viewing AI as something happening to them and start seeing it as something they can use alongside their clients.

If the client is so inclined, encourage them to bring AI-generated ideas into meetings.

• Discuss those ideas openly
• Explore them together while validating what is useful
• Explain what may be missing and help them understand not only the answer but also the reasoning behind it

Clients are not looking for replacement.

They are looking for empowerment.

And advisers who help create that empowerment may find themselves more valuable than ever in a world where information is everywhere, but wisdom remains remarkably scarce.

Related Content

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

These days, AI is quickly becoming part of everyday financial life.

According to a NerdWallet survey conducted in October, 43% of Americans have used artificial intelligence to help with personal financial planning. For younger generations especially, asking a chatbot about budgeting, investing or retirement is becoming as natural as searching the internet.

As CEO of Affinity Federal Credit Union, that trend doesn't surprise me. AI is available around the clock, answers questions in seconds and makes financial information easier to access than ever. For many people who have never worked with a financial professional, it's lowering barriers that have existed for years.

That's good news.

But as AI becomes more capable, I'm increasingly concerned that people are placing too much confidence in its answers without understanding its limitations. AI can be an outstanding financial assistant. It should not be mistaken for a financial adviser. Knowing the difference could save you from making an expensive mistake.

AI shines when the job is education and organization

There are plenty of financial tasks in which AI genuinely improves people's lives. If you're trying to build your first budget, understand how compound interest works, compare traditional and Roth IRAs or learn how to set up an automatic savings plan, AI can be incredibly helpful. It explains concepts in plain language, doesn't judge basic questions and is available whenever you need it.

It's equally useful for repetitive, data-driven tasks. Tracking spending, categorizing expenses, flagging unusual account activity and reminding you when bills are due are all areas at which technology excels. These jobs require consistency and speed more than personal judgment.

For many households, AI can also make financial education far more accessible. Someone who may never have scheduled an appointment with a financial professional can now learn the fundamentals of investing or retirement planning from the comfort of home. That's a positive development, particularly if it encourages people to become more engaged with their finances.

In other words, AI is very good at helping people become more informed and organized.

Where misplaced confidence can cause problems

Where I become concerned is when people begin treating AI-generated answers as personalized financial advice. Most AI platforms are designed to provide an answer, even when they don't have the full picture. That answer may sound thoughtful, detailed and authoritative, but confidence isn't the same thing as accuracy.

Researchers studying AI's role in personal finance have found that it can serve as a useful starting point, but its recommendations often remain generic because they lack the personal context that drives good financial decisions. That's the challenge.

Financial planning rarely comes down to numbers alone. The details that shape good advice often aren't found on a balance sheet. AI doesn't know that you're helping an aging parent who could soon require long-term care. It doesn't know your business partner is preparing to retire, your child has special financial needs or you're considering leaving a stressful career earlier than planned.

These are everyday realities that shape financial decisions in ways no algorithm can fully anticipate.

Similar finances don't always call for similar advice

Consider two people who are both 58. Each has $900,000 saved in a 401(k), owns a paid-off home and hopes to retire at age 65. On paper, they look almost identical. But one has a government pension and retiree health benefits. The other is self-employed, has no pension and expects significant healthcare expenses after retirement because of a spouse's chronic illness.

The numbers may be nearly identical, but the advice shouldn't be.

One household may be able to invest more aggressively because much of its retirement income is already secure. The other may need to prioritize preserving assets and building additional income reserves.

No AI tool can arrive at those conclusions unless someone first asks the right questions. Financial experts are best at interpreting these important details and suggesting the next best actions.

Money decisions are emotional

When conversing with AI, many people overlook the fact it can't recognize emotion the way a person can.

Some of the costliest financial mistakes happen during periods of fear or overconfidence. When markets become volatile, investors sometimes feel an overwhelming urge to sell everything and move to cash. During strong markets, others become convinced they've discovered a winning strategy that can't fail.

In either situation, these decisions are driven by emotions.

A trusted financial professional can hear hesitation in your voice, ask follow-up questions and help separate temporary emotions from long-term goals. AI can generate information, but it can't understand the personal circumstances behind a difficult decision or recognize when someone simply needs reassurance before making a life-changing move.

I don't believe consumers have to choose between AI and human guidance. The smartest approach is to use each when it adds the most value:

• Let AI help you organize your finances, answer basic questions, automate routine tasks and prepare for conversations about your financial future
• Rely on a trusted professional when decisions involve taxes, retirement income, estate planning, insurance, major investments or anything else that's difficult or impossible to undo

Here's a practical rule I encourage people to remember: If an AI recommendation leads you to move a significant amount of money, sign legal paperwork, claim Social Security, retire, or make a major investment decision, pause before acting.

Those are moments when a conversation with someone who understands your full financial picture is well worth the time.

Technology will continue to improve, and that's something we should welcome. AI has an important place in personal finance, particularly when it helps more people build healthier financial habits and better understand their options.

The goal is to make better decisions by combining the efficiency of technology with the perspective, context and accountability that only people can provide.

Related Content

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

"Ellen" called me on day 38.

I hear some version of that call every week.

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

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

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

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

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

The two clocks and when they start

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

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

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

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

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

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

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

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

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

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

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

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

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

The fourth-quarter problem

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

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

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

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

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

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

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

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

Urgency disguises itself as conviction

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

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

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

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

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

What to do before you close

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

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

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

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

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

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

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

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

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

A note on passive replacements

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

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

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

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

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

Back to Ellen

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

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

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

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

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

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

Related Content

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• Six Risks of Delaware Statutory Trusts in 1031 Exchanges
• I'm a Real Estate Investing Pro: This Is How to Use 1031 Exchanges to Scale Up Your Real Estate Empire
• Why Your Next 1031 Exchange Decision Might Not Be About Taxes (It Could Be About Life)
• A 1031 Exchange May Look Great for You on Paper, But It's Not Just About Taxes

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 new savings vehicle aimed at helping the youngest Americans get a financial head start is now available.

Created under the One Big Beautiful Bill Act, Trump Accounts are available for any eligible child under 18 with a Social Security number. Once the account is opened, parents, relatives, even employers can contribute up to $5,000 per year per child until the age of 18.

Designed to serve as a long-term investment account, the funds can be used for education, the first-time purchase of a home or even retirement. To encourage parents to open an account for their child, children born between January 1, 2025, and December 31, 2028, are eligible to receive a one-time $1,000 contribution from the government.

While the seed money is certainly helpful, Trump Accounts offer families something even more valuable: The power of time.

Trump Accounts and the power of compound growth

When it comes to long-term investing, the length of time those dollars stay in the market can have a greater impact than the amount of money initially invested. That's because investment returns have the ability to generate returns of their own, also known as compound growth. Over time, this compounding effect can allow modest contributions to grow significantly.

So while the initial $1,000 contribution from the government may not seem like much on its own, leaving that money untouched in the account allows it to grow in ways that wouldn't be possible if investing began later in adulthood.

While returns are never guaranteed, the Rule of 72 estimates that investments earning around 7.2% annually will double every 10 years. This means a child who begins investing at birth has a significant about of time on their side.

For example, if a child received an annual contribution of $1,000 starting at birth, with a 7.2% return their account could have a balance of about $39,000 at 18. If the trend continues throughout adulthood, the child could be looking at retirement savings of nearly $1 million by the time they hit retirement age.

Older children may also qualify for additional seed money. The Michael & Susan Dell Foundation has pledged to contribute $250 for the first 25 million eligible children born between 2016 and 2024 who live in eligible ZIP codes with median household incomes below $150,000. To check eligibility, you can enter your zip code on the Trump Accounts Guide.

How to use Trump Accounts effectively

Families may choose to fund Trump Accounts for the sole purpose of covering higher education costs. But the savings in these accounts can be used for much more. If your primary goal is paying for college, 529 plans are still one of the most effective tools available because they offer tax-deferred growth and tax-free withdrawals for qualified education expenses.

For families focused on saving for tuition, it may make sense to use a 529 plan for college while continuing to contribute to a Trump Account for future savings. A child who graduates with student loans still has decades left to repay them. But a retiree who reaches age 65 without retirement savings has far fewer options.

While every situation is different, maximizing as many years of compounding as possible may be more valuable in the long run than simply using the account for education.

In addition to the long-term potential, families should also be aware that the tax rules surrounding Trump Accounts will likely evolve over time. Before making any withdrawal or conversion decisions, it's important to understand how they'll affect taxes under the current law.

Working with a tax professional or financial adviser before making any decisions can help families determine the most appropriate strategy for their situation.

One more way to use Trump Accounts

Aside from building wealth for the future, parents who choose to open a Trump Account can also view it as an opportunity to teach their children about important financial concepts such as budgeting, investing and the value of long-term planning.

Understanding compound growth and delayed gratification can give them the skills necessary to continue managing the account once they turn 18.

Trump Accounts offer a unique opportunity for families to begin investing earlier than ever. While the government's contribution to eligible newborns, and the additional seed money that may be available for those who qualify, provides a great foundation, the true value of these accounts are the amount of time the investments have to grow.

With consistent investing, thoughtful planning and financial education, these accounts give the next generation the ability to start building wealth at birth.

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

Related Content

• 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)
• Is a Trump Account Worth It? Projected Growth — and Who Should Skip It
• Is Your Money 'Lazy'? Here’s How to Put It to Work
• Should Retirees Continue to Invest? Yes, and Here’s How

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

Many Americans think moving abroad is only for the ultra-wealthy. But that's not always the case. In fact, having wealth can make international moves more complex.

While ultra-wealthy households may absorb relocation costs and pay their way out of complicated tax and financial planning pitfalls, they're typically tied to banking systems that don't travel well internationally as a result of the Fair and Accurate Credit Transactions Act.

Larger portfolios, pre-existing estate planning structures and a diversified asset base that includes riskier holdings, such as cryptocurrency, also amplify potential tax exposure, reporting obligations and compliance risks.

In fact, when compared with relatively modest nest eggs built on more traditional holdings, the advantages of the ultra-wealthy shrink, largely because their cases are expensive to manage even before the cross-border risk factor is introduced.

Financial planning for a move abroad

Any move abroad involves two key questions:

• Will moving abroad improve my financial and lifestyle outcomes?
• What factors might lead to additional risks?

Let's examine a hypothetical scenario: Aurora is a healthy, single, 62-year-old U.S. citizen living in California who is considering retiring to Europe. She is specifically considering Portugal or France, but isn't opposed to Italy or Spain because she's enjoyed travels throughout all four countries. Her husband passed away two years ago, and she no longer feels as anchored to the U.S. as she once did.

Aurora has accumulated holdings across a standard IRA, Roth IRA and 401(k) totaling $2.5 million. She will be eligible to claim Social Security in five years. However, she is unsure if she can afford to move permanently and, if she can, how to financially plan for it.

Aurora's profile suggests she'd be a great candidate for cross-border financial planning. The main information missing from her profile is related to qualitative factors we need to discuss before we can craft a financial plan that caters to her vision and absolves her of the stress associated with managing U.S. finances from abroad.

One of those factors is lifestyle. This can surprise people because how it relates to cross-border financial planning may not be immediately clear.

When Aurora talks to a cross-border financial planner, she's surprised by some of their questions. They include:

• Which country or countries are you considering moving to?
• How do you envision your day-to-day life in Europe?
• Have you spent meaningful time in the place you imagine moving to, not including vacation time?

These questions matter because they shape every financial discussion that follows. When lifestyle expectations aren't clear, financial planning becomes more difficult.

Taken together, someone with a lower net worth but clarity around their lifestyle goals will almost always be a better fit for cross-border financial planning than the $10 million client who lacks those attributes.

Other key factors for a successful move

Over time, several other factors emerge as more predictive of a successful move abroad than raw wealth:

• Planning runway. Having 12 to 18 months to prepare before moving makes a meaningful difference. It provides time to understand how a particular country's tax treaty with the U.S. guides financial planning, and time to restructure accounts and avoid rushed decisions, particularly around state taxes.
• Alignment within a couple. Moves driven by one partner while the other remains hesitant means couples tend to struggle financially and emotionally.
• Children/timing. Families who want to move abroad with young children will need to take into account schooling, language integration and associated costs.
• Language. Fluency isn't required, but a commitment to learning matters.
• Work. Many European visas don't allow you to continue working. Plans that assume part-time work can jeopardize immigration status.

Choosing a country

It's tempting to compare countries based on headline tax rates, Golden Visa immigration schemes or popular rankings. In reality, each destination introduces a different type of cross-border tax and financial planning risk.

• Portugal has been attractive for years, yet post-NHR transitions now require careful forward planning to avoid large Portuguese income tax hits.
• France is often predictable thanks to a beneficial tax treaty with the U.S. that streamlines investment management, although in the past year there have been proposed changes relating to wealth tax and Social Security contributions. Additionally, a U.S. inheritance plan must be carefully reviewed and often revised in the event of a move to France. In general, the system rewards planning and heavily penalizes improvisation.
• Italy can be appealing, but the timing of a move matters. Residency start dates, income flows and elections into special tax regimes must be intentionally aligned to mitigate potential cross-border tax hits.
• Spain is an increasingly popular retirement country for Americans. But it tends to introduce higher compliance and reporting friction, particularly around assets held abroad. It also has wealth and solidarity tax considerations, which vary depending on which region you plan to move to.

Ultimately, the right choice depends on income sources, flexibility and how much uncertainty someone is willing to tolerate.

To see how different countries tax retirement income, you can check out this chart from Rook International CPAs & Advisors. You should review your particular situation with cross-border tax and financial planning professionals specializing in your target country to fully understand all the considerations.

It should also be mentioned that this refers to the taxation by each country. In most cases, the exempt income must still be reported on the foreign tax return.

Healthcare: One of the most powerful planning variables

Healthcare is often one of the first costs to decline after moving abroad. For many Americans, this becomes a stabilizing force in the broader financial plan — in Europe, full-time, in-home care and full-service nursing homes can be affordable.

In Portugal, for example, retirement home options generally start at around $20,000 a year, with in-home care varying widely depending on the amount of care required.

Lower and more predictable healthcare costs can free up resources for housing, travel or simply peace of mind. Healthcare planning abroad often reassures people that the move is not only feasible, but sustainable.

The bottom line

U.S. retirees with a healthy-but-not-ultra-wealthy nest egg of around $2 to $ 5 million have:

• Enough flexibility to plan properly before moving
• Spending patterns that are comfortable but not volatile
• Wealth accumulated through decades of work and disciplined investing, rather than complex entities or family offices

However, international relocation rewards adaptability and patience. Those who are unable or unwilling to practice those traits may find themselves feeling unstable or unhappy, even if their cross-border financial planning is sound.

Related Content

• How to Get Dual Citizenship: Pros, Cons and Steps to Take
• Why (and How) High-Net-Worth Individuals Are Securing Golden Visas to Protect Their Assets
• Why More U.S. Business Owners See a Second Passport as a Path to the Next Level
• For a Move Abroad, Choosing a Fiduciary Financial Planner Who Sees Both Sides of the Border Is Critical
• Considerations for Americans Who Want to Move to Europe

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 a high-earning woman, you may be doing many things right.

You've built a successful career, accumulated meaningful assets and likely earn more today than at any other point in your life.

Yet, there is a surprising reality many successful women face: A big paycheck doesn't automatically translate into long-term financial security.

The amount you save, how you invest and how you manage taxes will have a profound impact on the wealth you ultimately keep. Small inefficiencies that may seem insignificant today can compound into meaningful missed opportunities over time.

That challenge is particularly important for women, who generally live longer than men and often face higher lifetime healthcare costs. As a result, your assets may need to support a longer retirement and provide greater financial flexibility than you initially expected.

Many successful women accumulate less retirement wealth than their male counterparts despite high incomes. Vanguard's 2025 retirement data found that women have about 21% lower 401(k) balances than men despite saving at similar rates.

The real issue is not just how much you earn, but how well you turn that income into long-term wealth.

That is why intentional investing matters.

Intentional investors understand that every dollar has a job

Intentional investing can have an outsize impact on long-term financial security, especially for women who are in their peak earning years.

In addition to supercharging your savings, savvy investors should consider expected returns as well as risk, taxes, liquidity, diversification and how those investments fit within your overall financial plan.

Ask yourself:

• Do I have a diversified portfolio?
• Do I have a concentrated position in one investment that creates unnecessary risk?
• Am I holding investments in the most tax-efficient accounts?
• Does my asset allocation reflect my true time horizon and goals?
• Is my investment strategy aligned with the life I want to live in the next 10, 20 or 30 years?

The hidden cost of being conservative by default

If you're in your peak-earning years, retirement may still be 15, 20, even 25 years away. Yet, your portfolio could be positioned as though retirement is only a few years from now.

Over time, cash accumulates:

• A bonus gets deposited and never invested
• The proceeds from a stock sale sit in a money market account longer than intended
• An old 401(k) remains untouched for years
• Dividends and interest payments accumulate without being reinvested

In some cases, you may find yourself holding an increasingly large allocation to bonds simply because you've been told that bonds are "safer" than stocks.