After years of advising families through the transition into retirement, I've noticed that one question comes up more than any other, and it rarely has anything to do with how much money someone has saved.

It's a short question with a complicated answer. "Will I be okay?"

People want to know if they can retire, how they would draw income if they did and what risks might derail a plan they've spent decades building. The size of the number in an account doesn't make that question go away nearly as often as people expect it to.

Why the question doesn't disappear as wealth grows

It's easy to assume this worry is mostly about how much someone has saved. In my experience, it isn't, not entirely.

Until someone feels secure about their ability to retire, that concern tends to crowd out almost everything else. Tax efficiency, legacy planning, giving — none of it feels urgent until the core question is answered.

Once that sense of security is in place, a different worry often takes its spot: "Am I doing the right thing?" More accounts, more complexity, more moving parts can start to feel harder to manage, not easier.

The question evolves rather than getting answered once and staying answered. Having clarity of how much you need in order to retire is different from knowing your balance. One is a number on a statement. The other is a plan for turning that number into cash flow you can count on, year after year, market up or down.

Until that plan exists, the worry doesn't go away, no matter how large the balance is.

The adviser who helped you build wealth may not be the one who helps you spend it

One pattern shows up constantly among people exploring a new adviser relationship: The person they've worked with did a genuinely good job growing their money. That was never really in question. What's in question is what comes next.

Growing a portfolio and spending it down are two different problems with two different risk profiles.

While someone is accumulating, market swings are mostly noise — contributions keep going in regardless of what the market did last quarter.

Once withdrawals begin, the math changes. Pulling money out during a down market can do lasting damage to a portfolio in a way that contributing during a downturn never would. That's a real, well-documented risk, sometimes called sequence of returns risk, and it's one that a lot of accumulation-focused advisers simply aren't built to manage — not because they lack skill, but because it's a genuinely different discipline.

As I put it to a colleague recently: "Clients don't just want strategy. They don't just want solutions and answers or benefits. They want execution. The moment we stop doing that, we're out of business."

That's worth sitting with, because it applies just as much to the retiree managing their own plan as it does to any adviser. A strategy that sounds right on paper doesn't mean much if there's no mechanism to carry it out, rebalance around it and adjust it as circumstances change.

A framework for answering the question yourself

Feeling OK isn't something you talk yourself into. It's the result of having real answers to a specific set of questions. Anyone approaching retirement, whether working with an adviser or not, should be able to answer each of these with some confidence:

1. The number. How much do you need to retire, based on your own spending, not a generic rule of thumb like "25 times your expenses"?

2. The income plan. How will savings convert into a reliable paycheck? Which accounts get tapped in what order and why?

3. Social Security timing. When should you claim, and how does that decision interact with taxes, spousal benefits and the rest of the plan?

4. Tax sequencing. What are the tax implications of how and when you withdraw from taxable, tax-deferred and tax-free accounts?

5. Medicare and health care. How does the timeline for Medicare enrollment intersect with the income plan, particularly around IRMAA thresholds?

6. Estate alignment. Does your estate plan still reflect what you want, or is it a document that was drafted once and never revisited as circumstances changed?

Individually, each of these is manageable. Stacked together, they're exactly the kind of complexity that keeps people lying awake doing math in their head instead of enjoying the retirement they worked for.

Why the plan matters more than the portfolio

Most financial firms are built to manage investments. Far fewer are built to walk someone through this specific set of questions and turn the answers into a coordinated plan, one that comes before the investment strategy is finalized, not after, so the portfolio is built to support a real income plan rather than the other way around.

That distinction matters because a good plan that sits in a drawer doesn't make anyone feel OK. A plan holds up only if someone is checking in on it: Adjusting the withdrawal rate after a down year, revisiting the tax strategy when the rules change, updating beneficiary designations after a life event. The plan is not a one-time deliverable — it's an ongoing process.

What resolution looks like

People who work through this successfully rarely describe the outcome in technical terms. They describe it in plain language: The picture got simpler. The jargon went away. They stopped guessing and started deciding.

That's really the goal of good retirement income planning. Not to make the topic sound more sophisticated, but to take a pile of accounts, tax questions and what-ifs and turn them into something a person can hold in their head clearly: A number, a plan for drawing income and a sense of what happens if the market has a bad year right when retirement begins.

If you've built real wealth but still find yourself uncertain about what retirement looks like day to day, that uncertainty is common, and it's solvable.

It usually isn't a sign that something has gone wrong. It's a sign that no one has walked you through the whole picture at once, and that conversation is worth having before retirement begins, not after.

Please see important disclosure information at opalwealthadvisors.com/disclosure.

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

As a nurse and now the CEO of a health company that serves older adults, I've spent decades around serious illness, aging and death. I've watched families make extraordinary decisions under impossible circumstances.

I've also seen something that still surprises people: Choosing hospice or palliative care isn't about giving up. Often, it's about focusing on what matters most.

Too many Americans believe there are only two choices at the end of life. You either go to battle by taking on every available treatment, or you surrender. This is one of the most damaging myths in healthcare.

There is another clear path. It's choosing peace.

Over the years, I've noticed that people facing the end of life often fall into one of three mindsets.

Some simply shut down. They withdraw from the world, becoming disconnected from the people and life around them.

Others fight relentlessly. Every new procedure, every hospitalization, every intervention becomes another struggle to postpone what they know is coming.

Neither approach is inherently wrong. Every person's journey is deeply personal.

But the people who leave the greatest impression on me are those who arrive somewhere in the middle. They say something like: "I've had a good life. I don't want to die, but I know death is part of life. I want to spend whatever time I have left being myself."

That isn't surrender. It's acceptance, which provides the clarity that many families desperately need.

Hospice and palliative care myths

About 2 million Americans on Medicare opt for hospice and palliative care every year, according to a report from the National Alliance for Care At Home, but the choice remains shrouded in misconception.

One of the biggest myths is that doctors stop caring. The opposite is true. Curative care focuses on defeating disease. Palliative care focuses on relieving suffering.

For people nearing the end of life, hospice shifts the goal from extending every possible day to making every remaining day as meaningful and comfortable as possible.

The question isn't whether medicine can do something, because modern medicine almost always can.

The better question is whether it should.

I've cared for people in their 90s with advanced dementia who undergo major surgery after a broken hip. Technically, the operation is successful. The X-ray looks perfect. But has the person recovered? Or have we simply repaired one body part while losing sight of the whole human being?

Medicine is remarkably good at treating diseases, but it can struggle to treat people.

That distinction matters.

Conversations to have now

The hardest conversations rarely happen between doctors and patients. They happen around kitchen tables. Adult children want one more treatment because they're afraid of losing mom. A spouse can't imagine saying no to another procedure. Old family conflicts resurface. Guilt enters the room.

Suddenly, decisions that should be about the people's wishes become tangled in everyone else's emotions.

I've seen families spend months arguing over what their loved one would have wanted because no one asked while they still could.

That's why these conversations should happen years before anyone needs hospice.

Seniors, you should tell your family what quality of life means to you. Put your wishes in writing. Explain where you draw the line between living longer and living well. Don't assume your children will somehow know. In a crisis, uncertainty almost always leads to conflict.

When families understand and accept a loved one's wishes, something remarkable often happens. The anxiety begins to lift. People stop guessing. They stop wondering if they're making the wrong decision. They can focus on being daughters and sons instead of decision-makers, spouses instead of advocates, grandchildren instead of witnesses.

They can simply love each other.

I also believe we need to change how we talk about hospice itself.

Far too many people arrive there only in the last days of life. By waiting so long, they miss many of the services that make hospice so valuable, such as expert pain management, emotional support, spiritual care if desired, social workers who help families navigate difficult decisions, and bereavement resources that continue after a loved one dies.

Hospice isn't about hastening death. It's improving life when time is limited.

In my experience, families almost never tell me they started hospice too early. Much more often, they tell me they wish they'd accepted the support months sooner.

A good ending

None of this means curative care is the wrong choice. If treatment offers a realistic chance to restore meaningful health or aligns with a person's goals, pursuing it can be exactly the right decision. The goal isn't to replace curative medicine with palliative care — it's to recognize the moment when the purpose of care changes.

Every life reaches that moment differently.

What I hope families remember is this: The measure of a good ending isn't whether we exhausted every possible medical intervention. It's whether we honored the person's wishes, reduced unnecessary suffering and gave them the chance to remain themselves for as long as possible.

In healthcare, we often celebrate fighting.

I think we should also celebrate wisdom.

Sometimes the bravest decision a family can make isn't choosing one more treatment. It's choosing one more meaningful conversation. One more story. One more shared meal. One more peaceful afternoon holding hands instead of sitting in another waiting room.

Choosing hospice isn't choosing death.

Sometimes, it's choosing how to live until the very 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.

Every year, self-employed homebuyers do exactly what their accountants advise, then sit across from a lender who treats them as if they barely earn a living.

The write-offs that shrink a tax bill also shrink the income a mortgage underwriter will count, and that gap can decide whether you get an approval on your mortgage application or a courteous no.

This touches a large and growing share of the country. Bureau of Labor Statistics data put roughly 16.8 million Americans, more than 10% of the workforce, in self-employment as of late 2025. Upwork's research counts about 64 million people, close to 38% of workers, doing some freelance work over the course of a year.

Plenty earn more than enough to carry a mortgage, yet a conventional lender's math can still say otherwise. There is a well-worn path around the problem, plus a few moves that measurably improve where you land.

How your deductions shrink your borrowing power on a conventional loan

When you apply for a conventional loan, the underwriter doesn't look at what your business earned. They begin with the net profit on your tax return, run it through a standardized cash-flow worksheet (Fannie Mae's Form 1084 is the common one), average it over about two years, and turn the result into a monthly figure that gets weighed against your debts.

A low monthly number means low borrowing power, even when far more cash moves through your accounts than the return shows.

Not every deduction counts against you equally, though, and that detail rarely surfaces before someone assumes conventional financing is out of reach. The Fannie Mae worksheet adds several noncash write-offs, among them depreciation, the home office deduction, depletion and amortization, so those don't lower your qualifying income even though they lowered your tax bill.

What does pull the number down are ordinary cash operating costs:

• Supplies
• Subcontractors
• Vehicle and mileage
• Insurance
• Fuel
• Travel

That difference tells you how wide your own gap really is. If your write-offs are mostly depreciation and a home office, you might qualify with figures much closer to your true earnings.

If you carry heavy equipment, labor and fuel costs, a large slice of your income vanishes before the lender ever counts it.

How a bank statement loan reads your real cash flow

A bank statement loan settles the income question with your deposits rather than your return. Instead of starting from net profit, the lender totals the money that landed in your accounts in the past 12 or 24 months, discounts it to reflect the cost of doing business and spreads what remains across those months to reach a qualifying income.

That discount is the expense factor. On business accounts, lenders commonly assume expenses consume about half of deposits and count roughly 50% as income. Personal accounts get treated differently, since money reaching them has usually already covered some costs. This is also a number you can influence.

An underwriter is not tallying every credit on the page. They want deposits that are steady and roughly consistent with the income you report, and they remove anything that is not recurring business revenue, such as a transfer, a loan or a tax refund.

Overdrafts and returned payments draw the wrong kind of attention. The aim is to reconstruct what your business dependably produces.

The trade-off is rate. As nonqualified mortgage products, these loans typically run about 0.5 to 1 percentage point above a comparable conventional loan, and some programs ask for a few months of reserves.

Set that against what qualifying the conventional way would cost you, which is the deductions that lower your tax bill every year.

For many self-employed borrowers, keeping those write-offs is worth a slightly higher rate, though a thin-margin business should still run the numbers.

What to do before you apply

Borrowers who keep business and personal banking separate start from a strong position: Clean, easy-to-total deposits that tie plainly to their work and give an underwriter little room to discount them.

If your accounts are commingled, though, that's no reason to wait. A mortgage broker specializing in bank statement loans can review your deposits now and tell you what already qualifies, including whether your business or personal account makes the stronger case.

Those deposits also need to read clearly. Cash is hard to trace and often excluded, so deposit it promptly and keep records linking it to invoices.

When a large or irregular deposit lands, be ready to explain it, because anything resembling a transfer or a loan gets stripped from the calculation.

If your real costs run well below what the lender assumes, a CPA-prepared expense statement can increase the income on which your loan is based. This is where the expense factor stops being a flat 50%.

Say you deposit $20,000 a month and the lender counts half, or $10,000. If a CPA documents that your true costs are closer to 25%, the lender might count $15,000 instead, raising your qualifying income by half with nothing changed about how you operate.

It's not required, and it helps low-overhead businesses most. Ask your loan officer first, since lenders typically want the letter prepared in a specific way.

Where the program lets you choose, match the window to your trajectory. A business whose income has climbed usually looks stronger over 12 months, since a 24-month pull averages that recent year against a leaner one behind it.

A seasonal or uneven business tends to do better over 24, where the slow stretches sit next to the busy ones. Run it both ways and go with the window that best reflects your current earning power.

Line up the real costs before you fall for a house, including a down payment, several months of reserves and a rate above conventional.

Whatever you're preapproved for, make sure your cash flow comfortably covers the monthly payment and carrying costs in an ordinary month, not just a busy one.

Ask your CPA about timing, too, since the deduction strategy that saves the most at tax time is not always the one that serves you in a year when you also want to buy.

Lenders don't all read your file the same way, so gather a few quotes and select a loan officer who lays out both paths instead of selling one.

The right loan depends on what you need most: Conventional often wins on rate when your deductions are mostly the paper kind that get added back, while a bank statement loan can win on loan size or speed.

That call is yours to make. Assemble your file early either way:

• 12 to 24 months of statements
• About two years of proof of self-employment
• Your CPA's expense letter
• A year-to-date profit and loss statement

The bottom line

A conventional turndown usually says more about the measuring stick than about you. Underwriting built for a W-2 world reads a healthy business as a low earner, and the very deductions that make you a savvy taxpayer are the ones that make you look small on paper.

As the workforce keeps shifting toward independent income, the financing has quietly caught up.

Your task is to know which door fits and to arrive prepared: Clean deposits, a documented expense ratio, reserves set aside and a lender who writes these loans routinely. Do that, and self-employment stops being the reason you can't buy.

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

The Great Wealth Transfer is already underway, with trillions of dollars expected to pass from one generation to the next over the coming decades.

But most Americans spend more time planning a family vacation than working on their personal finances, and the amount of time they spend on their wealth transfer is even less.

In my experience, this oversight can have lasting consequences. Here are the biggest estate planning mistakes I try to help my clients avoid.

Not preparing your heirs

Wealth is a powerful tool for creating a legacy. But if you're assuming it will be a wonderful windfall that sets your family up for success after you die, you may be unpleasantly surprised. According to research from the Williams Group, 70% of wealthy families lose their wealth by the second generation, and 90% lose it by the third.

I've found that heirs are often better prepared for wealth when they develop accomplishments and confidence that are independent of family wealth. The goal isn't to make life difficult for your children, but to help them build the skills and judgment they'll need to manage opportunities responsibly.

Unfortunately, more than half of parents ages 55 and older surveyed by Morning Consult for Kiplinger say they rarely or never discuss money with their children.

That's why I encourage families to hold regular conversations about the purpose of their wealth. This doesn't have to mean disclosing every dollar. It's about helping the next generation understand how wealth was created, what responsibilities come with it and what role it should play in their lives.

The biggest gift you can leave for the next generation is clarity and financial confidence, and you can't do that if you don't talk to them.

You shouldn't be the only one talking to your children about money, however. It's hard to be a prophet in your own land, and one lesson I've learned as an adviser and parent is that children don't always take advice from those closest to them.

Sometimes they'll hear the exact same message from a trusted mentor, adviser or family friend and view it completely differently. Create opportunities for younger generations to learn from people who have good judgment and strong values.

Failing to formalize your plan

Legal processes need to be followed to ensure assets are transferred the way you want. It's always shocking to me how so few people have a will or trust. A Guardian study found that about half of high-net-worth individuals don't currently have a will.

I've seen estate disputes strain family relationships for years. In some cases, siblings stop speaking to one another because expectations were never clearly documented or communicated. If you've spent a lifetime building wealth, take the time to preserve family harmony by ensuring everyone understands your intentions before difficult questions arise.

Not protecting your wealth

A will or trust determines where assets go. Asset protection helps ensure they're still there when the time comes to transfer them. In this litigious world, asset protection is essential to protect people from lawsuit creditors and anyone else trying to separate you from your money.

Unexpected legal claims or liabilities could reduce the wealth you're hoping to pass on. I often tell clients they need a moat around their castle. I've seen many people's life's work wiped out by a judgment, regulatory issue or divorce.

Irrevocable trusts are a way to protect your assets. These types of trusts can shield your assets from lawsuits. Depending on your circumstances, they may also be able to lower your estate and income taxes.

Waiting until you're gone to make an impact

Many people assume wealth transfer is something that happens after they die. In reality, some of the most meaningful transfers happen while you're still alive to experience the benefits firsthand.

I've seen such joy in parents and grandparents when they get to see how their money benefits their offspring. It's also incredible to be so fortunate that you can give your money to places and causes you believe in and be able to see its impact while you're alive. This is why I encourage some of my clients to not wait until they're gone to give.

People are living longer these days. If you're 99 when you pass, your kids may be in their 70s and already retired. But in their 30s, 40s and 50s, your kids may be starting families, buying houses, building businesses and putting their kids through school. Transferring money at this point can provide far greater value.

Focusing on the "how" before the "who"

Everybody asks "how?" I think the better question is "who?"

• Who are the advisers helping you make estate planning decisions?
• Who is educating the next generation?
• Who is collaborating to help ensure every piece of your plan works together?

Transferring wealth requires a team, and the quality of your team determines the quality of your outcomes. I like to call this your "kitchen cabinet," meaning the group of people you trust enough to give you the right advice when you need it most.

You don't want five great professionals working independently. You want the right professionals working together. The families who navigate these transitions most successfully tend to have financial advisers, attorneys and tax professionals operating as a coordinated team.

Wealth transfer is about far more than passing down assets. It's about passing down opportunities, values and a vision for the future. With thoughtful planning, open communication and the right team of professionals guiding the process, your wealth can become a lasting legacy that benefits generations to come.

In my experience, the families that transfer wealth most successfully treat inheritance as a conversation, not an event.

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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 retirees and pre-retirees, the question has shifted, from "How do I grow my wealth?" to "How do I sustain, protect and distribute it tax-efficiently?"

Over the past few years, technological advancements in the investment world have ushered in a new era of flexibility and control.

As a financial planner and owner of Alpha Planning, I find that direct indexing and tax-loss harvesting have become strategies that I'm discussing regularly — often with clients who have brokerage accounts over $250,000 and are keen on managing their retirement tax outcomes.

What is direct indexing — and why is it different?

Most investors have grown comfortable with index funds: Buy an S&P 500 ETF, and you get hundreds of companies with one click. But direct indexing lets us go one step further.

Instead of holding shares of a fund, we own the individual stocks that make up an index, opening up far more opportunities for customization and tax optimization.

To illustrate: Imagine your portfolio is like a chef's kitchen. Index funds are the meal kit — pre-packaged, efficient and predictable.

But direct indexing is the custom kitchen, stocked with individual ingredients that let you adjust every dish to your taste. You can swap one item for another, season to your preferences or craft a meal that's uniquely yours.

This flexibility is invaluable when managing taxes and making strategic choices.

And it's not just theoretical. Our team consistently averages 1% to 1.5% of tax alpha each year in nonqualified accounts simply by trading stocks strategically — that's above and beyond any market performance.

"Tax alpha" is a measure of how much additional money you keep by lowering your tax bill, and this alpha accumulates year after year, resulting in thousands of dollars in additional value for our clients over time.

The capital gains budget: A smarter, more strategic tax plan

One concept that has become the backbone of many retirement conversations is the capital gains budget. Think of it as an annual spending plan for your realized gains: How much can you afford to distribute before tipping into higher tax brackets or triggering additional Medicare IRMAA premiums?

Intentionally setting a capital gains budget creates room to coordinate other income strategies — like Roth conversions — without crossing those crucial thresholds.

Direct indexing allows for precise control of:

Tax-loss harvesting. By tracking individual positions, we can harvest losses throughout the year, offsetting gains and smoothing out your tax bill.

Roth conversions. Loss harvesting frees up "space" in your tax bracket so you can convert more IRA assets to Roth at preferable rates and accelerate tax-free growth without impacting IRMAA.

IRMAA management. Staying under IRMAA cutoffs means keeping your Medicare premiums as low as possible.

Flexible withdrawals. Harvested losses don't just help in a single year — they often carry forward, providing valuable flexibility for withdrawals in later retirement years. This can help ensure you're less likely to trigger excessive taxes when accessing your investment accounts for future needs, often when long-term care comes into view.

A case from my desk: Linda and Bob's retirement tax playbook

Earlier this year, I met with Linda and Bob, a couple who'd recently retired with $3 million in investable assets. Their challenge: To maximize after-tax retirement income, minimize surprises and plan for their family's future.

With direct indexing in their taxable account, we harvested $75,000 in losses over the first two years of the strategy.

This loss harvesting became essential to keeping their capital gains budget on track — allowing us to convert IRA dollars to Roth while staying under Medicare IRMAA thresholds and AGI limits.

It also provided the flexibility to help fund a second home purchase without affecting their IRMAA and Roth conversion strategy thanks to the carry-over losses we had helped accrue.

The payoff? Linda and Bob enjoyed predictable Medicare premiums, more tax-free growth, more flexibility for future withdrawals and an estate strategy ready for the next generation.

Their story is a perfect example of how intentional planning — not just reacting to market swings — translates into tangible, lasting benefits.

Who benefits most?

Direct indexing and a capital gains budget aren't only for ultra-high-net-worth investors. If you have a brokerage account over $250,000 and want to take control of your retirement tax plan, these strategies could be your missing link.

They offer proactive ways to personalize your financial plan, prepare for future legislative changes and put more money to work for you.

Key takeaways

• Direct indexing brings customized flexibility — think of it like a custom-made mutual fund — you have control over when to buy and sell, not the mutual fund or ETF
• Tax-loss harvesting is more powerful when you own individual stocks
• Setting a capital gains budget helps coordinate Roth conversions and manage Medicare costs
• Strategic trading generates tax alpha — on average 1% to 1.5% per year — which compounds into substantial long-term benefits
• Harvested losses create flexibility for withdrawals in future years, helping minimize taxes as retirement unfolds — especially when future needs like long-term care arise

Final thoughts

Retirement is about more than investment returns — it's about controlling what you can and planning with intention.

If you haven't reviewed your capital gains budget or explored direct indexing, now's a good time to sit down with your adviser and ask the tough questions.

In my experience, the confidence that comes from a well-structured, tax-smart retirement plan is the most valuable asset you can own.

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

The most dangerous word in American estate planning is "permanent."

Congress used it last summer when it enacted the One Big Beautiful Bill Act (OBBBA), and every planning practice in the country quietly lost its sense of urgency in the days that followed.

The relief was understandable. For much of the preceding three years, the profession had operated under a deadline: The doubled estate exemption in the Tax Cuts and Jobs Act (TCJA) was scheduled to sunset at the end of 2025, and families with substantial wealth were counseled — correctly, under the law at the time — to compress years of transfer planning into a matter of months.

Then the deadline evaporated — and with it, for many families, the last practical motivation to reopen the estate binder.

The deadline that never came

On July 4, 2025, President Donald Trump signed the OBBBA into effect, setting the estate, gift and generation-skipping transfer tax exemption at $15 million per individual for 2026, or $30 million for married couples — up from $13.99 million and $27.98 million, respectively, in 2025.

It also provides for inflation adjustments beginning in 2027 using 2025 as the base year. The top federal rate remains 40%.

The 2026 annual gift exclusion for 2026 is $19,000.

Since the OBBBA took effect, for the great majority of Americans with substantial wealth — households with net worth between roughly $5 million and $30 million — the federal estate tax has effectively receded as a planning concern.

Why 'permanent' is a dangerous word

"Permanent," in tax legislation, is a term of art. It signals that Congress has chosen not to include a scheduled expiration in the statute — nothing more.

A future Congress remains free to revise the number at any time, and the historical record suggests it does so with regularity.

In 2001, the federal estate tax exemption stood at $675,000. By 2002, it had risen to $1 million. In 2009, it reached $3.5 million. In 2010, the estate tax was briefly repealed altogether, then reinstated at $5 million in 2011.

The TCJA doubled that figure to $11.18 million in 2018, and it drifted upward with inflation being lifted it to its current level.

Against that record, "permanent" is a description of legislative posture, not of statutory reality.

The behavioral response most families adopt on hearing the word — read the news, exhale, close the binder — is precisely the wrong one.

Four questions your documents need to address now

1. Does your existing plan still function when the exemption rises rather than falls?

Many trusts drafted during the preceding decade contain formula clauses — provisions that automatically allocate assets between a credit-shelter share and a marital share based on the exemption in effect at the first spouse's death.

A formula written to divide an estate at a $5 million or $7 million threshold behaves very differently at $15 million.

In some drafting patterns, the credit-shelter share now consumes nearly the entire estate and starves the surviving spouse's marital share. In others, the reverse occurs.

Neither outcome may reflect what the family intended when the documents were signed.

The remedy is unglamorous: Read the formula language, model the outcome under current law and amend or restate where the mechanics no longer serve the intent.

2. How should appreciated assets in your estate be handled?

This question inverts a decade of planning orthodoxy. Under the pre-OBBBA regime, the arithmetic favored removing appreciated assets from the estate — through gifts, sales to intentionally defective grantor trusts or grantor retained annuity trusts — to avoid a 40% estate tax that would otherwise apply.

That calculus was often correct. Under a permanent $30 million exemption, it frequently is not.

For families comfortably beneath the threshold, retaining appreciated assets in the estate captures the basis step-up permitted at death, which eliminates embedded capital gain from a lifetime of appreciation.

A 23.8% federal capital gains rate applied to decades of unrealized growth can now exceed the estate tax cost of holding the asset — often by a substantial margin.

The old default of "give it away" deserves a fresh calculation.

3. What impact will state estate or inheritance taxes have?

Several states levy their own estate tax at thresholds far below the federal exemptions, and additional jurisdictions impose inheritance tax on the recipient rather than the estate.

• Oregon begins taxation at $1 million
• Massachusetts at $2 million
• Washington at approximately $3 million
• New York at $7.35 million, with a distinctive cliff at 105% of exemption above which the entire estate becomes taxable from the first dollar

Our practice, Palmer Wealth Group, (I am the CEO), is based in Texas, which imposes no state estate tax, a genuine planning advantage for its residents.

But the analysis rarely stays clean. Property held in another state, family members domiciled elsewhere or a beneficiary residing in an inheritance tax jurisdiction can each trigger exposure the federal calculation misses entirely.

State thresholds change more frequently than federal, and several states index their exemptions annually. What was safe last year may not be safe this year.

4. Which trust strategies are the most tax-efficient?

This one addresses what existing trusts have quietly become. When federal estate tax was the binding constraint, the goal of an irrevocable trust was often to remove assets from the grantor's estate as efficiently as possible. Income taxation was a secondary concern. It is no longer.

Now, a trust reaches the top 37% federal income tax bracket at $16,000 of undistributed income in 2026 — a threshold a single individual does not encounter until $640,600 of taxable income.

For a trust with meaningful investment assets, the compression is severe.

Distributable net income planning, grantor-trust elections, situs selection and the choice between distributing and accumulating income each become materially more important once the estate tax rationale no longer overwhelms every other consideration.

What this review actually looks like

Taken together, these four questions form the shape of an estate plan review that has these components:

• Documentary. Retrieve the current trust and will documents and read the formula clauses aloud. The exercise is more revealing than most families expect.
• Arithmetic. Re-inventory the estate against the new estate tax threshold, separating what remains a candidate for lifetime transfer from what has quietly become a candidate for basis step-up.
• Geographic. identify every state in which the family owns real property, maintains a domicile or has significant beneficiaries and map the exposure against current state statutes.

The fourth component is coordinative — and, in some respects, it's the most difficult because estate planning, tax planning and investment management sit on three separate professional desks, plus a personal one:

• The attorney drafts the documents
• The accountant computes the return
• The adviser manages the assets
• The family too often serves as the unpaid coordinator among them

In our practice, the review typically begins with the attorney reading the formula clauses in the family's presence and ends with the accountant and the investment adviser at the same table, working from the same current inventory.

The mechanics are ordinary; the coordination is not. Its absence — not the tax code — is what most often causes an updated plan to remain uncompleted after the review begins.

Nothing in the current law prevents a future Congress from changing the exemption again. The 40% rate, the state estate tax landscape and the compressed income tax brackets that apply to trusts all remain what they were before OBBBA.

What has changed is the immediacy of the pressure to act. That change is welcome, but it should not be mistaken for a change in the underlying discipline.

Estate planning is not the practice of racing deadlines. It is the practice of building a plan that survives whatever the rules become next.

Related Content

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• The Illinois 'Cliff Tax': A Single Dollar Could Cost Families Hundreds of Thousands
• Inherited Money or Property? What You Need to Know Before Filing Your Taxes
• Estate Tax vs Inheritance Tax: Who Actually Pays the Bill?
• Which Trust Type Saves Your Kids The Most Money?

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

Apparently, artificial intelligence is going to take our jobs.

All of them.

We'll be sitting home in our pajamas while bots do our work, answer our emails, manage our money and, presumably, complain to each other about the boss at the virtual watercooler.

I'm not buying it.

We've seen this movie before

Every technological revolution arrives carrying the same warning: This time, the machines are coming for us.

The loom was going to replace the weaver. The automobile was going to destroy jobs tied to the horse. ATMs were supposed to eliminate bank tellers. The internet was going to make entire industries — and plenty of workers — obsolete.

Now it is AI's turn.

The headlines are certainly frightening enough. AI can write reports, analyze financial statements, create advertising, answer customer questions, write computer code and increasingly perform tasks that once required highly trained professionals.

So, should we start cleaning out our desks?

Not so fast

With every new technology, some jobs have disappeared. Others have changed. And entirely new industries — and millions of jobs — have been created that nobody could have imagined.

So maybe we're asking the wrong question.

Here's an even more provocative question: What if AI doesn't make people less valuable? What if it makes the right people much more valuable?

That is where this gets interesting.

AI can analyze a mountain of data before I finish my coffee. It can draft a memo, summarize a meeting, write computer code and probably compose a perfectly respectable thank-you note.

But can it know when the numbers are technically right and the decision is dead wrong? Can it read a room? Can it recognize that a frightened employee doesn't need another spreadsheet — they need someone to tell them what happens next? Can it take responsibility?

Can it have an original idea that comes from 40 years of experience, mistakes, relationships, intuition and occasionally falling flat on its face?

Not yet. And maybe that's the point.

The future may not belong to AI

The future may belong to people who figure out how to use AI.

My good friend and AI expert Priyanka Rao co-authored a Newsweek article (paywall), "The Empty Office: What Happens When AI Runs the Company." I asked her the obvious question: "If AI can do entry-level work, where do future experts come from?"

Rao answered candidly. "This is the one I actually worry about. The risk isn't the people who get things wrong. It's the people who get things wrong and are certain they're right, because they've stopped doing the thinking that would tell them otherwise.

"That's what happens when someone learns a skill by reviewing AI's output instead of producing their own first draft under pressure and getting it corrected. Juniors used to learn by doing something badly and having someone senior take it apart.

"If AI does the first draft, that correction loop disappears quietly, and nobody notices for a few years, until someone gets promoted into a senior seat having never actually done the work unsupervised."

What could AI do?

• AI could produce a similar transformation across white-collar America
• An accountant may spend less time assembling numbers and more time interpreting them
• A financial adviser may spend less time generating reports and more time understanding a family's goals
• A doctor may spend less time documenting a visit and more time talking with a patient
• A lawyer may spend less time searching thousands of documents and more time developing strategy
• A small-business owner may suddenly have access to analytical and administrative capabilities that previously required an entire staff

Productivity can create jobs, too

We tend to think about AI productivity backward.

If 10 employees can accomplish the work of 20, we immediately see 10 jobs disappearing. But what if those 10 people can now serve twice as many customers? What if a company that previously couldn't afford a marketing department can suddenly market nationally?

What if an entrepreneur can use AI to handle accounting, research, scheduling and customer service — and therefore finally afford to hire salespeople, designers, technicians or other specialists?

Technology doesn't simply reduce the number of people required to produce something. By lowering the cost of producing it, technology can increase demand. That can create entirely new businesses — and entirely new categories of jobs.

Few parents in 1990 were encouraging their children to become app developers, social-media managers, cybersecurity specialists or cloud architects. Those jobs didn't exist.

We should assume the AI economy will invent occupations we can't yet name.

That doesn't mean we should ignore the casualties. Not everyone is going to win. Technological transitions can be brutal for the people caught on the wrong side of them.

Early-career workers may be particularly vulnerable because many of the traditional entry-level assignments — research, basic analysis, drafting and administrative work — are exactly the tasks AI can perform well.

Don't compete with AI — learn to manage it

What do you advise your young colleagues to do? I think the financial lesson is surprisingly simple. Advise them not to build their career around doing something AI can do faster and cheaper. Build it around what AI allows them to do better.

Learn how to question it. Direct it. Check it. Correct it. Combine its capabilities with expertise it doesn't possess. And cultivate the stubbornly human skills that become more valuable as machines become more capable: Judgment, empathy, creativity, leadership, negotiation, ethics, curiosity and trust.

The person who knows how to use AI may replace the person who doesn't. But I suspect there is another possibility that receives far less attention. AI may allow one human being to accomplish things that previously required 10.

And when millions of people suddenly become capable of doing more, building more and creating more, history suggests they don't simply go home.

They invent something else. The office of the future may indeed contain fewer people doing yesterday's work. But that doesn't necessarily mean there will be fewer people working. It may simply mean we'll need them somewhere else.

Five ways to make yourself and your kids harder to replace

1. Stop hiding from AI.

If your reaction to AI is, "I don't understand it, and I don't want to," you may have just volunteered to become obsolete. You don't have to become a computer scientist. You do have to learn how AI can make you better at the job you already have.

Start using it. Ask it questions. Let it summarize something. Have it analyze information, critique your work or give you 10 suggestions for solving a problem. Then — and this is important — use your brain to decide whether it's right.

2. Figure out which parts of your job a machine can do.

Make a list of what you do all day. If half of it consists of moving information from one place to another, producing routine reports, scheduling, summarizing or creating first drafts, assume AI is eventually going to do some of that.

Don't defend those tasks. Give them away. Then ask the much more important question: What can I do with the time I just got back?

That's where your future job may be hiding.

3. Double down on being human.

AI has information. You have judgment.

You can negotiate with a difficult client, recognize that your boss is about to make a terrible decision, calm an angry customer, motivate a team, sell an idea and take responsibility when something goes wrong.

Those aren't "soft skills." In an AI economy, they may become some of our hardest assets to replace.

4. Become the person who knows how to use AI — not the person waiting to be taught.

Don't wait for Human Resources to send you to AI Training 101. Experiment. Take a course outside of work. Ask your employer what AI tools the company is adopting and volunteer to test them.

And put those skills on your résumé. Don't just say, "Experienced in AI." Say what you actually accomplished: Used AI to reduce research time by 30%. Automated weekly reporting. Cut proposal preparation from three hours to one.

The World Economic Forum estimates that nearly 40% of the skills required on the job will change by 2030. That sounds frightening until you realize something important: Skills can be learned.

5. Don't make your job your financial life raft.

This is the part nobody wants to talk about.

Even if AI ultimately creates more jobs than it eliminates, that doesn't mean your job can't disappear.

• Build an emergency fund
• Pay down expensive debt
• Keep your résumé and network alive
• Don't automatically increase your lifestyle every time your salary increases
• Keep investing for retirement

Career resilience and financial resilience are becoming the same conversation. You don't need to predict exactly what AI will do to the workforce. You need to make sure you're financially prepared if it does something to yours.

Don't compete with the machine

The winners of the AI revolution probably won't be the people who know everything about artificial intelligence.

They'll be the people who know something AI doesn't: Their customers, their businesses, their colleagues, their industries — and themselves.

AI may be able to do 30% of your job.

Great.

Give it the 30%.

Then become indispensable at the other 70%.

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

Every team is measured by the scoreboard, but after the game, good coaches look beyond the numbers in their constant quest for improvement.

They study video to discern strengths and weaknesses in their team and the upcoming opponent. They identify opportunities, assess risks and make adjustments before the next game.

Retirement planning deserves the same approach.

Most people know how much they have saved for retirement. They may know their investment returns, their 401(k) balance or the value of their IRA. But those numbers alone don't answer the most important question: Are you actually prepared for the retirement you want?

A strong retirement plan should be evaluated from several different angles. A retirement scorecard can help identify where a plan is strong, where it may have vulnerabilities and where adjustments could make a meaningful difference.

Here are five areas worth keeping score on.

1. Secure income: How much of your retirement income can you count on?

One of the first questions retirees should ask is not how much money they have, but how much reliable income they will have.

Social Security may provide an important foundation. Pensions can provide another source of dependable income. Some retirees may also use annuities or other strategies designed to create guaranteed income.

The next step is to compare that dependable income with the expenses that must be paid regardless of what the financial markets are doing.

Consider:

• Essential living expenses
• Healthcare costs
• Mortgage or housing expenses
• Other recurring obligations

The objective isn't necessarily to have every dollar of expenses covered by guaranteed income. Rather, it's important to understand how much of your essential lifestyle depends on your investment portfolio's performance.

A retiree with $2 million invested and $100,000 of dependable annual income may have a very different retirement outlook than someone with the same $2 million portfolio but only $40,000 of dependable income. The account balances are identical; the retirement plans are not.

2. Retirement confidence: How well does your plan hold up when things change?

Retirement rarely unfolds exactly as expected. Markets rise and fall. Inflation changes. Tax laws evolve. Healthcare expenses can be unpredictable. And people may live longer than they anticipated.

That's why a retirement plan should be tested against more than one possible future.

One way to do that is through Monte Carlo analysis, which can test a retirement plan across thousands of potential market and economic environments.

A retirement plan can be tested against periods of strong markets, declining markets, sideways markets, different inflation rates and changing tax environments.

The purpose isn't to predict exactly what the future will look like. It's to determine how resilient the plan is when the future doesn't cooperate.

A plan that works only when investment returns are strong may look successful on paper but provide less confidence in the real world. A stronger plan is one that has enough flexibility to withstand adversity without requiring the retiree to completely change course.

3. Retirement taxes: How much of your money will you get to keep?

A retirement account balance isn't necessarily the same thing as retirement wealth.

Taxes matter. A retiree may have money in traditional IRAs, 401(k)s, Roth accounts, taxable investment accounts and other sources. Each account can have different tax consequences when money is withdrawn.

That means retirement planning shouldn't simply ask, "How much can I withdraw?" It should also ask, "Which account should the money come from, and when?"

For example, a retiree might consider whether to:

• Convert some traditional IRA assets to a Roth IRA
• Realize capital gains in a lower tax year
• Coordinate IRA withdrawals with Social Security
• Manage income to avoid unnecessarily higher tax brackets
• Consider the effect of additional income on Medicare premiums
• Determine which investments should be sold to fund retirement expenses

These decisions can look relatively small when viewed individually. Over a 20- or 30-year retirement, though, the cumulative tax impact can be significant. That's why a retirement scorecard shouldn't measure only investment performance; it should also measure how efficiently the plan converts wealth into after-tax retirement income.

4. Retirement risk: What could knock the plan off course?

Risk in retirement is about much more than whether the stock market goes down.

A comprehensive risk assessment should consider several factors, including:

• Expected investment return
• Retirement time horizon
• Target portfolio withdrawals
• Market volatility
• Inflation
• Longevity
• Healthcare costs
• Liquidity needs
• Personal comfort with investment risk

One retiree may be comfortable with a portfolio that another would find difficult to stick to during a market downturn. A theoretically optimal portfolio isn't necessarily a successful portfolio if the investor can't remain committed to it during a difficult market.

The goal isn't to eliminate risk. That's impossible. The goal is to understand the risks you're taking and determine whether they're appropriate for the retirement you're trying to create.

5. Estate efficiency: What happens to the money you don't spend?

Retirement planning doesn't end when you determine that you have enough money to live comfortably. There is another question: What happens to the money that remains?

For many retirees, leaving assets to children, grandchildren or charitable organizations is an important part of the overall plan. That means estate planning should be considered alongside retirement planning rather than treated as a separate exercise.

The type of account, beneficiary designations, potential taxes, fees and the way assets are transferred can all influence how much reaches the intended beneficiaries.

The goal is about more than accumulating wealth; it's also about determining how efficiently that wealth can accomplish what you want it to accomplish — during your lifetime and afterward.

Keep evaluating your scorecard throughout retirement

A scorecard isn't valuable because it produces a number, but because it starts a conversation. A retirement plan might have excellent investment performance but a weak tax strategy.

It might have substantial assets but insufficient guaranteed income.

It might have a strong probability of success but too little liquidity for the retiree's comfort. Or it might provide plenty of income today while creating unnecessary tax or estate planning problems later. That's why the numbers need to be viewed together.

The purpose of a retirement scorecard is to identify what needs attention now. Great coaches evaluate throughout the season. They recognize what is working, identify what isn't and make adjustments when circumstances change. Retirement is a long season and deserves the same discipline.

The goal isn't to achieve a perfect score and put the plan on a shelf; it's to understand where you stand today and identify what may need to change as your circumstances, markets and priorities evolve. A strong retirement plan is evaluated, adjusted and improved throughout the retirement journey.

Great coaches don't wait until the final game of the season to make adjustments; they keep evaluating the scoreboard along the way. Retirement is a long season and deserves the same discipline.

Dan Dunkin contributed to this article.

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

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

For many of us, retirement planning starts with an age. For some people, that may be 62 or 65. Others may work until 70 to maximize Social Security benefits. Whatever the reason, our planned retirement age is a goal. But what happens if your career ends earlier than expected?

It's a problem playing out in real time. While the August jobs report revealed a more resilient labor market and a steady unemployment rate (4.1%) overall, the information industry lost 23,000 jobs.

The ADP National Employment Report showed private payrolls rose by only 38,000 in August, less than the 46,000 added in July and below the 47,000 economists expected.

When you're in your 50s or 60s, an unexpected job loss combined with a prolonged job search can dramatically disrupt years of retirement planning. Losing income during those final high-earning years can put additional pressure on savings or force you to make significant financial decisions earlier than planned.

The smart move is to build flexibility into your retirement plan in case the worst happens. This can help prevent emotional decision-making — such as choosing to drain retirement accounts or claiming benefits earlier than expected — which can have long-term consequences.

1. Get your financial life in order — and don't forget healthcare

Understanding what your finances would look like if you suddenly lost your paycheck is the first step in preparing for the unexpected.

Start by reviewing fixed and discretionary expenses, available savings and any other sources of income to determine how long you could realistically maintain your lifestyle without working.

While many financial professionals suggest three to six months' worth of emergency savings set aside, returning to work may take longer than that because of the slower job market. Aiming to save more will keep you better protected, especially if you become ill or no longer able to work.

Knowing how much money you need each month can also help you identify expenses that can be cut before you begin withdrawing from long-term savings.

A sudden loss of employment may also mean losing health coverage. If that happens before you're eligible for Medicare, options such as COBRA may come with substantially higher premiums that could drain savings.

Factoring healthcare coverage into any scenario involving unexpected job loss can help buy you more time to consider your options and protect savings.

Having funds outside of retirement accounts can offer another layer of protection. This reduces the need to sell investments or begin taking retirement distributions to cover expenses.

This becomes especially important if sudden unemployment coincides with market volatility — when selling investments may lock in losses or reduce the amount invested for a potential recovery.

2. Stress-test your retirement plan now

Understanding what would happen to your retirement plan in the event of a sudden job loss is also part of the preparation. Stress-testing your plan by running it through different scenarios can help you understand how your finances would be impacted if your current situation changed.

For example, you could model what would happen if you stopped working now, retired several years earlier than your target age, or began withdrawing from savings prematurely.

If you lose your job unexpectedly, retirement doesn't have to be the next step. Before claiming benefits or making withdrawals, consider how that could impact your retirement.

Working through different scenarios can help determine whether relying on those sources of income now makes sense, or whether continuing to work would leave you better off in the long run.

3. Stay connected

In addition to financial preparation, keeping your professional skills and network up to date can give you more options if you find yourself looking for work. This includes maintaining required licenses or designations as well as staying connected with people in your industry.

Keeping up with changes in your field later in life can make it easier to pursue another position if you lose your job, rather than feeling forced into retirement.

For many of us, the age at which we hope to stop working is the first step in retirement planning. But that timeline is subject to change at any time.

Preparing for the possibility of a sudden job loss, building flexibility into your retirement plan and stress-testing it under different scenarios will help you understand how to move forward without minimizing benefits or sacrificing years' worth of savings.

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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 are considering purchasing a home warranty, you might want to wait until after you've read this. Today's story offers information that can help you avoid getting ripped off.

First, let's clear up a common source of confusion: A home warranty is a service contract, not an insurance policy like your homeowners insurance. It is supposed to help pay to repair or replace major home systems and appliances that break down from normal wear and tear.

That's what the ads of home warranty firms say, and there are 114 such firms in the U.S. The largest is American Home Shield. Check out this NBC News video to get an idea of what many consumers are dealing with.

One of the ways companies that offer these contracts make oodles of money is by promising to be there for you, collecting your monthly coverage payments and then coming up with one reason after another to deny claims when you need to actually use the services they've sold you.

They operate very much like after-market extended auto warranties, an industry whose motto should be, "Oh, so you drove your car after paying for our extended warranty? Who said you could do that?"

You have to give AHS credit for creative advertising — the fortune-teller ads with Saturday Night Live alum Rachel Dratch are fun. Those ads clearly state, "If AHS can't fix your covered item, they'll replace it, no matter its age." You can watch one of the ads here, which is featured on AHS' YouTube channel.

Vonda and Rick's experience: Delay after delay plus incompetence

In our office, we didn't need to look at a calendar to know this summer — the hottest ever recorded in the U.S. — was over. Something, or, to be more precise, the lack of something, was the clue: Not as many complaints from frustrated people calling about their home warranty companies refusing to repair or replace their AC units.

The home warranty is the very definition of a bait-and-switch, with advertising campaigns making the promise that, with various wording and for a monthly fee, the company is your safety net should something happen to a major appliance or your heating and air conditioning system.

A safety net is what longtime Southern California readers Vonda and Rick Perales expected from American Home Shield. "We had been subscribers for over 20 years," Vonda said. "As the company promptly repaired little things, like a dishwasher, we felt certain they would quickly remedy our AC system that had failed. Mr. Beaver, we were so disappointed."

Their discovery of just how much AHS cared about their customers was set out in this summary of a chronology that is the very definition of gross incompetence — at the very least:

• June 18. AC stopped working. Rick contacts AHS.
• June 22. Contractor arrives but says he can't access the unit because it is on a two-story roof with Spanish tile. Later that day, a different contractor arrives and offers the same reason for not accessing the unit on the roof.
• June 23. A third contractor says the AC is too old to fix and makes a request to AHS to replace the entire unit. Only a replacement compressor and fan motor are authorized.

Just a reminder that the ads we mentioned earlier say, "If AHS can't fix your covered item, they'll replace it, no matter its age."

Rick said, "Because our unit was 33 years old, the replacement parts drew too much current, leading to burned wires and the AC failing repeatedly — burning wires is a true fire risk.

"AHS sent out the same contractors, who again could not access the roof, then told us to find our own contractor. They refused to accept responsibility for the delays."

Fed up with the largest home warranty company in the U.S. refusing to honor its contractual commitments — and the statement in its ads — the couple contacted me.

I emailed an AHS media contact, asking her to help my readers. There was no response to my first email, so I sent a second, and this one prompted action, which eventually resulted in a $4,600 buyout of the Peraleses' contract.

Collateral damage

Rick reported that as of July 29, he had made 52 calls to AHS, beginning in June, trying to get contractors to repair or replace their AC. AHS required them to pay an $800 bill for Freon, as it was not covered in their policy. That would have been reasonable had AHS actually repaired their AC. Instead, it was money down the drain.

Vonda wrote to me, "We had to purchase an AC window unit at a cost of $599 and have spent $1,205 on hotel rooms due to the excessive heat. We have paid for this policy for the last 20-plus years. I do not know where we would have wound up without your help. Thank you, Mr. Beaver."

My advice

If you are seriously considering signing up for a home warranty, search the Better Business Bureau (BBB) website for reviews and complaints.

I am not only pointing out AHS, which has a BBB rating of 1.28 out of 5 stars (based on nearly 6,000 customer reviews), but the complaints about many of these companies should make you run the other way!

I have looked for a home warranty company to recommend, but I have not found one.

What can you do instead of buying a home warranty? (Again, I'm not talking about homeowners insurance — that is legit). Instead of a home warranty, consider opening a home maintenance savings account so you can budget for the repairs that every home will require at some point.

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.

Every market cycle produces a handful of IPOs that seem impossible to ignore. The company dominates headlines, investors rush to gain access, and financial media debate whether the stock could become the next great growth story.

But before joining the excitement, investors should ask a more important question: Is the opportunity still attractive at today's price?

Why IPOs are different now

A generation ago, an IPO often marked the beginning of a company's growth story as a public company, following a relatively brief period as a private startup. Today, it more often marks the end of a long private‑market journey.

Many of the most successful businesses stay private for years, raising multiple rounds of capital that can amount to billions of dollars in funding and building scale before they ever list their shares.

That matters because a substantial share of value creation can happen before the IPO. By the time shares begin trading publicly, the company may already be mature and profitable.

Investors buying at the offering price are often not purchasing a ground‑floor opportunity; they are buying after much of the early growth has already been priced in. That's why investors should be careful about assuming that "initial" equals "early."

The valuation problem

When a company is widely discussed and covered positively by the media, demand can quickly overtake discipline. That can push the initial valuation quite high.

Think of it this way: Strong fundamentals do not automatically create strong investment outcomes.

For example, consider two investors who are looking at the same company. One buys during a hot IPO when enthusiasm is high, while the other waits, watches the stock trade for a period of time and buys only after the price resets to something closer to reality.

Even if they own the same company, their outcomes may be very different. Entry valuation can often determine the investor outcome as much as business fundamentals.

Are IPOs a liquidity event?

When a company goes public, the founders, early employees and private investors may already have captured years of growth. The IPO helps those stakeholders realize value, but for public-market investors, that can change the timeline. They often enter after years of private ownership, at a stage when the business is a well-known entity and the valuation can incorporate many years of extensive forward growth assumptions.

That shift means the investor's advantage is often smaller than many assume. If the company is strong, its future may still be bright. But the IPO valuation may already reflect a lot of that optimism.

You may already own it

Another reason to reconsider investing in an IPO is that many large IPOs eventually become part of broad market indexes or are quickly held by actively managed funds.

To put it another way, if you own diversified stock funds, you may gain exposure to a newly public company without ever placing an IPO order.

A series of mega-listings has also prompted several major indexes to adjust their methodology to allow for incorporation sooner than in the past.

Before buying an IPO directly, you should ask whether your existing portfolio already provides exposure through a total market fund, large-cap growth fund, sector fund or another diversified strategy. If the answer is yes, the case for adding a concentrated position weakens.

If the new company is in an industry you already are heavily invested in, you may be doubling down on the same risk without realizing it. Diversification does not eliminate risk, but it can keep a single headline-grabbing stock from dominating your outcome.

A simple IPO checklist

Before reaching out to your adviser to participate in an IPO, consider five questions:

1. Has the company already gone through most of its high-growth phase in private markets?

2. Does the offering price leave room for upside, or does it assume perfection?

3. Would I still want to own this stock if the media attention disappeared?

4. Do I already own similar exposure through diversified funds?

5. If I buy, can I size the position modestly enough that a bad outcome will not derail my plan?

If you're doubting the answers to these questions, it may be worthwhile to show patience.

A better time to decide on an IPO is often before the hype begins, when the price, the business and the role it may play in your portfolio can be evaluated objectively.

A strategy for disciplined investors

For many individuals, a smart way to approach IPOs is to wait, watch and focus on process. Let the stock trade, let the business prove itself as a public company and let the valuation settle.

Sometimes that means missing the first wave of excitement. However, that is often a small price to pay for avoiding a poorly timed purchase.

In some cases, investors may have an opportunity to buy the same company later at a similar or even better valuation, with more information and less emotion, although future valuations are uncertain.

If you do want exposure to innovation, a diversified portfolio may be a better option. Professionally managed strategies can provide exposure to companies as they enter the public markets, often without the need to chase a day-one price.

Where the value is being created

Another important shift for investors to consider revolves around a growing share of value creation that occurs in private markets rather than public markets.

Decades ago, many companies went public relatively early in their development, allowing public-market investors to participate in years of rapid growth. Today, abundant private capital from venture capital firms, private equity sponsors, sovereign wealth funds and other institutional investors enables companies to remain private much longer.

As a result, some of the most dramatic growth in revenue, users and enterprise value may occur before a company ever reaches the public markets.

For qualified investors seeking exposure to earlier-stage innovation and growth, participating through professionally managed private-market strategies may represent a more direct way to access this part of the corporate life cycle, though private investments come with their own risks, higher investment minimums, reduced liquidity and longer holding periods.

The bottom line

IPOs can be compelling, especially when they may involve well-known companies poised to disrupt markets in a positive way. But investors should remember that an exciting story is not the same thing as a successful investment.

A disciplined IPO strategy is about recognizing where value is created, who captured it first and whether the public offering still offers a reasonable purchase price.

For most investors, the recommendation is for patience and diversification. Introducing private markets exposure may also be a way to gain access to a portion of where the value creation has shifted.

The next time a company with a great deal of hype goes public, work with your adviser to review the price, your existing exposure and the role the stock would play in your portfolio. If the answer is not clear, waiting is often the most disciplined move of all.

Related Content

• Hot Upcoming IPOs to Watch
• The 25 Biggest US IPOs of All Time
• How to Read an IPO Prospectus
• How to Invest in Companies Before They Go Public

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 second article in a two-part series on investing via Delaware statutory trusts (DSTs) investing. The first is Why a "Fee-Based" DST Investing Sales Pitch is a Red Flag for Investors.

Delaware statutory trust (DST) investors sometimes ask, "Why am I paying taxes on more income than I actually received in cash?"

At first glance, it may seem confusing. However, this is not unique to DST investing — it is the same concept that has applied to direct real estate ownership for decades.

This is how we explain it at Kay Properties and Investments, which has been helping thousands of DST investors for nearly 20 years, and where I'm the CEO.

A simple example

For decades — indeed, for generations — real estate owners and landlords have followed the same basic financial principle: Not every dollar of rental income should be distributed immediately. A prudent owner plans ahead by setting aside reserves for future expenses that potentially protect and preserve the property's value.

Imagine you personally own a commercial building that generates $200,000 in annual rental income. During the year, you discover the roof has reached the end of its useful life and will need to be replaced in the near future. Rather than distributing every dollar of rental income to yourself, you wisely retain a portion of the cash flow each month to build a reserve fund for the future roof replacement.

At year-end, you may have only withdrawn $150,000 in cash, with the remaining $50,000 held in the property's bank account as reserves.

Even though you didn't receive that $50,000 personally, it is still income generated by your property. Under IRS tax rules, you generally report the property's taxable income — not simply the cash you chose to distribute to yourself.

At first, this may result in you paying tax on income that remained in the property's reserve account.

However, when those reserve dollars are ultimately used to replace the roof (or any other type of repair or investment in the property, such as resurfacing the parking lot, renovating space for a new tenant or completing other improvements), those expenditures become investments back into the property.

As those costs are recognized for tax purposes over time — major improvements are generally depreciated over their recovery periods rather than deducted all at once — they generally provide write-offs, expenses and future tax benefits to the property's owners, making the earlier timing difference largely a matter of when the expense and tax benefit is realized rather than whether it is realized.

This has been standard practice among real estate owners for decades and is simply part of responsible property ownership and long-term asset management.

How rental income is reported in a DST

Just as with direct real estate ownership, a DST property receives rental income from its tenants throughout the year.

Business tenants that pay rent in the course of their trade or business generally report the rent paid to the property on IRS Form 1099. The DST asset manager receives these forms on behalf of the investors and typically prepares a Nominee 1099 allocating each investor's proportional share of the property's gross rental income.

The Nominee 1099 is primarily an informational reporting document that helps reconcile the rental income reported to the IRS. It is not the document used to calculate an investor's taxable income. Instead, it serves as a record-keeping tool that ties together the gross rents reported by tenants with each investor's ownership interest in the DST.

In addition, DST investors receive a calendar-year balance sheet and income statement for the property. These financial statements reflect the full year of property operations and are prepared by the DST sponsor.

This financial information breaks down the entire DST property's financial information as well as further details of each individual investor's percentage ownership of the DST and their corresponding pro rata numbers. Typical DST financial information at year-end will include the property's gross rental income, operating expenses, net income and balance sheet.

The net income based on your pro rata percentage interest in the DST is an important starting point, but your CPA or tax preparer will adjust it — most notably for depreciation — when preparing your tax return, generally relying on the tax reporting package (often a grantor letter) provided by the sponsor rather than the operating statement alone. (Read on for why cash-basis net income and taxable income are not the same figure.)

Why cash distributions and taxable income may be different

DST investors may have questions if the amount of cash distributions they receive during the year is less than the taxable income reported by the DST property.

This difference is completely normal in commercial real estate whether the investor owns the property outright or a percentage of a DST.

One of the primary reasons is that prudent property management often requires retaining cash to build reserves for future property needs rather than distributing every available dollar to investors.

Those reserves may be accumulated for:

• Tenant improvements for lease renewals or new tenants
• Leasing commissions to secure a new tenant
• Roof replacements
• Parking lot resurfacing
• HVAC replacements
• Landscaping and exterior improvements
• Other major capital expenditures that preserve and improve the property

Although these reserve dollars may temporarily reduce current cash distributions, they remain assets of the property and continue to belong to the DST investors collectively based on their proportional ownership interests.

The reserves are not owned by the DST sponsor or asset manager — they are investor-owned funds being held at the property level for future capital needs. If reserve funds ultimately are not needed for their intended purpose, those funds remain property assets and will be distributed back to investors on a pro rata basis upon the sale or disposition of the property, consistent with the governing DST documents.

Two other reasons taxable income can differ from cash distributions received

Depreciation. One of the most significant tax features of real estate is depreciation. Each year the tax law allows the property's owners to deduct a portion of the building's cost, even though no cash is actually spent.

In the early years of a DST hold, depreciation often shelters a substantial portion of the property's net income — which is why many investors initially report taxable income that is lower than the cash they receive.

As those depreciation deductions decline over the hold period, taxable income tends to rise relative to cash flow.

Mortgage principal. In a leveraged DST, repaying mortgage principal uses the property's cash but is not tax-deductible. As depreciation deductions decline and a growing share of each mortgage payment is applied to principal, an investor may report taxable income that exceeds the cash actually distributed.

This effect — sometimes called "phantom income" — is a normal feature of leveraged real estate, whether owned directly or through a DST, and works alongside the reserve timing difference described in the main article.

The real estate ownership timing difference: Taxes today, tax benefits tomorrow

One point that is often overlooked is that reserve building generally creates a timing difference, not necessarily a permanent tax cost.

During the period reserves are being accumulated, an investor may report more taxable income than the amount of cash actually distributed because some of the property's cash flow has been retained for future capital needs.

However, when those reserve dollars are eventually used — to replace a roof, resurface a parking lot, install HVAC systems and so on — the property incurs those expenditures on behalf of its owners. Because each DST investor owns a beneficial interest in the property, each investor will receive their proportional share of the expenses and write offs associated with those capital expenditures.

As those reserve dollars are invested back into the property, the related expenses and write-offs are passed through to investors based on their ownership interests, helping offset taxable income over time. Because most of these items are capital in nature, the related deductions are generally realized gradually through depreciation and amortization rather than entirely in the year the reserves are spent.

In other words, while a DST investor may have paid tax earlier because reserves were accumulated instead of distributed (the same way as when they directly owned real estate and built reserves), those future expenses will help offset taxable income in later years.

What initially appears to be paying tax on "income you didn't receive" is often simply a matter of tax timing rather than an additional permanent tax burden. This is the case whether you own an interest in a DST or own a property outright.

Example timeline: How a reserve timing difference works

Imagine you own a 1% interest in a DST.

Year 1

• Rental income allocated to you: $100,000
• Cash distributed to you: $95,000
• Reserved by the property for future capital improvements: $5,000

Although you received only $95,000 in cash, the property earned $100,000, so you may report taxable income based on the property's operations rather than simply the cash distributed. (This illustration is simplified; your actual taxable income would reflect operating expenses, mortgage interest (if it were a leveraged DST but not if it was a debt free DST) and depreciation.)

The $5,000 was not paid to the sponsor — it remained your money as part of the property's reserve account, along with the reserves attributable to the other DST investors.

Year 2

The property uses the reserve funds to:

• Replace the roof
• Resurface the parking lot
• Complete tenant improvements for a new lease
• Pay leasing commissions to secure a new tenant

Because you are a beneficial owner of the DST property, your proportional share of those capital expenditures is reflected in the property's tax reporting. Those expenditures generally create future tax benefits that help offset taxable income in later years, generally realized through depreciation and amortization over the assets' recovery periods.

The result: Although you may have paid tax on the additional $5,000 in Year 1 because it remained in reserves, those reserve dollars were ultimately invested back into the property for your benefit.

The associated future expenses help offset taxable income over time, making the difference between taxable income and cash distributions a matter of timing rather than a permanent additional tax burden.

The bottom line

The difference between DST cash distributions and taxable income is often misunderstood, but it is simply a reflection of how commercial real estate ownership has worked for decades regardless of if it is owned outright by the investor or by a DST.

Think back to the example of the landlord who owned a building and prudently retained a portion of rental income to build reserves for a future roof replacement. Although that owner received less cash in hand during the year, the reserve funds still belonged to the owner, remained invested in the property, and were ultimately used to preserve and enhance the value of the real estate.

Those expenditures ultimately generated expenses associated with those improvements, helping offset taxable income over time.

A DST simply follows that same long-established and widely accepted real estate ownership practice through a professionally managed ownership structure.

As always, because every investor's tax situation is unique, investors should consult their CPA or qualified tax adviser regarding the tax treatment of their individual DST investment.

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• Six Risks of Delaware Statutory Trusts in 1031 Exchanges
• DST Exit Strategies: An Expert Guide to What Happens When the Trust Sells
• How to Use DSTs and 1031 Exchanges for Diversification
• How Do You Step Away From Your Real Estate Empire Without Facing a Giant Tax Bill?

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 public school teachers and other K-12 employees, retirement planning involves more than a pension and a single workplace savings account.

Depending on the employer, educators might have access to both a 403(b) plan and a governmental 457(b) plan, each offering tax-advantaged savings and features that can become particularly useful at different stages of a career.

Because the plans are often presented separately during benefits enrollment, employees might assume they need to choose one or the other.

In many cases, eligible workers can contribute to both, creating additional savings capacity along with more flexibility in determining when and how retirement assets are eventually used.

Why having both plans can matter

A 403(b) is available to employees of public schools and certain nonprofit organizations and functions in many ways like the 401(k) plans commonly offered in the private sector.

A governmental 457(b) is available to many state and local government employees.

Both generally allow employees to save through payroll on a tax-deferred basis, with Roth contributions also available under some plans.

For 2026, the standard employee contribution limit is $24,500 for each plan. Eligible workers age 50 and older might also qualify for catch-up contributions, while participants ages 60 through 63 might be able to make larger catch-up contributions if their plans allow it.

A 403(b) might also provide an additional catch-up opportunity for certain employees with at least 15 years of service.

The separate contribution limits can be especially valuable for educators who are able to save beyond the maximum permitted in one account. An employee with access to both plans could potentially contribute $24,500 to a 403(b) and another $24,500 to a governmental 457(b) in 2026 before applicable catch-up contributions.

Few households will be in a position to contribute the maximum to both accounts every year, but the additional room can become valuable later in a career when earnings are higher, major expenses have declined, or an employee is trying to accelerate retirement savings.

A 457(b) can offer added flexibility

The differences between the two plans become more important as retirement approaches.

Governmental 457(b) plans can provide added flexibility for employees who leave their employer before age 59½ because distributions after separation from service generally are not subject to the 10% additional tax that can apply to early withdrawals from other retirement accounts.

Different rules and exceptions apply to 403(b) plans, making the expected timing of retirement an important consideration when deciding how to allocate savings between the two accounts.

Consider a teacher who began working in her early 20s and expects to retire after more than 30 years of service. If she leaves her school system before she expects to draw heavily from her other retirement accounts, assets accumulated in a 457(b) could provide another source of income during the transition.

An educator planning to remain employed longer might place more emphasis on features of the 403(b), including the additional catch-up provision that might be available to long-tenured employees.

How the plans can work together

The value of having access to both accounts can change over the course of a career. A teacher in the middle of a career might contribute primarily to a 403(b) while balancing housing costs, college expenses or other financial priorities.

As those expenses decline, adding contributions to a 457(b) can provide another way to increase tax-advantaged retirement savings.

Retirement timing should also factor into the decision. An educator considering an earlier retirement might value the withdrawal flexibility of a governmental 457(b), while a long-tenured employee trying to increase savings late in a career might want to determine whether the 403(b) plan's additional catch-up provision applies.

Employees with sufficient income to contribute to both can also build separate pools of retirement assets that could provide additional flexibility when they begin drawing income.

Investment choices, fees and plan features should be part of the comparison, as well. Two plans offered by the same employer can have different investment menus, administrative costs, Roth options and loan provisions.

Understanding those differences can help employees decide where additional retirement dollars can be best directed.

Review your options before retirement

Educators approaching retirement should review the rules governing each account well before they expect to leave the workforce. The tax treatment of withdrawals can depend on the type of plan, the employee's age, when employment ends and other circumstances.

Reviewing those provisions several years ahead of retirement can provide more opportunity to coordinate workplace accounts with pension income, Social Security and other savings.

Benefits enrollment can also be a useful time for employees who have spent years automatically contributing to the same plan to revisit what their employer offers.

Asking whether both a 403(b) and governmental 457(b) are available, reviewing contribution and catch-up provisions, comparing investment choices and understanding withdrawal rules may uncover options that received little attention earlier in a career.

Teachers spend much of their professional lives planning around school years, grade levels and milestones that can be seen well in advance. Retirement benefits deserve the same periodic review.

Understanding how a 403(b) and 457(b) can work together might give educators more room to save during peak earning years and greater flexibility when the time comes to turn those savings into retirement income.

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• What to Do If You Plan to Make Catch-Up Contributions in 2026
• Pros and Cons of 403(b) 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.

By spring 1961, NASA was already launching rockets. Alan Shepard had just ridden one into space and back, a 15-minute flight.

Twenty days later, President John F. Kennedy raised the stakes in one sentence: "I believe that this nation should commit itself to achieving the goal … of landing a man on the moon and returning him safely to the Earth."

A quarter of a million miles, and back. Getting home wasn't an afterthought. It was in the mission from day one.

Nobody responded by shopping for a bunch of equipment. This was unknown territory. The mission plan came first, followed by years of engineering and training.

Once they had the mission mapped out, and engineering had their strategies in place, then they gathered the materials and tools needed for the job ahead.

How retirement planning is like that

Retirement planning is no different. While you are working and the paychecks keep coming in, you're flying short missions. Mistakes get refueled by the next contribution.

Retirement raises the stakes the way the moon did: The trip is longer, refueling stops, and the whole point is coming home safely (not running out of money).

The retirement planning mission is defined by your lifestyle and legacy goals. The engineering comes second, and its job is to get more out of your money while it carries out that mission.

Some retirees want more legacy or more flexibility and will accept a bumpier ride to get it. That's not wrong — it's your preference.

Others give up some upside for a smoother, more predictable ride, trading what matters less for more of what matters more.

There is no right or wrong answer. You decide the mission. Everything else is engineered around it.

The problem today is that too many soon-to-be retirees start buying tools and materials before the mission is defined: An annuity here, a REIT there, a CD because the rate looked attractive.

After the equipment is bought, they look to see what they can build. That's backward, and it's what often gets in the way of a good retirement plan.

Here's how to build a more comprehensive retirement plan, step by step.

Projections: The mission comes first

Your plan is your mission statement:

• What kind of retirement experience do you want?
• How much of your wealth is for lifestyle and income?
• How much is for legacy?

On the income side:

• Do you want more flexibility with a wilder ride?
• More predictability with less thrill?
• A happy middle built just for you?

Remember Kennedy's second clause: The mission was the safe return. Growing your money to become the richest person in the graveyard was never the mission either. Living on it, for decades, is.

Notice what we're doing here: We're defining the path forward, guided by the mission expectations. Not one product has been mentioned.

Strategies: Engineering comes second

Apollo crews logged thousands of simulator hours, and the engineers running the simulations rarely allowed a clean flight. They fed the crews the broken versions: Failed engines, dead radios, alarms mid-descent.

The crews knew the conditions ahead better than anyone alive and still trained for the ones no one could foresee.

This is your strategy session. If these dollars are going on this journey, how do they travel efficiently? This is where tax strategy and withdrawal sequencing come into play, where income, taxes, healthcare and legacy get coordinated. Mini missions, all serving the big one.

During Apollo 11's landing on the moon, computer alarms flashed, and then they discovered the landing zone was full of massive boulders. Neil Armstrong didn't panic or wing it. He flew past them to smoother ground and landed.

The crew never predicted that moment. However, they were prepared to react, and a prepared reaction is better than a risky prediction.

Investments and products: Equipment comes third

Only after the mission was set did the equipment get its assignments, and every piece was a specialist. The Saturn V was the rocket itself, 36 stories tall and nearly all of it fuel. It had one job: Throw the crew toward the moon. It burned itself out in minutes and fell away into the ocean, stage by stage.

The lunar module was the spindly, foil-wrapped lander riding up top, so specialized it could fly only in the vacuum of space. It carried two men down to the surface, lifted them back off and was left behind.

And the heat shield did absolutely nothing for eight days. Dead weight, riding in silence, until the capsule hit the atmosphere at 25,000 miles per hour, and the shield burned away, layer by layer, so the three men inside wouldn't.

No component was chosen on a vendor's pitch. Each was recruited because the mission required it.

Your investments and products deserve the same discipline. Diversify your assets by strategy, not investment ambiguity or hope that growth solves everything. Each investment or product should do a specific thing, at a specific time, in a specific way.

Some fund income in the early years. Some chase growth you won't touch for a decade. Some sit quietly until the markets crash and then get tapped for income while your other accounts recover. (For more on this strategy, check out my book, How to Retire on Time.)

Follow systems, not sentiment

Mission Control ran on flight rules, checklists and go/no-go polls written before launch. When an oxygen tank exploded on Apollo 13, nobody improvised from the gut. They worked the procedures and brought the crew home. They followed systems, not sentiment.

Write your processes down while you're calm so that when the markets crash, taxes go up, or something else unexpected happens, you'll know what to do. A process invented mid-crash is not a process. It's a fear-based reaction.

Run your retirement in this order:

• Plan (mission) first
• Strategies (engineering) second
• Investments and product (equipment) third

That way, the product pitch loses its power. Buy this annuity. Lock in this rate. Try this tool. Those lines don't work on someone with a mission. When the plan comes first and the strategies second, the right tools naturally select themselves.

So, before anyone shows you another product, ask the questions NASA asked before anything left the ground: What's the mission?

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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.

It starts at the very beginning. You hold your baby in your arms and feel a deep, primal desire to give them everything they need. At some point, though, it's time to tighten the purse strings and help them make responsible decisions.

Giving your kids everything they want can cause more problems than it solves, not only during their formative years, but also when they're well into adulthood. There can be a fine line between financially helping adult children and putting them into a situation in which they're financially reliant upon you.

The 'too-nice neighborhood' problem

According to a recent survey from mortgage lender Veterans United Home Loans, more than half of parents of adult children are willing to help their kids purchase a home. Sometimes that's helping with a down payment or closing costs. Other times, it's cosigning a loan.

Problems quickly arise when parents help kids buy houses they can't afford to maintain on their own. Whether it's a monthly payment that burdens the budget or homeowners association (HOA) fees that feel excessive, helping your kids buy a house that they can't afford can be more of a curse than a blessing.

Instead, help them buy within their means or match their down payment to ensure they have some financial skin in the game.

Avoid lifestyle inflation by proxy

If you paid for a somewhat luxurious life for your kids or took extravagant vacations when they were younger (and continue to do so into their adult years), your kids might feel that a certain lifestyle is the norm and come to expect it.

Trying to keep up with a lifestyle once provided by financially established parents can rapidly become problematic.

Covering rent, vacations or luxury expenses tells your kids that their current lifestyle is normal even when it's not sustainable. Once support stops, the adjustment can be brutal, and the kids might try to scramble to afford the same niceties to which they've become accustomed.

This isn't to say that you can't occasionally splurge on a fun family vacation or other luxury, but rather to suggest that boundaries are clear that such a splurge isn't to be expected.

You've probably learned how to deal with lifestyle inflation, as many successful people have. Don't allow it to become your kids' problem by proxy.

Gifts should build habits, not dependence

You can be generous with your adult kids without risking bigger problems. Offer to pay for tools that can create momentum so they can stand on their own, such as professional certifications, seed money for a business or contributions to a retirement account.

The goal is empowerment, not entitlement. If you can help set them up for success, do it with clear expectations that you thoroughly discuss.

Ensure the "help" you provide is actually helpful — a certification in a career your child has no interest in will likely be a waste of money, as would seed money for a business your child wouldn't be able to keep afloat.

Talk openly about the trade-offs

If you gift something to adult kids, explain what the gift does and doesn't cover. If you buy a home, clarify who handles taxes and maintenance. If you pay their tuition, make clear it's a one-time payment. Clarity today prevents conflict tomorrow.

Examine the complications and relational strain that can come with changing your role with your child from "parent" to "lender" and decide if it's worth it. If you expect your child to pay you back, have a clear agreement on the terms so there's no ambiguity in the payback of the funds.

Protect your own financial health

Parents often dip into retirement savings to help adult children, but that kindness can jeopardize long-term stability. It can be a bad idea to earmark money to fund your adult child's lifestyle when you might need that money for your retirement.

Remember: Your kids can borrow money for a house or an education, but you can't borrow your way through retirement. Being financially ill-prepared for retirement because you're helping your kids can backfire on everyone involved if they have to then step in to help you survive.

Helping your adult kids in a productive way can be beneficial, but putting your own finances at risk can damage your financial health. Instead, choose when you want to help, and be clear in your intentions of wanting to help your kids thrive in adulthood on their own.

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

Do I need a will, a trust or both? It's one of the most common questions we hear, and the answer is rarely simple. It depends on your family, your assets, your priorities and how much work you're willing to do now to make things easier for the people you leave behind.

Here's how we typically walk clients through the decision.

The core difference

A will is an ancient tool, which traces back to English common law and the Middle Ages. In many ways, it still operates on a system that's hundreds of years old.

When you die with a will as your primary estate planning vehicle, your estate goes through probate, which is a court-supervised process of settling what you owned. In most places, probate is slow, expensive and public.

Some states are less slow, less expensive or less public, but in general, probate is a complex and costly legal process.

A trust does much of the same work as a will, but it's a far more modern structure. A revocable living trust functions as a will-replacement vehicle. It helps you arrive at the same destination — your assets go to the people you choose. However, while a will typically goes through the probate court process, a trust can bypass it.

Some people need both

If your plan is built around a revocable trust, you still need a will. It will just play a different role. This fact tends to surprise a lot of people.

Think of it this way. A "will-only" plan uses the will to say who gets what and when. But once you have a revocable trust, the trust holds those details, and the will becomes a safety net beneath it.

For a trust to work, assets must be inside it or have a way to get in. If you pass away before you've retitled an account or updated a beneficiary designation, your will acts as a catch-all.

Instead of spelling out your whole family story, this will just says one thing: Sweep whatever is left in your probate estate into the trust to be administered under its terms.

The myths that hold people back

The biggest misconception we hear is that trusts are wildly expensive and only for the wealthy. Most people simply don't know what a trust is or how it works.

About 95% of the time, when someone says "trust," they mean a revocable living trust (also called a living trust). There are many other kinds of trusts, including spousal lifetime access trusts, life insurance trusts and more. These trusts typically don't enter the picture until you've built significant wealth.

Myths exist on the will side as well. Many people believe a will avoids probate. It doesn't. Others assume that being named executor (or personal representative) automatically puts them in charge. It doesn't either.

Until a will goes through the probate process and a court appoints someone as the executor or personal representative, the person named in the will has no legal power or authority.

Three key questions to ask yourself

If you're trying to decide between a will and a trust, ask yourself the following:

1. How would your family get by in the weeks after you're gone?

Probate can slow down access to money. Ask how important it is that your loved ones, especially a surviving spouse, can pay bills and keep living their lives. If immediate access matters, avoiding probate through a revocable trust deserves a serious look.

2. Who do you want doing the work?

Setting up a trust takes effort during your lifetime. Some families place a high value on making things efficient for their kids and grandkids while others don't. The question is whether you'd rather put in the work now or leave the next generation to handle it later.

3. How much do you care about privacy?

Probate usually produces an inventory of what you owned. In most states, that inventory is a public document.

Some people do nothing but go through probate records looking for houses to purchase at a discount, and few families enjoy getting a "sorry for your loss, want to sell the house?" call. A trust keeps those details private.

Overall, the choice between a will and a trust isn't about which is fancier or who's wealthy enough to need one. It comes down to how much you value privacy, how quickly your family needs access to your assets, and whether you'd rather do the work now or leave it to the next generation.

Once you understand what each document does and what it doesn't, the right answer will come into focus.

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.

One of the biggest misconceptions I encounter is that inherited investments should simply be sold.

Stocks are not cash. Many portfolios are built around long-term goals, whether that's preserving family wealth, generating future income or supporting future generations. Selling everything may often seem like the easiest option, but it doesn't always align with the investor's wishes.

This happens all too often. Investors spend years building wealth through brokerage accounts. They follow the markets, make strategic decisions and carefully build portfolios designed to achieve long-term financial goals.

Then, when it's time to put an estate plan in place, those same accounts are often left out of the conversation.

When stock portfolios aren't properly addressed in an estate plan, loved ones can be left trying to answer questions they were never prepared for.

• Should certain investments be kept or sold?
• Was the portfolio intended to support future generations?
• Were there specific goals behind the investment strategy that beneficiaries should understand before making big decisions?

If there are no clear instructions, even the most well-intentioned estate plans can become a headache for beneficiaries and cause confusion or worse — costly mistakes.

Most Americans haven't planned for their assets

Estate planning remains widely neglected. More than half (56%) of Americans don't have a will or trust, according to Caring.com's 2025 Wills Survey. People still view estate planning as something that can wait until later or is only for wealthy individuals.

This myth leads to countless assets being left without clear instructions for the people who will eventually inherit them.

Investing has also become more accessible than ever. More than 145 million people globally used stock trading apps in 2024, according to the Business of Apps Fintech App Report 2025. These apps give individuals easy, user-friendly access to building and managing their own portfolios.

The challenge is that while investing has become easier, planning for what happens to those investments after death often doesn't take place. Countless investment accounts exist without any clear estate planning instructions attached to them.

This problem isn't limited to people who have no estate plan at all. I often see it among people who have already taken the important step of creating one.

They may have a will. They may have discussed their wishes with family members. They may even have worked with attorneys or financial professionals. Yet their stock portfolio remains largely undocumented.

Family members may know the accounts exist but have little understanding of the intentions behind them. They may recognize certain holdings but don't understand why they were purchased in the first place.

• Was a particular investment intended to be held for another decade?
• Was the portfolio built to generate income for a surviving spouse?
• Was preserving the account more important than distributing it immediately?
• Who was the investor's financial adviser?

Those answers, along with important details about the investor's risk tolerance, are rarely documented, and beneficiaries are often left making important financial decisions without the context that guided the investor's strategy in the first place.

Stock liquidation isn't always the best plan

I've seen beneficiaries inherit a portfolio and begin liquidating positions simply because they don't know what else to do. That tactic is understandable. When there are no instructions, people are forced to make decisions based on limited information.

Some investors may have wanted heirs to retain certain long-term investments. Others may have wanted the portfolio to support goals such as education, home purchases or broader family support.

There may also be important tax implications beneficiaries should understand before taking action. Without guidance, those intentions can easily be lost.

The situation becomes even more complicated when there is no transfer on death (TOD) designation, no beneficiary designation or no trust directing the asset.

In those cases, the stock portfolio will typically become part of the probate estate, creating additional delays and expenses, and leaving the management of the portfolio to the administrator or executor rather than the ultimate beneficiary.

Before assuming a portfolio should simply be liquidated upon their death, investors — whether self-managed or accredited — should decide how they want those assets handled.

• Should certain investments be retained?
• Should others be sold and distributed?
• Have those wishes been documented clearly enough for beneficiaries and executors to carry them out?

The goal here is to leave enough context behind so beneficiaries aren't forced to guess. That starts with:

• Maintaining an inventory of brokerage accounts
• Keeping beneficiary information current
• Documenting the purpose of the portfolio
• Clarifying which holdings should be kept or sold
• Leaving contact information for any financial professionals involved

These details will make a significant difference when beneficiaries are trying to make informed decisions during a difficult time.

What happens when no instructions exist

When no instructions exist, families are often left piecing together information on their own. In many cases, the first challenge is simply identifying what accounts exist. A family may know a loved one invested throughout their lifetime, but have no idea where those accounts are held.

Locating records, accessing accounts and understanding how they fit into the broader estate can take significant time, creating unnecessary administrative burdens for executors.

Then comes the decision-making. I've seen beneficiaries inherit portfolios and immediately begin selling assets because they believe that is what they're supposed to do. I've also seen families disagree because each person has a different understanding of what the investor intended.

Nobody is acting with bad intentions. The problem is that they're trying to make important decisions without enough information. What should have been a relatively straightforward transfer of wealth becomes a far more complicated process than it needs to be.

What investors owe their beneficiaries

A few clear instructions go a long way and can help loved ones understand the purpose behind a portfolio, preserve wealth where appropriate, avoid unnecessary confusion and make more informed decisions.

Estate planning is not simply about transferring assets. It's about transferring clarity. You have to remember that the more guidance investors leave behind today, the easier it will become for beneficiaries to make thoughtful decisions when they don't have someone to guide them.

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

There's a well-known study that Fidelity produced years ago that reviewed thousands of brokerage accounts and looked at the returns in each. The anecdotal conclusion: The best-performing accounts belonged to deceased account holders.

Right behind them were accounts belonging to people who had simply forgotten their passwords. I find that finding remarkable — and completely logical.

You can't panic if you're not paying attention

The thesis is simple. Investors who aren't actively managing their accounts don't panic-sell, don't try to time the market and don't interrupt their investments' ability to compound.

Those combined factors tend to produce better returns than what more anxious, hands-on investors experience. The least-engaged accounts are effectively emotionless — no second-guessing when markets spike, no panic when they drop.

This tracks with what plays out in financial advising every day. Some clients want to be deeply involved in their portfolios — joining every call, making market calls of their own, flagging sectors they want to chase, constantly tinkering.

Others barely discuss their investments at check-ins, admit they haven't looked at their accounts in months and place full trust in their plans.

Categorically, the highly engaged, informed, opinionated investors tend to fare worse than the ones who stay mostly hands-off.

Markets go up and down — reliably

Detaching from day-to-day market noise can be a genuinely effective strategy for many investors. It keeps emotion — and the fight-or-flight instincts that come with it — out of the decision-making process.

It's tempting to make market calls or share strong opinions about the economy. The markets, unfortunately, aren't listening. They don't care about anyone's fears, predictions or analysis. They largely just do what they've always done, and they do it fairly predictably.

What does "predictably" mean here? Markets have historically averaged roughly 10% annual returns and have been up in about three out of every four calendar years. That's simply the pattern.

Knowing that in advance, a down year shouldn't come as a shock. Nor should the fact that some pullback happens during nearly every calendar year, even the good ones — that's the norm, not the exception.

There's no getting around it: Investing in the markets means living with volatility. The real question is how an investor responds to it.

The realistic middle ground

Being completely detached from an investment plan isn't the right answer either. It makes sense to keep some pulse on a portfolio, but for most people, an arm's-length relationship works best.

That might mean placing trust in a professional or building enough personal discipline to avoid constant tinkering.

The goal isn't to ignore the markets entirely — it's to stop reacting to every headline or talking head on a financial news show.

What matters more is staying allocated in a way that's aligned with long-term goals. Changes should be occasional, not reactive, grounded in research and represent a strategic shift worth committing to for an extended period.

Above all, an investor should be comfortable enough with the plan to stick with it through every kind of market.

Why this matters more in retirement

This dynamic becomes more important once someone shifts from saving to spending down a portfolio. During accumulation years, a rough patch in the market can often be corrected by continuing to contribute and letting time do the work.

In retirement, that safety net disappears. A retiree reacting emotionally to a downturn — selling at the wrong moment, abandoning a withdrawal strategy, chasing yield into something unfamiliar — can do lasting damage to a plan that took decades to build.

The retirees who tend to do best are often the ones who set an allocation aligned with their income needs, then largely leave it alone.

No one has to be dead to earn great long-term returns, but acting a bit more like it — staying invested, resisting the urge to tinker and tuning out short-term noise — might be the closest thing to a reliable strategy that exists.

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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 already contributing enough to capture your full 401(k) match, you've got the basics covered. The bigger opportunities — and the ones I see even diligent savers miss — are found a level up from there.

After more than a decade of helping people build their retirement plans as a CFP® professional, I've found that most people stop optimizing right after the match.

Other savings accounts and strategies that could work in their favor go unused for years, not because they're complicated, but because nobody ever walked through them step by step.

Here are five that can make a meaningful difference for people who are already saving well and want to do more.

1. Take advantage of an HSA's triple tax benefits

If you're eligible to contribute to a health savings account (HSA), it may be the most underused account you have.

HSAs offer a rare triple tax advantage: Contributions can be made pretax or may be deductible, earnings grow tax-free, and withdrawals are tax-free when used for qualified medical expenses.

For 2026, you can contribute up to $4,400 for self-only coverage or $8,750 for family coverage, plus another $1,000 if you're 55 or older.

Most people treat their HSA like a checking account for copays and prescriptions. You don't have to. You can pay medical costs out of pocket now, let the HSA grow untouched for decades and reimburse yourself years later, as long as the expenses were incurred after you established the HSA, weren't previously reimbursed or deducted and you kept adequate records.

I've worked with people in their 50s who'd been quietly saving old medical receipts for this exact reason, without ever calling it a strategy. Used that way, an HSA functions like one of the most tax-advantaged retirement accounts you have access to, not just a place to park money for copays.

2. Choose pretax or Roth in your 401(k) on purpose

Most people never actively decide between pretax and Roth contributions. Their 401(k) defaults to whatever the plan set up on day one, and they never revisit it. I've reviewed plans for people who hadn't looked at this choice in over a decade, even though their income, and the right answer for them, had changed completely in that time.

The difference matters. Pretax contributions generally reduce your taxable income now, while withdrawals are generally taxed as ordinary income later. Meanwhile, Roth contributions don't provide a current deduction, but qualified withdrawals are tax-free.

A useful starting point is to compare your marginal tax rate today with the rate you reasonably expect when the money is withdrawn. Keep in mind future required minimum distributions (RMDs), tax-law uncertainty, and the value of having both taxable and tax-free income sources in retirement.

For 2026, the 401(k) employee deferral limit is $24,500, with an additional $8,000 available if you're 50 or older.

One change worth flagging for this year: If your 2025 FICA wages from the employer sponsoring the plan exceeded $150,000, your 2026 catch-up contributions generally must be made as Roth contributions. It's a rule that's easy to miss.

There's no universal right answer here, only the one that fits your specific tax situation. Modeling your expected income and tax bracket in retirement with a retirement planning tool can help you make that call instead of guessing. (Note: I'm head of support and a financial planning educator at Boldin.) Make it a real decision, not a default.

3. Look into a mega backdoor Roth if you still have room to save

This one is for higher earners who've maxed out the accounts above and still have money left over to put away.

If your 401(k) plan allows after-tax contributions, separate from Roth contributions, you may be able to save well beyond the standard deferral limit. For 2026, the combined 401(k) employee-and-employer contribution limit is $72,000, or 100% of your compensation if less.

Catch-up contributions generally sit on top of that limit, potentially bringing the total to $80,000 if you're 50 or older, or $83,250 if you qualify for the higher age-60-to-63 "super" catch-up.

Once you've maxed your regular deferral and accounted for any employer contributions, the remaining room can sometimes be filled with after-tax dollars, then converted to Roth, either through an in-plan conversion or an in-service rollover to a Roth IRA.

This only works if your plan specifically permits both after-tax contributions and one of those conversion paths, so call your HR department or plan administrator before assuming it's available. Not every plan offers it, but for the people it fits, it's one of the more overlooked ways to build tax-free savings.

4. Stack a backdoor Roth IRA on top of your mega backdoor Roth

If you've just read about the mega backdoor Roth and assumed you've now used up your Roth options for the year, you haven't.

A backdoor Roth IRA lets high earners get money into a Roth IRA even after they've been phased out of contributing directly. You contribute to a traditional IRA on a non-deductible basis, then convert it to Roth shortly after. For 2026, the IRA contribution limit is $7,500, plus $1,100 more if you're 50 or older.

Here's the part I get asked about constantly: Your IRA contribution limit is separate from the limits that apply to your workplace plan. If you're otherwise eligible for each strategy, you can fund a backdoor Roth IRA and execute a mega backdoor Roth in the same year.

The one thing that can complicate a backdoor Roth IRA is the IRS's pro-rata rule, which requires you to consider all of your traditional, SEP and SIMPLE IRA balances together when calculating the tax on a conversion.

The calculation looks at the year-end value of all of those IRAs, not just the account holding your nondeductible contribution.

A mega backdoor Roth, whether converted inside your workplace plan or rolled directly to a Roth IRA, generally doesn't count toward those IRA balances.

If you don't have pretax traditional, SEP or SIMPLE IRA money sitting around, the backdoor Roth IRA stays clean from a tax standpoint. Either strategy can have tax consequences, so confirm the details with your CPA before you move any money.

5. Don't underestimate a plain taxable brokerage account

After three accounts built around tax breaks and rules, a taxable brokerage account can feel almost boring by comparison. But it doesn't get nearly enough credit.

There's no statutory contribution limit, no income cap and no early withdrawal penalty. You can invest as much as you want and sell investments or withdraw cash whenever you want, although selling appreciated investments can create a taxable gain.

That flexibility is rare among the accounts on this list, especially if you're hoping to retire before 59½ and need a bridge to cover expenses before your retirement accounts are penalty-free.

The tax treatment isn't as generous as a Roth or an HSA, but it's still better than most people assume. Long-term capital gains and qualified dividends get preferential rates, not your ordinary income rate.

For 2026, the 0% federal long-term capital gains bracket for married couples filing jointly extends through $98,900 of taxable income. Ordinary taxable income uses that bracket first, so only gains that fall within the remaining space qualify for the 0% rate.

There's also tax-loss harvesting: Selling an investment at a loss to offset capital gains and potentially up to $3,000 of ordinary income, subject to rules such as the wash-sale rule, something you simply can't do inside a 401(k) or IRA.

I've worked with many who treat their brokerage account as an afterthought, something they'll "get to eventually" once the tax-advantaged accounts are maxed. Fund it on purpose instead, particularly if flexibility and access before retirement age matter to your plan.

These add up faster than you'd think

Some of these moves require additional savings, while others change the tax treatment or destination of money you're already saving. The goal is to direct each additional dollar toward the account that best supports your plan.

That distinction compounds. A few percentage points redirected toward a Roth or an HSA in your 50s can mean a different tax bill in your 70s and 80s.

I've watched people run these strategies side by side and see for themselves how much of a difference the right combination makes over 20 or 30 years.

You don't need to implement all five at once. Start by identifying which strategies are available to you, then prioritize the one that best fits your tax situation, savings capacity and need for flexibility.

Before you know it, you will be on your way to a confident retirement knowing that you have optimized your savings.

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

From meal planning and research to fact-checking, copy editing and document summarization, artificial intelligence (AI) is rapidly altering the contours of daily life, becoming as indispensable as a basic internet connection.

But AI is not a magic wand. It's a tool that, when used responsibly, can improve efficiency and fill in specific knowledge gaps.

Within financial services, AI is becoming a bigger factor, both at the adviser level and among consumers, who have more access than ever to educational tools to support planning and investing.

In some ways, this access can be beneficial to consumers and participants, giving them unprecedented access to resources that help them be more involved and invested in their financial planning.

1. Everyday efficiency

I'm probably not the only person who uses ChatGPT to help with shopping and meal planning. With a single prompt, I have a ready-made grocery list and budget-friendly dinner plan built around my specific tastes and dietary guidelines.

Could I achieve the same thing by flipping through cookbooks or doing a Google search? Probably. But it would take a lot longer to sift through all the recipes that don't meet my criteria.

In finance, AI can serve a similar purpose, helping potential investors to get the lay of the land. Someone can use it to compare two investment options or learn about complementary opportunities.

It's a low-stakes way to familiarize yourself with the dizzying array of investment options.

2. Learning and definitions

AI is a great learning tool. At a basic level, you can use Claude or ChatGPT to provide definitions for common terminology: What is a stock? What is a bond?

Of course, Google does the same thing, but AI does it more efficiently and effectively.

3. Fact-checking professionals

Though AI can't replace a professional, it is effective for fact-checking, much in the way that patients can consult with another doctor to get a second opinion.

Humans are fallible (though they're less prone to errors than their robotic cohorts), so it's always healthy to do some quick fact-checking

However, when it comes to your finances, AI is not, and can't be, a substitute for professional expertise. It can't replace the empathy and connection that another human can provide.

4. Bad prompts produce errors

Ever heard of "garbage in, garbage out"? If you give AI a confusing prompt, you're likely to get a muddled answer.

I experienced this firsthand during planning for a group bike trip. As an avid cyclist, I turned to my trusty AI assistant to help plan a multiday bike route for me and some of my colleagues.

Apparently, something in my prompt was confusing, and on the last day, instead of setting out on a 30-mile ride, we discovered that it was, in fact, an 80-mile route.

I learned a hard lesson: Clarity is everything, and even small errors can lead to mistakes that you might not catch until it's too late.

5. Easily confused

AI is not great at juggling multiple thoughts at once. Specifically, it can conflate similar-sounding but different concepts such as a separately managed account vs an adviser-managed account, or a retirement-plan brokerage window vs a retail-brokerage account.

While these distinctions might seem small to the layperson, they're important because they involve different fee structures, governance and access rules. AI can slip up when multiple concepts converge, even if it gets them right individually.

6. Bias and data limitations

Studies have shown that large language models (LLMs) have consistently demonstrated bias across categories such as gender, race and age. While this is a discrimination problem, it also contributes to functional errors as diversity of thought leads to better, more accurate outputs.

Even in a perfect world, Claude or ChatGPT could never replace your doctor, lawyer or financial adviser. People want to look across the table at someone they trust when discussing critical issues such as their health and finances.

They also want accountability. A couple of years ago, I started working with a running coach. If you're not an avid runner, the idea of a coach might seem ridiculous. Running is just putting one foot in front of the other, right?

Well, in addition to helping with training, sleep and diet, my coach keeps me accountable. I pay for a coach not because I don't know how to run, but because someone showing up to my house in the morning keeps me accountable. I won't skip a run if I know Jeremy is going to be there. AI is not going to solve that issue.

Likewise, the value of the adviser-client relationship is accountability, trust and follow-through. As an investor, AI can be a useful tool to help you become more efficient and better informed, but it will never be a substitute for your financial adviser. Supplement, don't supplant.

You're likely not the only one using AI. Your financial adviser might use it, too, which is OK, even smart, but you're entitled to know how they're using it and make that part of the decision-making process.

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

I recently wrote about how today's clients expect something different from their advisers. They're looking for advice that helps them make better decisions, simplify complexity and regain time.

Investment management still matters, but increasingly, it's just one piece of the value equation.

Since then, I've had several conversations with advisers who agree with that premise but are wrestling with a different question: If clients expect more, how do you consistently deliver more?

What I've found is that many advisers already are. The challenge is that neither their teams nor their clients can clearly articulate what that "more" actually means.

Ask advisers to describe the value they bring, and most can do it without hesitation. Ask them to show where it's documented, how it's delivered consistently and how clients know what services are available to them, and the answer often becomes less clear.

That's because many firms didn't intentionally build their service model. They accumulated one.

Over the years, one client needed help with an estate issue. Another needed coordination with a CPA. A business owner required guidance on succession planning. The adviser stepped in, solved the problem and moved on. Then it happened again. And again.

Eventually, the adviser delivers far more value than investment management alone, but much of that value lies in experience rather than in a clearly defined model.

The hidden risk of doing more

Most firms don't have a capability problem. They have a visibility problem. When advisers don't define what they do, clients often receive whatever level of service is delivered rather than the level they need.

A client with a straightforward retirement plan and a client preparing for a business sale rarely have the same planning needs.

Yet many firms still approach both relationships through a similar service structure — not because they're unwilling to provide more, but because they've never established a framework that distinguishes one experience from another. Over time, that creates risk.

The highest-value clients often have the most complex needs. If they don't see evidence that those needs are being addressed proactively, they'll eventually look elsewhere. And when they do, they're rarely leaving because another adviser has radically different capabilities. They're leaving because another adviser made those capabilities visible.

Experience Alpha requires structure

One of the central ideas behind Experience Alpha, a strategic initiative launched at AE Wealth Management, where I am president, is that client experience doesn't happen by accident. It has to be designed. That design starts with understanding the services you're providing and determining which clients should receive them.

Some firms organize those services into tiers. Others categorize them by client complexity, planning needs or relationship type. The specific approach matters less than the discipline of defining it.

At our firm, we often think about services as evolving from foundational planning and investment guidance to broader planning coordination, advanced wealth strategies and concierge-style support for significant life events.

The labels aren't important. What matters is creating clarity for your team, for your clients and for yourself.

What advisers usually discover

When advisers map their client relationships against a defined service structure, two things almost always happen.

First, they realize they're already delivering far more value than they give themselves credit for. The work is happening every day. The problem is that clients often experience those services as isolated interactions rather than as part of a broader advisory relationship.

Second, advisers identify clients who should receive a more advanced level of support than they currently receive. Those discoveries are often uncomfortable. They also tend to be incredibly valuable because they reveal opportunities to strengthen client relationships before clients start questioning them.

The communication advantage

One of the simplest tests I encourage advisers to try is this: If a client referred you to a friend tomorrow, what would they say?

If the answer is simply, "My adviser is great," you've earned a compliment. If the answer is, "My adviser coordinated my tax strategy, helped structure my estate plan and guided us through a major liquidity event," you've created a story.

Stories generate referrals. Stories reinforce value. Stories help clients understand why they stay.

When clients clearly understand what you do, they're more likely to engage more deeply, consolidate assets and view the relationship through a broader lens than quarterly performance reports alone.

Make the invisible visible

The reality is that most advisers are already doing more than their clients realize. But value that remains invisible is difficult for clients to appreciate. It's difficult to explain. And it's difficult to differentiate.

As client expectations continue to evolve, the advisers who thrive won't necessarily be the ones who do the most. They'll be the ones who make their value the easiest to understand.

Because in today's environment, delivering a great experience is only half the challenge. Making sure clients can see it may be the other half.

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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 thought of your client's career as an investment, what would it be? Would it be safe, like a bond? Or risky, like a stock?

Conventional wisdom says a person's career is more like a bond. The rationale is simple: Most people receive a relatively stable paycheck, so their career income has low volatility.

From there, the traditional advice follows that younger people can afford to take more risk in their investment portfolios and then gradually reduce their equity exposure as they approach retirement.

The logic sounds reasonable as a rule of thumb. The problem is that it's disconnected from how careers actually work. For starters, volatility and risk are not the same thing.

What can go wrong with a career?

Think about some of the risks embedded in human capital:

• Job loss. Career income is illiquid. You can sell a bond whenever you want, but you have to work to get paid. Even a temporary disruption to income can create a cash crunch.
• Disability. This is an obvious risk for certain professions, such as professional athletes, but an unexpected health event can leave anyone temporarily or permanently unable to work.
• Death. For someone with dependents, this raises a very practical question: What happens to my spouse or children if my income disappears?
• Displacement. This risk is particularly relevant in the age of AI. It's anyone's best guess which jobs and industries will be disrupted over the next decade.
• Professional liability. Doctors, lawyers, accountants, executives and others may have substantial career risk tied to litigation or professional mistakes.
• Skill. Career success isn't guaranteed. You may be a CEO spending as though you have another 10 years of high income ahead of you, but a few bad decisions can quickly bring humility to those expectations.
• Volatility. And yes, volatility matters too. Income can fluctuate considerably for people who rely on bonuses, commissions, equity compensation or other forms of variable pay.

Are all these risks important for every client? No, every career is different, and that's a key point.

Looking only at the volatility of somebody's paycheck misses the bigger picture. Human capital isn't a "safe" income stream that we can simply drop into a Monte Carlo simulation. It is a major source of wealth with its own liquidity, concentration, personal and economic risks.

The good news: Many of these risks are manageable

Many of these problems have solutions. A reserve fund can cover expenses during a job loss, buying someone time to find the right next position instead of taking the first available paycheck. Insurance can address disability, death and professional liability risks.

The investment portfolio can also play a role. If a client works in technology and much of their future wealth already depends on the technology sector, maybe their portfolio should have less exposure to tech stocks.

The portfolio can help diversify risks that already exist elsewhere in the client's financial structure.

Of course, not every career risk can be neatly hedged. If AI displaces your job, the solution may involve retraining, changing industries or reducing spending for a period.

Professional liability insurance may cover a malpractice settlement, but it doesn't find you another job. Disability insurance can replace some income, but it generally can't re-create the full economic value of a career.

Risk management doesn't mean eliminating uncertainty. It means identifying the things that could materially affect the client and putting practical protections in place where you can.

So what type of asset is human capital?

In my view, human capital looks much more like a private business than a bond.

Start with the opportunity. For most people, their career is one of the most important engines for wealth creation. Outside of the ultra-wealthy (and even many of those families originally created their wealth through somebody's career or business), human capital is often responsible for producing the majority of lifetime wealth.

Then consider the risks. Like a private business, human capital is:

• Illiquid. You have to work to realize its value. You can't sell 20% of your career tomorrow because you need cash.
• Concentrated. Your eggs are largely in one basket. An injury can end an athlete's career just as a professional mistake can materially impair the career of a doctor, lawyer or executive.
• Non-tradeable. You can't exchange careers with somebody else. If your profession becomes obsolete and you need to retrain, you may be starting over.
• Uncertain. You own both the upside and downside of your future earnings. The result will depend on some combination of skill, effort and luck.

Once you start thinking about human capital this way, the planning implications become more interesting. Instead of simply saying, "You're young, so you can own more stocks," an adviser can ask more useful questions:

• How resilient is this person's career?
• How accessible is their wealth?
• What happens if their income disappears?
• Is their investment portfolio doubling down on risks they already have through their job?
• What protections would allow them to take career or investment risk more confidently?

Those questions get us much closer to real risk management.

Human capital can also offset bad luck

Human capital isn't just something we need to protect. It can be an important risk management tool in itself.

Imagine someone is about to retire and the stock market suddenly falls 30%. If they're already retired, their options may be limited. They may need to cut spending or sell investments in a down market.

Someone who is still working has another lever available: Their career. They could delay retirement for a few years. They might work additional hours, pursue a higher-paying role or temporarily trade some work-life balance for additional income.

None of those choices is necessarily desirable, but having the option is valuable.

This flexibility can offset bad luck elsewhere in the financial structure, and that has implications for the portfolio. Someone with significant career flexibility may reasonably be able to tolerate more investment risk because they have another resource available if markets disappoint.

The opposite may be true for retirees, or even for younger individuals with fewer marketable skills.

Of course, the right approach depends on how human capital relates to the broader financial picture and interacts with an individual's unique risks.

Bringing human capital into the total wealth picture

Ultimately, I don't think advisers should treat human capital as a safe bond or simply as another line item in a planning projection.

It is a unique asset that creates wealth and carries risks. It can be protected with reserves, insurance and diversification. And, because careers give people the ability to adapt their future income, human capital can sometimes help absorb bad outcomes elsewhere.

That's why it belongs in the same conversation as the investment portfolio, private assets, real estate, liabilities, insurance and other components of a client's total wealth.

Advisers are in a unique position to see all those pieces together. When you understand the client's career as part of that broader financial structure, you can move beyond simplistic rules of thumb and start asking a more useful question:

What can we do to help the client navigate their key risks and maximize their wealth potential?

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• The Retirement Mindset Shift: Deciding When to Ease Off Risk
• Starting to Advise Ultra-Rich Clients? Don't Rebuild Your Firm, Just Rethink It

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

Editor's note: This is part one of a two-part series on how financial professionals can help their clients avoid costly retirement mistakes.

For many pre-retirees, the transition into retirement doesn't unfold as carefully as they expected.

After years of disciplined saving, the focus suddenly shifts to income — and that's where things can feel rushed. Decisions are made quickly. Accounts are tapped without a clear sequence. Tax consequences show up later.

In other words, their approach is: Ready, shoot, aim.

At Wealthcare Advisors (WCA), we believe retirement income planning isn't something clients should figure out on the fly. This is where they need a skilled and knowledgeable financial advisor.

Before your client locks in their retirement date, there are several key questions — and more importantly, the how and why behind them — that deserve attention. That's what we'll look at in this two-part series.

Which accounts should you tap first — and why?

Retirement income doesn't come from a single paycheck. It comes from a coordinated strategy across different types of accounts:

• Tax-deferred (IRAs, 401(k))
• Tax-free (Roth IRAs)
• Taxable brokerage accounts

The question for clients isn't just, "Where do you pull money from?" It's also, "Which order makes sense for your situation?"

A structured withdrawal strategy can prolong the life of their assets, smooth out tax exposure over time and create flexibility in future years.

For example, drawing only from tax-deferred accounts early may seem logical, but it can create larger required minimum distributions (RMDs) later, potentially pushing a client into higher tax brackets and increasing Medicare premiums.

On the other hand, using taxable or Roth assets strategically in earlier years may allow them to proactively manage their tax position before RMDs begin. The difference-maker is intentional design — not convenience.

How do market conditions affect withdrawal decisions — and how should advisors respond?

Market volatility doesn't stop at retirement, but your client's strategy should account for it differently. The biggest risk isn't just market decline — it's withdrawing income during that decline. That is where sequence of return, or sequencing, risk becomes a reality.

So, how should you respond? Collaborating with your team and developing a plan mitigates much of this quote unknown risk.

A thoughtful income plan may include maintaining a short-term income "buffer" to avoid selling assets in down markets, adjusting which accounts clients draw from based on current market conditions, and diversifying income sources so they're not relying solely on portfolio withdrawals.

Instead of reacting emotionally, the goal is to build a system that anticipates market cycles and adjusts accordingly. You and your clients can't control the markets — but together, you can control how and where they get their income.

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• Old Annuities Contain Untapped Potential for Clients and Advisers: Here's Why
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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.

Headline equity indexes spent the third quarter displaying extreme market concentration. On paper, the S&P 500 managed a 2% gain. In reality, the median stock ended the quarter more than 15% below its 52-week high.

Despite surging long-term Treasury yields, sticky energy costs and the Fed's renewed tightening, headline equity indexes continue to defy the classic mantra to "not fight the Fed."

AI optimism continues to act as a strong counterweight. Yet even as yields surge to multiyear highs and market concentration hits historic extremes, investor complacency continues to build.

As we enter the final quarter of 2026, here are the essential takeaways investors should consider.

U.S. equities: Headline strength despite internal decay

The S&P 500 gained roughly 2% in Q3, a headline number that suggests smooth sailing, but the surface stability masks divergence beneath index weights. While corporate earnings beat conservative forecasts and mega-cap tech giants continue to pour billions into AI infrastructure, broad market participation has quietly collapsed.

The Dow, Equal-Weighted S&P 500 and the Russell 2000 all closed at multimonth lows.

Q3's defining story stems as much from historic breadth decay as it does from AI enthusiasm.

Breadth at dot-com extremes. The S&P 500 had 263 more decliners than advancers in Q3. While the market-cap-weighted S&P 500 hovers near record territory, only about 25% of its component stocks are trading above their 50-day moving average.

Even more stark, over 50% of S&P 500 stocks are trading below their 200-day moving average.

The median stock reality. Artificial intelligence spending has effectively created a two-tiered market, with the median stock well off its highs while the index sits near records.

Cap-weighted vs equal-weighted. The S&P 500 Equal Weight Index is now underperforming the traditional market-cap-weighted index by its largest margin since 2002.

Rate-sensitive collateral damage. Sectors most vulnerable to elevated borrowing costs, particularly small-cap stocks (Russell 2000) and residential housing developers, suffered sharp drawdowns during the quarter as long-term rates marched higher.

While the Magnificent 7 and hardware supply chains have powered headline index gains, the typical stock has corrected.

Furthermore, market mechanics are shifting rapidly as 24/7 exchange access expands and agentic trading algorithms proliferate. This threatens to amplify speculative momentum.

S&P 500: The 'set it and forget it' trap

Low-cost index funds remain one of the greatest financial innovations for individual wealth creation. However, the current market structure is transforming passive indexing into a potential trap.

A pervasive "set it and forget it" mentality has taken hold, fueled by financial social media algorithms and AI-generated content loops that reinforce the narrative that market-cap-weighted U.S. growth is an infallible compounding machine.

Looking across valuation metrics, from price-to-sales to Shiller CAPE ratios, current entry points sit in the top percentiles of historical risk. Driven by massive AI capital expenditure booms, mega-cap balance sheets are absorbing unprecedented amounts of capital.

Market history demonstrates that leadership regimes inevitably shift, often persisting for years. Relying exclusively on mega-cap U.S. tech for long-term growth ignores the cyclical reality of capital rotation.

International equities: Global yield shocks mute growth

International equities finished Q3 essentially flat across developed (MSCI EAFE) and emerging (MSCI EEM) markets. They were caught between rising global bond yields and fluctuating commodity prices.

Developed European markets struggled under the weight of persistent energy costs and stagnant industrial output, while emerging markets demonstrated pockets of strength.

Global sovereign yields rose along with U.S. Treasuries, tightening financial conditions across Europe and Asia. However, specific regional markets decoupled based on their exposure to critical technology supply chains.

South Korea's market fell about 10% in Q3, giving back part of its Q2 surge. The AI-driven rally in memory chip makers stalled as investors took profits.

Countries that import most of their energy and lack a strong tech export sector, such as India, Turkey and parts of Europe, were hit by both higher fuel costs and higher borrowing costs.

Fed and rates: Yields break out into a new regime

The third quarter closed with benchmark yields breaking out dramatically: The 10-year Treasury crossed 5.3%, while the 30-year finished above 5.6%.

The fixed-income market is enduring a historical regime shift. Long-term U.S. Treasuries remain in one of their most severe bear markets in modern history, with 30-year Treasury bond prices down over 50% from their 2020 highs.

The underlying drivers are no longer purely about monetary policy, but structural fiscal debt dynamics. Unprecedented federal budget deficits, surging capex for AI data centers and reduced foreign sovereign demand have created a persistent supply-demand mismatch.

Conversely, the rapid expansion of fiat-backed stablecoins has introduced a new marginal buyer for short-term Treasury bills.

This structural fiscal pressure is paired with a hawkish pivot in monetary expectations. The Fed raised rates by 25 basis points in September to 3.75% to 4%, its first hike since 2023, and signaled more to come.

DoubleLine Capital CEO Jeffrey Gundlach argued for a 50-basis-point rate hike, saying the Fed is trailing inflation rather than steering it. Futures markets now price in three more quarter-point rate hikes by June 2027.

The consequences of this higher trajectory are hitting the real economy directly through housing. Rapidly rising mortgage rates have frozen transaction volume, keeping housing market liquidity near historic lows as existing homeowners remain locked into sub-4% mortgage rates and disincentivized from trading up into higher financing terms.

Gold and silver: Still in consolidation mode

Both gold and silver gained about 2%, while the gold mining index (via GDX) was up over 16%, reflecting strong operating margin expansion.

Precious metals navigated a consolidation phase in Q3 following their dramatic surge earlier in the year. Central bank accumulation and systemic sovereign debt expansion continue to provide a structural floor for hard assets.

Even after consolidating off its January peak, precious metals remain historically under-allocated across mainstream portfolios. Global portfolio allocations hover at about 4%, and U.S. investors hold about 2% — a stark contrast to the almost 15% peak seen in 2011.

Bitcoin: Bear market called off for now

Bitcoin was the standout performer in Q3, surging 42% as it executed a decisive technical and fundamental turnaround. After weathering a false breakdown that briefly retested the lower boundary of its long-term trendline, the digital asset rebounded sharply.

Two core narratives drove the move. The first is wider access: Schwab's rollout of direct spot trading, corporate treasury accumulation and ETF inflows are broadening exposure to a volatile asset class.

The second is a growing view among institutional allocators that scarcity becomes more valuable as AI pushes down the cost of intellectual labor and digital production.

Closing advice: Stay flexible and diversified

With the range of outcomes unusually wide, investors may want to consider three things as we enter Q4:

• Trim concentration risk. Review how much of your portfolio rides on a handful of mega-cap growth stocks and consider adding domestic value and shorter duration bonds.
• Diversify beyond U.S. stocks. International stocks, short-term Treasuries and, for those who can tolerate the volatility, small positions in gold and/or bitcoin may cushion a liquidity shock.
• Exercise patience. At historic valuation extremes, avoid chasing momentum and rebalance gradually toward a target allocation you are comfortable with.

As Howard Marks, billionaire investor, author and co-founder of Oaktree Capital Management, has said, "The greatest risk doesn't come from low quality or high volatility. It comes from paying too high a price when everyone is optimistic."

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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.

Investors hear a common refrain year after year: "It's better to buy and hold and ride out the downturns. Missing only the 30 best days of market returns can meaningfully lower your portfolio value."

At GammaRoad Capital Partners, we decided to test this assertion.

Using the S&P 500 Total Return Index since its base date of January 4, 1988, a buy-and-hold investor earned an 11.46% annualized return through July 31, 2026, turning $1 into $65.48.

Missing only the market's 30 best days over that same span cuts the annualized return to 6.32%, leaving that $1 at just $10.60. That's a loss of roughly 84% of the wealth a buy-and-hold investor would have built.

That fact is frequently highlighted to support the case for staying invested through downturns. It is also only half the picture.

Run the same exercise on the market's 30 worst days instead, and a $1 investment that avoided them would have delivered a 17.41% annualized return and grown to $487.56. That's more than seven times what buy-and-hold produced.

Challenging the conventional narrative

What should an investor make of this information?

It is remarkable that just 30 out of 9,716 market days can create such an extreme impact on wealth creation. While no one can predict the future, thoughtful portfolio construction and the inclusion of risk management strategies can allow an investor to avoid the futility of prediction altogether.

The best and worst days do not scatter randomly across the market's history. Since 1988, a best or worst day has occurred within 21 trading days of another best or worst day more than 70% of the time.

The single most common gap between them was one day, meaning an extreme day was often followed immediately by another one.

Notably, nearly all of these days showed up during bear markets: On average, the S&P 500 had already fallen 29.17% from its prior peak by the time one of these best or worst days occurred.

Unless investors have tremendous luck or impossible foresight, conventional wisdom suggests that we simply have to take the bad days with the good.

However, the path dependency of returns and the asymmetric nature of drawdowns vs recoveries mean that passively holding through these periods can be far more consequential than the conventional narrative implies.

Consider that a -10% drawdown requires an +11.11% rally to get back to even, a -25% drawdown requires a +33.33% rally, a -40% drawdown requires a +66.67% rally, and a -50% drawdown requires a +100% rally just to break even.

For an investor with a real deadline — retirement in five years, a child's tuition bill, a home purchase — the amount of time it takes to recover from these drawdowns presents material consequences for their lives.

A downturn that hits at the wrong moment can force a retiree to withdraw a larger share of a smaller portfolio to cover the same living expenses, extending the damage well beyond the market's own recovery.

The conventional narrative relies on the assumption that it isn't possible to consistently avoid the worst periods, and therefore investors should remain fully invested and ensure they receive the benefit of the best periods.

However, there are approaches that can help you avoid some (or even most) of the impact of the worst days, which, as we've confirmed, carry far greater influence on annualized returns.

Portfolio diversification and risk-managed strategies, which adjust equity exposure based on volatility or market conditions, will likely underperform a fully invested passive approach in the late stages of a bull market.

In exchange for this trade-off, they aim to reduce the depth and length of the drawdowns that inflict the most damage on long-term returns and the financial planning that relies upon them.

The question worth asking is not whether you can time the best or worst days. You cannot. The question to ask is whether your portfolio is built to withstand the market environments where the worst days tend to occur.

Past performance is not indicative of future results. Please see the important disclosures that are integral to understanding the limitations applicable to the quantitative information in this article.

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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 Americans, a traditional measure of financial success has been straightforward: Build wealth and grow net worth.

Saving, investing and planning for retirement are as important as ever. Increasingly, however, people are also evaluating financial success through a broader lens.

Today, many people measure financial progress not only by what they've accumulated, but also by the opportunities, confidence and stability their finances provide.

That shift is reflected in research by Thrivent, where I am the president and CEO: 69% of Americans say long-term financial success is about financial security and peace of mind, while only 3% say it's primarily net worth.

This broader perspective reflects the realities many people face today. While Americans continue to value saving and investing, they also want confidence that their finances can help them navigate uncertainty, support the people and causes they care about and create opportunities for the future.

Money is a tool to build a better life

Nearly two-thirds of Americans say money is a tool for creating the life they want, rather than something to accumulate for its own sake. When money becomes a means rather than an end, financial success takes on a broader meaning. The focus shifts to what it makes possible:

• Preparing for the unexpected
• Caring for loved ones
• Pursuing meaningful experiences
• Supporting important causes
• Building a legacy

A growing account balance can strengthen someone's financial position, but confidence also comes from understanding where you stand, where you want to go and how your financial decisions support that journey.

What this shift means for financial services

As people's definition of financial success evolves, the role of the financial services industry must evolve alongside it.

People will always need sound financial fundamentals and expertise. But increasingly, they're also seeking guidance that helps them align their finances with what matters most to them.

That requires the industry to see the person behind the portfolio. Financial decisions are never just about dollars and cents. They're connected to people's goals, responsibilities, values and aspirations.

Our role is not to define success for someone else, but to help people make informed decisions in pursuit of the outcomes that matter most to them.

That's why trusted guidance is essential. Our industry can help people navigate complex decisions while keeping their goals, priorities and values at the center of the conversation.

When those elements come together, financial planning becomes a way to help people move forward with greater clarity and confidence.

The bottom line

Financial success can't be captured by a single number. It includes what people accumulate, but also the security, choices and opportunities their money creates.

Building wealth remains important. But ultimately, financial success is about aligning money with what matters most and using it to create the life you want to live.

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

Editor's note: This is the second article in a four-part series on AI concentration risk in growth portfolios. The first, Your Diversified ETF Isn't as Diversified as You Think, examined how popular growth ETFs concentrate exposure to this single economic engine. The next two examine the risks facing the supply chain itself and the corporate adoption timeline that will determine which layers ultimately earn their valuations.

Every AI stock you own sits somewhere on an assembly line, whether the company describes itself that way or not.

Investors talk about AI the way they talked about "tech" in 1999, as if it were one industry with one business model. It's not. AI runs through a supply chain with as many distinct layers as an automobile, from raw material to finished product, and each layer carries different economics, different competitors and different risks.

Where a company sits on that chain tells you more about its investment case than any AI narrative in its earnings call.

Layer No. 1: Designing the engine

Every AI system starts with a chip designed to run it. Nvidia remains the dominant name here, but AMD, Broadcom and Marvell all design chips or chip components that power AI workloads, either as general-purpose accelerators or as custom silicon built for a specific hyperscaler customer.

These are the companies that draw the most investor attention for a reason: They capture the highest margins in the chain because designing a chip that outperforms the field is genuinely difficult.

That attention creates a diversification illusion, though. If you own Nvidia, AMD, Broadcom and Marvell, you own four companies competing for the same customers, exposed to the same demand cycle and vulnerable to the same slowdown if hyperscaler spending decelerates.

Layer No. 2: Manufacturing the chip

A chip design is a blueprint. Someone still has to build it, and almost nobody can build the most advanced ones. Taiwan Semiconductor Manufacturing Company holds what amounts to a virtual monopoly on fabricating the most advanced logic chips used in AI accelerators.

TSMC can't do that without ASML, the Dutch company that holds more than 90% of the market for the extreme ultraviolet lithography machines required to print circuits at the smallest scale. There is no second supplier.

Applied Materials, Lam Research and KLA supply the deposition, etching, and inspection equipment that fills in the rest of the fabrication process, while Synopsys and Cadence supply the design software that makes the chip layouts possible.

None of these companies show up in most investors' mental picture of "AI stocks." All carry as much exposure to the AI capital spending cycle as Nvidia does.

Layer No. 3: Moving the data

A finished chip is useless sitting in a warehouse. AI workloads move enormous volumes of data between chips, servers and storage, and that movement has its own set of suppliers. Micron and Western Digital supply the memory and storage. Arista Networks, and Broadcom again, supply the networking equipment that connects thousands of chips into a single working cluster.

This layer is where bottlenecks tend to appear first. A chip shortage gets the headlines, but a memory shortage or a networking constraint can slow an AI buildout just as effectively, and it usually gets far less attention from investors watching the wrong part of the chain.

Layer No. 4: Building the factory

An AI data center is a construction project before it's a technology project. Vertiv and Eaton supply the power and cooling systems that keep tens of thousands of chips from overheating. Equinix and Digital Realty build and operate the physical data centers.

Quanta Services and Comfort Systems handle the electrical and mechanical construction work, and Trane Technologies supplies industrial cooling systems built for facilities that consume as much power as a small city.

This is the layer where AI stops looking like a technology story and starts looking like an infrastructure and utilities story.

These companies don't compete on chip performance. They compete on construction timelines, power availability and real estate. This makes their risks look nothing like Nvidia's risks even though their revenue depends on the same buildout.

Layer No. 5: Writing the checks

Microsoft, Amazon, Alphabet and Meta fund the entire chain. Combined, the four are projected to spend $700 billion to $725 billion on capital expenditures in 2026, an increase of about 60% to 77% over 2025. Most of that money flows to the layers above: Chip purchases, construction contracts, power agreements and networking equipment.

These four companies occupy a strange position in the chain. They're simultaneously the largest customers for every layer beneath them and the companies trying to sell AI services to justify that spending.

One company's cost of doing business is another company's entire revenue line. That circularity is not a scandal. It is how every capital-intensive industry works, and it's also why a slowdown at the top of this chain gets felt at every layer beneath it, almost immediately.

Layer No. 6: Monetizing the investment

The last layer has to prove the whole chain was worth building: the software companies selling AI capability to actual paying customers.

Salesforce, Adobe, ServiceNow, Palantir and Datadog all sell AI-enabled products to enterprises, and this is where the infrastructure spending described above has to eventually convert into revenue that justifies it.

This layer carries a different risk than the ones below it. The chip, fabrication and infrastructure layers get paid regardless of whether enterprise customers adopt AI tools at the pace hyperscalers are betting on.

The monetization layer only gets paid if that adoption happens on schedule. That distinction matters more than it sounds.

Why the map matters more than the ticker

Once you see AI as six layers instead of one sector, a different question arises. It's not, "Do I own AI stocks?" It's, "How many layers of the same buildout do I own, and what happens to all of them at once if the assumption underneath the buildout turns out to be wrong?"

A supply chain is only as strong as its most exposed layer, and in AI, every layer currently depends on the same four customers continuing to spend at a pace none of them has sustained before. Know which layer you own before you assume you know what you're exposed to.

Three considerations answer that for your own holdings.

1. Pull the top 10 holdings of every growth or tech fund you own and map them to a layer.

If Nvidia, Broadcom and a hyperscaler all show up in three different funds, you don't own three funds. You own one bet, sized three times over.

2. Check whether your exposure sits entirely in layers one and five.

Chip design and hyperscaler capital expenditures (capex) get the headlines and the fund flows. Layers two through four — the fabrication equipment, the memory and networking suppliers, the data center builders — often trade at lower multiples for the same underlying demand.

That's where the mismatch between attention and exposure tends to correct first.

3. Ask what happens to your specific holdings if hyperscaler capex growth merely slows, rather than reverses.

A deceleration from 70% growth to 20% growth still shows up as a down year for every layer beneath it. You don't need a bust scenario to feel this. A pause is enough.

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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 a pension and substantial retirement savings, your tax situation could look very different from that of the average retiree.

You might have heard the statistic: Roughly 80% of retirees pay no federal income taxes. If you have a pension and a million dollars or more saved for retirement, you might read that statistic and think, "There's no way that applies to me."

You're probably right.

As a CERTIFIED FINANCIAL PLANNER® and the founder and CEO of Peak Retirement Planning, we work primarily with what we call the 2% Club — people who have pensions and $1 million or more saved (I wrote a book about this group — you can request it for free here).

We see a pattern that runs counter to the retirement advice many of us have heard throughout our working years. We were told that we would be in a lower tax bracket once we stopped working, but for retirees with substantial pensions and significant tax-deferred savings, that outcome isn't guaranteed.

In fact, you might find yourself in the same or an even higher tax bracket.

The good news is that having to pay taxes in retirement is hardly a bad problem to have. It means you have income and assets that many retirees don't.

However, I don't believe you should pay a penny more than necessary, and the key is understanding why most retirees can avoid federal income taxes and why your situation may require a different strategy.

You can watch my video on this topic:

Why so many retirees pay no federal income tax

The primary reason is the standard deduction. The standard deduction allows taxpayers to exclude a certain amount of income from federal taxation. For retirees with relatively modest income, that deduction can eliminate much or all of their taxable income.

Consider a hypothetical retiree with $500,000 in an IRA, no pension and Social Security as their primary source of income. At age 73, that person would begin taking required minimum distributions (RMDs). A roughly 4% withdrawal from a $500,000 account would generate about $20,000 of taxable income.

That isn't a particularly large amount of income when compared with the standard deduction, especially when additional deductions available to older taxpayers are considered.

Social Security also isn't necessarily fully taxable, as the amount of Social Security benefits included in taxable income depends on a retiree's overall income, and in this case, little or none of their benefits will be taxable.

That's how you can arrive at a retiree with retirement income who still owes little or even $0 in federal income taxes.

Now let's change the equation.

A pension can change everything

A pension is one of the greatest retirement benefits you can have. It provides something that millions of Americans don't have, which is a predictable income for life.

But from a tax-planning perspective, that guaranteed income often creates a challenge. Instead of starting retirement with relatively little taxable income, a pension holder frequently has three significant sources of retirement income:

• A pension
• Social Security
• Withdrawals from tax-deferred accounts such as 401(k)s, IRAs, TSPs or 403(b)s

I call this the three-legged stool of retirement income. It can provide tremendous financial security, but it can also create a substantial tax bill.

If your pension alone provides $50,000, $100,000 or even several hundred thousand dollars annually, you have already moved well beyond the situation facing the retiree with $500,000 saved and no pension.

Then add Social Security and eventually RMDs, and your taxable income can climb even higher. That's why I tell pension holders to stop comparing their tax situation with the average retiree. Your retirement income strategy needs to be built around your specific numbers.

Your Social Security could become taxable, too

Social Security taxation is another reason pension holders can find themselves paying more than expected. Depending on your income, up to 85% of your Social Security benefits can be included in taxable income.

For many of the clients we work with, that full 85% is taxable because their pension and other income push them above the relevant thresholds.

This can create a compounding effect. Your pension generates taxable income, which can cause more of your Social Security to become taxable, which then increases your overall taxable income.

And that's before we even get to your retirement accounts.

RMDs can become a bigger problem over time

One of the biggest mistakes I see is treating RMDs as if they're a problem for someone else. They're not. If you have substantial tax-deferred savings, you need to think about what those accounts could look like when RMDs begin.

Let's say you're 60 years old with $1 million in tax-deferred retirement accounts. If those assets grow significantly over the next decade or more, you could reach your RMD years with substantially more than $1 million.

This creates a very different tax problem. The percentage you are required to withdraw increases as you age, and you have to take those distributions regardless of whether you actually need the money for spending.

This could leave you in a situation where your pension and Social Security already provide enough income to live comfortably, yet the government requires you to withdraw additional money from your IRA. This additional income can push you into higher tax brackets and affect other parts of your retirement plan.

Medicare adds another layer

Your income doesn't just determine your federal income tax bill; it can also affect your Medicare premiums through the income-related monthly adjustment amount, or IRMAA.

If your income increases enough, you will find yourself paying more in premiums for Medicare Part B and D for the exact same coverage as someone with a lower income.

This is one reason I don't think retirement tax planning should focus solely on the federal tax bracket you're in. The real question is: What is your all-in cost?

This includes federal income taxes, Social Security taxation, Medicare premiums, capital gains and, depending on where you live, state income taxes.

Tax diversification can give you more control

Most diligent savers we work with did exactly what they were told to do throughout their careers: They put money into their 401(k), IRA, TSP or other tax-deferred accounts, received the tax deduction and kept saving.

That's a great way to build wealth, but there's a potential downside when you reach retirement: You could have too much of your wealth sitting in one tax bucket.

If nearly all of your retirement savings are tax-deferred, you don't have complete control over your future tax bill, and when you need additional income, you typically have one option: To recognize more taxable income.

That's why I like the concept of tax diversification. Instead of having all your money in tax-deferred accounts, consider building a combination of:

• Tax-deferred accounts. Traditional IRAs, 401(k)s, TSPs and similar accounts
• Tax-free accounts. Roth IRAs and Roth 401(k)s
• Taxable accounts. Brokerage and other investment accounts

The goal isn't necessarily to maximize one category but to create flexibility. If tax rates are high, having money in a Roth account could give you a source of retirement income without creating additional taxable income, and if tax rates are lower, you could draw from tax-deferred accounts instead.

You can't predict exactly what tax laws will look like 10, 20 or 30 years from now, but you can build a portfolio that gives you choices.

Roth conversions could be especially valuable for pension holders

This is where Roth conversions enter the conversation. A Roth conversion allows you to move money from a tax-deferred account into a Roth IRA, paying the applicable taxes on the converted amount today. Once the money is in the Roth, qualified withdrawals are tax-free, and Roth IRAs don't have RMDs during the original owner's lifetime.

For a pension holder with substantial tax-deferred savings, this can be a powerful planning tool, but I don't recommend converting money simply because someone says, "Roth is tax-free."

The question is more nuanced: What tax rate are you paying today compared with the tax rate you could face later?

If you have a large pension, substantial retirement savings and years before RMDs begin, you could have an opportunity to gradually move money into the Roth while managing your tax bracket.

For example, someone with a $100,000 pension has a very different future tax picture from someone with no pension. Add $1 million or more in tax-deferred accounts, and future RMDs could become significant.

A Roth conversion could reduce the size of those future RMDs while also creating a pool of money that grows without future RMDs for you.

But there's an important caveat: Don't convert blindly. Converting too much may push you into a higher tax bracket, increase your Medicare premiums or create other unintended consequences.

Converting too little might leave valuable lower tax brackets unused. The objective is to find the right amount, not simply the biggest amount.

Don't forget about the widow's penalty

There's another tax issue that married couples need to consider long before it happens: The so-called widow's penalty. While you're married, you generally file a joint return and benefit from married-filing-jointly tax brackets and deductions. When one spouse dies, the surviving spouse eventually files as a single taxpayer.

At the same time, the surviving spouse could lose one Social Security benefit while continuing to have pension income and retirement assets. In other words, income declines while the tax brackets become less favorable.

That's why I encourage couples to plan for both spouses, not just the tax situation they have today.

One strategy could be taking larger withdrawals or completing Roth conversions during the years when both spouses are filing jointly. Doing so could reduce the amount of tax-deferred money that remains for the surviving spouse. It's essentially risk management for your tax plan.

Your retirement goal matters, too

Tax planning isn't only about minimizing taxes; it's about aligning your tax strategy with what you actually want to do with your money.

If your goal is to spend your savings during retirement, it could make sense to take advantage of the earlier years of retirement, when you're healthy enough to travel, pursue hobbies and enjoy the wealth you've accumulated. I call these the "go-go years."

If your goal is to leave a significant legacy, the strategy could look different. A Roth conversion could turn tax-deferred assets into a potentially tax-free legacy for your heirs while also eliminating lifetime RMDs on the converted Roth assets.
Either way, your retirement tax strategy should start with your goals, not simply a desire to pay the lowest possible tax bill this year.

You might not be able to join the 80%, but you can still pay less

If you have a pension and substantial savings, you probably aren't going to replicate the tax situation of a retiree with modest income and no pension. And that's OK. I'd rather have a large pension and substantial retirement savings and pay some taxes than have no taxable income because I didn't save enough.

But there's a big difference between paying taxes because you have significant income and paying more taxes than necessary because you didn't plan ahead. If you're a pension holder with significant retirement savings, start by asking yourself some questions:

• How much taxable income will my pension create?
• How much of my Social Security will be taxable?
• What will my RMDs look like at 73, 75 and beyond?
• Could my RMDs push me into a higher tax bracket?
• Could my income increase my Medicare premiums?
• How much of my retirement savings is tax-deferred vs tax-free?
• Would Roth conversions make sense while I'm still working or early in retirement?
• What happens to my spouse's tax situation if I die first?
• What happens to my heirs if I leave them a large tax-deferred account?
• Where will I live in retirement, and how will state taxes affect the equation?

You might not be able to eliminate your retirement tax bill. But with the right planning, you can potentially reduce it, spread it out and gain more control over where and when you pay it.

That's the goal we have for our clients: Pay your fair share, but not a penny more.

Related Content

• 8 Retirement Tax Strategies Your CPA Won't Tell You
• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
• Why a Roth Conversion Is Wrong for Most People But Often Right for Pension Holders
• 13 Things to Know About How Your Pension Affects Your Taxes in Retirement
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)

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

Retirement doesn't unfold in a straight line. It behaves more like a lake. Every financial decision, whether a withdrawal, major purchase, tax strategy or claiming choice, creates ripples that spread across a retiree's financial future.

Some ripples fade quickly. Others reshape the entire retirement landscape. Understanding those ripples is key to building a retirement plan that is resilient, flexible and sustainable.

Every decision has an outcome or a consequence. Every financial decision does, too. Your experience is what clients need to navigate them.

Here's how we use the lake metaphor at Wealthcare Advisors.

Lifetime savings: The first major ripple

Lifetime savings form the depth of the lake — the reservoir that determines how much flexibility your retiree or soon-to-be retiree client has when making major decisions later. Choices made during the accumulation years shape their entire retirement.

Key drivers include:

• Savings behavior. Consistency, contribution levels and discipline
• Asset location. Taxable, tax‑deferred and tax‑free positioning
• Liquidity reserves. Cash availability for large purchases
• Volatility exposure. How much risk the portfolio carries into and through retirement

These choices determine how disruptive a major expense will be later in life. A deep lake absorbs ripples. The second ripple, tax planning, magnifies them.

Tax planning: The second major ripple

Tax planning is the bridge between accumulation and distribution. It determines how efficiently your client can access their savings and how long those savings will last. Important tax ripples include:

• RMD exposure
• Roth conversion windows
• Withdrawal sequencing
• IRMAA thresholds

This is where real‑world decisions, such as buying a car or a home, become powerful teaching moments.

Imagine your clients decide to buy a $50,000 car at age 70. That single decision creates a cascade of ripples across their "retirement lake." We would frame it like this:

Ripple one: Liquidity shock. The source of the $50,000 determines the size of this ripple.

Should the clients decide to make a tax‑deferred withdrawal, that may lead them into a higher tax bracket, IRMAA penalty risk and reduced Roth conversion space.

Using assets within their taxable account may lead to additional capital gains and reduced future income‑producing asset base.

If the decision is to use some of their cash reserves, they may be concerned about lower emergency liquidity and higher portfolio withdrawal pressure.

A combination of two or all three of these sources may solve the issue.

Ripple two: 18-24 month spending impact. A $50,000 purchase will often reduce discretionary spending for 18 to 24 months. Here are just a few decisions that may be affected:

• Planned travel may be delayed and home projects postponed
• Gifts to family or charitable giving are reduced
• The clients may have to lean harder on the assets you manage as portfolio withdrawals may also need to be increased

This is the ripple clients feel most immediately — the stone hitting the water.

Lifetime income planning: The third major ripple

This is where all prior ripples converge. Lifetime income planning (LIP) is the art of turning savings, tax strategy and spending decisions into a coordinated, predictable income stream. And LIP is the most crucial and difficult of these tasks.

At Wealthcare Advisors, we explain it this way. Clients will have assets they "lean on," assets they "live on" and a legacy they will "leave behind." LIP is the successful combination of our first two. Key components include:

• Sustainable withdrawal strategies
• Bucket or time‑segmented planning
• Guaranteed income tools
• Longevity protection
• Sequence‑of‑returns mitigation

Using our prior example, a $50,000 car purchase becomes part of the client's income plan — not an isolated event. That may require adjusting withdrawal rates, rebalancing accounts or shifting guaranteed income sources to maintain stability.

Social Security claiming: The last major ripple

Once spending, taxes and lifetime income have been coordinated, the final major planning decision is often Social Security claiming strategy.

Social Security can either calm the lake or amplify the waves. It interacts directly with spending decisions, tax strategy and income planning and gives us several scenarios to consider:

• A major purchase may influence whether delaying benefits is still optimal
• Claiming now may reduce portfolio withdrawals in the future
• If planning for a couple's lifetime, how do survivor benefits fit into the plan?

Finally, we need to scope out exactly how Social Security interacts with other taxable income and IRMAA.

For example, if a client had planned to delay claiming to age 70 but now needs cash flow, claiming earlier may reduce strain on the portfolio but permanently reduces lifetime benefits. This is why Social Security must be evaluated after lifetime income planning, not before.

The question is more complex than, "When should I/we claim?" It's "How do I/we design the income bridge so delaying benefits becomes sustainable in practice, not just on paper?"

Why the lake metaphor works

Clients instantly understand:

• The stone = the decision
• The ripples = the consequences and trade-offs
• The shoreline = long‑term impact and outcomes

It is intuitive, visual and memorable. And it reinforces your core message: The ripples never stop.

Retirement planning is not a series of independent decisions. It is an interconnected process where every choice influences the next. A withdrawal affects taxes. Taxes affect income. Income affects Social Security strategies. And together, these decisions shape a retiree's long-term financial security.

Like a stone cast into a lake, every financial decision creates ripples. Some are small and short-lived. Others travel far beyond the initial event and can impact a client's lifestyle, legacy and confidence for years to come.

The advisor's role is not simply to react to the ripples, but to anticipate them and help clients understand their potential consequences.

When savings, tax planning, lifetime income planning and Social Security claiming are coordinated through a thoughtful process, clients are better positioned to allocate assets according to their goals and priorities.

They gain the confidence to spend what they have worked so hard to accumulate, support the people and causes they care about, and enjoy a retirement that is meaningful, secure and dignified.

At Wealthcare, we believe that understanding the ripple effect of every retirement decision helps advisors deliver more than a financial plan. It helps them provide clarity, confidence and a road map for lasting retirement 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.

One lesson we've all learned in recent years is that things change. Whether they're political, financial or health-related, events we have absolutely no control over can disrupt what we thought were our forever lives, making us consider a future elsewhere.

Even if the circumstances are not quite right to make an immediate move, having a workable Plan B for the future can help establish peace of mind and give you an "escape plan" if needed.

Residency by investment or "golden" visas are one option. But with so many schemes available, it can be difficult to narrow down the right one. Here are five of the top choices to consider.

1. Portugal's golden visa

Ideal for U.S., UK and international investors seeking access to the EU, the Portugal golden visa is perfect for families who can't relocate immediately but want to prioritize flexibility and optionality, with the promise of permanent residency and eventual citizenship.

Applicants are required to spend at least seven days a year in Portugal and invest a minimum of €500,000 (about $568,500) in regulated investment funds. Families can qualify for Portuguese permanent residency rights (without relocating) after five years and citizenship after 10.

Getting a Portuguese passport provides generational benefits as citizenship is passed down. Portugal is therefore a standout route for families seeking the right to live in Europe in the future without needing to uproot their lives now.

2. Greece's golden visa

This golden visa is recommended for anyone seeking Schengen Area access through real estate ownership in the Mediterranean. But it's also a good option if your family is hoping to spend significant time in Greece rather than simply seeking European citizenship.

An attractive lifestyle and climate are on offer, as well as a lower property purchase entry point of €250,000 (about $284,250) in selected areas. However, avoid investing at artificially inflated prices — this practice is common among certain developers seeking to take advantage of the program's high demand.

An additional benefit is that certain property-based investment options provide permanent residence, with no minimum stay requirement to maintain residency status.

3. Malta Permanent Residence Program

The Malta Permanent Residence Program (MPRP) suits families seeking a permanent, potentially lifelong EU residency without applying for citizenship — making it ideal for retirees and mobile families seeking long-term security, as well as investors who value certainty and permanence.

Non-EU citizens can obtain permanent residency upon successful completion of a multi-stage due diligence process:

• Families must apply for a temporary residence permit within six months of their initial application
• Once approved (and following full compliance with program obligations) the permit converts into a permanent residency certificate
• These certificates are issued every five years and are renewable indefinitely provided you maintain a Maltese address

Residency benefits cover up to four generations of a family. One thing to note, however: The MPRP has higher fees than other EU programs, with investors expected to provide almost €100,000 (about $113,700) to apply.

4. France's golden visa (aka the Passeport Talent – Investisseur Economique)

The French golden visa, available through the "Passeport Talent" investor route, is particularly suitable for investors seeking residence in a leading European economy with access to the wider Schengen Area.

A qualifying investment is relatively low at €300,000 (about $341,000) but can be made in only one target company. Other conditions apply, making investment options limited.

It is ideal for internationally mobile investors who want the security and credibility of residence in a Tier 1 country, supported by a relatively fast application process and no prescribed minimum physical stay requirement to maintain/renew the four-year residence permit.

For those who later choose to relocate, integrate and establish France as their principal home, the program may also provide a comparatively fast pathway towards French citizenship.

5. Dubai (United Arab Emirates) visa

Dubai's visa program is well suited to entrepreneurs, business owners, digital professionals and high earners seeking a low-tax jurisdiction, although citizenship pathways are complex and unlikely to be feasible for most applicants.

Investors buying property worth at least 2 million AED (around $545,000) or contributing significantly to businesses can qualify for a golden visa, providing permanent residency.

Given the stellar performance of the Dubai real estate market in recent years, its high yield potential and Airbnb-friendly legislation, this has proven to be an exceptionally popular Plan B investment option for investors around the world.

What's more, the unique structure of the program can allow investors to qualify for mortgage financing on a generous proportion of the property value, making the Dubai golden visa more accessible than most of its peers.

Alternative routes

Many other countries offer alternative residency by investment programs, including Italy, Latvia, Cyprus, Bulgaria and some Caribbean nations. Similar programs are in the pipeline in South America, including Panama, Paraguay, Argentina and others.

Each has benefits and disadvantages, and potential investors are advised to closely examine the qualifying criteria and progress of individual schemes before making a decision.

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• U.S. Business Leaders are Quietly Plotting Their Escape to Europe: How Will They Get There?

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

For most of our working lives, we know exactly how we get paid. We go to work, receive a paycheck, pay taxes and bills, save some money and spend the rest.

Then retirement arrives, and the paycheck often disappears.

That makes retirement one of the few "jobs" people take without knowing exactly how they'll be paid, how much they can spend or how long their money needs to last.

Yet many people still focus primarily on reaching a particular savings number, assuming that once they hit it, they're ready to retire.

The reality is that there is no magic retirement number. What matters more is having a plan for turning your savings into sustainable income that can support you throughout retirement.

Start with your income floor

Before retiring, determine how much income you'll need to maintain your lifestyle. This is your retirement income floor — the amount needed to cover your essential expenses and the lifestyle you want to maintain.

Start by looking at what you spend today, including household expenses, insurance, transportation, food, entertainment and housing. Then consider expenses that might become more significant in retirement, such as travel and healthcare.

As you age, you might need more frequent medical care, hearing aids, home healthcare or long-term care. You could also face major home repairs or need to replace a vehicle.

Once you have a reasonable estimate of your monthly expenses, compare it with your expected retirement income from sources such as Social Security, pensions and your retirement accounts.

Does the math add up?

If your essential expenses exceed your predictable income, you need to address that gap before retiring.

Build a retirement paycheck

Accumulating assets and creating retirement income are two different financial challenges.

During your working years, the goal is generally to save and invest for growth. In retirement, the focus shifts toward distributing those assets in a way that supports your lifestyle without prematurely exhausting your savings or overpaying in taxes.

Investment portfolios, dividend-paying stocks and real estate can all play important roles in a retirement strategy. But relying entirely on market performance to pay your monthly bills can leave you vulnerable when markets decline.

Creating a dependable income floor can provide greater stability. Social Security, pensions and certain guaranteed income products can potentially provide predictable income that continues throughout retirement.

When reliable income covers essential expenses, your investment portfolio might have more flexibility. You don't necessarily have to sell investments if the market is down and you need money to pay the electric bill or buy groceries.

Instead, your investments can have time to recover while also providing money for discretionary goals such as travel, hobbies and other experiences.

Don't underestimate what can drain your savings

Healthcare is one of the most obvious threats to retirement savings, but it's not the only one.

Believe it or not, one expense that often gets overlooked is generosity.

Retirees might feel obligated to help adult children or grandchildren with a car purchase, mortgage problems, debt or other financial emergencies.

Helping family is admirable, but every withdrawal from your retirement savings reduces the money available for your own future and the potential for the money to continue growing.

Before giving away a significant amount, consider how many years your retirement savings might need to support you. Protecting your own financial security isn't selfish; it's part of responsible retirement planning.

Time spending around your lifestyle

Retirement spending isn't constant. Many new retirees spend more during their early years. They travel, play golf, dine out, visit family and finally have time to pursue the activities they've delayed.

Later, spending patterns could change as people become less active, while healthcare and long-term care costs can become more important.

That's why a retirement income strategy shouldn't simply assume you'll spend the same amount every year. Instead, consider how your lifestyle and expenses might change throughout retirement and build a distribution strategy around those different stages.

Don't retire with just a number

Ultimately, the goal of retirement planning isn't to accumulate the largest possible portfolio. It's to create enough reliable income to enjoy your retirement without constantly worrying about running out of money.

Before retiring, ask yourself three questions:

• How much will I need?
• How much predictable income will I have?
• How will I fund the gap?

Retirement is a new job, and unlike your previous jobs, there will be no employer providing a paycheck. Creating that paycheck yourself is one of the most important steps you can take to make your money last as long as you do.

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

If you've felt torn between paying your parents' medical bills, helping your young adult child make a car payment and trying to save for your own retirement, you're not alone.

Millions of Americans in the sandwich generation face this financial and emotional challenge.

A few recent statistics underscore the issue's scale:

• One in four adults is a caregiver, and roughly 29% of them are supporting both children and aging adults, according to the Caregiving in the US Research Report 2025
• A record 19% of adults ages 25 to 34 live with their parents or grandparents, according to John Burns Research and Consulting

Why is this happening now?

Multiple pressures are converging for many people in midlife.

• Aging parents are living longer
• More adult children remain financially and emotionally dependent
• You still need to manage your career and prepare for your retirement
• Financial strains such as inflation and unexpected expenses can create additional burdens

This leaves many middle-aged adults unable to absorb the financial shock.

Even celebrities aren't immune. In a 2025 article from The Hollywood Reporter, Tina Fey described having her kids and an aging parent under one roof as wonderful but also as something that takes a real toll.

What challenges do aging parents present?

The primary concern for aging parents is medical expenses. One strategy is to make sure they're enrolled in the right health plan.

For example, Medicare Advantage could help limit out-of-pocket costs significantly.

The cost of assisted living is another pain point. If it's feasible, have a parent move in with you or another family member to reduce or eliminate that expense. Create a network of siblings, other family members and close friends who can pitch in with caregiving duties instead of paying for in-home healthcare.

Other nonmonetary resources you can provide are time, transportation and meal prep. Sharing the load this way saves money and can often strengthen family bonds.

It's also worth exploring what government or community resources might be available. Many families don't realize how much financial relief programs can provide until they investigate those avenues.

What challenges do adult children present?

For adult children, the issue is often less about a single expense and more about boundaries. If your child relies on you financially but doesn't have a clear path toward independence, it might be time to help them build one — whether that's finding a job, budgeting for their own apartment or creating an emergency savings account.

Have an honest conversation about money and expectations with your child. It might not be comfortable, but it's often necessary for both their and your long-term success.

You might also need to practice saying no, which is never easy for a parent. It's OK if they stumble a bit as they become more independent. That's how we all learn.

Consider ways to support your children that won't drain your bank account. Babysitting your grandchildren instead of paying for daycare is one example that benefits everyone. You can also save on food costs by having a large family meal at least once a week.

Don't forget to celebrate the small wins to help them build confidence.

How does this affect your retirement?

While it might be tempting to dip into your retirement savings to help family members, remember you spent decades building your nest egg. Once those funds are spent, it's nearly impossible to rebuild them in a meaningful way, as time is one resource you can't get back.

Additionally, your children might not be able to return the favor when you're the aging parent.

Sound advice in most situations is to prioritize your own health and treat your retirement savings as a last resort for helping family, not a first response. This doesn't mean you should avoid helping your family — you need to explore alternative ways to support them.

Where do you go from here?

Taking emotion out of financial decisions is difficult but essential. Try to approach each decision with a clear head and lean on your financial adviser to help you separate what feels urgent from what's sustainable.

Together, you can walk through your options and build a plan that balances caring for the people you love today with protecting the retirement you've worked so hard to build for tomorrow.

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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.

Think back for a moment to when you were a little boy or girl, out shopping with Grandma, and you saw a toy that you wanted. But she said, in a sweet, loving tone, "Honey, if wishes were horses, then beggars would ride."

Then she explained what that meant: "Wishing for things does not make them happen."

I am modifying that saying slightly as a way of leading into today's story: "Assuming things that are not yet concrete, not yet real, and relying on those assumptions can be a one-way ticket into a nightmare that you have created for yourself."

"Dr. Mark" is living that nightmare today, desperately reaching out to anyone who will listen, seemingly unaware that he burned all helpful bridges years ago.

The letter

In early September, emails with a letter attachment were received by a number of civil attorneys in a midsize West Coast city with the subject line: Possible Employment Discrimination/Withdrawal of Employment after Credentialing Approval.

In summary, the letter stated that the sender, Dr. Mark, was seeking legal advice "regarding a situation involving a medical position for possible unlawful discrimination or other wrongful conduct."

He wrote, "I was approached by a locum tenens company and interviewed with the medical director, who indicated he would be happy to have me join the clinic. The credentialing process led to a confirmation letter that the hiring committee had approved my status as a participating provider." (A locum tenens company in healthcare oversees providers who temporarily fill in for other healthcare professionals.)

However, communications from the company did not specifically state that he was being offered a job. And this is where Dr. Mark — who, at over 70 years of age, has worked for a variety of medical clinics — did something that no lawyer anywhere would have recommended.

"I relied on the expectation that I would be able to proceed with the position," he wrote. "Because of my understanding of restrictions concerning outside employment, I resigned from my existing position."

One week later, he said, the clinic sent him this note: "Leadership has pushed back, and we cannot move forward with your employment." No specific reason was given.

"While I have no proof," he continued, "I am concerned that the decision may have involved age discrimination, ethnicity discrimination or another reason, and I would like an attorney to investigate this." (For the record, Dr. Mark’s ethnicity is not part of a protected class.)

He added, "I resigned from my existing employment in reliance on this opportunity. My former employer will not take me back. Does my reliance create any potential claims for damages?"

An opinion from a labor and employment law attorney

Southern California labor and employment attorney — and a longtime friend of this column — Jay Rosenlieb provided this analysis: "Until you've got a job offer signed by the employer, and you've also signed it and sent it back, there is no deal.

"The offer can still be withdrawn at that point, with no liability to the prospective employer if the employer has done what we recommend to all of our clients."

Rosenlieb went on to describe what an employer should state in writing, that you are being offered a position:

• At a specific rate
• At a specific location
• With a specific start date

Additionally, the employer should include that your employment, where appropriate, is subject to:

• Passing a physical
• Passing a drug screen
• Passing a credit check
• Passing a background search, which includes a criminal background check

Rosenlieb added this warning: "Several states, in an effort to prevent discrimination against people with criminal records, have passed Fair Chance Acts. Employers need to be aware of how these laws impact criminal background checks."

Until you have a job offer in writing, do not quit your job

Rosenlieb added, "Dennis, in your recent story about a woman who wanted to put magnetic signs on her car, assuming the manufacturer and dealer were committing consumer fraud, you explained perfectly the danger of assuming facts that had not been proven.

"It is the same thing here with Dr. Mark. He has blended pieces of evidence that, in his mind, equate to having been offered a job, and relying on that logic, he did the worst thing possible by quitting his present employment."

Rosenlieb pointed out, "Now he wants to blame everyone, seeing himself as a victim. That is not going to fly."

Why would the locum tenens group suddenly just stop the process?

Dr. Mark apparently has a history of burning bridges and, to put it politely, not knowing when to remain silent. I learned that when he was at a teaching hospital, his residents loved and stood up for him when he was faced with being fired.

I met with several of them, who were in tears at the thought of losing this brilliant, gifted teacher. However, the many nurses he had embarrassed and yelled at also were in tears, but of a very different sort.

Dr. Mark never learned to listen when someone tried to talk to him about this, and he would never apologize.

I have no way of knowing what the clinic's background investigation turned up, if anything, but this issue made me feel sad for Dr. Mark.

I emailed him, "What a pity, someone with your level of education, a brilliant physician and teacher adored by your residents, and yet, one problem after another, always the fault of someone else.

"There is a common denominator here, and it has nothing to do with discrimination. Rather, blindness and judgment. Take a good, long look in the mirror."

He replied, "I looked at the mirror, and an old ugly face stared back at me."

The first moral of the story is something that Grandma might have also said: "Don't count your chickens before they hatch."

The second moral of the story: Be kind to others, especially on the job, and think long and hard when you're finding that it's always someone else's fault when something goes awry. It might not be them at all.

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.

Diane spent 32 years as a hospital administrator. She walked miles of corridors every day, climbed stairs between buildings and moved constantly through a campus that never stopped moving.

She didn't belong to a gym. She didn't follow a fitness regimen. She didn't think of herself as someone who exercised.

She retired at 65, in good health and good spirits. Within 18 months, she had gained weight, felt consistently fatigued and noticed that the mental sharpness she had always taken for granted was beginning to slip.

She was baffled. She told her doctor, "I've always been active."

Her doctor asked what she meant by "active." It was the first time she had no ready answer.

The workplace had been her gym, though she had not known it at the time.

The environmental design problem

The research on retirement and physical activity identifies a pattern that is both consistent and largely ignored in retirement planning conversations: The activity level people attribute to personal discipline is more often a function of their environment than of their character.

The average office worker walks 2 to 4 miles per day without thinking of it as exercise. Add a commute, meetings across floors, lunch trips and the physical demands of a working day, and the structure of employment quietly delivers a significant share of the daily movement the body requires.

Remove the structure, and the movement disappears. The default, without intentional design, is sedentary.

This is not laziness. It is what happens when the architecture of a life is rebuilt, and the physical dimension is overlooked. The workplace provided environmental design, making good choices automatic.

Retirement removes that environment. The retiree who wants to maintain the same activity level must now design it deliberately, because the structure that produced it is gone.

Diane was not inactive during her career. She simply was not intentional about it.

In retirement, the difference between the two matters considerably.

What exercise actually does

Most retirement planning conversations that include exercise treat it as a consideration for healthcare costs. The research frames it differently: As an asset class with measurable returns.

A 2020 Lancet Commission report identified 12 modifiable risk factors accounting for roughly 40% of dementia cases worldwide. Exercise acts on six of them: Physical inactivity, hypertension, diabetes, obesity, depression and social isolation. Few interventions available to a retiree touch half the list.

A 2025 meta-analysis confirmed that regular aerobic exercise reduces the risk of depression and cognitive decline in adults over 65, with an effect size comparable to pharmacological intervention for mild to moderate cases.

The biology is direct: Exercise increases BDNF, a protein that supports the growth of new neural connections. The brain that moves is a brain that continues to build.

The financial calculation, stated plainly, looks like this. According to Morningstar, the average cost of long-term care in the United States reached $242,373 in 2025. Seventy percent of adults turning 65 will require some form of long-term care.

Exercise is the single intervention most consistently identified by research as capable of deferring, reducing and, in some cases, eliminating the conditions that necessitate long-term care: Falls, muscle loss, cardiovascular disease and cognitive impairment.

An investment in physical fitness that defers long-term care by two years yields a financial return that most portfolio strategies cannot match. Yet it appears on no financial statement and is rarely included in a retirement plan as a line item.

Financial advisers calculate the rate of return for different asset classes. Exercise offers one of the highest returns available to a retiree. It generates that return in a currency money cannot replicate once it is gone: The capacity to move through the world independently.

The social multiplier

Among the forms of exercise the research identifies as most protective for retirees, three consistently rank at the top:

• Golf
• Cycling
• Pickleball

The reason is not only cardiovascular. All three involve social engagement. All three produce walking, outdoor exposure and relational texture that compound physical benefits into cognitive and emotional benefits simultaneously.

The research on social isolation and cognitive decline is unambiguous. Social engagement ranks among the most powerful protective factors for cognitive performance in later life, outperforming brain games and supplements in longitudinal studies.

Exercise that is inherently social does not choose between physical and cognitive protection. It delivers both.

A walk with a friend three mornings a week is not a fitness plan. It is a retirement health strategy that addresses physical fitness, emotional well-being and cognitive engagement in one commitment.

The retiree who designs for social exercise is not doing three things at once. They are compressing the investment.

Among the five pillars of a fulfilling retirement identified by the research, exercise is the only one that simultaneously yields returns in the other four. Move with purpose and in relationship, and the return compounds.

Designing it in

The prescription the research supports is less about intensity and more about consistency and design.

The first principle is environmental. Make the right choice the easy one. A retiree who keeps walking shoes by the bed is more likely to walk than one who has to retrieve them from a closet.

A neighborhood walking group that meets at 7 a.m. creates a social accountability structure that makes movement a natural consequence. The commitment is to show up; the exercise is automatic.

The second principle is social. Solitary exercise is better than no exercise. Social exercise is measurably better than solitary exercise. The social dimension is not a preference; it is a return multiplier.

The third principle is incremental. Research on sustained behavior change in older adults consistently supports gradual progression over aggressive starts. Not transformation, but steady accumulation.

A retiree who adds 10 minutes to a daily walk each week does not feel progress in week two. They feel it in month six. The compounding is biological and as patient as a well-managed portfolio.

Checking back in with Diane

Diane now walks every morning with two neighbors, golfs nine holes twice a week and hasn't weighed what she weighed at 18 months post-retirement in over two years.

She recently told me she doesn't think of it as exercise. She thinks of it as her calendar's most important appointment.

She is not wrong. For the first time, she is intentional.

Your financial plan tells you how long the money will last. Your physical fitness determines whether the person spending it will be present, capable and willing to spend it.

Both questions deserve an answer before you retire.

To learn more about designing a fulfilling retirement, pick up my new book, Your Encore Years: The Psychology of Retirement.

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

Editor's note: This is the first in a two-part series on Delaware statutory trust (DST) investing. The second will cover how property reserve funds work in a DST.

In today's 1031 exchange marketplace, investors are increasingly hearing a clever sales pitch from registered investment advisers (RIAs): Avoid upfront commissions on Delaware statutory trusts (DSTs) and instead pay a 1% annual assets-under-management (AUM) fee.

As the CEO of Kay Properties and Investments, which provides objective, specialized guidance to 1031 exchange investors, I find this alarming.

Lower upfront costs, alignment of interests and the comfort of a "fiduciary" relationship look appealing at first glance. But when you apply basic real estate logic, the math tells a very different story.

DSTs are real estate investments, so treat them that way

A DST is not a stock portfolio. It is a form of real estate ownership blessed by the IRS as like-kind for the purposes of a 1031 exchange. Investors in DSTs are effectively buying into institutional-grade properties such as apartment communities, industrial facilities and medical office buildings.

The key question investors should ask is, "What is my expected hold period?"

Most DSTs are structured with a projected hold period of five to 10 years, though they may go longer depending on market conditions.

A simple comparison: Rental property vs ongoing RIA fees

Imagine you purchased a rental property or commercial building. Would you agree to pay your broker or real estate agent 1% of the property value every year … indefinitely?

Highly unlikely.

Instead, the standard model in real estate has always been a one-time commission of approximately 5% to 6%. Why? Because over time, a recurring fee structure becomes dramatically more expensive than a one-time fee. This model would drastically eat into potential returns on your real estate purchase.

The same logic applies to DSTs. Traditional DST investments follow a one-time fee structure (typically around 5%, fully disclosed in the private placement memorandum, or PPM).

Under the RIA AUM model, investors pay around 1% per year, every year. At first glance, 1% may seem minimal — but over time, it compounds into a significantly higher total cost.

Case study: A 2008 DST investment (12-year hold)

To illustrate this, let's look at a real example of the first DST investment I personally made — an apartment community DST outside Seattle, purchased in 2008 with a hold period of about 12 years.

Fee comparison over 12 years: The RIA AUM model (1% annually) would have resulted in roughly 12% in total fees (1% x 12 years), while the traditional DST structure would have been around 5% (one-time).

The bottom-line outcome: The RIA model would have resulted in more than double the fees compared to the traditional real estate-style commission. This is not theoretical — it is real-world math based on an actual investment.

The compounding effect over typical DST timelines

Consider typical DST hold periods: At five years, a 1% annual RIA fee totals 5%, which is comparable to the traditional one-time fee of roughly 5%. At 10 years, the RIA fee totals 10% — two times more expensive. At 15 years, it totals 15% — three times more expensive.

Conclusion: The longer the hold period, the more the RIA's "fiduciary" AUM model works against the investor.

How RIA fees destroy monthly cash flow for 1031 investors

Beyond total fees, there is a very real and immediate impact that investors often overlook: Monthly income. Why do investors choose DSTs in a 1031 exchange? To defer capital gains taxes, to eliminate management headaches, and to generate consistent monthly passive income via ACH direct deposit.

The RIA fee structure problem: RIAs commonly structure their 1% AUM fee by having the DST sponsor pay them out of the property's cash flow before the investor receives distributions.

Hypothetical example: For a $1 million DST investment with a 6% annual yield, the traditional DST structure would generate $60,000 annually ($5,000/month). Under the RIA AUM model, after the $10,000 annual fee, the investor receives $50,000 annually (around $4,167/month). That's a difference of $10,000 less per year and roughly $833 less per month.

Impact: The RIA model reduces the investor's monthly income potential by approximately 20%. This raises a fair question: How is this a fiduciary approach to 1031 exchanges?

An even bigger concern: Perpetual non-traded REIT structures

Many RIAs are not only recommending DSTs with annual recurring fees but also positioning clients into DSTs that include mandatory UPREIT structures converting into perpetual-life non-traded REITs.

The key risks of perpetual REITs: They often have no defined liquidity event, can last 20 years or longer, and continue charging around 1% annually.

The math over 20 years: 20 years × 1% = 20% in total fees and potentially more over longer timeframes. This creates a situation where the RIA continues earning fees indefinitely while the investor continues paying fees indefinitely.

A fair question about fiduciary advice

RIAs often emphasize their fiduciary duty — acting in the client's best interest. Investors should ask this simple question: "How is it in my best interest to pay 10%, 15% or even 20%+ in total fees over time while also receiving less monthly income, when comparable DST investments are available with a one-time fee structure?"

The math is simple. The RIA model of charging DST investors 1% per year is typically the more costly fee structure for investors and lowers their monthly cash flow by typically 20%.

What 1031 investors must focus on

When evaluating DST investments in a 1031 exchange, investors must focus on:

• Total cost over expected hold period (not just upfront cost)
• How fees accumulate over time (1% compounds significantly)
• Impact on monthly cash flow (RIA fees reduce income by around 20%)
• Defined exit vs perpetual structure (perpetual REITs have no liquidity event)

The bottom line: Experience matters more than ever

The real lynchpin in this entire equation is experience. Many RIAs and financial advisers offering DSTs today have been working with these investments for a relatively short period. DSTs have only recently become a hot product at large financial institutions.

Advisers and RIAs often lack deep experience with full-cycle DST performance. They may not fully understand the nuances of DST structures, sponsors and 721 UPREITs. The risk to investors is that they can unknowingly become the testing ground for an adviser still learning the space.

Related Content

• What a Delaware Statutory Trust Can Do for Your Kids That Your Will Can't
• Six Risks of Delaware Statutory Trusts in 1031 Exchanges
• DST Exit Strategies: An Expert Guide to What Happens When the Trust Sells
• How to Use DSTs and 1031 Exchanges for Diversification
• How Do You Step Away From Your Real Estate Empire Without Facing a Giant Tax Bill?

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.

Once most Americans decide to move overseas, they follow a predictable series of steps:

• Sell the house
• Ship the belongings
• Buy property in the country of their choice
• Begin a new life

But in recent years, I've started seeing a different series of steps that lead up to the move — steps more in keeping with any major financial decision:

• Research
• Testing
• Evaluation of the conclusions
• The move

The most intriguing of those steps is "testing." That may involve a trial run — a month or two living in the new country to see if it's a good fit.

The growth of the medium-term furnished-apartment market makes the experiment easier. Companies such as Blueground offer fully furnished apartments designed for stays of a month or longer, giving prospective residents an alternative to both hotels and traditional long-term leases.

Airbnb offers another alternative — extended stays in private homes and apartments.

A trial run in Italy

For someone considering a move to Italy, this can be particularly useful. Instead of visiting Rome, Bologna, Florence or another potential destination for a week, you can spend six or eight weeks there and experience something much closer to ordinary life.

There is one important caveat: Americans can generally visit Italy without a visa for up to 90 days in any 180-day period, but longer stays require an appropriate Italian long-stay visa. The rules also depend on what you plan to do while you're there.

For someone considering a permanent move, understanding those requirements is part of the testing process itself. An immigration lawyer can help determine which visa, if any, is appropriate before signing a rental agreement or making other commitments.

You can shop for groceries, take public transportation, work remotely, explore different neighborhoods and figure out the actual monthly cost of living without having to buy a house or sign a yearlong lease.

A furnished apartment through a rental service can be particularly useful because the basic logistics are already handled. Utilities and internet are generally part of the arrangement, and the resident doesn't have to buy furniture or negotiate the kind of long-term lease that can be difficult for someone who is still figuring out whether a city is right for them.

Airbnb's marketplace of individual hosts can provide more variety, while a professionally managed operator such as Blueground offers more consistency in quality and support.

A local furnished rental may offer better value for a longer stay but can involve more paperwork and local knowledge. House shares can be an inexpensive option and provide an immediate opportunity to meet people.

The best choice depends on what you're trying to learn.

Your fact-finding mission

If you're testing whether you can actually live comfortably in a particular city, for example, the goal shouldn't necessarily be finding the cheapest possible apartment, but rather obtaining useful information before making a much larger financial commitment.

Think of it as a financial fact-finding mission.

• What will your monthly expenses be?
• How much will you spend on groceries, restaurants, transportation and utilities?
• Will you need a car?
• How often will you travel back to the U.S.?
• What kind of health insurance will you need?
• Depending on how long you stay, what could the arrangement mean for your tax and immigration situation?

The answers can be very different from what you might conclude during a vacation in Italy — vacationing somewhere and living there are fundamentally different experiences.

A beautiful neighborhood may turn out to be too noisy. A picturesque town may become frustrating if you need a car for everything. A city that appears inexpensive may prove less affordable once you maintain the lifestyle you're accustomed to.

Conversely, a destination you had initially overlooked may turn out to be an ideal fit.

It's much better to discover those things while renting an apartment for six weeks than after purchasing a €300,000 (about $343,800) home.

Americans may assume that if they're serious about moving abroad, they should immediately purchase a home. But ownership eliminates much of the flexibility that makes an international move attractive in the first place.

Renting for several months allows you to determine whether you like the country, the city and even the neighborhood. You can then make a property purchase based on actual experience rather than assumptions formed during a vacation.

The growing availability of companies has effectively created another step between a vacation and a permanent residency. Instead of choosing between a hotel and a traditional lease, prospective residents can find furnished accommodations intended for the middle ground — long enough to experience a place as a resident, but short enough to preserve flexibility.

Is this the right move?

Of course, renting an apartment for a month or two doesn't answer every question. Americans considering a permanent move abroad still need professional advice about residency requirements, taxes, estate planning, health insurance and other cross-border financial and legal issues.

But those decisions should follow a more fundamental question: Can I actually see myself living here?

An international move doesn't have to begin with a one-way ticket. Rather, it can begin with a month-long rental — and a much smarter opportunity to decide whether the place you fell in love with on vacation is actually somewhere you want to call home.

Related Content

• Considerations for Americans Who Want to Move to Europe
• 5 European Countries Welcoming US Expats
• Retire in Italy for Culture and Beauty
• How to Get Dual Citizenship: Pros, Cons and Steps to Take
• How to Find the Best International Moving Company for Your Big Move Abroad (and Avoid Costly Mistakes)

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.