Dear Wealth Wise: I'm 46 with two teens. I'm debt-free, own my home outright plus three rentals, and have a $5 million portfolio that I actively manage across diversified markets. I live well below my means, am extremely frugal, and do most repairs myself. I met a great partner (48) who also has two teens, owns a home with a mortgage, has a great job with a pension in six years and has a 401(k) worth $400K. He spends way more freely than I do. We're discussing the future but have different views on money and different asset levels. How can I protect myself and my kids?
— Cautiously in Love

Dear Cautiously in Love: Meeting a romantic partner later in life can be a wonderful but challenging thing, especially if there are kids in the picture. Blending families isn't easy, especially when navigating the already tricky teenage years. Here's what the experts have to say about her situation.

A prenuptial agreement is key

When you have two people entering a potential marriage with very different levels of wealth, it's natural to want to protect yourself, as well as your children.

Julia Rueschemeyer, a Massachusetts-based divorce lawyer, says, "If you are planning on getting married, the best and only way to protect yourself is to do a prenuptial agreement. This can spell out exactly what would happen financially in the case of divorce, and it would trump any state laws about division of assets and alimony."

The challenge is that prenups can have a negative connotation, but it's important to recognize that signing a prenup isn't inviting your marriage to fail. It's simply a way to protect yourself, especially since some states have very strict laws about how assets are divided in the event of a divorce.

As Rueschemeyer cautions, "[Massachusetts] state law says that a judge can take any and all assets of one party from before or during marriage and give them to the other party. Only a prenuptial agreement protects you from that."

Don't be afraid to keep some of your finances separate

It's clear that frugality has played a role in your financial success. That's why Kristyn Carmichael, professional mediator, family attorney, and certified divorce financial analyst at Couples Solutions Center, says it might be a good idea to keep some of your finances separate, especially if you and your partner tend to have different views on spending.

"Many of my clients are in this exact situation," she says. "Anything they bring into their marriage is kept separate property. They open a joint bank account that is for agreed upon joint expenses. ... They determine their budget for these expenses and contribute to the account either equally or in proportion to income on a monthly basis."

From there, though, all other expenses, such as individual costs for hobbies, shopping, solo vacations and kid-related expenses, should be paid from their own accounts, Carmichael advises. That way, there doesn't have to be resentment about how much is being spent. In addition, each person retains autonomy without having to consult the other.

This could lead not only to cleaner finances but also to a more harmonious relationship.

Put the right estate planning documents in place

In addition to a prenup, Carmichael says it's important to have your estate-planning wishes documented.

"You will also want a will and trust in place to protect your children individually," she says.

Carmichael says that a trust, for example, might come into play if one of you moves into the other's home.

"If the owner of the home were to pass away," she says, "they [could] will the home to their children but leave a clause that their partner can live in the home for up to a certain amount of time. This allows that person time to grieve since they lost their partner without being kicked out of their home, giving them a transition period while also retaining the children's interest in the asset."

Rueschemeyer says a revocable trust could be a particularly powerful tool in this situation.

"Real estate in a revocable trust does get the step-up in basis when the owner dies," she says. "The heirs pay capital gains only on increases in value from the time the property passes to them until they sell it."

Finally, our reader might consider a qualified terminable interest property or QTIP trust, which is especially helpful for blended families. A QTIP would allow her to provide lifetime income for her husband if she dies first, while legally ensuring that the remaining principal ultimately goes to her children, not his.

Talk to a counselor to avoid financial conflict

It's clear that you and your partner view money differently, and there's nothing wrong with that. You don't need to have the exact same financial philosophy to make a marriage or long-term relationship work.

That said, Rueschemeyer suggests, "Besides getting a prenup, you should meet with a relationship counselor to talk about money before you get married. This could help you talk about your financial habits and aspirations and come to a better understanding and appreciation for each other.

Counseling could also give you the coaching you need to talk about money openly, Rueschemeyer says, so you can enjoy it in your relationship rather than have it become a source of conflict.

A word from Wealth Wise

We understand our reader's concern about protecting her considerable assets in a new marriage, but we aren't convinced that her love interest is a financial slouch. With savings of $400,000 in his 401(k), he has amassed a much larger 401(k) balance than the average 40-something in the U.S., which was $140,000 in the first quarter of 2026.

Moreover, he has a pension, a good job and owns a home, which demonstrates financial discipline and a commitment to a solid retirement. He might feel more comfortable spending money than she does simply because they grew up in different financial circumstances or cultures.

For that reason, we recommend she start with Rueschemeyer's advice to see a counselor. The couple will need to discuss some basic assumptions and questions, such as how much money they need to feel safe, how they'll handle big expenses and purchases and where and how they want to live and retire.

More Advice from Wealth Wise

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Questions from real people, for real people.

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Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Dear Wealth Wise: "I’m 63 and my husband is 62. We currently have employer private insurance. Do I have to choose Medicare when I turn 65, or can I defer until he turns 65? Upon turning 65, I’m eligible for TRICARE For Life [for veterans]. I want to discontinue private insurance once I become eligible for Medicare, but that would leave my spouse without coverage. What are our options?"
— One Year Closer to 65

Dear One Year Closer to 65: You've asked a great question; many Americans struggle with healthcare decisions in their early 60s and even after Medicare kicks in at 65. You have the added complexity of being a veteran.

This question was so challenging that we interviewed multiple experts in retirement planning and federal benefits. Even if you're not a veteran, you'll find good information here on how to approach healthcare as a couple in your 60s.

What is TRICARE for Life (TFL)?

If you served in the military, you might be entitled to certain benefits long after your service ended. That includes health coverage through TRICARE For Life (TFL).

TFL acts as a secondary payer to Medicare, thereby limiting your out-of-pocket costs once you turn 65. But enrolling in Medicare and TFL can be tricky when you and your spouse aren't the same age.

If you're a year older than your spouse, you're eligible for Medicare and TFL sooner. But if you're the one whose employer provides coverage under a workplace plan, dumping that plan at 65 could leave your spouse scrambling for healthcare coverage.

That's the situation we have here. While it might seem complex at first, it could be more manageable than you'd think.

The crucial Medicare rule for veterans

When you turn 65, you officially become eligible for Medicare. While standard rules allow some working beyond 65 to delay enrollment, the strategy is different for military retirees.

Once you turn 65, you're eligible to sign up for Medicare. But that doesn't mean you have to, says Brandon Hill, senior adviser at Beckett Financial Group.

"You could maintain your employer’s private insurance at age 65 and beyond, assuming you're still working then," says Hill. (Note that if your employer has less than 20 employees, you will be required to enroll in Medicare Part B as your primary coverage.) "There is nothing that says you have to enroll in Medicare or TRICARE For Life at age 65 if you have creditable coverage elsewhere, such as an employer plan."

While delaying Medicare is perfectly legal under a large employer plan, doing so will completely freeze your veteran benefits. TRICARE For Life strictly requires active enrollment in both Medicare Parts A and B.

If you want to enroll in TFL, you also have to enroll in Medicare Parts A and B and pay the Part B premium, Hill says, which might happen automatically if you don't actively say no to that coverage.

"If you are already drawing your Social Security retirement benefits prior to age 65, then the Social Security Administration will automatically enroll you in Original Medicare, which is Part A and Part B, at age 65," Hill explains. He adds that the Part B premium in 2026 is $202.90 per month.

Your husband still has options if you drop your workplace plan

Dropping your workplace plan at 65 might make sense from a financial perspective. But that doesn't mean your husband will be out of options.

The solution for military families.

The best option for your husband's healthcare bridge to Medicare at 65 is likely a TRICARE Select or Prime plan, says Julie Mesaros, a federal benefits expert at Federal Solutions Support.

"Gaining eligibility for Medicare Part A is itself a qualifying life event for your husband," Mesaros says. "If you decide to drop your employer health plan, once you're covered by Medicare and TFL, that loss of coverage would also generally be considered a qualifying life event. That may allow your husband to enroll in another available TRICARE option, such as TRICARE Prime or TRICARE Select, if he's eligible. Either event would open a 90-day window."

Mesaros explains that from there, once your husband turns 65, he can enroll in Medicare Parts A and B and he'll transition to TFL as well.

For nonmilitary families.

For civilians who don't have access to TRICARE, Nick Punzio, wealth adviser at VestGen Wealth Partners, says that once you drop your employer-sponsored plan, there are several ways to bridge your husband's coverage gap.

"Some employers allow a spouse to remain on the plan even if the employee transitions to Medicare," Punzio says. However, he cautions, policies vary, so you'll need to check with your benefits department to see if you can do that.

Another option worth looking into is COBRA, says Punzio.

"This option lets your spouse temporarily keep the same coverage, usually for up to 18 to 36 months, though at a higher cost," he explains.

There are also Affordable Care Act Marketplace plans you can look into.

"Individual policies may be more affordable than expected, especially if your household qualifies for subsidies," Punzio says, though it's more difficult to qualify for marketplace subsidies in 2026.

You can get TRICARE while retaining your existing coverage

If you're on the fence about dropping your workplace plan entirely, there is a third path: keeping both. You might assume that you need to give up your workplace plan to enroll in TFL. But Hill says that's not necessarily the case.

"You can have both TRICARE For Life and employer coverage simultaneously," he insists. It could be worth doing to keep your spouse on your workplace plan until he's 65.

"In that situation, the employer plan would be the primary payer on claims, Medicare would pay second, and TRICARE would pay last," Hill explains.

Either way, Punzio says, you're doing the right thing by thinking about this now.

"Planning ahead ensures both partners maintain continuous, affordable coverage during the transition years before both are eligible for Medicare," he says.

How TRICARE For Life and Medicare work together

The relationship between Medicare and TFL can be complicated. The one thing Mesaros emphasizes is that TFL doesn't replace Medicare. It works with it.

"Medicare pays first, and TFL generally picks up many of the remaining eligible costs, which is one reason many retirees find the combination to be very comprehensive coverage," she says.

Mesaros also explains that a common mistake people make is treating Medicare and TRICARE as unrelated decisions.

"In reality, the timing must be coordinated because employer coverage changes can trigger a qualifying life event, and TRICARE eligibility at Medicare age depends on having both Part A and Part B. Dropping the private employer plan does not leave your husband uncovered, provided he enrolls in an available TRICARE option."

Mesaros also says that there's nothing wrong with having two different coverage arrangements within the same household.

"You may be covered by Medicare and TFL, while your husband may be covered by TRICARE Prime or TRICARE Select. That is completely normal," she explains.

Finally, Mesaros says, before initiating any moves, it's important to confirm your benefits.

"Before making any changes, I'd suggest confirming your specific situation with TRICARE and DEERS and comparing the cost of keeping your current employer coverage vs moving your husband to a TRICARE plan until he reaches age 65. That's likely where the biggest planning decision will be," she says.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Dear Wealth Wise: As a retired 66-year-old, I find plenty of guidance on portfolio allocation but very little on asset location — how investments should be divided among taxable accounts, traditional IRAs/401(k)s, and Roth IRAs/401(k)s.

Many experts suggest a portfolio split such as 50% stocks (mostly U.S., with some international exposure) and 50% more conservative investments, such as bonds and money market funds. But there's far less discussion about where those assets should be held to maximize after-tax returns. I feel undereducated on the topic of asset location and would like more guidance on how retirees can optimize investments across accounts with different tax characteristics.
— Where Should I Stash My Assets?

Dear "Where Should I Stash My Assets?": Asset allocation is an important part of retirement planning. And you, as a 66-year-old retiree, seem well informed about how much of your portfolio should go into aggressive holdings like stocks versus stable or income-producing assets like bonds.

But your question is one that's not raised often enough — where do the assets actually go?

Mark Sanaiha, CFP, founder and wealth advisor at Macallen Capital, says he likes to tell clients to follow a simple rule.

"Put your least tax-efficient assets where the IRS can't touch them, and your most tax-efficient assets where they're built for low taxes."

Let's dig deeper into that strategy to answer the burning question of how to find the right home for your various retirement assets.

Assets that belong in a traditional IRA or 401(k)

Traditional IRAs or 401(k)s offer the benefit of tax-free contributions and tax-deferred gains while you're in the process of building wealth. In retirement, though, they become less tax-efficient, since withdrawals are taxable and required minimum distributions (RMDs) eventually kick in.

Cody Garrett, CFP, owner and financial planner at Measure Twice Financial, says, "Traditional pre-tax retirement accounts should generally hold tax-inefficient assets, such as taxable bonds, money market funds, REITs, and BDCs."

As Garrett explains, these assets tend to distribute ordinary income rather than qualified dividends and can have higher yields than equities.

Garrett also says that for many retirees, it makes sense to allocate most or all of their bond holdings to traditional retirement accounts. Doing so could shelter your bond interest from immediate taxes, which is important, since bond interest is taxed at ordinary income rates.

Assets that belong in a Roth retirement plan

Roth accounts are often touted as a shining example of tax efficiency. Though contributions are made with after-tax dollars, gains are completely tax-free, as are withdrawals. There are also no RMDs to worry about.

Because assets held in a Roth IRA or 401(k) aren't subject to tax gains, Garrett says, "Roth accounts are often best used for assets with the highest expected long-term growth."

If you have U.S. or international stock market funds and other growth-oriented equity investments, you may want to load them into your Roth.

Sanaiha says, "Your Roth IRA is your growth engine, … so don't waste that on cash or money markets."

Sanaiha also cautions that while it often makes sense to hold international funds in a Roth IRA, it depends on the fund.

"In some cases, the tax drag is comparable to a value fund, so we'll then consider traditional or Roth IRAs for placement," he says.

Assets that belong in a taxable account

With a taxable account (such as a standard, non-retirement brokerage account), there's no IRS benefit when you're contributing funds and building wealth. But there's flexibility. You don't have to worry about annual contribution limits, early withdrawal penalties, or RMDs. Still, it's important to choose the right assets for these accounts.

"Taxable accounts favor tax-efficient investments that produce little taxable income each year and receive long-term capital gains tax treatment on qualified dividends," Garrett explains. "Examples include low-turnover equity funds, such as U.S. stock market index funds. These investments often generate modest dividend income."

Garrett says taxable accounts can also be appropriate for holding crypto ETFs and other volatile assets.

"Investors can harvest capital losses if values decline, while long-term capital gains from securities held longer than a year receive favorable tax treatment," he says. "Many crypto investors instinctively place speculative assets in Roth accounts hoping for tax-free growth, but taxable accounts provide useful tax benefits if the investment performs poorly."

That said, many retirement investors may prefer to skip highly speculative investments like crypto, even with the tax-loss harvesting benefit.

Another attractive option to balance tax efficiency and liquidity needs is municipal bonds or muni market funds, which are exempt from federal income tax. Sometimes they may also be exempt from state or local taxes if they are for in-state bonds.

Assets that belong in an accessible bank account

Retirees are often advised to maintain a hefty cash cushion to cover emergency expenses or buy themselves the flexibility to leave their investment portfolios untapped during periods of market decline. This helps avoid locking in permanent portfolio losses.

Garrett says that from a tax-efficiency perspective, cash and money market funds are best suited for traditional retirement accounts since interest is taxed at ordinary income rates.

"That said, many retirees still prefer to maintain one to two years of liquidity in checking, savings, and other taxable accounts, sacrificing tax optimization for peace of mind," Garrett explains.

Your strategy may shift over time

It's good to go into retirement with a general framework of where to house your various assets. But Sanaiha says that just as your asset allocation might change over time, so too might some of your asset location decisions.

For example, since our reader is 66 years old, their RMDs will start at age 75 under the SECURE Act 2.0. They will have nine years to plan Roth conversions to reduce the risk that RMDs will force them into higher tax brackets.

Moreover, a retiree's asset locations will need to shift as asset allocations change. As you spend down your accounts, using the bucket or other retirement withdrawal strategies, your overall asset allocation will shift. If you spend all your taxable cash first, you may need to rebalance other accounts, which could trigger taxes.

"Asset location decisions should always be made in the context of your overall tax situation, RMDs, Social Security timing, and legacy goals," he says. "What's optimal at 66 may shift significantly by the time RMDs begin."

An evolving strategy, Sanaiha insists, could help you generate retirement income more efficiently while keeping the most money away from the IRS.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Dear Wealth Wise: We retired at 57 due to a quick succession of inheritances and tax consequences, but are still too young to access our own retirement savings. We did manage to leave our children with no debt from college or graduate school. Now our 25-year-old wants to attend law school to do public interest law, but the changes to federal loan programs and the loan rates would leave over $180,000 in student loans at graduation. Should we consider providing a low-interest personal loan? What implications for our retirement should we consider?
— Retired But Still Parenting

Dear "Retired But Still Parenting": It's not always easy for young adults to know what professional path they want to follow off the bat. And it's pretty common for college students to major in something that ends up having little to nothing to do with their careers.

There's nothing wrong with being 25 years old and realizing you want to pursue a law degree. And the return on investment could end up being outstanding.

Georgetown University reports that median earnings, net of debt payments, are $72,000 four years after graduation for all law school graduates. And for graduates of top schools, they can exceed $200,000.

But financing a law degree can be daunting, especially in light of student loan changes under the One Big Beautiful Bill Act. Now, law students are generally limited to $50,000 per year in federal loans and $200,000 in total. (While the average cost of law school is about $50,000 per year, elite schools may charge over $80,000 per year, bringing the total cost of a three-year law degree to over $240,000.) Even if these new caps cover all costs, it can still be a lot of debt to graduate with, despite the strong earnings potential.

Of course, for people going into public interest law, the earnings potential may be more capped. On the plus side, public interest lawyers may be eligible for student loan forgiveness down the line.

The Public Service Loan Forgiveness (PSLF) program forgives federal student loan balances for qualifying professionals after 120 monthly payments. Also, almost all law schools offer a Loan Repayment Assistance Program (LRAP), which provides grants or forgivable loans to help qualifying lawyers make their 120 loan payments toward forgiveness.

The catch? A private family loan is not eligible for the PSLF program, and in some cases, a parental loan might also disqualify a student from LRAP support. The result is that the family might saddle their son with a $180,000 private loan when getting a qualifying loan would yield lower out-of-pocket costs through school grants and federal debt forgiveness.

Still, incoming law students should not bank on forgiveness; they may have a change of heart on their career path, or the rules on forgiveness may change. That means the daunting math of financing a law degree may largely stay the same.

Here, we have a couple who retired at 57 due to a series of windfalls. They're still a few years away from accessing their retirement savings penalty-free, and they're wondering whether it makes sense to write their son a low-interest $180,000 loan rather than have him borrow at higher rates.

Given that the going rate for federal Direct Unsubsidized Loans is 7.94%, a parent loan with an interest rate in the 3%-4% range, consistent with applicable federal rates, could yield significant savings. But will granting that loan introduce complications? Here's what the experts have to say.

Figure out where the money is going to come from

It's certainly noble to want to help your son finance a law degree more affordably. But before you start handing out money in any shape or form, make sure you know where it's going to come from, says Patrick Simasko, estate planning attorney at Simasko Law.

"Any assistance you provide should be structured so it protects your retirement," he says. "Since you retired at 57, tapping your own 401(k) could trigger a 10% early withdrawal penalty."

Simasko also points out that there are more affordable borrowing options for law school than for retirement expenses. So before you give out so much as a dime, make sure your retirement plan can handle it, and that you won't be compromising your ability to pay your bills.

Also, don't count on an IOU from your son to make up for the money you hand over today.

"While your child may promise to help you financially once they become a lawyer, they might find other ways to spend their money," Simasko cautions. Instead, make the loan official so your son is obligated to repay it.

Seth Friedman, Sr. Managing Director at Abacus Finance, has similar guidance.

"Retiring at 57 means that you might go a number of years without total access to certain retirement assets, so the preservation of liquidity during that window becomes an important question," he says. "I suggest that you stress-test your retirement plan as though [the loan] will never be paid off. If that does not diminish your long-term financial security, then helping may be justifiable."

Understand the pros and cons of writing a loan versus paying tuition directly

If you're trying to help make law school more affordable for your son, paying tuition directly could be a more tax-efficient way to go about it. When you pay tuition directly, it doesn't count toward your annual gift tax limit (which is $19,000 in 2026) or your lifetime exemption.

That said, Simasko says there's a big benefit to giving your son a loan rather than covering tuition bills: He'll have some skin in the game.

"I've seen situations where parents pay the entire cost of professional school only to have the child decide halfway through — or shortly after graduation — that they no longer want to practice in that profession," he says. "Having some financial responsibility helps ensure everyone remains committed to the plan."

Friedman says that if you're going to lend your son money, it's important to make it a part of your estate plan.

"In the event that you choose to lend out the cash, be sure to document it, charge a realistic interest rate, and set up an appropriate repayment schedule according to your kid's career plans," he says. "One of the most frequent errors I see is parents unofficially loaning money, which slowly morphs into an impromptu gift."

Make sure to keep things equitable for your other children

The fact that you've managed to give all your children debt-free educations thus far is commendable. But if you're now considering $180,000 in aid for your son, it's important to make sure you're being fair to your other children, Simasko says.

"If this child receives substantial financial help from you for law school, will their other siblings expect the same assistance in return? Many families either document the assistance as a loan or treat it as an advance on that child's future inheritance to avoid misunderstandings later," he explains.

If you decide not to lend out the money and instead pay your son's tuition directly for the tax advantages, make sure to document that and be transparent with your other children about it. If you talk things through and make it clear that you're willing to offer similar assistance to your remaining children, there should be no need for resentment.

A word from Wealth Wise

There are additional reasons the couple may want to tread carefully as they consider how to support their child's law school ambitions.

First, they should estimate their son's actual earnings and ability to repay a loan after law school. Georgetown University provides a searchable database of median earnings of graduates of over 100 U.S. law schools. Then they should take into account their son's desire to go into public-interest law, which typically pays less than private practice.

Finally, the job market for law school graduates is in flux, so there's no way to predict whether or how quickly their son might secure a public-interest legal position. With rising applications to law school and AI disrupting entry-level positions for new graduates, their son may find fewer entry-level legal jobs just as he starts his career. In that case, the parents may have to accept that the $180,000 loan is really a family gift.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Dear Wealth Wise: We live in New England in a mortgage-free home. I'm 63, and my husband is 65. I collect Social Security Disability and a pension. My husband still works and owns a rental property in Arizona with a $75,000 mortgage at 3.9%. The house is worth $340,000.

Between my benefits, my pension, and our annuities, we hope to have enough retirement income to manage without the additional income from the house. But we are concerned that inflation will make that more difficult over time. We currently clear $700 a month after expenses on the rental, barring extra repairs.

My husband wants to retire at 68. In light of that, should we keep the rental or sell it? We're worried about capital gains, real estate agent fees — and how those things might result in IRMAAs.
— Landlord No More?

Dear "Landlord No More?"

You'll often hear that it's wise to have diversified income streams in retirement. But what if one of those income streams comes with a world of risk and hassle?

In this situation, our reader asks a particularly savvy question. The couple wonders whether it pays to hang on to a rental property on the other side of the country. The rental income could clearly help with cash flow. But managing a rental isn't easy, especially when you don't live close by. Keeping a rental home means bearing the risk of property tax and home insurance rate increases, as well as ongoing maintenance and repairs.

Clearly, it's a tough decision — especially since selling the home could trigger a large capital gains tax bill. There's a capital gains exclusion of up to $250,000 per person for the sale of a primary residence. But because the couple is contemplating selling a rental property, that exclusion won't apply. A jump in their income could also trigger an IRMAA surcharge on Medicare. Real estate agent fees will take a bit out of the sale proceeds.

Here's how the experts suggest they approach this conundrum.

How well will your current income sources hold up over time?

The couple in this scenario has a few things going for them. Though they don't mention retirement savings, they have a variety of guaranteed income streams. But that might not cut it in the long run.

"Hoping to have enough income in retirement is not a winning strategy," says Nate Willardson, CFP and managing partner at Currents Wealth Strategies. "Before deciding whether to sell or keep the Arizona property, stress-test your income sources against different inflationary environments to understand what could happen to your purchasing power over time."

As Willardson explains, Social Security benefits, including Social Security Disability Insurance, are eligible for a cost-of-living adjustment each year. But pensions and annuities are often fixed, which means they can lose purchasing power over time. If you're not confident in your future cash flow, says Willardson, it might be worth holding on to the rental.

Andrew Wood, RICP and retirement planning adviser at Daniel A. White & Associates, agrees.

"I like the idea of keeping the Arizona house and using the income as an inflation hedge," Wood says. "If prices and rents continue to rise, you would be able to use the income to help offset inflation and potentially raise the rent accordingly."

Do you want to be a landlord?

Clearly, there's a benefit to keeping the rental property despite the costs of ownership. But Cayden McLaughlin, CFP, EA, and financial planner at WealthAdvisor365, says in his view, this is also a quality-of-life question.

"Do you even want to be an out-of-state landlord in retirement? Is that really how you envisioned spending those years? Most people say no," says McLaughlin. "An extra $700 a month probably isn't worth the hassle of coordinating repairs from across the country every time something breaks."

Willardson says that in his experience, most retirees prefer simplicity when it comes to their portfolios.

"Selling and reinvesting those assets for growth elsewhere is often the cleaner path," he explains.

McLaughlin says that if you do sell the property, you can invest the proceeds in equities for longer-term growth. You should still come away with a nice chunk of money, even after accounting for taxes and real estate agent fees.

"If they truly want income replacement, Treasury bonds may be worth considering," McLaughlin adds.

There might be a compromise — keeping the rental but hiring a property manager.

"If you want to hold the property but shed the administrative burden, a local property manager costs roughly 8% to 10% of monthly rent and buys you real peace of mind from 2,000 miles away," Willardson says.

That option would also lessen the risk that the couple might be unable to manage the property effectively as they age.

If you decide to sell, get your timing right

You're right to be worried about a large capital gains tax bill on a home you have $265,000 worth of equity in. But if the burden of managing that rental property from afar is too great and you're worried about future maintenance and repair costs, then selling could be the right choice.

In that case, Willardson says, "if you do sell, time it strategically. A lower-income year can reduce both capital gains exposure and the IRMAA impact on your Medicare premiums."

Since your husband still works now, you might want to wait until he retires to unload that property, especially if you can do so before he claims Social Security. You might still face an IRMAA, as the house sale will likely bump up your taxable income in a single year. But you can mitigate the overall tax impact by waiting until your household income drops.

That said, don't let the idea of an IRMAA drive you into a panic. Even if you face that surcharge, it might only apply for one year, Wood explains. From there, you can implement different strategies to minimize your taxable income. Municipal bonds, for example, are a good way to generate predictable income that's always federally tax-exempt.

The decision: It depends

All told, you have two very strong options here. There's no right or wrong answer.

"On its face, the rental property could be a solid source of supplemental income in retirement," McLaughlin says. "The interest rate is low, there's plenty of equity, and the husband is still working for a few more years, which can help pay down the remaining mortgage balance."

But if you just don't have the appetite to manage a rental property and bear the risk of rising ownership expenses, selling isn't the wrong move. You might feel the sting initially in the form of a larger one-time tax bill and potential Medicare IRMAA. But from there, you might enjoy the peace of mind that comes with knowing you're earning income more passively.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Dear Wealth Wise: My husband just retired from his job due to early-onset dementia. I have heart failure and collect disability benefits. We owe $255,000 on our home and pay $8,500 a year in property taxes and homeowners insurance. Our mortgage rate is 5.34%. Utilities are around $399 per month. My husband wants to use his $300k 401(k) to pay down the mortgage. I want to move to a more affordable location. But we're in a very walkable neighborhood close to a beautiful lake, and I hate to give it up. We argue about this every day. Help!
— Love My Lake Home

Dear "Love My Lake Home": When you retire in a home and neighborhood you know and love, it can make your post-working years that much more rewarding. But what if it's a struggle to keep up with your housing costs?

The Urban Institute says that over the past 20 years, the share of senior households considered severely cost-burdened — meaning spending more than half of their income on housing — has nearly doubled. And that burden isn't limited to rent or mortgage payments. Rising homeowners insurance premiums and property taxes are also big drivers.

Here, we have a couple struggling to afford their home. They have a moderate mortgage interest rate and high property taxes.

The husband is willing to empty his 401(k) to pay off the mortgage, while the wife thinks moving to a more affordable place is the smarter choice. At the same time, both would clearly rather stay put.

It's a tough situation, especially since it's compounded by the couple's health problems. Here's how the experts suggest navigating it.

Raiding your 401(k) may not solve your problem

If you're carrying a mortgage with a moderate interest rate, you might assume that tapping your 401(k) to pay it off is a smart move. The sooner you eliminate that loan, the more money on interest you can save.

But John Davis, Financial Planner at JKD Financial, warns that the math may not work out.

"One thing people often miss when they look at a 401(k) balance is that the IRS essentially owns a big chunk of it," he says. "If you were to pull out the full $300,000 in a single year to pay off that $255,000 mortgage, you’d likely trigger a tax bill of $60,000 to $70,000, assuming you’re in a moderate bracket."

Davis also cautions that 401(k) providers are legally required to withhold 20% of distributions for federal taxes immediately.

"That means you’d only actually get $240,000 in your hand, which wouldn't even be enough to pay off the $255,000 mortgage," he says. "You’d end up with a huge tax bill next April and still have a mortgage balance."

Then there are tax penalties to consider. We assume that our reader and her husband are over age 59½, since she hasn't expressed concern about 10% penalty for early withdrawals from a 401(k). However, if they are younger than 59½, they may possibly qualify for an exemption due to their significant health issues, though they would still have to pay ordinary income tax on the withdrawal.

Emptying your 401(k) means losing flexibility

Taxes aside, there's a real danger to using your 401(k) to pay off a mortgage. As Chad Gammon, CFP and owner of Custom Fit Financial, says, "With the 401(k), you have liquidity and flexibility to use that money for needs that come up, such as medical. Paying off the mortgage opens up some cash flow, but not to the extent of having the 401(k)."

Gammon agrees, noting that while it's possible to borrow against home equity, that doesn't offer the same level of flexibility as having money in a 401(k).

"Money that is in a 401(k) is easier to use than money that is tied into a personal residence," he insists. "If they pay off the mortgage, they may be forced to get a home equity loan on the home they thought they just paid off. That very well could be at a higher interest rate and they'd be worse off than where they are today."

If you're going to move or downsize, do it carefully

In a situation like this, moving to a more affordable location or downsizing might seem like a logical money-saving choice. But Davis says it's important to do your research first to make sure that's actually the case.

"For many people in your shoes, downsizing is a much cleaner way to free up cash, but only if you're careful," he warns. "With today's housing prices, downsizing can sometimes cost just as much as staying put once you factor in moving costs and higher interest rates on a new place."

Keep in mind that if you're buying a home in a retirement community, you may be subject to expensive HOA fees that can rise over time. This isn't to say that a new place definitely won't save you money, but you'll need to get a solid handle on all of the costs involved before making a move.

One strong argument for downsizing: She and her husband may exclude up to $500,000 in capital gains when selling their primary residence as a couple. Their equity profit from selling the house would likely be tax-free, whereas the traditional 401(k) withdrawal would probably incur significant taxes.

Consider a middle-ground solution

Raiding your 401(k) to pay off your mortgage leaves you fairly illiquid. A better option, says Davis, may be to accelerate mortgage payments but carry that loan a while longer.

"If you really want to stay in that walkable neighborhood you love," Davis explains, "pay the mortgage down faster but over a longer period — say five to 10 years. Instead of one big withdrawal, take smaller monthly or annual distributions."

This approach, adds Davis, satisfies the urge to get rid of debt and could result in interest savings. But importantly, it spreads out the tax hit so you aren't jumping into a much higher tax bracket all at once.

"Plus," says Davis, "it keeps your 401(k) assets available to generate income for your other needs if the house becomes too much to handle later on."

A final word from Wealth Wise — healthcare should come first

One of the most concerning elements of this reader's question is the double burden of her own health issues and her husband's early-onset dementia (defined as dementia starting before age 65). Unfortunately, it's hard to predict the trajectory of this type of dementia, but our reader may face several years when her husband needs extensive care that she may not be physically able to provide.

As she balances staying in the home she loves versus downsizing, she should also consider how to pay for long-term care. Tapping the 401(k) for healthcare may prove a smarter move than focusing on the house. Moreover, staying in the home may be untenable if it is not adapted for aging in place.

Working with a financial adviser may help her untangle the emotional and financial pressures she'll face in the next few years. We wish her all the best.

Read More From Wealth Wise

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Questions from real people, for real people.

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Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Questions from real people, for real people. Got a question? See below for how to send it to us.

DEAR WEALTH WISE: We are both 61, still working, and earn $400k a year. We've accumulated substantial unsecured debt and want to pay it off using an equity loan from our primary home. However, because of our debt-to-income ratio, we can't get approved for an equity loan from our credit union. We have a second home (the reason for our high debt ratio), which we bought with our single daughter and that serves as her primary home. My husband holds the power of attorney and manages his 90-year-old father’s finances and assisted living expenses.

Should we use money from his father’s account to pay the unsecured loans — improve our DTI — and then get an equity loan to pay back what we took from his father’s account? — Up to Our Ears

Dear "Up to Our Ears": It's not a given that earning a high salary makes debt easy to manage. Even with a generous income, you may find yourself overwhelmed with monthly debt payments.

Here, we have a 61-year-old couple earning $400,000 who needs help managing their debt. A home equity loan is commonly a great consolidation tool for unsecured debts because it can offer a considerably lower interest rate.

But this couple has a high debt-to-income ratio (DTI). That means they may struggle to get approved for a home equity loan. And even if they do get approved, they may face a less favorable interest rate due to their borrower profile.

The couple wants to know if borrowing the money from the husband's father's account is a smart course of action. The husband has power of attorney and can easily access that money. But while theft is clearly the last thing on this couple's mind, as they've expressly stated their intent would be to repay every dollar, this approach raises a few red flags.

It's a very slippery slope

When a person gets power of attorney over another person's finances, it's often because they've become incapacitated due to illness, injury, or dementia. As such, they're not in a place to make clear-headed, informed financial decisions.

The person holding power of attorney is often a relative and a trusted person by nature. But here, borrowing a lump sum of money may breach that trust.

"The power of attorney from an elderly father to his son only allows the son to act for his father’s benefit, and it also includes a fiduciary duty that the agent, the son, owes to his father," explains Asher Rubinstein, estate planning attorney and partner at Gallet Dreyer & Berkey.

"Using the elderly father’s money to pay off the son’s loans is a definite breach of the fiduciary duty, as it only benefits the son and depletes the father’s assets. It may also cross the line of criminality."

Kerri Koen, estate planning attorney at Modern Legacy Law Group, agrees.

"Whenever your strategy depends on 'we’ll pay it back later,' you can be sure there are legal and ethical red flags," she says. "Using an elderly parent’s funds under a power of attorney to solve your own debt problem, even temporarily, is almost always a breach of fiduciary duty that will create legal exposure for you and risk to your parent’s care, not to mention the possibility of significant family conflict."

Jonathan Codispoti, Founder at Legacy Wealth Strategies, says the repercussions of taking an unauthorized loan could be significant.

"I understand the logic," he says. "You see a pool of money, you have every intention of paying it back, and nobody technically gets hurt. But the law, the ethics, and the practical risks all point in the same direction."

Codispoti also says that in this situation, the collateral damage could be enormous.

"Your husband could face criminal charges, civil suits from other heirs, and an Adult Protective Services investigation triggered by his father's assisted living facility, which is a mandated reporter," he explains. "If his father is on Medicaid or might apply within five years, the transfer creates a 'look-back' problem that can disqualify him from benefits and leave your family personally responsible for care that easily runs $8,000 to $12,000 a month."

Additionally, Codispoti points out that if you were to move forward with your plan and apply for a home equity loan, you may be asked to document the source of the funds used to pay off your debts.

"Misrepresenting that on a loan application is itself fraud," he says.

An authorized loan may be a different story

It's clearly illegal to borrow from a parent's funds without their consent. But an authorized loan may be acceptable, provided the father is capable of making that determination.

"If they are borrowing from the father and he has the capacity to agree to this, then that would be a better approach," says Koen.

Rubinstein agrees, but with a strong caveat.

"Is the 90-year-old father capable of gifting to his debtor son himself, or giving the son written, notarized permission to use the power as anticipated? If not, then it would be over-reaching for the son to use the power in the way he is considering," he insists.

However, Rubinstein cautions, "Even if the father makes a gift to the son, if the father is frail, someone — another potential beneficiary — could try to argue that the son over-reached and unduly influenced the father to make the gift."

You have other options for addressing your debt problem

Since using the father's funds in any capacity is potentially problematic, a safer move may be to address your debt on your own. The good news, says Codispoti, is that you may have more options than you think.

"Shop the loan," he says. "Credit unions are often conservative on DTI. A mortgage broker can place you with banks or non-bank lenders that underwrite high-income borrowers with elevated DTI from a second property more flexibly. Cash-out refinances and non-QM HELOCs are worth asking about."

Codispoti also suggests addressing the root cause of your issue.

"The second home is driving your DTI," he says. "Hard as the conversation may be, explore whether your daughter can refinance it into her own name, whether you can restructure ownership, or whether selling is the right call."

Take the ethical route

You may technically be able to get a loan from your husband's father without crossing a legal line. Whether that's the right thing to do is very questionable.

"Your father-in-law is 90," Codispoti says. "The money in his account exists to ensure his dignity, comfort, and safety in the final chapter of his life.... Diverting it, even briefly, puts his welfare at risk to solve a problem he didn't create."

A word from Wealth Wise

We know that many Gen X readers, like this couple, struggle to provide support to their adult children and aging parents, all while planning their own retirement. In many cases, something's got to give. As our article explains, selling the second home that the daughter lives in might just be the best long-term option.

Moreover, an unspoken (or perhaps unconscious) implication of the reader's question is that the father, at 90, won't be around much longer. That would free up his assets and make paying back the loan moot. That's a dangerous assumption, given that the Social Security Administration's Life Expectancy Calculator estimates that someone born in 1936 will likely live another four years and that more Americans are living to 100.

So, play it safe: Live with the resources you have now and know that your inheritance will be a welcome windfall someday.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

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