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In our cover story this month, we've taken a deep dive into what the Great Wealth Transfer — the estimated $124 trillion of assets that will flow from older generations to heirs and charities through 2048 — means for families. While a good chunk of that transfer will come from a small slice of high-net-worth households, those who aren't among the super-rich are making plans to share their wealth over the coming couple of decades, too.

To gather insight into how families are handling this historic shift, Kiplinger commissioned an exclusive survey, conducted by research firm Morning Consult, of more than 5,000 older parents and adult children, asking for their knowledge and expectations surrounding the inheritance that parents will leave for their heirs.

Drawing from the survey's findings, the story you can find here offers advice on how families can successfully navigate this transition, from determining what information you may want to disclose to your children about their inheritance ahead of time to ensuring that you pass along your values, too. In another story, we outline some key takeaways from the survey.

And in a third story, we provide guidelines on having conversations with your adult children that will leave them well positioned to manage their inheritance and minimize conflicts and confusion among your heirs when the assets change hands.

How real families are handling this transition

As a complement to the stories in our cover package, we asked readers to send us their responses to this question: Are you giving away some of your money or assets to your heirs while you're still living, or do you intend to leave a larger inheritance later? I'm sharing a few responses here.

Many readers said they are offering some financial help while they're still around to see their children enjoy it, and at a stage during which their kids may most need the assistance. Says one reader, "My in-laws gave us money at a time in our lives when we were raising three children, and it was very helpful to our family. We feel that our retirement is secure and have started giving some money each year to our children while they are young adults, as they raise children and buy homes. I feel that it can benefit them more at this stage of their lives than later."

Another reader emphasized the importance of conveying financial lessons along with giving gifts. "Our philosophy for giving to children is to make their lives better, not remove the incentive for hard work and development of good spending habits," he says. He and his wife provided about 35% of the down payment for their son's home purchase, and they explained to him how paying extra on his mortgage can reduce total interest on the loan and shorten the time it takes to pay it off.

Several of you mentioned that you're helping your grandchildren, too, funding their retirement accounts and college-savings plans. One reader is contributing $5,000 yearly to each of his five grandchildren's 529 plans, with a goal of contributing $100,000 total per beneficiary.

"Because I was willing to start early, my family can benefit from the tax-free growth of these funds," he says. And, he notes, if any of the grandchildren don't use all the savings on education expenses, they can roll over as much as $35,000 from the 529 to a Roth IRA tax- and penalty-free, "giving that generation a head start on retirement savings."

A reader whose two oldest grandchildren are in college is boosting their retirement savings — and encouraging them to start thinking about investing—by contributing to their Roth IRAs. And, he says, "Once they begin their careers, we will offer to match their retirement-fund contribution."

More Trillion Dollar Talk

• The Great Wealth Transfer is Creating a New Generation of Family CFOs
• The $124 Trillion Great Wealth Transfer: Fact vs Fiction Quiz
• Could You Handle a Sudden Windfall Quiz?

When money or property changes hands after a loved one passes, the tax rules surrounding inheritance taxes and estate taxes can feel daunting.

Additionally, many people may have heard claims about owing IRS tax bills after an inheritance or intimidating phrases like "death taxes," which can blur the lines between myth and reality. In fact, a new survey conducted by Morning Consult for Kiplinger's Trillion Dollar Talk campaign found that a third of both older adults and adult children are unsure whether heirs will owe taxes on an inheritance, demonstrating the confusion around this topic.

As with all tax rules, knowing the facts is important. So why not test your knowledge with this short quiz to see if you can separate inheritance tax facts from fiction.

More Trillion Dollar Talk

• Estate Tax v. Inheritance Tax: Who Actually Pays?
• States That Won't Tax Your Death
• What Happens With Taxes When You Inherit a House?

You may envision aging in place and remaining independent throughout retirement. But as you plan for the years ahead, it is also important to consider the possibility that you may eventually need some form of long-term care.

According to the U.S. Department of Health and Human Services, approximately 70% of people turning age 65 can expect to need some form of long-term care during their lives. Long-term care costs can add up quickly, potentially affecting both your retirement savings and the assets you hope to leave behind.

A Morning Consult survey commissioned by Kiplinger as part of our Trillion Dollar Talk campaign found that 47% of parents expect to leave a meaningful inheritance. But even a carefully planned inheritance can be affected by expenses later in life, particularly the cost of long-term care. If leaving money or other assets to your children is important to you, planning for those potential costs now can help protect your own financial security while preserving more flexibility for what you ultimately leave behind.

How long-term care costs can affect an inheritance

Long-term care can be expensive, and what you pay will depend on the type of care you need and where you live. According to the CareScout 2025 Cost of Care Survey, national median costs for several common types of care include:

• In-home care: $80,080 per year, assuming 44 hours of care per week
• Assisted living community care: $6,200 per month, or $74,400 annually
• Nursing home care in a semi-private room: $315 per day, or $114,975 annually
• Nursing home care in a private room: $355 per day, or $129,575 annually

Paying for several years of long-term care could significantly reduce your savings and other assets, leaving less to pass on to your heirs. It's a concern shared by many parents. The Trillion Dollar Talk survey found that 24% of parents surveyed worry long-term care or healthcare costs could deplete their estate.

While you may want to preserve an inheritance for your children, your own retirement and care needs should come first. Planning ahead can help you prepare for those costs while protecting your broader financial goals.

Build long-term care into your financial plan

Because you may need long-term care at some point, it is important to plan for how you would cover the cost before you actually need care.

Savings and retirement income may be part of that plan. If you are eligible for a health savings account (HSA), it can provide a tax-advantaged way to set aside money for future health care expenses.

HSA balances roll over from year to year, allowing you to build up funds that can be used tax-free for qualified medical expenses. You can also use HSA funds to pay qualified long-term care insurance premiums, subject to annual IRS limits based on your age.

Long-term care insurance is another option to consider. Medicare and traditional health insurance generally do not cover ongoing custodial care, such as help with everyday activities like bathing, dressing or eating. Depending on the policy, long-term care insurance can help cover services provided at home, in an assisted living facility or in a nursing home.

Coverage varies by policy, so it is important to understand what you are buying. Policies typically have an elimination period before benefits begin and limits on how much they will pay per day or month and over your lifetime. Premiums, benefit amounts and covered services can also vary considerably.

No single strategy will be right for everyone. Your approach might include a combination of savings, retirement income, insurance and other assets. As your finances and circumstances change, revisit your plan to make sure you have adequate resources to cover potential care costs.

A financial adviser can also help you evaluate your options and how they fit into your broader retirement and estate plans.

Use the tool below to connect with a vetted financial professional:

Make sure your estate plan reflects your priorities

An estate plan can include a will, trust, power of attorney and other documents that outline how you want your finances, property and other affairs handled during your lifetime and after your death. Yet the Trillion Dollar Talk survey found that nearly 3 in 10 parents have no formal estate plan, while 41% have a will.

If you already have an estate plan, review your will, trust, beneficiary designations and other documents periodically to make sure they still reflect your wishes. As part of that review, consider how potential long-term care expenses could affect the assets you expect to leave to your heirs.

When you develop or review your estate plan, keep in mind that the value of your assets today may not reflect what is ultimately passed down to your heirs. Retirement spending and long-term care costs can reduce your assets over time, potentially leaving a smaller inheritance than you originally planned.

Talk to your children about what to expect

Talking to your children about your estate plan can be difficult, and many families put off the conversation. The Trillion Dollar Talk survey found that roughly two in five families have never discussed plans for passing down money and assets. Among parents who haven't discussed their plans in detail, 34% say there are too many unknowns, including how long they will live and how much they will ultimately have to leave behind.

You don't need to provide an exact inheritance amount. Instead, the conversation can focus on the plans you have in place and how your assets may be used during your lifetime, including how to pay for long-term care.

This is also a good time to discuss whether you expect your children to play a role in your care or help manage your finances. Make sure they know where to find important information, including details about your financial accounts, life and long-term care insurance policies, will and other estate planning documents.

Having these conversations before a health crisis gives your children time to ask questions, understand your wishes and prepare for any responsibilities they may take on. It can also help avoid confusion or difficult decisions during an already stressful time.

Ultimately, the inheritance you expect to leave may change as your care needs and expenses evolve. Planning for those costs now can help you protect your own financial security while giving your family a clearer idea of what to expect.

More Trillion Dollar Talk

• The Great Wealth Transfer is Creating a New Generation of Family CFOs
• Long-Term Care Insurance: 10 Things You Should Know
• These Are the 2 Legal Documents Everyone Should Have, Courtesy of an Estate Planning Attorney

For many families, the Great Wealth Transfer starts long before an inheritance. Many adult children are becoming their aging parents' go-to financial decision-makers.

The shift from adult child to the family's Chief Financial Officer (CFO) can happen suddenly after discovering unpaid bills, a suspicious bank wire request or an aging parent falling prey to a scammer. Or the job can be created out of necessity after realizing mom and dad's financial life has grown too complex to manage on their own, says Tyler Rosser, managing director at Oxford Financial Group.

Longer life expectancies, coupled with the staggering $124 trillion in wealth set to change hands through 2048, according to Cerulli Associates, are making the family CFO an increasingly common job description. "It's becoming much more prevalent," says Rosser.

Serving as the de facto family CFO means taking on a broad range of money-related responsibilities, such as overseeing estate planning and long-term care. It's time-consuming and, depending on your parents' situation, difficult, so make sure you take care of yourself throughout your "term" as CFO.

Here are six steps to acting as a family CFO.

1: Start with a conversation

The best plan of action is to sit down with your aging parents while they are still capable of making financial decisions — and before a crisis strikes, such as the onset of dementia — and explain why you'd like to play a larger role in managing their finances and be privy to their estate planning.

"It starts with a conversation with the older parents and getting their buy-in," says Rosser.

"Millions of families [are] going through generational transitions," says Timothy Habbershon, managing director and founder of the Fidelity Center for Family Engagement. Unfortunately, many families have not had these important sit-downs. A Morning Consult survey, commissioned by Kiplinger as part of the Trillion Dollar Talk campaign, found that roughly two in five families have never discussed the plans for passing on money and assets.

"As people get older — especially past 70 — they often become less willing to talk about things like estate planning," Habbershon said. It's a unique opportunity, he says, to "create confidence, closeness and peace of mind for years to come."

2. Collect relevant financial information with an "audit"

To perform CFO duties properly, the adult child in charge must have access to all pertinent financial information for both parents, including the following items.

• Account access: Savings, investment, and retirement account numbers and passwords, as well as combinations or keys to safes and safety-deposit boxes.
• Cash flow: Monthly bill statements and recurring expenses.
• Legal documents: Real estate records, wills, and trusts.
• Insurance: Life, health, and long-term care policies.

"When your parents are aging, the most important thing adult children (acting as CFO) need to do is gather key financial information," says Noah Doyle, CEO of SoundRidge Private Wealth.

Gathering these documents gives the family CFO a fuller picture of their parents' finances. By laying everything out on the table while the parents are still alive and mentally competent, the family CFO also has a better chance at preventing in-fighting between adult siblings who have a stake in their aging parents' estate, adds Doyle.

Ideally, the family CFO will have full transparency into his or her parents' financial life. At a minimum, the CFO should get the parents to grant access to their account statements, preferably via a "duplicate statement" arrangement or "view-only access."

"It gives the family CFO insight into transactions that are coming in and out of a checking account or what withdrawals are coming out of an investment account," says Rosser. "They can log into a Fidelity or Schwab account, for example, and see account data in real time."

A parent can also authorize his financial institution or financial adviser to add the adult child and family CFO as a "trusted contact," which allows the adviser to contact the family CFO if he suspects financial exploitation, fraud, cognitive decline, or can't reach the client. They can do the same for their Social Security accounts.

"The last thing you want is your parent to be susceptible to some sort of elder fraud," says Doyle. "So, anytime a wire goes out, or a transaction looks suspicious or fishy, you know it's time to step in."

A key piece of information that must be clarified, adds Doyle, is whether aging parents have a long-term care policy in place. Often, elderly parents do have a policy but don't share that key information with their adult children.

If a long-term care policy does exist, it's important to evaluate it closely.

"You need to know what the policy number is and understand what the benefits are because if there's ever a time when your parents have to use this policy, it's the children who are going to actually file the claim and know what the care options are," says Doyle.

If there's no long-term care policy in place, the CFO must analyze the parents' assets to determine whether they have enough to cover long-term care and, if so, the most tax-efficient ways to raise the cash to pay for care, says Doyle.

3. Secure power of attorney

In many cases, it's prudent for the family CFO to have the aging parent or parents grant them power of attorney (POA), a legal authorization that lets the child manage the parents' financial affairs. "A power of attorney can encompass everything from paying their mortgage to making sure they have enough liquid resources to satisfy their day-to-day living expenses," says Rosser.

Peggy Sizow, chief fiduciary officer at National Advisors Trust, says a power of attorney can be customized however a family wants. If the family CFO is most suited for financial matters, a financial power of attorney can be set up; if another family member is more comfortable with health care issues, a healthcare power of attorney can be set up in their name, says Sizow.

The financial power of attorney can enable the family CFO to take control over all a parent’s finances, or it can specify certain types of financial accounts, such as bank accounts, brokerage accounts or retirement accounts. "They can be as customizable as you like," says Sizow.

Having full visibility into a parent's financial accounts is also a way to protect them from cybercriminals and other fraudsters and scammers, and in some cases protecting them from themselves, says Rosser.

"It protects them from bad actors," says Rosser. An elderly person may also inadvertently cause financial harm to themselves by continuing to give to charities they have supported their entire life but can no longer afford. A review of checking accounts by the CFO can spot those types of self-inflicted wounds.

"The family CFO can step in and say, 'Mom, you've done such a good job gifting to charity in your life, but you really need to preserve most of those assets for the rest of your life," says Rosser.

4. Build a team of trusted advisers

The family CFO likely won't be an expert in money management, estate planning, or tax planning. So, it's prudent for the adult child managing a parent's finances to connect with and build a relationship with experts when needed, adds Rosser.

"Bringing in a broader advisory group is a really good strategy," says Rosser. "Lean on the professionals around you."

Aging parents may be more willing to listen to a suggestion by the family CFO if it is backed up by the parents' long-time financial adviser or CPA.

"Everyone is sort of singing the same tune," says Rosser. "You get more buy-in that way."

An effective family CFO gathers key financial information from trusted experts and makes a sound financial decision.

"The family CFO's job is to get the information and options from the parents' long-term accountant, long-term estate attorney, long-term financial adviser," says Doyle. "And once they've gotten all the information from the professionals, then they make the best decision that’s best for their family."

5. Create or manage the estate plan

Finalize and verify your parents' estate plan well before mom or dad gets sick or incapacitated, says Sizow. "There are quite a few things that could take place prior to an inheritance," says Sizow.

Creating a trust and titling assets as "payable on death," for example, can help assets pass more easily to heirs and avoid costly, time-intensive probate court, Sizow advises.

It's important that you know the key components of the estate plan, including the names and contact information of the professionals your parents worked with on it, as well as how to access estate documents. Kiplinger's Trillion Dollar Talk survey found that a third of adult children whose parents have estate documents don't know how to access those documents.

6. Act when necessary

Hopefully you will not need to step in on your parents' behalf for years to come. Still, it makes sense to monitor their accounts and keep an eye on their health, especially if they show signs of physical or mental decline.

Read More on Managing an Estate

• How to Talk to Your Family About Estate Planning (Without the Drama)
• Being the Executor of an Estate Is a Thankless Job: Here's How to Do It Well Anyway
• How to Organize Your Financial Paperwork for Your Heirs
• 12 Common Estate Planning Mistakes

The Great Wealth Transfer is upon us: A decades-long period in which over $100 trillion in assets are expected to pass from one generation to the next.

This once-in-a-lifetime transfer of generational wealth has long been hyped in the press, online and on social media for good reason. An estimated $124 trillion will flow to heirs through 2048, according to research firm Cerulli Associates. That's a lot of money individuals will have to spend, save and invest — and many don't even know it's coming: A new survey conducted by Morning Consult on behalf of Kiplinger found that while 47% of parents expect to leave a meaningful inheritance, only 24% of adult children expect to receive one.

But there's more to the Great Wealth Transfer than the dollar amount, even though it is eye-popping. There's who actually gets a piece of the pie, how end-of-life expenses will shrink it, and what it means for your financial plan. And that's just scratching the surface.

If you are one of the millions of Americans who stand to inherit wealth during the coming decades, it's important to know everything you can about the Great Wealth Transfer. To test your expertise and help you prepare, take our "Fact or Fiction" quiz.

More Trillion Dollar Talk

• An Expert's Guide to the Estate Planning Documents Everyone Needs
• Is Your Will 'Fair'? Estate Planning Is About More Than Money
• Why the 'Great Wealth Transfer' Could Leave Heirs With Less Retirement Money Than Expected
• Do Your Successful Kids Really Need an Inheritance?

A home is one of the most valuable assets many parents will eventually leave behind. It may also carry decades of memories, making it a particularly personal inheritance. But passing down a house isn't always as simple as handing over the keys.

Even a mortgage-free home comes with ongoing expenses, from property taxes and insurance to maintenance and repairs. And when multiple children inherit a property, questions about whether to keep, sell or live in the home can make matters even more complicated.

And you're not alone in facing these decisions. As the Great Wealth Transfer unfolds, baby boomers are expected to pass trillions of dollars in wealth to younger generations, and homes will be a significant part of that inheritance. A record 340,000 U.S. homes were passed down through inheritance between August 2024 and August 2025, according to Cotality. If your home is likely to be part of that transfer, it's worth deciding what you want that inheritance to look like before your children are the ones left to figure it out.

Have you asked your children what they want?

The first conversation your children have about what to do with the family home shouldn't happen after you're gone. Talking about your plans now gives everyone an opportunity to be candid about what they would realistically want to do with the property and gives you time to adjust your estate plan if their expectations differ from yours.

I can tell you to have this conversation, but I know actually sitting down and having it is another matter. And our research suggests many families feel the same way. In a new survey conducted by Morning Consult on behalf of Kiplinger for our Trillion Dollar Talk campaign, both parents and adult children ranked inheritance among the most uncomfortable family topics to discuss, second to sex and dating.

Yet when forced to choose between the two uncomfortable conversations, 71% of adult children said they'd rather talk with their parents about what they'll inherit than discuss sex and dating. Parents felt similarly: 79% said they'd rather discuss what their children will inherit.

So, while inheritance may not be an easy conversation, your children may be more willing to have it than you think. You don't need to settle your entire estate plan in one sitting.

Start with practical questions about the house. Would anyone actually live there? Would they prefer to sell it? If more than one child is involved, do they have different ideas about what should happen? These conversations may also uncover financial concerns you hadn't considered, such as whether someone could afford the ongoing costs of keeping the home.

And don't assume one conversation settles the matter permanently. A move, marriage, divorce, major renovation or change in finances can alter what's practical for you or your children. Revisit the plan periodically so that what you've put on paper continues to reflect what you and your family actually want. Once you've opened the conversation, these are the questions worth working through together.

1. Do your children actually want the house?

You may love your home and everything it represents, but that doesn't necessarily mean your children will want to keep it. Before making the house a central part of your estate plan, ask your children what they would realistically want to do with it.

Consider where they live and what their lives might look like when they inherit the property. A child who owns a home across the country may have little interest in moving back, while another may not want the financial responsibility of maintaining a second property.

Even if they don't plan to live there, they could face decisions about whether to rent it, maintain it as a vacation home or sell it. The longer those decisions drag on, the more likely the property is to become a financial burden or fall into disrepair.

In my years as a real estate agent, I worked with families who struggled to decide what to do with a home after someone passed away. The property held so many memories that selling it felt painful, but no one wanted to live there. Meanwhile, the bills kept coming and the house continued to deteriorate.

The truth about what makes sense for a family home can hurt, but indecision has a cost, too. Wait too long, and you may find that time, money or the condition of the property has made the decision for you.

Sentimental attachment can also vary from one family member to another. You may see the house as an important part of your family's history, while your children may prefer to inherit assets that are easier to manage or divide. Having that conversation now gives everyone a chance to share their expectations and can help you avoid making plans based on assumptions.

2. Can they afford to keep it?

Even if your children want the house, the next question is whether they can realistically afford to keep it. A mortgage-free home isn't a free home. Property taxes, homeowners insurance, utilities, HOA fees, routine maintenance and major repairs can add up to thousands of dollars each year.

This is something I've thought about with my own home. It's the "big house" where our family gathers, and that makes it important to me. But my children aren't established yet, and the things that make the house great for a large family gathering could make it too much for one person or a small family to maintain. Leaving someone a valuable asset doesn't necessarily mean you're leaving them something they can comfortably afford.

That matters even more when the home represents a large share of what you're leaving behind. Kiplinger's Trillion Dollar Talk survey found that 33% of parents said real estate, including their home, would make up the greatest share of their children's inheritance.

For children who aren't yet financially established, an inheritance could have a big impact on their personal finances. The value tied up in a home could help them buy a home of their own, pay down debt, invest or build long-term financial security. But realizing that value requires a plan. Without one, heirs could instead find themselves responsible for a valuable property they can't afford to maintain or can't agree on what to do with.

If you still have a mortgage, that adds another consideration. Your children may inherit the home, but the debt doesn't simply disappear. Talk through what keeping the house would cost, whether anyone could comfortably take on those expenses and what would happen if they couldn't. In some cases, selling a beloved family home may ultimately make more financial sense than struggling to keep it.

3. What happens if one child wants the home and another wants the money?

Leaving a home to multiple children can turn what seems like a straightforward inheritance into a complicated financial decision. One child may want to keep the family home, while another would rather sell and receive their share of the proceeds.

If one heir wants the property, consider whether they could realistically afford to buy out their siblings without putting themselves under financial strain.

For many parents, dividing an estate equally is the goal. Kiplinger and Morning Consult's Trillion Dollar Talk survey found that 71% of parents with more than one child intend to divide their assets equally among them. But an equal inheritance doesn't necessarily require dividing every asset into equal pieces. Parents can look at their other assets when deciding how to accomplish that.

For example, one child might inherit the home while another receives a larger share of savings, investments or life insurance proceeds. What's equal on paper may not always be what's most practical for your children, so think about both the value you're leaving each child and what inheriting each asset would actually mean for them.

For my family, I've decided I don't want my children to have to wrestle with what to do with our home or risk having the house become a source of disagreement. Our plan is for the home to be sold and the proceeds divided among them. The house has been where our family built memories together, but I'd rather its value help my children build dreams of their own.

Do your children understand the potential tax consequences?

Inheriting a home can come with tax implications, particularly if your children eventually sell it. Under current federal tax law, inherited property generally receives a "step-up" in cost basis to its fair market value as of the owner's date of death.

That can significantly reduce the capital gains taxes an heir might otherwise owe compared with receiving the home as a gift during the parent's lifetime.

For example, if you bought your home for $150,000 and it's worth $500,000 when your children inherit it, their cost basis would generally be stepped up to $500,000. If they soon sold it for about that amount, there might be little or no taxable capital gain. If they kept the house and later sold it for $600,000, however, the increase in value after they inherited it could potentially be taxable.

Federal taxes aren't the only consideration, and the rules can vary depending on how the property is transferred, when it's sold and where you live. Before deciding how to pass down a home, consider talking with an estate-planning attorney or tax professional who can explain how your plan could affect both your estate and your heirs.

Whatever you decide, make sure your estate documents can actually carry out those wishes. An estate-planning attorney can help you determine the best way to transfer the property or direct its sale under the laws in your state.

Make sure the house fits their future

As I get older, I'm starting to see my children in a different light. They're building lives and growing in directions I couldn't have predicted when they were younger. I want the inheritance I leave them to support that growth, not limit the choices they have about what comes next.

For my family, that means planning for our home to eventually be sold and the proceeds divided. But what's right for my family may not be right for yours. Keeping a beloved home in the family could be exactly what your children want, and it could become a place where another generation builds memories of its own.

The important thing is not to assume. Talk with your children about what the home means to them, what they would realistically want to do with it and whether they could afford the responsibilities that come with keeping it. Then make sure your estate plan reflects those conversations.

A family home can be an incredible legacy. Just make sure the legacy you're planning is one your children actually want.

More Trillion Dollar Talk

• What to Do With an Inherited House
• Manage an Inheritance Like a Pro in Just 7 Steps
• What Happens With Taxes When You Inherit a House

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

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

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

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

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

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

1. Hold appreciated investments until death

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

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

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

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

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

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

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

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

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

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

3. Regular gifts under the tax threshold

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

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

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

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

4. Irrevocable trusts

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

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

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

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

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

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

5. Financial planning is personal, so talk about it

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

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

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

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

And most importantly, share your plans clearly with your heirs before it's too late.

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

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Do you plan to leave your children a meaningful inheritance? Do you worry about how inflation and long-term-care costs might affect how much you have to give? Have you talked to your kids about your plans? Or, if you're the adult child in this equation, have you broached the subject of inheritance with your mom and dad?

On the eve of what's expected to be a historic generational transfer of wealth in the U.S., Kiplinger set out to explore how families are navigating inheritance planning in their households — what they intend, what they hope for, what they worry about and how they've communicated with each other. Toward that end, we partnered with research firm Morning Consult to field a national survey asking 5,156 Americans — half adult children ages 25 to 60, half parents ages 55 and up — to share their views and circumstances.

Here is a look at what we learned.

Parents and adult children are not on the same page

When it comes to inheritance plans, the survey reveals a big gap in expectations and knowledge between the older and younger generations in many families.

For starters, adult children are far less likely to think they'll be getting an inheritance at all, compared with parents who expect to leave one. Some 42% of younger respondents say they don't expect to receive a meaningful amount, but just 15% of parents say they won't have any money to pass down. On the flip side, about twice as many parents, in fact, do plan on leaving a meaningful inheritance as adult children who anticipate they'll get one.

The kids generally aren't clear what assets will be involved, either. Nearly two-thirds of parents say they have money in cash and savings, but fewer than four in 10 children think those assets are part of the older generation's estate. Adult children are also far less likely to say that life insurance, real estate, an IRA or a 401(k), and other investments are part of their parent's holdings, compared with parents who say they own these assets.

There are also big generational gaps concerning how much financial help parents extend to their children now (parents consistently say they are helping more than children believe); whether it's better to split inheritances evenly among siblings or consider other factors such as financial need or past assistance (more kids favor "fair" over equal than parents, by a 21 percentage point margin); and whether they've discussed an inheritance plan (more parents report having shared information than children recall hearing).

"Both parents and adult children need to do a better job of understanding where the other side is coming from," says Kurt Supe, a certified public accountant and retirement planner at Creative Financial Group in Indianapolis and CFD Investments. "The key is better communication."

There's a gender gap when it comes to inheritances, too.

Sons are more confident about their ability to manage an inheritance than daughters, the survey results show. That's in keeping with other research showing men's greater belief in their financial acumen (although the studies don't necessarily indicate that faith is justified).

Sons are also more likely than daughters to expect an inheritance (30% versus 18%), to say their parents have shared plans for passing down assets, and to know how to locate Mom and Dad's will and other estate-planning documents. Daughters, by contrast, answered "not sure/don't know" to questions more frequently than sons — about how much they'll inherit, whether they'll owe taxes on the bequest, and even whether they prefer financial help from their parents now or a larger inheritance later.

When it comes to talking to the kids about inheritance plans, moms rule. Although both mothers and fathers express the same comfort level in talking to their children about money, dads in practice are more likely to have said nothing to their kids about their inheritance plans (45% of dads have stayed tight-lipped, compared with just 33% of moms).

Financial adviser Stephanie McCullough, founder of Sofia Financial, a financial planning firm for women in Berwyn, Pa., suggests that women who aren't confident about managing their finances may get past the hump if they connect with a friend they feel comfortable talking with about money or if they consult with a professional. Says McCullough: "Find a money buddy or an adviser to help. And if they make you feel stupid, find a different one."

Everybody has big questions about inheritance

Inheritance plans live largely in the dark, the survey shows. Two in five families have never discussed them, and three in 10 parents have no formal plans. Families rank inheritance next to last among topics they feel comfortable discussing — only sex and dating elicit more of a shudder.

And the less wealth parents have, the quieter things get.

It's not just that parents and kids don't communicate; it's that many don't even know what's at stake. More than one-third of adult children and nearly four in 10 parents aren't sure whether the older generation will have any assets left to pass down; just over one-fourth of parents can't estimate the size of their estate; and 43% of children and 38% of parents have no clue how much each of the kids will inherit.

The top reason parents stay silent: "There are too many unknowns about how long I will live or how much will be left." Inflation and other economic pressures top their list of concerns, along with possible long-term-care costs. Kids worry about those things on their parents' behalf, too, and some 16% are also anxious that their moms and dads will need financial help from them instead of the other way around.

Wealthier families — parents with incomes above $100,000 or estates worth $1 million or more — share those same top concerns. But they also keep quiet about estate plans because they do not want their offspring to count on an inheritance (cited by about one in three parents with estates estimated at $500,000 or more, for instance, compared with 19% of parent respondents overall).

That's understandable, says financial psychologist Brad Klontz, who notes, "You don't want your child's financial plan to be your death."

Love and good intentions are abundant

When asked what they'd want done or would do with an inheritance, both parents and adult children focused primarily on practical moves that would help the younger generation. Paying off debt. Buying a home. Saving to build wealth and a secure retirement. Providing a better life for the children of the adult kids and the parents' grandchildren.

Something else families agree on: Most adult children feel ready to manage an inheritance (70%), and nearly as many parents (67%) feel the same.

What would adult children ask their parents, if they felt comfortable? Sure, some (18%) were curious to ask, "How much?" But others wanted to know their parents' wishes for the money so they could respect those intentions (9%), and to understand more about the older generation's experiences (12%). As one adult child put it, "I would ask if they were truly happy in life."

David Chubak, head of wealth management and field management at Edward Jones, says families shouldn't keep questions, feelings and plans about wealth transfer inside. He encourages them to talk in advance of assets changing hands. "These are important conversations that touch every family and every level of wealth," he says. "My best advice is to start now."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

More Trillion Dollar Talk

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Stepping into the role of a trustee is a major responsibility, but it doesn't have to be overwhelming. At its core, being named a trustee means someone placed an extraordinary amount of confidence in your judgment and integrity to handle their assets for the benefit of others.

While the job comes with legal duties — from keeping accurate financial records to protecting trust property — your main objective is simply to carry out the grantor’s vision while looking out for the beneficiaries.

It helps to know right off the bat where your role begins and ends. While you might hear "trustee" and "executor" used in the same breath, they cover different ground: an executor wraps up a person's individual estate through probate, whereas a trustee manages the assets held specifically within a trust. Understanding that distinction is just the starting point.

The real work lies in navigating the day-to-day decisions, balancing competing interests and staying on top of the administrative details that keep a trust running smoothly.

Trustee vs executor: How the roles differ

A trustee holds legal title to assets in a trust and manages them for the benefit of designated beneficiaries, according to the instructions in the trust agreement. An executor is appointed by a will — or designated by a probate court — to manage and settle a deceased person’s individual estate.

While both act as fiduciaries with a strict legal duty to act in good faith and in the best interests of the beneficiaries, their scope of work, duration of responsibility and oversight differ significantly.

Core duties and responsibilities of a trustee

When you accept the role of trustee, you assume a high standard of care known as a fiduciary duty. This means you are legally obligated to act with absolute loyalty to the trust beneficiaries, avoiding conflicts of interest and self-dealing.

Your primary job isn't to make bold financial moves, but to manage and protect the trust's assets strictly according to the grantor's instructions and for the exclusive benefit of the named beneficiaries.

You have the option to say "no" to being a trustee before you start, or you can step down later and pass the role to a successor named in the trust. You are also entitled to be paid for your time, with reasonable compensation usually stipulated in the trust document itself or guided by state law.

If you find the prospect at all intimidating, you can and should get outside help. "There are a lot of different components in how to administer a trust, and you can hire professional advisors to help you do that. And those fees are an appropriate expense of the trust," said Kerry L.S. Mast, a fellow of the American College of Trust and Estate Counsel (ACTEC).

• Duty of loyalty: You must place the beneficiaries' interests above your own at all times. You must strictly avoid self-dealing, conflicts of interest or using trust assets for personal gain, ensuring every decision benefits the trust.
• Duty of prudent administration and investment: Your main job is to protect the assets and investments of the trust, safeguard trust property (real estate, accounts, business interests) and invest liquid assets prudently to balance growth with income needs.
• Duty of recordkeeping and accounting: It’s vital to maintain detailed records of all income, expenditures, distributions and investments and to provide periodic accountings to beneficiaries. Your records should also include an inventory of trust assets, copies of important communications with beneficiaries/professionals and receipts for expenses.
• Duty of impartiality: When a trust has multiple beneficiaries, you cannot show favoritism toward any one individual or group. You must balance competing interests fairly, such as providing sufficient current income to lifetime beneficiaries while preserving principal for remainder beneficiaries.
• Duty to follow the trust terms: The trust instrument serves as your ultimate guide and rulebook. You are legally obligated to execute the grantor's explicit instructions regarding investments, distributions and administrative procedures, departing from those terms only if ordered by a court or required by law.
• Duty to communicate: Transparency is key to maintaining trust and avoiding legal disputes. You must keep beneficiaries reasonably informed about the administration of the trust, provide regular financial accountings and promptly answer reasonable requests for information about trust assets.
• Tax compliance: Obtain an employer identification number (EIN) for irrevocable trusts, file annual trust income tax returns (Form 1041) and issue Schedule K-1s to beneficiaries receiving distributions.
• Distributions: Follow the trust guidelines regarding when and how much to distribute to beneficiaries. Pay attention to discretionary vs mandatory distributions, age milestones and any health or education requirements.

What to do when you become a trustee

While your exact duties depend on the wording of the trust document, every trustee has basic tasks to complete to get the trust in order. This is a good place for a new trustee to begin.

Step 1: Review estate documents. Obtain and thoroughly read the trust agreement, any amendments and associated estate planning documents, such as the will. This step helps you understand the grantor’s exact intent, your specific authority as trustee, payout instructions and any conditions placed on distributions.

Step 2: Categorize assets. Take a complete inventory of all assets connected to the trust, distinguishing between liquid property (such as bank accounts and stocks) and non-liquid property (such as real estate, business interests, jewelry or physical collectibles). Knowing what the trust owns allows you to determine immediate management needs, insurance requirements and appropriate investment strategies.

Step 3: Review beneficiary assignments. Examine beneficiary designations across all relevant accounts and policies to ensure they align with the trust agreement. Verifying primary and contingent beneficiaries helps prevent assets from bypassing the trust unexpectedly or triggering unnecessary probate proceedings.

Step 4: Account titling. Confirm that all designated assets are formally re-titled in the legal name of the trust rather than the grantor’s individual name. Properly titling bank accounts, real estate deeds and brokerage holdings is essential to ensure you have legal control to manage, protect and distribute those assets.

Common problems and issues trustees encounter

Even with the best intentions, administering a trust rarely goes without a hitch. Most complications don't come from bad math or missing paperwork — they stem from human dynamics, vague trust language and the heavy legal burden placed on the trustee. Knowing the most common pitfalls ahead of time is the best way to protect both the trust's assets and yourself.

• Discretionary conflicts: Trust documents often give trustees discretion to approve or deny requests for funds (e.g., for health, education, maintenance and support). Deciding when to grant or deny requests can create friction with beneficiaries.
• Competing beneficiary interests: Balancing the current income needs of lifetime beneficiaries (such as a surviving spouse) with the long-term capital preservation expectations of remainder beneficiaries (children from a prior marriage).
• Personal liability: Trustees can be held personally liable for financial losses resulting from improper investments, failure to pay taxes or misapplication of trust funds.
• Co-trustee deadlock: If multiple co-trustees are named without a clear tie-breaker mechanism, disagreements on investment strategy or distributions can paralyze administration.
• Administrative burden: Managing non-standard assets — such as closely held businesses, rental real estate or complex private equity investments — requires specialized expertise that many trustees may lack.

They trusted you for a reason

If you think you'll be managing a trust for your parents one day, take an opportunity to talk to them. An astonishing 51% of parents and adult children say they rarely or never discuss money, according to the Kiplinger Trillion Dollar Talk survey. The "element of surprise" is fun for birthdays or scavenger hunts, but that's not the case when you are on deck to assume an important responsibility.

Ultimately, serving as a trustee is less about mastering legal jargon and more about executing a series of thoughtful, deliberate choices over time. The real key to success lies in handling the trickier human and administrative moments — such as evaluating tough distribution requests, keeping peace among family members and maintaining pristine records to safeguard yourself from personal liability.

By honoring the boundaries of your role and making each decision with transparency and care, you can carry out the grantor’s vision with confidence and protect the people relying on you.

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The amounts are staggering. Over the next 20 years or so, U.S. households are expected to pass an estimated $124 trillion in financial assets to heirs and other beneficiaries, according to Cerulli Associates, a financial services research firm. That includes some $85 trillion going to the Gen X and millennial offspring of boomer and Silent Generation parents, with many trillions more headed to surviving spouses and charity.

Experts are calling it the greatest wealth transfer in history, and the drumbeat heralding its arrival grows louder every day.

To explore how American families are navigating this inheritance wave and offer smart advice to help them meet the challenge, Kiplinger commissioned an exclusive, national survey of more than 5,000 older parents and adult children, conducted by the research firm Morning Consult.

What we discovered is a mix of big hopes and deep uncertainty as the older generation prepares to pass down the assets they've built over a lifetime, the younger generation stands poised to receive them and concerns grow on both sides that outside factors could erode that wealth before it changes hands.

The results also make clear there is a big gap in expectations and knowledge between older and younger family members about the money and property at stake — in part because both sides are deeply reluctant to talk to each other about it. Among the survey's key takeaways:

• Nearly half of older parents expect to leave their kids a meaningful inheritance, but the majority of adult children don't think they're getting anything or aren't sure what might be left for them.
• The amounts involved for most families are not the life-changing windfalls recent headlines suggest but still have the potential for serious impact, from enabling the younger generation to buy a home to helping put their own kids through college.
• Many parents worry that a shaky economy and their own healthcare costs will upend their plans to pass down wealth — even as the children, facing big expenses of their own, wish their elders wouldn't wait so long to send money their way.
• Plans for gifting and inheritances live mostly in the dark because parents and kids would rather talk to each other about almost anything else — only sex and dating are more awkward topics.
• As a result, uncertainty casts a cloud over the inheritance process and keeps many families from taking the steps needed to make the most of these assets — moves that could also help parents and adult children forge an even closer bond.

"People are grappling with being asked to make important decisions that will impact their wealth and the assets they want to pass to future generations without having perfect information," says Valerie Galinskaya, managing director and head of the Merrill Center for Family Wealth.

"The individuals and families I see excel and do this most effectively don't wait for uncertainty to disappear. They build their plans and then adapt as life unfolds."

Here is what you need to know to ensure that you and the people you love plan for inheritance in a way that not only creates a smooth and effective transfer of wealth but also helps bring your family closer in the process.

The Great Wealth Transfer won't be great for everyone

Lest anyone feel bad that the assets parents intend to leave to children in their family can't be counted in eight or more digits, rest assured those megasize amounts that pundits are quoting about the Great Wealth Transfer aren't all they're cracked up to be.

More than half of the expected inheritances coming down the pike over the next two decades will be concentrated among the richest 2% of U.S. households, Cerulli estimates, leaving a lot less to be divided among everyone else.

How much less? About one-fourth of the parents who expect to leave an inheritance to their children estimate their estate will be worth less than $100,000, and about half put the total at less than $500,000, according to the Kiplinger–Morning Consult survey.

Just over one in 10 valued their estate at $1 million or more. Homes made up the greatest share of the wealth to be passed down, followed by life insurance, liquid savings and investments.

The numbers get whittled down even further when you consider that in many families these assets will be divided among more than one child. Roughly one in four parents thought each of their children would inherit less than $50,000 from them, with 44% estimating the amount per child would be less than $250,000.

Bequests in seven-figure territory were rare, cited by just 5% of the parents who expect to leave an inheritance. These findings are largely in keeping with Federal Reserve data, which shows that about half of heirs receive less than $50,000 and 30% of inheritances range from $50,000 to $249,000.

"That big, huge $124 trillion number is irrelevant to the vast majority of people — but it's not that there's nothing coming, either," says Teresa Ghilarducci, professor of economics at The New School for Social Research, who puts the number of adult children who can expect an inheritance at about 30 million.

That's a lot of potential heirs, but relatively few of them know what to expect. While nearly half of parents 55 and older expect to leave a meaningful inheritance for their children, only about one-fourth of adults ages 25 to 60 with at least one living parent think they'll receive one, the Kiplinger–Morning Consult study found.

Driving the disconnect: Relatively few families are talking about inheritance. Roughly two in five have never discussed the older generation's plans for passing along their assets, the survey reveals. And among those who have talked, it's mostly in generalities, such as whether the parents have a will or who will inherit something, rather than specifics, with details about the assets parents have, their value, or Mom and Dad's wishes regarding them.

"When families do not talk, everyone makes up a different story," Ghilarducci says. "That's when trouble starts."

"Parents may think they don't want to burden a child by talking about their death," says certified financial planner Douglas Boneparth, founder and president of Bone Fide Wealth, a New York City firm that specializes in advice for millennials.

"But not communicating a plan or conveying your wishes to the very person or people who ultimately will be responsible for settling your estate and dealing with your affairs will leave them in the dark and scrambling to figure things out while they're grieving over the loss of a loved one. It's an absolute kick in the pants and burdens them more than you could have imagined."

Lack of knowledge can also prevent the younger generation from making informed choices about their lives, financial experts say. That's especially true if the parents intend to gift money during their lifetime — say, to help with the down payment on a home or a grandchild's college education.

"Counting on nothing may seem like the safest approach for adult children, and the easiest emotionally," says adviser Stephanie McCullough, founder and CEO of Sofia Financial in Berwyn, Pa.

"But if knowing that your parents plan to leave you some money might help you breathe a little easier financially now or do a little more for your own kids, it would be good to have some sense of it."

Uncertainty prevails — and paralyzes estate planning

There are plenty of reasons why many families shy away from conversations about money generally and inheritances specifically.

For starters, no one likes to talk about their own mortality or think about their parents dying. Or about the possibility that illness or disability might drain the older generation's savings.

Then, too, many boomers and members of the Silent Generation grew up in homes where talking about money was considered impolite or taboo. (Our survey found that families would prefer to talk about almost anything else — politics, mental health, you name it — than inheritances. Only sex was a more awkward topic.) And, especially at greater levels of wealth, parents may worry that learning of an inheritance could be de-motivating for their children.

Adult kids also don't want to raise the subject and risk coming across to Mom and Dad as grasping. "Bringing up a parent's finances can feel like you're being greedy or morbid," Boneparth says. "Millennials want to know but feel like they shouldn't have to ask."

Yet the top reason families stay silent, the Kiplinger–Morning Consult survey shows, is uncertainty. More than one-third of parents who haven't discussed inheritance plans with their adult children say there are too many unknowns about how long they'll live or how much money they'll have left.

Overall, the top worries among parents about the inheritance they've earmarked for their kids are that, given inflation and other economic pressures, they might not have much left to give and that long-term care or other health costs might deplete their estate. And that was true even at higher levels of income and wealth.

Another source of uncertainty for many parents is whether and how long they may need to help their kids financially now, given sometimes shaky career paths, high housing costs and, for some, hefty student loans, says David Chubak, head of wealth management and field management at Edward Jones.

The Kiplinger–Morning Consult study confirms that lots of parents are providing that support: More than four in five say they have given their adult kids financial assistance, from helping with expenses or debt to regular gifting.

"The reality is we live in an age of financial uncertainty and anxiety like no other," Chubak says.

Bundle all of that uncertainty together and it can become paralyzing, stopping parents from crafting an estate plan or talking about any plans that have been made, says Joshua Morris, vice president of thought leadership and research insights at the Fidelity Center for Family Engagement.

Parents in the Kiplinger survey who were uncertain about the value of their estate, for instance, were half as likely to have a will as parents who were confident about leaving an inheritance, and even fewer had discussed estate-planning issues with their kids.

"The senior generation often feel they need everything completely buttoned up before they say anything to their children, so feeling uncertain about one or two things regarding estate planning shuts down dialogue about everything," Morris says.

"And if you're not having dialogue, that compounds the uncertainty both generations feel, because without conversation, there's no flow of information or talking about concerns and wishes."

What the "kids" really need to know about inheritance

When it comes to inheritances, parents are usually most reluctant to share specific numbers, such as how much money they have saved or expect to leave to each child, financial advisers say.

"Mom and Dad worry if they tell the kids they have, say, a million dollars, the kids will think they're rich — the gifts should be bigger at Christmas, they should be doing more for the grandkids, and why aren't they helping me more when I'm struggling to pay my rent?" says Kurt Supe, a certified public accountant and retirement planner at Creative Financial Group in Indianapolis and CFD Investments.

"Meanwhile, the parents are thinking, We don't know if we have enough to last our lives, and a long-term-care event could wipe out half of what we've got."

If you'd prefer to keep the amounts to yourself, or you just don't know what they'll be, that's fine, advisers say. And if you choose to disclose, keep it to broad ranges and possibilities, because circumstances can change.

More important than the numbers, though, is sharing practical details, such as whether you have a will and, if so, where you've stored it, as well as insight into the reasons for key decisions, such as who your executor will be.

"A lot of times people think about disclosure as a light switch — you're either on or off," says Galinskaya at the Merrill Center for Family Wealth. "We prefer a dimmer-switch approach."

New research from the Fidelity Center for Family Engagement suggests what younger family members most want to know are details that will bring them peace of mind, instead of anxiously wondering what to expect. While the definition of peace of mind differs from individual to individual, and from family to family, common themes pop up.

For instance, a separate Fidelity study found that 76% of the younger generation want to know whether they are named as beneficiaries — something that applies to retirement accounts and life insurance policies as well as being named in a will or trust — but only 35% of baby boomers have shared this information.

A Merrill report identified clarity around expectations as the top concern of younger family members, including whether parents have specific wishes for how any money they inherit should be used. Adult children with a special-needs sibling might be concerned about whether their parents have made provisions for care when they're no longer around to provide it.

The key is to identify the issues that might cause confusion or anxiety in your particular family circumstances. And if younger family members approach the subject respectfully, they don't have to wait for parents to initiate the talk.

Says Boneparth, "The best thing a millennial child can do is give their parents a reason to have a conversation about their estate planning that has nothing to do with money. It's asking about their wishes, their values and their worries."

One exception to the suggestion that parents can stay tight-lipped about dollar figures is if you intend to provide financial gifts during your lifetime, because that knowledge might affect the decisions and choices your children make.

"Let your adult children know whether they can expect financial help from you at key moments in their life when a lump sum would really help, such as when they want to buy a house, or when they graduate from college, get married or have a child," says Ghilarducci. "Be frank and up front about what you have budgeted."

How families can set up for estate transfer success

A smooth transfer of wealth requires a clear plan that lays out who your heirs will be and how you want your assets divided among them. It should also appoint individuals you trust to settle your affairs, with legal documents in place to ensure your wishes are upheld. Few families, however, have such a plan in place.

"Most people take the ostrich approach: I'm going to stick my head in the sand and hope I never have to deal with this," Supe says.

In fact, only four in 10 parents in the Kiplinger–Morning Consult survey say they have a will, just over one-third have designated beneficiaries on retirement accounts or life insurance policies, and a scant 14% have written a letter of instruction outlining their wishes.

Wealthier families are far more likely to have the legal paperwork drawn up, but large swaths of them still go without. About one-third of parents with estates worth more than $500,000, for instance, don't have a will, and nearly half haven't documented what they want to happen to their personal possessions.

"A will is not just for rich people," Ghilarducci says. "Even a modest estate can include a house, retirement accounts, a car and personal property. Somebody has to sort all that out. Parents usually need a will, a financial power of attorney, a healthcare directive and updated beneficiary forms. A simple letter explaining where everything is can save the family a lot of grief."

Once the documents are drawn up, you'll need to communicate that information to your children and other loved ones. Let them know where the papers are stored, whether you place them in a digital file, a physical binder or both.

And it's not a one-and-done exercise; you'll want to revisit and update, as needed, every few years and after major life milestones.

"The plans that worked for you in your fifties may need to be adapted in your sixties, as well as once you retire, when your children get married or you have grandchildren, and then again in your seventies and eighties," says CFP Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Md.

You will also need to consider how taxes may impact a planned inheritance — an issue that causes a lot of confusion for both generations, the Kiplinger survey shows. None but the ultra-wealthy will owe federal taxes, with the amount exempt from estate taxes now at $15 million for individuals and $30 million for couples.

However, about a dozen states have estate taxes of their own, including Oregon (exemption: $1 million), Rhode Island ($1,838,056) and Massachusetts ($2 million). If you live in one of those states and calculate your net worth in seven figures, you'll want to consult a financial adviser about ways to minimize the impact.

A more pressing issue for most families: If you plan to leave money in a traditional IRA or 401(k) to your children, they could be in for a big tax hit. Under a recent rule change, heirs other than a spouse now typically have to withdraw all the money in these accounts by the end of the 10th year after the original IRA owner's death rather than stretching withdrawals over their life expectancy, and they'll pay taxes on the money at their ordinary income tax rates.

A possible double whammy: Those withdrawals could push heirs into a higher tax bracket.

"The biggest threat to eroding the value of an inheritance for adult children who are beneficiaries of traditional retirement plans is the possible tax hit," Supe says.

What to do? Supe suggests you might convert all or a portion of a traditional IRA or 401(k) to a Roth account over time. You'll pay income tax on the amount you convert, but your children will then be able to withdraw the money tax-free when they inherit — a strategy that makes sense if you are in a lower tax bracket than your kids, as is the case for many retirees with offspring who are in their peak earning years.

You'll want to make sure, though, that your withdrawals from the traditional plan don't push you into a higher income tax bracket or income tier for Medicare, which could cause your premiums to increase sharply.

McCullough says some people are reluctant to do the conversion and pay taxes up front because they've been taught to defer, defer, defer, and it's hard to break that mind-set. She says, "Think of the taxes you'll pay as part of what you're gifting to your children, a way to maximize the value of what they inherit from you."

Issues that can topple your inheritance plan

One of the thorniest challenges that many families face in transferring wealth to younger generations: The great now-versus-later debate.

Nearly twice as many adult children in the Kiplinger–Morning Consult study say they'd prefer their parents help them financially now, when their biggest life expenses are upon them, as those who say they favor getting a bigger inheritance later.

With older generations now living longer, healthier lives, it could be a long wait — 10 to 20 years or more — and millennials and Gen Xers are buying homes, raising children and paying for college now. Indeed, Fed data shows that inheritances in middle-class and affluent families most commonly go to recipients in their early to mid-sixties, when those heirs are often closing in on retirement themselves.

Many parents, however, aren't on board — with good reason. The largest segment of parents in the survey (42%) intend to wait to provide an inheritance, most commonly because they want to be sure they have enough money to support themselves throughout their lifetime. Just 14% said they would rather give more now to see their children benefit from the money.

Then, too, a lot of parents are already providing a generous helping hand. Nearly half of the parents in the Kiplinger–Morning Consult survey report they have provided financial help to adult children on an as-needed basis, nearly one-third have helped with other expenses and one-fourth have assisted with major life events.

Similarly, recent Visa research shows that one in four millennial homeowners received help with the down payment from their parents, and about the same number said they couldn't have purchased the house without it.

How can families navigate the competing, compelling needs of both generations? "It's a balancing act," says Cheng. "While parents don't want to give away too much during their lifetime, the flip side is that if you wait until you're gone, did your money really have the greatest impact it could have?"

Cheng suggests putting parameters around the financial help you offer now. For instance, you might provide money for a specific purpose rather than ongoing, unrestricted gifts — say, supplying the money for a down payment, paying for a grandchild's music lessons or sleepaway camp, or contributing to a 529 college-savings plan.

If you do choose to gift annually — in 2026, you can give up to $19,000 per recipient, without filing IRS paperwork; couples can give up to $38,000 — make it clear that you'll revisit your strategy every year and that you may not always be able to give the amount you've been giving, or be able to give at all, if your financial circumstances or needs change.

The key, says Galinskaya, is to avoid binary thinking. In other words, do not consider gifting to be an all-or-nothing proposition and that you'll have to do it forever once you start, or that you'll always have to give the same amount to each of your children. "There's a spectrum of options," she says.

For parents with more than one child, the question of fairness is perhaps toughest of all. Typically, parents are eager to avoid discord among siblings. That's likely why the vast majority of them in the Kiplinger–Morning Consult survey — 71% in all —said they intend to divide their assets equally among their children.

Sons and daughters, however, are less convinced that's the best approach. Although half of the adult children in the survey preferred an even split with siblings, one in five thought inheritances should be based on factors such as how much each of them had helped their parents or gotten financial help in the past (11%) or each one's financial need (9%).

Many also anticipated trouble ahead, with one-third of the adult children respondents expecting an inheritance to create conflict with their siblings. And experts agree: The risk is high.

"Adult children will often view inheritances through the lens of unresolved issues and patterns in the family, especially if the way assets are divided between siblings comes as a surprise to them," says financial psychologist Brad Klontz, coauthor of Psychology of Financial Planning. "Someone feels hurt and thinks, Oh, Mom must have loved you more than me, or You influenced our parents behind my back."

For many parents, it's their worst nightmare.

The best way to avoid that outcome is for parents to talk with their children in advance about how assets will be divided and, critically, why. "Err on the side of equality unless there's a good reason not to — and sometimes there is a good reason not to. Maybe one child works in the family business, one puts in more effort, another has special needs," says Galinskaya.

"A good outcome is less about whether dividing things equally or fairly is best and more about how you communicate your actions and explain the intent behind them."

Leaving a legacy beyond money

Experts say that's generally true of inheritance planning. "The biggest mistake parents can make is passing down money without communicating the family values that drive your thinking," says Klontz. "That could be and should be the most valuable part of your legacy."

Make sure the conversations you have as a family about transferring wealth are two-sided and collaborative, not just parents delivering news and rendering decisions from on high, advisers say. "It's Mom and Dad's money, and they get to choose what to do with it. But children should have a voice, if not a vote, in the process," Galinskaya says.

Rather than a single big talk, think in terms of having a series of smaller chats over a long period. "One misconception about the Great Wealth Transfer is that it is a single point in time, the reading of the will, like the movie scene where everyone is in the room and you find out where all the money goes," says Joshua Morris of Fidelity.

"We like to reframe the transfer as a transition that's happening over decades as parents move into and through retirement — planning, gifting and adapting plans along the way."

Fidelity uses the skiing concept of bunny slopes and black diamond trails to suggest how the conversations should move from initially low-stakes, emotionally easy topics — say, what to do with family heirlooms or where the will and other documents are stored — to more challenging subjects around inheritance and estate planning involving how assets will be divided and their value. (For more about the best ways to approach these conversations, see our article on talking to your adult kids about inheritance.)

Each conversation is an opportunity for parents and children to share feelings as well as facts, and for parents in particular to provide insight about what they view as the purpose behind the assets they've accumulated, big or small, and their wishes for the next generation.

"Whatever number is attached to the wealth you've built, it is the story of your career, the story of your life, and there's a vulnerability and emotionality attached to sharing your story that brings families closer together," Morris says.

Fidelity's latest research bears that out. It found that parents who regularly share planning details and keep family members informed are more likely to report peace of mind and confidence about the future than those who don't. Adult children will probably feel a lot better too.

Says Morris, "That's a payoff for families that goes far beyond money."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Joseph Moore's oldest daughter was 10 years old when she raised the question some parents dread: Are we rich?

She'd noticed that, unlike her friends, she lived in a gated golf course community with celebrities as neighbors, Moore says. The family's affluent lifestyle reflected the wealth Moore had built through real estate investing. But he was quick to challenge his daughter's assumption.

"I said to her, 'No, I'm rich,' " Moore says. "'You have what you've put in your savings account.'"

The distinction was intentional. Moore wanted his daughter to understand he had worked to create his wealth, and she would have to do the same to create her own fortune.

That doesn't mean that Moore's oldest daughter and her younger sister won't benefit from the wealth he has amassed. Rather than save the conversation for adulthood, Moore has a multiphase plan for talking with his daughters, now 13 and 6, about money and how he will share his assets with them. The framework grew out of research for his best-selling book, How to Get Rich in American History: 300 Years of Financial Advice That Worked (& Didn't).

He's already started teaching them basic financial concepts and money-management skills. With his teenager, he has moved on to explaining the kinds of opportunities he'll pay for, such as college, a down payment on a home or a business venture. When his daughters are mature enough, he will share details about what assets he will pass on to them and others, including charities.

"I'd much rather them be handed these things in phases than think that there's some huge pot of gold that they're going to get at my demise," Moore says. The real inheritance he hopes to leave his daughters, he says, is competence: "That to me is the lesson of history, that competence outperforms trust funds."

Most families don't take such a deliberate approach. 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.

Talking about inheritance is even more taboo. Both generations rank it as one of the most challenging topics to raise — more uncomfortable than talking about mental health, politics, or even your end-of-life wishes and funeral arrangements.

Financial experts say that avoiding these conversations can leave children unprepared to manage wealth and families vulnerable to confusion or conflict when assets eventually change hands.

"I have seen many families really struggle, be torn apart due to surprises about things that came out after people passed away," says Ruschelle Khanna, a therapist with 25 years of experience working with high-net-worth families and author of Inherited Trauma and Family Wealth.

One reason many find it difficult to have these discussions is that there's little historical precedence for having them, Moore says. In the past, few families had the type of wealth that could be bequeathed to the next generation. Since the shift from pensions to 401(k)s began in the early 1980s, Americans have been retiring with more liquid assets that can be passed on when they die, Moore says.

Known as the Great Wealth Transfer, $105 trillion is expected to be handed down — largely by high-net-worth households — to heirs through 2048, according to the consulting firm Cerulli Associates. After removing the top 1% from the equation, there's still an estimated $36 trillion that will be transferred from boomers to their Gen X and millennial children over the next two decades, according to Visa Business and Economic Insights.

"This is a newer conversation for middle-class families," Moore says. "If your parents didn't sit you down and explain how you were going to inherit your wealth, you don't know how to do it with someone else."

That doesn't mean you can't learn. Experts say productive inheritance conversations aren't about revealing dollar amounts all at once. Instead, they recommend treating them as an ongoing dialogue that evolves with your child's age and maturity and any changes in your own circumstances or views. Here's how to start.

The case for talking about inheritance

When it comes to inheritance, there's a transparency gap. Nearly half of parents expect to leave money or assets to loved ones when they die, but only about one-fourth of adult children expect to receive an inheritance, according to the Kiplinger–Morning Consult survey.

The most-common reasons parents give for not talking are that there are too many unknowns, they don't have a clear plan or that they simply haven't gotten around to having the conversation, the survey found.

"I have had clients say, 'I don't care what happens because I'll be dead,'" says Sandi Bragar, chief client officer at wealth management firm Aspiriant in San Francisco.

If you die without any estate-planning documents, such as a will or trust, that spell out who gets what when you die, your state's laws will determine how your assets will be distributed. "People of all net worths ought to have a plan," says Michael Whitty, an estate-planning attorney with Smith, Gambrill and Russell in Chicago. "Even if they are of very modest means, they should have at least a will."

Online will and trust creation services, such as LegalZoom, Trust & Will and Quicken WillMaker & Trust, are low-cost options. However, Whitty advises working with a professional who can ask the right questions about your wishes to tailor estate-planning documents to your needs, rather than trying to rely exclusively on self-help services.

Once you have a plan, it's important to let your family know that you have one and to share some details. "One of the biggest mistakes is not communicating with your children or asking your advisers to communicate on your behalf," says Dawn Jinsky, a partner with Plante Moran Wealth Management in Ann Arbor, Michigan. "They need to hear it from you."

If they don't, your children could make assumptions about the reasons you won't share inheritance information with them. They might think that you don't trust them with money, Jinsky says. Or they might have unrealistic expectations about what they will inherit.

Lack of communication can also leave children unprepared for the wealth they receive or roles they'll have to fill. "For example, if a child is meant to become a trustee of a trust, we want to help the client make sure the child has the skills and competency to fulfill the responsibilities of the trust," Bragar says.

Plus, an unwillingness to discuss your plan and explain the reasoning behind your decisions can lead to resentment or disputes among your children.

"There are plenty of stories of families throughout history who go to the will reading to find out that what they had assumed would be a fair and equitable distribution was not," Moore says. "Your legacy is forever locked into that last moment of conflict."

When to have conversations about inheritance

The best time to start talking about inheritance isn't when you're drafting your estate plan. Ideally, parents should start laying the foundation for discussions as soon as their children can understand the concept of money. "The families that do this the best begin as young as possible," Khanna says.

When children are in elementary school, conversations can focus on family values and money-management basics. As children mature, parents can gradually introduce more information about family finances, including goals for their wealth and, eventually, details about their inheritance planning, Whitty says. The goal is to avoid leaving children to fill in the blanks.

"If you're silent, the kids might think, I don't know if I'll get anything, but I may get a lot," Whitty says. "That could distort their motivations about their own careers, personal development, even their choice of a potential spouse."

Parents who missed earlier opportunities shouldn't assume they have waited too long. Experts say discussions with adult children are essential — as long as they happen before a crisis forces the issue.

"I'm sure a lot of these conversations occur on the deathbed," says David Russell, a wealth adviser with Argent Trust in Ridgeland, Missouri. "At that time, it's too late to do anything planning-wise."

Don't let reluctance to talk hold you back. "If you're not ready to jump into the conversation, find an adviser as soon as possible," Khanna says.

She recommends working with a financial planner with experience facilitating family money talks. (You may be able to find one using the directory at 2164.net/advisors, which lists financial pros who focus on multigenerational planning and family philanthropy.)

If emotional barriers are getting in the way, a financial therapist can help you address fears that are preventing you from sharing inheritance information with your children. You can find a financial therapist through the Financial Therapy Association

What to share about inheritance

Before you talk, Bragar recommends identifying what you hope to achieve. "How do you want your family to think about the wealth that will be left?" she says.

"When people care about their family members and want there to be some level of harmony, it's easier to go into the conversation when you visualize what is important."

Then, consider the questions your children might have. "What type of information might they need about you to live their lives stress-free?" Bragar says. For example, they might be wondering whether you have enough money to live comfortably in retirement or to pay for long-term care.

Bragar says some parents are reluctant to spend savings because they want to leave more for their children — even though that can be the last thing the children want.

Russell has what he calls "who does what when" meetings with his clients and their children to foster conversations about both wealth transfer and long-term-care planning. The focus on logistics can help keep emotions at bay to ensure a more productive discussion, he says.

To replicate the process, parents can create three columns on paper or a computer document to list the people they expect to be involved with their finances as they age and after they die, what role each person will play, and when they are expected to fill those roles. Parents could add a fourth "Why" column to explain the reasoning behind their choices, Russell says.

Note that there's not a column for "How much." Russell says that most of his clients aren't willing to share the details of how much they have.

Other financial advisers meet with the same resistance. "Clients feel like communication means opening the curtain and sharing everything," Jinsky says. "You don't need full transparency with your children."

There are a handful of reasons why it could make sense not to share specifics about how much your children or family members will inherit. For starters, you might end up needing to spend more of your savings than you think, especially if dementia or another chronic condition forces you to pay hundreds of thousands of dollars for many years of care.

Another reason: You might change your mind. "Don't lock yourself into a conversation your children will remember," Jinsky says. For example, one of her clients who lived to age 96 changed her estate-planning documents 32 times — every time she did or didn't get a call on her birthday.

However, Jinsky cautions that full disclosure is needed in some circumstances, such as when you've legally appointed your child to manage your assets when you die. "If you're in your eighties and your child is the trustee, that is a pull-the-curtain-and-share-everything moment," she says.

Another reason parents might opt for sharing some details with children about what they can expect to inherit or receive while you're still living: If knowing, even just broad ranges, might help them make more-informed financial and estate-planning decisions in their own lives, Whitty says.

How to keep inheritance conflict to a minimum

Experts recommend having a family meeting with all of your children to share your inheritance plans if everyone gets along well. This holds true even if you plan to divide your assets unevenly or give the bulk of your wealth to charity, your place of worship or a similar organization.

Children who are mature and have a strong relationship with their parents and each other should understand why, for example, their parents plan to give more to a child with special needs, Whitty says.

When a family meeting isn't the best choice: "If there is resentment, jealousy or in-fighting, or any sort of disrespect, maybe you want to have those conversations individually," Khanna says. It also can be helpful to have a third party, such as an attorney, financial adviser or therapist, mediate potentially difficult inheritance talks to "slow the conversation down and hold space for big feelings," she says.

Another option is to write letters to your children to explain your decisions. This tactic can also be effective if you have children who are unwilling to engage in a conversation because of their fears about aging and death, Khanna says.

Although it's your money at the end of the day, and the approach you choose is ultimately up to you, Khanna says, "I always try to encourage families to make compassionate decisions knowing the impact it will have on people."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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With a challenging economy and rising business failures and bankruptcies, the need for thoughtful asset protection planning is greater than ever.

Asset protection is a layered strategy — a financial fortress built one wall at a time — and the right combination of tools depends on your needs, your risk profile and your circumstances.

Understanding what asset protection is — and is not — is essential: Done properly, it is not about hiding assets or evading legitimate debts, but it is entirely lawful and transparent.

The goal is to structure your affairs so that reaching your assets becomes difficult, slow and expensive for a creditor — changing the economics of a dispute so a claimant is motivated to settle for a fraction of the claim, if anything at all.

While the objective is not mere concealment, legitimate steps such as holding real property in an anonymous LLC can keep your ownership out of public view, since title to real property is a matter of public record.

Protection layer No. 1: The right business entity

The foundation of most plans is to operate any active trade or business through a properly formed and maintained entity, most commonly a C corporation, an S corporation or an LLC.

The purpose is liability containment: A shareholder or member is generally not personally liable for the entity's debts, so long as corporate formalities — separate bank accounts, adequate capitalization, documented governance and arm's-length dealings — are respected. However, the extent of the protection depends on the nature of the claim, the creditor and all the circumstances.

For example, a corporation or LLC is formed for liability protection, but the business owner fails to pay the employees' share of payroll taxes. Most states and the IRS provide for personal liability of not only the corporate or company officers but anyone with control over the business accounts.

The benefits of the limited liability entity were lost for failure to pay the employees' share of the payroll tax liability.

Ignoring those formalities invites veil-piercing or alter-ego claims that reach the owner personally. The choice among entities is driven mainly by taxation:

• A C corporation is a separate taxpayer subject to double taxation
• An S corporation is a pass-through but is limited to 100 eligible shareholders and a single class of stock
• An LLC is the most flexible, offering pass-through taxation by default with the option to elect other treatment

Protection layer No. 2: Foundational estate planning

Before layering on advanced tools, everyone should have a foundational estate plan, because incapacity or death can itself expose assets and because the advanced structures are built on these documents.

The core documents are:

• A revocable living trust, to avoid probate and manage assets on incapacity
• A pour-over will, to name an executor and guardians and catch assets left outside the trust
• Durable powers of attorney for financial and healthcare decisions
• An advance healthcare directive
• A HIPAA authorization

Key considerations include properly funding the trust, coordinating beneficiary designations on retirement accounts and life insurance and using discretionary and spendthrift provisions so that what you leave to children is shielded from their future creditors and divorcing spouses.

A revocable trust avoids probate, but, because you retain control, it does not protect your assets from your own creditors during life; a blind trust — which can even be a revocable trust whose name does not identify you — can hold title to real property without revealing your name in public filings.

Protection layer No. 3: Statutory exemptions

State and federal law already shield specified assets without any special structuring, so careful planning means identifying and maximizing the exemptions available where you live.

The homestead exemption protects equity in a primary residence, but the amount varies enormously by state — from a few thousand dollars to a capped figure (California ties its exemption to countywide median home prices), to the effectively unlimited exemptions in Florida and Texas.

Retirement assets receive some of the strongest protection: ERISA-governed plans such as 401(k)s enjoy a federal anti-alienation shield, and IRAs are protected in bankruptcy up to an inflation-adjusted cap.

Most states also exempt some combination of life insurance cash value and annuities, a motor vehicle up to a set value, household goods, tools of the trade, a portion of wages, public benefits such as Social Security and workers' compensation, college savings accounts and a "wildcard" amount — and some protect property held as tenancy by the entirety from the creditors of only one spouse.

A well-known illustration is the O.J. Simpson matter: After a roughly $33.5 million wrongful death judgment for the Goldman and Brown families, little was collected, in part because his NFL pension and other retirement assets were beyond creditors' reach, and he'd moved to Florida, where the homestead exemption is essentially unlimited in value.

Protection layer No. 4: Limited liability entities

Holding investment assets and real estate in limited liability entities such as LLCs and limited partnerships adds a layer of separation and changes the remedies available to a creditor.

Their signature feature is the charging order, which in many states limits a creditor to a lien on distributions rather than the entity's assets — and where the charging order is the exclusive remedy, the creditor cannot foreclose on the interest or force a distribution, improving settlement posture.

The strength of this protection varies by state: Nevada makes the charging order the exclusive remedy even for single-member LLCs, one of the strongest positions in the country, while single-member LLCs are weaker elsewhere (Florida's Olmstead decision is the well-known example, since addressed by statute).

Holding real property in an anonymous LLC also keeps ownership off the public record, though this is privacy, not concealment, and transfers into an entity remain subject to fraudulent transfer law.

Protection layer No. 5: Marital planning

For married couples, careful planning can shift lower-risk assets to the spouse less exposed to liability. The mechanics depend on the marital property regime:

• In community property states, community property is generally reachable for the debts of either spouse, so planning may involve a written transmutation or partition agreement converting it to the separate property of the lower-risk spouse
• In common-law states, titling — and, where available, tenancy by the entirety — controls ownership.

Premarital (prenuptial) and postmarital (postnuptial) agreements are central tools, characterizing assets as one spouse's separate property and defining how future earnings are owned — generally enforceable only with full financial disclosure, independent counsel for each spouse and the absence of duress.

This planning must be proactive: A transfer to a spouse made after a claim arises can be unwound as a fraudulent transfer, and it carries divorce-related risk that should be weighed separately.

Protection layer No. 6: Domestic asset protection trusts

A domestic asset protection trust (DAPT) is a self-settled spendthrift trust that, contrary to the traditional rule, lets you remain a discretionary beneficiary while shielding trust assets from many creditors after a seasoning period.

DAPTs are authorized or permitted in 20 states, which include Alaska, Delaware, Nevada, South Dakota, Tennessee and Wyoming. Nevada is often favored for its lack of a state income tax, short two-year seasoning period and absence of statutory exception creditors.

A DAPT can also enhance privacy, since assets titled in the trust's name are not held in your own name.

Residents of states hostile to self-settled trusts — California, in particular — should plan carefully, often using a third-party trust (for the benefit of a spouse, child or parent) rather than a self-settled DAPT.

Protection layer No. 7: Foreign and hybrid trusts

A fully foreign trust is often considered the highest level of protection because it places assets beyond the easy reach of U.S. courts, but it carries the heaviest U.S. tax compliance from the outset, including foreign trust and foreign account reporting (Forms 3520 and 3520-A and FBAR filings).

The hybrid trust captures the benefit while deferring that cost: It begins as a DAPT and stays domestic until a defined threat arises, at which point the U.S. trustee resigns, and a predesignated foreign trustee takes over.

Because a trust is generally governed by the law of the jurisdiction where the trustee sits, that change shifts the trust into an offshore regime such as the Cook Islands, Nevis or the Cayman Islands — where U.S. judgments are not recognized, registries are private, and, in the Cook Islands, a creditor must prove its case beyond a reasonable doubt with no contingency fees allowed.

Even greater protection comes from also moving the underlying assets offshore, and the heavier reporting is triggered only if the trust actually goes foreign.

One important caution: If you remain within reach of the U.S. courts while your assets sit offshore, a court can order you to repatriate them and hold you in civil contempt — even jailing you until you comply, as happened in FTC v. Affordable Media, LLC and in Re Lawrence.

In both cases, though, the debtor retained control or acted in bad faith; a trust settled in calm weather is harder for a court to reach, but the personal risk of contempt is real.

Critical limitations

The most important rule is timing: Planning must be completed before the events that give rise to the liability.

Every state has a fraudulent transfer statute — the Uniform Fraudulent Transfer Act or its successor, the Uniform Voidable Transactions Act — allowing a creditor to unwind two kinds of transfers:

• Actual fraud, made with intent to hinder, delay or defraud, inferred from "badges of fraud" such as transfers to insiders or after being sued
• Constructive fraud, made without reasonably equivalent value while insolvent, regardless of intent

A voidable transfer can be set aside and clawed back from the transferee.

In asset protection, once a claim is on the horizon, the most effective tools are largely off the table, so implement any plan well in advance and with experienced counsel.

The same principle applies to exemptions, which are powerful but not absolute: In bankruptcy, the homestead exemption is reduced to the extent its value derives from property disposed of within the prior 10 years with intent to defraud a creditor, so last-minute conversions of nonexempt assets into exempt ones can be challenged.

In conclusion

Asset protection works best when it is proactive, layered and tailored to your circumstances.

Beginning with the right operating entity and a sound foundational estate plan, then adding statutory exemptions, limited liability entities, marital planning and — where appropriate — domestic, hybrid or foreign trusts, you can build a financial fortress that stands up to future challenges.

Because the rules vary significantly by state, interact with federal tax and bankruptcy law and turn heavily on timing, this planning should always be done well before any claim arises and with the guidance of qualified counsel.

This article is provided for general informational purposes and does not constitute legal advice. Consult a qualified attorney regarding your specific circumstances.

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

Spending time with the grandkids tops many retirees' wish lists, and so does helping their adult children out. So it would only seem natural to sign up to become a free nanny. You can check off both boxes, save your kids money, and bond with your grandchidren.

It's what financial planner Kelly Regan's parents have been doing ever since she went back to work at Girard, a Univest Wealth Division, about a year ago. To save $480 a month or nearly $5,800 a year on daycare, Regan's parents watch her 17-month-old twin daughters on Fridays. The arrangement works for both sides — Regan and her husband save money, and her parents get fulfillment from their granddaughters.

"We coordinate calendars about a month ahead, so if they can't watch them one Friday, my husband and I have time to pivot. We understand they're doing this for free and don't want them to miss out on things if we can find other coverage," said Regan. "We also bought a house 20 minutes from them three years before we had kids, knowing my mom had expressed interest in helping. Being close makes it easy for them to come and go without long commutes."

Depending on where you live, the age of your grandchildren and the kind of childcare they have, your adult kids could save a lot by having you babysit. The national average for childcare is $15,000 annually, and $17,000 for infants. In some cities, an in-home nanny can cost up to $60,000 per year.

3 Questions to ask before signing up to be the grandkids' nanny

While Regan's parents are OK with helping out one day a week, doing it full-time would be a different story. Regan said her mom does most of the caregiving and is usually exhausted at the end of the day. "Chasing kids, toddler meltdowns, and not sitting down is no joke," she said.

Caring for the grandkids full-time comes with other challenges. Expenses like transportation, meals and activities could put a dent in your retirement savings. Plus, it means less time to enjoy your own pursuits, something retirement is supposed to be about.

That's not to say it won't work out, but before you become a full-time babysitter for the grandkids, ask yourself these three questions.

1. Can I afford to help out?

Acting as the full-time nanny can save your adult children some serious cash, but you don't want it to come at the expense of your retirement. That's why the first question you should ask yourself is: Can I afford to help?

"A lot of times people talk about it as making a retirement choice, but they also have to protect their financial plan," said Regan. "Who is paying for transportation, covering the groceries, and the zoo memberships? All of that stuff can add up. You have to iron out the financial details."

2. Can I physically manage childcare?

Grandchildren are tiring, especially toddlers. Depending on your health and fitness level, it can be easy or extremely taxing. That's why the second question you should ask yourself is: Can I physically help with childcare for the schedule I've been asked to follow?

"If you are running yourself down caring for the grandkids, at what point does it cause health issues?" said Regan. If it does, can you afford the trips to the doctor's office or to the emergency room? Plus, if you get injured helping with the grandkids, it could prevent you from pursuing your own hobbies.

3. Do I have the time to help?

Caring for the grandkids is a big commitment. It usually means long days and plenty of notice if you have to miss one. It also means goodbye to spontaneous trips and the freedom that comes with retirement. It's a big trade-off, which is why the third question you need to ask yourself is: Am I willing to give up my freedom to care for the grandkids?

"The freedom component is very important here," said Frank Legan, partner and financial adviser at Signature Estate & Investment Advisors. "What will they be giving up by committing their time to caring for grandchildren?"

Before you say yes, think about what watching the grandchildren five days a week means to your social life, your alone time with your spouse, the pursuit of hobbies, and your own happiness. Resentment can breed bitterness, which could lead to family strife, something you likely want to avoid in retirement.

Set boundaries for success

Ultimately, stepping in as a full-time caregiver can be a rewarding gift to your family, but it shouldn't come at the expense of your own wealth, health and well-being. By setting clear boundaries, having honest conversations about finances, and finding a balance — whether that means helping out one day a week like the Regan family or several days — you can support your adult kids while still enjoying the freedom you worked so hard to earn in retirement.

Editor's note: This article is part of an ongoing series looking at three questions to ask yourself before making a major financial or lifestyle decision. The other stories in the series are:

Retirement readiness

3 Questions That Determine If You're Actually Ready to Retire Early

3 Questions to Ask Before Unretiring

Lump Sum vs Monthly Pension: 3 Questions To Ask Before Making a Permanent Mistake

Where to retire

Moving to Florida or Texas for Retirement? 3 Questions to Ask First.

3 Questions That Reveal If You're Actually Ready to Age in Place

Thinking About Moving Near the Grandkids? Ask Yourself These 3 Questions First

Retirement savings and spending

3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You

3 Questions That Help You Find Your Perfect Social Security Claiming Age

Go Ahead and Splurge, But Ask Yourself These 3 Questions First

Before You Give Money To Your Kids, Ask Yourself These 3 Questions

3 Questions to Ensure Your Retirement Nest Egg Is Inflation-Proof

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• Small Splurges That Won't Derail Your Retirement
• Is 'Prepaying' Your Retirement Dreams Worth the Financial Risk?
• 'What I Wish I’d Known at 45': Retirees' Best Financial Advice

The age-old advice of "buy low, sell high" seems simple enough to follow, and it is — except when the market tosses out surprises and emotions kick in.

We watch as stock prices plummet and something inside calls out, "Sell now, before it's too late." Of course, at that point it already is.

Or the market soars and that inner voice says, "Buy now and catch this wave." But the wave may have already crested.

Humans are human, which means if we aren't careful, emotions can replace logic when market volatility comes into play, causing us to make financial moves we later regret.

We saw this in 2020. When the pandemic began to affect markets, some people grew nervous and moved their money into the safety of money market accounts. By the end of the year, when the market had recovered and they had missed out on the gains, they lamented that move.

One thing we can count on is that there are always events that can lead to market volatility. Wars. Natural disasters. Government shutdowns. Unexpected election results.

During this year's midterm elections, depending on how people react to the results, the market could soar, plummet or hold steady. (Interestingly, the market tends to do well, on average, after a midterm election, although that doesn't mean every midterm election has proved favorable for investors.)

We can't control market volatility. But what retirees can do is have an investment portfolio that is suitable for this stage of life and that matches their risk tolerance. That way, they are in better shape to withstand market swings.

With the right investments attuned to their needs, they won't see as many large fluctuations as they would with a high-growth portfolio, and they will feel more comfortable with what they do experience.

Gauging risk tolerance

Among the problems retirees face with volatility is that they may not have time to recover when the market tumbles. Younger clients may have a 20- or 30-year time horizon, so a loss today isn't as worrisome because they have decades to recover.

Retirees, who often are withdrawing money from their accounts to live on, even as the value drops, are in a rougher spot. For example, after the 2008 financial crisis, it took more than five years for the S&P 500 to fully recover.

Still, that doesn't mean your situation is the same as everyone else's. One of the keys to building a portfolio is to look at all of your assets and determine how to invest them in the most efficient way.

If you are working with a financial professional, the more they know about your complete financial picture, the better. Much like a doctor, they can advise you based only on what they know.

An effective strategy many retirees use is to divide their investments among different investing buckets with different levels of risk that accomplish different goals.

When doing this, you first want to make sure your income is taken care of. That's the bucket with safer investments that will pay for your current living expenses.

After that, other buckets with different time horizons can be more aggressive because you don't anticipate needing to use that money anytime soon.

Once again, though, your risk tolerance comes into play. How much risk are you taking, and how do you feel about that risk? At our firm, Retirement Solutions Group (RSG), we use specific tools and technology to help our clients identify their risk tolerance. We determine what their pain points are so we can allocate investments appropriately.

It's not unusual for a husband and wife to have different results on the risk questionnaire, with one more conservative than the other. In those situations, it's important to get them on the same page so they are both comfortable with the investing decisions.

Helping you set aside the emotions

Market volatility always has been and always will be a possibility, and no one has a crystal ball to predict when the going might get rocky.

That's why it's important to have a financial professional you can speak with about any concerns you have, someone who can help you separate emotions from investing decisions and who understands your needs.

With the right person in your corner, you can build a portfolio where you will feel comfortable regardless of market ups and downs.

Ronnie Blair contributed to this article.

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

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• A Simple Trick for Better Investing: Stop Timing the Market
• 5 Top Buy-and-Hold Investments to Manage Market Volatility

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.

Despite economic uncertainty seemingly around every corner, the stock market seems unfazed, continuing to set record highs.

It's a welcome sight for investors, particularly those playing the long game.

But for those nearing retirement, it can create a sense of unease, wondering if or when the shoe could drop.

It's a reasonable concern since deciding when to retire is one of the most important financial decisions you'll ever make. But in many cases, retirement readiness has far less to do with what the stock market is doing today and more to do with the planning you've done leading up to retirement.

If you've planned well, market highs can present an opportunity to retire sooner than you expected. As a wealth planner at Blue Ridge Wealth Planners with nearly 15 years of experience, I'm here to help you figure that out.

What makes early retirement possible?

Retirement should not be driven by fear or by trying to predict the market's next move. It should be based on preparation, spending needs and risk management.

One of the biggest threats to any retirement plan is when retirees must withdraw from their accounts while the market is down, which locks in their losses and can have a negative compounding effect on their nest eggs. This is known as sequence of returns risk.

That is why many retirement income strategies focus on ensuring that the first few years of retirement are funded through more stable income sources or lower-risk assets.

You can never remove all risk, but the goal is to make sure any sudden market drops don't force major changes to your retirement plan.

How can you manage risk leading up to retirement?

Strong markets can be especially helpful for those who are close to retirement. If your portfolio has seen significant growth, those gains might improve your odds of retiring when you want.

In some cases, it might even allow you to retire early. But being able to call it quits early depends on more than just account balances.

As you get closer to retirement, the goal is no longer simply maximizing returns. It's about ensuring that the wealth you've accumulated can support your lifestyle throughout your retirement.

For example, if you're someone within a few years of retirement, today's elevated market conditions might provide an opportunity to lock in gains, reduce risk and position your assets more strategically to focus on income generation.

Why is retirement planning as important as building savings?

Without proper planning, wild swings in the stock market can create problems. For example, if you're heavily exposed to stocks and planning to retire soon, a sudden market drop could delay your retirement by years.

That's a long time to continue working because you took on too much risk nearing retirement. Your retirement plan needs to be resilient enough to handle market ups and downs without jeopardizing your long-term future.

Your retirement income plan should be stress-tested against different market conditions and life scenarios. You need a clear strategy for generating income.

Retirement isn't simply about having a large account balance. It's about turning your assets into a dependable income stream that can last for decades.

What do you spend in retirement?

Keeping your expenses down is also a key factor. Someone who spends conservatively may be able to retire earlier than someone with a more expensive lifestyle, even if their savings are similar.

The difference comes down to how much income will be needed each year and how much flexibility exists within the budget. If you've done a good job controlling your expenses, you might have more options than you realize.

Don't let your emotions drive your decision-making

Many investors wait for the bottom to fall out, assuming that a stock market correction must be around the corner. That mindset can lead people to postpone retirement when they don't have to. This could cause you to spend years trying to make back the money you had, then lost.

Instead of making an emotionally charged decision, I encourage clients to ask themselves a series of questions to help determine their retirement readiness:

• Do I have enough saved to support my lifestyle?
• Are my expenses low enough to make my savings last?
• Have I reduced risk enough to avoid having the market dictate my retirement date?
• Would delaying retirement improve my outcome or add unnecessary stress?

If their answer is yes to any of those questions, then market conditions might be less of a warning sign and more of an opportunity.

The bottom line

No one knows when the next market correction will happen. Instead of trying to predict what markets will do next, focus on what you can control: Your savings, spending habits, income strategy, tax planning and overall risk exposure.

At Blue Ridge Wealth Planners, we take the guesswork and complexity out of financial planning. We help our clients create a plan for everything that covers all the bases in their wealth world.

If you're nearing retirement, now is the time to evaluate your readiness. Strong market performance has created opportunities for many investors, but retirement success isn't about chasing every dollar. It's about converting the wealth you've accumulated into lasting financial confidence.

Blue Ridge Wealth Planners is an investment adviser registered with the Securities and Exchange Commission. SEC registration is not an endorsement by the SEC nor does it imply a certain level of skill or training.

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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.

Dear Wealth Wise: I'm in my 60s and will retire in March 2027. I'm happy with the amount I have saved and, at this point, would like to keep no more than 15% in equities. Where should I put the remaining 85% to generate stable income? — Intentional Investor

Dear Intentional Investor: When you're in the process of building wealth for retirement, it's common to invest the bulk of your portfolio in stocks. But it's equally common to shift away from stocks as retirement nears to reduce risk.

Our reader has clearly done a good job of saving for retirement and understands their income needs. They want minimal stock market exposure so they can sleep at night. Here's the approach our experts suggest to build an ultra-low-risk portfolio.

Bonds can get the job done

Bonds are often a great fit for retirees because they offer predictable income without the wild swings for which the stock market is known. Paul L. Gaudio, CFP, director and wealth planner at Crestwood Advisors, says that for a simple portfolio, a broad investment-grade bond fund or a pure Treasury bond fund could be a good choice.

These funds can deliver competitive yields without the homework of tracking individual maturity dates, he notes.

That said, it's important to consider near-term cash flow and upcoming expenses.

"If they have specific spending needs coming up, then a Treasury ladder may offer a great solution," Gaudio explains.

"Picture splitting money evenly across 1-, 2-, and 3-year Treasuries," he continues. "Each year a rung matures, and that principal is there for spending or reinvesting at whatever rates look like then. It's predictable and helps reduce some interest rate risk."

Municipal bonds might be worth a look

Keeping taxable income as low as possible in retirement is crucial. When income creeps up, it could trigger Medicare premium surcharges called IRMAAs, or income-related monthly adjustment amounts, that could add hundreds of dollars per month to the cost of Part B.

The "problem" with bonds is that interest payments are commonly included in taxable income. That's why Gaudio says municipal bonds might be worth considering.

"If they're in a high tax bracket, municipal bonds deserve a serious look," he says. "Municipal bond interest is exempt from federal tax entirely, and home-state bonds usually avoid state tax, too."

On the other hand, municipal bonds can't protect you from IRMAA surcharges, as their interest is added back to your modified adjusted gross income (MAGI).

Gaudio also says that for higher-income retirees, municipal bonds can offer more financial upside than Treasuries when accounting for tax-equivalent yields.

However, he cautions, "The trade-off is lower headline yields and thinner liquidity than Treasuries, so they work best as part of the mix, not the whole allocation."

It's worth considering an annuity

Retirees who are extremely risk-averse are often willing to forgo portfolio gains and liquidity for peace of mind. In that case, Gaudio says, "If this client’s true concern is guaranteeing income, then it may also be appropriate to consider an immediate annuity with a portion of their wealth."

As Gaudio explains, an annuity requires an up-front sum that guarantees income for the remainder of the client’s life. But annuities have certain drawbacks. They can be complex and often come with hefty fees. They might also lack inflation protection.

"The trade-off is that the principal is locked up in exchange for that guarantee, so it works best for money the client won’t need for flexibility or legacy purposes," he says.

Focus on liquidity

When you're retired and are actively using your savings to cover living costs, it's important to make sure you have enough safe, liquid assets to cover at least a few years' worth of living expenses, says Stoy Hall, CFP and founder at Black Mammoth.

"High-yield money market funds are paying in the neighborhood of 3.5% right now, and Treasury bills are around 3.7% and backed by the government," he says. Both could be appropriate places to stash one to two years of living costs.

Hall also recommends building a CD ladder for midterm liquidity. With this approach, "cash lands in your lap on a schedule, and you're never forced to sell anything at a bad time."

Protect against inflation

Hall understands the desire our reader has to unload risk.

"You saved enough, and you want to sleep at night, so we build you a paycheck, not a portfolio to babysit," he says.

On the flip side, Hall cautions that over the course of what could be a 30-year retirement, a 15% equity allocation exposes you to inflation risk. For this reason, he says, the remaining 85% of your income needs to keep up with the cost of living.

To this end, he says, it could be wise to put money into TIPS, or Treasury Inflation-Protected Securities, as well as I-bonds. TIPS adjust the bond's principal for inflation, while I-bonds adjust their interest rate. (Note, however, that I-bonds impose an annual investment limit of $10,000 per individual.)

"With most of your money in fixed-rate assets, this is your hedge against the one force that quietly shrinks a 'safe' retirement," he adds.

Look at the big picture

Many financial experts warn that a 15% equity allocation can erode purchasing power over time.

Gaudio says this allocation could work for some people, but not everyone.

"It tends to make the most sense for clients spending this money within the next five years, or clients who are highly risk-averse and have spending needs well below their portfolio's long-term potential," he says.

Ultimately, Gaudio explains, the right investment mix depends on a given retiree's full picture, including their income needs, spending patterns and tax situation.

"That's where working with a planner earns its keep — translating a menu of good options into the portfolio that actually fits this investor's life," he 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.

Read More Wealth Wise Stories on Asset Allocation

• Is a 60/40 Portfolio Too Aggressive in Your Seventies?
• Should Fully Funded Retirees Invest Like 30-Year-Olds?
• You’ve Mastered Asset Allocation — Now It’s Time for Asset Location

Every sports fan loves the game-winning touchdown, the walk-off home run or the buzzer-beating shot. Those unforgettable moments make the highlight reels.

But ask any championship coach what really wins titles, and you'll hear a different answer. Championships are usually won long before the final whistle. They're built through preparation, discipline, communication and making countless small decisions that put a team in position to succeed when the pressure is highest.

Retirement is no different. The people who enjoy the most successful retirements rarely arrive there by accident. They get there through years of preparation, thoughtful decisions and disciplined execution.

Many people assume a successful retirement comes down to having a large investment portfolio or earning the highest possible return. While those certainly help, the retirees who enjoy the greatest financial freedom often succeed because they follow many of the same principles great coaches emphasize every season.

Focus on the fundamentals of your plan

As Vince Lombardi famously reminded players by holding up a ball and saying, "Gentlemen, this is a football," championship teams focus relentlessly on fundamentals.

For retirement, those same fundamentals apply to achieving your financial goals. Here are 10:

• Saving regularly during your working years
• Avoiding emotional investment decisions
• Adjusting plans as life evolves
• Seeking advice before major financial decisions rather than after
• Living within your means
• Maintaining an appropriate emergency reserve
• Diversifying investments
• Reviewing beneficiary designations
• Managing taxes proactively instead of reactively
• Rebalancing periodically instead of emotionally

Over the course of a 20- or 30-year retirement, mastering these fundamentals often matters more than trying to predict the next hot investment. Small improvements, repeated consistently over decades, often produce extraordinary results.

1. Review your game plan every year

Preparation creates options.

• The best time to think about taxes isn't during tax season
• The best time to plan for required minimum distributions (RMDs) isn't the year you turn 73
• The best time to evaluate your Social Security strategy isn't the month before you file

The more decisions you make before they're urgent, the more flexibility you'll have when opportunities — or unexpected challenges — arise.

Legendary UCLA men's basketball coach John Wooden always preached that, "Failing to prepare is preparing to fail." Winning one game doesn't guarantee a championship.

Likewise, retirement isn't won by making one brilliant financial investment or decision. A successful, secure retirement is achieved by a series of thoughtful decisions year after year:

• Should this be the year for a Roth conversion?
• Should I realize capital gains this year while I'm in a lower tax bracket?
• Is it time to begin Social Security benefits?
• Which accounts should fund this year's income?
• Will an additional IRA withdrawal increase Medicare premiums in two years?
• Should appreciated investments be sold now or later?

Viewed individually, these choices may seem small, but they can significantly influence how much retirement income you keep after taxes and how long your savings last.

Coordinate the pieces of your plan

Even the best head coach relies on assistants, scouts and a coordinated game plan. The various pieces of retirement planning work much the same way.

• Investment decisions affect taxes
• Tax decisions influence Medicare premiums
• Estate planning impacts future generations
• Insurance decisions affect retirement income
• Withdrawal strategies affect all of the above

Some of the greatest retirement opportunities occur when tax planning, investment management, retirement income planning and estate planning are coordinated rather than addressed separately.

That's one of the advantages of working with both a CFP® and a CPA. When each piece is considered independently, opportunities are often missed. When they're coordinated, they reinforce one another.

Create a long-term plan that brings calm during uncertainty

Preparation creates confidence. Confidence makes disciplined decision-making easier when emotions run high.

One of the defining characteristics of great coaches is their ability to remain composed when circumstances become unpredictable. Financial markets inevitably experience periods of volatility. Headlines create anxiety. Predictions dominate television and social media.

Retirees who remain committed to a thoughtful, long-term strategy often fare better than those who constantly react to the latest news cycle.

Be flexible to adjust when necessary

No coach expects every game to unfold exactly as planned. No master strategist like Bill Belichick walks into the locker room at halftime and says, "Let's keep doing exactly what we planned before the game started."

They evaluate what's working and what isn't. They prepare for injuries, weather, unexpected opponents and momentum swings. They develop contingency plans because they know uncertainty isn't an exception — it's part of the game.

Retirement deserves the same mindset. Markets will fluctuate. Tax laws will change. Healthcare costs may rise. Family circumstances can shift. Inflation may persist longer than expected.

A retirement plan shouldn't be built for one perfect scenario; it should be flexible enough to adapt when life inevitably calls an audible. The best retirement plans are living documents that are revisited regularly. A retirement plan shouldn't be a trophy placed on a shelf and forgotten.

Winning in the long run

Much like championship teams, people who get the most out of their retirement years trusted a process. Retirement is about preparation, adaptability and disciplined execution over time.

The highlight moments — traveling with family, supporting grandchildren, pursuing long-delayed passions or simply enjoying the confidence that comes from financial security — are often the result of years of quiet decisions that no one else ever noticed. That's a lesson every championship coach understands — and one every retiree can benefit from embracing.

It is often said that winning moments lead to winning days. Winning days lead to winning seasons. Winning seasons ultimately create a championship retirement.

No single decision determines financial success. Rather, it's the accumulation of hundreds of thoughtful decisions made consistently over time that builds lasting confidence and financial security.

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.

A 65-year-old retiring in 2026 can expect to spend $185,000 on healthcare costs. That's a 130% increase since 2002.

Those figures come from a new report from Fidelity, and they don't include long-term care, such as at-home caretakers or retirement homes.

You may have mapped out your retirement destination and legacy plans, but have you thought through the long-term care costs?

As a Registered Financial Consultant (RFC®) who specializes in tax-efficient planning for retirees, I'm sharing four considerations that every retiree should think about when it comes to planning for healthcare costs later in life.

1. Healthcare could become your largest retirement expense

Most Americans are ready to plan their housing, travel and everyday living expenses in retirement, but a portion could find that healthcare costs balloon beyond expectations, becoming the overall largest expense.

Consider the costs of Medicare premiums, prescription drugs and out-of-pocket costs that factor into your yearly budget.

You should also be honest with yourself about your mobility and health later in life. Americans are living longer, with more people making it to age 100 every year. Self-sufficiency at older ages can deteriorate quickly, and if you expect you'll need long-term care from professionals or a facility, monthly costs can range from $6,000 to $11,000, according to CareScout.

2. Medicare could fall short in retirement

Don't assume that Medicare will take care of your healthcare expenses in retirement. While it will certainly help with inpatient care, specialist visits and important screenings, there are multitudes of expenses that Medicare will not cover.

Beneficiaries will still pay for things like deductibles, coinsurance and insurance premiums. You can be hit with surprise expenses for out-of-market coverage or emergency care. It also won't cover routine dental, hearing and vision care appointments.

There are also significant time limits to the care that Medicare covers. If you find yourself at a long-term care facility, Medicare will cover only the first 20 days of your stay in full and only a portion of the care up to 100 days.

Medicare offers great support for paying for medical expenses, but if you're expecting it to take care of you on its own, you'll find a pile of unexpected bills in your mailbox.

3. Make your healthcare plans now

The earlier you begin planning for healthcare expenses, the more options you will have in retirement.

If you're still working, contributing to a health savings account (HSA) can offer one of the most tax-efficient ways to save for future healthcare costs.

Part of your plan should be what age you intend to enroll in Medicare. Most should enroll around the age of 65, but you may be able to delay Medicare Part B without penalty if you're still working and receive health insurance through your employer.

This will keep you from paying the premiums on your current insurance and Medicare at the same time.

You will be allowed to sign up for Medicare during a special enrollment period if you leave your position and lose your employer coverage.

The real issue to avoid is enrolling late without qualifying coverage. If you miss your window to apply, your premium can increase by 10% for each year you were eligible but chose not to enroll.

That is a devastating and unnecessary expense that will follow you throughout your retirement.

Be sure to speak with a financial adviser or retirement professional to understand the important windows of when you should enroll.

4. It's never too late to lower risk and costs

The best way to reduce your healthcare costs is by not needing healthcare in the first place.

Obviously, some unforeseen conditions and circumstances will impact our healthcare spending, but it's never too late to reduce the risk factors.

Eating well and exercising regularly will help keep risk factors for a wide range of illnesses and health conditions down. A lower risk of heart disease or broken bones means fewer medical bills throughout your retirement.

It will also greatly improve your mobility later in life, helping you enjoy your golden years to the fullest.

Just like saving for retirement, the sooner you invest in your health, the better. But it's never too late to start the journey to healthier living.

It's not a conventional consideration when making your financial plan, but it is a factor that could make a major impact on your healthcare spending in 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.

During my long career in journalism, I was good at meeting deadlines, which made me popular with editors. I’ve always filed my tax return well before April 15. I even return my library books on time.

But when it comes to things that don’t have a hard deadline, I’m less diligent. I often postpone mundane tasks, such as cleaning out my spice cabinet, because I don’t have to worry about paying interest or penalties — or losing my job — if I put off tossing some expired cumin.

I suspect that for many people, estate planning falls into this category. It’s something we’re all aware we’re supposed to do, but since we don’t know when we’re going to die, there’s no specific deadline for completing this unpleasant task.

It’s important to understand that creating an estate plan isn’t just about deciding who will inherit your assets after you’re gone. Without advance directives for your finances and healthcare, your family could be forced to go to court to obtain the authority to manage your affairs if you become incapacitated.

Here's my checklist.

Update beneficiary designations

Now that I’m semi-retired and definitely not getting any younger, I’m in the process of getting my estate in order. My first step is to update my beneficiary designations. My husband and I don’t have children, so I’ve named him as the beneficiary for retirement accounts and other financial assets that aren’t already jointly owned. But I need to add a secondary beneficiary — also known as a contingent beneficiary — to those accounts.

A secondary beneficiary will inherit your assets if the primary beneficiary is deceased, can’t be located or declines the inheritance. If that happens and there is no contingent beneficiary, your assets will go into probate — the legal process by which assets are distributed in accordance with state law.

You can name multiple contingent beneficiaries, so I plan to designate some of the charities I support. (If I outlive my husband, I’ll probably name them as my primary beneficiaries).

Update powers of attorney

My next step is to make sure our powers of attorney for finances and healthcare are up to date. Many people believe married couples don’t need these documents, but if you are incapacitated, there may be limits on what your spouse can do with jointly owned accounts without a POA. The same goes for power of attorney for healthcare (also known as a healthcare proxy), which gives someone you trust the ability to make healthcare decisions on your behalf.

If you don’t have an attorney, you can download the documents from websites such as LegalZoom and Rocket Lawyer. It’s a good idea to have these documents notarized, even if your state doesn’t require it, because financial institutions and hospitals may not recognize forms that a notary doesn’t sign.

You should also make sure that your financial service providers will honor your POA for finances. Some institutions require you to use their own POAs, and obtaining one at the last minute is not something you want to have to deal with in an emergency.

Draw up a will

The final estate-planning task I need to tackle is drawing up a will. Although beneficiary designations will provide for the distribution of my financial accounts, both my husband and I have inherited items with a lot of sentimental value, and we need to think about what will happen to them after we’re gone.

And I’m going to start getting rid of things I’m pretty sure nobody wants — an effort popularized by Margareta Magnusson, author of The Gentle Art of Swedish Death Cleaning. Magnusson, who died earlier this year, said that decluttering is one of the greatest gifts you can leave to your heirs. Hard to argue with that.

Sandra Block is a former senior editor of Kiplinger Personal Finance. Send comments to sandra.block02@futurenet.com.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Financial confidence in retirement isn't just about accumulating a large nest egg.

According to the Employee Benefit Research Institute, retirees in the top 10% of the wealthy share distinctive money-management behaviors — and many have little to do with investment genius and everything to do with discipline and planning.

What makes these patterns valuable is that many are accessible across the wealth spectrum — you don't need millions to adopt the behaviors that protect millions.

Here's what the most successful retirees do differently, and how to apply it at any account balance.

1. They treated retirement savings as non-negotiable during working years

Their security was built decades before retirement. These retirees consistently maxed out 401(k) contributions, treating savings as a fixed expense rather than a choice.

The compounding is dramatic — $20,000 a year from age 30 to 65 at 7% grows to roughly $2.7 million — and they added catch-up contributions after 50.

They automated contributions, raised them with every pay increase and never cut them in downturns.

2. They front-loaded Roth conversions in early retirement

Many of these retirees spent their 60s converting traditional IRA assets to Roth, especially in the low-income years from retirement to claiming Social Security.

The strategy is counterintuitive — paying taxes now to avoid them later — but it works when you convert in low brackets instead of the higher ones that required minimum distributions (RMDs) and Social Security might trigger later.

The benefits compound: Roth IRAs have no lifetime required distributions, withdrawals don't count toward Medicare IRMAA surcharges, and assets pass to heirs tax-free.

These retirees typically hold 30% to 40% of assets in a Roth by their mid-70s, vs under 10% for others.

3. They maintain multiyear cash reserves

Market volatility doesn't stress wealthy retirees because they're not forced to sell during downturns. They typically keep two to four years of spending in cash and equivalents — high-yield savings, money market funds, short-term CDs or Treasury bills.

The modest opportunity cost is really insurance against sequence-of-returns risk: The danger that selling stocks in an early downturn permanently depleting a portfolio.

Studies show two to three years of reserves raise the odds of a portfolio lasting 30-plus years by 15 to 20 percentage points.

4. They delay Social Security to maximize lifetime benefits

The top 10% overwhelmingly delay Social Security to age 70, funding the early years from other assets. Each year of delay past full retirement age raises the benefit about 8% — a guaranteed, inflation-adjusted return impossible to replicate elsewhere, and for a high earner, that can mean an extra $10,000 or more a year for life.

They bridge the gap with taxable-account withdrawals, Roth conversions and earmarked cash.

For married couples, the higher earner often delays to 70, while the other claims earlier, ensuring the surviving spouse receives the maximum benefit.

5. They work with fee-only or fee-based financial advisers

According to Russell Investments' 2024 Value of an Advisor study, advisers add roughly 3.75% in net value annually through planning, coaching, tax strategy and portfolio management.

These retirees typically work with fee-only or fee-based fiduciary advisers, compensated through transparent fees rather than product commissions — so recommendations aren't skewed toward whatever pays most.

The value isn't investment selection but coordination of tax planning, behavioral coaching, estate and healthcare decisions and sustainable withdrawals.

They view advisory fees (typically 0.5% to 1.5% of assets) as insurance against costly mistakes.

6. They separate essential from discretionary spending

Wealthy retirees separate non-negotiable expenses (housing, healthcare, food, insurance) from discretionary ones (travel, entertainment, gifts, dining out).

Essentials are typically covered by Social Security, pensions and bond income, while discretionary spending comes from portfolio withdrawals — so in a downturn they can cut it 30% to 50% for a year or two, easing pressure at the worst time to sell. This isn't deprivation but options.

7. They optimize healthcare decisions strategically

These retirees treat Medicare enrollment, Medigap vs Medicare Advantage and drug-plan selection as serious planning exercises, not administrative tasks.

They typically choose Medigap — higher premiums for lower out-of-pocket risk and broader provider access — and watch income before age 65 to avoid IRMAA surcharges.

Most important, they plan for long-term care early, often buying coverage in their 50s when premiums are lower.

8. They practice tax-bracket arbitrage religiously

Perhaps the most distinctive behavior: These retirees obsess about marginal tax rates, making year-by-year decisions to minimize lifetime taxes — filling low brackets with Roth conversions, realizing capital gains at 0% when income allows, avoiding IRMAA cliffs, bunching deductions in alternate years and making qualified charitable distributions after age 70½.

Over a 30-year retirement, that discipline can save $100,000 to $200,000.

9. They rebalance systematically without emotion

These retirees rebalance on a schedule, acting when allocations drift 5% or more from their target. This enforces buying low and selling high: Surging stocks get trimmed into bonds, and crashes become buying opportunities.

The discipline matters more than the frequency: No panic-selling after declines, no chasing rallies.

10. They update estate plans and beneficiaries regularly

Finally, these retirees review estate documents every three to five years and after major life events.

They keep beneficiary designations current — which is critical, since these override will provisions — and update powers of attorney, directives and trusts to reflect current wishes and tax law.

The distinction: Average retirees create a plan once and file it away; these retirees treat it as an ongoing process.

The common thread

These behaviors share a common trait: They require planning, discipline and often some upfront costs.

These retirees build wealth not because they're investment geniuses but because they're systematic, proactive and make decisions that compound over decades.

Most of these traits can be adopted at any wealth level — you can keep proportional cash reserves, delay Social Security, practice tax-bracket arbitrage and rebalance systematically without millions in the bank.

Financial confidence in retirement is less about the size of your nest egg than how strategically you manage it.

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• 8 Expenses That Quietly Disappear After Retirement

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

When most people picture retirement, they think of the traditional "hard stop": handing in a resignation and walking away from a career overnight. But some of today's retirees are rewriting the rules.

According to a Fidelity Investments® study, 72% of Americans expect to retire "on their own terms," with 61% opting to phase out full-time work — embracing what many now call a "soft retirement" by transitioning into part-time consulting, freelancing, or passion-driven roles.

"Retirement is being reframed," said Rita Assaf, Vice President of Retirement Offerings at Fidelity Investments, in the Fidelity study's release. "It's no longer a single date and instead is an adaptable stage."

Yet while stepping down gradually may offer lifestyle benefits, like maintaining a sense of structured routine, blending part-time earnings with long-term tax planning takes precision.

For instance, dropping into a reduced federal income tax bracket can open a prime window for lower-cost Roth IRA conversions, but stacking wages on top of those conversions can limit how much you convert.

Here are the ways to navigate this modern trend and coordinate your income without running into unexpected tax pitfalls in 2026.

What is 'soft retirement'?

"Soft retirement" describes working in a reduced capacity during your traditional retirement years. It often pairs with a sister concept, "soft saving" — prioritizing present-day experiences over more aggressive saving strategies like FIRE (Financial Independence, Retire Early).

"Soft saving is the opposite of a movement like FIRE," Melissa Almuttar, H&R Block Director of Financial Services, told Bankrate. "It's the moment where you've had enough, and you want to do something different."

• Soft saving strategies include micro-saving habits like setting up small automatic transfers of your paycheck (like 5% or 10%) into savings or retirement accounts before spending the rest.
• Soft savers direct their discretionary funds toward meaningful purchases like hobbies or self-care while minimizing spending on less significant items (see also: 3 Creative Ways to Lower Retirement Taxes).
• By setting aside less for retirement, soft savers commit to a "soft retirement" — or working more during their golden years — but in a part-time capacity and with something that brings them joy (like getting a job at the local bookstore, for instance).

According to AARP's "The Push and Pull of Work and Retirement" survey, roughly 7% of retirees return to work after retiring, driven largely by economic need (48%) or a desire to stay active (18%).

Soft retirement embraces that flexibility for those who want (or need) additional income. But it comes with certain financial risks.

How soft income impacts 2026 Roth conversions

A common strategy in any retirement plan is converting traditional IRA funds into a Roth IRA. In essence, you pay ordinary income tax on the converted amount from a 401(k) (or other traditional IRA) today, so the funds can compound and be withdrawn federally tax-free from a Roth account later.

However, executing a Roth conversion strategy during soft retirement creates a balancing act. You have to weigh two competing dynamics:

• On one hand, leaving a high-salaried job for a lower "soft retirement" job may drop you into lower federal marginal tax brackets (like the 10% or 12% brackets). This can allow you to convert pre-tax IRA dollars at significantly lower tax rates than during your peak earning years.
• Conversely, unlike a 100% full retirement — where taxable income starts at $0 — part-time earnings create a baseline income floor. So if you earn $30,000 in consulting income, your Roth conversions start on top of that $30,000. This leaves less "space" in lower tax brackets before you push yourself into a higher tier.

Contributing to a Roth as a part-time retiree in 2026

Working part-time in 2026 also allows you to make direct Roth IRA contributions using cash from your paycheck.

To do this, you must meet two IRS rules: your contribution cannot exceed your actual job earnings, and your modified adjusted gross income (MAGI) must stay below the IRS phase-out limits.

• Annual contribution limits for 2026. $7,500 for workers under 50, or $8,600 for those age 50 and older (which includes a $1,100 catch-up contribution).
• Income phaseout thresholds for 2026. Full contributions are allowed up to a MAGI of $153,000 for single filers ($168,000 upper phaseout limit) and $242,000 for married couples filing jointly ($252,000 upper phaseout limit).

So, depending on when (or if) your "soft retirement" becomes a "full retirement," you might want to prioritize funding a direct Roth IRA alongside smaller, strategically timed conversions to help maximize tax-free growth.

Related: New 2026 Tax Change Could Mean More for Your IRA and 401(k) Savings

Four tax traps to avoid during a soft retirement

By stepping away from a financially lucrative career into a lower-paying one, retirees with a soft retirement strategy may face more tax complexities. For instance:

1. Increased health insurance costs. Leaving employer-sponsored healthcare before age 65 requires buying private health insurance or ACA marketplace coverage, which can offset much of your part-time income.
2. Reduced Social Security benefits. Transitioning from full-time to part-time work may incentivize you to claim Social Security early to offset lower wages. However, claiming Social Security before your full retirement age (FRA) permanently reduces the monthly payment amounts you receive — and could push your taxable income higher (and more of your Social Security benefits may be taxed with a part-time job).
3. Higher IRMAA Medicare surcharges. Some retirees may also find that part-time income combined with investment income pushes their modified adjusted gross income (MAGI) higher, triggering the income-related monthly adjustment amount (IRMAA). For 2026, the IRMAA threshold sits at $109,000 for single filers and $218,000 for joint filers.
4. Added self-employment (SE) Tax. Freelancing or consulting income is subject to a 15.3% self-employment tax (covering 2.9% Medicare and 12.4% Social Security) on top of standard federal and state income taxes. If you've never done freelance or contract work before, this may come as a surprise.

Is a soft retirement right for you?

A soft retirement isn't for everyone. It requires lifestyle changes, shifting your professional identity from a senior role to a part-time position, and sacrificing the complete free time you would get in a "full" retirement.

And then there are the financial shifts required. Balancing your retirement budget as you move from higher to lower paychecks, potentially drawing on savings, and entering into complex tax situations all take discipline.

But the payoff may be worth the sacrifice.

"The heart of the new retirement playbook is keeping things personal and practical," Assaf said in the Fidelity release. "Planning is what turns preference into payoff. With the right plan — built around retirement income, taxes, health care, and consolidation, investors can have the tools in their corner to help define a successful retirement journey."

So whether or not you adopt a soft retirement, sitting down with a tax professional can help ensure your golden years hit the ground running — and not a hard stop when you expect a soft landing.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

Read More

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• 5 Little-Known Senior Tax Deductions

Many investors spend their lives staying the course, saving well, pushing for growth and riding the market as long as they can.

The problem with that strategy is that it ignores the most critical phase of your retirement saving journey: The five-year home stretch until you retire.

Most people don't want to hear this, but one wrong move or assumption can do lasting damage.

A common mindset among pre-retirees is the expectation that strong market returns will continue indefinitely. It's not unusual to hear someone project 15% — or even 20% — annual returns as part of their retirement plan.

On paper, that kind of growth can make everything work beautifully. But markets don't move in straight lines, and they rarely cooperate with timelines.

The real risk isn't just that returns fall short. It's that they fall at the wrong time.

How one bad year can upend your retirement

As retirement approaches, the impact of market volatility changes. A downturn early in your career is inconvenient. A downturn just before or after you retire can be devastating.

Consider what happens if the market drops 30% to 40% in the years leading up to retirement. Many investors assume their portfolios will perform in line with the S&P 500, but that's often not the case.

Many portfolios are made up of mutual funds, sector funds or other investments that can behave very differently, sometimes falling even further due to overlapping risks and hidden correlations.

Then comes the bigger issue: Withdrawals.

If you're taking 4% to 5% income from a portfolio that just lost 30%, your effective loss isn't just 30% — it's closer to 35% once withdrawals are factored in.

This also means the following year, you're taking income from a significantly smaller base.

That creates a mathematical uphill battle that many portfolios never fully recover from. This is known as sequence of returns risk, and it's one of the most underestimated threats in retirement planning.

Lessons from past market cycles

During the dot-com bubble and the 2008 financial crisis, many investors discovered that their portfolios were far more vulnerable than they'd realized, which had a significant impact on those nearing retirement.

Even those who believed they were diversified found that their investments were heavily tied to the same underlying risks. When markets fell, everything seemed to fall together.

The major lesson learned is that diversification isn't just about owning different funds — it's about understanding how those assets behave under stress.

Why asset allocation matters more than ever

In the final years before retirement, asset allocation becomes less about maximizing returns and more about managing risk. That doesn't mean abandoning growth altogether, but being intentional with your investment decisions.

Every piece of your portfolio should have a defined purpose. Some assets should be geared toward growth, others earmarked for protection and designed to generate income.

When portfolios are heavily skewed toward one objective, typically growth, without enough consideration for what happens when markets take a turn for the worse, that's when problems occur.

Think stability first, growth second

One of the best ways to manage risk is to flip the traditional planning process. Instead of starting with investments and hoping they generate enough income, start with the income itself.

How much do you need in retirement? From there, identify reliable income sources — Social Security, pensions, rental income, etc. Determine how to fill any remaining gaps with strategies designed to produce consistent, predictable income.

For some investors, that could include annuities, particularly those that offer guaranteed lifetime income or principal protection with some growth potential. While they may not be right for everyone, these tools can serve a specific purpose: Creating a baseline of income that isn't dependent on market performance.

Once that foundation is in place, the rest of the portfolio can be invested for growth with a clearer sense of purpose and pressure.

The mindset shift before retirement

Perhaps the biggest transition in the final five years before retirement is not financial, but psychological.

You've spent decades accumulating: Saving, investing and growing your portfolio. Retirement flips that script. Now the focus shifts to distribution: Turning assets into income. That's not always an easy transition.

Many retirees struggle with the mechanics of withdrawals — deciding which investments to sell, when to sell them and how to do so efficiently. Those decisions become more complicated and emotionally charged in volatile markets.

A structured income strategy can simplify this process. Instead of constantly making withdrawal decisions, you're replacing a paycheck with a predictable income stream. The rest of the portfolio can then be managed with a longer-term perspective.

The bottom line as you near your golden years

Retirement planning isn't just about building wealth — it's about making that wealth last, because in the final years leading up to retirement, the margin for error becomes much smaller.

A strong market can mask underlying risks, but a single downturn at the wrong time can expose them quickly.

Keep these issues in mind to ensure your retirement plan can withstand whatever the market delivers:

• Markets don't move in straight lines. Adjust your investment strategy in the five years leading to retirement.
• One bad year in the market can ruin your retirement if your portfolio is not properly balanced.
• Asset allocation matters more than ever. Every piece of your portfolio should have a designed purpose.
• Flip the traditional planning process and think stability first, growth second.
• Embrace the mindset shift from accumulation to distribution to make your wealth last.

Retirement success isn't determined by how high your portfolio climbs; it's about whether it can carry you through your golden years.

Your 50s are not the time to take chances with the money you've worked your whole life to earn. It's never too late to create or adjust your retirement plan.

Work with an adviser who can help you find investments that will grow at a steady pace, benefiting when the market goes up without taking a hit when it goes down.

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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.

JP spent 38 years in technology. He built two companies, sold one and retired at 66 with a portfolio he described as more than sufficient.

He had done everything the financial planning industry said was essential to a strong retirement plan: The right accounts, the right withdrawal rate, the right estate documents and enough money to do almost anything he wanted.

Eight months into retirement, he found himself trying to articulate something he couldn't quite name. He tried several versions before settling on this one: "I have everything I said I wanted, and I feel like I'm waiting for something that never arrives."

He had not yet named what was missing. He had also, without realizing it, just described the most common yet least expected experience of modern retirement.

What the career was providing

For 38 years, JP woke up with a reason that extended beyond himself. Not every day was meaningful in a way he could articulate. But the aggregate of his work, the teams he built, the problems his company solved and the engineers he developed gave his days a context that outlasted any individual task.

He was part of something. That something had stakes. And the stakes, invisibly and continuously, answered a question that retirement would eventually force into the open: Why do my days matter to anyone other than me?

Most people never ask that question during their careers. Their careers answer it automatically. Retirement removes that answer before anyone has a chance to replace it.

What the research says

The pillar of retirement most likely to be dismissed in a financial planning context is the one the research most consistently shows to predict health and longevity.

A 2019 JAMA Network Open study followed more than 6,000 adults over 50 and found that a greater sense of purpose in life was linked to significantly lower all-cause mortality and fewer cardiovascular events.

The effect was substantial. Adults in the lowest quartile of purpose were more than twice as likely to die during the study period as those in the highest. Purpose was not a soft variable. It was a biological one.

Researchers studying the world's Blue Zones, the five regions where people consistently live past 100, identified purpose as a common thread across cultures.

In Okinawa, Japan, the concept is called ikigai: A reason to get out of bed in the morning. In Nicoya, Costa Rica, residents call it plan de vida.

The vocabulary changes; the underlying mechanism does not. People with a clear reason to matter live measurably longer than those without one.

Austrian neurologist, psychiatrist and Holocaust survivor Viktor Frankl observed that human beings can endure almost any "how" if they have a sufficient "why." The inverse is equally true. Comfort without meaning is not fulfillment. At best, it is a holding pattern.

The definition that matters

In this research, spirituality is not religion. This distinction matters because it determines who reads this article and who stops reading here.

The research uses the term to describe a specific condition: A connection to something larger than oneself, a sense of meaning that extends beyond personal comfort, and an answer to the question of why the days have weight.

This does not require faith, doctrine or affiliation. It requires only a coherent response to the question that retirement poses to every retiree, whether ready or not.

JP is comfortable in retirement. His days are pleasant and unhurried, and, in a way he has not yet named, purposeless. He has not lost his intelligence or capability. He has lost the context that gave those qualities a place to go.

That is not a spiritual crisis in any religious sense. It is a planning gap with measurable health consequences.

The planning gap

Financial planning answers the quantity question: How long will the money last? It does not answer the quality question: What are those years for?

Purpose is plannable. Most retirees encounter this idea expecting it to be framed in therapeutic terms. The research frames it differently: As a design problem. You cannot withdraw from a purpose account you never opened.

The retirees who sustain the highest levels of well-being in later life are not those who stumbled into meaning after retirement. They are those who designed for it before they retired.

The question that begins the design is not complicated. It is uncomfortable, which is why most people avoid it: What would make the next chapter matter to anyone other than yourself?

For JP, the answer emerged slowly, then clearly. He began mentoring two young engineers through their first company. Not for equity. Not for visibility. For the work itself and for what it produced in the people he was developing. A year later, that absence was gone. The portfolio has not changed. The purpose has.

The prescription

Purpose in retirement is not found by waiting for it. It is built by answering a question most retirement plans never ask.

The research identifies three conditions under which purpose takes root in later life: A commitment that demands your best thinking, a community that depends on your presence, and an outcome that outlasts you. None of these require a salary. But all of them require a decision.

The financial plan funds the years. Purpose determines whether the person living them gets out of bed with a reason.

Both require planning. For too long, only one has received any.

To learn more about designing a fulfilling retirement, pick up my 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.

A pattern shows up often enough in my practice that I've stopped being surprised by it.

Someone in their mid-50s comes in for a routine check-in. Their mortgage is paid off. The kids whose 20-year term life policy was meant to protect are mostly grown. That policy did its job well.

But somewhere in the conversation, it comes out that an aging parent has just moved in or started needing help that wasn't part of anyone's plan two decades ago, right around the time the original coverage is scheduled to end.

September is Life Insurance Awareness Month, which makes this a good moment to look at a timing problem that comes up more than people expect. This isn't a rare coincidence.

According to Northwestern Mutual's Planning & Progress Study, roughly one in five Americans is caring for a family member, and many are making financial trade-offs to do it: Cutting spending, pulling from savings or taking on debt.

That's the backdrop many are managing when a term policy expires in the same decade.

What makes these situations challenging is not necessarily the policy itself. It is that people may be trying to address today's responsibilities with a financial plan built for a very different season of life.

How age and health affect the cost of new coverage

Here's what I explain to people in that situation: Term life insurance is generally relatively inexpensive because it's temporary, and the premium you paid years ago reflected your age and health at that time.

When that policy ends and you look for new coverage at 55 instead of 35, an insurer isn't underwriting the same person. Medical history and health markers may have changed over that period, even for people who feel healthy.

What that means in practice: Replacement coverage at this stage may cost more for the same death benefit, and health changes can sometimes limit what you're able to qualify for.

I don't tell people that buying term coverage in their 30s was a mistake. If they had a young family and a time-limited need, like a mortgage or a child's dependent years, term insurance was likely the most cost-effective way to secure meaningful coverage, and for many it still is. The issue is making sure the plan keeps pace as responsibilities change.

Three ways to approach an expiring policy

If your term policy is nearing its end date, there are three paths to consider. The right one depends on your health, budget and what you're trying to protect against.

Convert what you have. Some term policies include a conversion option that may allow you to convert some or all the coverage to a permanent policy, subject to policy terms, without new medical underwriting.

This may be a valuable option for anyone whose health has changed, but conversion windows are typically limited to a specific age, so check before your policy expires.

Add smaller coverage on top. Instead of replacing your full death benefit, you may need only a death benefit to help cover a narrower, current gap, like a parent's care needs or a remaining few years of a child's dependency on your income.

Start over with today's numbers. The coverage amount that made sense at 35, based on income replacement, a mortgage and young children, may have little to do with what you need to protect now. Recalculating based on your current obligations often produces a more accurate target.

This kind of planning matters even more for those also thinking about what they'll eventually leave behind. A historic $124 trillion intergenerational Great Wealth Transfer is already underway between generations in the U.S., and those revisiting an expiring term policy are often also due for a broader look at their estate plan.

Don't skip the estate planning conversation

An expiring policy is a natural prompt to check something many haven't looked at in years: Their beneficiary designations.

I ask clients to review whether their beneficiary designations still align with their estate plan and whether they should consult tax or legal professionals about potential unintended consequences.

A former spouse listed as beneficiary, a minor child who'd receive a lump sum before they're ready to manage it or an estate named as beneficiary by default can all create complications that a trust, staggered distribution or other planning tool may help address.

Some permanent life insurance policies can build cash value over time. For some households, its death benefit can help address estate planning needs, which may include estate taxes, equalizing inheritances among heirs or charitable giving.

For those whose estate plan hasn't been reviewed since the term policy was purchased, an expiring policy is as good a reason as any to have both conversations at once.

For wealthier individuals, the expiring policy itself is often less the point than what it was quietly standing in for. Coverage tied to a business loan, buy-sell agreement or key-person planning can also expire or lapse, and often carries higher stakes.

It's also common for these clients to have postponed other estate planning decisions, such as gifting assets into a trust or updating succession plans. An expiring policy is a reasonable prompt to finally have that conversation.

What to do before the policy lapses

If any part of this sounds like your household, a few steps are worth taking now, while you still have options:

Pull your policy documents and check whether it includes a conversion option and by what date it needs to be exercised

Take an honest inventory of who currently depends on your income, rather than the picture from 20 years ago

Check your beneficiary designations against your current estate plan, not the one you had 20 years ago

Talk to a financial adviser before your term expires, not after a lapse notice arrives — options narrow once the policy has ended

In my experience, the clients most exposed to this timing mismatch usually aren't the ones who think of themselves as underinsured. They may have purchased exactly the right coverage for the season of life they were in.

The challenge is that life rarely stands still. Careers change. Families change. Businesses grow. Parents age. Responsibilities shift.

The good news is that many of these situations can be addressed when they are identified early. The goal is not to perfectly predict every change life may bring. It's to revisit your plan often enough that it can evolve alongside the people and priorities that matter most.

Sometimes an expiring policy is simply the reminder that it's time to make sure your financial plan has changed along with your life.

Article prepared by Northwestern Mutual with the cooperation of Gina Cimineri. To view detailed disclosures regarding individual representatives, view their information at taketwofinancial.nm.com.

This article is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax or legal professional for advice specific to your situation.

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

You spend 30 or 40 years doing almost everything right.

Save instead of spend. Max out the 401(k). Invest the bonus. Live below your means. Think twice before splurging. Let compound growth do its work.

Then retirement arrives, your financial adviser tells you that you have plenty of money, and suddenly the rules are supposed to change.

Go ahead. Take the trip. Remodel the kitchen. Fly first class. Help the grandchildren. Enjoy yourself.

For some lifelong savers, shifting from accumulating wealth to spending it can be one of the hardest financial transitions of retirement. I’ve heard this repeatedly from financial advisers who work with affluent retirees. Some clients have multimillion-dollar portfolios and financial plans that remain solid well into their 90s, yet they still hesitate to spend $10,000 on a family vacation or upgrade a home that no longer meets their needs.

The problem often isn’t whether they can afford it; it’s whether they can give themselves permission to spend it.

When $8 million still doesn’t feel like enough

Tessa Steinemann of True Alpha Wealth Management in Sandusky, Ohio, works with a retired woman we’ll call Suzie.

Suzie, 65, and her 75-year-old husband have more than $8 million in investable assets. Yet when she considered spending about $10,000 to take her family away for Christmas, she struggled with the decision.

The couple hardly touches its portfolio other than the husband’s required minimum distribution from his IRA. Financially, the trip wasn’t going to derail anything.

Emotionally, it was another story. "A lot of the hesitation to spend with the baby boomer generation comes from their parents living through the Great Depression," Steinemann says.

Suzie’s parents were extraordinarily frugal. Their children worked while growing up, spending was closely monitored and the family absorbed a powerful lesson: Money needed to be protected. Those lessons can remain long after the circumstances that created them disappear.

Steinemann reviewed Suzie’s financial plan and showed her what the couple could comfortably spend each year. But she also reframed the decision around something a spreadsheet can’t measure very well: time.

Suzie’s adult children have successful businesses and don’t need a large inheritance. For them, a family vacation today could be worth far more than receiving additional money decades from now. So Suzie booked the trip.

The episode illustrates an irony I’ve noticed in writing about retirement: The people who become particularly good at accumulating wealth can sometimes become particularly uncomfortable using it.

Disciplined savers question purchases. They comparison shop. They avoid waste. They delay gratification. Those are excellent habits when you are 45 and trying to build a retirement portfolio, but they can become restrictive at 70.

Spending your portfolio can feel scary

For many retirees, the difficulty begins with something more fundamental: After a lifetime of receiving a paycheck, spending from investments feels wrong.

"It’s a tricky process to go from savings to spending," says Lisa Kirchenbauer of Omega Wealth Management in Arlington, Va.

Kirchenbauer recently began working with a high-net-worth Washington, D.C.-area couple in their early 60s who are transitioning from executive careers into retirement. They had never worked with an adviser and brought several common worries with them: spending too much, long-term care costs and the possibility of a major market downturn.

They also have no children, adding another question to the retirement calculation: Who will take care of us when we are old?

The couple has significant financial resources and recently built a dream home in a community they love. Kirchenbauer is helping them develop an aging-in-place strategy while also modeling their future spending.

But the numbers are only part of the job. Some clients want to see detailed projections. Others need frequent reassurance. And for couples who have spent decades measuring financial progress by how much they've saved, drawing money down can feel like going backward.

Advisers like Kirchenbauer sometimes find themselves doing something retirees never imagined they would need: permitting them to spend their own money.

When watching the balance rise becomes the reward

Ryan Maynard of Vaquero Private Wealth in Dallas has seen another version of spending guilt. For some wealthy clients, he says, the pleasure of accumulating money wasn’t primarily about what the money might someday buy. The pleasure was watching the number get bigger.

"Once you understand that, the spending guilt behavior makes sense," Maynard says. "Spending doesn't feel enjoyable; it feels like losing ground."

One of his clients built a uniform-manufacturing business that eventually produced several million dollars of wealth. She had worked so hard for so many years that she rarely traveled. After retiring, the habit continued. Travel felt unfamiliar and intimidating, and she still found herself thinking she didn’t have enough time or money.

Maynard worked with a multimillionaire who continued to live in a high-crime neighborhood despite ongoing safety concerns, because she believed she couldn’t afford to move. Another client, in his 80s and with millions of dollars in excess capital, resisted accessibility improvements to his house even after multiple falls landed him in the hospital. The money was there, but changing the behavior was harder.

Maynard sometimes runs a financial plan twice: once including the expense that’s holding clients back and once without it. Seeing two nearly identical long-term outcomes can help a client understand how little a purchase may affect overall financial security.

Your spouse may have a different money story

Spending anxiety becomes more complicated when couples see money differently. One spouse may view their savings as a tool to enjoy retirement. The other may still see the portfolio as protection against everything that could go wrong.

Maynard had one couple in which a spouse became more comfortable traveling after they set aside three years of spending needs in cash. Another client needed monthly financial planning reviews before she felt comfortable continuing to spend as planned.

The solution wasn’t necessarily earning higher returns, but identifying what would make the fearful spouse feel safe.

Derek Wittijohann of Premier Path Wealth Partners in Madison, N.J., saw the power of family history with a client whose father died without leaving enough financial support for his mother. The son watched his mother struggle and made himself a promise: That would never happen to his family.

Years later, he had significantly exceeded his own retirement savings goal. He understood intellectually that the family had enough. Emotionally, the childhood lesson remained powerful. Wittijohann stress-tested the portfolio using conservative assumptions and mapped income from Social Security, pensions, investments and required distributions.

But one of the most productive conversations came when the client’s wife joined the discussion. She talked about the experiences they wanted together and what postponing retirement was costing them in time.

Bottom line: The client was effectively trying to improve an already extremely strong retirement plan while sacrificing years when he and his wife were healthy enough to travel and enjoy it.

Give your money a job

For retirees who find the idea of "spending more" uncomfortable, smaller buckets can help. Evan Mills of Scholar Advising in Winston-Salem, N.C., might tell a client that $30,000 a year is specifically available for travel rather than simply saying, "You have plenty of money. Spend more."

"If someone has $500,000 available annually, the number may feel extravagant. Divide it into $200,000 for living expenses, $100,000 for travel, and $200,000 for family gifts, for example, and each dollar suddenly has a job. It makes it look less like reckless spending and more like permission to spend," Mills says.

That doesn’t mean retirement should turn an Applebee’s regular into a five-star restaurant connoisseur.

One of Mills’ clients had accumulated about $20 million in company stock before retiring from a senior executive position in California and moving to Georgia. The client didn’t want a flashy new lifestyle that might create distance from friends.

So the upgrades were modest. They still traveled, but sometimes flew first class. They hired a black car instead of an Uber. In Italy, they chose private tours. At familiar restaurants, they might order the better bottle of wine and leave a little more for the tip.

Their lifestyle improved without forcing them to become people they didn’t recognize or wondering if their neighbors would talk about them.

Spend it, gift it — or leave it?

For some families, the question eventually becomes less about whether the money will be spent and more about when it will be transferred.

Wittijohann calls it the "warm hand versus cold hand" decision: Do you give money to loved ones while you are alive and can see them use it, or leave a larger inheritance after your death?

He works with a 70-year-old woman whose family recently sold a successful New York jewelry business. She wants to provide for her children but also worries about protecting the money from possibilities such as a future divorce.

There is no universal answer. Some retirees care deeply about leaving a large legacy. Others would rather pay for a family vacation, help with a first home or fund a grandchild’s education today.

The first step is deciding what you actually want your wealth to accomplish.

What was all that saving for?

Perhaps that is the question lifelong savers eventually need to ask themselves. Saving is usually attached to a future purpose. For decades, retirement itself may have been that purpose. Once retirement arrives, the job of the money can change.

Your portfolio might provide security. It might create experiences with family. It might support children, grandchildren or charities. Or it might simply give you the freedom to make life a little easier and more enjoyable.

As Maynard puts it, the purpose of accumulated assets is different for each person. The goal is to understand what you want the money to do for you.

You don’t need to abandon the habits that made you financially successful. But after a lifetime of saving, retirement means finally learning to enjoy what you've built.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And it pushed them from regular Medicare costs to paying extra through the IRMAA (Income-Related Monthly Adjustment Amount) Medicare surcharges.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Before claiming your Social Security benefits, remember to:

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

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

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

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

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

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

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

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

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

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

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

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

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

Create your tax-smart retirement plan

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

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

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

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

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

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

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

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

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• Retiring in the Next 12 Months? Answer These 3 Questions Before Your Paycheck Stops
• Are Roth Conversions for Retirees Dead in 2026 Because of the New Tax Law?

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 hidden epidemic that might be lurking in your future: Stress, which doesn't retire when you do.

Retiring from working might eliminate one stressful aspect of life, but the sudden lack of structure and purpose can have detrimental effects on emotional and psychological health.

It's important to retire into a life that's structured differently, but still structured. Whether that means maintaining a schedule of volunteering or socializing regularly, retirement with purpose is preferable to a purposeless existence.

AARP research suggests that feelings of financial insecurity are on the rise among those ages 50 to 64.

The same research also suggests that financial insecurity isn't necessarily tied to income, but stems from experiencing "financial shocks," such as losing a job, encountering an unexpected but significant expense, market volatility or even losing money due to fraud.

The sandwich generation is squeezed from both sides

Financial shocks in midlife can also take the form of caring for aging parents while also helping children who are entering adulthood.

Most people realize they might need to eventually help their kids through college or in buying a first home, but not everyone realizes that they might have to do that while helping their own parents.

This sandwich generation provides financial, emotional and sometimes physical support to both kids and parents in a juggling act that's potentially exhausting and can lead to emotional burnout. Add financial strain, and retirement becomes far less tranquil.

Another AARP report further suggests that emergency savings are the key to feeling less financially insecure later in life.

Conversely, the presence of debt and a lack of retirement savings increase feelings of financial insecurity in midlife. It's never too late to pay down debt and increase savings, and the benefits of doing so will be numerous as you age.

Isolation has a price tag

Loneliness comes at a cost. Research from the U.S. Surgeon General suggests that social disconnection poses a health risk comparable to smoking 15 cigarettes a day.

Retirement shouldn't be the time when you metaphorically drop off the face of the earth and stop socializing. If anything, it's a time to strengthen social connections and actively seek ways to be more involved.

Whether they realize it or not, some people try to fill the social void with overspending, leading to compounding problems. According to Psychology Today, research suggests that loneliness can increase materialism, which can further increase loneliness. It can be a vicious cycle.

Building social networks can be just as important as building your investment portfolio when it comes to living a long, happy life. Isolation in retirement isn't solved by reaching into your wallet; it's solved by reaching out to other people.

Financial shame keeps people silent

By some estimates, debt in the 50-plus demographic has nearly doubled in the last decade. It's a problem that many people live with, but few talk about because they're embarrassed.

That embarrassment can sometimes lead to avoidance, which can quickly become a bigger problem because people don't seek solutions, so the problem grows.

Avoidance and money management are a bad combination, especially among those who should be spending this time preparing for retirement.

Recovering from financial shame starts with knowledge and open communication. Stop avoiding your finances and start creating a plan.

Transparent conversations with your financial adviser and those close to you can reveal solutions and ease the burden of stress that can come with willful avoidance.

The new wealth equation includes well-being

True financial planning should be a holistic plan that takes mental health into consideration. Wealth isn't just numbers in an account; it's also your ability to enjoy life.

A comprehensive budget should include time for things that can accentuate your life, such as therapy when appropriate, relaxation and community. If your money plan doesn't protect your mind and well-being, it's not protecting your life.

Speak with your adviser to set up a plan to create the midlife experience you want — one that is rich with community engagement, fun events and a financial plan that moves you toward the life you want.

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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 my favorite online reads is the "Tough Love" column in The Free Press, in which author Abigail Shrier dispenses advice to readers seeking help with a wide range of family-related issues.

Recently, Abigail replied to a query from a reader signed Darrill. Darrill sought advice on how to eject his 38-year-old son, who has been living in Darrill's garage apartment for eight years (along with his current girlfriend) and shows no inclination to leave despite having earned two college degrees funded by his parents.

Darrill writes, "We've made it clear that the gravy train ends in six months, and he either moves or starts paying rent, but I have no confidence that things will change by then."

Abigail responds: "How do you make a 38-year-old act like an adult? You can't. You have but one productive role to play in your son's rescue: Kick him out. Cease your mollycoddling and leave the rest to him. Give them two months and then — if necessary — hire a company to box up their things and put them out on the lawn."

Along with most of the dozens of readers who commented, I agreed that in the spirit of tough love, Abigail's counsel was spot on, if often difficult for parents to take. That prompted me to revisit advice I had given to parents of boomerang kids when I wrote my book Raising Money Smart Kids more than two decades ago.

Would the advice of my younger self still hold up, especially at a time when one-third of adults between the ages of 18 and 34 are still living with their parents? Many parents are happy to lend a hand — or a spare bedroom — but how do you keep the kids from becoming too comfy on the couch, stunting their growth into adulthood and possibly jeopardizing your own retirement?

Lay down the house rules.

My best advice, both then and now, is to nip things in the bud by coming up with "The Plan." You and your children should work out in advance the terms under which they'll move back into your home and what they'll do once they get there.

The Plan should start by addressing how long your children will stay. It needn't be a brief interlude, but it shouldn't be open-ended. If your children are home to attend a graduate or training program, their stay could end with the program. If the kids are job-hunting, start with, say, six months and give them an option to renew. Ditto if they have a job and are saving up for a deposit on an apartment. Not being firm enough on this point is one of the biggest mistakes parents can make.

Another big bone of contention is room and board. If your young adults have a job, The Plan should include an arrangement for them to pay at least a nominal amount of rent. If you don't need the money, you can always put it aside for the kids to save for a security deposit on an apartment or to pay off any debt. As an alternative to rent, they could contribute to the cost of food, streaming services or other household expenses. And kids with no income can provide in-kind payment by cooking, grocery shopping, taking over the yard work or performing other household chores.

Whatever arrangement you agree on, it helps to write down the terms in a contract so everyone is working from the same page. And most important, follow through — even if it means, as in Darrill's case, boxing up their things and moving them out.

But it shouldn't come to that if you create The Plan beforehand. It isn't helpful for either of you if you continue to play the role of enabler, conspiring to keep your adult children from growing up.

Note: If you have had adult children return home, let me know how you handled the situation. I'll be happy to share your advice.

Janet Bodnar is editor at large of Kiplinger Personal Finance. Contact her at Janet.Bodnar@futurenet.com.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Each week in our Ask the Tax Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers on retirement plans and IRAs, including a big change to 401(k) catch-up contributions. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. 401(k) catch-up contributions

Question: I am 53, and I make tax-deferred contributions each month to my employer's 401(k) plan. This year, I intend to max out my regular contributions and also make catch-up contributions to the plan. However, I was told by my employer that, because of the amount of my annual salary, I can put catch-up contributions only into my employer's Roth 401(k). Is this true?

Joy Taylor: Yes. This change, which was enacted under the 2022 Secure 2.0 Act, first takes effect this year. Employees who are 50 and older, and whose annual compensation exceeds $150,000 in 2025, can make 401(k) catch-up contributions only to a post-tax Roth 401(k). Note that the IRS offered a grace period until 2027 for employers and plans to implement the rule in good faith, but many employers have already done so.

2. Roth IRA conversions

Question: I am 75 years old. I am thinking of converting a portion of my traditional IRA to a Roth IRA. Can I do that before taking my required minimum distribution (RMD) from my traditional IRA for the year?

Joy Taylor: No. You must first take your annual RMD for the year before doing the Roth conversion.

For people with multiple traditional IRAs, the rule that you must take your annual RMD before doing a Roth conversion for the year can be tricky. That’s because if a person has multiple traditional IRAs, the total aggregate RMD for the year must be withdrawn during the year before doing a Roth conversion from any of the traditional IRAs. (Note that this doesn’t include RMDs from 401(k)s or other workplace retirement plans.)

3. IRA inherited from spouse

Question: My wife passed away last year in late December. She had a traditional IRA, and I am the beneficiary. After she died, I elected to have her IRA funds added to my traditional IRA, but that didn't happen until February of this year. How do I calculate my RMD for 2026?

Joy Taylor: Since you rolled your deceased wife's IRA into your own IRA, you are treated as owning the IRA. So you determine your RMD as if you were the owner, beginning the year you are deemed to be the owner (that would be 2026, when you added the funds to your IRA). You would then determine your RMD for 2026 using your life expectancy. I am guessing your wife, while alive, already took her RMD for 2025, the year of her death. If not, you have until December 31, 2026, to do so.

4. Inherited Roth IRA

Question: I inherited a Roth IRA from my uncle earlier this year. Do I have to take annual RMDs?

Joy Taylor: No. Roth IRA owners do not need to take RMDs. You should, however, be aware of the 10-year rule for inherited IRAs. Similar to the rules for traditional IRAs, many non-spousal beneficiaries of Roth IRAs inherited after 2019 must clean out the account by the end of the 10th year after the owner’s death.

Because Roth IRA owners are not required to take annual RMDs, beneficiaries of inherited Roth IRAs needn’t worry about whether the original account owner died before or after the starting date for taking RMDs. Roth IRA beneficiaries can opt to clean out the account in year 1, wait until year 10 to take out all the Roth IRA funds, skip years, or take annual distributions, provided they fully deplete the Roth IRA within the 10-year period.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

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 editors and experts, in this Q&A series, 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 or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Estimated Tax Payments and Withholding
• Ask the Editor: Questions on Selling a Home
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Tax Rules for Landlords

Recently, I sat across from a retired professor who wanted to cancel his long-term care policy.

He had reasons, some of them good ones.

His wife had needed care at home for the last stretch of her life. The policy paid, eventually. But every claim was a fight.

• Paperwork came back rejected for reasons nobody at the company could explain
• Approvals that should have taken two weeks took two months
• He spent evenings on hold with a call center while she slept in the next room, and he did that for a long time

By the time it was over, he had a binder of correspondence and a permanent opinion about the name of the insurance company on the letterhead.

Then his own premium notice arrived. The increase was close to 9%.

He told me he was finished. He said he would rather pay for his own care out of pocket than send that company another dollar.

I did not argue with him.

What struck me was not whether he should keep the policy. It was that he was answering two different questions at once and did not seem to know it.

Let me explain why I did not argue, then what I asked him to consider instead.

Where he was right

He was not imagining the carrier problem. The stand-alone long-term care industry has been in slow structural failure for two decades. Insurers priced these policies badly in the 1980s and 1990s, mostly by assuming far more people would drop coverage than actually did. When the losses came, companies raised premiums or left.

By 2020, the number of carriers still writing traditional policies had fallen from more than a hundred to fewer than a dozen, and class actions followed over how the rate increases were disclosed.

When a client tells me his carrier fought him on a legitimate claim, I take it at face value. He lived it. I did not.

He was also right that most people never see the catastrophic scenario. Research prepared for the Department of Health and Human Services found that while roughly 70% of adults who reach age 65 develop serious care needs, only 24% receive more than two years of paid care. Most episodes are short, and many are handled entirely by family.

He had the money. He could have written the checks himself without changing how he lived. That matters, and I told him so.

None of it answered the question in front of him.

Two questions that look like one

Here is what I told him.

He was answering two questions at the same time, and they were not the same question.

The first is whether he trusted this insurance company. He'd answered that over two years of phone calls. Nothing I said was going to move him, and I was not going to try.

The second is whether the policy he owned still has value.

Those feel like one question because the same company is attached to both.

I wanted to be clear that conflating them is not a failure of reasoning. It's how people work. When an institution puts you through something difficult, the frustration attaches to everything connected to it.

• The premium notice
• The paperwork
• The contract itself

You stop seeing an asset and start seeing a relationship you want to leave.

But a contract doesn't lose value because the claims experience was miserable. The terms sit on the page, indifferent to how you feel about the company obligated to honor them.

I wasn't asking him to be less angry. The anger was earned. I was asking him to put it in the right column.

What he actually owned

His contract had a 5% compound inflation rider, purchased more than two decades ago and quietly compounding ever since. The benefit pool had grown past seven figures.

You can't buy that today. New pricing on 5% compound is so high that almost nobody takes it, and lifetime benefit periods have largely disappeared along with it. The feature that made his policy valuable is effectively extinct in the current market.

Now put that against what care costs here. A semiprivate nursing home room in Connecticut runs roughly $182,500 a year, against a national median closer to $115,000. We're one of the most expensive states in the country for this.

He was comparing that number to home care and concluding, correctly, that home care is cheaper. But the home care figures everyone quotes are built on 40 hours a week. That is eight hours a day, five days a week. No nights. No weekends.

The comparison holds right up until someone needs care around the clock, which is exactly the scenario insurance exists for.

Medicare doesn't fill the gap. It covers short-term skilled nursing after a qualifying hospital stay. It does not cover custodial care, which is the help with bathing, dressing and eating that most people need. Medicaid covers it only after assets are nearly gone.

The real question was never whether he liked the company. It was whether he wanted the cost of care, if it came, to come out of his estate or out of a contract he already owned and for which he had already paid.

The door doesn't reopen

Canceling a long-term care policy is a one-way decision. At his age, with his health history, there is no replacement product to buy. If he changed his mind in three years, there would be nothing available.

A decision you can reverse and a decision you can't aren't the same kind of decision, even when the math looks identical.

That asymmetry deserves real weight in the analysis, and it almost never gets any. We evaluate the annual premium against the annual benefit and treat it as a math problem.

It's not only a math problem. It's a question about which mistakes you can survive making.

There is a sobering finding here. A study in the Journal of Risk and Insurance found that roughly a quarter of people who buy a policy at 65 let it lapse before they die, forfeiting everything they paid. The authors found no evidence this was strategic. Lapse rates were meaningfully higher among people with cognitive impairment.

Read that again. The decision to drop coverage often gets made right when someone's judgment is starting to thin, by the person least equipped to see what's coming.

That did not describe my client. He was sharp, and his reasoning was clear. But it's a reason to make this decision deliberately, in writing, with someone else in the room.

When canceling is the right call

I'm not arguing that everyone should keep every policy.

Fewer than 8% of adults 60 and older owned a stand-alone long-term care policy as of 2022. The overwhelming majority of American families handle this without insurance, and many handle it fine.

Self-insuring is a legitimate strategy. If you have the assets, the liquidity and a genuine willingness to spend them on your own care rather than preserve them, paying out of pocket can be perfectly sound. It avoids claims disputes entirely and gives you complete control of what care you buy and from whom.

The honest test is not whether you're angry at the carrier. It's whether the plan survives being written down.

• What is the actual number, at today's costs, inflated forward 20 years?
• Where does it come from, and what does selling that asset do to everything else?
• Who administers it if you can't?
• What happens to a surviving spouse's plan if the first spouse's care consumes the portfolio?

If those questions have good answers, cancel the policy. That's a real decision, made on the merits.

Talk to your family first

I asked him to do one more thing before deciding, and I ask nearly everyone in this position to do it.

Talk to your children before you cancel. Not because the decision is theirs. It's not. It's your money and your care.

But a long-term care decision doesn't stop at the person making it. It lands on whoever coordinates the care, takes the calls and decides what gets sold and when.

They might know something about the shape of the next 15 years for which you haven't accounted. They might have obligations of their own that change what they can absorb. They might simply want to be told.

I've watched families handle this well and watched families handle it badly. The difference is almost never the size of the portfolio. It's whether the conversation happened before the crisis or during it.

What I wanted for him

He made his own decision in the end, and I supported it. That is the job.

What I wanted was for the decision to rest on the economics and the planning, not on a grievance he had every right to hold.

The grievance was real. It simply answered a different question.

Most of the hard choices in retirement have this shape. Somewhere underneath the noise, there's a question you can answer, and the work is separating it from the one you answered a long time ago and have been re-answering ever since.

Related Content

• What You Need to Know About Long-Term Care Before You Need It
• How to Pay for Long-Term Care
• A Financial Professional's Take on Long-Term Care Insurance: Buy or Not?
• If Not Long-Term Care Insurance, Then What?
• Long-Term Care Insurance Alternatives: How to Craft a Flexible Plan to Help Cover Future Health Needs

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

My father was a doctor, often on call for emergencies. Though he worked tirelessly, he valued family time. Long before "work-life balance" entered the American vernacular, he practiced it.

Now, decades later, I carry both his work ethic and commitment to loved ones in my own life and share these values with my daughter and clients at Pence Capital Management, where I am the chief investment officer. With summer winding down, I am reminded of the importance of prioritizing family while pursuing success.

Shopify President Harley Finkelstein spoke last year about the concept of "work-life harmony" rather than "work-life balance." I tend to agree. For each of us, there will be many seasons of life where balance will ebb and flow. For the sake of our health and our families, we must learn to find harmony in the season we are in.

What it takes to put family first

Consider this: A great family, financial success, yet children who feel disconnected.

In my decades of work as a wealth adviser, I've seen the terrible repercussions of professionals who have done well financially at the expense of their families. It's not uncommon in our industry to guide clients through painful divorces.

Even in our Golden State, where the rest of the country comes to rest and recharge, Californians need to get away as much as anyone else.

You can choose to prioritize meaningful connections now rather than risk repairing — even severing — relationships later. While financial security is important, investing time in your family can be even more valuable.

Begin today by establishing clear guidelines and intentionally dedicating time and resources to your family's well-being. It's easier than it sounds.

Consider the 'BS account'

It's often hard to spend our hard-earned money because we fear something might come up that requires those funds. Naturally, we want to protect our assets and save for a rainy day, as we were taught for many years.

But allowing yourself to spend on experiences for you and your loved ones is one of life's greatest gifts, and one that can slip away if we're not careful. We should be as intentional about spending on experiences as we are with retirement planning.

My father called this practice a "BS account" and encouraged me to create one early. His rule: Imagine something you want to do with your family, set a cost and save for it in a separate investment account. When you reach the goal, spend it. Then start again.

When I was growing up, he contributed money to this savings account every month, and whenever it reached a certain level, he would spend it on something for the family — usually a great vacation.

When I was young, his "BS account" bought a lake house. Our family would retreat there every weekend and spend time together outdoors.

In the spring, I formally presented the concept of "BS accounts" to a few hundred of our clients and encouraged them to send our team photos if they took our advice.

It's been one of the greatest joys of my professional career to see their memories start rolling into our inboxes.

What experiences matter most to you?

Today, some of my own "BS account" goes toward funding biannual family reunions, one of which I recently wrapped up in the Middle East.

Yours might fund a magical trip to Disneyland, an escape to Europe or the adventurous "California Double," where you surf in the morning and ski in the afternoon. "BS accounts" are less about the cost and more about intentionality and memories.

Decide what experiences matter most to you and your loved ones. Take the first steps: Set up your own account, define the rules and start saving for moments you'll remember.

Make your memories a priority — commit to spending for experiences, not just saving for someday.

You set the rules.

Create transformative traditions

Children will remember the time and memories they share with their parents more than any paycheck. Financial statements might gather dust in a drawer, but the experiences we share stay with us for life.

For a lasting legacy, make your scrapbook as important as your checkbook.

None of us needs permission to spend our money, but sometimes we do need a little encouragement.

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

While the maximum out-of-pocket and deductible amounts for Part D are set, the full picture for 2027 isn't quite complete yet. Now, all eyes turn to the fall, when the Centers for Medicare & Medicaid Services (CMS) officially releases the upcoming figures for standard Part B premiums, as well as the Part A and Part B deductibles. Keeping an eye out for those numbers — along with reviewing your plan's Annual Notice of Change (ANOC) this October — will ensure you have every piece of the puzzle before open enrollment begins.

According to Fidelity, a 65-year-old retiring in 2026 can expect to spend an average of $185,500 on healthcare and medical expenses throughout retirement. That's an increase of 7% or $13,000 over the 2025 estimate.

Are rising costs and evolving program coverage rules frustrating? Absolutely — that's why we've waded through this year's Medicare changes to help keep you informed and hopefully save you money.

Here are eight Medicare changes to be aware of in 2027.

1. Stand-alone Part D drug plan options are shrinking

The landscape for stand-alone prescription drug plans (PDPs) continues to shrink. Five years ago, Medicare beneficiaries could pick from an average of 30 stand-alone plans; by 2026, that selection dropped to just 11. That represents a 22% drop in plan availability in a single year alone.

Because options are consolidating rapidly, enrollees can no longer rely on their current plan staying available — or remaining price-competitive — heading into next year. Be prepared to shop around.

CMS has a great tool that allows beneficiaries to compare drug plans that can be filtered by deductible, premium or premium + drug costs.

2. Part D premium subsidies end in 2027

The temporary federal support that lowered Part D premiums in 2025 and 2026 is officially ending. The federal government's IRA premium stabilization demonstration — which lowered monthly premiums by an estimated $16 per person in 2026 — will not be extended to 2027.

CMS announced in July that this federal relief will conclude at the end of the year to transition Part D back to standard market conditions, clearing the way for potential premium increases in 2027.

For now, we are all in the dark about what type of rate increases will result from the discontinuation of the subsidy. "Without these extra subsidies in place for 2027, some Part D stand-alone drug plan enrollees could face a larger premium increase for drug coverage next year than in recent years, though plan-specific premium amounts are not yet known," said Juliette Cubanski, vice president and director of the Program on Medicare Policy for KFF.

3. Medicare Part D deductible will go up

Your deductible for your Medicare Part D insurance will depend on the plan you choose. Moreover, the deductible can vary, and you may not have to pay one at all. However, if you are subject to a Part D deductible, there is a maximum that no policy may exceed.

Annual deductible. If your plan has a deductible, you pay 100% of your gross covered prescription drug costs (GCPDC) until the deductible is met. For 2027, that maximum is $700, $75 more than the 2026 amount of $615.

You pay all out-of-pocket costs until you meet your plan's full deductible. After that, you'll pay 25% coinsurance for both generic and brand-name drugs. This continues until your total out-of-pocket spending on covered Part D drugs reaches the out-of-pocket maximum for 2027.

4. Maximum out-of-pocket for Part D expenses is going up

Beneficiaries pay 100% of prescription costs until they hit their deductible ($700 maximum), after which a flat 25% coinsurance rate applies until out-of-pocket spending reaches the statutory maximum for 2027.

In 2027, the cap on out-of-pocket prescription drug costs is $2,400, a $300 increase over the 2026 limit of $2,100. That means you'll be liable for an additional $300 in drug costs over the year in 2027.

5. Medicare Advantage perks and hemp

Federal law still strictly bans traditional medical marijuana across all Medicare plans, but federal regulators have established updated rules that allow access to select non-intoxicating hemp and CBD products.

While high-THC marijuana remains prohibited, Medicare Advantage plans can use updated guidelines for Special Supplemental Benefits for the Chronically Ill (SSBCI) to cover basic, federally legal hemp items. Plans can offer FDA-recognized "Generally Recognized as Safe" (GRAS) products, such as hulled hemp seeds, hemp protein powder and low-THC hemp seed oil.

6. Doctor-guided CBD pilot program

Medicare is also expanding testing doctor-prescribed CBD through CMS Innovation Center initiatives. Starting in 2027, the Long-term Enhanced ACO Design (LEAD) Model will be able to supply non-inhalable CBD directly to patients to help manage chronic pain or sleep issues.

You will not be able to access this benefit at a regular doctor's office. The Substance Access Beneficiary Engagement Incentive (BEI) is a model-specific tool within Innovation Center models and is not available to all Medicare beneficiaries.

The CMS announced in an April 2026 press release that ACO REACH Models and the Enhancing Oncology Models (EOM) may furnish eligible hemp-derived products for up to $500 per year per eligible beneficiary, subject to model requirements and safeguards, as well as clinical determination. This was contingent on submission and approval of an implementation plan.

Note: The ACO REACH models will be ending at the close of 2026 and will be replaced by the new Long-term Enhanced ACO Design (LEAD) that comes online in 2027.

7. Medical telehealth coverage has been extended through 2027

The use of telehealth appointments took on new significance during the pandemic. Previously reserved for patients in rural areas, it was expanded to all Medicare beneficiaries.

However, Medicare's expanded telehealth benefits have since operated under a temporary safety net. Rather than making these broad virtual rules permanent, lawmakers have kept them alive through a patchwork of short-term legislative extensions to avoid a coverage cliff.

That cycle continues for the 2027 plan year. Under the Consolidated Appropriations Act of 2026, Congress extended core Medicare telehealth flexibilities through December 31, 2027. This extension gives beneficiaries and healthcare providers guaranteed stability for at least one year.

While permanent reform remains the ultimate goal for health systems and patient advocates, this latest legislative extension ensures virtual care remains fully accessible and reimbursable through the end of 2027.

8. Lower negotiated prices for some prescription drugs

Medicare Beneficiaries will save on these 15 medications starting in 2027. They were on the second list of prescription medications that should cost less due to negotiations under the Medicare Drug Price Negotiation Program.

Of course, how much you pay overall will also be impacted by the terms of your Part D policy.

Prepare now to get the best Medicare coverage in 2027

Medicare open enrollment starts on October 15 and runs through December 7. In late October or early November, CMS will officially announce the updated Part B monthly premiums along with the Part A and Part B deductibles. Once those baseline numbers land, you’ll have the complete roadmap you need to compare coverage options and pick the best plan(s) for the coming year.

If you have a Medicare Part D or Medicare Advantage Plan, your ANOC is crucial. The information inside will help you decide whether to keep your current coverage or find a new plan for the coming year. Don't make the mistake of keeping your plan on autopilot without reviewing it first.

Related Content

• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise
• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• Don't Toss It! Why Your Medicare Annual Notice of Change Matters

Some people may assume that once Social Security taxes have been deducted from their paychecks, they will automatically be eligible to receive a retirement benefit.

But eligibility is not attained simply by starting to pay into the program. Workers must accumulate a minimum number of Social Security credits before they can collect retirement benefits on their own earnings record.

This can create an unpleasant surprise for immigrants, people who spent only part of their careers in the United States, workers who moved in and out of covered employment and those who stopped working earlier than expected.

The good news is that falling short of the standard requirement does not always mean the Social Security taxes you paid will produce no benefit. Depending on your age, marital history, future work plans and employment in another country, several options may still be available.

Understanding the 40-credit requirement

A credit is the basic unit for determining whether a worker is insured under the Social Security program. To be eligible to collect retirement benefits, a worker must have earned enough income, subject to FICA or SECA payroll tax contributions, to have received 40 credits.

Each credit is earned by a dollar amount and not specific to when it is earned in the calendar year.

In 2026, the amount of earnings required for one credit is $1,890. Therefore, to earn all four credits in 2026, a worker must earn and pay FICA or SECA taxes on at least $7,560 of gross income or net income if they're self-employed.

No matter how high the earnings may be, only up to four credits may be earned in one year.

If a person earns a lower amount than $7,560 in 2026, they will earn fewer credits. A person earning $7,560 and another earning $100,000 would each receive four credits for the year.

As an example, let's consider a worker who expects to earn $3,900 in 2026. This person will earn two credits in 2026. This is determined as follows: $3,900 ÷ $1,890 = 2.06 → 2 credits

A credit is never rounded up since the dollar amount of the next quarter has not been met. Only full quarters of coverage can be earned.

Credits determine only whether you are insured for benefits; they do not directly determine the size of your Social Security benefit.

You may be able to earn the missing credits

Social Security credits remain on your earnings record permanently. They do not expire simply because you stop working, leave the United States or take a job that is not covered by Social Security.

A person with 36 credits, for example, could earn the remaining four credits through one additional year of covered employment. Because credits are based on annual earnings, the person would not necessarily need to work for the entire year.

Before making employment decisions, all workers, of any age, should review their official earnings history through their personal my Social Security account at SSA. Missing or incorrectly reported earnings could affect both the number of credits and future benefit amounts.

SSA recommends regularly checking the earnings record and requesting corrections when necessary.

Workers should also confirm that their current employment is covered by Social Security. Most private-sector employment is covered, but certain state and local government positions, foreign employment and other specialized work arrangements may operate under different rules.

You might qualify on someone else's record

Social Security offers benefits to dependents of a worker as well. A person does not need 40 credits on their own record to potentially receive a benefit as a spouse, divorced spouse, widow or widower.

For example, someone who is married to a worker receiving Social Security retirement or disability benefits may qualify for spousal benefits, generally beginning at age 62. At full retirement age (FRA), the maximum spousal benefit may equal as much as 50% of the worker's FRA benefit. Claiming before FRA will result in a permanent reduction of the spousal benefit.

A divorced person may potentially qualify on a former spouse's record if the marriage lasted at least 10 years, and the other eligibility requirements are met. Survivor benefits may also be available to qualifying widows, widowers and surviving divorced spouses.

All these benefits are based on the worker's insured status, so the spouse or former spouse does not have to independently earn 40 credits.

The rules for disability and survivor protection are also different from the standard retirement rules. Younger workers may qualify for Social Security Disability Insurance (SSDI) with fewer than 40 credits, although they must generally satisfy both a total-work and recent-work requirement.

Likewise, the number of credits required to provide survivor protection depends partly on the worker's age at death.

In certain cases, as few as six recent credits may provide benefits for surviving children and a spouse caring for those children.

What happens to the Social Security payroll tax contributions already paid?

Social Security is a social insurance program, not an individual investment account in which each person's payroll taxes are held separately.

As such, Social Security taxes paid by employees and employers into the Old-Age, Survivor Disability (OASDI) trust fund and Hospital Insurance (HI), or Medicare, trust fund cannot be refunded merely because a worker has not accumulated enough credits to qualify for benefits from these funds.

This makes it particularly important to identify possible eligibility through additional work, family benefits or international coverage before assuming the contributions will never produce a benefit.

Worked in another country? A totalization agreement may help

The U.S. has bilateral Social Security agreements, commonly called totalization agreements, with numerous countries, including Canada, the United Kingdom, Germany, France, Italy, Australia, Japan, South Korea, Brazil and others.

These agreements serve two primary purposes:

• They help prevent workers and employers from paying Social Security taxes to two countries on the same earnings
• They also help people who divided their careers between the U.S. and another country qualify for benefits when they lack sufficient coverage under either system alone

For U.S. benefits, a worker generally must have at least six U.S. Social Security credits before foreign coverage can be considered. The foreign credits do not become U.S. credits. Instead, the two countries' coverage periods may be combined to establish eligibility.

If the combined record qualifies the worker for a U.S. benefit, the SSA calculates a partial, or prorated, benefit reflecting the portion of the worker's career covered under the U.S. system. The foreign country may separately determine whether the person qualifies for a benefit under its laws.

A worker who already has enough U.S. credits to qualify without foreign coverage generally receives a regular U.S. benefit rather than a totalization benefit.

Review and prepare before retirement

Anyone who has worked in the U.S. for fewer than 10 years should review their Social Security earnings record in detail well before retirement. They can then determine how many credits are on their record, whether any earnings are missing and how many additional credits could realistically be earned.

Considering all options is critical:

• Are spousal, ex-spouse or survivor benefits available?
• Was part of the career spent in a country with a U.S. totalization agreement?
• Could another year or two of covered work secure insured status?

Coming up short of 40 credits may limit the options, but it does not always end the conversation. A careful review of the worker's complete employment and marital history can uncover benefits that might otherwise be overlooked.

Related Content

• How Divorced Retirees Can Maximize Their Social Security Benefits: A Case Study
• Paper Social Security Checks Are on Their Way Out: How to Help Your Aging Loved Ones Cope
• Social Security Family Maximum Benefits: Are You Eligible and How Much Can You Receive?
• Filed for Social Security Too Soon? 2 Ways to Get a Do-Over
• Still Working While Receiving Social Security? A Financial Adviser's Guide to the Earnings Test

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.