Answer: There’s a reason so many people end up having to work in retirement.

The Social Security Administration puts the average monthly retirement benefit today at $2,012. Meanwhile, the median retirement savings among Americans ages 65 to 74 at just $200,000 as of 2022, the last year for which data are available.

A $200,000 nest egg results in about $8,000 of annual income under the popular 4% rule. Combined with roughly $24,000 a year in Social Security, that’s not exactly living in luxury. And so it’s not surprising that in 2024, about 7% of the U.S. workforce was 65 and over, according to the Bureau of Labor Statistics.

But while some retirees may have no choice but to continue working part-time to supplement their Social Security benefits, others opt to work not because they have to, but because they want to.

T. Rowe Price found that while 48% of retirees who are working do so for financial reasons, 45% opt to work for the social and emotional benefits. And if you have plenty of retirement savings — say, $2.2 million worth — it wouldn’t be an unusual thing to work a couple of retail shifts a week to get out of the house and have something to do.

Unfortunately, though, today’s economy is taking a toll on retailers. Consumers are spending their money more cautiously to cope with stubborn inflation, and it’s forcing companies to rethink their staffing needs.

Retail companies announced 3,290 job cuts in November, according to data from Challenger, Gray & Christmas. And retail job cuts for the year were up 139% from 2024.

If you’re working a retail job for fun, but your young colleague who needs the money just lost some hours, you may be toying with the idea of quitting so that she can have your shifts and potentially avoid what could be a terrible loss of income.

It’s an extremely nice gesture on your part. But make sure to think things through before tendering your resignation.

Make sure your efforts won’t be for nothing

If you don’t need the money from your retail job and your colleague desperately does, quitting so she can have your shifts is a true act of kindness. But Chad Gammon, CFP and owner of Custom Fit Financial, says that before you do that, make sure your actions will lead to the outcome you’re hoping for.

"The scenario can be tricky and may not have the consequences you’re looking for," he warns.

"First, you may rely on the non-financial aspects of the job that help your health. Second, you could quit and it doesn't do anything to help the younger co-worker."

Gammon suggests talking to management about the situation before quitting. If possible, ask outright if your resignation will allow your younger colleague to retain the hours they want. If not, there may not be a sense in you giving up a job you enjoy.

Remember, Gammon says, your retail job may be adding a lot of value to your life even if it isn’t financial in nature. You may be using your job to maintain social connections and get some exercise. Or, he says, you may like having a routine and structure. Before you give all of that up, make sure there’s an actual reason to do so.

You may have an easier time than your colleague finding other work

Let’s assume you’ve talked to your manager about giving up your shifts, and they’ve confirmed that those hours will, indeed, go to your younger colleague. In that case, Robert Jeter, CFP and founder at Back Bay Financial Planning & Investments, says that if you’re not too attached to the job, giving it up is probably not such a huge risk.

Fulfillment and social interaction from work are aspects that are commonly lost transitioning into retirement, he explains. However, he says, "If this individual has a deep background or professional expertise, they should be able to find other work."

Also, if you don’t need the money your job provides and you’re doing it for social interaction, there may be other ways to stay busy, such as volunteering or joining a club.

If you do decide you’d rather be in a work environment, your $2.2 million in savings gives you the flexibility to take your time finding the right fit. This way, you’re doing an extremely nice thing to help a colleague you clearly care about.

"Giving back, whether it be time, talent, money, or generosity, is the real currency that I think becomes so valuable for affluent retirees," Jeter explains. "I have zero doubts this individual would have regrets by helping out their colleague — and they would likely have zero issues finding other work that brings value."

Read More

• I Retired at 63 to Enjoy My Free Time but My Grown Kids Want Help With Child Care. I Love My Grandkids, but It's Too Much. What Should I Do?
• My Adult Child Was Laid Off. Can We Discuss It Without Ruining the Holidays?
• I'm Retiring With $3.3 Million at Age 65 and Don't Want to Touch My Portfolio's Principal

Most people have at least a little familiarity with annuities, which are attracting more attention.

Sales set a record for the first half of the year: $223.0 billion in total, up 3% from the same period last year and a record, according to LIMRA, an industry research group.

More people are concluding annuities are right for them. That doesn't mean an annuity is right for you. Different types of annuities do very different things. One type might fit your needs precisely, while another might not at all.

The best plan is to learn about annuities, decide if any might be right for you, then home in on which would be optimal.

Here are four key considerations.

1. Your age

Nonqualified annuities are funded with after-tax money. They're not held in an IRA, Roth IRA or other qualified retirement account.

These annuities offer one of the few ways to get powerful tax advantages with nonqualified savings. As long as you don't withdraw any interest or earnings from the annuity, you won't be taxed on it.

With tax deferral, your money can grow faster. With an IRA or 401(k), you must start taking distributions, knowns as RMDs, by age 73. With nonqualified annuities, there's no age requirement. You can let your money compound without taxes as long as you like.

Sound like a great deal? Sure. It's such a great deal, the government puts restrictions on it. Any withdrawals of annuity earnings before age 59½ are taxed and penalized.

With a few exceptions (such as for permanent, total disability), there's a 10% IRS penalty on withdrawals, along with regular income tax.

All accumulated interest must be withdrawn first before you can take out tax-free return of principal, according to IRS rules.

Because of that penalty, most annuities are bought by people who are in their 50s or older because they're already exempt from the penalty or soon will be. Age is an important consideration.

2. How much you have in savings and investments

With few exceptions, annuities aren't completely liquid. Those designed to build up your savings (deferred annuities), you'll pay a penalty to the issuing insurance company if you make an excessive withdrawal or cancel your policy during the penalty period.

With almost all income annuities, once the free-look period is past, you're committed and can't get your principal back. You're locked into a contract.

If you're considering an annuity, it's important to figure out how much access to your money you might need.

If your savings are minimal and you have a lot of credit card debt, you probably can't afford to lock up money in an annuity. You'll need unhindered access to your funds when expenses come up.

There's no magic number for the amount of savings you need to make a nonqualified annuity feasible, but you don't have to be wealthy. It depends a lot on your circumstances.

Can an annuity be a good idea if you have $250,000 total in savings and investments? You can probably move some of that safely into one or more annuities.

But people with less in savings can safely put money into an annuity. For instance, if you're retired and have a good stream of income from a pension, Social Security and perhaps other sources, you might be able to safely sock away some money in an annuity.

3. Your asset allocation

Annuities of all types (except variable annuities) are designed to reduce risk because they come with guarantees. Income annuities guarantee payments for either a set period or life. Fixed deferred annuities come in various flavors, but (except variable annuities) guarantee your principal.

If you're heavily invested in stocks and can afford to tie up some money in an annuity, it would make sense to use a fixed or income annuity to lower your risk and give you peace of mind.

4. Income generation

If you're retired or semiretired, or about to be, you might need to generate income, especially if you want to delay taking Social Security benefits to maximize your payout.

An immediate income annuity can be a great answer. Most people choose the lifetime option. This lets you create your own lifetime private pension and helps assure you'll never run out of money. It's "longevity insurance."

I'm a big advocate of income annuities, but I know they don't appeal to some people because you're signing over your money to an insurer in exchange for a stream of guaranteed income.

Those folks might want to use a fixed-rate annuity — a multi-year guarantee annuity or MYGA — instead to generate income.

A MYGA is a CD-like vehicle that provides a set rate for a set period, and rates are typically higher than bank CD rates for the same term. For instance, as of November 2025, you can get up to 6.30% on a five, six or seven-year MYGA. Most MYGAs allow penalty-free withdrawals of interest.

If you put $100,000 into a 10-year contract earning 5.75% with that feature, you'll receive $5,750 a year for the next 10 years. If you withdraw all the interest each year, you'll still get your $100,000 principal back at the end of year 10.

Flexibility is a big advantage. Let's say during years one to five, you need to take out all the interest.

In year six, you start receiving Social Security payments and no longer need the income. You can let the interest compound tax-deferred in the annuity for the remaining five years. After five years, the principal will have grown to $132,252.

Determining if an annuity might be right for you takes some thought and planning. Consider your situation in total, and if an annuity can help you meet your goals, act now.

Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and lifetime income annuities. Ken is a nationally recognized annuity expert and widely published author. A free rate comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356. The firm also offers an income- annuity quoting service. There are no fees or charges for the firm's services; 100% of the client's money goes to work for them in their annuity.

Related Content

• I'm an Annuities Expert: Here Are Two Ways to Use Annuities to Benefit From the OBBB
• How Much Income Will an Indexed Annuity Get You? An Annuities Expert Lays Out the Numbers
• Watch Out for Annuity Surrender Charges: How to Avoid Them
• What You Don't Know About Annuities Can Hurt You
• How Much Income Can You Get From an Annuity? An Annuities Expert Gets Specific

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.

Retirees have long expressed their frustration that a portion of the Social Security benefits they've spent a lifetime earning could be subject to federal income taxes. And for years, those concerns have sparked debate across the political spectrum.

During his 2024 campaign, President Trump proposed exempting Social Security from federal income tax. And in recent months, lawmakers in Congress (both Republicans and Democrats) introduced legislation with that same goal in mind.

So far, however, the tax on benefits — which is based on a person's filing status and income — remains in place.

But thanks to the One Big Beautiful Bill Act (OBBBA), which passed in July, many older Americans can still count on a hefty tax break, at least for the next four years.

The new law temporarily provides a "bonus" deduction of up to $6,000 each year, from 2025 through 2028, for taxpayers 65 and older. (That's $12,000 for married-filing-jointly couples if both spouses are 65-plus.) This is on top of the annual additional standard deduction that these older taxpayers are already allowed.

But unlike the existing additional standard deduction, you can take the new bonus deduction even if you choose to itemize on your tax return.

There are income limits: The value of the bonus deduction begins to phase out at a modified adjusted gross income (MAGI) of $75,000 for single filers and $150,000 for those who are married and filing jointly.

And it phases out entirely if you have a MAGI above $175,000 as a single filer, or above $250,000 for those married and filing jointly. (It is not available at all to those whose tax status is married filing separately.)

Benefits of the new tax break

For many middle-income individuals and couples, this will make a significant difference at tax time. Most will be able to escape, or at least reduce, the taxation of their Social Security benefits.

And because the bonus deduction isn't tied specifically to Social Security, others will get a break, as well. For example, lower-income retirees, who generally don't owe taxes on their Social Security benefits, can also take advantage of the bonus deduction.

So can older adults who have decided to delay filing for their Social Security payments as long as possible in order to keep growing their monthly payment.

The reform recognizes the financial pressures retirees face today, from rising health care costs to housing instability, and aims to provide a buffer against these challenges.

And if supporters of the new law are correct, the tax relief will also have a positive impact on the overall economy — both locally and nationally — as retirees will have more money to spend on goods and services.

Here's how the bonus deduction for older people works

The new deduction is referred to as a "bonus" because it can be layered on top of the standard deduction you take for your filing status, or on top of your itemized deductions, and the additional deduction that older adults already receive.

Here are some basic examples of what that could look like, based on 2025 deduction amounts, for taxpayers who are eligible for the full bonus deduction.

An eligible single filer, age 65-plus, could receive: $15,750 standard deduction + $2,000 annual additional deduction + $6,000 new bonus deduction = $23,750

An eligible married couple filing jointly, both 65-plus, could receive: $31,500 standard deduction + $3,200 annual additional deduction ($1,600 each) + $12,000 new bonus deduction ($6,000 each) = $46,700

Make the most of your bonus with proactive planning

How can you optimize the bonus deduction for the next four years — and into the future if it's made permanent?

If you're hoping to avoid paying taxes on Social Security, the bonus deduction alone may be enough to keep you under IRS thresholds for your filing status. If you're single and your combined income is between $25,000 and $34,000 — or between $32,000 and $44,000 if you're married filing jointly — 50% of benefits may be taxable.

If your combined income is over those limits, 85% of your benefits may be taxable. Though the bonus deduction won't exempt everyone, it's expected to deliver welcome relief for many retirees.

And with proactive planning, there may be other ways to benefit from the bonus deduction. You might find the time is finally right to do that Roth conversion, for example.

Or, if you had high medical bills or made a substantial gift to charity, you may want to look at itemizing this year.

You can also use the deduction to offset the taxes on required minimum distributions (RMDs).

Your financial adviser and/or tax professional can help you evaluate a variety of strategies that might suit your needs. But don't delay: The clock is already ticking on this opportunity to pay less to Uncle Sam and keep more money in your pocket.

For many older Americans, that's more important than ever.

The passage of the OBBBA represents more than a tax cut; it's also the recognition of this generation's contribution to the nation's economy and an assurance that retirement shouldn't come with new financial burdens.

And I expect, as its implementation continues, that the long-term effects of this innovative law could play a crucial role in shaping retirement policy for generations to come.

Kim Franke-Folstad 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.

Related Content

• If You're Retired or Soon-to-Be Retired, You Won't Want to Miss Out on These 3 OBBB Tax Breaks
• I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term Plan
• Is the One Big Beautiful Bill Really All That Great for Your Retirement?
• ​​What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's Guide
• Your Golden Years Just Got a Tax Break, But There's a Catch

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

It's understandable to get more conservative with your investments the closer you are to retirement or if you're already there. After all, the money has to last decades. Plus, you worked hard amassing your nest egg, so who can blame you for wanting to protect it!

It’s why conservative portfolio constructions — such as 40% stocks, 60% fixed income — exist, or why annuity sales in the third quarter alone reached nearly $120 billion.

People don’t want to outlive their money, nor do they want to lose sleep worrying about what’s happening in the stock market.

Peace of mind for a price

But safety comes at a cost. Sometimes that conservative nature can cause more harm than good, even in volatile times.

Just ask all the investors who went to cash when stocks tumbled during the Great Recession, the COVID-19 pandemic and the bear market of 2022. By bailing out when the market was down, they lost out on the recoveries and bull runs that followed.

It’s not just the prospect of missed returns that hurts overly conservative investors, especially retirees. It’s the risk that their investments won’t keep up with inflation, putting them at risk of outliving their money in retirement.

And if that isn’t scary enough, what if you didn’t even know your portfolio had gotten too conservative? After all, many of us set up our asset allocation and forget about it, especially if all of our money is tied up in our 401(k) or we don’t have a financial adviser.

The good news is there are telltale signs your retirement portfolio is too conservative, and even better, some strategies you can employ to fix it. Read on to learn what they are and what you can do.

The “safe” cash pile isn’t so safe

Cash is not king in retirement. Sure, it’s nice to have some on hand, but having too much of it is a concern.

“Anytime you're keeping dry powder for some future event, it’s a big red flag,” says Jamie Hopkins, CEO of Bryn Mawr Trust Advisors. “A lot of people are holding this cash waiting for the tariffs to be over to get back in the market. You get returns in the market when you manage through the risk and volatility.”

Hopkins says you're better off buying when a stock is down and holding it for the long term. Even when you retire, a stock will still have years to recoup its losses.

Missing the market’s strongest days

The S&P 500, Nasdaq, and Dow Jones Industrial Average each set record highs in the past three years, and 2025 is shaping up to be another one for the books.

That’s great news for stock investors, but not so much for their more conservative counterparts, who have steered clear of stocks, favoring cash, bonds, treasuries and CDs, which all had lower returns.

Consider if $100,000 had been invested over twenty years through the end of 2024. If it had been invested in bonds, it would have appreciated to around $185,000, says Eric Diton, president and managing director of The Wealth Alliance. In a large-cap core stock, it would have appreciated to roughly $844,000. A big difference.

“The idea is to find assets that don’t all do the same thing at the same time,” said Diton. “If you plant a garden, you don’t want everything to bloom at the same time and die at the same time. It’s the same thing with investing. You try to diversify into different asset classes.”

When inflation eats your retirement

If inflation is running at 3% and your investment returns aren’t, that’s a doozy of a sign your portfolio is too conservative, both Hopkins and Diton said. If you don’t change your lifestyle or your asset allocation, you're likely to run out of money in retirement.

“If you had $100,000 and 3% inflation, over 25 years, that $100,000 buys you about $47,760,” said Diton. “You lost over half your purchasing power.” What about 8% inflation, which occurred after the pandemic? You would lose about 85% of your purchasing power."

Now that you know the signs, it's time for a calculated shift

Understanding that you've been playing it too safe in your approach to investing and retirement is important. But recognizing that you've been too conservative is not enough. You may need to use that knowledge to make some changes. Here are a few good options for what to do.

Stop guessing and get diversified

The best way to ensure you aren't overly conservative is to make sure your investments are diversified, and the only way you'll know is by reviewing your portfolio. What better time than the end of the year to do that?

If you haven't worked with a financial adviser, it may be time to consider doing so. It will cost some money, but if it prevents you from having an overly conservative portfolio, it may be worth it.

If not, here are some of the signs your portfolio isn’t diversified:

-Your money is invested in fewer than ten stocks

-Your asset allocation is heavily weighted in one area, say, bonds

-Your portfolio moves up or down on specific news. For example, Nvidia misses earnings, and your entire portfolio tanks.

-All the funds in your portfolio have overlapping investments

-There’s no international exposure

-Most of the investments are in one sector or industry.

Create a comfortable cash "safety floor"

One way to have the best of both worlds — peace of mind while staying invested — is to create a withdrawal strategy once you are in retirement.

This is a plan for how you’ll spend your money, taking into account inflation, longevity and ideally, unexpected health care expenses. The idea is to cover all of your expenses and leave the rest alone to continue to grow and compound.

There are several ways to do that. Hopkins points to flooring as one option. With this approach, you create a secure, guaranteed base of income that covers your monthly essentials, which typically include housing, health care, insurance, transportation, food, toiletries, and apparel, and the rest of the money can be invested.

“Once you understand what your essential expenses are and what you have in income, you’ll be much more willing to put discretionary spending at risk,” says Hopkins.

Future-proof your money with the bucket approach

Another way to ensure you stay properly invested is the bucket approach to retirement spending. With it, you put your retirement savings in three buckets: short-term, medium-term and long-term.

The first bucket of spending covers your short-term needs, the money that you’ll spend in the first one to four years of retirement.

The medium-term bucket is designed to provide a stable stream of income that can keep up with inflation and feed cash into the short-term bucket. That money covers years five through ten. Investments in this bucket tend to be less risky.

The long-term bucket is for growth during years ten through thirty. The money will be invested more aggressively in the stock market.“I’ve found bucketing or time segmentation is very helpful,” says Hopkins.

The best time to start is when you feel ready

Taking risks can be scary, especially when it comes to your life savings, but getting even slightly less conservative may be easier than you think, which is why baby steps are totally okay.

Baby steps might include a commitment to look over your portfolio this month, or a little shift in your asset allocation next month.

The good news is that just being aware you're too conservative and understanding the implications may be enough to get you to make a calculated move when you're ready.

Related Content

• Should You Skip the Wait and Prepay Your Retirement Dreams?
• Are You a Retirement Millionaire Too Afraid to Spend?
• The ‘Common Man’ Rule of Retirement Spending
• Are You Saving Too Much for Retirement? Know These Surprising Downsides

Some are consistent savers, while others don't give it too much thought. Then there are the extremes and the in betweens.

Wondering where you fall on the saver continuum and how it matches up with three out-of-the-box spirit animals — the sloth, chipmunk and bat? Take our quiz and find out.

More on Retirement, from the Kiplinger team:

• Is 2026 Your Year To Retire?
• Are You Saving Too Much for Retirement? Know These Surprising Downsides
• Should You Skip the Wait and Prepay Your Retirement Dreams?
• Avoid These Four Mistakes in the Run Up to Retirement

If you're a federal employee, understanding how to optimize your many benefits before transitioning to retirement is critical to achieving long-term success.

Yet, finding clear and trustworthy guidance that's specific to government workers, and the programs for which you're eligible, can be challenging.

Interpreting the myriad regulations that govern federal benefits has always been difficult, particularly when it comes to retirement. It can be tough to stay up to date with regulations that are subject to change at any time.

Getting timely answers can be a struggle

Since there isn't a single agency in charge of everything and everyone, it can take time to track down valid answers that pertain to your individual circumstances. (Time you likely don't have if you're still working.)

As a financial adviser who frequently consults with government workers, I can appreciate the struggle. Creating plans that optimize their unique benefits has become an important part of my practice.

Many variables can affect a federal employee's future, so it's no wonder clients and prospective clients often come in with a long list of questions when we meet.

There are two topics that come up repeatedly that I think are especially critical. The questions I hear most often are:

1. Should I roll over my Thrift Savings Plan (TSP) in retirement or stick with the plan I have?

The TSP is similar to the tax-advantaged 401(k) plans available in the private sector — and it can be a great plan when you're still working.

It makes investing easy with automatic enrollment, matching agency contributions, catch-up contributions starting at age 50, a Roth option and more.

But once you reach retirement, the TSP can lose some of its luster.

For one thing, the plan doesn't offer as many investment options as you'll find within a traditional or Roth IRA. It has only five funds to choose from (C, S, I, L and G).

Some investments that are popular with retirees can't be purchased through a TSP. These include certificates of deposit (CDs), annuity safe-growth accounts and assets such as real estate. This can make diversifying your risk in retirement more difficult.

There's also the question of the taxes with which TSP account holders will eventually have to deal. Just as with a 401(k), withdrawals from a traditional TSP are generally taxed as ordinary income. This includes contributions made with pre-tax dollars, agency contributions and earnings.

If you've stashed a sizable chunk of your savings in a TSP (unless it's a Roth option), you could be setting yourself up for burdensome tax bills in retirement.

If you're comfortable with the structure of the TSP, you might decide to stick with the plan. But rolling over your TSP to a traditional and/or Roth IRA is worth considering if you're looking for more flexibility in retirement.

A financial adviser can help you consider all the options available, run projections to determine whether a rollover makes sense for you, explain the various withdrawal choices if you stay with the TSP and assist you in making the appropriate moves when the time is right.

2. Should I choose the survivor benefit so my spouse can still receive pension payments if I die first?

When determining what portion of your pension, if any, your spouse will receive upon your death, you have three basic options.

You can choose for your surviving spouse to receive 50% of your pension for the rest of their life, no matter how long that might be. This security comes at a cost: If you make this election, your ongoing monthly pension payments will be reduced by 10%.

That can add up to a hefty sum over the years. (If your spouse dies first, your benefit will be restored to the full amount — but you won't get back the money you lost.)

You can opt for a reduced survivor benefit of 25%. This choice will cost 5% of your ongoing pension payments, which is a smaller, more manageable bite.

It still requires some math to determine if it's the right move. (Your benefit will go back to the full amount if you're the surviving spouse, but the money you gave up in exchange for the survivor benefit will be gone.)

You can go with the self-only option. The payments you receive while you're alive won't be reduced, but your spouse won't receive any payments if you pass first. They'll also lose the health insurance coverage you had under the Federal Employees Health Benefits (FEHB) program, which would remain in place if you chose a survivor benefit.

How might they feel about losing you, the reliable income from your pension and FEHB coverage all at once? That's something you'll have to discuss. If you go for this option or the reduced (25%) survivor benefit, your spouse will have to sign a notarized document agreeing to the choice.

As with any financial decision, there are multiple strategies to consider and numbers to run when making this important call.

Consulting with a financial adviser who understands the nuances of the Federal Employee Retirement System (FERS) can help clarify the trade-offs.

For many couples, we've found life insurance can be used to replace both the lost pension and cover the cost of health insurance if a surviving spouse hasn't yet qualified for Medicare.

Life insurance offers other benefits, as well. The beneficiary of the life insurance policy (often the surviving spouse) receives the money tax-free. Life insurance policies can also include long-term care options in which the death benefit can be used to pay for future care, instead.

Asking for help

I often compare getting useful FERS information from the government to trying to break into one of those confounding plastic "clamshell" packages. It's far more difficult and frustrating than it should be.

The U.S. Office of Personnel Management (OPM) has an extensive FAQ section on its website that can give you a good start.

But when you're ready to begin making the decisions that will impact the retirement you've worked so hard for, I recommend talking to an experienced professional who can help you make the most of the benefits you've earned.

Kim Franke-Folstad 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.

Related Content

• Five Things Federal Employees Should Know for Retirement
• Four Action Items for Federal Employees With $2M+ Saved
• Five Wins for Federal Employees in the Social Security Fairness Act
• How Federal Retirees Can Make SSFA Repeals Work for Them
• To Retire, Mind Your P's: Purpose, Planning and Procrastination

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.

Answer: The nice thing about being retired is getting to take back control of your time, as opposed to having to be on an employer’s schedule. That could mean spending your days doing projects at home, enjoying hobbies or spending time with the people about whom you care.

A recent Transamerica survey (PDF) of retirees found that 32% are prioritizing time with family, and 19% are taking care of grandchildren.

While you might find it fulfilling to look after your grandkids on occasion, there can come a point when it gets to be too much. Not only can being a constant babysitter get exhausting, but it could monopolize more of your time than you’re comfortable with.

If you’re a retiree who’s constantly being pressured to babysit, you might need to speak up so it doesn’t become a point of stress or bitterness for you. Here’s how to have that conversation without sparking a war with your grown kids.

Share the root of the problem

Before you broach the topic of child care (or too much of it) with your grown kids, it’s important to pinpoint the factors that bother you the most, says Cory Reid-Vanas, licensed marriage and family therapist (LMFT) and founder at Rocky Mountain Counseling Collective.

"In preparation for talking to the adult child, it’s important to identify what feels overwhelming," Reid-Vanas says. "Is it the frequency? The number of hours? The lack of notice? Or all of the above?"

Identifying your biggest sticking points could lead to a more productive conversation.

For example, if the issue is a lack of notice, it paves the way to a discussion along the lines of: “I enjoy watching the kids, but I need more of a heads-up so I can plan my own schedule.”

Lead with empathy

Child care costs today are expensive. Care.com puts the average cost of an after-school babysitter for two children at $332 a week. For those needing day care, the cost can be even more astronomical.

That’s why Andrew Kami, Ph.D. and marriage and family therapy professor at Pacific Oaks College, says it’s important to lead with empathy when having conversations with your grown kids.

“Let your children know you understand their stress, the financial pressures, and how hard it is to find trustworthy childcare,” he says.

Reid-Vanas says that if you can afford to offer financial support to help your grown kids cover the cost of child care (and shift some of the burden away from you), that's something to consider.

However, he says, "I recommend that it be a decision the grandparent makes on their own, with some potential guidance from a financial adviser to help them evaluate the feasibility.”

You should not let your grown kids pressure you into chipping in for their kids’ day care, especially if that puts a strain on your own finances.

Share what your experience has been like

Your grown kids might not realize how difficult it is to provide frequent child care at your age if you don’t loop them in. If they start to recognize that it’s physically exhausting, they might start being more judicious in asking for help.

Kami suggests saying things along the lines of: “I love spending time with the kids, and I understand how tough child care is right now. But the amount of babysitting I’ve been doing is becoming overwhelming for me.”

Set clear boundaries so there’s no confusion

If you’re willing to continue watching your grandchildren but want to do so less frequently, it’s important to make that very clear to your grown kids.

“Setting boundaries is the healthiest way to preserve the relationship, but it has to be done thoughtfully,” Kami says. He suggests defining what you can and cannot do so your own children understand what commitment you’re willing to make.

For example, Kami says, you can say something like, “Going forward, I can help on Fridays for a few hours, but I can’t commit beyond that.”

Better yet, Kami says, be as specific as possible — for example, “I can help on Fridays from 3 pm to 6 pm.”

“Predictability lowers stress for everyone and prevents misinterpretation,” he explains.

That said, if you can’t commit to a predictable schedule, that’s OK, too. You could instead offer to watch your grandkids on occasion so their parents can enjoy a date night, Kami suggests.

You might start out with a set schedule that evolves over time based on your needs as well as those of your grandchildren. Continue to revisit your arrangement to ensure that it’s working for everyone.

Don’t let resentment fester

If you feel like you’ve become your grandkids’ default babysitter against your will, it’s important to share your concerns before resentment builds, Kami insists.

“[Your] children may have assumed you were available simply because you hadn’t said otherwise,” he says. Helping them understand that you need balance and boundaries is not hurtful, it’s honest.”

Reid-Vanas agrees.

"Setting boundaries does not mean that you love your grandchildren less. Setting boundaries means that you’re ensuring you can be the best grandparent possible, and there are some limits to that," he says.

Read More

• I Want to Help Pay for My Grandkids' College. Should I Make a Lump-Sum 529 Plan Contribution or Spread Funds out Through the Years?
• I Want to Retire, but I Have to Keep Working so My Adult Kids Have Insurance
• I'm a 76-Year-Old Widow and My Son Is Pushing Me Into Assisted Living. How Do I Convince Him I'm Fine Living on My Own?
• I'm Retired and Want to Save Money, but My Adult Son Wants to Move Back Home After His Divorce. What Should I Do?

RMDs are like colon cancer screenings: You thought they were only for older folks, and ignoring them now could lead to bigger problems down the road.

When you get to the current RMD age of 73 (updated in the SECURE 2.0 Act) and you're forced to take money from your traditional accounts, you're not just paying taxes on that specific RMD dollar amount.

• Your RMD amount likely makes more of your Social Security taxable
• Your RMD amount could force you to pay extra for Medicare through the income-related monthly adjustment amount (IRMAA)
• Your RMD amount could make you lose out on deductions such as the enhanced deduction for older people and the medical expense deduction
• And you could pay an extra 25% tax penalty on RMDs you don't take out on time

Here are the five biggest mistakes I see retirees make with their RMDs. Learn from these mistakes so that you can plan your RMDs ahead of time and hopefully lower their tax bite.

Mistake No. 1: Waiting until age 73 to create a plan

One of the most consistent concerns I hear from retirees is, "How bad am I going to get killed on taxes when my RMDs start?"

They have projected out their future RMD amount of $10,000, $25,000, even $100,000 in future taxable income, and they're concerned about the tax cost.

But then they stop there. They see the problem, but they figure they can't do anything about it.

Thankfully, you can. Go beyond just projecting your RMD amount, but also project your future tax brackets. Then find the tax years between now and 73 when your taxes are likely to be lowest; this is often before you start Social Security.

Then, during those lower projected tax years, do a Roth conversion at that lower tax rate, so that your future RMD is lower and the Roth money can grow tax-free.

Mistake No. 2: Failing to make use of qualified charitable distributions (QCDs)

A retired pastor came to my office for a new client meeting. He brought in his investment statements, and tax return, and he explained that he had roughly a $12,000 RMD each year and that he gave it all away.

I reviewed his tax return and saw the RMD listed as taxable income, and I saw that he wasn't itemizing his deductions — he was paying more taxes than he should have!

I asked the pastor how he took out his RMD each year to give to charity, and he said, "I want to follow the rules, so I take out my RMD as soon as I can each year and put it in the bank. Then at the end of the year, I write out checks to my church and favorite charities."

I showed him that he could do a qualified charitable distribution (QCD) instead, sending the money from the IRA directly to the charities.

I calculated that using the QCD rules on the $12,000 QCD amount to be $2,263 in income tax savings.

And here's a next-level QCD move: You can start doing QCDs at age 70½, even though RMDs don't start until 73 currently. It just might lower this year's taxes, and it will definitely lower your future RMD amounts.

Mistake No. 3: Doing the wrong tax withholding

I just met a retiree who had his first RMD distribution last year. He and his wife make $36,000 from Social Security and $36,000 from his pension.

They don't need their IRA money, which is why they hadn't taken anything out until their first RMD, which came to $40,000.

His investment company sent him the $40,000 at the end of last year, doing the 10% mandatory federal withholding and no state tax withholding because it wasn't required.

It turned out the taxes on his RMD were $6,400 for federal, not the $4,000 that was withheld, and $2,000 for state — and there was nothing withheld for that.

He had to write out two big checks, and he owed even more because of underpayment penalties.

Before you take out your RMD, do a tax projection to get the withholding right — the standard 10% is almost never the right amount.

Mistake No. 4: Not realizing how your RMD income affects the rest of your tax return

You would think that paying taxes on your RMDs is simple. If you're in the 12% tax bracket, and you take out $10,000, then you just pay $1,200 in extra taxes, right? If only it were that simple.

When you take money from your traditional IRA, especially for the first time with your RMD, you're often surprised at how much it affects the rest of your tax return.

The amount of your Social Security that is taxable is based on how much other income you have. When you have more other income from your IRA, your taxable Social Security amount goes up.

That RMD amount could push you into the next tax bracket. The IRS doesn't hand you a card saying, "You're in the 12% tax bracket forever." When your RMDs start, your income goes up, and often your tax bracket goes higher.

Or perhaps that extra income means that you get less medical deductions or less of the enhanced deduction for older people.

I often see RMDs push retirees over the edge so that they are paying extra for Medicare because of the IRMAA. You can read about those IRMAA tax brackets in the Kiplinger article Medicare Premiums 2025: IRMAA Brackets and Surcharges for Parts B and D. And you can see the 2026 brackets in this Kiplinger article.

When it comes to the U.S. tax code, more RMD income often means more other income and fewer deductions, and then you pay more in taxes than you expected.

Before you take your first RMD, make sure you understand how the new taxable income affects the rest of your income and deductions.

Mistake No. 5: Forgetting that the M in RMD means 'minimum,' not 'maximum'

All these tax mistakes add up to a lot of big surprises when you hit RMD age. Perhaps you've resolved to reduce the tax pain by sticking to just the minimum amount for your RMD. But you don't have to restrict your distribution to the minimum.

Often, the solution to your future RMD tax problems is to bite the bullet this year and do a Roth conversion at a tax rate that you're comfortable with so that your future RMDs are lower.

Also, remember that just because you're required to do RMDs at age 73 doesn't mean you can't take out money earlier. The minimum age to withdraw from your IRA without a penalty is 59½, which means you could have 13-plus years to plan for the likely RMD tax pain.

Lower your retirement taxes by creating your RMD strategy today

RMDs might seem like an annoying part of the tax code, but when it comes to retirement taxes, RMDs affect the rest of your retirement:

• Your tax bracket
• Your Social Security taxation
• Your Medicare premiums
• Your investment strategy
• Your charitable giving

The time to start planning for your RMDs is not the year you turn 73, but even before you retire. In your retirement planning, focus not just on your investment growth, but on how that growth will affect your future tax situation.

That's why I put tax planning as step three in my book, Retire Today: Create Your Retirement Master Plan in 5 Simple Steps, even before your investment planning (step four).

A tax-smart retirement gets you ready for your RMDs well ahead of time and works to minimize their tax impact even when you get to RMD age.

Related Content

• How to Calculate RMDs (Required Minimum Distributions) for IRAs
• I'm a Financial Planner: This Is How You Can Get Started With RMDs
• Required Minimum Distributions (RMDs): Rules, Deadlines, and Important Changes to Know
• Stressing About RMDs? Two Ways to Reduce or Even Eliminate Them
• New Year's Eve RMD Deadline: What to Know and What to Do

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

I still remember a turning point early in my career. I was working at a financial firm that had a strict minimum asset requirement for clients. One day, I met with a couple who had about $250,000 to invest, which was below our firm's threshold.

I knew we could make a meaningful difference in their retirement plan. But when I brought it up with the firm's owner, his response was short and final: "That's too bad, but they don't meet the minimum. We have to move on."

That moment stuck with me. Turning someone away — not because we couldn't help, but because they weren't "wealthy enough" — felt wrong.

I argued that people with limited assets needed our help more than those with higher asset levels. It was clear that if I ever had my own firm, I would do things differently.

Fast-forward to today, and I'm a financial adviser and managing partner of a firm I co-founded called Reverent Asset Management. The name "Reverent" comes from the Latin word for respect, and that concept is at the heart of everything we do.

Respect is not just a branding choice; it's our guiding principle.

Regardless of income, people need to understand how to get the most out of their dollars. In the United States, many people approach or reach retirement without accumulating the amount of retirement savings they would prefer.

For example, as recently as 2022, the median retirement savings for those ages 55 to 64 was $185,000, according to the Federal Reserve.

For ages 65 to 74, it was $200,000. And remember, that's the median, so half of the people in those age groups have less than those amounts. In some cases, much less.

When I'm working with clients, there are principles that guide my approach. These principles also translate into ways in which you can plan for your retirement regardless of how much your portfolio holds.

Principle No. 1: Respect every plan, no matter its balance

Whether you have $10 million or $10,000, it's important for you to understand how to help protect yourself and grow your money. Wealth does not determine worth.

Money can be an emotional and sensitive topic, and people should never feel embarrassed about asking basic questions or discussing modest portfolios. Asking questions and seeking help isn't a sign of weakness; it's a smart move.

If you're preparing for retirement, start with the basics:

• Tally your monthly income in retirement from all sources (Social Security, pensions, savings and part-time work).
• Estimate your monthly expenses.
• Compare the two. If there's a gap, look for solutions: reduce spending, delay retirement or explore additional income options.

Everyone has goals, and everyone deserves a plan.

Principle No. 2: Educate yourself

My 25 years of experience in the financial services industry have taught me that when people truly understand why a strategy makes sense, decisions become clear and comfortable — and they feel more confident making them.

Educate yourself as much as possible about retirement and financial topics. Fortunately, ample books, magazine articles, webinars, podcasts and other sources are easily available.

Just make sure you are getting the information from credible sources. If you have the opportunity, attend workshops or other events that financial professionals offer in your community.

My firm regularly holds free workshops and seminars on retirement planning because we want our community to learn, not just hear a sales spiel.

During individual meetings, we use plain language and whiteboards to break down concepts. We encourage questions. The more you know, the more empowered you are to make confident choices.

An educational approach also means a slower, more thoughtful planning process. By educating first, we let the plan's value speak for itself.

Principle No. 3: Honesty and transparency are crucial

As an investment adviser representative, I am committed to putting clients' interests first when providing investment advisory services. Some industry slogans sound good in ads but tell you nothing about what actually happens.

I start by understanding your goals, then show you, in writing, how I'm paid and whether lower-cost options meet those goals just as well.

For example, many advisers charge fees based on assets under management (AUM), which means they earn more if a client's investments increase in value.

While there is nothing wrong with that in principle, it makes sense to ask how those fees influence the level of risk chosen and whether that risk matches your goals.

With any investment, you will want to know what fees are associated with it. Ask about and factor those in as you determine whether a particular product or portfolio is right for you. Will that investment provide the return you expect and/or need to achieve your financial goals?

Advice you can rely on is built on trust, and trust is built on honesty and transparency.

Principle No. 4: Plan for distribution, not just accumulation

People spend decades building their nest egg, but they may not be prepared for the "distribution phase," when it's time to turn those savings into reliable income.

And while many financial advisers are great at helping clients grow wealth during the accumulation phase, retirement is a whole new ballgame. This is the distribution phase.

It's one of the most important (and often overlooked) parts of retirement planning, when you start drawing down those savings to create an income stream for life.

Why is distribution planning so key? Because once you retire, mistakes can be magnified. You no longer have a paycheck to cover errors or market downturns.

Taking too much risk or withdrawing funds in an inefficient way can quickly derail a retirement plan.

The No. 1 fear I hear from retirees is running out of money. That's why at my firm we create detailed, personalized income plans as part of the financial planning process.

We look at all income sources — Social Security, pensions, investment accounts — and determine the optimal order and amount to withdraw from various accounts. The goal is simple: Make your money last.

Some of that goes back to education. The better you understand how all the pieces of a financial plan work together, the better you can make decisions that are right for your situation.

Whether you're a schoolteacher with a modest 401(k) or a business owner with a multimillion-dollar portfolio, the most important factor in your financial plan is you — your values, goals and life circumstances.

Work with someone who respects that. Choose an adviser who listens, educates and puts your interests first.

When we focus on helping people, not just managing money, we create clarity and confidence for the road ahead.

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. Ezra Byer contributed to this article. Ezra Byer is not affiliated with Reverent Asset Management, LLC or AEWM. 3402624 - 10/25

Related Content

• The Average Retirement Savings by Age
• Retirement Calculator: How Much Do You Need to Retire?
• How to Find a Financial Adviser for Retirement Planning
• 8 Rules for Choosing the Right Financial Adviser
• How to Change Financial Advisers

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.

Tax season might feel far off, but the IRS has already set the stage for 2026 — and there are some updates worth paying attention to, especially if you're retired or nearing retirement.

Inflation adjustments are raising income thresholds, standard deductions and the extra deduction for adults age 65 and older.

Thanks to a recently passed tax bill, there's also a new limited-time bonus deduction designed specifically for older taxpayers.

Let's break down what's changing, what's new and how it might affect your bottom line in 2026 and beyond.

A little extra for retirees: A bigger additional standard deduction

If you're 65 or older, you get a little more breathing room in your tax return this year. The IRS bumped up the additional standard deduction for 2026:

• Single filers and heads of household (age 65-plus): $2,050 (up from $2,000 in 2025)
• Married couples (65-plus): $1,650 per qualifying spouse (up from $1,600)

If both partners qualify, that's a $100 total increase. It's not life-changing, but enough to slightly reduce your taxable income — and that's always a win.

For those who are both 65-plus and blind, that amount doubles:

• Singles/heads of household: $4,100
• Married, filing jointly: $3,300 per qualifying spouse

This "double bump" is meant to help taxpayers with additional challenges offset a bit more of their income.

Standard deduction amounts are also on the rise

Most Americans take the standard deduction instead of itemizing, and that number is getting a lift for 2026. The new amounts you'll use when filing in early 2027:

With nearly 90% of taxpayers claiming the standard deduction, these adjustments will put a little more money back into most pockets.

The headliner: A temporary $6,000 'bonus deduction' for older people

The biggest new development for retirees is a fresh, temporary deduction created by the GOP's 2025 tax package — a four-year perk for those age 65 and older.

Here's the highlight reel:

• Worth: Up to $6,000 per taxpayer
• Available: 2025 through 2028
• Income limits: Phases out starting at $75,000 (single) and $150,000 (joint)
• Eligibility: You can take it whether you itemize or claim the standard deduction

Even if you already claim deductions for mortgage interest, medical expenses or charitable giving, you can still tack on this additional benefit. Think of it as a short-term tax break designed to ease the burden on older Americans during a high-inflation period.

How these changes could affect you

Whether these updates have a big impact on you depends on your personal financial picture — but for many retirees, even small adjustments can matter.

Here's how to make the most of them:

Stay strategic about income timing. Adjust when and how you withdraw from IRAs, pensions or brokerage accounts to remain in the most efficient tax bracket.

Double-check your filing strategy. Standard vs itemized deductions can look very different with these new thresholds.

Ask about the bonus deduction early. Because it's temporary, you'll want to plan to make the most of it over the next few years.

The takeaway

Updates for 2026 aren't dramatic, but they're still worth knowing — especially if you're managing income from multiple sources in retirement.

A little planning now can help you take advantage of every available tax break, and that means keeping more of your money where it belongs: in your pocket.

If you're not sure how these changes fit into your broader retirement plan, now's the time to talk with a financial or tax adviser who can run the numbers and help you strategize before the next tax season rolls around.

Smart planning today means fewer surprises — and maybe a few extra dinners at your favorite local spot tomorrow.

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.

Related Content

• New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Age 65-Plus
• Five Ways to Cash In on the $6,000 'Senior Bonus' Deduction
• The Extra Standard Deduction for People Age 65 and Older
• New 2026 Income Tax Brackets Are Set: Will Your Rate Change?
• 2025-2026 Tax Brackets and Federal Income Tax Rates

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.

At 77, after announcing his retirement from the U.S. Senate, Glenn joined the space shuttle Discovery, returning to orbit 36 years after becoming the first American to circle the Earth. His late-life mission wasn’t a stunt. It was an expression of who he was and what he believed about meaning in the later chapters of life.

“If there is one thing I've learned in my years on this planet,” he once said, “it's that the happiest people are ones who pursue meaning.”

You don’t need to go to space to pursue a happy retirement. Most retirees are already happy. A 2025 TIAA Institute review of retirement well-being found that more than 90% of retirees report being “quite satisfied” or happy with their lives overall, despite common worries about money.

Percentage of respondents moderately or very satisfied with retirement, 1992 - 2020.

But when you dig deeper, the picture becomes far more nuanced. Not all happy retirees are happy in the same way. These statistics reveal why.

1. Retiring early isn't always better

It’s easy to assume that the earlier the retirement, the happier the retiree. But the data suggests there’s a “sweet spot,” and missing it by retiring too early can lead to lower satisfaction if it wasn't planned.

According to the 2024 MassMutual Retirement Happiness Study (PDF), Americans overwhelmingly view 63 as the ideal retirement age, even though the average American actually retires at 62.

That one-year difference matters. Retiring earlier than planned is often linked to involuntary reasons such as layoffs or health issues, and MassMutual found that while 67% of retirees say they’re happier, those who retired earlier than planned were significantly more likely to report feeling lonely or stressed.

2. Control matters more than age

A major reason early, unplanned retirees are less happy is that control over the exit is one of the strongest predictors of retirement well-being.

ProPublica research shows that 56% of workers age 50 and older experience at least one involuntary job separation before they plan to retire. Researchers have also found that voluntary retirees have significantly higher life satisfaction scores than involuntary retirees.

Essentially, a forced exit denies retirees the “mental runway” needed to build a new identity and routine, often leading to a dip rather than a bump in happiness.

In short, when you retire matters, but how you retire matters more.

3. The endless vacation myth

Many people dream of an endless vacation, but the happiest retirees aren’t the ones lounging around all day — they’re the ones doing something.

SunLife’s 2025 Life Well Spent report, which surveyed more than 2,000 adults age 50 and older, found that the happiest retirees spend 43 more minutes per week in nature and significantly less time watching TV than unhappy retirees.

Purpose also plays a powerful role. Retirees who volunteer are 64% more likely to report high levels of happiness. It’s not just altruism; it’s a hack for mental health, replacing the dopamine hit of “being needed” that work used to provide.

For some, the pursuit of purpose leads them back into the workforce. A T. Rowe Price study found that about 20% of retirees eventually “unretire,” and nearly 45% return for social or emotional reasons, rather than financial necessity.

As one Age Wave survey discovered, 93% of retirees believe it’s important to feel useful in retirement, and 92% believe purpose is key to a successful retirement.

Purpose doesn’t have to mean working. It correlates with “doing” vs “viewing.” Happier retirees tend to have more core pursuits (hobbies such as gardening, travel or pickleball) than unhappy retirees.

4. Who wins in retirement — men or women?

Research is mixed on whether men or women are ultimately happier in retirement. Overall, both experience a lift in life satisfaction upon entering retirement, and that satisfaction remains stable thereafter.

Some research finds that men tend to experience slightly higher gains in life satisfaction at retirement, especially when pension security and financial resources are strong.

Other studies show that women often do just as well or better when non-financial factors are the focus, such as strong social networks, meaningful routines, purpose-driven hobbies, volunteer work and stable health.

Ultimately, researchers tend to find that happiness in retirement is less about gender and more about circumstances (PDF).

5. More money, more happiness? Yes, but with diminishing returns

Are wealthier retirees happier? Generally, yes. But the relationship between money and happiness isn’t linear.

One research paper found that happiness continues to increase “well beyond” an annual income of $500,000, although the impact of each additional dollar diminishes at higher income levels. There is no strict plateau, but the slope becomes shallower.

Debt, however, is a much clearer villain. The Employee Benefit Research Institute (PDF) found that retirees with low assets, low savings and high levels of debt, including credit cards and medical bills, reported the lowest life-satisfaction scores, averaging 5.8 out of 10.

That suggests debt is a stronger predictor of unhappiness than wealth is of happiness.

6. Retirement doesn’t guarantee “happily ever after” for couples

People who marry tend to remain more satisfied at every stage of the relationship, from newlywed years through long-duration marriages (even after controlling for people’s happiness levels before marriage), according to a 2017 study in the Journal of Happiness Studies. The research also showed that married adults experience a less severe midlife dip in life satisfaction than unmarried adults, suggesting that marriage provides emotional stability and social support that can carry into retirement.

But retirement can strain relationships, too. The divorce rate for adults age 50 and older has tripled since 1990, and today 36% of all U.S. divorces involve couples age 50-plus. The graph below compares divorce rates by age in 1990 and 2019.

This “gray divorce” phenomenon can have severe financial implications. Women see their standard of living drop by 45% on average post-divorce, compared with 21% for men

7. The "U-curve" of happiness

Happiness follows a widely documented U-shaped curve, hitting its lowest point in the late 40s (roughly age 47 to 48) and rising steadily through the 60s and 70s.

Retirees in their 60s and 70s consistently report higher satisfaction than people in their 30s and 40s. However, the curve can dip again after age 75 to 80 as health issues overtake financial freedom as the dominant driver of well-being.

8. Health is wealth … and happiness

Retirement happiness can also get a lift by hitting the gym. MassMutual’s Retirement Happiness Study also found that 49% of retirees who are “much happier” in retirement cited taking care of their health before they retired as a key reason.

Among that group, 70% rank exercise as a top activity, second only to spending time with loved ones.

9. A happy retirement is a work in progress

Research has found that happiness fluctuates; it’s a constant work in progress. One study concluded that happy people become more satisfied not simply because they feel better, but because they develop the resources to live well.

Retirement might offer more opportunities for finding happiness, but it doesn’t mean happiness becomes automatic.

It’s the kind of job you can’t simply retire from.

Read More

• The Rule of Two Lives in Retirement — For Couples
• 8 Habits for a Happy Retirement
• The Y Rule of Retirement: Why Men Need to Plan Differently
• The Rule of 1,000 Hours in Retirement

Taxes are a worry for most retirees, even as they put their working years behind them and ease into what should be a more relaxing time.

Taxpayers were expecting to face even more worries at the end of this year, when the Tax Cuts and Jobs Act of 2017 was set to expire.

Fortunately, many of the act's provisions became permanent when Congress passed and the president signed the One Big Beautiful Bill (OBBB).

But the new law has done more than that. It also includes tax changes that are especially amenable to many retirees and near retirees.

However, they aren't all going to last, so it may be wise to take advantage sooner rather than later.

The 65-and-older advantage

One of those changes is that many taxpayers age 65 and older can qualify for an extra $6,000 standard deduction. This not only lowers your tax bill but could also reduce your taxable income enough to avoid taxes on your Social Security benefits.

Yes, up to 85% of your Social Security benefits can be taxed, depending on your income.

If couples filing jointly are both at least 65, they can each qualify for the extra deduction, making it a total of $12,000.

But there are income restrictions on who qualifies. The deduction phases out for taxpayers with modified adjusted gross income over $75,000 (or $150,000 for joint filers).

The deduction also won't be around forever; it lasts only through 2028.

Higher deductions for state and local taxes

Some federal income taxpayers may also be able to take advantage of a higher deduction for what they pay in state and local taxes, the so-called SALT deduction, at least until 2029, when this law expires.

The cap on how much you can deduct has been raised from $10,000 to $40,000, but once again, there are income limits.

In this case, the new cap applies to incomes under $500,000 for those filing jointly, or under $250,000 for individuals or married couples filing separately.

For those whose taxable income is over $500,000, the cap is gradually reduced until it reaches the previous level of $10,000.

This new cap could change whether you decide to itemize your deductions rather than take the standard deduction.

Good opportunity for Roth conversions

In addition to taking advantage of the tax changes, there are other steps to consider during this limited period when your tax liability could be lower.

For example, this would be a great time to consider a Roth conversion if you have been saving money for retirement in a traditional IRA, 401(k) or other tax-deferred accounts.

Those accounts are great for saving money, and you do have immediate tax advantages with them since your yearly contributions aren't taxed.

The downside is that when you retire and start spending the money you saved, your withdrawals are taxed.

Plus, once you reach age 73 (age 75 for those born in 1960 or later), required minimum distributions (RMDs) kick in, forcing you to withdraw a certain percentage each year whether you want to or not.

Roth accounts, on the other hand, grow tax-free, aren't taxed when you make withdrawals and don't have RMDs. You do, however, pay taxes when you make a conversion from a traditional account to a Roth.

But that's one reason these next few years may be a good time to move some of your money to a Roth.

You have some wiggle room in your tax bill, thanks to tax provisions such as the extra deduction for those 65 and older, and you can also take advantage of the higher SALT cap.

Pay less, keep more for yourself

One criticism of the OBBB is that lower taxes could increase the federal deficit and add to the country's growing debt. At some point in the future, that debt will need to be addressed — possibly through higher taxes.

In the meantime, consult with a financial professional to make sure you are getting the most out of the tax advantages currently available to you.

An adviser can review your individual situation, analyze your income sources and any available deductions or financial moves, and help you craft a plan that works best for you.

Yes, taxes are a concern even in retirement. But good planning and an awareness of changes that apply to you can allow you to give Uncle Sam less money and keep more for yourself.

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.

Related Content

• I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term Plan
• Is the One Big Beautiful Bill Really All That Great for Your Retirement?
• ​​What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's Guide
• Your Golden Years Just Got a Tax Break, But There's a Catch

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

For many people, charitable giving feels like something to focus on later in life, after retirement, when there's more time to reflect and plan.

But from a financial standpoint, the most powerful time to give is often while you're still earning.

That may sound counterintuitive. After all, retirement is when you finally have clarity about what you can afford to give away.

But the truth is, charitable gifts made during your peak earning years can have a bigger financial impact — both for you and for the organizations you support.

1. Tax advantages today, generosity in the future

Here's an example to better illustrate: Deductions are most valuable when your income, and therefore your tax bracket, is at its highest. A $10,000 donation can feel very different depending on when it's made.

If you're in the 35% tax bracket, that gift could save you $3,500 in taxes. Make the same contribution after you've retired and dropped into a 22% bracket, and the tax savings fall to $2,200.

The charitable impact is the same, but the benefit to you is nearly 60% greater during your earning years.

That doesn't mean you have to give away a large sum all at once. One of the best tools for bridging today's tax advantages with tomorrow's generosity is a donor-advised fund (DAF).

These funds allow you to make a sizable, tax-deductible contribution in a high-income year, but decide later how and when to distribute the money to the charities you care about.

It's like setting aside cash in your "charitable account." You lock in the deduction now, but retain the flexibility to give gradually, even long after you've retired.

This approach can be especially useful if you're expecting a one-time jump in income, such as selling a business, receiving a bonus or exercising stock options.

You can offset some of that taxable income by funding a donor-advised account in the same year.

2. High interest rates can work in your favor

Today's higher interest rate environment has also made certain charitable strategies more appealing than they've been in years. Vehicles like charitable remainder trusts or charitable gift annuities can provide reliable income streams for you or your loved ones while ultimately benefiting the causes you support.

With rates up, those income streams are often higher, a welcome development for anyone seeking both generosity and financial security.

3. You'll make an impact now

The bigger picture here is that giving shouldn't be an afterthought or something reserved for the end of your career.

It can be a living, active part of your financial plan, and a way to align your wealth with your values while you're still building both.

The key is understanding what you need to support your lifestyle and what constitutes excess net worth that could be put to work for others.

When giving is integrated into your broader plan, it not only helps you make the most of your resources but also adds purpose to your financial life.

You don't have to wait for retirement to make an impact. You can start now. Often, that's when your generosity goes the farthest.

Related Content

• Charitable Giving Just Got a Little Easier, But Also a Little Harder
• I'm a Financial Planner: Here Are Three High-Impact Ways to Make a Difference With Your Dollars
• How to Choose the Best Charities to Donate To
• Five Ways to Adapt Your Charitable Giving Strategy in a Changing World: An Expert Guide
• Like Getting Healthy, Getting Wealthy Requires Good Habits

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.

Understanding which plan aligns with your wallet and risk tolerance is essential. Take this quick quiz to discover your "Medicare Personality Type" and learn whether you are better suited for the high-premium, low-copay freedom of a Traditionalist, or the low-premium, high-cap security of a Bundler.

You can find more information about Medicare and Medicare Advantage in the linked articles below.

More on Medicare and Medicare Advantage, from the Kiplinger retirement team:

• 12 FAQs About Medicare: Your Medicare Questions Answered
• 11 Costly Medicare Mistakes You Should Avoid Making
• Can You Sign Up for Medicare While Still on an Employer Health Plan?
• Medicare Open Enrollment Occurs Annually from October to December — Here's What You Need to Know
• Medicare Advantage Open Enrollment Runs from January 1 to March 31

It's not too late to do some clever tax planning for 2025 that will save money on your taxes — but if you wait until January, it will be too late.

When it comes to taxes, the best opportunities come from proactive planning throughout the year, rather than waiting until it's over.

For example, most families who have been saving and investing for some time will generate significant capital gains each year. Long-term capital gains rates can be as high as 20%, while short-term rates can be as high as 37%, depending on your income bracket.

An additional 3.8% tax, the net investment income tax (NIIT), applies to investors above certain income limits. For many, this tax bill can be considerable.

How to employ tax-loss harvesting

These gains can be offset with tax-loss harvesting strategies, which involve strategically selling securities at a loss, creating an offset to that year's capital gains, then replacing them with similar assets.

If the new assets perform similarly to the old ones, your portfolio ends up in a similar place, but through the strategic sale, you now have losses to offset potential gains, resulting in lower taxes. (There is nuance involved, such as complying with wash-sale rules, which should be navigated carefully to maximize the benefit.)

Most tax-loss harvesting is effective when it's opportunistic throughout the year. By January, it's too late to even think about it for the previous year.

If you wait until the end of the year, you might find a few assets in your portfolio that are down, but you'd likely find the most opportunities if you use tax-loss harvesting throughout the year.

Consider the market so far in 2025.

In April, the S&P 500 was briefly down as much as 20%, and a wide range of assets could have been opportunistically sold. But you had to be thinking about it throughout the year to be in a position to take advantage.

If you started thinking about tax losses now, you haven't completely missed opportunities for 2025, but you might have missed the best opportunity of the year.

Maximize your charitable contributions

For investors considering their charitable giving strategies, another opportunity for year-round tax planning is available.

If you have securities that have appreciated in value, you can donate them to a charity at their current fair market value (if they have been held for over a year).

Neither you nor the charity owes capital gains tax on the gift.

A moment of market upswing, which could occur at any point during the year, maximizes both the tax benefit to you and the funds available to your charitable cause.

Now is a good moment for this one.

Consider potential Roth conversions

A third tax-saving strategy to triangulate with your year-round planning would be Roth conversions.

If the deductions from tax-loss harvesting and strategic charitable donations pushed you into a lower tax bracket, you could use this opportunity to convert taxable retirement accounts into after-tax Roth accounts.

The big takeaway here is that there are still opportunities in the final months of 2025 to implement a valuable tax strategy, such as our tax-loss harvesting example above.

There could be even bigger opportunities if you make 2026 the year that you begin year-round tax planning.

Estate planning at the end of the year

In addition to tax strategies within your portfolio, the final months of the year are a valuable window for estate planning.

The annual gift tax limit is $19,000 for an individual and $38,000 for a couple in 2025. No taxes are owed, but the gift opportunity is use-it-or-lose-it.

Some families use the end of the year to take advantage of income-shifting. A family member in a higher tax bracket uses the gift tax limits to donate assets to a family member, perhaps a young adult child, in a much lower tax bracket. Future income from that asset is taxed at the lower rate.

The key takeaway is that if your finances have even a little bit of complexity — capital gains, charitable goals, pretax retirement accounts — there are significant opportunities for tax savings.

As the complexity of your finances grows, so do the opportunities.

For many investors, a key stumbling block is the difficulty of coordinating these strategies among different professionals, a wealth adviser, a tax accountant and an estate planning attorney. That's one reason it often falls by the wayside until it's too late.

Some opportunities fade throughout the year, and most savings opportunities are completely gone by the time the tax-filing deadlines roll around.

Your taxes shouldn't be an exercise in digging up historical documents, but an exercise in active savings. There are still opportunities in 2025 taxes, and even more for 2026.

Related Content

• Year-End Retirement Tax Planning Actions if You Have $1 Million or More
• Trump's 2025 Tax Bill: What's Changing and How It Affects Your Taxes
• Seven Moves for High-Net-Worth People to Make Before End of 2025, From a Financial Planner
• New Tax Rules: Income the IRS Won't Touch in 2025
• Capital Gains Tax Rates 2025 and 2026: What You Need to Know

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

Many people choose to make philanthropy a priority in retirement, using their resources to bless others and fund a charitable legacy.

Years of hard work and saving provide them with an opportunity to give back in a meaningful way.

But here's the challenge: Without a proactive tax plan, retirees often pay far more to the IRS than they have to, which can limit the amount that reaches the causes they care about most.

Being more intentional about the timing and structure of your charitable contributions can allow you to minimize your tax liability and maximize the impact of your gifts.

Here are four practical strategies that can help make your giving more tax-efficient.

1. Turn your RMD into a tax-free gift

Once you turn 73, you must make required minimum distributions (RMDs) every year from your tax-deferred accounts. These withdrawals are taxed as ordinary income, and they can easily nudge you into a higher tax bracket.

That could trigger a tax on up to 85% of your Social Security benefits and potentially raise the cost of your Medicare premiums.

For those who are charitably inclined, a qualified charitable donation (QCD) can be one of the simplest solutions. If you're 70½ or older, QCDs allow you to make tax-free donations directly from your IRA to a qualified charity.

The donation can satisfy all or a portion of your RMD and isn't reported as taxable income on your tax return. Your charity receives the full distribution, and the IRS gets nothing.

You can make a QCD from any tax-deferred IRA account, such as a traditional IRA, inherited IRA, or a SIMPLE IRA or SEP IRA that you're no longer contributing to. (You cannot use a 401(k) or similar workplace plan.)

In 2025, you can donate up to $108,000, and if you're married, each spouse can donate up to his or her individual annual limit. Just be sure the QCD goes directly from your custodian to the charity. The IRS says the funds can't touch your bank account.

2. Give appreciated stock, not cash

If you own stocks, mutual funds or exchange-traded funds (ETFs) that you've held for more than a year, you may find it makes sense to donate those investments directly to your church or a charity instead of selling them and giving cash.

Here's why: When you sell securities that have appreciated in value over time, the gains are subject to capital gains taxes. Depending on where you live, you also could owe state taxes on the gain.

But if you donate those investments directly to a qualified charity, you won't pay capital gains tax. Instead, you'll get a tax deduction for the full fair market value of the securities at the time of the transfer (if you itemize).

The tax deduction limit is up to 30% of your adjusted gross income, but you can carry over any excess for up to five years.

Meanwhile, the charity can sell the positions and pay zero taxes on the capital gains. If your church or nonprofit doesn't have a brokerage account, many custodians or local community foundations can help facilitate the transfer.

3. Name a charity as a beneficiary of your IRA or 401(k)

If you have more money saved in your 401(k) or traditional IRA than you expect to spend in retirement, you may be planning to designate your child or another loved one as the account's beneficiary when you pass.

But for many people, leaving the account to a favorite charity, or charities, can be a more tax-efficient option.

That's because when a qualified charitable organization receives a distribution from a traditional IRA, it doesn't have to pay income tax on the funds. This is a notable advantage compared to a child or other non-spousal beneficiary, who would have to pay ordinary income tax each year on any withdrawals from the account.

In most cases, family members are now required to take distributions from pretax accounts within 10 years, which could push your beneficiary into a higher tax bracket (especially if they're in their peak earning years).

In other words, leaving $200,000 to a specific charity through a traditional IRA would provide the charity with $200,000 to use.

But if that $200,000 IRA were to go to a non-spousal beneficiary, the taxes owed would likely eat up a good-sized chunk of that generous gift.

Your loved ones would probably be happier to receive a tax-free life insurance payout, a Roth IRA or another tax-smart option.

4. Make a difference with a donor-advised fund

Donor-advised funds (DAFs) have gained popularity since the Tax Cuts and Jobs Act (TCJA) changed the rules for writing off charitable contributions starting in 2018.

With a DAF, you can bundle or "bunch" several years' worth of donations into one large contribution (in cash or assets) to meet the TCJA threshold for itemizing charitable deductions in that year.

Instead of going directly to a charity in one lump sum, your donation is then invested by the DAF's sponsoring organization. And once it's invested, the donation can continue to grow tax-free until it is paid out, also tax-free, to qualifying causes over time.

Though you'll no longer have a legal right to the money in the DAF, you will have "advisory" privileges, which means you can help plan when and to whom you wish to make grants.

A DAF is relatively easy and inexpensive to set up — and it's a tax-smart way to follow through on your gifting goals.

Faithful giving, wise stewardship

I don't know many people who would say that getting a tax deduction is their top motivation for charitable giving. For most folks, it's more about their value system or part of their faith journey.

Still, tax efficiency can be an important consideration for many donors. The right strategy can help you be a better steward and allow you to give cheerfully, knowing you're making the maximum impact with your money.

An experienced financial adviser can walk you through the pros and cons — and the sometimes complex IRS rules — for these and other gifting options. Don't hesitate to ask for help so you can find the best fit for your family's giving goals.

Kim Franke-Folstad 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.

Related Content

• Developing a Charitable Giving Strategy: Where to Begin
• Benefits of Charitable Contributions You May Be Overlooking
• How to Donate Your Life Insurance Policy to Charity
• Three Charitable Giving Strategies for High-Net-Worth Individuals
• Maximize Charitable Giving Tax Savings and Give All Year

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.

Answer: The holidays are a great time for families to reconnect. If you're an empty nester with grown kids, you might look forward to seeing them this December.

A recent survey found that 54% of empty nesters expect their adult children to come home for the holidays, and 69% say luring them home with the promise of their favorite foods is a tactic that's long been successful.

But if your adult child is planning to return home for the holidays, you don’t want to spoil that visit by discussing topics that might be off-putting, such as when they plan to pop the question to their long-term partner or when they might contemplate blessing you with the grandchild you’ve always wanted.

Such topics are ones on which you might know to bite your tongue, but if your child recently lost a job, that’s a harder subject to ignore.

You don’t want to make it seem as if you aren’t concerned for your child’s mental and financial well-being. You also don’t want to make your adult child feel worse about the situation when it’s out of their control.

It’s a tough act to balance, but here’s how to tackle the topic of unemployment at a time when you’re also supposed to be embracing the joy of the holidays.

Be generous with validation and empathy — not advice

When a child of yours is struggling, it’s natural to want to dole out advice — no matter the situation. In the context of a recent layoff, advice might not be well received, says Raffi Bilek, LCSW-C (licensed certified social worker-clinical) and therapist at The Baltimore Therapy Center. He recommends focusing on validating your child’s feelings and expressing empathy instead.

“Don’t tell them what they should do or, worse, what they should have done — even if you have really helpful thoughts to share,” Bilek insists. “Just ask them how they’re doing and give plenty of validation.”

Bilek says it could be helpful to say things like, “Of course you’re a bit depressed right now. You just got laid off. It makes sense that you’d be a little more stressed lately. I totally get it.”

He also recommends empathetic statements such as, "I can only imagine how hard it must be to be going through this right now. I’m so sorry this is happening to you.”

“ 'You know what I would do if I were you?' doesn't fall into either of those categories," he explains.

If you believe you have useful advice for your child, you can, after validating their feelings and expressing empathy, ask if they're open to it, Bilek says. If they decline, respect that and don't push.

"Nothing is less helpful than unwanted advice," he explains.

That said, you shouldn't hesitate to let your child know that you’re proud of them for doing the best they can in the face of a difficult situation, Bilek says. That way, you’re being supportive without overstepping.

Give your adult child a day off from feeling down

Losing a job can take a huge toll on your child's mental health. If they're coming home for the holidays, one nice thing you can do for them is give them a break from that line of thinking, says Nicole Issa, clinical psychologist and founder of PVD Psychological Associates.

"Give them a day off," she insists. "Sleep late and maybe go out together for the afternoon shopping or having coffee. No pressure and no expectations mean they can, for a short time, forget about what’s happened and remove themselves from any feelings of anxiety."

Make it clear that you’re there for support

Losing a job can be an isolating experience, and it can also stir up feelings of shame, even if the layoff had nothing to do with performance. That’s why it’s important to make it clear that you’re there for your child during this challenging time, says Andrew Crowell, financial adviser and vice chairman of Wealth Management at D.A. Davidson.

As a dad of two children in their 20s himself, Crowell understands how important it is to support a child in this situation without overstepping. He suggests that you start with something along the lines of, “Listen, I know it’s been a rough couple of months for you, and I just want you to know that I’m here for you if you wish to talk.”

“This opens the door to further discussion but leaves it up to the child to decide when, how or even if to pursue it further,” Crowell says.

He also recommends letting your child know that you’re confident in their ability to secure a new job. You might say something such as, “I know this is a challenging time right now, but I have confidence in you that you’ll be resilient and find your footing once again, just as you always have in the past.”

If you also want to provide financial support to your adult child, tread carefully. While it's a common practice — 50% of parents supported their adult children in 2025, according to Savings' fourth annual survey — it can jeopardize your retirement security.

Finally, Crowell says, don’t only talk about your child’s layoff. Spend just as much time, if not more so, catching up on life outside of work. Don’t be afraid to sprinkle in some nostalgia and family memories.

The holidays are supposed to be joyous, and they still can be for your child, even if they’re in the midst of navigating a career setback.

Read More

• How to Help Your Kids With Finances When They Move Back Home
• Average Net Worth by Age
• I Want to Retire, but I Have to Keep Working so My Adult Kids Have Insurance
• The 'Pay Yourself' Rule of Retirement Spending

I swore I would never write another column specific to one piece of legislation because of its short shelf life in the ever-changing political landscape. However …

There were enough changes in the planning strategies stemming from the One Big Beautiful Bill (expect a cosmetic name change before the midterms) that I thought it would be a disservice to leave my followers in the dark.

We've done our year-end reviews early because most custodians have to execute transactions before the IRS deadline of December 31. Much of this work requires calculations that take some time.

Here are the strategies our clients with $2 million to $10 million are looking at by the end of the year:

1. Different Roth conversion calculations and considerations

I've equated a Roth conversion calculation to walking across a busy street. Look left for income tax rates, look right for capital gains thresholds. Look both ways for electric scooters. In this analogy, Medicare IRMAA brackets.

Now there's a fourth threat: phaseouts on a few of the tax breaks created by OBBB.

The two that we saw come up multiple times in our reviews were the enhanced senior deduction phaseout and the SALT (state and local taxes) cap expansion phaseout. The enhanced senior deduction adds a $12,000 deduction for a married couple, if both are at least age 65.

However, that additional deduction starts to phase out at $150,000 of income. It disappears at $250,000 of income.

A Roth conversion might cost more than the marginal rate if we accidentally breach this threshold. That doesn't mean it's not worth doing.

You might wonder why I attached an asset level of $2 million to $10 million. Many of our clients fall within this range, and portfolios of this size, depending on where the money is held, can make some of these thresholds easy to hit.

Next one on our list is the temporary SALT cap increase. It increases the cap on the deduction for SALT to $40,000 retroactively to the beginning of 2025 through 2029.

However, a phaseout of that deduction starts at $500,000 of income and reverts to $10,000 at $600,000 of income (joint). A Roth conversion might cost more if we cross the line.

These new rules have made calculations more difficult because of the nuanced rules and sheer number of landmines.

We rely on tax-planning software to load a prior year's return, change the tax year to 2025 and see the impact of the new rules.

2. Charitable bunching

Bunching became popular with the advent of the Tax Cuts and Jobs Act (TCJA) in 2018. Because of the SALT cap of $10,000 and higher standard deductions, a much smaller percentage of wealthy taxpayers itemize deductions.

We would often "bunch" or "stack" deductions in one year to get over the standard deduction hurdle. The taxpayer would make several years of charitable gifts in one year, often using a donor-advised fund (DAF). Our clients would then go back to the standard deduction in subsequent years.

This is not a new strategy, but it has become more important because more people will itemize under the expanded SALT cap and because there is a 0.5% floor on charitable giving starting in 2026.

Think of that floor like the floor on medical expenses. If a client has $100,000 in adjusted gross income (AGI) and wants to give $4,000, only $3,500 of it would be deductible on Schedule A, because of that floor.

This makes the charitable bunching strategy even more important, as the higher you go with the gift, the more inconsequential that hurdle becomes.

If you're close to the standard deduction threshold, this strategy will become even more beneficial if you revert to the standard deduction in 2026. Starting in 2026, there is an additional $2,000 (joint) charitable deduction available for those who take the standard deduction.

We rely on financial planning software to look forward several years and try to figure out if our clients should be itemizing or taking the standard deduction. Unlike the tax software I referenced, we make a free version of this software.

3. Energy projects

We had several clients scrambling to make the electric car credit deadline of September 30. However, there are credits still available for projects completed by December 31.

These credits have fairly low caps, so you should do one of these projects only if you were otherwise already considering it. The energy-efficient home improvement credit is outlined under IRS Section 25C.

This credit allows you to deduct a certain percentage of materials costs for such things as energy-efficient windows, air conditioning units, etc.

As I think of all these caps, phaseouts and rules, I'm picturing a stack of dominos that my 3-year-old lines up on the living room floor. Accidentally knock one over, and the whole line goes down.

Perhaps that's extreme, but it's now even more important to make sure you don't ruin your strategy by inadvertently pushing over one domino.

Related Content

• 3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025
• Three Strategies to Take Advantage of OBBB Changes, From a Financial Planning Pro
• Thanks to the OBBB, Now Could Be the Best Tax-Planning Window We've Had: 12 Things You Should Know
• Four Times You Need a Second Opinion on Your Financial Plan
• Six Financial Actions to Take the Year Before You Retire, From a Financial Planner

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

If you were to type into a search engine, "Should I talk about politics with my financial adviser?" you would find a long list of articles by advisers, and for advisers, about how best to avoid politics when discussing financial plans with clients.

I vehemently disagree with the notion that political conversations between financial advisers and clients should be sidestepped.

In fact, I would go so far as to say it is impossible for an adviser to fulfill their fiduciary duty — a legal obligation to act in your best interest — without fully knowing you as a whole person, including your political orientation.

A sound financial plan should be shaped by who you are, what you care about and the kind of world you want your money to help build. So, yes, you should get political with your adviser.

Here are three reasons why it's so important for you to do so.

1. Financial planning is deeply personal

Money isn't just about the numbers. And your financial plan isn't a spreadsheet — it's a reflection of your life: your goals, your fears, your family and your sense of purpose.

Everyone deserves the opportunity to show up as their full selves in all aspects of their lives — and that includes meetings with your financial adviser.

If your adviser brushes off this conversation, it is a red flag. You deserve a space where you can speak openly about what matters to you; whether that's climate change, income inequality, reproductive rights or local community investment.

An adviser who invites those conversations will help you create a financial strategy that feels authentic and aligned, instead of one that leaves you second-guessing whether you're compromising your values for returns.

2. Every dollar we spend has a political impact

Whether we like it or not, money is political. Every dollar you earn, invest, donate or spend influences the economy, industries and political policies in ways that either reflect your values or contradict them.

These choices aren't just abstract. They have real-world consequences for the communities we live in and the planet we want to have around for future generations.

A thoughtful financial adviser should help you understand not just where your money is going — specifically, what companies you're investing in — but also what type of direct impact those companies are having on people and the planet.

Here are some prompts you can use to initiate these conversations:

• What specific industries am I invested in, and how do they derive their profits?
• How do the companies I'm invested in stack up in terms of environmental, social, and governance (ESG) metrics, and what sources of data are you using to determine that?
• How do the companies I'm invested in contribute or detract from the United Nations' Sustainable Development Goals (SDGs)?

3. Sacrificing financial returns for ethical alignment is an outdated misconception

Some financial professionals still believe that investing in a way that prioritizes a client's values by excluding certain industries, or using ESG metrics, means sacrificing returns. That is simply not true.

In fact, companies focused on addressing the world's most urgent challenges by prioritizing people, planet and integrity are better positioned to benefit from rising consumer demand as climate change, geopolitical instability, population growth and resource scarcity intensify.

Furthermore, according to a 2025 report by Morgan Stanley, nearly 80% of global investors stated they are likely to choose a financial adviser based on sustainable investment offerings.

This reflects a broader shift toward aligning financial goals with personal values, proving that impact investing is not just a trend, but a lasting shift in how people view wealth.

A skilled, values-aligned adviser can help you invest in companies whose businesses yield both profit and purpose. It's not about choosing between doing well and doing good. It's about doing both.

Finding the right fit

It is completely appropriate to ask your financial adviser if your investments are aligned with specific values that are important to you.

If you get pushback or are sidestepped by phrases like, "You should ignore politics completely when investing," or "I can put you in an ESG mutual fund," with no further discussion about how those funds align specifically with certain issues or themes, you may want to consider whether this adviser is the right fit for you.

Do not be discouraged. There are financial advisers who are not only open to these conversations but who see them as essential to good financial planning.

You can start your search at valuesadviser.org, a directory of professionals who understand that your portfolio reflects your principles and vision for the future.

Money is powerful. When you bring your whole self — your values, your politics and your purpose — to the conversation, you give that power direction. And a good financial adviser should be right there with you, helping to turn that direction into a plan that truly fits who you are.

At the end of the day, sharing your political views with your financial adviser isn't risky. It's responsible.

Related Content

• Could Political Arguments Ruin Your Estate Plan?
• What Is ESG Investing and Is It Right for You?
• Scared About Climate Change? Change the Way You Invest
• Two Don'ts and Four Dos During Trump's Trade War
• I'm a Financial Planner: Here Are Three High-Impact Ways to Make a Difference With Your Dollars

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 Americans move abroad, their financial lives become significantly more complex. From navigating foreign tax systems to understanding how U.S. retirement accounts are treated overseas, the stakes rise even as the margin for error narrows.

That's why choosing the right cross-border financial planner is so important. High-earning and high-net-worth U.S. taxpayers must find someone who understands the full scope of cross-border financial planning and is committed to a long-term relationship.

A brief review: Types of financial planners

When we talk about different "types" of financial planners, they can be differentiated across three spectrums:

For Americans living in the U.S., these distinctions help guide their choice of professional financial planning service. But for those moving abroad, the meaning of these categories takes on new importance.

Why cross-border planning changes everything

Let's say you're working with a U.S.-based investment manager who doesn't offer planning services. That might work fine while you're stateside; many people feel more comfortable steering their own financial planning ship and personally checking that their compass is pointing due north.

But moving abroad without the support of cross-border expertise to guide the revision and implementation of your financial planning framework can lead to costly mistakes.

Take France, for example. It's often considered one of the "easier" Western European countries for Americans to retire to, thanks to a favorable tax treaty and a relatively straightforward long-stay visitor visa.

But even there, there are common tripwires. One of the most overlooked is the cotisation subsidiaire maladie, more commonly known as the PUMa tax.

The PUMa tax was introduced to help fund France's universal health care system and applies to residents who receive significant passive income, such as dividends, rental income or investment gains, but have little or no earned income.
Here's how it works:

• If your earned income is below 20% of the French social security threshold (PASS), which is €9,273.60 in 2024 (the most recent tax year), and
• Your passive income exceeds 50% of the PASS, or €23,184 in 2024, then
• You may be subject to a 6.5% tax on the portion of your passive income above that threshold.

This tax does not apply if you receive replacement income such as pensions, disability payments or unemployment benefits.

It also doesn't apply if your spouse or civil partnership (PACS) partner earns above the threshold or receives qualifying replacement income.

The formula used to calculate the tax is nuanced, adjusting the rate based on how much earned income you have.

For example, Jean and Marie, both U.S. citizens, move to France and become French tax residents. They draw no earned income in France (well below the €9,273 threshold for 2024) and instead live off €120,000 of U.S. investment dividends.

Because their passive income easily exceeds the €23,184 "50% of PASS" threshold for 2024 and their earned income is minimal, they could face about €6,375 in tax (6.5% of the amount above €23,184) — a surprise many couples who retire abroad don't budget for.

This example illustrates a broader point: Even in jurisdictions considered expat-friendly, the financial landscape requires U.S. financial planners to have a certain familiarity with the local system in order to offer the highest-quality service.

Without a planner who understands both U.S. and local systems, you may be exposed to unexpected liabilities that at best are vaguely annoying, but at worst could derail your retirement plans.

The value of holistic financial planning for expats

When you take a holistic approach to cross-border financial planning, you're able to integrate the following when building a cross-border financial plan:

• Thoughtful relationship-building time in the initial meetings
• Tax planning across jurisdictions, i.e., cross-border tax planning
• Visa and immigration considerations
• Estate planning under foreign laws
• Currency and banking logistics
• Retirement account treatment abroad

A holistic approach ultimately allows the planner to structure the client's portfolio in a way that avoids triggering unexpected taxes or compliance issues.

And, depending on where your cross-border planner is based, they may be equipped to help you navigate the cultural and bureaucratic differences that come with living in another country.

Common pitfalls

1. Continuing with a U.S.-based planner without cross-border experience

Americans understandably want to maintain their existing financial planning relationships when they move abroad.

But, as Arielle Tucker, CFP® and founder of Connected Financial Planning, notes, "Unless your planner has experience with cross-border clients, and ideally specializes in your destination country, they may not be equipped to serve you effectively."

2. Working with EU advisory firms

On the other hand, some expats choose to work with a foreign firm, thinking that working with a local firm in their adopted country is a logical or even savvy financial move. However, this can present challenges.

"Foreign firms typically have higher fees and transaction costs than the U.S., and foreign mutual funds and ETFs are considered PFICs (Passive Foreign Investment Companies for American investors," says Ricardo Jesus, financial adviser at Liberty Atlantic Advisors (also an Adviser Intel contributor).

"This causes additional reporting and tax complications. Plus, client service expectations differ radically between the U.S. and Europe. As an example, execution timelines are often much slower."

Final thoughts

Candidly, moving abroad can feel like you've turned your life upside down and changed the operating language. So, it's completely understandable to seek familiarity among the chaos.

But, speaking as someone who has moved to different countries nearly half a dozen times, I can attest that prioritizing familiarity can come at the expense of long-term stability, particularly when we're talking about financial planning.

Moving abroad is a major life change, and your financial plan needs to reflect that. That said, it doesn't need to be an overwhelmingly frightening change.

Working with a cross-border planner or firm that takes a holistic approach outsources the challenging task of finding the optimal financial through-line in your life abroad, allowing you to be fully present in the new day-to-day of living your life abroad.

Related Content

• I'm a Cross-Border Financial Adviser: 5 Things I Wish Americans Knew About Taxes Before Moving to Portugal
• How to Manage Retirement Savings When Living Abroad
• Where to Retire: Living in the Dominican Republic
• Want to Move to Portugal? What to Consider Financially
• The Pros and Cons of Retiring Abroad

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

The negotiated "maximum fair prices," made possible by the 2022 Inflation Reduction Act, promise to save the program $12 billion annually compared with last year's Medicare spending on 15 widely used drugs to treat cancer and other serious chronic conditions that hit older adults hardest.

Previously, the Biden administration reached deals to lower the costs of 10 prescription drugs, including several for heart disease and diabetes, which are set to take effect in 2026. This latest round of price negotiations will go into effect in 2027, with seniors expected to see an estimated $685 million in out-of-pocket relief.

Historically, prescription drug costs have wreaked havoc on many seniors' budgets, with some rationing doses or skipping their meds altogether due to high costs, according to a survey by research group KFF.

For the roughly 5.3 million Medicare beneficiaries who take these 15 medications, and the new $2,100 annual out-of-pocket cap in Medicare Part D, starting in 2026, 2027 can’t come soon enough.

For decades, Medicare was prohibited by law from negotiating drug prices directly with manufacturers, resulting in older Americans paying two to four times what patients in Europe or Canada paid for the same medicines.

Seniors like 72-year-old retiree Ryan Whitworth of Florida, who relies on Xtandl for prostate cancer, could see his monthly copays halved. “Finally, I won’t have to choose between meds and groceries,” he told Kiplinger. 

Below is the full list of the 15 drugs and their new Medicare maximum fair prices compared with the 2024 list prices. All figures are for a typical 30-day supply. The numbers are rounded to the nearest dollar where applicable.

The “2024 List Price” column shows the gross Wholesale Acquisition Cost (WAC) that Medicare Part D plans were charged in 2024 for a 30-day supply, before any rebates or discounts.

The “2027 Medicare Price” column is the Maximum Fair Price (MFP) manufacturers must offer Medicare starting January 1, 2027, for a 30-day supply.

Sources: CMS, November 2025 (pdf); Medicare prescription drug affordability fact sheet; Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability, Year 2027 (pdf)

List prices reflect typical Part D gross costs before rebates.

Related content

• 16 Strategies to Save Money on Prescription Drugs
• Here Are the 10 Medicare Negotiated Drug Prices
• Medicare to Cover Obesity Drugs Under Trump Deal for as Little as $50. What You Need to Know
• Seven Medicare Changes Coming in 2026
• Brace for Higher Health Costs in 2026: A Look at Projected Medicare Premiums

One way to determine this is by looking at the average retirement income in the United States, categorized by age group and state.

The breakdown by age, from Empower, looking at the 2025 U.S. Census Current Population Survey, shows how the median and mean annual income for retirees change across different age brackets, from the more active 55 to 59 and 60 to 64 age groups to the later-stage 75-plus age group.

We also examined data on average retirement incomes across all 50 states, provided by Wisevoter and based on the U.S. Census Bureau's American Community Survey.

Knowing the average retirement income for your age bracket and state helps you benchmark your savings progress.

If the median household income for retirees in your state is, for example, $65,000, and your projected income is $40,000, you're below the local benchmark.

To maintain a similar standard of living in your area, you might decide you need to increase your savings or reduce your expected spending.

Retirement income by age, median and mean figures

Social Security provides a vital baseline, but it’s not enough to cover living expenses — especially when faced with rising health care costs and inflation. To bridge that gap, you need a realistic savings target.

By looking at data by age groups, you can see how much the average income drops over the course of retirement. The median income for those ages 60 to 64 is $83,770. That figure drops by $35,980 (nearly 43%) for individuals age 75 and older. This decline is attributed to a reduction in work income and the necessary drawdown of retirement accounts.

The median number is probably more representative of the actual average income in the U.S. than the mean number. This is because households with higher incomes tend to skew the mean calculation toward the high side.

Ultimately, the most important lesson derived from viewing average retirement income by age is recognizing the income deceleration that occurs in later years. The consistent decline in median income after age 59 underscores the financial risk posed by inflation and the cessation of work-related income.

This knowledge can be used to focus on creating a sustainable, tax-efficient withdrawal strategy today — one that accounts for the inevitable drop in income and prioritizes managing your future tax liabilities, such as required minimum distributions (RMDs), to protect the longevity of your portfolio. Your goal isn't just to reach the average, but to outlast it.

Average retirement income by state

Where you live is the single largest determinant of your retirement budget. While the national average retirement income serves as a starting point, it masks vast differences in the cost of living.

A detailed, state-by-state perspective can help you move beyond national generalizations, setting a savings goal informed by the real-world earnings of your counterparts in other states.

For instance, many states offer additional tax breaks for retirees. Some states exempt all retirement income from taxation, while other states offer substantial tax credits to retirees living on fixed incomes.

One reality you can't escape is how the federal government taxes your retirement income and estate. Even if you move to a state that doesn't tax Social Security benefits, pensions or has no inheritance/estate taxes, you will still be subject to federal taxes.

If you're considering a move, note that a state with a much higher average retirement income usually has a proportionally higher cost of living as well. Knowing this can help you assess whether your savings will be more durable in an area characterized by a lower average income and subsequently lower costs.

Planning tip. Only nine states tax Social Security benefits. You might want to take note of this as you're considering a move.

Using data to your advantage

The data show that retirement income is far from uniform; it can shift dramatically by age and geography. While median figures provide a powerful benchmark, your ultimate financial success depends on personalizing this information.

Use these age and state-by-state averages not as a final goal, but as a critical reality check. Suppose that your projected income falls below the average for your age or location. In that case, it’s a clear signal to increase savings, optimize your withdrawal strategy to manage taxes or re-evaluate your geographic future.

The time to plan your specific income strategy is now.

Related Content

• The Average Retirement Savings by Age
• Average Cost of Health Care by Age and US State
• Nine Things You Need for a Complete Retirement
• 6 Changes to IRAs, 401(k)s and HSAs in 2026

If you're a high-income investor, your brokerage account could be quietly working against you.

Mutual funds, long considered a cornerstone of diversified investing, can trigger surprise tax bills that eat away at returns. The reason lies not in your investment performance, but in the structure of the funds themselves.

The problem: A tax bill you can't control

When you own a mutual fund, your money is pooled with the funds of thousands of other investors. The fund manager actively buys and sells stocks or bonds within that pool. When appreciated securities are sold, those gains must be distributed to shareholders each year under federal law.

That sounds straightforward until you realize two major drawbacks:

No control over timing. The manager's sales decisions are driven by portfolio strategy and redemptions, not your personal tax situation. You can end up realizing gains even when you didn't sell anything.

"Phantom" gains. You can owe taxes even if your fund's value drops. If the manager sells appreciated holdings to meet redemptions, those gains are still passed to remaining investors.

In short, you're paying for someone else's selling decisions and possibly paying taxes on income you never pocketed.

A painful lesson from 2022

This dynamic became painfully clear in 2022, when the S&P 500 fell nearly 20%. Many investors saw their portfolios lose value, yet still received capital-gain distributions.

Actively managed funds had to sell appreciated positions to meet investor withdrawals during the downturn.

Consider the Growth Fund of America (AGTHX). It lost roughly 25% in 2022 but still distributed $3.71 per share in long-term capital gains that December.

Investors were hit twice: a shrinking portfolio and a tax bill on "phantom" gains.

The triple drag: Loads, taxes and fees

Let's break down the hidden costs with a real-world example from The Growth Fund of America®.

• Front-end load. Class A shares charge up to 5.75%. A $100,000 investment could lose $5,750 before the money even hits the market.
• Tax drag. In December 2024, the fund distributed $1.15 per share in dividends and $6.38 in long-term capital gains. For a high-income taxpayer, that could mean roughly $1,900 in federal taxes, according to IRS Publication 550 and Topic No. 559 (net investment income tax).
• Expense ratio. The annual 0.61% fee equals $610 on $100,000.

Combined, the first-year headwind can be staggering. Add the $1,900 tax and $610 fee to the $5,750 sales charge, and your $100,000 investment effectively starts 8.25% behind.

Smarter, tax-efficient alternatives

High-income investors don't have to accept this structural disadvantage. More efficient tools can help reduce taxable drag and improve after-tax returns.

Exchange-traded funds (ETFs). ETFs generally avoid distributing capital gains because of their in-kind redemption mechanism. That structure allows managers to swap appreciated securities out of the fund without triggering taxable events.

Combined with typically lower expense ratios, ETFs are often the better choice for taxable accounts.

Separately managed accounts (SMAs). An SMA gives you direct ownership of the underlying securities. That ownership allows for individualized tax-loss harvesting, which can offset gains elsewhere in your portfolio.

For investors with significant assets and complex tax situations, this added flexibility can be valuable.

Direct indexing. Direct indexing takes tax efficiency a step further. Instead of buying a single fund, you hold the actual stocks of an index. Your adviser or manager can harvest losses from specific positions while keeping overall exposure aligned with the benchmark.

This granular control can meaningfully reduce taxable income over time.

The bigger idea: Asset location matters

Tax efficiency isn't just about what you own, it's about where you own it. Growth-oriented or high-turnover funds belong in tax-advantaged accounts, such as IRAs or 401(k)s.

Your taxable brokerage account should be designed with low-turnover, tax-efficient investments.

This concept, known as asset location, can make a measurable difference. Studies consistently show that thoughtful asset location can boost after-tax returns by 0.5% to 1% per year, a compounding advantage that grows over decades.

The bottom line

If your taxable accounts are filled with actively managed mutual funds, you might be losing money to taxes you can't control. ETFs, SMAs and direct indexing can give you back that control while improving efficiency.

Your portfolio isn't just a collection of investments; it's a financial ecosystem that must work together across account types. By being intentional about structure and location, you can stop the silent erosion and keep more of what you earn working toward your future.

Josh Taffer is a Founding Partner and Wealth Advisor of Journey Wealth Strategies and is an investment adviser representative of Signal Advisors Wealth, LLC ("Signal Wealth"), a Registered Investment Adviser with the U.S. Securities & Exchange Commission.

Related Content

• Capital Gains Taxes Trap: How to Avoid Mutual Fund Tax Bombs
• Which Capital Gains Are Taxable and How to Calculate Your Tax
• To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's Steps
• The Easiest Asset Allocation Rule
• Five Tax Strategies to Preserve Your Retirement Savings

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

Many assume that Social Security benefits are tax-free after a certain age or that only wages affect whether your Social Security benefits are taxed by the IRS, but the reality is more nuanced.

This quiz will test your knowledge of the often-misunderstood topic of Social Security taxation, including how provisional income works, how other income types affect your tax burden, and common misconceptions.

Read More About Social Security Taxes

• Social Security and Your Taxes: Five Things to Know
• How to Calculate Taxes on Social Security Benefits
• The New $6,000 Senior Bonus Deduction: What It Means for You

This 10-question True/False quiz covers the essential facts about the Initial Enrollment Period (IEP), late penalties, and the crucial distinction between Medicare's different parts. Test your knowledge now to ensure your transition to Medicare is smooth, timely and penalty-free.

Don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Medicare, from the Kiplinger retirement team:

• 12 FAQs About Medicare: Your Medicare Questions Answered
• 11 Costly Medicare Mistakes You Should Avoid Making
• Can You Sign Up for Medicare While Still on an Employer Health Plan?
• Medicare Open Enrollment Occurs Annually from October to December — Here's What You Need to Know
• Medicare Advantage Open Enrollment Runs from January 1 to March 31

Social Security's annual cost-of-living adjustment (COLA) will be 2.8% in 2026, just a smidge higher than 2025's 2.5% increase, which was the lowest boost in benefits since 2021. The average monthly payment will rise by about $56, to an estimated $2,071, while the maximum that a recipient can take home at full retirement age is expected to hit $4,152 a month, up from $4,018 in 2025.

The modest COLA is a positive sign that inflation, despite creeping up lately due partly to tariffs, still remains far below recent pandemic-era highs. That good news may feel underwhelming, however, when you're at the checkout counter or paying your bills. Consumer prices have risen nearly 25% overall since 2020, and household staples such as eggs and beef have more than doubled in that period.

Adding to the sting for 2026: The 9.7% increase in Medicare premiums, which will raise monthly payments for coverage by $17.90 for the typical beneficiary, wiping out nearly one-third of the increase in Social Security benefits. And if you're among the 5 million high-income Medicare recipients who pay a premium surcharge known as the income-related monthly adjustment amount (IRMAA), your Social Security payments could actually go down next year after factoring in the Medicare price hike.

Retirees are feeling the pain. More than three-fourths of the respondents in a recent AARP poll said that a 3% COLA would not be enough to keep up with rising prices, while 72% said they'd need an adjustment of 5% or more to afford their living expenses.

"The loss of buying power for older Americans has really accumulated over the years," says Shannon Benton, executive director of The Senior Citizens League. Part of the problem, Benton notes, is that the Social Security Administration calculates the COLA using an inflation measure that reflects the expenses of urban wage earners rather than those of retirees.

For example, she says, health care doesn't get enough weight, while technology costs, which may have less relevance for retirees, have an outsize impact. "Every year that the COLA doesn't keep up with the actual inflation rate that older people experience, it increases the loss of buying power more and more," Benton says.

If the 2026 COLA won't keep up with your household's rising costs, these steps may help.

Get creative about trimming costs

You may be able to lower your bills by asking and shopping around for better rates on everything from your gym membership to your insurance policies. More than 90% of Americans who switch auto insurance carriers save money, the majority by $100 or more a year, according to a recent LendingTree survey. The online loan marketplace has also found that 95% of credit card holders who ask to have an annual fee waived or reduced are successful.

Another prime place to look for savings: "Subscriptions and service fees only go up," says Pam Krueger, founder and CEO of Wealthramp, a referral service for fiduciary financial advisers. "Think monthly streaming, extra cell lines and lots of apps you probably don't use. Review them, then cancel the subscriptions you really don't need."

If you have credit card debt — as do 42% of Americans ages 65 to 74 and 35% of those 75 and up — consider moving it to a balance-transfer card with a 0% introductory rate to give you a break on interest charges while you pay it down (the introductory rate lasts for 15 months, on average). "Credit card debt is something you should address head on," says Pedro Silva, principal partner at Apex Investment Group.

Generate extra income

After diligently building your retirement savings for decades, it can be psychologically difficult to switch to spending mode, but a modest bump in withdrawals could provide you with just enough extra cash to cover higher expenses.

More than one-fourth of retirees take less than 3% from portfolios every year, according to IRALogix, even though studies suggest a 4% to 4.7% withdrawal rate, adjusted annually for inflation, will not put most retirees at risk of outliving their assets.

Another option is to take on a part-time job or side hustle, something that one in five baby boomers now do, earning them an average of more than $900 per month, according to Bankrate. Sites such as SideHusl.com and RetirementJobs.com can help you find an opportunity that makes sense for your situation.

Read more: The Best-Paying Side Gigs For Retirees

Factor inflation into your investment plan

With tariffs projected to keep upward pressure on prices for the foreseeable future, retirees probably can't expect the challenge of what feels like an inadequate annual Social Security COLA to be resolved anytime soon, experts say. That makes it all the more important to include a longer-term inflation hedge in your financial strategy.

Your best bet, says Mike Lynch, managing director of applied insights at Hartford Funds, is to maintain a healthy dose of equities in your investment mix, along with fixed-income investments such as bonds and certificates of deposit. Stocks, historically, have delivered the best inflation-beating returns over long periods, he says, compared with other assets.

Other investment options that can help you hedge against cost increases include inflation-protected annuities, which provide an income stream that's guaranteed to keep pace with rising prices, as well as Treasury inflation-protected securities, or TIPS, which adjust their rates twice a year to reflect changes in the consumer price index.

Having a mix of assets is key. "We need to make sure we stay well diversified," Lynch says. "It's proven that, over time, a diversified portfolio will really help keep up with and, hopefully, outpace inflation."

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.

Related Content

• 2026 Social Security COLA is 2.8%: What You Need to Know
• The Best Side Hustles for Retirees
• Retirement Income Funds to Keep Cash Flowing In Your Golden Years

This stretch coincides with year-end holidays and tax planning and is accompanied by an increased focus on charitable activities.

During this time, nonprofits are ramping up requests with annual appeals and year-end campaigns, while donors are making charitable giving part of their annual holiday traditions and tax strategies.

Each year brings unique conditions that impact giving approaches. This year, the passage of the One Big Beautiful Bill (OBBB) and interest rate cuts drove many of the conversations donors had with their advisers as they planned their year-end giving and tax impacts.

In the wake of the legislation, many donors are now seeking to front-load contributions this year before tax changes take effect in 2026, including the new 0.5% floor on charitable contributions for taxpayers who itemize.

Considerations like these are part of smart philanthropic giving and tax planning. Yet, as year-end approaches, it's important to think beyond giving season when it comes to charitable giving and its implications, for donors' financial portfolios and for the nonprofits receiving funds.

Year-end giving for year-round impact

Charities understand — and often drive — the push for year-end giving, particularly in late November and throughout December.

In fact, nearly one-third of annual giving occurs in December, with 10% taking place in the last three days of the year.

But budgeting for expected giving only goes so far, and nonprofits need support throughout the year.

What's more, many charities support causes and engage in work that is, by definition, unpredictable. Occurrences from natural disasters to shifting regulations can create a significant and unexpected need for support outside of the traditional giving period.

Many donors want the opportunity to support these needs and unexpected giving opportunities. Often, this unexpected giving is in addition to gifts planned throughout the year.

The good news is that donors can leverage several tools to help sustain the work of the nonprofits and causes they support throughout the year.

Here's a closer look at some of the ways donors can increase the impact of their donations all year long while still achieving the tax benefits of year-end giving.

Separate contributions and grantmaking

One of the most effective ways to combine year-end giving with year-round impact is leveraging the right giving tools.

A donor-advised fund (DAF) is one such tool that allows investors to contribute when it makes the most sense for their portfolios while ensuring their contributions can be used to support charities throughout the year.

When contributing to a DAF, individuals receive an immediate deduction and can recommend grants to nonprofits at any time.

In the context of year-end tax planning, these contributions are a vital mechanism that can lower taxable income and, in many cases, reduce overall tax liability when a donor's full financial picture for the year comes into view.

Additional contributions and grantmaking recommendations can happen when they make the most sense, and funds in a DAF — which are earmarked for charity — can be invested and grow tax-free over time.

This growth, combined with traditionally lower fees and the power to separate gifting and granting, means donors can significantly increase their charitable impact with the right DAF partner.

Prioritize recurring giving

Like any business, nonprofits crave stability and predictability when it comes to resources and financial commitments. Recurring grants are a crucial way that donors can support a nonprofit year-round and provide that predictability of funding.

In fact, 3 in 4 charities prefer repeated gifts over a one-time gift for the same amount, according to Vanguard Charitable's recent Why Giving Matters report.

At the same time, donors who utilize recurring grants tend to give more over time.

Over a five-year period, a typical recurring donor's most recent grant will be 40% greater than their first, and the total recurring grant amount will increase by 8% each year on average, the report shows.

Recurring grants help close the gap for year-round impact and provide stability when traditional fundraising efforts tend to slow.

Tap into recoverable grants

Recoverable grants offer another way for donors to support nonprofits as needs and resources fluctuate.

Recoverable grants provide grantees with the immediate, flexible and high-impact backing they need, when they need it.

It's different from a traditional grant in that the funds may be recovered (sometimes even beyond the initial granted capital) by the DAF and used to recommend additional grants to other nonprofits.

A recoverable grant can be a powerful year-round giving tool that allows nonprofits to navigate funding gaps or capitalize on unique opportunities to expand or scale their impact.

Give without restrictions

Giving with few limitations on how the funds will be used is another way to empower nonprofits to maximize their impact outside of giving season.

Nonprofits consistently identify unrestricted giving as a top priority in helping to alleviate more pressing needs. This approach enables organizations to allocate funding where it's most needed to help fulfill their mission, which can include channeling donations directly to programming, hiring, fundraising events and more.

Each of these gifting strategies reflects a vote of confidence in the nonprofit's long-term vision and its ability to reach its goals.

With the right approach, donors can achieve the tax benefits associated with their charitable giving while ensuring maximum philanthropic impact throughout the year and beyond.

Related Content

• I'm a Financial Planner: Here's How to Make the Most of Your Charitable Giving on a Budget
• I'm a Wealth Adviser: Here's How to Maximize Your Generosity Before the OBBB's 2026 Cap Kicks In
• Charitable Contributions: Five Frequently Asked Questions
• A Donor-Advised Fund Can Give Your Charitable Giving a Boost
• Donating Complex Assets Doesn't Have to Be Complicated

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.

Jimmy Buffett, the legendary singer, songwriter and successful entrepreneur, taught generations to slow down, let the good times roll and that happiness is what it’s all about. Though he might not be with us anymore, he left an ocean of wisdom through his words.

From his 32 albums to his three No. 1 best-selling books, the world can learn a lot from the Mayor of Margaritaville.

His words are particularly relevant to retirees navigating everything from how they spend their money to how they spend their time.

Whether your retirement is just getting started or you’re in the thick of it, here are some words, or in this case, Jimmy Buffett lyrics, all retirees should live by.

Jimmy Buffett Lyrics To Keep You Singing

1. Go fast enough to get there / but slow enough to see / Moderation seems to be the key.
"Barometer Soup”

Retirees can use this as a blueprint for how they should live and spend their money in retirement.

Many are reluctant to withdraw money in retirement, but it's important not to be too frugal. Wait too long, and you might not get around to fulfilling items on that bucket list.

At the same time, you can’t spend freely, or you'll risk running out of money. The solution is finding a balance between spending and living well, and that's where moderation comes in. 'Everything in moderation' is the main lesson from this Buffett lyric.

To help control your spending in retirement, develop a withdrawal strategy that accounts for inflation, market volatility and longevity. A popular approach is the 4% rule, but others include the bucket rule of spending, the "Pay Yourself," "Me-First," and "Permission-to-Spend" rules.

2. I'd rather die while I'm living / than live while I'm dead.
"Growing Older But Not Up"

Rewind a few decades, and retirement meant the end of the line. You stopped working, and your days were spent sitting in front of the TV or hanging with the grandkids. That’s no longer the case, and you shouldn’t view it like that.

Buffett certainly didn’t, hence the lyrics and Margaritaville, his 55-plus sprawling retirement community that has more than 10,000 homes in Florida and South Carolina.

Many people don’t just stop working. They might opt for a phased retirement, take on a part-time job, consult, volunteer, pursue a completely new career or do a combination of some of the above. The point is they continue to have purpose and passion even when they stop working 9-to-5, and that’s what Buffett is proclaiming with those lyrics.

3. That’s what living is to me.
“That’s What Living Is To Me”

You might already know this or are starting to realize this, but as we get older, what makes us happy is less about the material possessions or money and more about freedom, passion and the experiences we have with the people we love.

It doesn’t matter how you're living; if you are happy, you'll feel rich, whether you take three vacations a year or one every other year.

That was the case for one retiree, who was able to make it work with just $33,000 saved in his 401(k) when he retired at 61, and he couldn’t be happier. Are you seeking ways to have a happier retirement? Check out our list here.

4. Only have oceans of time.
"Oceans of Time"

We spend decades meeting deadlines, keeping up with tight schedules and rushing around to ensure everything gets done. When we retire, we reclaim our time. That is hard for some people to enjoy or even accept.

Buffett is telling us we should enjoy our free time. With the lyric, he’s saying that in retirement, you have time to enjoy life, to stop and smell the roses or watch the sunset.

Take the time to appreciate your newfound freedom, but don’t squander it. Ensure you fill it with things that bring you happiness and keep you busy. We lay out some fun and free ways to fill your days in this article.

5. Some of it's tragic / some of it's magic / but I had a good life all the way.
"He Went to Paris"

Life is full of regrets, and retirement is a time for reflection, but you shouldn’t spend a lot of time dwelling on them. It's OK to acknowledge you made mistakes and to look back on all the ups and downs, but once that’s over, make peace and move on.

That’s the message Buffett is trying to convey in those lyrics, and it's something many retirees can benefit from hearing.

6. "When reality looks too ugly, fantasize."
A Pirate Looks at Fifty

We would be remiss if we didn’t include at least a quote from one of Buffett’s three best-selling books, and this one seemed fitting for the times, given that the stock markets have been volatile this year.

With this quote, Buffett reflects on his philosophy of seeking escape when times get tough. That approach can be applied to how retirees handle dips in the markets.

While it's easy to panic, sell, and move to cash, that's the worst thing you can do. The better choice is to distract yourself or fantasize and wait for the markets to rebound, which they historically always have.

Go live ….

Ultimately, Buffett's message was that happiness was the ultimate currency. While everyone’s definition of happiness is different, the key takeaway from Buffett is that it starts and ends with being able to accept what you can’t change and striving to make what you can better.

With Buffett’s lyrics in the back of your mind, go do what Buffett would do and “breathe in, breathe out, move on.”

Related Content

• Need a Reason to Retire Early? Consider These Eye-Opening Stats
• Ramit Sethi Tells Us the Biggest Retirement Mistake You Can Make
• Should You Skip the Wait and Prepay Your Retirement Dreams?
• The 'Die With Zero' Rule of Retirement

This was 20 years ago, well before the Affordable Care Act mandated that those tests be covered. My mom wanted to pay for it so we might have a clue about my own risk level, but I didn't want her to spend $10,000 or more.

I was in my late 20s then. If her tests came back positive, I would need to be tested, too. At an additional $5,000, that felt financially out of reach, so we decided to forgo genetic testing.

Still, her diagnosis forced me to think differently about my health, and I tried to work proactively with my doctors. Rather than standard mammograms, my doctors recommended annual MRIs, since mammograms are not as effective for young women with dense breast tissue.

But insurance didn't see it that way. They labeled the screenings "medically unnecessary" and flat-out refused to cover them, even with a direct family history of cancer.

The pink tax is alive and well

Across the board, women like my mom and me pay more for health care. According to the World Economic Forum, the average American woman spends 18% more on health expenses than a man. It's part of a broader pattern you may know as the "pink tax."

We've all seen it: higher prices on shampoo, razors, dry cleaning and clothing. In health care, the pink tax shows up in our medical bills.

Excluding pregnancy (don't get me started on that), women pay an average of $266 more per year than men. That may not sound like a lot, but it adds up.

Over time, nearly every major health expense we face is tied to gender: contraception, fertility treatments, pregnancy and childbirth, menopause, osteoporosis, dementia, autoimmune conditions, cancers of the breast, ovaries, cervix and uterus, and the list goes on and on.

And, when we're not paying for our own care, we're often the ones providing it.

Women are far more likely to become unpaid caregivers for aging parents, ill spouses or children with medical needs. That caregiving comes at a steep cost: lost wages, foregone promotions and reduced retirement savings.

It's an invisible tax that slowly eats away at our long-term financial security.

Where the gap hurts most

The health care system's biggest blind spots often align with uniquely female health concerns. Take reproductive care.

The cost of contraceptives still falls mostly on women. While the ACA improved coverage, regulatory changes around abortion, contraceptives and fertility treatments are creating new financial hurdles.

When I was considering fertility treatments to conceive my daughter, the cost wasn't covered in Nebraska, where I lived at the time. Each cycle of in vitro fertilization costs about $12,000, and most couples need several rounds before they conceive.

Today, IVF is covered only by health insurance in a small handful of states.

Then there's menopause. Every woman goes through it, but comprehensive menopause care remains largely absent from standard insurance coverage. Only 26% of plans cover menopause-related prescriptions in full, according to GoodRx.

Hormone replacement therapy is often treated as optional, even though it's seen as the gold standard for treating severe symptoms. Without coverage, women must choose between suffering or shouldering the cost themselves.

And it doesn't stop there. Because of their genetic structure, women are more likely to be diagnosed with autoimmune diseases like lupus, colitis and multiple sclerosis. They're more likely to take medical leave for a disability during their working years.

And they suffer from Alzheimer's at twice the rate of men. The Alzheimer's Association estimates the lifetime cost of care for someone living with dementia to be $405,262. That information is staggering.

Take control of your health care

These health care disparities aren't going away anytime soon. It's up to each of us to find ways to protect our physical and financial well-being. Here are a few places to start.

Use your workplace benefits

If you're employed, start with your health insurance policy. During open enrollment, review your options — especially if you expect higher medical expenses in the coming year. Choose the most comprehensive plan you can afford, even if the monthly premium is higher. It may save you far more in out-of-pocket costs down the road.

Next, explore additional benefits your employer might offer, such as:

• Voluntary supplemental health plans for critical illness or hospital stays
• Mental health services to connect with a therapist
• Caregiving support or employee assistance programs
• Menopause-specific resources (increasingly offered by large employers)

Don't be shy about asking HR what's available. These programs are there for you. Use them.

Maximize HSAs and FSAs

Health savings accounts (HSAs) and flexible spending accounts (FSAs) can help offset costs. HSAs, for example, offer a triple tax advantage: Contributions go in tax-free, grow tax-free and can be withdrawn tax-free for qualified medical expenses.

You must pair an HSA with a high-deductible health insurance plan, but you can roll funds over indefinitely, even into retirement.

FSAs, meanwhile, must be used in the year you contribute to them (although you may be able to carry over a small balance year-to-year depending on your employer's plan).

If you expect high medical bills, say, for fertility treatments, max out your FSA so you can pay for treatment with pre-tax dollars.

Protect your income

Don't overlook disability insurance. If your employer offers group coverage, consider using it. Short-term disability usually starts within a few weeks and lasts a few months. Long-term coverage typically kicks in after 90 days and can replace around 60% of your salary for up to a few years.

If possible, consider an individual policy to supplement what your employer provides. It's not cheap, but it can be a lifesaver when you need it most.

Get professional help

A financial adviser can be a great resource for helping you budget for high-cost years and help you analyze your insurance plan. Don't have an adviser? Start by searching for a CERTIFIED FINANCIAL PLANNER® (CFP®) professional through the CFP Board's professional directory, which allows you to filter by location, specialization and fee structure.

If you can't afford an adviser, you can find a pro bono adviser through the Foundation for Financial Planning, which can pair you with a volunteer financial planner for free if you qualify based on income and other circumstances.

Hard-won progress, but still fighting

A year ago, my mom's cancer returned. She's fighting it with everything she has. Now that my family history has become impossible to ignore and changes by the ACA have taken effect, genetic testing is covered for her, but still not for me.

However, my insurance company finally treats my case as high risk. For the first time in 18 years, insurance approved an MRI.

The irony isn't lost on me: Eighteen years of paying out of pocket for the screening that would actually benefit my health, while insurance covered the less effective option.

The pink tax on health care is real. But with dogged planning and advocacy, we can minimize its sting on our financial and physical well-being. Persistence and advocacy can eventually lead to better coverage.

The key is never to accept "no" when it comes to our health.

We shouldn't have to fight this hard for care that fits our bodies. But until we don't have to, we need to plan and speak up.

Our lives depend on it.

Related Content

• I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have Millions
• Don't Let Menopause Derail Your Career
• Four Ways to Make the Most of Your Benefits During Open Enrollment
• Don't Let Health Care Costs Wreck Your Retirement: Here's How
• Six Steps to Being Empowered and On Track: An Expert Financial Guide for Women

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.

High inflation as of late means this is the fourth year in a row that the adjustments have resulted in a higher 401(k) contribution limit. But what about your IRA?

Here’s how much you can contribute to retirement accounts in 2026.

IRA 2026 contribution limits

The contribution limits for a traditional or Roth IRA increased last year and will increase again for 2026.

• You can contribute a maximum of $7,500 (up from $7,000 last year).
• Catch-up contributions for taxpayers 50 and older are also subject to cost-of-living adjustments, and these limits have also increased for 2026 to $1,100 ($8,600 total).

However, not everyone can make the maximum IRA contribution limits this year. You can only make the maximum contribution to your Roth IRA if your modified adjusted gross income (MAGI) is below the threshold set for the year.

• For 2026, single and head-of-household filers with a MAGI below $153,000 (up from $150,000 last year) can contribute the full $7,500 in 2026.
• The maximum contribution is reduced for these filers if their MAGI is between $153,000 and $168,000, and these taxpayers can't contribute to a Roth IRA at all if their MAGI exceeds $168,000.
• For married couples filing jointly, the income phase-out range for 2026 is from $242,000 to $252,000 (up from from $236,000 to $246,000 last year).
• Joint filers with a MAGI below $242,000 can contribute the full $7,500 for 2026, but these filers cannot contribute anything to an IRA with a MAGI greater than $252,000.

(Note: The above income limits do not apply to traditional IRAs.)

401(k) limit increase for 2026 contributions

Contribution limits for 401(k), 403(b) most 457 plans, and the federal government's Thrift Savings Plan will increase by $1,000 for 2026. Eligible taxpayers can contribute $24,500 to these accounts in 2026 (up from $23,00 last year).

The contribution limit for SIMPLE plans increases to $17,000 this year (up from $16,500 last year). Similarly, participants of an applicable SIMPLE plan might be able to contribute a higher amount of $18,100 (up from $17,600 last year).

401(k) 2026 catch-up limit

There's an increase in catch-up contribution limits for taxpayers 50 and older for 2026. These taxpayers will be able to contribute an additional $8,000 in 2026 ($32,500 total).

However, under SECURE 2.0, a higher catch-up contribution limit applies for those age 60 to 63 beginning this year. (Participants in that age range could contribute an additional $11,250 instead of $8,000.) The total potential contribution amount for these taxpayers is $35,750.

For more information, see Kiplinger's report: 'Super Catch-Up' Contribution for Ages 60-63.

The catch-up contribution limit for employees age 50 and older who participate in SIMPLE plans also has increased for 2026, to $4,000 (certain applicable plans might have a contribution limit of $3,850).

But under a new change under SECURE 2.0, those who are 60 to 63 can contribute more to SIMPLE plans, ($5,250) for 2026.

IRA deduction phase-out thresholds for 2026

If you put money in a traditional IRA, you might be able to take a tax deduction for some or all your contributions. (There is no deduction available for contributions to a Roth IRA.)

However, the deduction is gradually phased out if your income is above a certain amount.

Here are the phase-out ranges for 2026.

• For single taxpayers covered by a workplace retirement plan, the phase-out range is from $81,000 to $91,000 (up from from $79,000 to $89,000 last year).
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is from $129,000 to $149,000 (up from $126,000 to $146,000 last year).
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is from $242,000 to $252,000 (up from from $236,000 to $246,000 last year).

If you are married and filing a separate return (and covered by a workplace retirement plan), the phase-out range remains from $0 to $10,000 because this limit is not subject to a cost-of-living adjustment.

Saver's Credit income limit for 2026

Americans with lower and middle incomes who contribute to a retirement plan can claim the Saver's Credit on their federal tax return, which could lower their tax bills.

However, not everyone qualifies. Here are the new income limits for claiming the Saver’s Credit in 2026.

• $80,500 for married couples filing jointly (up from $79,000 last year).
• $60,375 for heads of household (up from $59,250 last year).
• $40,250 for single and married taxpayers filing separately (up from $39,500 last year).

Read More

• 2026 HSA Contribution Limit: What You Should Know
• Saver's Credit: Who Qualifies for This Retirement Tax Break?
• New 2026 Income Tax Brackets Are Set

No doubt, this retirement savings strategy, which relies on funding your 401(k) up to the contribution limit, can boost the size of your nest egg. But putting every spare penny of savings into a traditional 401(k) is akin to putting on a financial straitjacket.

Just like the downsides of being house rich and cash poor, it’s possible to have a sizable nest egg and still run into liquidity issues or other money-related obstacles that can put stress on your finances.

While there’s no denying that taking advantage of the upfront tax break, tax-deferred growth, a potential employer match and automatic investments that a traditional 401(k) offers, there are also risks to putting all your investable assets in one basket: a 401(k) funded with pre-tax dollars.

Should you max out your 401(k)?

Get the match. No matter what, it’s a given that investors should put enough in a 401(k) to at least earn matching contributions, says Christine Benz, director of personal finance and retirement planning at Morningstar. There’s no reason to leave money on the table.

Know your company plan. The first question you'll need to answer is what the 401(k) match is at your company. Is it generous? (The average match is 4.6% of pay, according to Vanguard.) Do you earn that match from day one, or do you have to work for a few years first? Are you vested right away? If you plan to leave your company before you're eligible for a match, then you might not want to invest in the company's 401(k) plan.

Once you're familiar with your company's 401(k) plan, here's how to determine if you should contribute the maximum allowable amount.

The hidden downsides of maxing out your 401(k)

It’s often said that in life, stuff happens. When financial emergencies strike, or you’re intent on buying a new car or a vacation home, being able to access your money easily and penalty-free is crucial. Having the bulk of your money tied up in a traditional 401(k) can handcuff you.

Before tying up your hard-earned cash, you should understand the drawbacks of traditional 401(k)s (and related accounts such as traditional 403(b)s and 457(b)s). Since distributions are taxed as ordinary income, large 401(k) withdrawals in your retirement years when spending spikes can push you into a higher tax bracket and boost your tax bill.

IRS rules also place restrictions on accessing your money before age 59½. If you do, you'll most likely be hit with a 10% early withdrawal penalty on top of any taxes you incur.

Your traditional 401(k) might also lack a strong lineup of funds to choose from, offer a meager company match or charge hefty fees that bite into your returns.

Financial experts say you should still save as much as you can. The key is to spread your money across different types of accounts to ensure you have the most financial wiggle room for cash flow and taxes, no matter your age.

“One of the biggest downsides is the lack of financial flexibility before you hit your full retirement age,” said retirement expert Roger Young, a thought leadership director at T. Rowe Price.

Many Americans retire early, get laid off late in life or have a large pending purchase or bill. As a result, they might face financial challenges that traditional 401(k)s aren't designed to address. The problem is the inability to withdraw money as needed in a tax-efficient, penalty-free way.

“It is definitely helpful to have money in different places so that you have access to it without penalty,” said Young.

Tax diversification is the winning strategy

Spreading your savings across investment buckets with different tax treatments provides maximum flexibility.

“Having tax diversification is really critical,” said Chris Kampitsis, a financial planner at Barnum Financial Group. “Having some money in a Roth bucket, a brokerage account, and an emergency fund in cash or cash equivalents allows you to call your shots in terms of the tax rate that you’re going to be looking to be in throughout retirement.”

Being able to choose between a tax-free Roth withdrawal, a lower capital gains hit from a brokerage account or cash or a traditional 401(k) withdrawal provides ample options, depending on financial circumstances.

There are plenty of options to better manage your tax hit.

“Having assets in a taxable brokerage account, Roth accounts, as well as traditional tax-deferred accounts, gives you more flexibility to control your tax bills on a year-to-year basis,” said Benz.

What you want to avoid, if possible, is having every saved dollar in a traditional 401(k). The reason: Every dollar you withdraw will be taxed at your ordinary income tax rate.

If you don’t max out your 401(k), where should you save money?

Roth accounts. Contributing to a Roth 401(k) (if your company offers it) or a Roth IRA account funded with after-tax dollars offers a few key benefits that traditional 401(k)s do not.

For one, withdrawals are tax-free. That means even if you yank out $100,000 for a down payment on a home, it won’t boost your income by a single penny or increase the amount you owe to the IRS. Since the money you contribute to a Roth has already been taxed by Uncle Sam, you can withdraw your deposits (not your gains) before age 59½ without paying an early withdrawal penalty or taxes on your earnings.

Once your Roth has been open for five years, you have the freedom to do whatever you wish with the money you’ve put in the account without paying taxes.

“You can spend it as freely as you want when you need it,” said Kampitsis.

With the new IRS rule mandating that high-earners in 401(k) plans that offer a Roth 401(k) invest their employer’s matching contributions into a Roth account starting in 2026, there’s an opportunity for many retirement savers to diversify their retirement savings from a tax perspective.

“If you’re a boomer who’s been doing pre-tax, pre-tax, pre-tax contributions (forever), I would try to focus on building up my Roth bucket as much as possible,” said Kampitsis.

Taxable brokerage accounts. In the age of tax-efficient exchange-traded funds (ETFs), parking money in a taxable brokerage account will allow your money to grow without major interference from big tax bills, said Benz.

“ETFs are just a terrific, tax-efficient way to invest taxable dollars,” said Benz. “These accounts can mimic the tax-sheltering features you get with your 401(k) or IRA.”

So-called “asset location” is another key plank in a financial plan looking to reduce tax drag on returns, adds T. Rowe Price’s Young.

“The tax consequences of having a taxable account are not as potentially negative as in the past,” said Young.

Another perk is that investments in taxable accounts are subject to lower capital gains tax rates, adds Kampitsis.

“Building up your brokerage bucket can be tremendously effective,” said Kampitsis. Depending on your income, you could pay as little as 0% on long-term capital gains for assets held at least one year. The highest rate is 20%. But the IRS says most Americans pay 15%.

There are many upsides to saving in brokerage accounts. There are no contribution limits. There are no age limits when it comes to tapping your money penalty-free, unlike traditional 401(k)s that require you to wait until age 59½ to make penalty-free withdrawals.

The “rule of 55” — an IRS provision that allows workers who leave their job in or after age 55 to withdraw from a qualified plan without a 10% penalty — doesn’t apply, either.

With layoffs on the rise, brokerage accounts can be a lifeline.

“Having that reserve of non-401(k) money is critical now more than ever,” said Kampitsis.

When it doesn’t make sense to max out your 401(k)

If it drains too much liquidity. You need money to pay the monthly bills and cover big expenses. Having assets parked in either Roth products, taxable accounts or a cash emergency fund that you can access easily before full retirement age is critical.

When the interest on debt is higher than account earnings. If the debt you’re carrying on credit cards, personal loans or auto loans is higher than the return you’re getting in your 401(k), it might make sense to reduce your retirement plan contributions to service the high-interest debt, says Kampitsis.

“Say you’re saving money to get a 10% return, but you’re paying 27% in interest on credit card bills and you’re only sending in the minimum payment,” said Kampitsis. “It might make sense to restructure your cash flow to accomplish both goals.”

If you plan to retire early. Many people who want to stop working before full retirement age tend to max out their 401(k)s to amass as much money as possible before they retire, says Kampitsis.

The problem is that if most of their savings are in a traditional 401(k), they likely will have to tap their old workplace retirement account and pay the 10% early-withdrawal penalty. What’s more, piling up so much money in a traditional 401(k) can add up to massive required minimum distributions (RMDs) when they turn 73.

Fund your accounts in this order

If you want to spread your retirement dollars around, the pecking order goes like this: Start with your 401(k) and contribute enough to get the match. A Roth IRA is next in line due to its more favorable withdrawal rules before age 59½ and tax-free withdrawals. Finally, funnel money into a taxable brokerage account to fill the third bucket.

“It’s like building blocks,” said Lisa Featherngill, national director of wealth planning at Comerica Wealth Management. “All of these accounts are going towards your retirement nest egg.”

Read More

• Average 401(k) Balance by Age and Generation
• 6 Changes to IRAs, 401(k)s and HSAs in 2026
• I'm 52, make $210K a year and heard I may lose a 401(k) tax break in 2026. Should I max out my 401(k) anyway?
• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA

We work with families who have $1 million or more saved — we call them Midwestern Millionaires. They're the kind of people who pack their lunch, pay off their home and try to do things the right way.

For those who have spent decades saving, serving and doing the right thing, sending painful amounts of money to Uncle Sam to pay taxes can feel downright unfair.

When you have a high income and a high net worth in retirement, then taxes will likely be your greatest expense.

Tax avoidance, not evasion

I get it. One of our clients, Jeannie, looked me straight in the eye during our first meeting and said, "Joe, there's one thing you need to know about me — I hate taxes." That moment inspired my bestselling book I Hate Taxes (request a free copy here).

And, honestly, she's right. You shouldn't feel bad about wanting to keep as much as you can of what you earned through all your years of hard work.

Let's be clear: I'm not talking about breaking the rules. I'm talking about using them to your advantage.

As Judge Learned Hand famously said, "Anyone may arrange his affairs so that his taxes shall be as low as possible ... There is nothing sinister in so arranging affairs as to keep taxes as low as possible."

That is exactly what smart tax planning is about: paying your fair share, but not a penny more — and not tipping Uncle Sam.

The IRS has a plan for you. Do you have a plan for you?

Here is the truth most retirees don't realize: You already have a tax plan — it's set out for you by the IRS.

If you don't take control of how and when you pay taxes, the government will happily make that decision for you by imposing required minimum distributions (RMDs).

Creating your own retirement tax plan now can allow you to decide when and how much to pay in taxes.

Plus, you can structure your retirement income so more goes into your pocket and less goes into Uncle Sam's.

Taxes are on sale — for now

Current tax rates are among the lowest in U.S. history. The top tax rate today is 37%. In the 1980s, it was 70%. And in the 1940s, the highest tax rate was 94%!

When clients ask me, "Joe, when's the best time to plan for taxes?" my answer is simple: right now.

If taxes were going to double over the next 10 years, would you do something today? Of course. And with our national debt now over $38 trillion, that future isn't hard to imagine.

That's why I say taxes are currently on sale, and like most sales, this one may not last forever.

When you shop at the grocery store, you check prices before putting items in your cart. But with tax-deferred accounts, most Americans are shopping blind.

Every time you add money to your 401(k) or traditional IRA, you're agreeing to pay taxes later, but you don't know how much "later" will cost.

Would you invest in something if you didn't know the price? Of course not, and that's why understanding your future tax liability is so crucial.

Now, as I always say, the tax code is written in pencil, which is why we must proactively plan for what we call tax diversification.

Three tax buckets

We teach our clients to think of their savings as being in three buckets:

• Taxable bucket. Checking, savings, brokerage accounts
• Tax-deferred bucket (Uncle Sam is the joint owner of this one). 401(k)s, IRAs, TSPs, 457s, 403(b)s
• Tax-free bucket. Roth IRAs, Roth 401(k)s, HSAs

Here is the goal: to move money from the "tax later" category to "tax never." I always ask, if we had a magic wand, which bucket would we want our money in? The tax-free one, of course.

Unfortunately, most people have the majority of their wealth in tax-deferred investments. So, typically, what they do is contribute to a Roth from their taxable bucket.

Or they look at doing Roth conversions by moving a portion of their tax-deferred bucket to the tax-free bucket and paying taxes now while they are lower.

You can't take it with you

You've worked hard, you've saved, you've done everything right … Now it is time to ask yourself, What is all of this for?

I tell people all the time that there will be no U-Haul hitched to your hearse. You can spend your money, give it to your family, give it to charity … or give it to Uncle Sam.

If your retirement plan is structured properly, you can live comfortably, give generously and still leave a lasting legacy without giving the IRS a tip on your way out.

Smart tax planning

The IRS is very good at making taxes complex, but your strategy doesn't have to be.

With tactical and intentional planning strategies — using Roth conversions, charitable giving, income diversification and more — you can cut your tax bill, strengthen your retirement and put more of your money toward what truly matters.

At Peak Retirement Planning, we believe that every dollar you save in taxes is another dollar that can serve your family, your community and your legacy.

Related Content

• Here's What Being in the 2% Club Means for Your Retirement
• Are You a 'Midwestern Millionaire'? Four Retirement Strategies
• Five Opportunities if You're in the 2% Club in Retirement
• Here's Why You Shouldn't Put All Your Money Into Roth IRAs
• Thanks to the OBBB, Now Could Be the Best Tax-Planning Window We've Had: 12 Things You Should Know

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 this advice is well-intended and generally useful, it turns out that following this advice blindly can sometimes make things worse than if you had done nothing at all.

Let's start with that last point about avoiding probate. Many people have heard horror stories about probate, and consequently they want to do everything they can to enable their estates to avoid it.

There are multiple ways to try to accomplish this, from establishing trusts to setting up payable-on-death (aka transfer-on-death) accounts and more.

Small estates already protected

Before bothering with any of these avoidance maneuvers, however, you should be aware that "small" estates don't need to go through probate in the first place.

Almost every state has laws that allow certain estates to bypass or at least greatly simplify probate … and the definition of "small" can be quite generous.

For example, California estates worth less than $208,850 in 2025 don't have to go through court at all (and assets like vehicles and IRAs with named beneficiaries don't even count against this limit). You can visit EstateExec.com for details by state.

Overdoing automatic transfers

If an estate doesn't qualify as "small," some people attempt to bypass probate by putting everything into assets that transfer automatically on death … but overdoing this process can leave a real mess for the survivors.

For example, if everything automatically transfers, what will be left to pay your final bills (medical, credit cards, funeral expenses and more)?

Automatically transferring everything will effectively make your estate insolvent, enabling your creditors to sue the recipients of your transfers, and leaving a real headache for the person responsible for finalizing your affairs.

One approach to handling this is to leave some of the money in accounts that don't automatically transfer … but if you leave too much, then probate will be triggered anyway.

Be careful here: While California's limit is over $200,000, South Carolina's equivalent limit is only $25,000.

Another thing to consider is that assets change in value over time, so while you may equitably set things up so one child gets a bank account that's payable on death and another gets your stock portfolio, by the time you eventually pass away, those could be at very different values.

This could result in unwanted discrepancies between the amount each person inherits.

If there are only a couple of heirs, you could list them at their desired percentages for every account, but if you have more people you want to inherit, or there are specific bequests involved, it can get a little messy.

Trust mistakes

Rather than using payable-on-death or transfer-on-death accounts, some people try to avoid probate by way of a trust.

One common misunderstanding involves a "testamentary trust," in which the will establishes a trust upon the decedent's death.

While there may be valid reasons to set up such a trust (for example, to provide for the care of a minor), you should be aware that these trusts are officially funded with assets after those assets have gone through probate … and thus don't avoid probate at all.

Another area of misunderstanding that can lead to costly mistakes concerns cost basis. When you sell an asset, you typically owe taxes on any gains you make if the selling price exceeds the original cost of the item.

So if you bought a house for $250,000 and sell it for $600,000, you will owe taxes on the $350,000 gain.

However, the U.S. tax code gives heirs a break on this tax: Many assets enjoy an automatic step-up in cost basis upon death, so if your mother bought the house, and it was worth $600,000 at the time of her death, the house would be assigned a new cost basis of $600,000.

You could turn around and sell the house for $600,000 with no taxes owed!

Unless the house had been placed in an irrevocable trust … in which case there would be no automatic cost basis step-up, and thus taxes would be due on the full $350,000 gain.

You can see how things would likely have been much better for their heirs if nothing at all had been done, and they had simply inherited the house according to normal probate processes.

Revocable trusts do generally benefit from a cost basis step-up at the time of death, and can be quite helpful — but they have their own gotchas, and in any case, you'll want to be sure that some provision has been made to pay your debts at the time of death (even if they're just your latest credit card charges), along with sufficient funds to keep everything maintained while your estate is settled and everything resolved.

The will

Of course, if you put everything (or almost everything) into assets that bypass probate, then your will won't really matter, because the will only affects things that don't automatically transfer (i.e., things subject to probate). Maybe that's OK, but it's something to take into consideration.

If not, everything will bypass probate, then a will can be quite important, especially if you have strong ideas about what you want done with your estate upon your death.

Perhaps you want to make a large charitable donation, perhaps you have certain belongings you wish to go to certain people, or perhaps you simply want to ensure that a friend or distant relative inherits a share of your estate (or that a close relation doesn't!).

However, if you're not careful, you can end up with a flawed will that can be challenged and overturned in court. Without very careful wording, for example, it can be difficult to "cut someone out of your will."

For example, many states have laws that protect a surviving spouse from such situations, and upon request from such a spouse, the court will simply overrule your will. In another example, a child of a Louisiana decedent is usually entitled to a significant portion of the estate, regardless of almost anything the will may say.

For these reasons, if you intend to do anything "unusual" in your will, it makes sense to have an experienced lawyer help you draft it. And then be sure an interested party will have access to the will upon your death … it doesn't do any good to have a will if no one can find it when the time comes.

Intestate estates

On the other hand, if you're not going to do anything unusual in your will, you may wonder why you should even bother in the first place.

After all, every state has laws that require your estate to go to your closest relations (i.e., spouse, children, etc.) if there is no will, and no one should feel slighted if the estate goes to the "normal" distribution percentages.

In fact, settling an estate can be even easier without a will. If there is no will, no one needs to prove that the signature on the will was yours, and that you were in your sound mind and not under duress when you signed it.

If there is no will, distributions can be made directly to the "heirs-at-law" (your closest relations as defined by law), but if there is a will, the heirs-at-law must be officially notified so they have a chance to contest the will. And so on.

Lawyers generally cringe when they hear someone saying that settling an estate can be easier without a will, because it's just accepted wisdom that everyone should have a will.

We're certainly not recommending that you avoid writing a will. If you care about the outcome, it's probably a good thing to do.

We're just pointing out that, like everything in life, there are pros and cons, and you should decide what's best for you … and that for better or worse, the majority of people opt not to bother in the end.

Estate planning vs estate settlement

While all aspects of estate planning are optional, estate settlement (the process of winding up the decedent's affairs) is mandatory.

And no matter what plans have been made, there are still myriad things that must be done after the death, even if everything has been set to transfer "automatically" (for example, various federal and local agencies must be notified, the residence must be cleaned out, debts resolved and more).

If your goal is to make things easy on your surviving family, one other thing to consider is estate settlement preparation, which doesn't involve legal documents or anything formal: just pulling together some basic information like a list of major assets, the location of keys, how to contact the heirs, etc.

Although often overlooked, settlement preparation is probably the easiest aspect of estate planning. Even something as simple as a list of financial accounts can transform the settlement process from a complex investigation into a straightforward task.

You can just list things in a basic spreadsheet, you can use a purpose-built product like The NokBox, or you can even use something like EstateExec, which will also automatically guide your executor through the settlement when the time comes. (Note: I am the founder and CEO of EstateExec.)

Summary

Traditional estate planning can be helpful, especially for larger estates, but it can also backfire, so if you are going to engage in it, it is best to get advice and help from an experienced professional.

And if the estate is on the smaller side, one of the most important things you can do is to ensure your executor will have some basic information about your estate when the time comes.

Related Content

• Simple Ways to Make Your Executor's Job Less of a Pain
• Probate: The Terrible, Horrible, No Good, Very Bad Side of Estate Planning
• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• An Expert's Guide to the Estate Planning Documents Everyone Needs
• Estate Planning Checklist: 13 Smart Moves

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.

That’s not the case today. Interest rates are nowhere near that — CDs are yielding around 4% — but it's still possible to live off investment interest with the “Common Man” rule of retirement spending.

It's not going to make you rich, but with this approach, your retirement savings pay you regularly, and you don't have to worry about outliving your savings. How’s that for putting your money to work for you?

“It's for the everyday retiree. The more armchair retiree rather than the one who's going to travel to Europe with the grandkids,” said Steve Parrish, professor of Practice, Retirement Planning at The American College of Financial Services.

“This is more for conservative people who don’t have a lot of big expenses in retirement and are not comfortable with heavy-duty investing. They can live off the interest and leave the rest to the kids.”

If you're looking for a safe way to withdraw money in retirement and still have some left over to grow and leave behind, read on to learn how the “Common Man” rule of retirement spending works.

The 'Common Man' rule: Rely on secure investment interest in retirement

With this approach to retirement spending, you take your 401(k) balance or other retirement savings and put them in conservative investments or savings accounts that generate income and grow.

At the same time, they're safe enough that you won’t risk losing your shirt in the stock market.

Here are some types of conservative investment accounts you might consider:

• CDs
• Stable stocks that pay dividends
• Dividend-paying mutual funds
• Dividend-paying ETFs
• Bonds
• QLACs (qualified longevity annuity contract) and other annuities

The idea is to generate recurring cash that, combined with Social Security, a part-time job or other income, would be enough to get by and thrive. The principal grows, albeit modestly. You aren't chasing high-flying dividend stocks with this approach.

If you're making withdrawals from a traditional 401(k), you'll need to be at least age 59½ to avoid fees, and you'll have to plan for taxes. (Withdrawals from a traditional 401(k) are taxed at your ordinary income rate.)

The downsides of the 'Common Man' approach

You get peace of mind and a reliable monthly income with this approach to spending, but it comes at a cost: inflation, interest rate volatility and a possible lack of liquidity.

“The principle is much more secure, but on the other hand, it doesn’t have that inflation factor. Part of the assets aren’t growing to keep up with inflation,” said Peter Eckerline, a managing director of RBC Wealth Management. Plus, you lose the opportunity cost of the money not compounding and growing in the markets.

This strategy is also more challenging when the Federal Reserve is cutting interest rates. The central bank cut rates twice this year and might do so once more in 2025.

When interest rates are falling, Parrish said you might want to have longer-term CDs and bonds that mature in a few years.

It's also a good idea to avoid locking up your money in investments that aren’t easy to liquidate or have fees and penalties. Some alternative assets and income annuities, for example, are difficult to pull money out of.

It's a little complicated … at first

All good things require a little work, and that’s true of the “Common Man” rule of retirement spending.

Living on interest from your investments is one thing; getting paid each month (or receiving a paycheck equivalent in retirement) is another. If you’re wondering how that happens, you’re not alone.

If you’re getting paid dividends from a mutual fund, ETF or stock, most will pay you on a schedule, typically every month, quarter or year. You can set it up to be paid automatically and directly into a bank account, or you can receive a check. Bonds, CDs and other interest payments are paid directly into your account according to a schedule or mailed to you via check.

Arranging all payments to come automatically and regularly will take some work up front, but once it's set up, it's done; you must be willing to make the arrangements yourself or get help. That’s where a trusted financial adviser might come in.

Giving up the investment growth can be worth it

We spend our working years focused on saving, but give little thought to how we’ll spend our money. For people who are conservative in nature, don’t want to spend a lot and are hesitant to put it all in the markets, living off the interest can be an option.

That peace of mind does come at a cost. You give up potential growth, and if the Fed keeps cutting interest rates and you don’t stay on top of it, you could potentially lose gains.

However, with some careful planning and strategizing, putting your money to work — so you don’t have to worry — might be the right approach for you.

Related Content

• The 'Permission to Spend' Rules of Retirement Spending
• The 'Go Live Your Life' Rule of Retirement Spending
• The 'Pay Yourself' Rule of Retirement Spending
• The 'Me-First' Rule of Retirement Spending

The 69-year-old from Bridgeton, Maine, has always been athletic, playing tennis, soccer and softball. She was drawn to pickleball about a decade ago because it was a sport she could play year-round in Maine, and the community she found on the courts kept her coming back.

She blames her shoes for two hospital visits, saying they caught on the surface of the court, which tends to be asphalt or concrete compared to tennis’ clay or grass. At one point, Landers literally taped her fractured wrist to her pickleball paddle to go to the emergency room.

“The first time I went into the wall — thankfully, the walls are padded — and hit my head pretty hard,” she says. “But then the second time, when I broke my wrist, I was side-stepping to get a low backhand, and I caught my foot, and I was down before I even knew I was falling. I broke it pretty good. I've got a plate and screws and all kinds of stuff going on in there.”

Landers has a lot of company. Pickleball, a combination of tennis and ping-pong, has been the fastest growing sport in the country for three years in a row, according to the Sports & Fitness Industry Association. Although the highest number of players fall in the 25-34 age bracket, it’s the older players running into walls and problems.

Taking a toll on the over-50 crowd

A 2024 study in Health analyzed nearly 17,000 pickleball-related injuries and found that 87% of emergency room visits involved people over 50. Orthopedic injuries were the most common, such as fractures, sprains and muscle tears, but cardiac incidents also stood out.

Ches Jones, an injury researcher at the University of Arkansas and lead author of the study, says the smaller court makes pickleball seem approachable, but too often players don’t realize they need to prepare physically.

"People think, 'Oh, I can do this without getting proper doctor's clearance,'" says Jones. "There's a perception that pickleball is a less strenuous activity than other sports. But in actuality, pickleball can be very strenuous, especially on the cardiovascular system."

‘Job security’ for surgeons

Frederick Azar is an orthopedic surgeon and director of the sports medicine fellowship at the University of Tennessee Campbell Clinic. There were so many referrals to orthopedic surgeons from pickleball injuries that it became a joke that they invented the sport for job security, he says.

He says he started noticing that his patients who had pickleball injuries fell into certain patterns and wanted more information to help with injury prevention. In a 2024 review in the Journal of the American Academy of Orthopedic Surgeons, he analyzed emergency room data from pickleball injuries from 2001 to 2017 and also surveyed clinic patients. Like the Arkansas study, he found that wrist fractures and ankle sprains were common, along with soft-tissue injuries like meniscal tears and tendinitis.

Azar’s study also found that there were differences between genders — women were more likely to suffer fractures, often tied to bone health issues like osteoporosis, while men tended to sustain sprains and strains. Many issues stem from loss of balance as players move quickly front-to-back and side-to-side, he says.

Both studies highlighted another danger: the heart. In the Arkansas analysis of older players, one out of five injuries resulted in hospital admissions, with most admissions for cardiac arrest and 25% for fractures.

Azar says the cardiac numbers highlighted the need for a good check-up before hitting the court, particularly for sedentary people who planned to play. In addition to a cardiac check-up, new players should ask about bone health, balance issues and medication side effects, like dizziness, that might result in injury, he says.

“It’s a new sport, so we’re trying to raise awareness and encourage people to take precautions because people can get hurt here,” he says.

There’s never enough

Carl Cogdill, 62, from Fort Worth, Texas, turned to wheelchair pickleball three years ago after 34 years of tennis because the smaller courts were easier on his chair and his body. Cogdill loved the inclusive nature of the sport, competing in the National Wheelchair Pickleball Championships, winning three silvers.

But then his love of the sport became an obsession. Where he could only play tennis for 20 minutes before his arms started hurting, he could play pickleball for hours without pain. At one point he was playing 70 hours a week, and once played 13 hours straight.

“Then I ended up with tendonitis and started straining my ligaments,” he says, adding that he finally went to the doctor “when I couldn’t use my arm.” That became a real issue when he needed to transfer from his wheelchair to his bed, the couch or the car.

Cogdill ended up getting several steroid injections, doing the physical therapy exercises he’d learned in the past, and knocking back his hours. Somewhat. He still plays five days a week, but only for three or four hours a day.

Jon Herting, owner of Precision Performance Physical Therapy in Philadelphia, holds a doctorate in physical therapy. He says many of the injuries he sees come from people jumping from a sedentary lifestyle onto the pickleball court without a lot of preparation.

One particular challenge with pickleball, Herting says, is that, like tennis, pickleball has a lot of sudden power-based movements, a skill that deteriorates as people age. Leaping suddenly for a ball or pushing off to run puts a lot of stress on the Achilles tendon, potentially causing tears.

“Obviously, we recommend that people maintain their strength to be able to play pickleball and maintain tissue elasticity,” he says. “But on top of that, think about introducing power-based exercise. It doesn't have to be these big-box jumps that you see NFL players doing, but like simply jumping rope, which is a great activity. That's a low barrier of entry.”

Start simply, and build up, even if it’s starting with 10 reps, he says. People can start by holding onto a wall and practicing an explosive calf raise where the toes don’t leave the ground, building up to maintain balance.

Nevertheless, pickleball definitely has an addictive side to it. Says Herting: “I don’t think we’ve had anyone that hasn’t ended up going back to play in some capacity.”

Balancing joy and risk

Jason Fruen, a 51-year-old real estate agent in Minnesota, has an entire social scene at the pickleball court, where a regular group of four or eight comes to play and then goes out for a drink or checks out a concert. In his two years on the court, he has seen some terrible injuries, including someone who was hit in the eye and another man who tripped and hit his head.

On Aug. 6, Fruen posted a photo of his foot in a boot on Facebook after suffering a calf tear, announcing: “Well I went and did it this time… Tore my calf muscle driving to the net, felt it pop & down I went.”

Fruen, who says he mostly lifted weights before starting pickleball, says by the time he reached a local orthopedic urgent care, he couldn’t walk. But he considers the calf tear “one of the luckiest of injuries you can get,” because surgery wasn’t needed.

Even so, he made sure to elevate, ice and rest. Three weeks later, he was back on the court — reducing his playing time from four or five times a week to two. Now he makes sure to stretch in the hot tub, strength train and give himself permission to rest when he’s hurting instead of forcing himself on the court.

For Terry Landers in Maine, though, the risks are worth it. After concussions, surgeries, and a wrist held together by metal, she has changed nothing about the way she plays — except she’s traded her volleyball shoes for pickleball ones.

“No, no, I'm an idiot,” she says. “I play as aggressively as I always have.”

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

Related content

• 6 Pickleball Vacation Ideas for Your Next Trip
• ‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?
• Pickleball Injuries Are to Blame for Surging Health Care Costs
• Protect Your Heart: The Surprising Power of This Simple Treatment

Here, he tells Kiplinger Personal Finance Magazine what the research reveals about Americans' attitudes to longer life, why social connections need just as much attention as retirement funds, and how best to start preparing for your later years.

Q: What does the index measure, and what are you hoping to learn from it?

The index asks Americans: Are you aware of what you need to do to be prepared for a longer life, have you assessed where you are now, and have you taken any action to be ready in the future? To get a read, we asked over 1,300 people questions about their social connections, finances, daily activities, care options, home, community, health and life transitions and evaluated each domain on a scale of 0 to 100 to get a baseline of how prepared we are.

Q: You found that most Americans are underprepared for longer lives; you give them a “D.” What are we doing wrong?

It’s not so much that we’re getting it wrong, but we’re hacking longevity because we have no precedent. We are living longer but don’t think about the practical aspects — where we’re going to live, how we’re going to get around. The point of the index is not to give people a grade, but to give them a heads-up. We’re hoping it sparks a movement toward awareness and action.

Q: Very few people you surveyed knew who is going to care for them as they age and how they’ll afford care — it was the biggest blind spot. Why?

We are terrible about projecting our future selves. While we might be able to see the need for care coming, we don’t want to admit to it. We haven’t had conversations with our spouses about care to put a plan in place.

Q: What is the connection between financial readiness and longevity preparedness?

As you might expect, we found the better off you are financially, generally speaking, the more prepared you are for a longer life — but not in all cases. Many of us did not anticipate our lifespan outrunning our wealth span. We’re having a wealth of time and a dearth of resources, as evidenced by rising poverty rates among older Americans.

Q: The index shows that women are generally more prepared for longevity than men. Why?

Women typically are the primary caregiver. They are the chief consumer of the house; they make the health care decisions. As a result of their roles over a lifetime, they realize that having a robust investment portfolio does not predict a robust retirement.

Q: What are the most important steps we can take to better prepare for our longer lives?

The first thing is to ask yourself, is your home age-ready for you to stay there? We should rethink simple things such as: Can we get to the front door? Is it three steps up? Ten steps up? Your fifties and sixties might be a good time not just to remodel, but to think about whether your cabinets can be lower and whether the bed is low enough to get in and out of without falling.

After that, the most important thing to do is to have the care conversation. Talk to your spouse or partner; talk to adult children, if you have them. If you don’t have those people, start thinking about your social network of close friends you can depend on.

Q: Were there any findings that surprised you?

I don’t think people are fully aware they need to continue to invest in their social portfolio — their social connections — as much as they invest in their retirement portfolio.

Q: What are the benefits if people become better prepared to live longer?

Anticipating what is to come will probably incentivize us to be far better financially prepared. Longevity preparedness also means you might be able to remain independent longer. That takes the burden off your children and your spouse.

Ultimately, longevity preparedness improves society in general. It’s about keeping people engaged and productive. That can reduce chronic-disease costs down the road. The question is, how much quality of life can we have now that we have a longer life?

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.

Related content

• Changes Coming to Social Security in 2026
• A Social Security Storm Is Gathering: Here's Your Safety Plan
• When Will Social Security Run Out of Money? And Medicare?

1. Annual limits on Roth IRA contributions

Question: I am thinking of doing a Roth IRA conversion for 2025, but my income is above the limit for making annual Roth IRA contributions. Can I still do a conversion?

Joy Taylor: Yes. Although there are income limitations for making regular, annual contributions to Roth IRAs, those income limitations do not apply to Roth conversions. Even if you cannot make an annual $7,000 ($8,000 for people 50 and older) Roth IRA contribution for 2025 because your income is too high, you can still transfer money from your traditional IRA to your Roth IRA in a Roth conversion. There is no limit on the amount of funds you can convert.

2. Taking the annual RMD and married couples

Question: I am 74 years old. I understand that if I want to transfer some funds from my traditional IRA to my Roth IRA in a Roth conversion, I must first take my total aggregate annual required minimum distribution (RMD) from my traditional IRA before I do the Roth conversion. My husband and I file joint tax returns, and he also has a traditional IRA. Does he have to take his full annual RMD before I can do a Roth conversion for the year?

Joy Taylor: Traditional IRA owners who are 73 and older must take annual RMDs. People of RMD age who are considering a Roth IRA conversion must first take their full annual RMD for the year before doing the conversion.

Since IRAs are individual accounts, only you must take your full required RMD for the year before converting any part of your traditional IRA into a Roth IRA. It’s OK if your husband waits until later in the year to take his annual RMD from his traditional IRA. That won’t have any impact on your Roth conversion for the year.

3. Rollover IRAs and Roth Conversions

Question: I am 63 and retired, and I want to do Roth conversions over the coming years. I have an existing Roth IRA. I also have a rollover IRA to which I had previously rolled over all the funds in my 401(k) account shortly after I retired. Can I do Roth conversions from my rollover IRA to my Roth IRA, or do I have to convert my rollover IRA to a traditional IRA first and then do the conversions?

Joy Taylor: You can do a Roth conversion from a rollover IRA to a Roth IRA. The income tax consequences should be the same as doing a Roth conversion from a traditional IRA.

4. SIMPLE IRA and SEP IRA

Question: Can a Roth IRA conversion be done from a SIMPLE IRA or SEP IRA?

Joy Taylor: Yes, you can transfer funds from a SIMPLE IRA or a SEP IRA to a Roth IRA, and the tax consequences should be the same as if you did the Roth IRA conversion from a traditional IRA.

5. Converting entire traditional IRA vs. a portion

Question: Can I transfer only a portion of my traditional IRA to a Roth IRA in a Roth conversion, or must I transfer all my traditional IRA funds in one swoop?

Joy Taylor: In a Roth conversion, you can convert all or a portion of your traditional IRA to the Roth. And in fact, many personal finance professionals advise to space out the Roth conversions by converting a portion of their traditional IRA each year. That way, you minimize the income tax impact on each conversion, thereby allowing you to manage your adjusted gross income (AGI) or modified AGI in the conversion years. This helps if you are of Medicare age and are trying to avoid Parts B and D Medicare premium surcharges on top of your regular monthly premiums. It also helps if you are trying to qualify for tax deductions or credits that have AGI phaseouts.

There are many factors to consider before doing a Roth conversion. I would suggest you talk with your IRA custodian or other personal finance professional before making any moves.

6. Five-year rules for Roth IRAs

Question: I know there is a five-year rule for withdrawing money tax-free from a Roth IRA. Can you explain the rule? When does the five-year rule start?

Answer: There are actually two five-year rules that apply to Roth IRAs. The first applies to Roth IRA contributions, including rollovers and conversions, and whether distributed earnings are tax-free to you. Under this rule, distributions of earnings after age 59½ aren’t taxed if at least five tax years have passed since the owner first contributed to a Roth IRA.

For this first five-year rule, the five-year clock starts the first time that money is deposited into any Roth IRA that you own, through either a contribution or a conversion from a traditional IRA. The clock doesn’t start for later Roth contributions, conversions or for newly opened Roth IRA accounts.

The second five-year rule applies specifically to Roth IRA conversions, and whether the 10% early distribution penalty hits pre-age-59½ payouts. This rule is an anti-abuse rule to prevent people who are younger than 59½ from circumventing the early IRA withdrawal penalty by first doing a Roth conversion and soon thereafter taking the money out of the Roth IRA. That’s because the 10% early withdrawal penalty doesn’t hit Roth IRA conversions.

This second five-year rule doesn’t apply to new contributions to Roth IRAs, but to conversions of pre-tax income from traditional IRAs to Roths. Under this rule, if someone who is younger than 59½ does a Roth conversion, and later takes a distribution within five years of the conversion and before turning 59½, then the amount of conversion principal that is withdrawn is hit with the 10% penalty. Once you turn 59½, you needn’t worry, even if you take a payout before your conversion meets the five-year period.

Under this second five-year rule, each conversion has its own separate five-year period, which differs from the first five-year rule discussed above. For instance, if you do multiple Roth IRA conversions, there will be multiple five-year time periods, even if each conversion is done into the same Roth IRA account that you have owned for years.

For more information on the two Roth IRA five-year rules, see what to know about the five-year rules for Roth IRAs.

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 round-ups. 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: Tax Questions on Roth IRA Conversions
• Ask the Editor: Reader Questions on QCDs
• Ask the Editor: QCDs and Tax Planning
• Ask the Editor: Questions on Inherited IRAs
• Ask the Editor: Questions on the $6,000 Senior Deduction

Answer: The average 65-year-old American had about $609,000 in retirement savings in 2022. If you’re retiring with $3.3 million at 65, you’re clearly well ahead of the game.

But no matter how much money you manage to bring into retirement, you may have a nagging fear of running out. And you’re not alone.

Allianz reports that 64% of Americans are more worried about running out of money in retirement than actually dying. And while utilizing a smart withdrawal rate could lower your chances of depleting your nest egg in your lifetime, it doesn’t eliminate the risk.

But what if you were able to avoid touching your principal year after year in retirement and only live off of portfolio income? That effectively guarantees that your funds will never run out. You could also leave your family a hefty estate.

With $3.3 million saved, you may be in a pretty good position to stick to that strategy. But it’s important to understand the pitfalls and drawbacks you might encounter.

You may not have to touch your principal if you play your cards right

Someone with $609,000 saved for retirement (the average for your age) may have a hard time living solely on portfolio income. With $3.3 million, it’s more than doable, says John Dugas, Financial Planner at Prudential Advisors.

"Retiring at 65 with $3.3 million puts you in a very strong position, especially once Social Security is factored in," Dugas explains. "Social Security alone can likely cover a meaningful portion of your annual expenses. That guaranteed income reduces the pressure on your portfolio."

Plus, there’s the option to delay Social Security for even larger monthly payments.

From there, Dugas says, the goal is to structure your investments so they generate enough income to cover the rest of your lifestyle needs.

"A diversified mix that produces roughly 3–4% annually in dividends and interest can create $100,000 to $130,000 per year on a $3.3 million portfolio," he explains. "When you add Social Security to that, you could get $130,000 to $170,000 or more in annual income without ever touching the principal."

Now there are different ways to approach that income strategy. Some people, says Dugas, prefer a dividend-focused portfolio built around high-quality companies with long histories of raising their payouts, supported by REITs and investment-grade bonds.

Others, he says, may use a “bucket” structure that keeps a few years of spending in cash equivalents, sets aside a medium-term bond ladder, and allows the stock component to focus on growth and long-term income.

"Both approaches can work well, as long as the overall goal is consistent, reliable income," Dugas says.

Dugas also explains that if you value predictability, converting some of your portfolio to an immediate annuity could make sense. If you were to put $1 million into an annuity, it would likely cover all or most of your essential living expenses, he says, leaving the remaining $2.3 million completely untouched.

You may be doing yourself a disservice by leaving your principal untapped

Although a $3.3 million nest egg gives you the option to avoid touching your principal in retirement, that doesn’t mean it’s an optimal solution, says Tyler Meyer, CFP and founder of RetireToAbundance.com.

“The idea is technically doable,” he says, “but it usually sends people down the wrong path.”

As Meyer explains, "When someone tries to avoid touching principal at all costs, they usually end up tilting the portfolio way too heavily toward income-producing assets. That sounds harmless, but it leaves you with too much in income-oriented investments and not nearly enough in long-term equities. Over time, you end up hamstringing yourself.”

Meyer feels that most people in the situation above would be better off maintaining a more traditional portfolio allocation and simply taking smaller withdrawals than what the portfolio can support.

"This is usually what leads to larger account balances later in life — not the 'never touch principal' mindset," he explains.

Like Dugas, Meyer is a fan of the bucket strategy.

"When you follow this structure and your withdrawals stay below 5%, you have a very good chance of dying with more money than you started with," he insists.

Be open to a different path

"Ultimately," says Dugas, "with $3.3 million and Social Security starting at 65, the idea of never dipping into principal is realistic. The bigger question is whether preserving every dollar is actually the best way to use your resources."

Using a small portion of your principal strategically — especially early on in retirement — could create more flexibility and enjoyment, he says.

Meyer agrees.

"The goal in retirement is not to freeze your account balance at a specific number," he says. "The goal is to keep your lifestyle steady, give the portfolio room to grow, and not box yourself in with unnecessary constraints."

Read More

• Retirement Income Strategies for the Long Haul
• The Retirement Bucket Rule: Your Guide to Fear-Free Spending
• Want to Retire with $100K a Year? Here's How Much to Save
• How to Pay for Long-Term Care

“These cuts to research are going to have a significant negative and enduring impact on the health and well-being of all Americans and, perhaps disproportionately, upon older individuals,” says James Appleby, CEO of the Gerontological Society of America. The society surveyed members who are experts in aging research and found 71% saying their work has been harmed.

Medical research for a wide variety of maladies plaguing older people — from Alzheimer's to pneumonia, diabetes to strokes — is being affected.

“Researchers are reducing federally-funded work on several topics relevant to older adults,” says William Dow, a professor of public health and management at the University of California, Berkeley, and chair of the Government and Public Affairs Committee of the Population Association of America, a nonprofit that promotes demographic research. “This is from a combination of grant recissions on certain topics, informal guidance from program officers and a general chilling effect, which has caused researchers to pivot their focus.”

Grants frozen or canceled

The National Institute on Aging, the government agency that focuses on health research regarding older people, initially slashed or froze nearly 500 grants since January, according to Grant Witness, a website that tracks cuts in scientific research grants under the Trump administration. Of those 500, about 300 were reinstated or unfrozen, but 200 remained listed in mid-October as being terminated or still frozen.

Among the terminated grants was one that aimed to “provide insight into the molecular underpinnings of age-related cognitive decline” and another that proposed to look at health outcomes for participants in private Medicare plans.

In addition, many health conditions, such as pneumonia and stroke, disproportionately affect older people. Grants to research these conditions are typically funded by the National Institutes of Health, the government’s primary medical research agency, which includes the National Institute on Aging and 26 other institutes and centers, such as the National Heart, Lung and Blood Institute; the National Institute of Arthritis and Musculoskeletal and Skin Diseases; and the National Institute of Neurological Disorders and Stroke.

The New York Times has reported that NIH has frozen or canceled nearly 2,500 research grants nationwide. Among the frozen grants from the National Institute of Neurological Disorders was one where researchers aimed to study people of different age groups and identify specific risk factors of developing dementia to help identify people who could benefit from early intervention.

The Trump administration has given several reasons for derailing research, ranging from assertions of waste and fraud to a failure to align with the administration’s priorities. In August, the Supreme Court allowed the NIH to stop paying approximately $783 million in research grants for projects it said failed to align with the administration.

Staff cuts

The administration has also laid off 1,300 employees at the National Institutes of Health. It’s unclear how many National Institute of Aging employees have been affected, but in March, the Alliance for Aging Research and numerous other organizations wrote to Health and Human Services Secretary Robert F. Kennedy Jr. expressing alarm at the cuts there, as well as at the National Institute of Neurological Disorders and Stroke (NINDS).

“Already, the NIA has lost at least 115 new employees, or 17% of its total workforce,” the letter said. “Despite the lack of transparency, we understand another 60 to 70 employees were dismissed at NINDS. Layoffs and [reductions-in-force] include several of the most prominent and distinguished program directors and experts in aging research" — most of whom were thought to be recent hires or promotions.

Moving forward, President Trump’s proposed budget would cut the National Institute on Aging budget to $2.7 billion in 2026 from $4.4 billion previously. That’s part of an overall 40% cut at NIH to $26 billion from $45 billion. However, members of Congress of both parties continue to support funding research.

Nonmedical research cut

The cuts have gone beyond medical research and the NIH. Among the other casualties was the Retirement and Disability Research Consortium, which involved six research centers that helped the Social Security Administration assess the impact of its policies on beneficiaries. The consortium “helped the agency improve program efficiency, reduce improper payments and ensure that critical benefits and services reach our communities,” according to a prior statement from Social Security.

In terminating the consortium, Social Security cited Trump’s “priorities to end wasteful initiatives and contracts,” partly because the research “included a focus on research addressing [diversity, equity and inclusion] in Social Security, retirement and disability policy.”

“The immediate consequence would be that these programs will not be as good of a match to the needs of the beneficiary population,” says Dmitriy Stolyarov, director of the Michigan Retirement and Disability Research Center, which was part of the consortium.

The administration has also terminated a study funded by the Environmental Protection Agency aimed at helping mitigate wildfire smoke risk in Nevada. While the study description does not mention age, other research has found that older people are particularly vulnerable to harm from inhaling wildfire smoke.

Administration priorities and leverage

Cuts have directly targeted research examining health disparities among racial and other groups, which the administration has characterized as violating its policies against diversity, equity and inclusion.

Among the research project cuts cited by the Population Association of America’s Dow are: “vaccine hesitancy, learning from the COVID-19 pandemic response, health impacts of climate change, health and healthcare access related to gender identity, racial discrimination effects on health and healthcare access, immigrant health, effect of immigration policy changes on the health care workforce, etc.”

Other significant cuts and funding freezes have been unrelated to the substance of the research, but rather used as leverage against universities accused of harboring antisemitism, promoting diversity, equity and inclusion or otherwise failing to align with administration policies.

In some instances, researchers found temporary, alternative funding in hopes that grants could be restored.

“The practical effect (of the cuts) on older people is that this will cause delays in our discoveries of new risk factors and new treatments for the diseases that affect us as we grow older,“ says Daniel Belsky, epidemiology professor at Columbia University. “So, over the long term, this will make the lives of older people worse than they would have been had we not had this disruption.” Columbia saw $400 million in grants frozen before it settled with the administration in July.

Some grants have been restarted by court orders or, as was the case at Columbia, by settlements with the administration. In other cases, projects remain in limbo or have been killed outright.

“NIH now looks on track to spend their full budget this fiscal year, including the NIA,” Dow says. “But they are awarding fewer grants overall this fiscal year by using the current budget to fund grants over several years. That will, of course, adversely affect the amount of science that will get done from this year's spending.”

Corruption alleged

Defending cuts, Health Secretary Kennedy told a Senate committee there was “a lot of corruption” at NIH. He added that the U.S. has “the sickest people in the world. The NIH, with the best science, is supposed to be protecting. We should be the healthiest people in the world. We're switching the trajectory so that we're going to really focus narrowly on chronic disease, ending the chronic disease epidemic, and then we're going to make sure that the science cannot be corrupted.” Kennedy also said he plans to use artificial intelligence to make the work less expensive and more efficient.

Appleby, of the Gerontological Society, says as a scientist, he looks at the data, and he hasn’t seen evidence of corruption. “I'm always concerned when I hear that we're going to be better at science by cutting investments in science,” he adds. “That doesn't ring true for me as a believable statement.”

'Not political'

Nationwide, researchers are disoriented from being thrust into politics after having historically found broad bipartisan support. Diabetes, heart disease and cancer, they note, don’t discriminate between Democrats and Republicans.

“Alzheimer's is not a political event,” says Lee Lindquist, chief of Northwestern University’s Division of Geriatrics. “It's something that has always received generous funding from the government because it is a big issue. But what we're finding now, more than ever, is that there are more blockades making it harder and harder for research to be started.”

Lindquist’s research, which seeks to help older adults stay in their homes as they age, derailed in March when the NIH froze $800 million in grants to Northwestern amid unrelated allegations of student antisemitism.

Lindquist says the university’s board of trustees has provided short-term funding to keep the research afloat for now.

“It's just frustrating from my end,” Lindquist says, “because you try to do good work for seniors and it's just being cut off at the knees.”

She says it’s extremely difficult to apply for grants because of staffing cuts at the NIH. The agency used to issue regular notices of grants being available. Now, researchers are told to search a website. “If you go on that website … it's almost like finding a needle in a haystack,” Lindquist says.

And when researchers do apply for grants, the process has slowed, she says; applications are processed through an additional review by political appointees to determine if they align with administration priorities.

Alzheimer’s disease probes curbed

Progress in Alzheimer’s research at a collaborative of 14 research centers nationwide screeched to a halt in March as the administration froze some funding and stopped processing grants. As researchers found stop-gap funding, their work limped along for months, says Ann Cohen, co-director of the Alzheimer's Disease Research Center at the University of Pittsburgh. The funding for the collaboration was restored on July 31, but funding for individual research projects remained in question.

Cohen says researchers don’t know why the funding was disrupted. “Fourteen of the top Alzheimer's disease research centers in the country were essentially handcuffed for six months and not able to collect data and do research,” Cohen says. “There's a long-lasting impact on the field. Everything is moving so much more slowly and that really is hard to see happen. It really is kind of gutting.”

Cohen has the unmitigated support of at least one research subject, Ted Popovich, 80, whose mother participated until she died of Alzheimer’s. Popovich enrolled when asked and has been monitored for 14 years. A retired engineer and businessman, Popovich is an avid supporter of science and is determined to save the Alzheimer’s study. In fact, he thinks it should receive more funding; he’s encouraged other people to participate because he thinks it’s vital that we find answers as our population ages.

“Let me put it this way,” he says. “It won't stop. I'm adamant about it because I'll raise my voice to get a whole bunch of other people to go to our congressman's office. Even go to Washington and make a fuss.”

Stroke research affected

S. Thomas Carmichael, chairman of the Neurology Department at the University of California, Los Angeles, says, UCLA lost federal grant funding in July over allegations relating to pro-Palestinian demonstrations last year and admissions policies for undergraduates. The administration also demanded $1.3 billion in fines to restore $548 million in grants.

“The grant suspensions affected a lot of diseases that relate to aging,” Carmichael says. “We had to stop cold.”

The suspension disrupted clinical trials for new drugs to treat strokes and Alzheimer’s and also research into Parkinson’s disease, vascular dementia and other conditions, Carmichael says.

The university sued, and a federal judge ordered that the grants be restored. So ultimately, the disruption was relatively brief — July 31 to Oct. 1. “We can overcome this delay,” Carmichael says. “Had this gone on longer… we would have had layoffs of highly trained personnel, and they would not have been replaceable.”

Diabetes research project caught in university dispute

A 29-year landmark national diabetes research study, credited with helping significantly decrease the number of new cases of type 2 diabetes in the U.S., came to a sudden halt in March as it became collateral damage in a clash between President Trump and Columbia University that had nothing to do with the study.

Alleging the school had mishandled allegations of antisemitism, the administration froze federal grants going to Columbia.

“We got swept up into it,” says David Nathan, director of the Diabetes Prevention Program Outcomes Study. “Of the $400 million that were stopped at Columbia, we were the largest part. We represented about $90 million.”

Not only was the study unrelated to the antisemitism allegations, but with 26 sites around the country, very little of the grant money was actually for research at Columbia, which had been designated to manage the grant funds for the national project. “It was rather odd because in fact, although the money flowed through Columbia, the vast majority, like 95% of the dollars, made a U-turn” and was distributed to centers, laboratories and imaging centers around the country, says Nathan, who is based at Harvard University. “Columbia had frankly a small financial stake. However, when Columbia got zapped, we got zapped along with them.”

The study — which had followed the medical lives of what had started out as 3,200 Americans and still involved about 1,800 people — came to a screeching halt. Researchers had to call the participants whose average ages were in the 70s to tell them not to come for their appointments.

The study began in 1996, when the country was in the midst of what was considered a diabetes epidemic with a rate of diabetes growing at about 5% a year. The study began looking at people with high blood sugar who were not yet diabetic, but considered prediabetic. Their blood sugar made them highly susceptible to the disease, getting it at a rate of about 11% a year.

Researchers found that lifestyle intervention (losing 7% of weight) reduced the development of diabetes by 58% and using the inexpensive diabetes drug metformin reduced it by 31%. The findings helped develop a national model that, once adopted, Nathan says, caused the national diabetes rate to drop, leveling off in 2016 when it reached 1.4 million new cases a year, down from a high of 2 million new cases annually.

The study continued, tracking how long the effects lasted, as well as the effects of the interventions on cardiovascular disease and cancer. As required, researchers renewed their grant applications every five years, continuing to get approvals. Three years ago, researchers began looking at dementia, with funding shifting to the National Institute on Aging.

After the study was halted in March, Nathan says the researchers turned to the Congressional Diabetes Caucus. In May, one of its leaders, Sen. Jeanne Shaheen, D-N.H., confronted Health Secretary Kennedy, who professed to be unaware of the halting of the study and promised to look into it. But nothing happened.

Then, at the end of July, Columbia settled with the Trump administration and the study funding was restored.

“They didn't kill the study,” says Nathan. “They just injured it. We're now kind of in rehab and yes, we're going to have to change some of our strategies.”

Deterring future researchers

The disruptions follow a slew of medical breakthroughs in recent years. “The world has been rapidly accelerating, I would say, in the past five years or so,” says Esther Oh, who is on the board of directors for the American Geriatrics Society and teaches at Johns Hopkins University. Oh, who specializes in Alzheimer’s, describes a recent clinic: “I was telling my patients, ‘Had you come to see me maybe two to three years ago, I would have been prescribing your medication that was FDA-approved in the 1990s. And here we are discussing new options that you have.’”

But now fewer younger researchers are entering the field as the result of cuts to training grants, as well as overall uncertainty.

UC Berkeley’s Dow says there’s anxiety in the research field that is “leading to cuts in the research pipeline of young people. And so we're seeing early career researchers leave the field. We're seeing graduate programs cut back on the number of new people that are accepted into the field. And all of this is going to have long-term damage.”

What happens next and how deep and permanent the cuts will be depends on battles being waged in Congress and at colleges and universities.

Says Oh: “If we don't fund the future scientists of America, that day when we might actually have a cure for Alzheimer's disease may be delayed.”

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

Read More

• Medicare to Cover Obesity Drugs Under Trump Deal for as Little as $50. What You Need to Know
• Want to Live Longer? Here's What Works
• What You Will Pay for Medicare in 2026
• I Tried a New AI Tool to Answer One of the Hardest Retirement Questions We All Face

There's about to be a period in which the largest wealth transfer in history takes place, called the Great Wealth Transfer.

By 2048, an estimated $124 trillion, according to Cerulli Associates, is expected to be passed down from Boomers to younger generations.

How do you deal with assets that high when transferring them to heirs and receiving them as an heir?

It's a complex situation in which there's no cookie-cutter approach, but there are things to know about transferring wealth that could help you understand how to best position yourself to receive that money, how it could affect your financial situation and, ultimately, how to weave it into your financial plan.

How to approach the transfer of ownership of assets

The reality is that not everyone wants their children to know about their financial situation or their distribution of assets in the same way.

Many of those fears are for good reason. Studies show that 70% of families lose their wealth by the second generation, and an astonishing 90% lose it by the third generation.

A variety of factors can contribute to this, including taxes, frivolous spending and a lack of understanding of how to handle transferred assets.

For example, if you inherit an IRA, you might think you must pay all taxes on the account now instead of stretching it over 10 years, as the rules currently state.

Instead, you can apply strategies to better utilize or combine that money to allow yourself to retire earlier than you thought possible.

In some cases, an effective wealth transfer can even accelerate a retirement timeline. You might be able to strategically use some rules that enable you to liquidate assets to bridge that gap.

For example, let's say you're in a position to retire early at age 54, but you can't touch your 401(k) without penalty until age 59½, whereas if you worked until age 55, you can, thanks to the so-called Rule of 55. If you inherit assets, it could free you to avoid touching those retirement assets.

Take the funds that you're forced to take from an inheritance to bridge the gap until you get to a point where you can access retirement money.

Otherwise, you'd have had to work five more years just to be able to access what you put into a retirement plan. Here are the three steps that can help to see you and your heirs through a transfer of wealth:

Step 1: Know what you're inheriting and what buckets you receive

The first step is knowing what you're inheriting and what buckets you've received. Sometimes when people inherit money, they think they're going to have a huge tax burden.

But most of the time, if you do it strategically, you won't have a lot of taxes due at one time, based on the current rules on a stepped-up cost basis.

If you inherit a home and sell it immediately, there shouldn't be any taxes. The same is true if you inherit a stock portfolio. The tax basis will update to the date-of-death value.

Depending on the process, you can have a bucket in which assets aren't taxable but available to do such things as help you pay off your mortgage, lowering the amount of money you need monthly. This could put you in a window in which retirement is a possibility.

When it comes to retirement, you must think about your cash flow and how you fill that bucket. What's going to be available for emergencies? What kind of growth vehicle am I going to need for inflation? Depending on what you inherit, that could fill a bucket that you don't currently have today.

If it's a situation in which you feel good about your pension and Social Security income but don't have enough flexibility for emergencies, maybe those assets will bridge that gap. You could have a great situation today, but you are worried about longevity. You could position assets for long-term growth potential.

It's about trying to figure out how to weave that strategy into what you're already doing, because we tell people inherited money is a lot like lottery money.

If you don't know you're going to get it or what you plan to do with it, the money tends to disappear very quickly.

Make sure you're strategic to a point, but don't count money before you have it. I think everybody would like their parents to finish well and have enough money for long-term care and other things that could put a dent in the expected inheritance that you get, especially if you're dividing it between siblings.

Never make tactical decisions before you have money, but it's good to make strategic planning choices or have awareness so you're prepared when you do receive assets.

Step 2: Be as efficient as possible

If you want to transfer wealth as efficiently as possible, there are several actionable steps to make sure your assets are accurate and structured according to your preference.

This will ensure as many of your assets go through beneficiary designations as possible and you aren't waiting on a probate timeline, which helps reduce the risk of someone thinking they're entitled to money they aren't.

Have basic estate planning documents in place so you can end your life well, but also make sure anything that doesn't have a beneficiary's name attached to it is dealt with appropriately.

This time is also about education and having conversations with your children so they're not blindsided. Leave your heirs with a plan, not a puzzle. Determine who needs to have a voice in the conversation and who needs to have a vote in the conversation.

If you want to handle the wealth-transfer process right, communication is key with the next generation.

For example, let's say you have three siblings; two are in good financial shape, but the third has hit hard times. Logically, it would make sense to shift more of the estate in their favor.

But if there's no communication and they see the documents, they might think their parents loved that sibling more than them.

People attach a lot of psychology to money decisions, especially later in life. The more communication you have and get buy-in from the kids, the better it will be for everyone. Don't ruin your legacy through a lack of communication.

Step 3: Be strategic in your gifting

In the same way the recipient must be strategic in how they receive money, parents should be strategic in how they give or leave money.

If they're in a position in which they're financially able, they could gift funds annually while still living, passing money to their heirs that doesn't have the same restrictions or taxation.

Remember to think about the tax buckets. For example, suppose half your money is in a house and the other half is in a retirement account. You want half your money to go to charity and the other half to your kids.

In this case, you'd want to gift the house to the kids, because they would get more and the charity would get more if you gift the entire retirement account.

It might sound simple, but if you switch those, the whole estate is going to be smaller and less impactful simply because you didn't gift from the right bucket to the right places. Strategy matters.

This could make Roth conversions more valuable because inherited Roth funds are the only funds you can receive that have a tax-free life after the person who funded the Roth.

Try to use that as motivation to say, "If I know I'm never going to use that money and I want to try and maximize its impact, then maybe it makes sense for me to start paying taxes on this money for the benefit of kids or grandkids to be able to have a tax-free runway."

Some clients I work with recognize the impact of Roth conversions on their situation, but when I ask about their parents, they tell me they're 89 years old, living on Social Security and are forced to take money out every year.

Because of that, their total income is probably not a lot, especially compared with their heirs.

Could it make sense for the parents to convert so that the money the children receive will then be able to grow tax-free during their lifetime and retirement years?

It's easy to get into your upper 80s and not realize how beneficial a Roth conversion is when you're just pulling whatever the government makes you take out since required minimum distributions (RMDs) started for you almost 20 years ago.

It's about being strategic with what you want to have happen and how you can leverage the decisions that you can make today and maximize the impact.

Related Content

• This Is How You Can Guide Your Heirs Through the Great Wealth Transfer
• You've Built Your Wealth, Now Make Sure Your Family Keeps It
• Great Wealth Transfer: How Families Can Get on the Same Page
• Wealth Transfer Is About More Than Just Money
• Six Ways to Make Talking With Family About Estate Planning Easier

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

It doesn’t matter that it means two mortgages. He can still contribute to his 401(k), and although things may be a little tighter, when he does retire, he’ll have two homes that he hopes will have appreciated, along with a plan for where he’ll spend his golden years.

Unconventional? Maybe. After all, the normal trajectory is to save money in a tax-advantaged retirement savings account, retire, and then start your next chapter.

For Rivera, prepaying a portion of his retirement not only gives him peace of mind but presents an opportunity to pass on generational wealth to his two adult children. When he retires, they’ll inherit his current home, and when he passes, his retirement home.

“Even if I’m wrong, you can’t really put a price on that,” said Rivera. “I already know where I want to retire, and that location may not be affordable to me in ten years.”

Prepaying retirement dreams

However, it’s not just retirement homes that people are prepaying.

They are buying new cars as they approach retirement, worrying that they may not get approved for the best financing when they stop collecting a paycheck. Alternatively, they may consider purchasing an RV to encourage themselves to travel the country when they retire, or retrofit their homes pre-retirement to age in place later in life.

Some people are moving into retirement communities long before they stop working, to prepare for the transition into that phase of their lives.

But the question is, from a wealth planning perspective, is that the best approach? Would their money be better served invested elsewhere?

The answer: It depends.

Prepaying retirement is ok if…

Go for it, says Denny Artache, president and CEO of Artache Financial Group, if the purchase meets certain criteria.

To begin with, you need to be able to afford it. If Rivera had purchased the home in Puerto Rico, but as a result, couldn’t afford his first mortgage, Artache would have said, 'Don't do it.'

But Rivera can afford both and plans to have his retirement home paid off before he stops working. At that point, his children will take over his first mortgage, and he’ll live mortgage-free, alleviating a big financial burden in retirement.

“Whenever you look at ‘Should I?,’ ask yourself, ‘can I afford to?'" says Artache. “Don’t go out of your way to finance a pipe dream.”

The cost of financing and depreciation are other things to consider. If your dream is to travel the country in an RV once you retire in five years, and you want to encourage yourself to do it by buying it ahead of time, the cost of ownership comes into play.

If you have to pay interest on a loan to make it a reality now, or if the RV will be worth nothing when you finally use it, you may be better off waiting. You can save more money to avoid financing charges and get a more modern one later on.

Then there’s the investment returns. In the case of Rivera, he purchased real estate that has the potential to appreciate. That may not be true if you prepaid for a boat or RV.

Some people don't care if prepaying a piece of their retirement dream isn’t the smartest financial move; for them, it's about the peace of mind, and that can be priceless.

“If you can afford to have peace of mind, go for it,” says Artache.

Test the waters instead

It’s nice to have a dream and want to prepay for it, but there’s a lot that can go wrong with that, cautions Michael Pumphrey, a wealth advisor at Tanglewood Total Wealth Management.

“One of the big picture things to consider as we guide retirees into the next phase of their life is to have an idea about what retirement might look like, but also that those ideas can change over time,” said Pumphrey.

Rivera may want to live in Puerto Rico now, but who knows if he will still want to in ten years, says Pumphrey. If he changes his mind, he has to deal with trying to sell the property and the potential for losses.

Rather than going all in, Pumphrey advocates a test-the-waters approach in which you take small bites.

“Instead of buying a house in the Caribbean or buying an RV right now, maybe rent an Airbnb or an RV a couple of weeks a year for a few years and see if you like it,” he says. “Even people with these grandiose ideas of how they want to spend all this money decide 'it isn’t for me.'”

Evaluate your reasons for prepaying

Ultimately, your motivation will dictate why you are prepaying your retirement bucket list item. For Rivera, it's a desire to retire to a place he always dreamed of and to pass it on to his kids and maybe grandkids, and he’s ok if it doesn’t make him a fortune.

For someone else, it may be less about legacy and the location and more about spending time with family.

“I always say for people to evaluate really what they value, what's more important to them, and make sure they are prioritizing that in terms of their spending decisions,” said Pumphrey.

Related Content

• Retirement Savings on Track? How Much You Should Have by 50 and 55
• The 'Go Live Your Life' Rule of Retirement Spending
• Avoid These Four Mistakes in the Run Up to Retirement
• Baby Boomers vs Gen X: How They Approach Retirement Differently

Answer: There can be benefits to carrying a mortgage rather than paying it off with a lump sum of cash. For one thing, if you itemize on your tax returns, you may be able to lower your IRS bill via the mortgage interest deduction. And if you have a relatively low interest rate on your mortgage, it could pay to invest your money elsewhere at a higher return.

On the other hand, at the end of the day, a mortgage is a form of debt. And you may not love having debt in retirement.

If you have a $360,000 mortgage on a vacation home worth $1.2 million, you clearly have plenty of equity in that property. But you may be tired of having to make monthly payments on that loan.

If you’re on the hook for a $45,000 required minimum distribution (RMD) you don’t need for other expenses, you may be inclined to use it to pay down your mortgage and shed that loan more quickly. But is that a good idea?

It’s a matter of liquidity

The amount of interest you’re paying on your mortgage might help dictate whether it makes sense to use an RMD to pay off that loan sooner. But regardless of your mortgage’s interest rate, as long as it’s not astronomical, you’ll want to consider how putting more money into your home will impact your overall liquidity.

“When I walk clients through decisions like this, we look at which option leaves them better positioned for the unknown,” says Drew Lunt, founder and adviser at Scratch Capital. “Investing the after-tax RMD or using it for QCDs can preserve liquidity and allow total-return compounding to do the heavy lifting.”

Matt Hylland, financial planner at Arnold and Mote Wealth Management, agrees.

“Using an unneeded RMD for proceeds to accelerate the paydown of the mortgage can be a great way to guarantee some interest savings in the long run,” he says.

But first, he says, you must make sure you have enough liquid assets and savings as a buffer.

As Hylland explains, “Building up additional equity in a home can pay off eventually, but it will be expensive to access that equity if it is needed before selling the home.” This especially holds true in today’s borrowing environment, where interest rates remain stubbornly high.

Hylland suggests evaluating the interest rate on other safe investments, like money markets and Treasury bills, to see how it compares to your mortgage rate. If you could earn a comparable interest rate outside of paying down the mortgage, the benefit of greater liquidity may ultimately be a better option.

As Lunt cautions, “A vacation home is already an illiquid, concentrated asset. Adding more equity may feel productive, but it can reduce resilience when unexpected repairs, rising insurance costs, or life changes inevitably show up.”

There are other ways to maximize an RMD

If you don't need your upcoming RMD for living expenses but you're not sure you want to tie another $45,000 up in a vacation home, there are other ways to use that money productively.

Lunt suggests looking at qualified charitable distributions (QCDs) if you're eager to reduce your tax burden. You can also invest your RMD in a taxable brokerage account that can generate income.

Another option, says Hylland, is to use the RMD to pay the tax bill on a Roth conversion that reduces or eliminates future RMDs.

"This strategy will help reduce future year RMDs, potentially saving taxes for the rest of their life, and give this person additional money that will grow tax-free in a Roth IRA, which may ultimately be much more valuable than saving some interest on their mortgage," he explains.

Think about what gives you the most peace of mind

Money you don't need for pressing expenses in retirement can be used to serve another key goal — improving your sense of financial security. That's why you may want to base your decision on what gives you the most peace of mind, provided you've done a personal liquidity analysis first (either on your own or with the help of a financial adviser).

As Lunt says, "Paying down the loan can legitimately reduce financial stress and create more stability."

However, if putting more money into an illiquid asset will introduce more financial fragility over time, then it may not be worth it. You'll need to think about what's best for you in a broad sense — not just in the context of dealing with this year's RMD.

"The right choice here isn’t about maximizing short-term math," Lunt says. "It’s about increasing long-term optionality and making sure [you] can adapt when life doesn’t follow the plan."

Read More

• I'm 61 and need $50,000 for home repairs. Should I borrow, given today's rates, or take a withdrawal from my $950,000 401(k)?
• Lower Your Retirement Taxes: Seven Common RMD Mistakes to Avoid
• I Have to Take a $22,000 RMD by the End of the Year, and I Don't Need the Money. What Should I Do With It?

Unlike income taxes, which often decline in retirement, property taxes are based on the value of your home — and in many parts of the country, assessed values have skyrocketed in recent years. Median property taxes rose by an average of 10.4% between 2021 and 2023, according to an analysis of the latest data available by LendingTree, an online marketplace for consumer loans. The median property tax in 2023 was nearly $3,000 ($2,969), but median property taxes in 50 metropolitan areas ranged from $1,091 to nearly $10,000, according to LendingTree.

Before writing a check for your next property tax bill, make sure you take full advantage of property tax relief programs offered by your state or locality. While more than 9 million Americans likely qualify for property tax relief, only about 8% apply for it, according to the AARP. “Many aren’t aware these programs exist or assume they’re not going to qualify,” says Nicole Heckman, vice president of well-being for the AARP Foundation.

The types of property tax relief available vary, not only by state but by individual counties and jurisdictions. Many states and jurisdictions offer expanded relief to homeowners who are 65 or older; some offer breaks to homeowners who are 61 and older. Veterans and residents with disabilities may also qualify for a reduction in their property taxes. While eligibility is often income-based, the income thresholds “can be pretty expansive,” Heckman says, so don’t assume you earn too much to qualify. In New Jersey, for example, homeowners with incomes of up to $500,000 are eligible for reimbursement of a portion of their property tax bill.

Tax relief isn’t automatic. In most cases, you must fill out an application and file it by a deadline set by your locality or state. Some jurisdictions require you to apply in person. Other states and localities allow you to apply online, but that can be challenging for older adults who don’t have broadband internet, Heckman says.

The AARP Foundation’s Property Tax Aide program, now in its fifth year, allows homeowners to research more than 140 programs in 50 states and Washington, D.C. Users can find details on eligibility, deadlines and where to get help. The average amount of relief provided through the program is $400, but some users have saved up to $1,000, Heckman says. Many states allow eligible homeowners to apply for up to three years of back tax relief, she says. “That can be a significant credit or refund.”

Some types of relief states and localities offer homeowners:

1. Tax credits and refunds

More than a dozen states offer property tax credits or refunds to eligible older adults in amounts ranging from $250 to $2,730. Pennsylvania provides rebates ranging from $380 to $1,000 for eligible older and disabled residents. Tennessee refunds all or a portion of property taxes paid by eligible residents.

Minnesota provides two types of property tax refunds: one based on homeowners’ income and the amount of their property taxes, and another based on how much residents’ property taxes have increased. (Some residents qualify for both, and the program isn’t limited to older adults.) Cindy Rieck, 68, of Pequot Lakes, Minn., whose home has nearly doubled in value since she purchased it in 2007, says she received a refund of $1,200 in 2024.

2. Expanded homestead exemption

Property taxes are based on the assessed value of your home, which may differ from its appraised or market value. A homestead exemption lowers the assessment, thus reducing your property tax bill. Most states offer some kind of homestead exemption for residents, but many states provide an additional homestead exemption for older adults.

Florida, for example, allows residents to exempt up to $50,000 of their home’s assessed value from property taxes (which will increase with the rate of inflation starting in 2025), but jurisdictions in the state have the option of providing an additional $50,000 exemption to eligible homeowners 65 and older.

Texas recently increased its homestead exemption to $140,000 for all residents. The state provides an additional $60,000 exemption for residents age 65 or older, for a total combined homestead exemption of $200,000. Texas now allows individual jurisdictions to add $3,000 to that amount.

3. Assessment freeze

In Arizona, homeowners ages 65 or older who have lived in their primary home for at least two years and meet income limits can have their property’s valuation frozen for three years. New Jersey has a “senior freeze” program that reimburses property tax increases for eligible residents who have owned their homes for at least three years.

4. Tax deferral

Illinois allows eligible homeowners 65 and older to defer up to $7,500 of property taxes on their principal residence. California, Maine, Minnesota, Vermont and Washington also allow eligible older adults to defer property taxes.

If you sign up for deferral, the state or locality will place a lien on your home; the taxes must be paid, usually with interest, after you die or sell the home. That’s important to consider when planning your estate. If your heirs sell the home, the back taxes will reduce the amount they’ll receive from the proceeds, and if they want to keep it, they’ll be on the hook for the taxes you deferred. “If you can afford it, you may decide you’d rather pay the tax now and not have something your heirs will have to worry about when they sell the property,” says Jared Walczak, vice president of state projects at the Tax Foundation in Washington, D.C., a tax-policy research organization.

Other options to cut your tax bill

Applying for property tax relief is just one way to lower your tax bill. Other options that may be available to you:

Claim a deduction
The One Big Beautiful Bill Act, signed into law in July, allows homeowners to deduct up to $40,000 in state and local taxes, up from a cap of $10,000. The provision takes effect in 2025 and expires in 2029. The legislation also expanded the standard deduction for eligible taxpayers 65 and older, so for many older adults, claiming the standard deduction will still provide the lower tax bill. However, if you live in a high-tax state and have other deductible expenses — large charitable contributions, for example — it’s worth running the numbers with your tax preparer or on a tax software program to determine whether you should itemize on your 2025 tax return.

Challenge your property tax bill
If you believe your assessment was inaccurate or outdated, you may be able to lower it by filing an appeal. Review your property’s record card, usually available on your locality’s website or by request. If you find an obvious error — four bedrooms instead of two, for example — your assessor may agree to lower the assessment on the spot.

If the information on your property’s record card is correct but you believe your assessment was higher than those for comparable homes in your neighborhood, you can use that information to file an appeal. Check your local government’s website for deadlines and procedures. Realtor.com offers a tool that will provide you with an estimate of the market value of your home, along with estimated values of other homes in your neighborhood. The tool is free but you must create an account to use it.

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

Related content

• States With the Lowest Property Tax in 2025
• The Cheapest Places to Retire in the US
• The Original Property Tax Hack: Avoiding The ‘Window Tax’
• New Trump Tax Bill: Five Changes Homeowners Need to Know Now

Even a small step now — sharing your thoughts on aging, care or estate plans — could help prevent confusion, conflict or stress down the road.

Many people find these conversations challenging, and understandably so. They touch on mortality, money and independence.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Yet, in my experience with clients, the greatest gift you can give isn't always measured in dollars; it's the clarity and peace of mind that come from a well-communicated plan.

Whether you are the matriarch or patriarch of the family, or the adult child looking to support aging parents, here is how to approach these conversations this season.

For the older generation: Stewardship and clarity

If you are the one who built or stewarded the family's wealth, you are likely focused on two main objectives: maintaining your own comfort and easing future responsibilities for your children. Clear communication supports both.

Long-term care and living wills

Talking about long-term care doesn't have to be a technical discussion about insurance policies. It can be as simple as expressing a wish: "I want to make sure my health care preferences are clear if I can't speak for myself."

From there, you can share whether you would prefer to age at home or elsewhere and confirm that your power of attorney and health directive documents are current. This isn't about giving rigid instructions — it's about ensuring your family isn't left guessing during a crisis.

Estate plans and legacy

A smooth, organized transition is one of the most meaningful legacies you can leave. You don't need to get into specific dollar figures at the dinner table. Instead, focus on the logistics:

• Where are the key documents kept?
• Who are your attorney, tax professional and wealth manager?
• What is the general structure of the plan?

If your plan involves unequal distributions, offering brief context now can spare significant tension later.

Family values and philanthropy

If discussing assets feels too heavy, try starting with values. Bringing your family into your charitable giving can be a gentle way to discuss legacy. Asking which causes matter to them turns the conversation toward shared purpose rather than inheritance.

For adult children: Curiosity and respect

Adult children often want to support their parents but fear overstepping boundaries. The key is approaching these topics with curiosity and respect, rather than demands.

Asking about preparedness

You would feel better knowing where your parents' key documents are and who to contact if something happens. Frame the question practically, not intrusively.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

Understand what key professionals are involved — the attorney, wealth manager, accountant and anyone else supporting the family. Identifying these individuals is not only part of maintaining an "orderly estate," but it also helps reduce the risk of miscommunication.

Crucially, it can help prevent your parents from becoming victims of financial fraud and hacking by ensuring there is a trusted team watching over their affairs.

Understanding the care plan

If your parents have said they want to age in place, it helps to ask what that means in practice. How do they imagine the family coordinating support?

Discussing this now keeps everyone aligned and avoids accidental misunderstandings later.

Aligning on educational support

Holidays can also be a good time to talk about help for the grandchildren's education. Asking whether they would like to contribute to 529 plans — or use another approach — keeps things coordinated and tax-efficient.

Conversation starters

If you aren't sure how to break the ice, try one of these openers.

Parents could say:

• "We're not getting any younger, and I want to make sure we're on the same page about elder care. We'd like you to be the point person for our care when we're older. Is that something you'd be open to?"
• "At some point next year, I'd like you to sit down with our wealth manager and attorney to understand what to expect when I'm gone. Can we get something on the calendar?"

Adult children could say:

• "I'm not sure how to think about planning for the children's education. Is that something you'd be willing to contribute to during your lifetime instead of leaving it up to the will?"
• "If you got hit by a bus tomorrow, where is everything saved? Do you have a doomsday file on your computer?"

Putting it all together

Not every topic will be resolved over a single holiday dinner — and that's okay. The goal is simply to begin.

By opening the door to these conversations, your family can create a shared commitment to clarity, stability and long-term well-being. That is a gift that lasts far beyond the holiday season.

Related Content

• Your Estate Plan Isn't 'Done' Until You've Completed These Five Steps, From an Estate Planning Attorney
• What Would You Like to Leave Behind? A Financial Planner's Guide to Family Wealth Discussions
• Resist the Taboo: Talk to Your Kids About Family Wealth
• Prepare Your Family for the Financial and Legal Aftermath of Your Death
• You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term Care

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

It's no longer an esoteric technology that interests only nerds. Now, people use the technology to write, create images, edit videos, analyze data and write code.

As AI continues to impact every industry, the personal finance industry hasn't been left behind. The AI-powered personal finance management market was valued at $1.48 billion in 2024, according to Research and Markets.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

It's projected to be a $1.63 billion market by the end of 2025, at a compounded annual growth rate (CAGR) of 10.1%, and a $2.37 billion market in 2029, at a CAGR of 9.8%.

From budgeting, saving and investing to robo-advising, financial coaching, credit scoring and debt management, AI continues to shape personal finance management, providing value across the globe.

Let's look at some of the applications of AI in personal finance, the challenges with adopting AI and tips for wise usage of AI.

AI and budgeting

AI-powered tools can help with:

Data aggregation and categorization. AI-powered tools such as Monarch, YNAB, PocketGuard and Mint AI, among others, can pull data from your bank accounts, credit cards and payment history to identify spending patterns and categorize transactions.

Based on this information, you can create a budget to gain better control of your finances. These apps can also use relevant information to suggest areas in which you can modify spending habits to pursue more important goals.

Automated budget creation. AI-powered tools such as Galaxy.ai and Tiller can create a personalized budget based on your income, expenses and financial goals. They'll suggest how you can better allocate your income across expenses to help achieve your goals.

Predictive forecasting. Some budgeting tools (Drivetrain and SuperAGI, among others) can use AI to forecast how your budget will change if your income changes, unexpected expenses arise or you take out a loan.

Anomaly detection. Some AI tools (such as Expenzey and Cleo) can use your past spending habits to flag unusual transactions or overspending in real time. They help prevent fraud and ensure you stay on budget.

Expenses tracking. Budgeting tools allow you to see how close you are to reaching your budget limits. Examples include Mint AI and Cleo.

Bill negotiation. Apps such as PocketGuard can identify bills that might be too high. They'll automatically negotiate with the relevant service providers to lower your expenses.

Automated bill payment. SuperAGI and Mint AI, among others, automate bill payments to a range of providers.

AI and saving

For some, the main point of budgeting is to foster saving.

AI-powered budgeting tools have features that can help. These include:

• Identifying areas to cut expenses. SuperAGI, YNAB, Tiller and PocketGuard
• Paying yourself first by automating savings. PocketGuard, Albert and Oportun
• Identifying and canceling unwanted subscriptions. Rocket Money and Subscription Stopper

AI, investing and financial planning

Some AI tools can suggest how to invest based on your financial goals, time horizon and risk tolerance.

For example, Empower provides investment recommendations based on investment goals and risk tolerance. It also offers retirement planning tools.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

Some AI-powered tools provide comprehensive financial planning that goes beyond investment management.

For example, Albert combines AI with human advisers to provide comprehensive money management.

Even robo-advisers such as Acorns and Wealthfront use AI to optimize client portfolios and automate portfolio rebalancing.

AI and financial education

Albert has a feature called Genius in which an AI tool can act as a virtual financial coach.

Large-language models (LLMs) such as ChatGPT, Perplexity and Claude, among others, can also act as a financial coach and provide a comprehensive financial education.

Most of the apps we've discussed are also built in a chatbot style, so you can ask questions and get personalized answers if they have access to your financial information.

AI, credit scoring and debt management

Some financial institutions now use AI for credit scoring. These combine traditional credit data with alternative sources such as utility bills, transaction history, income, work history and other behavioral data to evaluate creditworthiness. Examples include FICO Score XD and Zest AI.

Consumers can use platforms such as Experian Boost and Credit Karma to improve their credit scores. They use AI to analyze multiple data points to provide personalized suggestions.

Navigating the risks of AI in personal finance

Despite the benefits that AI provides, certain risks remain with its usage in general and in personal finance management in particular.

Some of the most important include:

Limits to the possibility of personalization. AI-powered apps don't have the emotional intelligence and human judgment required to offer truly personalized advice.

While it can help with the automation of repetitive tasks and the provision of information, the emotive element makes human financial advisers necessary.

Privacy concerns. To provide more valuable advice, AI-powered apps will require more personal information, including sensitive personal data. Given concerns about cybersecurity, this is a risk.

AI models can be hacked to make the information they provide reflect a particular ideology or the personal views of the attacker.

Factual mistakes. Generative AI can be factually inaccurate in many cases. They sometimes cite sources that don't exist.

What can you do about these risks?

While AI-powered apps can help, they shouldn't be a replacement for human financial advisers.

Instead, advisers should find a way to integrate AI into their activities so they can provide maximum value to their clients.

Other ways to mitigate risks:

Data-protection policies. Before using any AI-powered app, read its data-protection policies. Choose those you're confident have the policies in place to protect you.

Don't ignore reputable blogs. Look for blogs that provide information from financial experts to confirm what AI tells you.

By familiarizing yourself with reputable blogs, you become insulated from false information, because LLMs might not always be objective.

Provide AI with accurate information. The quality of what you get from AI-powered apps is proportional to the quality of the information you provide.

If you're sure a platform can protect your data, provide relevant information to provide better value.

Final thoughts

The opportunities for the use of AI in personal finance are enormous. However, given the risks, it is up to you to use AI-powered apps responsibly.

If you have a human adviser, consult them before making significant financial choices based on AI recommendation.

Related Content

• Should You Replace Your Financial Adviser with AI?
• I Tried a New AI Tool to Answer One of the Hardest Retirement Questions We All Face
• I'm a Personal Finance Expert: Here's the Truth About Using AI to Plan Your Retirement
• Tax Software vs a Tax Professional: Which Should You Choose?
• For a Good Time Managing Your Money, Call on These Apps

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

This 10-question True/False quiz covers the essential facts you need to maximize your annual contributions and avoid costly mistakes. Don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on IRAs, from the Kiplinger team:

• 6 Changes to IRAs, 401(k)s and HSAs in 2026
• The Average Retirement Savings by Age
• Roth IRAs: What They Are and How They Work
• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
• Roth IRA Contribution Limits for 2026
• SEP IRA Contribution Limits for 2026

Saving for retirement is only half the battle; spending what you saved wins the war. But for a surprising number of retirees, letting go of that hard-earned cash is easier said than done.

This pervasive reluctance, according to MasterClass instructor, author and behavioral finance expert Ramit Sethi, is the single greatest mistake people make in retirement.

“They save for decades, then are afraid to spend their money,” Sethi told Kiplinger in an exclusive interview. “If you haven’t built the skill of spending money meaningfully … it’s very possible to spend your entire life simply worrying about money.”

Keep it simple

Sethi holds the belief that people should automate their savings and investments and not restrict their small purchases. Sethi wrote the New York Times best-selling book “I Will Teach You To Be Rich,” which was turned into a Netflix series of the same name.

One thing he consistently emphasizes is that retirees should spend the money they’ve worked so hard to amass; otherwise, what’s the point?

“I’ve talked to retirees with $2 million in the bank who still drive five extra miles to save money on gas. They’re often terrified to spend a dime because they’ve internalized 40 years of restriction,” says Sethi.

“Don’t go out to eat. Don’t take that trip. Save every penny ‘just in case.’ But when is the ‘right time’ to spend? At 90? In a hospital bed?”

The fear is real

Spending money in retirement is a challenge for many retirees who, for decades, worked diligently to accumulate savings to live off when they retired.

Fears of outliving their money can cause some retirees to experience spending paralysis, which is understandable. Thanks to advances in health care and healthier lifestyles, retirement can easily last 30 years.

The good news is that several retirement spending strategies exist to help retirees determine how much to withdraw during their golden years. The 4% rule is a popular one.

The rule calls for withdrawing 4% of your savings in the first year of retirement, then adjusting that withdrawal amount for inflation each subsequent year to ensure the money lasts for 30 years.

There's the bucket rule of spending, in which you spread out your retirement savings across three buckets: short-term, medium-term and long-term needs. The rule helps you remain disciplined and worry less because you know where your money is and how much you have to spend.

Other spending strategies include the "Pay Yourself," "Me-First" and "Permission-to-Spend" rules.

Still won't budge

Despite these rules and many other spending strategies, retirees are still reluctant to spend.

“People think if you just show retirees a 4% withdrawal rate and tell them you’re good, they’ll start spending. That’s not how it works. A chart doesn’t solve an emotional problem,” said Sethi. “You have to work on the psychology of money, and for many, that means unlearning decades of fear-based advice.”

Sethi advises retirees to start small by taking a guilt-free weekend trip. Or if that feels like too much, try his "$100 Challenge."

With the challenge, you spend $100 on something you love. “It can’t be for your kids, grandkids or dogs. It has to be for you, so you build a connection between money and joy. That’s how you start rewiring your mindset,” he says.

Don’t sweat the small stuff

Ultimately, the main challenge for retirees is not a lack of a plan but the fear of spending, and that’s particularly true when it comes to those smaller, everyday purchases.

Sethi said if he had to choose a runner-up retirement mistake, it would be an obsession with the small money decisions rather than the big ones.

“The financial industry has trained people to ask $3 questions, like should I cut back on coffee, instead of $30,000 questions, like should I negotiate my salary, or is my adviser charging me 1% AUM (assets under management), which costs me tens of thousands of dollars,” said Sethi.

But in retirement, it's the $30,000 questions that matter, he said. “Where do I want to live? How much do I want to spend on travel? Should I be working with someone who helps me enjoy my money, not just hoard it?”

Related Content

• Are You Saving Too Much for Retirement? Know These Surprising Downsides
• Did My $50,000 Starbucks Habit Ruin My Retirement Plan?
• Seven Guilt-Free Ways to Spend Your Retirement Cash
• The Smart Way to Retire: 13 Habits to Steal From the Wealthy

Rather than focusing on luxury or one-time donations, many are channeling their resources into lasting, purpose-driven movements that can shape communities for generations.

One powerful example is Alice L. Walton, the richest woman in the world, who recently opened her own medical school and is covering tuition for its first five graduating classes, as reported by Time magazine.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Walton's $154 million investment in Bentonville, Arkansas, reimagines medical education by focusing on preventive health, holistic wellness and the principle that doctors must learn to heal themselves before they can heal others.

Her vision exemplifies how today's women of wealth are shifting from traditional philanthropy to creating sustainable systems to fund philanthropic gifts into perpetuity.

A strategic and generous model of giving

This new model of giving is not just generous, it's strategic. It's reshaping how ultra-affluent women think about wealth management and legacy.

To facilitate this movement, many are turning to family offices and multifamily offices to help them transform legacy into meaningful impact.

This CFO-type relationship enables women to focus on enabling significant change rather than managing their daily financial complexities.

Women of wealth today expect far more than traditional portfolio oversight. They seek solutions that align wealth with purpose, impact and legacy.

According to HSBC's 2025 report The Giving Shift, 60% of female respondents said financial giving is extremely or very important, prioritizing causes tied to family, health and community over status or prestige.

This values-based approach underscores how women use wealth to strengthen connections and drive measurable impact.

This evolution extends to how women choose their wealth managers.

A 2024 New York Life survey found that 48% of women feel more understood by a female adviser, up from 29% just five years earlier, and nearly half value collaborative, educational relationships.

They're not seeking transactions; they're seeking strategic partners.

How the family office model delivers

The family office model delivers this by providing detailed and timely financial analysis to address all the complexities of multigenerational wealth — tax, estate and philanthropy.

This clarity provides the time and ability for these women to pursue their passions.

Unlike traditional firms with standardized offerings, family offices are designed to be nimble to the complexity of clients' entire lives.

The timing of this shift is significant, as the Great Wealth Transfer has begun. Bank of America Institute's Women and Wealth report projected that roughly $54 trillion will pass to surviving spouses, 95% of whom are women.

Concurrently, Deloitte's Global Family Office Report provides insight that there are more than 8,000 single-family offices worldwide, up from approximately 6,000 in 2019. That figure is projected to increase by 75% or exceed 10,000 by the end of the decade.

A powerful truth

Together, these trends reveal a powerful truth: The next generation of female-led wealth is redefining stewardship. For women, that stewardship often centers on three main pillars:

• Wealth preservation and growth
• Family mission
• Next-generation education

The first priority is the security and growth of wealth throughout future generations with proper entity structure and risk management. The family's mission channels resources toward philanthropic causes that support family values and beliefs.

Family wealth counseling prepares children and grandchildren not only to inherit wealth, but to continue the stewardship in perpetuity.

Family offices help support these pillars by turning intention into an actionable plan of execution, helping to ensure a successful outcome of the long-term family strategy.

One example includes coordinating a charitable giving strategy with an income tax event in the same year. Within the Great Wealth Transfer, a significant portion of assets will come from qualified retirement plans.

Non-spouse beneficiaries of these plans are required to take mandatory annual distributions and must fully withdraw all assets within 10 years of the original account owner's passing.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

Because these distributions are taxed as ordinary income, working with a family office that understands your entire financial situation is essential. This coordination enables proactive tax bracket management and the use of charitable deductions to offset income, supporting both tax efficiency and the family's broader legacy objectives.

Documentation is critical

Another example is the structure and organization a family office provides when navigating complex, multigenerational strategies — particularly those involving estate exemptions and the transfer of assets to the second and third generations.

Many of these plans evolve over decades, making documentation vital. Tools such as our proprietary Family Legacy Book^® serve as a central record of gifting history, ownership structures and entity relationships.

This living road map ensures that if the matriarch or patriarch passes unexpectedly, the family retains a clear and current financial picture, providing continuity, confidence and peace of mind.

These examples reflect a broader movement among affluent women leveraging wealth with intentionality.

Increasingly, they recognize that family offices don't just preserve capital, they simplify complexity, saving them time and allowing them to focus on what truly matters: health, family purpose, personal passions and family legacy.

Beginning with the end in mind

For women of wealth, the takeaway is clear: Building a lasting legacy begins with the end in mind. Rather than chasing returns, they build the management around meeting their targeted objectives, incorporating investments, trusts, philanthropy and education under one coordinated strategy.

A well-run family office makes this possible, serving as the hub that turns intention into successful outcomes.

Start by defining what you want your wealth to accomplish, whether that's long-term stability, meaningful philanthropy or empowering the next generation with financial confidence. Surround yourself with professionals who listen, educate and collaborate.

True stewardship isn't about managing assets; it's about ensuring your wealth continues to advance family values and the future vision across generations.

Related Content

• Ten Ways Family Offices Can Build Resilience in a Volatile World
• Do You Need a Family Office? Four Signs for the Very Wealthy
• How Women Can Handle Their Growing Wealth Like a Pro
• Financial Planning: Sisters Should Be Doin' It for Themselves
• Melinda French Gates Models Three Strong Lessons for Philanthropists

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.

Answer: Many people look forward to retiring because it typically means a break from the daily grind of work. But there’s a downside to not working — having too much free time.

If you’re starting to feel restless in retirement, you might be interested in starting a business — not necessarily for the money, but to have something meaningful to do with your time.

Let's be honest: Being a vintner sounds like a lot of fun.

If you’re 64 with $2.4 million, you might have enough money for a pretty comfortable lifestyle — especially if you have a nice Social Security check coming your way every month. Do you have enough to invest a good portion of your savings in a co-owned winery?

Clearly, there are some risks involved. Not only could taking $400,000 from your savings force you to change your broad withdrawal strategy, but you could conceivably lose all that money if your business fails.

You'll need to do some due diligence, of course. Wine making is a tough industry these days, according to Silicon Valley Bank, with only 16% of vintners saying their business was "very strong" or "rock solid" in 2024.

Some industry's headwinds might be hard to shake, as younger generations are drinking less, and U.S. wine consumption is declining due to health concerns.

That doesn’t mean investing in a winery is a poor choice, though.

Consider the benefits

While investing in a winery might be risky, Bruce Maginn, adviser at Solomon Financial, says there can be significant benefits.

“Co-owning a winery throughout retirement can have financial and personal benefits,” Maginn insists. “However, you’ll want to ensure the investment isn’t relied on for significant income.”

As Maginn explains, because the wine industry typically moves independently of traditional markets, any income your business generates could provide diversification for your portfolio.

More important, though, is the personal satisfaction you might get from owning and operating that business.

“Co-owning the winery can also give you a sense of purpose and fulfillment while enjoying retirement,” Maginn says. “It can help connect you to your community, create social engagement opportunities, and help keep you mentally active.”

Maginn also points out that a business such as a winery “could be used as a way to create a legacy for your children and grandchildren.”

Recognize and mitigate the risks

There’s no such thing as a risk-free investment, and a winery falls into that category. The risk in this situation, says Maginn, isn’t just losing your $400,000 investment. Rather, you could face additional expenses that eat into your savings even more, such as litigation, partnership disputes, and operational surprises. If you’re going to open that winery, you’ll need to factor these potential costs into your decision.

For this reason, Maginn suggests financing the $400,000 rather than pulling the money from savings.

“If you can borrow at a low percentage rate,” he says, “then the long-term math will likely work in your favor. You will likely have earned more interest than you paid to the lender.”

Adam Spiegelman, founder and wealth adviser at Spiegelman Wealth Management, agrees that the risks of owning a private business can be substantial.

"A winery is not a brokerage account," he says. "Once your money is in, it’s in. If your life changes, the market dries up, or you simply want out, it may be extremely difficult to get your capital back."

For this reason, borrowing may be a better choice than tying up your own money.

Spiegelman also warns that even if you're not relying on your business for retirement income, if it fails, it could have a huge impact on your life.

"If this goes poorly, it may affect mental health, family relationships, or retirement expectations," he says. "Pride and ego often get wrapped up in passion projects more than people realize."

All told, Spiegelman says, "Committing more than 5% [of a portfolio] to a single private winery would make most advisers nervous." In this case, a $400,000 investment represents almost 17% of a $2.4 million portfolio, making it "a very large concentration in a very risky corner of the investment universe."

Be honest about the why

Spiegelman says that in this situation, buying into the winery isn't necessarily the wrong choice. But be honest with yourself and, if applicable, your spouse or family, about why you're doing it.

"If someone loves wine, nature, hospitality or simply needs a post-career purpose, a winery can provide structure, social connection, intellectual challenge, and a reason to get out of the house," Spiegelman says. "But those positives don’t change the underlying risk."

Spiegelman suggests framing the decision as a consumption choice rather than an investment.

"If you treat it like buying a vacation home or a boat — something that may enrich your life but probably won’t enrich your net worth — the math becomes more honest," he says.

Maginn agrees.

“This opportunity could really enhance your retirement,” he insists. “If you approach the investment with a clear head, legal protection and a partner who shares your vision, then it can be a rewarding experience.”

Read More

• Living Solely on Investment Income in Retirement: Can it Be Done?
• The Seven Best-Paying Side Gigs For Retirees
• Turn Your Retirement Hobby into Income: The Pros and Cons
• I Retired at 60 Two Years Ago With $3.1 Million. My 62-Year-Old Wife Still Works Because She Wants to, but She Resents My Free Time. Help!

Now you're a few years from reaching your peak earnings and retiring. When that happens, the view from the mountaintop will be satisfying and well-earned.

Then what? How will descending the mountain look and feel when, after decades of building a nice nest egg, you'll no longer be accumulating and instead will be switching gears dramatically into the drawdown/withdrawal phase of your retirement accounts?

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

If you're not careful and thorough with your retirement planning, it can feel as hair-raising as driving down a mountain without brakes.

Many people worry about running out of money in retirement, and that concern has risen in recent years because, in general, we're living longer.

Knowing how to navigate the drawdown phase is crucial. Here are some important tips.

The bucket strategy

You'll want effective ways to access your savings in retirement so you'll have enough income to last, avoid unnecessary taxes and preserve and grow your portfolio's value.

The bucket strategy divides your savings into buckets geared to different timeframes and needs in retirement. This approach might offer several advantages for retirees:

Risk management. Retirees can reduce the impact of market volatility on their immediate income needs when they allocate assets according to when they'll be needed.

Inflation-protection strategies. The growth bucket allows for continued investment in assets with the potential to outpace inflation, preserving the purchasing power of your savings.

Flexibility. The plan can be adjusted based on changing needs, market conditions and personal circumstances.

Clarity and confidence. A structured plan can provide confidence, knowing that you have a strategy to fund each phase of retirement.

The core and liquidity bucket

This covers your essential living expenses. It can be a combination of cash, money market funds, high-yield savings accounts and a CD ladder.

It's also funded by your fixed retirement resources such as Social Security, pensions and fixed index annuities.

The liquidity bucket should include an emergency fund of at least six months of living expenses.

This bucket needs to be coordinated appropriately with required minimum distributions. This bucket covers retirement years one through three, on average.

The income bucket

This low-risk bucket is intended to generate steady income for the midterm phase of retirement, usually covering years four to seven.

It might include fixed-income investments such as bonds, annuities or dividend-paying stocks that provide a reliable stream of income while still offering some potential for growth to keep pace with inflation.

You're not dipping into this bucket early in retirement, but you need to be careful not to jeopardize this bucket with more aggressive investments that carry higher yields but also higher risk.

The growth bucket

This third bucket is focused on long-term growth and is meant to sustain you in the later stages of retirement, beyond eight years.

It's typically invested in a diversified portfolio of stocks, exchange-traded funds (ETFs), mutual funds and other growth-oriented assets.

The growth bucket often contains higher-risk/higher-yield investment strategies that will help fight inflation and fund future expenses, such as dream vacations or big-ticket items.

It is designed to weather market fluctuations. You shouldn't have to worry about being forced to sell long-term investments in the event of a market downturn if you have other buckets to pay your immediate costs.

These assets typically won't be needed for more than a decade.

Proportional withdrawals, coordinated with the bucket strategy

This involves taking funds proportionally from different accounts — taxable, tax-deferred (traditional 401(k) and IRAs) and Roth accounts — to reduce the tax impact of withdrawals. Draw from taxable and tax-deferred accounts first, then from Roths.

Roth conversions of tax-deferred accounts can be a key strategy to reduce retirement taxes. Required minimum distributions (RMDs) take effect for most people when they turn 73, but withdrawals from Roths are not subject to RMDs and are tax-free.

Those with tax-deferred accounts, however, can push themselves into a higher tax bracket in retirement if they haven't withdrawn much of their money before 73.

The proportional approach requires customization, and it makes sense to consult your tax and financial advisers.

Be wary of the 4% rule

The 4% rule is a popular retirement guideline. It suggests that retirees can withdraw 4% from their portfolios in their first year of retirement and adjust that amount for inflation in subsequent years. The goal is to make their savings last 30 years.

But the 4% rule has several important issues and limitations. Here are some:

It's outdated. The rule was derived from U.S. market data from the 20th century, which creates significant limitations when applied universally to international markets and modern economic conditions. It assumes future returns on stocks and bonds will mirror past performance.

Sequence of returns risk. Retirees are most vulnerable in the early years of retirement. If markets perform poorly early on, the portfolio might be depleted faster, even if average returns recover later. The 4% rule doesn't account well for this "bad luck" risk.

Inflation assumptions. In high or persistent inflation environments, the real value of withdrawals might not keep pace with expenses (especially health care or housing).

One-size-fits-all approach. Everyone has different risk tolerance, expenses, health/longevity expectations, income sources and retirement time horizons. The rule assumes no flexibility in spending, which is unrealistic. Most retirees adjust spending based on market conditions or personal circumstances.

It doesn't account for taxes or fees. Withdrawals might be taxed (e.g., from traditional 401(k)s or traditional IRAs), and portfolios often have management fees. These reduce the actual amount a retiree can spend, making 4% potentially too optimistic.

Considering these issues and imitations, you might want to consider more personalized strategies that account for longevity and risk management.

Generating income on top of Social Security

In retirement, from an investment standpoint, it's important to change your mindset to "preserve-plus-grow." That means balancing the protection of your assets from market volatility with generating investment growth.

The goal of preserve-plus-grow is to have a stable income stream while your portfolio keeps up with inflation or outpaces it with a core segment of your retirement portfolio.

This might be achievable with a mix of low-risk and moderate-risk investments. Having a diversified portfolio is one strategy that could help.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

To support both asset preservation and growth, consider diversifying your investments across multiple asset classes, including various types of stocks and bonds. As you progress through retirement, gradually reducing stock exposure might help manage risk.

Diversification through index funds and ETFs, including options that track the S&P 500, could help address stock volatility.

In the long term, a balanced mix of stocks and bonds can offer both growth potential and income, although results will vary based on market conditions. The percentage allocations should be adjusted for each person's needs.

Here are some investment options that might generate income in retirement:

Dividend growth stocks. These are the stocks of established companies that consistently pay and increase their dividend payouts. In an inflationary environment, these companies can often pass on higher costs to consumers.

But as their revenues grow, they can increase their dividends, potentially providing a rising income stream that helps offset inflation.

Treasury inflation-protected securities. TIPS are government bonds with principal value that rise and fall with inflation, as measured by the Consumer Price Index (CPI).

When the principal is adjusted for inflation, your semiannual interest payments also increase, as they are a fixed percentage of the adjusted principal.

However, returns from TIPS might be lower during periods of low inflation or deflation, making them most effective in higher inflation environments.

Real estate investment trusts. REITs involve companies that own income-producing real estate, which can be invested in via a mutual fund or ETF.

When inflation pushes property values higher, REITs' revenues and stock prices often rise.

But note that REITs are susceptible to interest rate changes and economic downturns. The dividend income is often taxed at a higher rate than other stock dividends.

It's important to develop a road map for your retirement drawdown years to help navigate the long ride down the mountain.

Having a comprehensive plan with an eye on tax efficiency and a preserve-and-grow approach might support lasting financial resources and contribute to a more confident retirement.

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.

Related Content

• Which of These Four Withdrawal Strategies Is Right for You?
• The 'Permission to Spend' Rules of Retirement Spending
• How to Be Strategic With Your Retirement Withdrawals
• Retirement Income Strategies for the Long Haul
• One Good Way to Withdraw Retirement Assets (and a Bad One)

———————————————————————————————

Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. This material is intended for informational and educational purposes only and does not constitute investment, tax, or legal advice. The strategies discussed may not be suitable for all investors. Individual results will vary, and investment decisions should be based on your unique goals, time horizon, and risk tolerance.

Dividend payments from stocks and real estate investment trusts (REITs) are not guaranteed and may be reduced or eliminated at any time.

Returns from Treasury Inflation-Protected Securities (TIPS) may be lower during periods of low inflation or deflation. REITs are sensitive to interest rate changes and economic downturns, and dividends may be taxed at a higher rate than other forms of investment income.

Diversification and asset allocation strategies do not ensure a profit or protect against loss in declining markets.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. You should consult a financial professional regarding your individual situation before implementing any investment strategy. AE Wealth Management does not provide tax or legal advice. Please consult with a qualified professional for such guidance. 3359115 - 10/25

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.